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LAM RESEARCH CORP (LRCX) Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered strong topline and profitability: revenue $5.17B, GAAP gross margin 50.1%, non-GAAP gross margin 50.3%, and non-GAAP EPS $1.33; EPS exceeded guidance range and gross margin set a post‑Novellus record .
  • Mix tailwinds: record foundry systems revenue, upgrades at a new high, China revenue up to 35% of total; deferred revenue rose ~$670M q/q to $2.68B .
  • September quarter guidance: revenue $5.20B ± $300M, gross margin ~50% ±1ppt, operating margin ~34% ±1ppt, EPS $1.20 ± $0.10; tax rate expected to revert to low–mid teens from 4.8% in June .
  • Wall Street consensus (S&P Global) was exceeded: revenue $5.00B*, EPS $1.21* vs actual $5.17B/$1.33; management also flagged December quarter revenue and gross margin softness (mix, tariffs) as a cautionary near‑term catalyst .

What Went Well and What Went Wrong

What Went Well

  • Gross margin and EPS beat: non-GAAP GM 50.3% and EPS $1.33, with CFO noting “record gross margin percentage of 50.3%” and EPS above guidance; CEO: “strong gross margins and record EPS” .
  • Foundry momentum and upgrades: record foundry systems revenue (52% of systems), upgrades at a third consecutive record driven by NAND layer conversions for AI requirements .
  • Strategic product wins: Mali ALD metal deposition adoption in foundry logic and NAND; Akara conductor etch wins in DRAM; advanced packaging and copper plating share gains (Sabre 3D +~5 pts YoY) .
    • CEO quote: “Our gross margins exceeded 50%… EPS hit a new high… upgrades business grew to a new high” .

What Went Wrong

  • Near-term softness ahead: management guided December quarter revenue down (mirroring March) and gross margin ~48% (“mix” and “tariffs” headwinds) .
  • DRAM systems mix down sequentially to 14% (from 23%): timing of projects; logic & other at 7% of systems, down q/q .
  • CSBG Reliant weakness: Reliant declined; management reiterated CSBG “modest” growth for calendar year with Reliant headwinds offset by upgrades/spares .

Financial Results

Revenue, EPS, and Margins vs Prior Periods and Consensus

MetricQ4 FY2024 (June 2024)Q3 FY2025 (March 2025)Q4 FY2025 (June 2025)Q4 FY2025 Consensus*
Revenue ($USD Billions)$3.87 $4.72 $5.17 $5.00*
GAAP Gross Margin %47.5% 49.0% 50.1% N/A
Non-GAAP Gross Margin %N/A49.0% 50.3% N/A
GAAP Operating Margin %29.1% 33.1% 33.7% N/A
Non-GAAP Operating Margin %N/A32.8% 34.4% N/A
GAAP Diluted EPS ($)$0.78 $1.03 $1.35 N/A
Non-GAAP Diluted EPS ($)N/A$1.04 $1.33 $1.21*

Values retrieved from S&P Global (consensus)*

Segment Revenue Breakdown

Segment ($USD Billions)Q4 FY2024Q3 FY2025Q4 FY2025
Systems$2.17 $3.04 $3.44
Customer support-related & other$1.70 $1.68 $1.73
Total Revenue$3.87 $4.72 $5.17

Geographic Mix (% of Total Revenue)

RegionQ3 FY2025Q4 FY2025
China31% 35%
Korea24% 22%
Taiwan24% 19%
Japan10% 14%
United States4% 6%
Southeast Asia4% 2%
Europe3% 2%

KPIs and Operating Metrics

KPIQ3 FY2025Q4 FY2025
Deferred Revenue ($USD Billions)$2.01 $2.68
Cash & Equivalents ($USD Billions)$5.45 $6.39
Cash from Operations ($USD Billions, Qtr)$1.31 $2.55
DSO (days)62 59
Inventory Turns (x)2.2x 2.4x
Non-GAAP Tax Rate (%)13.3% 4.8%
Diluted Share Count (millions)1,288.1 1,276.9
Dividend per share ($)$0.23 $0.23

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)Q1 FY2026 (Sep qtr)N/A$5.20 ± $0.30 New
Gross Margin % (non-GAAP)Q1 FY2026N/A~50% ±1ppt New
Operating Margin % (non-GAAP)Q1 FY2026N/A~34% ±1ppt New
EPS (non-GAAP)Q1 FY2026N/A$1.20 ± $0.10 New
Diluted Share Count (B)Q1 FY2026N/A~1.27 New
Tax Rate (non-GAAP)Q1 FY2026N/ALow–mid teens New
DividendsNext declared$0.23 (June qtr) Increased to $0.26 (effective Oct 15, 2025) Raised

Notes:

  • Management expects stronger China revenue in September and tariff headwinds to increase in December; OI&E remains variable .

Earnings Call Themes & Trends

TopicQ2 FY2025 (Dec qtr) Prior MentionsQ3 FY2025 (Mar qtr) Prior MentionsQ4 FY2025 (June qtr) Current PeriodTrend
AI/Tech inflections (GAA, HBM, dry resist)Shipped >$1B to GAA & advanced packaging in 2024; Aether dry resist DTR win announced Record foundry revenues; Cryo 3.0/Vantex CX+ momentum; Akara wins Expanded Mali ALD adoption; Akara wins in DRAM; advanced packaging share gains Strengthening
China mix & tariffsChina 31%; tariff headwinds contemplated in GM guide China 31%; $700M of restricted customers removed; first-half weighted year China 35%; stronger China in Sep; tariffs rising into Dec Mixed; cautious near-term
NAND upgrades & layer scalingNAND up from low base; upgrades and new tools (moly, carbon gap fill) Biggest % growth driver into June; $40B multi‑year upgrade cycle Upgrades at record; Mali adoption; Vantex Cryo wins; Japan revenue a record Sustained upcycle (upgrade‑led)
DRAM/HBMStrong DRAM spend in 2024; TSV/HBM investments DRAM upgrades (1β/1γ); dry resist win for HBM DRAM at 14% systems; HBM strength, long tail; Akara share gains Momentum + lumpiness
Operational execution (Malaysia)Asia ops improved GM; ~100+ bps contribution Close-to-customer strategy; inventory turns improving GM 50.3%; DSO 59, turns 2.4x; OpEx up on incentives Structural margin lift
CSBG (spares/upgrades/Reliant)CSBG +11% in 2024; Dextro cobot launched Record upgrades; Reliant headwinds; flattish 2025 view Third consecutive record upgrades; Reliant down; modest CSBG growth Mix shift to upgrades/services

Management Commentary

  • CEO: “Revenues and profitability came in at the upper end of our guided ranges. Our gross margins exceeded 50%… and EPS hit a new high for the company… upgrades business grew to a new high… as NAND customers migrate to higher layer count” .
  • CFO: “June quarter gross margin came in at 50.3%… these past two quarters represent Lam’s highest gross margin percentage since we merged [with Novellus] in 2012… EPS exceeded the guidance range” .
  • CEO on Mali: “We are the only company with ALD Mali tools already in production in foundry logic… secured a key win at another leading foundry customer” .
  • CFO on December outlook: “You should be thinking about where consensus is today, which is about 48% [gross margin]… December revenue [will be] down… mix is a little bit softer… tariffs are a little bit higher” .

Q&A Highlights

  • China dynamics: Multinationals in China grew >90% q/q; September quarter China up; December normalization and tariff headwinds expected .
  • Revenue/GM trajectory: December quarter expected down vs September, GM ~48% per CFO, reflecting customer/product mix and tariffs .
  • NAND upgrade cycle: Management reiterated ~$40B multi‑year NAND upgrades; drivers include higher layers (200+), carbon gap fill, Mali ALD; upgrades + new tools mix .
  • Advanced packaging/HBM: AP business likely stronger than planned; HBM transition (3E→4E) increases wafer needs (~30% more wafers) and WFE intensity; Sabre 3D plating share rising .
  • Foundry/GAA: Record foundry systems revenue; gate‑all‑around, backside power, dry resist seen as multi‑year SAM expansion and share gain drivers .

Estimates Context

Q4 FY2025S&P Global Consensus*Actual
Revenue ($USD Billions)$5.00*$5.17
Primary EPS ($)$1.21*$1.33

Values retrieved from S&P Global (consensus)*

  • Results were above consensus for both revenue and EPS; management also noted EPS exceeded guidance range, and gross margin reached 50%+ for the second straight quarter .
  • Implications: Consensus models likely adjust higher for near-term margins/revenue in September given guidance, but incorporate December caution (mix/tariffs) and CSBG Reliant softness .

Key Takeaways for Investors

  • Q4 FY2025 was a clean beat: revenue and EPS above S&P consensus with non‑GAAP GM at 50.3%—a post‑Novellus record .
  • Momentum in foundry (GAA) and advanced packaging plus NAND upgrade cycle underpin outperformance vs WFE; strategic wins in Mali ALD and Akara conductor etch broaden SAM and share .
  • September guide is solid (rev ~$5.2B, GM ~50%) with stronger China; however, management flagged December revenue/GM softness (~48%) from mix and tariffs—model seasonality accordingly .
  • CSBG mix shift: upgrades/spares strong, Reliant down on China restrictions; expect modest CSBG growth for the year despite Reliant headwinds .
  • Balance sheet/cash generation robust: OCF $2.55B in the quarter, cash $6.39B, deferred revenue $2.68B providing visibility; inventory turns and DSO improved .
  • Capital return continues: dividend raised 13% to $0.26/share (effective Oct 15), $7.5B buyback authorization remaining; share count trending down .
  • Product/news catalysts in Q4 period: TEOS 3D advanced packaging tool launch and JSR/Inpria cross‑license for EUV dry resist strengthen long‑term positioning in AI era .

Appendix: Source Documents

  • Q4 FY2025 8‑K 2.02 and Exhibit 99.1 press release with full financials and guidance .
  • Q4 FY2025 earnings call transcript (prepared remarks and Q&A) .
  • Prior quarter press release and transcript (Q3 FY2025) .
  • Prior quarter press release (Q2 FY2025) .
  • Other relevant press releases (dividend increase; TEOS 3D; JSR/Inpria collaboration) .

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