ASML Q4 Earnings Review

This earnings season, I will be covering ASML, Tesla, Microsoft, Google, Texas Instruments, Visa, Zoetis, Mercado Libre, and perhaps Burford and Winmark. Reviews will be behind a paywall, but you can access them by sharing the newsletter, referring acquaintances.

ASML reported earnings on Wednesday 24^th, before the market opened. As usual, the review will be split into three parts. We will first go over the business’ financials as a whole, taking pertinent detours, then breaking down the revenue, and finally, management’s commentary and outlook, followed by my personal take.

Quarterly revenue came in at 7.23bn, growing 12.5% on a yearly basis and 8.4% sequentially. Notoriously, this is the highest topline the company has ever reported. ASML’s compound annual growth rate sits at 18.1% for the past 5 years. Even though the chart might suggest extreme deceleration, this is mostly attributable to 2023 Q1’s unusually strong quarter. Further, ASML’s business is cyclical and quite volatile, as many financial components have historically displayed.

Keep in mind ASML reports in Euros.

Source: Self-made with data from ASML’s quarterly press releases

It has been remarkable how strong the demand for ASML’s systems is. While the semiconductor industry has been in a somewhat pronounced down cycle, the company has been able to maintain its topline growing and at a fast pace. Although the latter might be somewhat eclipsed by 2024’s guidance of null growth, guidance for 2025 and beyond was reiterated. Such resilience showcases how crucial of a component the business possesses in the chip manufacturing chain.

“our Public Chinese customers say: We are happy to take the machines that others don’t want” Q2 2023

“DUV demand still exceeds supply.” H1 2023 Interim Report

ASML reported a gross margin of 51.4%, which was flat YoY, implying gross profit was 3.71bn for the quarter. Operating income was 2.391bn, meaning the company operated at a 33% margin, also flat yearly. Lastly, net income came in at 2.048bn, up from 1.816bn in the comparable period. The net profit margin stood at 28.3% for the 4Q of 2023.

“we expect significant costs in 2024 related to the introduction of High NA and to the ramp of our capacity to the 90 EUV, 600 DUV levels that we have talked about before, which will create pressure on the gross margin” Q4 23 conference call

Source: Self-made with data from ASML’s quarterly press releases

Turning to the cash flow statement, ASML brought in 3.19bn in cash from operating activities. For the year that just finished, the business had 5.44bn, down from 8.486bn in 2022. Capital expenditures, on the other hand, amounted to 584M.

Source: Self-made with data from ASML’s quarterly press releases

Now onto the revenue breakdown, followed by bookings, management’s commentary and my take.