LAM RESEARCH CORP (LRCX) Q3 2025 Earnings Summary

Executive Summary

March quarter delivered broad-based beats: revenue $4.72B (+8% q/q, +24% y/y), non-GAAP gross margin 49.0% (+150 bps q/q), operating margin 32.8% (+210 bps q/q), and non-GAAP EPS $1.04, all ahead of midpoints; management highlighted record foundry revenue and the company’s highest quarterly gross margin percentage since the Novellus merger .
Guidance implies further margin expansion in June: revenue $5.0B ±$300M, gross margin 49.5% ±100 bps, operating margin 33.5% ±100 bps, and EPS $1.20 ±$0.10; tax rate guided to single digits on a reserve release, with OI&E slightly negative; foundry and NAND systems revenue expected up q/q .
Strategic drivers intact: management reiterated ~$100B 2025 WFE and continued outperformance driven by gate-all-around, advanced packaging, dry EUV resist, and NAND conversions (molybdenum and carbon gap fill), with record foundry revenues and strong Taiwan strength underscoring share gains .
Watch items/H2 setup: second-half skew modestly lower vs first-half given removal of ~$700M China-restricted business that had been H2-weighted; gross margin sustainability will vary with customer/geo mix and tariffs, though close-to-customer ops add structural uplift (~200 bps vs late-2022 at similar revenue) .

What Went Well and What Went Wrong

What Went Well
- Record foundry revenue and record corporate gross margin since Novellus merger; management called out strong product momentum at leading-edge nodes and advanced packaging .
- Systems strength: foundry 48% of systems revenue (new dollar record) with NAND conversions progressing; Taiwan and Korea each 24% of total revenue, with Taiwan at a dollar record .
- Upgrades robust within CSBG (record upgrade revenue), powered by NAND conversions; multi-year spares agreement signed; structural margin lift from close-to-customer supply chain and Malaysia ramp .
What Went Wrong
- China restrictions continue to weigh: China at 31% of total revenue (flat q/q), but management expects China concentration down y/y in 2025; loss of a subset of China customers removes ~$700M that had been H2-weighted .
- Gross margin sustainability: management flagged “variability” around current levels as mix shifts; tariff headwinds are contemplated in the June guide but remain a risk .
- CSBG mix: Reliant (mature-node tools) faces headwinds (especially China), keeping CSBG roughly flattish for 2025 despite strong upgrades; service/spares to restricted customers also curtailed .

Financial Results

GAAP summary (oldest → newest)

Metric	Q3 2024	Q1 2025 (Sep-24)	Q2 2025 (Dec-24)	Q3 2025 (Mar-25)
Revenue ($B)	$3.79	$4.17	$4.38	$4.72
Gross Margin %	47.5%	48.0%	47.4%	49.0%
Operating Margin %	27.9%	30.3%	30.5%	33.1%
Diluted EPS ($)	$0.73	$0.86	$0.92	$1.03

Non-GAAP summary (oldest → newest)

Metric	Q1 2025 (Sep-24)	Q2 2025 (Dec-24)	Q3 2025 (Mar-25)
Gross Margin %	48.2%	47.5%	49.0%
Operating Margin %	30.9%	30.7%	32.8%
Diluted EPS ($)	$0.86	$0.91	$1.04

Q3 2025 vs S&P Global consensus

Metric	Consensus	Actual	Surprise
Revenue ($B)	$4.64*	$4.72	+$0.08B (+1.7%)*
EPS ($)	$1.00*	$1.04	+$0.04 (+4%)*
EBITDA ($B)	$1.56*	$1.66*	+$0.10B (+6%)*

Values marked with * retrieved from S&P Global (Capital IQ) via GetEstimates.

Segment and geography

Mix (% of Systems Revenue)	Q2 2025 (Dec-24)	Q3 2025 (Mar-25)
Memory (Total)	50%	43%
- NAND (within Memory)	24%	20%
- DRAM (within Memory)	26%	23%
Foundry	35%	48%
Logic & Other	15%	9%

Geography (% total revenue)	Q1 2025 (Sep-24)	Q2 2025 (Dec-24)	Q3 2025 (Mar-25)
China	37%	31%	31%
Korea	18%	25%	24%
Taiwan	15%	17%	24%
Japan	7%	8%	10%
United States	12%	9%	4%
SE Asia	6%	7%	4%
Europe	5%	3%	3%

Operating KPIs

KPI	Q2 2025 (Dec-24)	Q3 2025 (Mar-25)
CSBG revenue ($B)	$1.750	$1.685
Systems revenue ($B)	$2.626	$3.035
Deferred revenue ($B)	$2.032	$2.011
DSO (days)	69	62
Inventory ($B)	$4.36	$4.46
Inventory turns (x)	2.1x	2.2x
Capex ($M)	$188	$288
OI&E ($M)	+$11	-$7
Non-GAAP tax rate	13.2%	13.3%
Buybacks ($M)	$698	$347
Dividends paid ($M)	$298	$296

Note: Press release shows Q3 capex $288M; one transcript variant referenced $208M; use filing/press release as definitive .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 2025 (Jun-25)	—	$5.0B ±$0.3B	New
Gross Margin % (non-GAAP)	Q4 2025	—	49.5% ±1 ppt	New
Operating Margin % (non-GAAP)	Q4 2025	—	33.5% ±1 ppt	New
EPS (non-GAAP)	Q4 2025	—	$1.20 ±$0.10	New
Tax rate	Q4 2025	Low–mid-teens in prior commentary	Single-digit (reserve release)	Lower
OI&E	Q4 2025	—	Slight negative bias	New color
Segment outlook	Q4 2025	—	Foundry and NAND systems up q/q	New
Dividend	Next payment	$0.23/qtr	$0.23 declared, payable Jul 9, 2025	Maintained

Guidance incorporates current tariff impacts; management sees no pull-ins from future quarters .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
WFE outlook	2025 WFE ~ $100B; Lam to outperform via dep/etch intensity and tech inflections	Maintains ~$100B view; continued outperformance confidence	Stable, constructive
NAND conversions	Emphasis on moly & carbon gap fill; upgrades drive several hundred $M in 2025; 2/3 bits <200 layers	NAND upgrades biggest systems growth into June; Halo moly adoption broadening	Accelerating upgrade cycle
Foundry/advanced packaging	>$1B advanced packaging in 2024; strong GAA; dry resist Aether DRAM win	Record foundry revenue; GAA/advanced packaging strength; progress on dry EUV resist	Strengthening
China/tariffs/export controls	New Dec restrictions remove ~$700M (H2-weighted)	China 31% mix; GM “variability”; tariffs contemplated in guide; flexible global mfg footprint	Headwind managed
Gross margin	Close-to-customer ops uplift >100 bps in 2024; sustained improvement	49.0% non-GAAP; 49.5% guided; variability ahead; structural uplift vs 2022 ~200 bps	Higher base, variable
CSBG	Flattish for 2025; Reliant down, upgrades up; spares/service curtailed to restricted customers	Record upgrades in Q3; CSBG ~$1.7B (-q/q, +21% y/y)	Mix shift within CSBG

Management Commentary

“Gross margin percentage was also a record for the company since the Novellus merger… As our guidance indicates, gross margins are set to expand in the June quarter.” — Tim Archer, CEO .
“Foundry represented 48% of our systems revenue… This level represents a new record in dollar terms for Lam.” — Doug Bettinger, CFO .
“We don’t see anything being pulled in from future quarters… this would be the highest operating margin percentage that Lam delivered since the late 90s.” — Doug Bettinger on June guidance .
“We have… a very flexible manufacturing and supply chain operation… factories in the United States, Austria, Malaysia, Taiwan, [and] Korea.” — Management on tariff mitigation .
“Our Striker Spark ALD… and ALTUS Halo molybdenum… are seeing increased adoption… Akara [etch] has also won multiple critical etch applications…” — CEO on product momentum .

Q&A Highlights

NAND upgrade cycle: Management expects sustainability beyond June as 2/3 of bits remain ~128–<200 layers; mix of upgrades and new tools (e.g., moly) as layers rise toward 300–400 .
Foundry momentum: Record levels viewed as sustainable, driven by GAA and advanced packaging; Taiwan at dollar record .
Tariffs: Guidance includes tariff impact; flexible global mfg footprint to mitigate; details not quantified .
2H profile: Year remains somewhat first-half weighted owing to removal of ~$700M restricted China revenue originally H2-weighted; lumpiness across projects .
Gross margin sustainability: Variability around current level expected due to mix; structural uplift from operations strategy persists .

Estimates Context

Q3 2025 beat both revenue and EPS: $4.72B vs $4.64B consensus (+1.7%); $1.04 vs $1.00 EPS (+4%). EBITDA also ahead ($1.66B vs $1.56B). Estimate counts: 22 (revenue), 25 (EPS) for Q3 *.
Estimate implications: June guide implies sequential revenue and margin expansion; likely upward revisions for Q4 revenue and EPS; mix comments suggest modest caution on GM sustainability due to geographic/customer mix variability .