Slide 1: Third Quarter Fiscal 2024 Earnings Presentation
Third Quarter Fiscal 2024 Earnings Presentation August 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 SEPT 4 Citi Global TMT Conference SEPT 11 Goldman Sachs Communicopia + Technology 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: FQ3'24: Continuing to Deliver Strong Results
FQ3’24: Continuing to Deliver Strong Results ▪ Record Q3 revenue, earnings toward high end of guided range ▪ Long-term secular trends grow Applied’s available market ▪ Unique and connected portfolio positions us to outperform the industry 5 | Applied Materials External
Slide 6: Today's Key Themes
Today’s Key Themes Device architecture AI driving need for Working in new inflections increasingly energy-efficient ways to accelerate enabled by materials computing the roadmap engineering 2024 SEMICON WEST TECHNOLOGY BREAKFAST 6 | Applied Materials External
Slide 7: Tectonic Shifts in Technology are Built on Semiconductors
Tectonic Shifts in Technology are Built on Semiconductors DATA CENTER AI EDGE AI, IOT EV and AV RENEWABLE and ROBOTICS ENERGY AI is the Biggest Inflection of Our Lifetimes 7 | Applied Materials External
Slide 8: Industry Focused on Accelerating Energy-Efficient Performance
Industry Focused on Accelerating Energy-Efficient Performance Energy-Efficient Performance (Log Scale) Projected ▪ AI companies increasingly focused on reducing power-per-operation ▪ Goal is to drive 10,000X improvement in performance- per-watt over next 15 years 2005 2010 2015 2020 2025 2030 2035 2
Slide 9: Today's Key Themes
Today’s Key Themes Device architecture AI driving need for Working in new inflections increasingly energy-efficient ways to accelerate enabled by materials computing the roadmap engineering 9 | Applied Materials External
Slide 10: Key Architecture Inflections Fueling the AI Race
Key Architecture Inflections Fueling the AI Race Leading-Edge Logic High-Performance DRAM High-Bandwidth Memory Advanced Packaging Applied is #1 in Materials Engineering in Each Area 10 | Applied Materials External
Slide 11: Leading-Edge Logic Inflections Benefit Applied
Leading-Edge Logic Inflections Benefit Applied LEADING-EDGE LOGIC TRANSISTORS ▪ Transition from FinFET to Gate-All-Around (GAA) to grow Applied’s transistor SAM from ~$6B to ~$7B* ▪ On track for >50% SAM share Gate-All-Around WIRING ▪ Introduction of Backside Power Delivery (BPD) to grow Applied’s w
Slide 12: High-Performance DRAM Inflections Benefit Applied
High-Performance DRAM Inflections Benefit Applied HIGH-PERFORMANCE DRAM PLANAR SCALING 6F2 VT 4F2 ▪ Future transition from 6F2 to 4F2 (vertical transistor) to grow Applied’s SAM from ~$6B to ~$6.5B* ▪ Expect to increase SAM share to ~50% Planar DRAM Scaling 3D DRAM ▪ Subsequent transition to 3D DRAM
Slide 13: Advanced Packaging Inflections Benefit Applied
Advanced Packaging Inflections Benefit Applied ADVANCED PACKAGING HIGH-BANDWIDTH MEMORY (HBM) DIE STACKING ▪ Applied has strong leadership in key technologies including microbump and through-silicon via (TSV) ▪ Expect to generate >$600M of HBM packaging revenue in FY24, ~6X FY23 revenue High-Bandwid
Slide 14: Expect Materials Engineering to Increase within WFE Mix
Expect Materials Engineering to Increase within WFE Mix Materials Engineering vs. Litho/Track WFE Mix* LOGIC DRAM 100% Litho/Track Materials Engineering 0% 20nm+ 16/14nm 7nm 5/4nm 3nm GAA+BPD D1a D1b D1c D1d VT 4F2 3D DRAM Materials engineering % of incremental WFE* >50% >40% >40% >60% >75% >60% >70
Slide 15: Today's Key Themes
Today’s Key Themes Device architecture AI driving need for Working in new inflections increasingly energy-efficient ways to accelerate enabled by materials computing the roadmap engineering 15 | Applied Materials External
Slide 16: Connecting Applied's Unique Materials Engineering Portfolio
Pillar Connecting Applied’s Unique Materials Engineering Portfolio PVD ALD Producer CVD CVD PVD PVD Reflow Reflow ALD ALD Treat ALD Centris Sym3 Etch Endura PVD Example: Endura IMS Integrated Materials Solution Unit Processes Co-optimized Processes Integrated Processes One technology Two or more co-
Slide 17: Changing the Way We Work to Accelerate the Roadmap
Pillar Changing the Way We Work to Accelerate the Roadmap NEW ORGANIZATIONS GLOBAL EPIC PLATFORM Integrated Materials Solutions (IMS ) Maydan Technology Center ICAPS Materials Engineering Technology Accelerator Heterogenous Integration (HI) Advanced Packaging Development Center Actionable Insight Ac
Slide 18: Applied Global Services
APPLIED ▪ Record revenue of $1.58B in FQ3’24 GLOBAL SERVICES ▪ 20 consecutive quarters of YoY growth Enables Customers to Accelerate Technology Transfer and Optimize Factory Performance 18 | Applied Materials External
Slide 19: Fueling the Race for AI Leadership
Fueling the Race for AI Leadership AI is the Addressed by New collaboration biggest inflection major architecture playbook will of our lifetimes inflections accelerate new AI architectures Limited by compute Enabled by Applied’s unique energy efficiency and connected materials engineering portfolio
Slide 20: Brice Hill, SVP, Chief Financial Officer
Brice Hill SVP, Chief Financial Officer Applied Materials External
Slide 21: 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 22: Business Environment
Business Environment ▪ Strong pull related to AI and data center computing ▪ DRAM shipments remain strong ▪ Growth in adoption of high-bandwidth memory and other forms of advanced packaging ▪ Leading-edge foundry-logic investment growing each quarter, becoming a larger percentage of our mix ▪ ICAPS
Slide 23: Q3F24 Non-GAAP Financial Results
Q3F24 Non-GAAP Financial Results $M, except EPS Q3F23 Q2F24 Q3F24 YoY QoQ Revenue 6,425 6,646 6,778 5% 2% Gross Margin* 46.4% 47.5% 47.4% 100bps (10bps) Operating Expenses* 1,165 1,233 1,258 8% 2% Operating Income* 1,818 1,927 1,953 7% 1% Operating Margin* 28.3% 29.0% 28.8% 50bps (20bps) EPS* $1.90
Slide 24: Cash Flows and Shareholder Distributions
Cash Flows and Shareholder Distributions CASH FLOWS ($M) Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Operating Cash Flow 2,583 1,555 2,325 1,392 2,385 Free Cash Flow* 2,328 1,246 2,096 1,135 2,088 SHAREHOLDER DISTRIBUTIONS ($M) Total Shareholder Distributions (707) (968) (966) (1,086) (1,192) Share Repurchases (4
Slide 25: Q3F24 Segment Results
Q3F24 Segment Results SEMICONDUCTOR SYSTEMS APPLIED GLOBAL SERVICES DISPLAY & ADJACENT MARKETS Non-GAAP Operating Margin* 36% 36% 35% 35% 34% 30% 28% 29% 27% 27% 4,924 4,909 4,901 4,883 21% 4,676 1,580 14% 1,530 1,476 1,471 10% 1,464 6% 3% 298 251 244 235 Revenue ($M) 179 Q3F23 Q4F23 Q1F24 Q2F24 Q3F
Slide 26: Semiconductor Systems
SEMICONDUCTOR SYSTEMS ▪ DRAM: revenue grew nearly 50% YoY ▪ NAND: revenue grew 10% YoY ▪ Leading-edge foundry-logic: demand continued to strengthen » Expect >$2.5B in revenue from GAA nodes in CY2024, with potential to more than double in CY2025 ▪ ICAPS: remained strong, with pockets of weakness in
Slide 27: Tectonic Shifts in Technology Are Built on Semiconductors (ICAPS)
Tectonic Shifts in Technology Are Built on Semiconductors DATA CENTER AI EDGE AI, IOT EV and AV RENEWABLE and ROBOTICS ENERGY » Expect mid- to high-single-digit, through-cycle demand for ICAPS semiconductors Long-term, expect » Applied is innovating in ICAPS to develop new unit process, ICAPS to rem
Slide 28: AGS Delivering Stable Growth
AGS Delivering Stable Growth AGS Revenue ($B) ▪ Every tool we ship grows our installed base and 6 service opportunity: » 7% YoY increase in installed base of systems and chambers 5 ▪ Customer factory utilization continued to 4 strengthen in the quarter ▪ Leading indicators of AGS growth remain posit
Slide 29: Fourth Quarter Fiscal 2024 Business Outlook
Business Outlook Total Revenue* ~$6.93B ± $400M FOURTH OUTLOOK Non-GAAP EPS ~$2.18 ± $0.18 QUARTER FISCAL 2024 Semiconductor Systems ~$5.10B SEGMENT Applied Global Services ~$1.61B REVENUE Display and Adjacent Markets ~$200M Non-GAAP Gross Margin ~47.4% OTHER Non-GAAP Operating Expenses ~$1,275M Non
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Slide 31: 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 $3.2 billion ~35,200* $26.9 billion ~19,600** TTM R&D employees TTM REVENUE INVESTMENTS active
Slide 32: Applied Materials Technology Portfolio
Applied Materials Technology Portfolio Heterogeneous Materials Engineering Integration Create and deposit Metal Dielectric Selective Epitaxy Plating ALD Digital lithography deposition deposition deposition Shape and remove Etch Planarization Selective removal Pattern shaping Panel-level PVD Connect
Slide 33: A Virtuous Cycle
OPERATING MODEL: A Virtuous Cycle DISTRIBUTE EXCESS CASH » Grow dividend R EI Service per share NV Research Accelerate » Repurchase shares ES Collaborate customer ramps with customers and optimize output, T to invent new yield and cost over semiconductor decades of useful life technologies Build & S
Slide 34: Capital Allocation Strategy
Capital Allocation Strategy 1. Invest in R&D and infrastructure OVER PAST 10 FISCAL YEARS (through FY23) to enable profitable growth » Reinvested >$20B in R&D and >$5B in capital additions » Distributed >90% of FCF* 2. Grow dividend per share and use » Grew dividend per share at ~12% CAGR buybacks t
Slide 35: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet CASH AND INVESTMENTS ($M) Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Cash and cash equivalents 6,025 6,132 6,854 7,085 8,288 Short-term investments 510 737 638 472 815 Long-term investments 2,177 2,281 2,910 2,983 2,981 Total cash and investments 8,712 9,150 10,402 10,540 12,084
Slide 36: 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: 2023 Sustainability Report | 2023 Sustainability Highlights 36 | Applied Materials External
Slide 37: Additional Resources
Additional Resources Investor Relations Home Page LINK Latest News LINK Blog: Ideas, Actions & Technologies LINK 2024: Semicon West Technology Breakfast LINK 2024: 2023 WFE Market Summary LINK 2024: Applied Materials Panel Discussion during SPIE Conference LINK 2023: Panel Discussion during IEDM 202
Slide 38: Appendix: GAAP to Non-GAAP Reconciliations
Appendix GAAP to Non-GAAP Reconciliations 38 | Applied Materials External
Slide 39: 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 40: Unaudited 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 Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Non-GAAP Gross Profit GAAP reported gross profit $ 2,976 $ 3,169 $ 3,204 $ 3,153 $ 3,205 Certain items associated with acquisitions 1 7 8 7 7 6
Slide 41: Reconciliation of GAAP to Non-GAAP Operating Expenses
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP OPERATING EXPENSES IN MILLIONS Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 GAAP Reported Operating Expenses $ 1,174 $ 1,198 $ 1,237 $ 1,241 $ 1,263 Certain items associated with acquisitions (3) (3) (4) (3) (4) Acquisition integration and deal costs (6) (2) (
Slide 42: Reconciliation of GAAP to Non-GAAP Segment Operating Results
UNAUDITED QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP SEGMENT OPERATING RESULTS IN MILLIONS, EXCEPT PERCENTAGES Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Semiconductor Systems Non-GAAP Operating Income GAAP reported operating income $ 1,568 $ 1,741 $ 1,744 $ 1,701 $ 1,712 Certain items associated with acquisit
Slide 43: Reconciliation of Non-GAAP Free Cash Flow
UNAUDITED QUARTERLY RECONCILIATION OF NON-GAAP FREE CASH FLOW IN MILLIONS Q3F23 Q4F23 Q1F24 Q2F24 Q3F24 Non-GAAP Free Cash Flows1 Cash provided by operating activities $ 2,583 $ 1,555 $ 2,325 $ 1,392 $ 2,385 Capital expenditures (255) (309) (229) (257) (297) Non-GAAP free cash flow $ 2,328 $ 1,246 $
Slide 44: Reconciliation Information for Business Outlook
RECONCILIATION INFORMATION FOR BUSINESS OUTLOOK Non-GAAP outlook for the fourth quarter of fiscal 2024 excludes known charges related to completed acquisitions of approximately $10 million, or $0.01 per share, includes the normalized tax benefit of share-based compensation of approximately $7 millio
Slide 45: Closing slide
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