Q4 2024 ASML Holding NV Earnings Call - Pre-recorded

January 29, 2025

Skip Miller: 2024 results video. Let me start by welcoming Christophe and Roger. If I can start with you, Roger, can you give us an overview of Q4 and full year 2024 results?

We start by welcoming Christoph and Rajiv.

If I can start with Euro Jay can you give us an overview of Q4 and full year 2024 results absolutely. Jim. So Q4 net sales came in at $9 3 billion, which is a bit higher than that and we guide its primary driven by a by installed base business, which came in at $2 1 billion.

Roger Dassen: Absolutely, Jim. Q4 net sales came in at EUR 9.3 billion, which is a bit higher than we guided, primarily driven by install base business, which came in at EUR 2.1 billion. 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. Primarily driven I would say by the install base business, which in total came in at EUR 6.5 billion, which is about 16% growth in comparison to 2023.

So that was quite a bit higher than that and we and we guided for the full year. We're looking at $28 3 billion of revenue again, a higher done <unk> done the last year, and primarily driven I would say by the installed base business, which in total came in six and a half a billion, which is about 16% growth in comparison to 2023.

Roger Dassen: 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 Q4. Also because as you know, we have the revenue recognition for the first High-NA tools, so we have two High-NA tools that we were able to recognize revenue for in the quarter because the customer accepted the two tools.

Hi.

Gross margin for the quarter came in at 51.7% again ahead of our ahead of our guidance primarily because of the additional upgrade business that we were able to record in the fourth in the fourth quarter.

And also because as you know we have the the revenue recognition for the first hi, Nate tool. So we had two high need tools.

Well, we were able to recognize revenue for <unk> in the quarter and because the customer accepted the the two the two tools.

Roger Dassen: That is, you know, 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, so 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.

And that is you know recognizing our high ne 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. So that was also one of the reasons why did the gross margin for the quarter came in a bit better than we anticipated gross margin for the year, 51.3%.

Which is so similar to the gross margin that we had in 2023.

If you look at our net income for the quarter, a 2.7 billion 1 billion euros for the full year, a 7.6 billion euros in terms of the total net income.

Roger Dassen: Net system bookings for the quarter, EUR 7.1 billion, of which EUR 3 billion EUV, and that got us to a backlog, you know, at the end of the year, of approximately EUR 36 billion. Talking about net bookings, you know, the net bookings, and we said this before, net bookings can be lumpy, or 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, you know, an ongoing review cycle that we have with customers. It's much less influenced, I would say, by the bookings.

At net system bookings for the year for the quarter, a 7.1 billion euros.

Of which <unk> 3 billion are easy and I've got us to a backlog for you know at the end of the year of approximately 36 36 billion.

Talking about your net bookings.

You know the net bookings and we said this said this before net bookings can be lumpy Oh, particularly if you look at it from a from one quarter to the to the other.

And in fact, the way we do it the way we work with our customers and the way, we come up with or our expectations for the business really is based on you know on on an ongoing review cycle that we have with our with customers. So it's much less influence I would say bye bye bye bookings, it's much more based on regular review.

Roger Dassen: It's much more based on regular reviews that we have with customers. Recognizing that, you know, that PO bookings can be lumpy and are not necessarily, we would say, a good reflection or, you know, 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. On an annual basis, we will provide you with the total backlog.

That we that we have with it with customers.

So recognizing that recognizing that you know that bookings can be lumpy and are not necessarily we would say a good reflection or accurate reflection of the business momentum. We set will continue to provide a number throughout this year, but after this year, we will stop providing this said this number what we will do is provide a backlog.

So on an annual basis, we will provide you with the total the total backlog. So all that said how would you summarize Q4 and the full year and 24, while Q4 was a record quarter for our for ASML, a 'twenty 'twenty four is yet again, a growth year and therefore, yet again from a revenue perspective, a record too.

Skip Miller: All that said, how would you summarize Q4 and the full year in 2024?

Roger Dassen: Well, Q4 was a record quarter for ASML. 2024 is, you know, yet again a growth year and therefore yet again from a revenue perspective, a record year for ASML. I would say, recognizing that in the current very dynamic market circumstances, 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, you know, both the employees and all the partners that we have within ASML, to make that possible within this very dynamic environment.

A record year for for ASML.

And I would say recognizing recognizing that recognizing in the current very dynamic market circumstances, recognizing that said that we once again had a record quarter and a record for the year I think kudos and a big Thank you to the entire ASML family you know both the employees and all the partners that we have.

Have with any of smell to make that possible within this very dynamic environment.

Skip Miller: I can turn to you, Christophe. Can you give us an outlook on 2025, how you see things?

If I can turn to you Christophe can you give us an outlook on 2025, how do you see things, where I think our outlook remains consistent with the view, we gave last quarter we.

Christophe Fouquet: Well, I think our outlook remain consistent with the view we gave last quarter. We see total revenue for 2025 between EUR 30 and 35 billion, and the gross margin between 51% and 53%. AI is the clear driver. I think we started to see that last quarter.

We see total revenue for 2025 between 30, and 35 billion Euro 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 customer benefiting for it very strongly.

Skip Miller: Mm.

Christophe Fouquet: In fact, at this point, we really believe that AI is creating a shift, in the market, and we have seen customer benefiting for it very strongly, other maybe a bit less. For AI, if the demand remains strong and our customer 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 customer, and this also justify the lowest part of the range.

There may be a bit less so for AI, if the demand remains strong and our customers are capable to build some capacity, we see the opportunity to all the highest part of the range on the other hand, there are still quite some uncertainty on the other customer and this also justified the lowest part of the range.

Skip Miller: If we look then at the different market segments, you know, logic, memory, install base, how do you see that progressing through 25?

If we look then at the different market segments, you know logic memory installed base, how do you see that progressing through 'twenty five.

Christophe Fouquet: 2024 was strong for memory, and we expect memory to remain strong. We expect logic to grow to basically fulfill the demand of AI.

So 2024 was strong for memory and we remain we expect to memory to remains strong we expect logic to grow to basically fulfilled the demand of AI and what about our installed base.

Skip Miller: What about installed base?

Christophe Fouquet: Well, our number of systems in the 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.

Well a number of systems in the installed base continues to grow we see an increased share of EV as well and we expect some more upgrades next year. So overall, we would see or saw an increase in our installed base business. 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.

Skip Miller: 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?

Progressing and twenty-five versus 'twenty three 'twenty four for example.

Christophe Fouquet: Well, 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.

We had a lot of discussion about China in 2020 free 2024, because our revenue in China was extremely high.

We have explained that this was caused by the fact that we are still walking on some backlog created in 2022, when our capacity was not big enough to fulfill the all market.

2025 would be a year, where we see China going back to a more normal ratio in our business. So I think we're going to see again numbers people used to see before 'twenty free.

Skip Miller: Mm.

Christophe Fouquet: I think we're going to see again numbers, people used to see before 2023.

Skip Miller: If we turn back to you, Roger, if we look at 25 in terms of the numbers point of view, how do you see Q1 in terms of guidance?

Returned back to you Rajiv we look at 25 in terms of the numbers point of view, how do you see Q1.

Rajiv: In terms of guidance.

Roger Dassen: For Q1, when it comes to net sales, we're looking at guidance between EUR 7.5 billion and 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. We'd be looking at a gross margin somewhere between 52% and 53%.

Rajiv: For Q1, when it comes to our net sales were looking at a guidance between seven 5 billion and 8 billion included in there would be $2 1 billion that we expect for installed base business, which would be similar to the two the last to the last quarter and we've been looking at the gross margin somewhere between 52 and 53%.

Skip Miller: 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, you know, the high end of the guidance there?

Rajiv: 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.

Rajiv: The high end of the guidance there.

Roger Dassen: Gross margin 52% to 53%, if you compare it a little bit to what we had in the last quarter, 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. Net, we still believe that we're gonna have a little bit better gross margin in Q1 than we would have had in Q4.

Rajiv: So gross margin of 52% to 53% if you compare it a little bit to what we had in the last quarter, so, whereas the year, whereas the uptick from there from the last quarter a number of moving parts. Most significant moving parts. We do not expect to have revenue recognition for high in a in this quarter. So that's a that's a that's a positive on the other hand also for Q1 are there.

Rajiv: A little bit less immersion sales in there, which is which is detrimental to gross margins. So net net we still believe that we're going to have a little bit better gross margin in Q1 than we would've had in Q4.

Roger Dassen: If you look at the full year, again, particularly in light of High-NA and High-NA revenue recognition, we believe that is, you know, primarily skewed towards the second half of the year. 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%.

Rajiv: If you look at our if you look at the full year.

Rajiv: Again, particularly in light of the of Hainan Heinie revenue recognition, we believe that as you know primarily skewed towards the second half of the year.

Rajiv: 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, the what we said before and the gross margin expectation for the year is between 51% to 53%, Okay and do you expect any additional impacts from the latest export control regulations that have been recently.

Skip Miller: Okay. Do you expect any additional impacts from the latest export control regulations that have been recently published?

Rajiv: Published quite.

Roger Dassen: Quite a few moving parts when it comes to export controls from the US. As you know, the US 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. They also added a number of fabs to the list of restricted fabs. Fab, you know, where restrictions apply. You also know that the Dutch government very recently came out with new regulation there as well. I would say that the combination and the impact of those both US and Dutch measures has been appropriately reflected in the guidance that we've given before.

Rajiv: Quite a few moves.

Moving parts when it comes to it to export controls on from the U S. As you know the U S are articulated a number of new regulations and the in December.

Rajiv: Two two big parts. There one was they included a number of new technologies on the list of of restricted to technologies and they also added a number of fabs to the list of of restricted fast. So if a fab you know where where restrictions apply them. You also noted the Dutch government very recently came out with.

Rajiv: New regulation, there as well, but I would say that the combination and the impact of of doses. Both U S and Dutch Mac measures has been appropriately reflected in the guidance that we've given before so the 30 to 35 billion property reflects the limitations that we see from an export controls perspective.

Roger Dassen: The 30 to 35 billion properly reflects the limitations that we see from an export controls perspective.

Skip Miller: 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?

Rajiv: Christophe if I can switch to our technology can you give us the update on the latest progress when it comes to low and a high and a R D UV products as well as applications.

Christophe Fouquet: Well, 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 product that will be very, very critical for customer volume ramp on AI, but also for their longer term roadmap. Let me start with EUV Low-NA. This is our NXE 3800. We started to ship this system last year, as you know. We have achieved a very important milestone Q4, which is to demonstrate basically the full capability of the tool, final specification here at ASML. 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.

Rajiv: If you look back at 2024 I think this has been a very rich year for technology at ASML.

Rajiv: We have started to ship some product that would be very very critical for customer volume ramp on the eye, but also further our longer term roadmap.

Rajiv: So let me start with the easy low any dishes. Our Nx E. 38 onwards, we started to ship D. C stem last year as you know we have achieve a very important milestone last quarter, which is to demonstrate basically the full capability of that tool final specification here at ASML.

Rajiv: 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.

Christophe Fouquet: 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. 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, you know, 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. The key discussion now is really when, how, and in which volume, I will say, to insert this tool into volume manufacturing. That's a discussion we're going to have with our customer. DUV, still a lot happening on DUV.

Rajiv: As you know as well on this tool this would become the majority of our shipments when it comes through in a this year.

Rajiv: He was referring to the margin this is going to be a good contribution to that.

Speaker Change: I N. A we're very very happy with our achievement. All 90 last year, we got the first two customer acceptance, which you know after so many years of development has been a major milestone.

Speaker Change: The feedback on the imaging performance from all DRAM customer logic customer continue to be very very positive they like what they see.

Speaker Change: And the key discussion now is really when how and in which volume I would say to insert this tune into volume manufacturing the discussion we're going to have with our customer.

Speaker Change: Deep UV are still a lot happening on deep UV, we have shipped our latest generation on immersion. The NXT 21, 50, we have shipped the latest generation on care Ralph the NXT 870, B, which can provide up to 400 with a cross speed, which is a major major step competitive.

Christophe Fouquet: We have shipped our latest generation on immersion, the NXT 2150. We have shipped the latest generation on KrF, the NXT:870B, which can provide up to 400 watts of power speed, which is a major step compared to the previous platform. A lot of good also progress on DUV. Finally, I think also a bigger highlight when it comes to application. You know that we have been working on e-beam product for quite a few years after the Hermes Microvision acquisition. Multibeam was a major reason to do this acquisition, and by the end of last year, we got also our first tool customer acceptance on multibeam, which is, of course, a major milestone for all of us at ASML.

Speaker Change: <unk> platform, so a lot of good or so progress on deep UV.

Speaker Change: And finally as it goes to a bigger highlight when it comes to our application you know that we have been walking.

Speaker Change: Only been product for quite a few years after the HMA acquisition multi beam was a major reason to do this acquisition.

Speaker Change: And by the end of last year. We got also all first for customer acceptance on multi beam, which is of course, a major milestone for all of us at ASML.

Skip Miller: 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?

Speaker Change: We ended the year with a significant amount of cash on our balance sheet can.

Speaker Change: Can you give us some more details on what you plan to do in terms of capital allocation going forward. So you're right a lot of cash generation in Q4, particularly in the past in the last weeks of the year of the quarter a lot of a lot of cash gain that came in.

Roger Dassen: You're right. A lot of cash generation in Q4, particularly 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, right? To make sure that the business goes on. As you also know, our policy is to have increasing dividends. The dividend, the interim payment that we're gonna 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 propose to the AGM is EUR 1.84 per ordinary share.

Speaker Change: As you know you know, we first and foremost a use of cash in our business right to make sure that the business that business goes on.

Speaker Change: And then as you also know our policy is to have increasing dividends and so the the dividend the interim payment that we're going to make in this quarter will be one point 52 euros per ordinary share which is in line with what we had last quarter. The final dividend that we proposed to the AGM is one point 84 per ordinary share so that gets total dividend.

Roger Dassen: That gets total dividends for the year to EUR 6.40 per ordinary share, which is about a 5% increase from the year before.

Speaker Change: For the year to six point to $6 40.

Speaker Change: Per ordinary share, which is about a 5% increase from them from the from the year before so I think here you know you see that the continuous improvement in inquiries and dividends. It writes it right there whatever is left.

Christophe Fouquet: I think, you know, you see the continuous improvement and increase in dividends, right there. Whatever is left, you know, can be used for share buybacks and, you know, we should continue to see that throughout the plan period.

Speaker Change: You know can be used for share buybacks and we should continue to see that throughout the planned period.

Skip Miller: 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, you know, beyond 2025?

Speaker Change: 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 then well beyond 25.

Christophe Fouquet: Well, 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 start to talk about AI everywhere, and 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.

Speaker Change: Well I think our view on the long term is still a I would say very positive and we used to talk about our semiconductor everywhere in sika. Since November we started to talk about AI everywhere and we truly believe that AI is going to bring even more opportunity to the semiconductor industry.

Speaker Change: That's the first thing to say.

Speaker Change: I think 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 and logic technology. So more appetite for an aggressive roadmap. This is of course good for lithography.

Speaker Change: We also believe that the solution, we can provide our customer will secure debt lithography remains at the core of the solution. They want to use basically to execute on these very aggressive on map and this is why as we have said in November we expect the number of lithography layers to continue.

Christophe Fouquet: This is why, as we have said in November, we expect the number of lithography layers to continue to increase on all application. 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 and 60 billion. Our gross margin will be somewhere between 56% and 60%.

Speaker Change: To increase on all application.

Speaker Change: And to translate that into numbers I think again very consistent with the view we presented in November total revenue for 2030 would be between 44, and 60 billion Euro all gross margin would be somewhere between 56 and 60% very clear.

Skip Miller: Very clear. Thank you, Christophe. Thank you, Roger.

Christophe: Thank you Christophe and thank you rajeev.

Roger Dassen: Pleasure.

Roger Dassen: Thank you, Jim.

Skip Miller: Thank you, Jim.

Speaker Change: Jim.

Speaker Change: [music].

Speaker Change: Yes.

Yes.

Speaker Change: With.

Speaker Change: With regard.

Q4 2024 ASML Holding NV Earnings Call - Pre-recorded

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