ASML (ASML) Q3 2026 Earnings: Upgrades Lift Installed Base Sales and Margin

ASML's Q3 2026 earnings showed customers buying upgrades for installed lithography tools to add capacity while new machines remain in short supply. The company reported results for the third quarter ended September 27 in a Form 6-K on October 14, 2026, with sales and gross margin ahead of guidance and the extra growth coming mainly from upgrades to installed systems [1].

Four questions framed the earlier view of ASML: whether EUV capacity turns into revenue, whether the gross margin step-up lasts, whether services and upgrades keep growing fast, and whether the demand mix is healthy. In this quarter, services and upgrades beat guidance again, gross margin rose further, the full-year growth outlook for non-EUV systems was cut, and EUV shipments stayed on plan [1][2]. Taken together, customers turned to upgrading existing tools while new machines are scarce, and more of the growth in ASML's 2026 sales outlook of €44 billion to €45 billion now comes from the installed base [1].

ASML is the only company that can mass-produce extreme ultraviolet (EUV) lithography systems, and its customers are a small group of leading-edge logic foundries and memory chipmakers. It earns money by selling new systems and by servicing and upgrading tools already installed at customer fabs. Total net sales were €32.7 billion in 2025, with growth driven mainly by foundry investment tied to AI [3].

Change 1: Upgrade demand keeps Installed Base Management above guidance

Installed Base Management sales were €3.289 billion in Q3 2026, about €0.4 billion above the company's guidance of roughly €2.9 billion [1]. These sales rose about 68% year over year, and the nine-month total of €8.538 billion already exceeds the full-2025 figure of €8.193 billion [4]. In Q2 2026 the business also beat guidance, by almost €300 million, and both beats came mainly from upgrade business [5].

Customers are buying upgrades because supply of new machines is tight. The CFO said upgrades let customers add capacity quickly within their existing fab footprint, and ASML is accelerating the development of more upgrade packages [2]. ASML raised its full-year growth outlook for the business from over 30% to around 50%, with Q4 guidance of around €3.7 billion [2][6]. On that basis, the full year comes to about €12.3 billion, roughly €1.6 billion more than the earlier outlook implied, which makes it the main source of the higher 2026 sales outlook. ASML does not split service from upgrade revenue, and there is no evidence yet on whether upgrade demand will hold once new-system deliveries catch up.

Change 2: Gross margin beat guidance for a second straight quarter

Gross margin was 57.5% in Q3 2026, above the 55% to 57% guidance range, and the Q2 figure of 54.0% was also above the guidance given at the time [1][5]. The full-year gross margin outlook moved from 54% to 56% to around 56%, with Q4 at around 57%. A full-year margin of around 56% reaches the low end of the 56% to 60% range in the company's 2030 scenario [1][7].

Management attributed the improvement to higher sales absorbing fixed costs, a strong share of EUV and immersion systems, and high-margin upgrade business [2]. Operating margin was 44.4% in Q3, and R&D costs of €1.174 billion returned to the guided level of around €1.2 billion [4]. ASML has completed value-based pricing discussions with key customers, and the company said the effect will be partly visible in 2027 and fully visible in 2028 and beyond [2]. Q3 net income of €4.960 billion included a €0.510 billion gain on equity investments, which is not an operating improvement [4].

Change 3: Non-EUV full-year growth outlook was cut

In the results interview, the CFO said the non-EUV business should grow around 20% for the full year, down from around 25% given in July [2][8]. Non-EUV systems made up about 51% of Q3 net system sales, or about €4.27 billion, and ASML recognized 40 immersion lithography systems, up from 23 in Q2 [9]. The company said full-year immersion shipments will be about the same as in 2025 and did not explain the lower outlook [2]. Because customer demand is described as exceeding supply, the cut more likely reflects capacity or delivery timing, but ASML has not confirmed this.

The demand mix stayed broadly stable, and EUV progressed as planned. Memory customers accounted for 46% of Q3 net system sales, and memory-related sales for the first nine months reached €10.3 billion, above the full-2025 figure of €8.4 billion; China accounted for 23% [9]. ASML kept its view that China will be around 20% of full-year total net sales, which implies a slightly lower amount than in 2025 [2]. EUV made up about 49% of Q3 net system sales, or about €4.1 billion, roughly double a year earlier. ASML kept its plan to ship about 65 EUV systems this year and said that adding about 30% capacity in each of 2027 and 2028 will still not fully meet demand, so it is investigating a larger expansion for 2028 [9][2][1].

Conclusion

This quarter shows ASML delivering capacity to customers through both new machines and upgrades, rather than through new machines alone. The full-year sales outlook implies growth of about 36%, with the added growth tilted toward upgrades while the non-EUV outlook was lowered. The 57.5% gross margin shows operating leverage, but the 2026 improvement depends on volume, mix and upgrades, and pricing has not yet shown up in the numbers. On cash, Q3 operating cash flow was €11.798 billion and the nine-month total was €11.315 billion; over the same quarter, non-current contract liabilities rose by about €5.7 billion, which the company did not explain [4]. The next tests are whether Q4 Installed Base Management of about €3.7 billion and gross margin of about 57% are delivered, whether upgrade demand holds as new-system deliveries increase, and whether value-based pricing starts to show in 2027.

Sources

[1] ASML Q3 2026 results 6-K Exhibit 99.1 press release (October 14, 2026, ASML Form 6-K, Exhibit 99.1 press release) https://www.sec.gov/Archives/edgar/data/937966/000162828026065813/pressreleasefinancialresul.htm [2] ASML Q3 2026 earnings call 2026-10-14 (October 14, 2026, ASML results interview transcript) https://www.asml.com/en/investors/financial-results [3] ASML 20-F FY2025 — total net sales bridge 2024 to 2025 (February 25, 2026, ASML Form 20-F) https://www.sec.gov/Archives/edgar/data/937966/000162828026011378/0001628280-26-011378-index.htm [4] ASML Q3 2026 results 6-K Exhibit 99.3 US GAAP financial statements (October 14, 2026, ASML Form 6-K, Exhibit 99.3 financial statements) https://www.sec.gov/Archives/edgar/data/937966/000162828026065813/financial_statementsxusx.htm [5] ASML Q2 2026 earnings call — CFO review of second-quarter results (July 15, 2026, ASML earnings call) https://www.asml.com/en/news/press-releases/2026/q2-2026-financial-results [6] ASML Q3 2026 results 6-K Exhibit 99.2 presentation (October 14, 2026, ASML Form 6-K, Exhibit 99.2 results presentation) https://www.sec.gov/Archives/edgar/data/937966/000162828026065813/a2026_10x14xpresentation.htm [7] ASML 20-F FY2025 — 2030 long-term growth opportunity (February 25, 2026, ASML Form 20-F) https://www.sec.gov/Archives/edgar/data/937966/000162828026011378/0001628280-26-011378-index.htm [8] ASML Q2 2026 earnings call — non-EUV and immersion outlook (July 15, 2026, ASML earnings call) https://www.asml.com/en/news/press-releases/2026/q2-2026-financial-results [9] ASML Q3 2026 results 6-K Exhibit 99.2 presentation slides 9-10 (October 14, 2026, ASML Form 6-K, Exhibit 99.2 presentation charts) https://www.sec.gov/Archives/edgar/data/937966/000162828026065813/a2026_10x14xpresentation009.jpg