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MT

MICRON TECHNOLOGY INC (MU)·Q1 2025 Earnings Summary

Executive Summary

  • Micron delivered record fiscal Q1 revenue of $8.71B, GAAP EPS $1.67 and non-GAAP EPS $1.79; gross margin improved to 39.5% non-GAAP, driven by data center mix surpassing 50% and HBM strength .
  • Data center revenue grew over 40% sequentially and over 400% YoY; HBM revenue more than doubled sequentially with margins accretive to DRAM and overall company .
  • Management guided FQ2 revenue to $7.90B ±$200M and non-GAAP GM 38.5% ±100bps, citing near-term NAND weakness and consumer inventory digestion; NAND underloading expected to weigh on FQ3 gross margins .
  • Prior-quarter FQ1 guidance for revenue/GM/EPS was met or marginally exceeded (actual $8.709B vs guided $8.70B ±$200M; non-GAAP GM 39.5% vs 39.5% ±100bps; non-GAAP EPS $1.79 vs $1.74 ±$0.08) .
  • Post-print sentiment turned on weaker-than-expected FQ2 guide and NAND pressures; analysts reduced price targets and shares fell sharply on Dec 19, 2024, highlighting estimate reset risk for near-term quarters .

What Went Well and What Went Wrong

What Went Well

  • Record Q1 revenue with data center mix >50% of total; HBM shipments ahead of plan and revenue more than doubled sequentially; data center SSD revenue reached record with share gains .
  • DRAM strength: Q1 DRAM revenue $6.4B (73% of total), sequential bit shipments up low double digits, pricing up high single digits; gross margin improved 300bps QoQ to 39.5% non-GAAP .
  • Strategic HBM positioning: Designed into NVIDIA Blackwell B200/GB200; expanded to second large HBM customer with third customer starting CQ1; upgraded 2025 HBM TAM estimate to >$30B; target HBM share aligned with DRAM share in 2H25 .

What Went Wrong

  • Near-term NAND softness: sequential NAND revenue down 5% with bit shipments and prices decreasing low single digits; management flagged NAND industry weakness, data center SSD digestion, and upcoming underload charges impacting FQ3 margins .
  • Consumer inventory digestion: mobile down 19% QoQ; embedded down 10% QoQ; management expects inventories to improve by spring before shipment strength resumes in 2H FY25 .
  • FQ2 guide reset: revenue $7.9B ±$200M and non-GAAP GM 38.5% ±100bps reflect NAND headwinds; EPS guided to $1.43 ±$0.10 (non-GAAP) vs prior quarter’s $1.79, implying estimate cuts and margin constraints into FQ3 from supply actions .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$6.811 $7.750 $8.709
GAAP Gross Margin (%)26.9% 35.3% 38.4%
Non-GAAP Gross Margin (%)28.1% 36.5% 39.5%
GAAP Operating Income ($USD Billions)$0.719 $1.522 $2.174
Non-GAAP Operating Income ($USD Billions)$0.941 $1.745 $2.394
GAAP Net Income ($USD Billions)$0.332 $0.887 $1.870
Non-GAAP Net Income ($USD Billions)$0.702 $1.342 $2.037
GAAP Diluted EPS ($)$0.30 $0.79 $1.67
Non-GAAP Diluted EPS ($)$0.62 $1.18 $1.79

Segment and product mix

BreakdownQ1 2025
DRAM Revenue ($USD Billions)$6.4
NAND Revenue ($USD Billions)$2.2
Compute & Networking (CNBU) Revenue ($USD Billions)$4.4; +46% QoQ
Mobile (MBU) Revenue ($USD Billions)$1.5; -19% QoQ
Embedded (EBU) Revenue ($USD Billions)$1.1; -10% QoQ
Storage (SBU) Revenue ($USD Billions)$1.7; +3% QoQ
Data Center Revenue Mix>50% of total

Key KPIs

KPIQ1 2025
Operating Cash Flow ($USD Billions)$3.244
Net CapEx ($USD Billions)$3.132
Adjusted Free Cash Flow ($USD Millions)$112
Ending Inventory Days149 (down 9 days QoQ)
Cash & Investments ($USD Billions)$8.7
Total Debt ($USD Billions)$13.8
Adjusted EBITDA ($USD Billions)$4.4; Margin 50.6%
Dividend Declared$0.115 per share

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FQ1-25$8.70 ± $0.20 Actual $8.709 Met (at midpoint)
Non-GAAP Gross Margin (%)FQ1-2539.5% ± 1.0% Actual 39.5% Met
Non-GAAP Diluted EPS ($)FQ1-25$1.74 ± $0.08 Actual $1.79 Slight beat
Revenue ($USD Billions)FQ2-25—$7.90 ± $0.20 New guide (lower sequential)
Non-GAAP Gross Margin (%)FQ2-25—38.5% ± 1.0% New guide (down ~100bps QoQ)
Operating Expenses ($USD Billions)FQ2-25—$1.10 ± $0.015 (non-GAAP) New guide
Non-GAAP Diluted EPS ($)FQ2-25—$1.43 ± $0.10 New guide
Tax Rate (non-GAAP)FQ2-25—Mid-teens % New guide
DividendFQ1-25—$0.115 declared Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/HBM TAM and ShareSold out '25 HBM; pricing largely set; HBM margins accretive; path to match DRAM share in 2025 Several hundred million HBM in Q4; yields strong; DRAM bit outlook improved; plan to match DRAM share in 2025 HBM in NVIDIA Blackwell; >$30B 2025 TAM; shipments to 2nd/3rd large customers; target HBM share in 2H25 Improving
Data center SSD and mixRecord data center SSD revenue; AI-driven demand Data center strength; data center SSD digestion risk emerging Record data center SSD revenue and share gains; data center >50% mix Improving (near-term digestion)
Consumer (PC/Mobile) demandPC/mobile stable; some inventory build; AI PC/smartphone content rising Consumer inventories elevated; expect improvement through FY25 with seasonality Inventory reductions more pronounced; mobile down; improvement expected by spring; stronger 2H Near-term softer, medium-term improving
NAND marketRecovering in Q3; improved storage BU profitability Caution on NAND; digestion likely Meaningful NAND bit decline Q2; underloading to weigh on Q3 margins Worsening near term
Regional/ChinaLP4/DDR4 legacy mix shrinking; China supply at low/mid shares Legacy node China supply focused on lower end Mainland China/HK revenue mid-teens % mix; legacy DRAM ~10% remainder FY25 Stable
R&D/EUV and node ramps1-beta ramp; plan for 1-gamma with EUV in Japan Continued cost-down; CapEx elevated for HBM Prioritize R&D; OpEx up for HBM; 1-beta ramping; 1-gamma in CY25 Executing

Management Commentary

  • “Micron achieved record revenue in fiscal Q1 with revenue, gross margins and EPS all at or above the midpoint of our guidance range. Data center revenue grew over 400% year-over-year and 40% sequentially… with data center revenue mix surpassing 50%” .
  • “Our HBM shipments were ahead of plan and we achieved more than a sequential doubling of HBM revenue… Micron's HBM3E 8-high is designed into NVIDIA's Blackwell B200 and GB200 platforms” .
  • “We have increased our HBM market TAM estimate to now exceed $30 billion in 2025… we expect to achieve HBM market share commensurate with our overall DRAM market share sometime in the second half of calendar 2025” .
  • “We expect DRAM bit shipments to decline sequentially and expect a meaningful sequential decline in NAND bit shipments… NAND underloading to affect fiscal Q3 gross margins” .
  • “Non-GAAP guidance for fiscal Q2: revenue $7.9 billion ±$200 million; gross margin ~38.5%; OpEx ~$1.1 billion; EPS $1.43 ±$0.10” .

Q&A Highlights

  • HBM trajectory: TAM lifted to >$30B; multiple large customers; aim to reach HBM share aligned with DRAM share by 2H25; premium pricing supported by power/performance leadership .
  • Margin dynamics: DRAM mix (HBM) tailwinds offset by NAND weakness; FQ3 gross margin constrained by NAND underload supply response costs before resuming expansion beyond Q3 .
  • Consumer inventory/seasonality: FQ2 affected by seasonality and inventory digestion; improvement expected by spring leading to stronger 2H shipments; mobile and embedded weaker sequentially .
  • CapEx/OpEx discipline: FY25 CapEx ~$14B (majority for HBM/facilities/R&D); OpEx rising low-to-mid teens YoY with HBM prioritization; 1-beta ramp and 1-gamma EUV prep .
  • China competition: Legacy node supply focused on lower-performance categories; Micron’s legacy mix ~10% of remainder FY25 and shrinking; focus on high-end and data center quality requirements .

Estimates Context

  • S&P Global consensus for Q1 2025 (Revenue/EPS/Gross Margin) was not retrievable due to system limits at the time of analysis. Values from S&P Global were unavailable for comparison. Estimates unavailable; comparisons anchored on company guidance and reported results .
  • Street reaction was negative to FQ2 guidance and NAND commentary; multiple analysts cut price targets and shares fell on Dec 19, 2024, indicating near-term estimate resets for FQ2/FQ3 .

Key Takeaways for Investors

  • Record Q1 with accelerating data center/HBM mix underpins multi-quarter margin trajectory, though NAND digestion creates a near-term speedbump into Q2–Q3; expect re-acceleration beyond Q3 as underloading fades and mix tailwinds strengthen .
  • The strategic HBM roadmap (8-high to 12-high in 2025; HBM4 in 2026) and expanding customer base position Micron to capture outsized profit pools; TAM raised to >$30B for 2025 supports sustained revenue growth and premium pricing .
  • Consumer inventory normalization by spring and AI PC/smartphone content growth should pivot mobile/client back to growth in 2H FY25, broadening drivers beyond data center .
  • CapEx intensity (~$14B FY25) is focused on HBM and advanced nodes; OpEx increases are targeted to HBM/R&D; expect capital returns via dividends to continue, with buybacks governed by CHIPS Act constraints in initial years .
  • Watch FQ2 print for confirmation of NAND trough and clarity on Q3 margin impact from underloading; a cleaner setup into 2H could catalyze estimate upgrades as data center momentum persists .
  • Regional dynamics remain manageable: China exposure mid-teens % of revenue, legacy node competition focused on low-end products; Micron’s mix continues shifting to high-end/data center .
  • Near-term trading: volatility likely around FQ2/FQ3 on NAND and margin cadence; medium-term thesis strengthened by HBM leadership, data center SSD share gains, and AI-driven content growth across end markets .