Key Points
- Revenue for June 2024 quarter was $3.87 billion, exceeding the midpoint of management's guidance range at $3.8 billion.
- GAAP diluted EPS increased by 6% to $7.78 compared to $7.34 in the previous quarter.
- Management provided optimistic guidance for next quarter, with revenue expected to reach $4.05 billion ± $300 million.
Lam Research (LRCX 0.08%) is a leading provider of wafer fabrication equipment and services to the semiconductor industry. In its earnings release dated July 31, 2024, for the quarter ending June 30, 2024, it reported revenue of $3.87 billion, surpassing management's guidance of $3.8 billion ± $300 million.
This represents a quarterly increase of 2.1% from $3.79 billion in the March 2024 quarter. Diluted earnings per share (EPS) according to generally accepted accounting practices (GAAP) rose by 6.0% to $7.78, compared to $7.34 in March 2024. Non-GAAP diluted EPS increased to $8.14 from $7.79, above the midpoint of management's guidance of $7.50 ± $0.75.
Overall, the report showed solid financial performance with improvements across several metrics.
| Q2 2024 | Management's Guidance | Q1 2024 | Percent Change | |
|---|---|---|---|---|
| Revenue | $3.87 billion | $3.8 ± 0.3 billion | $3.79 billion | 2.1% |
| Gross Margin | 47.5% | 46.7% ± 1% | 47.5% | 0.0 pp |
| Operating Income Margin | 29.1% | 28.3% ± 1% | 27.9% | +1.2 pp |
| Diluted EPS | $7.78 | $7.20 ± 0.75 | $7.34 | 6.0% |
Data source: SEC filings with expectations based on management's guidance. PP = percentage points.
Understanding Lam Research
Lam Research provides essential equipment for semiconductor wafer fabrication, a key component in creating integrated circuits used in many electronic devices. Its primary product segments include etching, deposition, and cleaning tools used in semiconductor manufacturing.
Recently, the company has focused heavily on (R&D) to maintain its competitive edge. Investments in advanced packaging, high-bandwidth memory, and technologies related to artificial intelligence (AI) have been pivotal. The company's strategic direction also emphasizes strong customer relationships and collaborating within the .
Quarterly Highlights
The quarter ending June 30, 2024, saw several notable achievements for Lam Research. Revenue increased by 2.1% quarter-over-quarter to $3.87 billion, driven by solid gains in customer support-related revenue amid a 9% drop in systems sales. Gross margin stood at 47.5%, consistent with the prior quarter, and operating income improved to 29.1% of revenue, up from 27.9% in the previous quarter.
From a financial perspective, GAAP diluted EPS increased to $7.78, a 6.0% increase from $7.34 in the March quarter. Non-GAAP diluted EPS also showed growth, rising 4.5% to $8.14, slightly above management's guidance of $7.50 ± $0.75.
Key growth areas included the customer support business, which saw an increase in revenue from $1.40 billion in the March quarter to $1.70 billion. Geographically, China continued to be a major revenue contributor, accounting for 39% of total sales. Other important regions included Korea (18%) and Taiwan (15%).
However, there were also challenges. Deferred revenue decreased significantly from $1.75 billion at the end of March to $1.55 billion at the end of June. This decrease could indicate potential future revenue timing issues. On the regulatory front, ongoing concerns about potential U.S. government-imposed restrictions on exports to China remain a risk.
Lam Research also continued to make strategic investments in R&D and operations to position itself favorably within the industry. The company is optimistic about ongoing strong demand, particularly for AI-related equipment and services. Furthermore, the company announced a set to take effect in October 2024, which could positively impact stock liquidity and affordability.
Looking Ahead
For the third quarter of 2024, ending September 29, management projects revenue of $4.05 billion ± $300 million, indicating an optimistic outlook with an expected sequential growth. Gross margin is projected to be around 47%, and operating income is expected to be approximately 29.4% of revenue.
Investors should monitor the company's continued focus on innovation and technological leadership, especially in AI and memory technologies. Additionally, potential regulatory changes and their impact on Lam’s operations, particularly regarding exports to China, remain areas to watch closely.
