Executive Summary
Lam Research delivered solid Q4 FY2024 results, with revenue of $3.871B, gross margin of 48.5% (guidance range 47% ±1%), and GAAP net income of roughly $1.02B (diluted EPS of $0.78 on a 1.306B-share base). The quarter benefited from a robust CSBG (Customer Support and Services/Spare Parts & Upgrades) mix, and Lam achieved a record gross margin for the post-merger era (FY2024 gross margin of 48.2%). Management highlighted accelerating demand in the CSBG channel through Reliant systems and spares, and they underscored a strategic investment program to extend technology differentiation, expand Asia-based manufacturing, and accelerate digital transformation to capture multiyear WFE spending growth. The firm also celebrated a manufacturing milestone (Malaysia facility shipping its 5,000th chamber) as it ramps capacity to support near-market service and upgrade demand.
Looking ahead, Lam guided to a September quarter revenue of about $4.05B (+/-$0.3B), gross margin of ~47% (+/-1 pp), operating margin ~29.5% (+/-1 pp), and an EPS target of about $8 (+/-$0.75) based on a reduced share count (~131M). Management reiterated a positive view on 2025 WFE spending, signaling a mid-to-high single-digit to double-digit potential in NAND/DRAM upgrade-driven capex, and a continued AI-enabled etch/deposition opportunity pipeline (including Gate-All-Around, backside power delivery, and advanced packaging). They also signaled that China spending should remain solid in 2025 but with a first-half emphasis, acknowledging continued geopolitical/regulatory risk.
Overall, Lam remains leverageable to the AI-driven semiconductor cycle, supported by a strong balance sheet (net cash position) and robust free cash flow generation. The key questions for investors are the pace of NAND/DRAM upgrade cycles, China spend trajectory, and Lam’s ability to scale new platforms (e.g., DIRECTDRIVE conductor etch, Lam Cryo 3.0, and PECVD-based gap fill deposition) across a growing installed base and Asia-centric manufacturing footprint.
Key Performance Indicators
Key Insights
Revenue: $3.871B in Q4 FY2024 (YoY +20.7%, QoQ +2.1%); Gross profit: $1.849B, gross margin 47.8% (vs. 47.8% reported); Operating income: $1.136B, operating margin ~29.35%; Net income: $1.020B, net margin ~26.35%; Diluted EPS: $0.78 (vs. prior periods); Cash from operations: $862.4M; Free cash flow: $761.7M; Cash and cash equivalents: $5.848B; Net debt: negative $0.865B; Deferred revenue: $1.556B; DSO ~59 days; Inventory turns ~1.9x.
YoY and QoQ metrics (from earnings metrics): Revenue YoY +20.7...
Financial Highlights
Revenue: $3.871B in Q4 FY2024 (YoY +20.7%, QoQ +2.1%); Gross profit: $1.849B, gross margin 47.8% (vs. 47.8% reported); Operating income: $1.136B, operating margin ~29.35%; Net income: $1.020B, net margin ~26.35%; Diluted EPS: $0.78 (vs. prior periods); Cash from operations: $862.4M; Free cash flow: $761.7M; Cash and cash equivalents: $5.848B; Net debt: negative $0.865B; Deferred revenue: $1.556B; DSO ~59 days; Inventory turns ~1.9x.
YoY and QoQ metrics (from earnings metrics): Revenue YoY +20.7%, QoQ +2.1%; Gross profit YoY +26.9%, QoQ +1.9%; Operating income YoY +33.0%, QoQ +4.5%; Net income YoY +27.1%, QoQ +5.6%; EPS YoY +30.2%, QoQ +5.7%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.87B |
20.71% |
2.05% |
| Gross Profit |
1.85B |
26.87% |
1.92% |
| Operating Income |
1.14B |
32.97% |
4.49% |
| Net Income |
1.02B |
27.13% |
5.64% |
| EPS |
0.78 |
30.22% |
5.69% |
Key Financial Ratios
operatingProfitMargin
29.4%
operatingCashFlowPerShare
$0.66
freeCashFlowPerShare
$0.58
dividendPayoutRatio
25.6%
Management Commentary
Strategy and technology inflections: Tim Archer emphasized AI-driven demand and Lam’s technology roadmap, noting that Gate-All-Around, backside power delivery, and advanced packaging are growth opportunities at or above $1B each for Lam. He highlighted DIRECTDRIVE, a direct power coupled conductor etch tool, delivering faster plasma stabilization and improved depth uniformity for 4F2 DRAM applications and EUV patterning. He also underscored Lam Cryo 3.0 (cryogenic etch) delivering industry-leading control (10 micron deep holes with <10 nm profile deviation) and a 40% reduction in energy per wafer with a 90% reduction in greenhouse gas emissions vs non-cryogenic etchers.
Operations and execution: Doug Bettinger stressed that Lam exceeded all guided metrics in Q4, achieving the highest gross margin since the Lam-Novellus merger (FY2024 gross margin 48.2%), and highlighted a strong CSBG performance driven by Reliant systems and spares. He noted progress in Malaysia with 5,000th chamber shipped and a plan to continue cost reductions via an expanded manufacturing footprint. He also discussed a stable deferred revenue balance (~$1.55B) and a disciplined capital return program (approx. $10B authorization with $10.8B remaining).
Markets and guidance: Management described a favorable 2024-2025 WFE landscape, with 2024 WFE spending in the mid-$90B range and expectations for continued growth into 2025 as AI expands model training and inferencing in devices. They called for modest CSBG growth in calendar 2024 and highlighted an anticipated ramp in upgrades as memory fabs modernize. They acknowledged China spending would be somewhat first-half weighted this year and likely solid in 2025, with potential gross margin headwinds from near-term product mix shifts. The September quarter guide (revenue ~$4.05B, GM ~47%, EPS guidance ~$8 with ~131M shares) reflects an outlook that assumes ongoing mix shifts and ongoing transformation costs.
"All of these are etch and deposition intensive and each represents a $1 billion or higher growth opportunity for Lam."
— Tim Archer
"For fiscal year 2024, we achieved the highest gross margin percentage since the merging of Lam with Novellus in 2013, coming in at 48.2% and we generated quite strong free cash flow of approximately $4.3 billion or 29% of revenue."
— Douglas Bettinger
Forward Guidance
Lam guides for the September 2024 quarter to revenue of $4.05B +/- $300M, gross margin of 47% +/- 1pp, and operating margin of 29.5% +/- 1pp, with GAAP/non-GAAP EPS of about $8 +/- $0.75 based on a share count around 131M. Management reiterated expectations for 2025 WFE to remain supportive of Lam’s upgrade-centric model, signaling continued strength in NAND/DRAM upgrade cycles and AI-related etch/deposition demand. They emphasized Lam’s competitive advantages in conductor etch (including 4F2 DRAM) and deposition (e.g., PECVD-based gap fill) as enablers of SAM expansion and share gains across multiple nodes. Key catalysts include:
- Expanded Asia manufacturing footprint that lowers unit costs and accelerates supply to customers
- Lam Cryo 3.0 deployment enabling higher NAND bit density and energy savings
- DIRECTDRIVE conductor etch enabling superior depth control and defectivity reductions, especially for EUV-patterned devices
- Incremental demand in HBM and advanced packaging (HBM, backside power delivery, 3D stacking)
Risks to the outlook include: continued volatility in China WFE demand and potential macro slowing; potential supply chain disruptions; and variability in CSBG (Reliant, spares, upgrades) as installed base economics normalize. Investors should monitor (1) China contribution by region (Q4 guidance implies first-half weighting), (2) mix-driven gross margin evolution (September GM guidance at 47% implies potential headwinds vs June’s 48.5%), (3) uptake of 4F2/ Gate-All-Around and backside power capabilities, and (4) progress on Lam’s next Investor Day in February 2025 for long-range financial modeling.