Yahoo Finance Lam Research (LRCX) Q3 Earnings Beat, Revenues Decline Y/Y
Lam Research Corporation LRCX delivered third-quarter fiscal 2024 non-GAAP earnings of $7.79 per share, which surpassed the Zacks Consensus Estimate by 7.3%. The figure increased 11.4% from the year-ago quarter.
Revenues of $3.79 billion surpassed the Zacks Consensus Estimate of $3.70 billion. The figure declined 2% year over year. This was primarily attributed to weakness in the systems business due to sluggish memory spending.
Lam Research’s system revenues were $2.39 billion (63% of the total revenues), down 6.2% from the year-ago quarter. The reported figure surpassed the Zacks Consensus Estimate of $2.27 billion.
In the Customer Support Business Group, revenues for the reported quarter were $1.39 billion (37%), down 13.4% from the year-ago quarter. The figure missed the consensus mark of $1.44 billion.
Although sluggish wafer fabrication equipment (“WFE”) spending has been concerning, modest improvement in it due to additional litho shipments into China is a positive.
NAND is expected to benefit from technology upgrades, whereas DRAM is likely to gain from investments in HBM and solidifying prospects in domestic China. Foundry/logic is anticipated to benefit from leading-edge investments.
Stability in domestic spending in China has been a plus.
Lam Research’s proper execution and expansion, as well as diversifying global footprints, have been positives. The company’s technological advancements, especially with AI, are noteworthy. Its strength in 3D DRAM and advanced packaging is another tailwind.
Coming to the price performance, LRCX has gained 13.2% year to date, outperforming the Zacks Computer and Technology sector’s growth of 7.9%.
Lam Research Corporation Price, Consensus and EPS Surprise
Lam Research Corporation price-consensus-eps-surprise-chart | Lam Research Corporation Quote
Regions in Detail
China, Korea and Taiwan accounted for 42%, 24% and 9%, respectively, of Lam Research’s total revenues for the fiscal third quarter. Japan, Southeast Asia, the United States and Europe accounted for 9%, 5%, 6% and 5%, respectively.
Operating Details
The non-GAAP gross margin was 48.7%, which expanded 470 basis points (bps) from the year-ago quarter.
Non-GAAP operating expenses were $697.7 million, up 14.8% from the prior-year quarter. As a percentage of revenues, the figure expanded 270 bps from the year-earlier quarter to 18.4%.
The non-GAAP operating margin was 30.3%, expanding 200 bps from the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2024, cash and cash equivalents were $5.67 billion compared with $5.62 billion as of Dec 24, 2023.
Cash flow from operating activities was $1.38 billion for the reported quarter, down from $1.45 billion in the previous fiscal quarter.
In the reported quarter, Lam Research paid out dividends of $263 million and repurchased shares worth $981 million.
Guidance
For fourth-quarter fiscal 2024, LRCX expects revenues of $3.8 billion (+/- $300 million). The Zacks Consensus Estimate for the same is pegged at $3.77 billion.
The non-GAAP gross margin is projected at 47.5% (+/-1%), whereas the non-GAAP operating margin is expected to be 29.5% (+/-1%).
Non-GAAP earnings are projected to be $7.50 (+/- 75 cents) per share on a diluted share count of 131 million. The Zacks Consensus Estimate for the same is pinned at $7.34 per share.
Zacks Rank & Stocks to Consider
Currently, Lam Research carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are Arista Networks ANET, Dell Technologies DELL and Badger Meter BMI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Arista Networks have gained 4.2% in the year-to-date period. The long-term earnings growth rate for ANET is 17.48%.
Shares of Dell Technologies have gained 52.3% in the year-to-date period. The long-term earnings growth rate for DELL is projected at 12%.
Shares of Badger Meter have gained 17.5% in the year-to-date period. The long-term earnings growth rate for BMI is 15.57%.
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