ASML Holding NV Q3 FY2024 earnings call

• Technology progress: Low NA NXE:3800E system ramping, with customers shifting to it for higher performance; High NA systems shipped are exposing wafers at customers, with revenue expected to be recognized by end of year, and new data showing performance benefits.
• Market conditions: AI is a key driver of industry recovery but other segments recovering slower than anticipated, customer cautiousness and investment push outs; China business to normalize; long-term growth drivers like AI, energy transition intact, with new fabs being built globally.

Total net sales came in at EUR7.5 billion. Net sales were EUR5.9 billion, with EUR2.1 billion from EUV sales and EUR3.8 billion from non-EUV sales. Net system sales were driven by logic at 64% and memory at 36%. Installed Base Management sales for the quarter were EUR1.54 billion. Gross margin was 50.8%. R&D expenses were EUR1.06 billion, SG&A expenses were EUR297 million. EPS was EUR5.28. Cash, cash equivalents and short-term investments ended the third quarter at EUR5.0 billion. Free cash flow was EUR534 million. Q3 net system bookings were EUR2.6 billion, with EUR1.4 billion from EUV and EUR1.2 billion from non-EUV. Backlog was over EUR36 billion at the end of Q3 2024.

• Fourth quarter 2024: Total net sales expected between EUR8.8 billion and EUR9.2 billion; installed base management sales expected around EUR1.9 billion; gross margin expected between 49% and 50%.
• 2024: Revenue expected at around EUR28 billion with gross margin of around 50.6%.
• 2025: Revenue expected between EUR30 billion and EUR35 billion; gross margin expected between 51% and 53%; operational expenses expected at upper end of EUR5.6 billion to EUR6.1 billion.

• Market recovery slower than anticipated leading to customer investment push outs.
• Uncertainties in China business due to potential export controls.
• EUV unit numbers lower than expected affecting gross margin.

Q: Understand change in China demand and non-China DUV revenue driver.

A: China demand normalization due to backlog and export control speculation; non-China DUV revenue increase linked to EUV growth.

Q: Follow-up on 2025 gross margin guidance.

A: 2025 gross margin driven by EUV volume and mix effects, with lower EUV units and mix affecting it.

Q: Change in 2025 guidance.

A: Materialization of risks and uncertainties led to lower revenue guidance.

Q: High NA momentum and reticle change.

A: Interest in High NA increasing, discussion on 12 inches reticle is long-term technical discussion not impacting current business.

Q: Internal capacity targets.

A: Focus on 2025 with slower recovery, slowing short-term investment but continuing long-term capability building.

Q: China business normalization.

A: 20% of revenue considered normal for China, subject to export controls.

Q: DUV outside China growth.

A: Strong correlation between EUV and non-China DUV growth expected.

Q: High NA adoption.

A: All EUV customers engaged with High NA, collecting data for adoption plans.

Q: High NA customer sign-up.

A: All EUV customers engaged, collecting data for adoption.