In last quarter's ASML article, I noted that ASML's 2024 results would show no growth, with the inflection expected in 2025; this quarter is no different.
Lithography leader ASML reports Q1 earnings:
Revenue was €5.29B, down 22% year over year, down 27% sequentially, in line with the midpoint of prior guidance.
Gross margin was 51%, up 0.4 percentage points year over year, down 0.4 percentage points sequentially.
Operating profit was €1.39B, down 37% year over year, down 42% sequentially; operating margin 26.3%.
Net income was €1.22B, down 37% year over year, down 40% sequentially; net margin 23.1%.
Q1 share repurchases of €400M.
On the lithography side, Q1 shipped 70 systems total, down 30% year over year:
EUV: 11 systems, revenue €1.824B, 46% of system revenue, ASP €166M.
ArFi: 20 systems, revenue €1.547B, 39% of system revenue, ASP €77.34M.
ArFdry: 4 systems, revenue €119M, 3% of system revenue, ASP €29.75M.
KrF: 25 systems, revenue €317M, 12% of system revenue, ASP €12.63M.
I-Line: 10 systems, revenue €40M, 1% of system revenue, ASP €3.97M.
EUV revenue share continued to rise this quarter, surpassing immersion DUV for the second consecutive quarter. Q1 delivered the first low-NA NXE:3800 system, throughput increased from 160 wafers/h to 220 wafers/h; NXE:3800 expected to become the EUV revenue mainstay in H2 and next year. ASML recently delivered the second High-NA system; first output wafers expected in the coming weeks.
The most criticized aspect of this report is the year-over-year decline in bookings (€3.611B, down 4%), with EUV bookings only €646M. Last quarter bookings beat expectations with a surge (€9.186B, up 45% year over year).
Management stated that to maintain the 2025 revenue target of €30B-€40B, each of the remaining three quarters this year needs bookings above €4B.
Mainland China lithography revenue remained elevated this quarter, with single-quarter system revenue of €1.885B, up 355% year over year, accounting for 49% of system revenue, making it ASML's largest customer region for the third consecutive quarter.
Outlook:
Q2 2024 revenue guided at €5.7B-€6.2B, down 10%-17% year over year; full-year revenue flat year over year, H2 revenue greater than H1.
Q2 gross margin 50%-51%; full-year gross margin down slightly year over year, mainly due to immersion DUV revenue decline and capacity expansion investment.
2025 operating targets unchanged: revenue €30B-€40B, gross margin 54%-56%; confidence from High-NA EUV ramp, higher ASP EUV mix increase, and large new fab deployments.
In last quarter's report I noted ASML's biggest current issue is growth. ASML 2024 revenue flat; if the 2025 €30B-€40B target holds, that implies 2025 revenue growth of 9%-45%, midpoint 27%, which raises questions about current valuation levels.
By comparison, tomorrow's TSMC earnings are more worth anticipating.