Slide 1: First Quarter Fiscal 2024 Earnings Presentation
First Quarter Fiscal 2024 Earnings Presentation February 15, 2024 Applied Materials External
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, ou
Slide 3: Upcoming Events
UPCOMING Events FEBRUARY 26 Applied Materials Panel SPIE Advanced Lithography + Patterning Conference MARCH 4 Morgan Stanley Technology, Media & Telecom Conference 3 | Applied Materials External
Slide 4: Gary Dickerson, President and Chief Executive Officer
Gary Dickerson President and Chief Executive Officer Applied Materials External
Slide 5: Enabled by Key Inflections
ENABLED BY KEY INFLECTIONS ▪ New ASICs and accelerators New architectures ▪ High-performance compute memory ▪ Specialty, CIS, power ▪ GAA transistors COVERING TODAY New structures / 3D ▪ Backside power delivery ▪ 3D NAND, 3D DRAM ▪ Transistor Gate New materials ▪ Transistor Contact ▪ Interconnect Wi
Slide 6: Semiconductor Market Outlook and Applied 2024 Outlook
SEMICONDUCTOR APPLIED 2024 MARKET OUTLOOK OUTLOOK » Overall dynamics » Leading-edge improving foundry/logic stronger » Re-acceleration of capital » ICAPS slightly lower investments by cloud » NAND up, <10% of WFE companies » DRAM strong, high- » Increasing fab utilization bandwidth memory across all
Slide 7: DRAM Leadership and High-Bandwidth Memory Leadership
DRAM Leadership High-Bandwidth Memory Leadership ▪ #1 in DRAM process equipment ▪ #1 in HBM process equipment ▪ Increased share >10pts in 10 years ▪ Our HBM packaging revenue to grow ~4X in FY24 ▪ Positioned for future growth: » DRAM adopting our logic technologies ▪ Positive market fundamentals » ~
Slide 8: Growing in Key Inflections
Growing in Key Inflections ADVANCED PACKAGING GATE ALL AROUND eBEAM METROLOGY » Industry’s broadest advanced » Grows Applied’s available » Developed industry-leading packaging portfolio market by $1B for every Cold Field Emission (CFE) 100K wafer starts per month eBeam technology » Expect to grow to
Slide 9: Growing Technology Complexity Increases Our Opportunity
Growing Technology Complexity Increases Our Opportunity INCREASING CO-OPTIMIZED AND IMS SOLUTIONS IMS Multiple processes in one >30% of FY23 Semi Systems revenue system, under vacuum Co-optimized Adjacent processes Unit Process Single process IMS = Integrated Materials Solution 9 | Applied Materials
Slide 10: Expanding Our Innovation Network With R&D Collaboration
Expanding Our Innovation Network With R&D Collaboration Expanding our long-term New platform to accelerate Announced new collaboration partnership with CEA-Leti innovation and commercialization with MIT centered around focused on ICAPS innovation of leading-edge technologies power electronics 10 | A
Slide 11: Applied Global Services
APPLIED ▪ Record revenue in Q1’24, 18 consecutive quarters of YoY growth GLOBAL ▪ >49k tools, ~200k chambers in installed base ▪ ~2/3 recurring revenue generated from subscriptions SERVICES » ~17k tools under service agreements, up 8% YoY » >90% renewal rate Enables customers to accelerate R&D and t
Slide 12: CEO Summary
CEO ▪ Delivered strong results in Q1’24 SUMMARY ▪ Outperformed markets in 2023 for fifth consecutive year ▪ Leadership positions at key industry inflections support continued outperformance ▪ Strengthening R&D collaboration to drive innovation and commercialization velocity ▪ Growing demand for our
Slide 13: Brice Hill, SVP, Chief Financial Officer
Brice Hill SVP, Chief Financial Officer Applied Materials External
Slide 14: Creating Value for Shareholders
Creating Value for Shareholders STRATEGY RESULTS RECENT RESULTS » Harness industry’s broadest and » Record equipment sales: deepest process equipment portfolio » Leading-edge foundry / ~$20.7B in CY23 and expertise logic stronger » Record » ICAPS DRAM slightly sales: lower » Invest ~$3 billion in an
Slide 15: Over past 10 fiscal years, increased ROIC from 8% to 35%
C O M P O U N D A N N U A L G R O W T H R AT E O V E R 1 0 F I S C A L Y E A R S >13% ~30% 33% ~12% REVENUE NON-GAAP EPS* FREE CASH FLOW** DIVIDENDS / SHARE Over past 10 fiscal years, increased ROIC from 8% to 35% and reduced net shares outstanding by over 30% *For reconciliation of GAAP to non-GAAP
Slide 16: Growth Thesis
Growth Thesis 1. Semiconductors Global GDP significantly outgrow GDP 2. Fab equipment grows as fast Semiconductors or faster than semiconductors 3. Applied Semi Systems outgrows fab equipment market Wafer Fab Equipment 4. Applied Global Services grows as fast or faster than Applied Semi Systems Semi
Slide 17: Applied Technologies Enable Growth in AI, IoT and Energy Transformation
Applied Technologies Enable Growth in Artificial Intelligence, Internet of Things and Global Energy Transformation EDGE AI AND GLOBAL ENERGY DATA CENTER AI ELECTRIC VEHICLES INTERNET OF THINGS TRANSFORMATION Process equipment leadership Positioned to continue to outperform ▪ #1 in advanced foundry/l
Slide 18: Q1F24 Non-GAAP Financial Results
Q1F24 Non-GAAP Financial Results $M, except EPS Q1F23 Q4F23 Q1F24 YoY QoQ Revenue 6,739 6,723 6,707 - - Gross Margin* 46.8% 47.3% 47.9% 110bps 60bps Operating Expenses* 1,165 1,193 1,230 6% 3% Operating Income* 1,987 1,984 1,981 - - Operating Margin* 29.5% 29.5% 29.5% - - EPS* $2.03 $2.12 $2.13 5% -
Slide 19: Q1F24 Segment Results
Q1F24 Segment Results SEMICONDUCTOR SYSTEMS APPLIED GLOBAL SERVICES DISPLAY & ADJACENT MARKETS Non-GAAP Operating Margin* 36% 36% 36% 35% 34% 28% 27% 27% 27% 5,162 4,977 4,909 25% 4,883 4,676 1,476 1,471 21% 1,464 1,428 1,369 14% 10% 10% 2% 298 244 235 Revenue ($M) 168 167 Q1F23 Q2F23 Q3F23 Q4F23 Q1
Slide 20: Cash Flows and Shareholder Distributions
Cash Flows and Shareholder Distributions CASH FLOWS ($M) Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Operating Cash Flow 2,270 2,292 2,583 1,555 2,325 Free Cash Flow* 1,983 2,037 2,328 1,246 2,096 SHAREHOLDER DISTRIBUTIONS ($M) Total Shareholder Distributions (470) (1,019) (707) (968) (966) Share Repurchases (250
Slide 21: Second Quarter Fiscal 2024 Business Outlook
Business Outlook Total Revenue ~$6.50B ± $400M Second OUTLOOK Non-GAAP EPS ~$1.97 ± $0.18 QUARTER FISCAL 2024 Semiconductor Systems ~$4.80B SEGMENT Applied Global Services ~$1.50B REVENUE Display and Adjacent Markets ~$150M Non-GAAP Gross Margin ~47.3% OTHER Non-GAAP Operating Expenses ~$1,235M Non-
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Slide 23: Segment Financial Table
SEGMENT FINANCIAL TABLE RECAST PREVIOUSLY REPORTED IN MILLIONS, EXCEPT PERCENTAGES FY22 Q1F23 Q2F23 Q3F23 Q4F23 FY22 Q1F23 Q2F23 Q3F23 Q4F23 SEMICONDUCTOR SYSTEMS Net revenue $ 18,797 $ 5,162 $ 4,977 $ 4,676 $ 4,883 $ 18,797 $ 5,162 $ 4,977 $ 4,676 $ 4,883 Operating income $ 6,790 $ 1,855 $ 1,715 $
Slide 24: Strong History of Shareholder Distributions
Strong History of Shareholder Distributions Over past 10 fiscal years (through FY23) In March 2023 Board of Directors approved » Grew dividend per share at ~12% CAGR » 23% dividend per share increase » Reduced net shares outstanding by over 30% » $10B supplemental share repurchase authorization » Di
Slide 25: Applied Materials At-A-Glance
APPLIED MATERIALS AT-A-GLANCE REPORTING SEGMENTS FOUNDED Semiconductor Systems CURRENT FISCAL 1967 YEAR ENDS FIRST PUBLIC Applied Global Services 27 October 2024 OFFERING Display and Adjacent Markets 1972 $3.1 billion ~34,500* $26.5 billion ~19,600** TTM R&D employees TTM REVENUE INVESTMENTS active
Slide 26: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet CASH AND INVESTMENTS ($M) Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Cash and cash equivalents 3,547 4,588 6,025 6,132 6,854 Short-term investments 500 510 510 737 638 Long-term investments 2,088 2,024 2,177 2,281 2,910 Total cash and investments 6,135 7,122 8,712 9,150 10,402 C
Slide 27: Latest 3rd Party ESG Ratings
LATEST 3rd PARTY ESG RATINGS CDP Climate A- CDP Water B MSCI AAA Sustainalytics Risk Rating Low ISS (E/S/G) 1/2/1 Links: Net Zero 2040 Playbook | 2022 Sustainability Report | 2022 Sustainability Report Data Annex 27 | Applied Materials External
Slide 28: Additional Resources
Additional Resources Investor Relations Home Page LINK Latest News LINK Blog: Ideas, Actions & Technologies LINK 2021 Memory Master Class LINK 2021 Logic Master Class LINK 2021 ICAPS and Packaging Master Class LINK 2021 Process Control and AppliedPRO Master Class LINK 2022 New Ways to Shrink Master
Slide 29: Appendix: GAAP to Non-GAAP Reconciliations
Appendix GAAP to Non-GAAP Reconciliations 29 | Applied Materials External
Slide 30: Use of Non-GAAP Adjusted Financial Measures
Use of Non-GAAP Adjusted Financial Measures Applied provides investors with certain non-GAAP financial measures, which are adjusted for the impact of certain costs, expenses, gains and losses, including certain items related to mergers and acquisitions; restructuring and severance charges and any as
Slide 31: Quarterly Reconciliation of GAAP to Non-GAAP Adjusted Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Non-GAAP Gross Profit GAAP reported gross profit $ 3,145 $ 3,094 $ 2,976 $ 3,169 $ 3,204 Certain items associated with acquisitions 1 7 7 7 8 7
Slide 32: Quarterly Reconciliation of GAAP to Non-GAAP Operating Expenses
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES IN MILLIONS Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 GAAP Reported Operating Expenses $ 1,175 $ 1,183 $ 1,174 $ 1,198 $ 1,237 Certain items associated with acquisitions (4) (4) (3) (3) (4) Acquisition integration and deal costs (6) (8) (
Slide 33: Quarterly Reconciliation of GAAP to Non-GAAP Segment Operating Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP SEGMENT OPERATING RESULTS IN MILLIONS, EXCEPT PERCENTAGES Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Semiconductor Systems Non-GAAP Operating Income GAAP reported operating income $ 1,855 $ 1,715 $ 1,568 $ 1,741 $ 1,744 Certain items associated with acquisit
Slide 34: Quarterly Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED QUARTERLY RECONCILIATION OF NON-GAAP FREE CASH FLOW IN MILLIONS Q1F23 Q2F23 Q3F23 Q4F23 Q1F24 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 2,270 $ 2,292 $ 2,583 $ 1,555 $ 2,325 Capital expenditures (287) (255) (255) (309) (229) Non-GAAP free cash flow $ 1,983 $ 2,037 $
Slide 35: Reconciliation of GAAP to Non-GAAP Results
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS FY2023 FY2013 Non-GAAP Earnings Per Diluted Share GAAP reported earnings per diluted share $ 8.11 $ 0.21 Certain items associated with acquisitions1 0.05 0.14 Acquisition integration and deal costs 0.02 0.02 I
Slide 36: Calculation of Non-GAAP Measures
UNAUDITED CALCULATION OF NON-GAAP MEASURES IN MILLIONS FY2023 FY2013 Free Cash Flow1 Cash provided by operating activities $ 8,700 $ 623 Capital expenditures (1,106) (197) Free cash flow $ 7,594 $ 426 FOOTNOTE: 1. Free cash flow is a non-GAAP measure and is defined as net cash provided by operating
Slide 37: Calculation of Return on Invested Capital
UNAUDITED CALCULATION OF RETURN ON INVESTED CAPITAL IN MILLIONS, EXCEPT PERCENTAGES FY2023 FY2022 FY2013 FY2012 Non-GAAP operating income after tax Non-GAAP operating income before tax $ 7,719 $ 1,032 Non-GAAP effective income tax rate 12.1% 24.5% Non-GAAP operating income after tax (a) $ 6,785 $ 77
Slide 38: Reconciliation of GAAP to Non-GAAP Results
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS IN MILLIONS FY2023 FY2022 FY2013 FY2012 Non-GAAP Operating Income GAAP reported operating income $ 7,654 $ 7,788 $ 432 $ 411 Certain items associated with acquisitions1 43 39 201 298 Acquisition integration and deal costs 22 38 38 81 Impairment of
Slide 39: Reconciliation Information for Business Outlook
RECONCILIATION INFORMATION FOR BUSINESS OUTLOOK Non-GAAP outlook for the second quarter of fiscal 2024 (including non-GAAP gross margin, operating margin, operating expenses and EPS) excludes known charges related to completed acquisitions of approximately $10 million, or $0.01 per share, includes t
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