Q1 2025 ASML Holding NV Earnings Call - Pre-Recorded
Christophe welcomed roget Rouge.
Speaker Change: Hey, if I can start with you can you provide us an overview of Q1 2025 results sure total net sales came in at 7.7 billion euros are included in their 2 billion for installed base of business. The 7.7 within that within guidance. Our gross margin came in a little bit better than that in guidance at 54% main reasons.
Speaker Change: Why it was a bit better and actually two one a S. P. For EV was it was higher as a result of a a more more 38 hundreds versus the 36 hundreds in the mix than we anticipated and also because the configuration of the EV tools was a bit richer than we are that we are that we anticipated.
Speaker Change: Second main reason is that we had some customer specific performance targets for the for the quarter and we got rewarded for them for that.
Speaker Change: Net income for the quarter came in at 2.4 billion euros and the order intake was $3 9 billion of orders for the quarter included in there 1.2 billion for EV.
Christophe: Christophe if I can turn to you and ask you. If you can give us a some insights on how youre looking at the full year 2025 in terms of the market well.
Christophe: Well I think the dynamic is very similar to what we discussed last quarter. Our AI is still the driver of the market. The demand is strong it remains strong and we see two scenario if the demand on a I continue to be strong and our customer are capable to add capacity. So we have basically opportunity for an upside looking at.
Christophe: The upper range of our guidance the 35 billion Euro.
Christophe: Or the other and we still see some uncertainty with some of our customer that could also you know take us to the lower hand of the guidance of the 30 billion Euro but overhaul same dynamic then can you share some more insights on how youre looking at the different segments, you know logic memory and install base through 2025, yes.
Christophe: Yeah. So we still see logic are increasing as it gets very strong, especially because of advanced logic. We had been talking about two nanometer for a long time. This is now happening in customer ramping theyre very advanced logic node.
Christophe: For memory, we think memory will remain strong same level as last year and this is also being confirmed by the activity of our customer.
Christophe: When it comes to the install base our install base is growing we see a stronger mix of <unk> versus deep UV and this is also leading to some growth in the installed base in 2025, and then how do you see the dynamics around tariffs playing a role in the markets well I think the whole dynamic is still.
Christophe: Very new and I think the one thing I'd like to say, which is being shared by many experts. Many businesses is that this dynamic is creating a new uncertainty, especially when it comes to GDP, so micro level and indirectly of course, our potential market demand and so this is a dynamic I think we have to watch.
Christophe: <unk> very carefully.
Christophe: Now this being said, where we are today, we still see basically our revenue range for 2025 being between basically $13 55 billion Euro.
Christophe: Then maybe if we switch to technology, how are we making progress in terms of supporting our customers and their requirements, maybe first with low in a while.
Well, let me start maybe with the EV in general because you know that <unk> are going to be combined at some point by our customer in order to optimize musically their technology their product roadmap and also their cost. So it's very important that we make progress on baas platform.
Christophe: He comes to low in a I think some great achievement. This quarter, we have upgraded our first system in the field to the final specification to under 20 with it for hours or he was mentioning that they start to have a positive impact basically on our margin in Q1.
Christophe: Good adoption from our customer they are all shifting basically to this platform and we really expect that the 3800 is going to become on the very very short term. The men tool. Following now this is very important we talked a lot about the litho intensity about cost of technology and our capital market day.
Christophe: And the progress on productivity basically allow us to execute with our customer on cost of technology and is a reserves we start to see the opportunity to have more E V Segal expose adoption.
Christophe: Of course at the expense of multi patterning. This is great for our customer because it helps with cycle time simplification yield and of course four I said remember this means that this litho intensity, especially for DRAM now is continuing to increase and then looking at high in a.
Speaker Change: We recently had a S. P. R E conference back in February can you share some of the results that came from a conference.
Speaker Change: Yeah. So I think FTAA was a very good events, because we saw our customer being very eager to share basically there are reserves on a.
Speaker Change: If you are strong example, I seek Intel was expanding that they had exposed more than 30000 with her on their tool. They also pointed very strongly to the fact that the iron ore could help them simplify their process and they mentioned one layers, whether they could reduce basically the number of process steps from 40 to 10, which are.
Speaker Change: Of course helps with <unk>.
Speaker Change: Cycle time yield and process complexity.
Speaker Change: Samsung also on the same topic said that iron they could reduce their cycle time in fact by 60%. So we start to see basically so some of the value of <unk> being recognized being measured in some way by our customer which is very very encouraging now on top of that we have now shipped all all EXE <unk>.
Speaker Change: 2003 of our customer as this tool either installed or under installation. So we also continue to expect basically a lot more data a lot more learning of nine eight in the coming weeks.
Speaker Change: Maybe back to you Rajiv if you can maybe follow up on Christopher's comments around tariffs, how do you see that potentially impacting two.
Speaker Change: <unk> 2025 for asthma, I think Christoph sorry, that's a first of all it's a very dynamic field data that said that we're that we're operating in is it when it comes to when it comes to terrorism, maybe you know it would be good to have a bit of a breakdown where it could potentially affect our affect the ecosystem. So first off obviously you have tariffs that could be imposed on shipments.
Speaker Change: Of entire systems, and new systems into the United States. So that's one category the.
The second category would be tariffs imposed on parts and tools that you use for field operations in the United States.
Speaker Change: The third category could be on what we import empty in the into the United States for manufacturing in the U S. As you know we have some some manufacturing capability in the U S. So anything related to that that will be the third category.
Speaker Change: And the fourth could be any other.
Speaker Change: Country imposing tariffs on things that are being shipped from the United States into those into those countries. So those are the different I would say direct implications of terrorists are very actively working with the entire ecosystem throw out to try and minimize the overall impact on the whole ecosystem as a result of that.
Once once we have better understanding of how exactly it all it all works.
Speaker Change: But clearly our intent is that the impact that it said that it should have on on our financials should be as limited as possible.
Speaker Change: And of course, you have the indirect effect on this you know what what Christoph also talked about or to what extent will it have an impact on global GDP and.
Speaker Change: To what extent will it have an impact on end market totaled towards the market demand.
Speaker Change: It's way too early to discuss that and therefore, it's quite impossible actually to put it to put a number to put a number on that.
Speaker Change: Having said all that how do you look at Q2 in terms of our guidance can you provide them. Some detailer yeah. So when it comes to to revenue. We expect our we expect revenue between seven point to $7.7 billion billion euros four for Q2 again, approximately 2 billion for our installed base.
Speaker Change: So for the installed base business.
Speaker Change: Gross margin, we expect somewhere between 50 and 53% that is a wider bandwidth then we typically apply but that really is you know as a result of the uncertainty when it comes to tariffs. So both you know what is it what does the tariff situation and also how does it get allocated of course short term there are some uncertainties. There. So that's why we why we chose to.
Speaker Change: A wider bandwidth for gross margin this quarter.
Speaker Change: And then with that in mind, how are you looking at the whole year from a gross margin point of view.
Speaker Change: Yeah, So first quarter, 54% second quarter as I, just said between 50 and 53% we do expect the second half of the of the of the year our second.
Speaker Change: Second our second half year to be a little bit lower in terms of gross margin does a number of reasons for that and as you know and Christophe talked about it about heinie a hiatus since that we're in the process of shipping we do expect the second half to be stronger when it comes to revenue recognition than the first half and as you know high <unk> margin dial.
So it's so therefore, we expect a.
Speaker Change: Negative impact on the on the gross margin in the second half as a result of that in comparison to the first through the first half. We also expect a little bit less upgrade business in the in the second half in comparison to the through the first half and also as we just set a you know we have the uncertainty when it comes to the two tariffs if you take it all together.
Speaker Change: Again with the caveat of the of the uncertainty around tariffs tariffs that we need to need to mention we continue to expect the gross margin between 51 and 53% for the whole year.
Speaker Change: Then switching to.
To share buyback so that we ended the year of 2024 with a lot of cash we executed some share buyback in Q1.
Speaker Change: So can you provide a little bit more detail on the plans around returning cash to shareholders for the rest of the year. So indeed strong share buyback and in the first quarter 2.7 billion euros worth of shares were bought back in Q1, when it comes to dividends, we paid an interim.
Speaker Change: Evident in the first quarter of one point 50 to euro per ordinary share.
Speaker Change: Our proposal to the AGM is to pay a final dividend of $1 84 at Eurosport ordinary share. If you combine it all that would get you to six points of 40 euros per ordinary share is the total dividend over the year 2024.
Speaker Change: Christophe and maybe one last question is if you can give us a little bit of a forward looking view on how you see the market etcetera beyond 2025.
Speaker Change: Well I think as I said, so first AI has been a very strong and has driven the industry in the last few quarters we.
Speaker Change: We still see a lot of strange thing. They are in fact, some of the demand for this year of course, but also for next year has solidified so that's very encouraging.
Speaker Change: Now if we had to that discussion with our customer points to 2025, and 2020 seeks to be boss gross here as we explained in our previous discussion.
Speaker Change: Now of course, Jorge went into the details there's this new uncertainty around tariffs.
Speaker Change: And like many experts many businesses are explaining this is of course something that we don't know how to quantify it but he sees heading differently and certainty on the long term.
Speaker Change: Now if we look at the market itself, we expect a shift towards more advanced technology. This is true for logic and this is true for DRAM and as we explained at capital market day, disarm basically technologies that we require more advanced lithography.
Speaker Change: Also explain is very very important that the progress we have made on the 30th onward, and I and they bring our customer the technology they need to switch more and more of the year from multi patterning to single exposure UV and this is of course, a good thing when it comes to litho intensity with all of that James So we feel that we're making.
Speaker Change: A very good step towards our guidance given at the capital market day in November for 2030 with a range of revenue between 44, and 60 billion Euro and a gross margin range between 56 and 60%.
Speaker Change: You Rajiv Thank you Christophe and with that I'd like to remind you all that we will host our annual general meeting on April 23rd and I hope to see all our shareholders there.
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With regard.
Speaker Change: With regard.