ASML Q4 2024 Pre Recorded Earnings Report

ASML EPS Results

• Actual EPS: $7.30
• Consensus EPS: $7.67
• Beat/Miss: Missed by -$0.37
• One Year Ago EPS: N/A

ASML Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $9.84 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

ASML Announcement Details

• Quarter: Q4 2024 Pre Recorded
• Date: 1/29/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, January 29, 2025
• Conference Call Time: 1:00AM ET

ASML (NASDAQ:ASML) (NASDAQ: ASML) is a Dutch company that develops, manufactures and services advanced photolithography systems used to produce semiconductor chips. Headquartered in Veldhoven, Netherlands, ASML supplies capital equipment and associated software and services that enable semiconductor manufacturers to pattern the intricate circuits on silicon wafers. The company is widely recognized for its leadership in extreme ultraviolet (EUV) lithography as well as its deep ultraviolet (DUV) platforms used across multiple process nodes.

ASML's product portfolio includes EUV and DUV lithography machines, light sources, imaging optics and control software, together with spare parts, upgrades and field services. Its systems are integrated into customers' fabs and supported through installation, maintenance, refurbishment and application engineering to optimize throughput and yield. The company collaborates closely with suppliers and technology partners to develop the optics, illumination and source technologies required for increasingly fine patterning.

Founded in 1984 as a technology joint venture out of the Netherlands, ASML has grown into a global supplier serving major semiconductor manufacturers and foundries across Asia, North America and Europe. The company has expanded capabilities through strategic partnerships and acquisitions to secure critical subsystems, including light-source and optics technologies, while maintaining a strong emphasis on long-term research and development to keep pace with Moore's Law-driven demand for denser, more powerful chips.

ASML is a publicly traded company listed on European and U.S. exchanges and is led by an executive team experienced in semiconductor equipment and systems businesses. Because its tools are central to advanced node production, ASML occupies a strategic position in the semiconductor supply chain, supplying the specialized equipment many leading chipmakers rely on to manufacture high-performance processors and memory devices.

ASML Q4 2024 Pre Recorded Earnings Call Transcript

Key Takeaways

• Record Q4 net sales of CHF 9.3 B and full-year revenues of SEK 28.3 B, driven by a 16% year-over-year growth in the installed-base business.
• Q4 gross margin beat guidance at 51.7%, with full-year margin at 51.3%, thanks to stronger upgrade sales and lower-than-planned costs on high-NA tool revenue recognition.
• For 2025, ASML forecasts revenue of €30–35 B and a gross margin of 51–53%, noting AI demand could push results toward the high end but offset by broader market uncertainties and export controls.
• China revenues are expected to normalize in 2025 to pre-2023 ratios, indicating a slowdown from the elevated levels seen last year.
• Key technology milestones include full-spec demonstration of the EUV low-NA NXE3800, first customer acceptances of high-NA and multibeam products, and shipments of advanced DUV platforms.

Presentation

[Jim Kavanagh, VP of Investor Relations at ASML]

If I can start with you, Roger, can you give us an overview of Q4 and full year 2024 results?

[Roger Dassen, EVP and CFO at ASML]

Absolutely, Jim. So Q4 net sales came in at EUR 9.3 billion, which is a bit higher than we guided. It's primarily driven by Installed Base business, which came in at EUR 2.1 billion. So that was quite a bit higher than we guided. For the full year, we're looking at EUR 28.3 billion of revenue, again higher than last year, and primarily driven, I would say, by the Installed Base business, which in total came in at EUR 6.5 billion, which is about 16% growth in comparison to 2023. Gross margin for the quarter came in at 51.7%, again ahead of guidance, primarily because of additional upgrade business that we were able to record in the fourth quarter. And also because, as you know, we have the revenue recognition for the first High NA tools.

[Roger Dassen, EVP and CFO at ASML]

We had two High NA tools where we were able to recognize revenue for in the quarter because the customer accepted the two tools. That is, recognizing High NA revenue, as you know, is detrimental to the gross margin, but in fact, the cost that we needed to incur in order to make the systems work were actually lower than planned. That was also one of the reasons why the gross margin for the quarter came in a bit better than we anticipated. Gross margin for the year, 51.3%, which is similar to the gross margin that we had in 2023. If you look at net income for the quarter, EUR 2.7 billion. For the full year, EUR 7.6 billion in terms of total net income.

[Roger Dassen, EVP and CFO at ASML]

Net system bookings for the quarter, EUR 7.1 billion, of which EUR 3 billion EUV, and that got us to a backlog at the end of the year of approximately EUR 36 billion. Talking about net bookings, the net bookings, and we said this before, net bookings can be lumpy, particularly if you look at it from one quarter to the other. In fact, the way we do it, the way we work with our customers, and the way we come up with our expectations for the business really is based on an ongoing review cycle that we have with customers. So it's much less influenced, I would say, by bookings. It's much more based on regular reviews that we have with customers.

[Roger Dassen, EVP and CFO at ASML]

Recognizing that, recognizing that PO bookings can be lumpy and are not necessarily, we would say, a good reflection or accurate reflection of the business momentum, we said we'll continue to provide a number throughout this year, but after this year, we will stop providing this number. What we will do is provide a backlog. So on an annual basis, we will provide you with the total backlog.

[Jim Kavanagh, VP of Investor Relations at ASML]

So all that said, how would you summarize Q4 and the full year in 2024?

[Roger Dassen, EVP and CFO at ASML]

Q4 was a record quarter for ASML. 2024 is yet again a growth year and therefore, yet again, from a revenue perspective, a record year for ASML. I would say recognizing that, recognizing in the current very dynamic market circumstances, recognizing that we once again had a record quarter and a record year, I think kudos and a big thank you to the entire ASML family. Both the employees and all the partners that we have within ASML, to make that possible within this very dynamic environment.

[Jim Kavanagh, VP of Investor Relations at ASML]

If I can turn to you, Christophe, can you give us an outlook on 2025, how you see things?

[Christophe Fouquet, President and CEO at ASML]

I think our outlook remained consistent with the view we gave last quarter. We see total revenue for 2025 between EUR 30 billion and EUR 35 billion and the gross margin between 51% and 53%. AI is the clear driver. I think we started to see that last year. In fact, at this point, we really believe that AI is creating a shift in the market, and we have seen customers benefiting from it very strongly. Others, maybe a bit less. So for AI, if the demand remains strong and our customers are capable to build some capacity, we see the opportunity toward the highest part of the range. On the other hand, there's still quite some uncertainty on the other customers, and this also justifies the lowest part of the range.

[Jim Kavanagh, VP of Investor Relations at ASML]

If we look then at the different market segments, Logic, Memory, Installed Base, how do you see that progressing through 2025?

[Christophe Fouquet, President and CEO at ASML]

So 2024 was strong for Memory, and we expect Memory to remain strong. We expect Logic to grow to basically fulfill the demand of AI.

[Jim Kavanagh, VP of Investor Relations at ASML]

What about Installed Base?

[Christophe Fouquet, President and CEO at ASML]

Our number of systems in Installed Base continues to grow. We see an increased share of EUV as well, and we expect some more upgrades next year. Overall, we will see also an increase in our Installed Base business.

[Jim Kavanagh, VP of Investor Relations at ASML]

If we look then maybe at a topic that's on everybody's mind a lot of the time, is China. How do you see China revenue progressing in 2025 versus 2023-2024, for example?

[Christophe Fouquet, President and CEO at ASML]

We had a lot of discussion about China in 2023-2024, because our revenue in China was extremely high. I think we have explained that this was caused by the fact that we are still working on some backlog created in 2022 when our capacity was not big enough to fulfill the whole market. 2025 will be a year where we see China going back to a more normal ratio in our business. I think we're going to see again numbers people used to see before 2023.

[Jim Kavanagh, VP of Investor Relations at ASML]

If we turn back to you, Roger, we look at 2025 in terms of a numbers point of view, how do you see Q1 in terms of guidance?

[Roger Dassen, EVP and CFO at ASML]

For Q1, when it comes to net sales, we're looking at guidance between EUR 7.5 billion and EUR 8 billion. Included in there would be EUR 2.1 billion that we expect for Installed Base business, which would be similar to the last quarter. And we've been looking at a gross margin somewhere between 52 and 53%.

[Jim Kavanagh, VP of Investor Relations at ASML]

So if I look at that gross margin in Q1, how should we expect things throughout the full year as a whole? Should we expect the high end of the guidance there?

[Roger Dassen, EVP and CFO at ASML]

So gross margin 52%-53%, if you compare it a little bit to what we had in the last quarter, so where is the uptick from the last quarter? A number of moving parts, most significant moving parts, we do not expect to have revenue recognition for High NA in this quarter, so that's a positive. On the other hand, also for Q1, there is a little bit less immersion sales in there, which is detrimental to gross margin. So net net, we still believe that we're going to have a little bit better gross margin in Q1 than we would have had in Q4. If you look at the full year, again, particularly in light of High NA and High NA revenue recognition, we believe that is primarily skewed towards the second half of the year.

[Roger Dassen, EVP and CFO at ASML]

As a result of that, I would expect that the gross margin in the first half is a little bit better than the gross margin in the second half. Nonetheless, what we said before, the gross margin expectation for the year is between 51% and 53%.

[Jim Kavanagh, VP of Investor Relations at ASML]

Okay. And do you expect any additional impacts from the latest export control regulations that have been recently published?

[Roger Dassen, EVP and CFO at ASML]

Quite a few moving parts when it comes to export controls from the U.S. As you know, the U.S. articulated a number of new regulations in December. Actually, two big parts there. One was they included a number of new technologies on the list of restricted technologies. And they also added a number of fabs to the list of restricted fabs, so where restrictions apply. You also know that the Dutch government very recently came out with new regulation there as well. But I would say that the combination and the impact of those both U.S. and Dutch measures has been appropriately reflected in the guidance that we've given before. So the EUR 30 billion-EUR 35 billion probably reflects the limitations that we see from an export controls perspective.

[Jim Kavanagh, VP of Investor Relations at ASML]

Christophe, if I can switch to our technology, can you give us updates on the latest progress when it comes to Low NA, High NA, our DUV products as well as applications?

[Christophe Fouquet, President and CEO at ASML]

If you look back at 2024, I think this has been a very rich year for technology at ASML. We have started to ship some products that would be very, very critical for customer volume ramp on AI, but also for their longer-term roadmap. So let me start with EUV Low NA. This is our NXE:3800E. We started to ship this system last year, as you know. We have achieved a very important milestone last quarter, which is to demonstrate basically the full capability of the tool, final specification here at ASML. And we are continuing to mature basically the platform with our customers so that the tool can be ready this year to really support high-volume manufacturing. As you know as well, on this tool, this will become the majority of our shipment when it comes to Low NA this year. Roger was referring to the margin.

[Christophe Fouquet, President and CEO at ASML]

This is going to be a good contribution to that. High NA, we are very, very happy with our achievement on High NA last year. We got the first two customer acceptance, which after so many years of development has been a major milestone. The feedback on the imaging performance from our DRAM customer, Logic customer continue to be very, very positive. They like what they see. And the key discussion now is really when, how, and in which volume I will say to insert this tool into volume manufacturing. That's the discussion we're going to have with our customer. DUV, still a lot happening on DUV. We have shipped our latest generation on Immersion, the NXT:2150i. We have shipped the latest generation on KrF, the NXT:870B, which can provide up to 400WPH speed, which is a major, major step compared to the previous platform.

[Christophe Fouquet, President and CEO at ASML]

So, a lot of good, also progress on DUV. And finally, I think also a big highlight when it comes to application. You know that we have been working on e-beam product for quite a few years after the HMI acquisition. Multi-beam was a major reason to do this acquisition. And at the end of last year, we got also our first full customer acceptance on multi-beam, which is of course a major milestone for all of us at ASML.

[Jim Kavanagh, VP of Investor Relations at ASML]

We ended the year with a significant amount of cash on our balance sheet. Can you give us some more details on what you plan to do in terms of capital allocation going forward?

[Roger Dassen, EVP and CFO at ASML]

You're right, a lot of cash generation in Q4, particularly in the past, in the last weeks of the quarter, a lot of cash came in. As you know, we first and foremost use the cash in our business to make sure that the business goes on. And then, as you also know, our policy is to have increasing dividends. The dividend, the interim payment that we're going to make in this quarter will be EUR 1.52 per ordinary share, which is in line with what we had last quarter. The final dividend that we proposed to the AGM is EUR 1.84 per ordinary share. That gets the total dividend for the year to EUR 6.40 per ordinary share, which is about a 5% increase from the year before. I think you see the continuous improvement and increase in dividend right there.

[Roger Dassen, EVP and CFO at ASML]

Whatever is left can be used for share buybacks, and we should continue to see that throughout the planned period.

[Jim Kavanagh, VP of Investor Relations at ASML]

We've just finished our Investor Day back in November of last year. Can you give us a more long-term outlook of how you see both the market and ASML between now and beyond '25?

[Christophe Fouquet, President and CEO at ASML]

I think our view on the long term is still, I would say, very positive. We used to talk about semiconductor everywhere. I think since November, we started to talk about AI everywhere. We truly believe that AI is going to bring even more opportunity to this semiconductor industry. That's the first thing. The second thing is that AI is going to drive more advanced technology to address some of the challenges on cost, on power consumption. We believe that this will drive more advanced DRAM Logic technology, so more appetite for an aggressive roadmap. This is, of course, good for lithography. We also believe that the solution we can provide our customer will secure that lithography remains at the core of the solution they want to use basically to execute on this very aggressive roadmap.

[Christophe Fouquet, President and CEO at ASML]

This is why, as we have said in November, we expect the number of lithography layers to continue to increase on all applications. To translate that into numbers, I think, again, very consistent to the view we presented in November, total revenue for 2030 will be between EUR 44 billion and EUR 60 billion. Our gross margin will be somewhere between 56% and 60%.

[Jim Kavanagh, VP of Investor Relations at ASML]

Very clear. Thank you, Christophe, and thank you, Roger.

[Roger Dassen, EVP and CFO at ASML]

Thank you, Jim.

Participants

Executives

• Jim Kavanagh, VP of Investor Relations
• Christophe Fouquet, President and CEO
• Roger Dassen, EVP and CFO