LRCX · Q2 2025 Earnings

Bullish

Lam Research

Reported July 30, 2025

30-second summary

Lam printed $5.17B in revenue (+33.6% YoY, +9.6% QoQ) with non-GAAP EPS of $1.33, non-GAAP gross margin of 50.3%, and non-GAAP operating margin of 34.4% — all evidence that the deposition/etch franchise is converting to P&L. The September-quarter guide of $5.20B ±$300M implies continued momentum at the midpoint, and the FY print of $18.44B (+23.7%) with $5.41B of free cash flow (29.4% FCF margin) confirms Lam is executing through the current WFE backdrop. CEO Tim Archer framed the setup as "deposition and etch criticality intensifying in the AI era" — the primary management message on this release.

Headline numbers

EPS

Q2 FY2025

$1.33

Revenue

Q2 FY2025

$5.17B

+33.6% YoY

Gross margin

Q2 FY2025

50.1%

Free cash flow

Q2 FY2025

$2.38B

Operating margin

Q2 FY2025

33.7%

Key financials

Q2 FY2025

Metric	Q2 FY2025	YoY
Revenue	$5.17B	+33.6%
EPS	$1.33	—
Gross margin	50.1%	—
Operating margin	33.7%	—
Free cash flow	$2.38B	—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment performance

Q2 FY2025

Segment	Q2 FY2025	YoY
Systems revenue	$3.44B	+58.4%
Customer support-related revenue and other	$1.73B	+1.9%

Capacity & utilization

Q2 FY2025

Segment	Q2 FY2025
Deferred revenue	$2.68 billion
Deferred revenue from Japan shipments (not yet accepted)	$342 million

Profitability

Q2 FY2025

Segment	Q2 FY2025
Non-GAAP operating margin	34.4%
Non-GAAP gross margin	50.3%

Management tone

The Q4 FY2025 press release carries a single, focused message from CEO Tim Archer: "With deposition and etch criticality intensifying in the AI era, we are executing on our long-term strategic initiatives and leveraging our differentiated product portfolio to position Lam for outperformance." That framing — pairing record EPS with an explicit claim on AI-era process criticality and outperformance — is the headline shift. Without a corresponding earnings call transcript for this quarter, we are not extrapolating further tone signals.

Recurring themes management leaned on this quarter:

AI-driven technology inflections enabling outperformance vs. WFEDeposition and etch criticality in advanced node manufacturingNAND capacity conversion (layer count transitions) as multi-year opportunityAsia operational leverage improving gross margins and responsivenessServices and software (Semiverse, Cobot) expanding competitive moatProduct portfolio breadth across DRAM, Foundry, and NAND segments

Risks management surfaced:

Deferred revenue expected to trend lower into calendar 2025Customer concentration to remain roughly consistent (implying exposure to concentration risk)Geographic exposure to China declined to 31% but still materialOther income and expense expected to have 'slight negative bias' in March quarterUnfavorable customer mix pressuring gross margin sequentially

Q&A highlights

Tim Arcuri · UBS

Gross margin guidance and puts/takes; WFU growth of $3-5B YoY; NAND spending outlook and whether it will double

Gross margins expected in tight range with headwinds from customer concentration offset by Asia operations strategy. NAND will be up but likely not double; some NAND spending will occur in China with restricted customers. Leading edge foundry expected strong; DRAM plus or minus from strong prior year.

Gross margins expected tight range, maybe trim slightly through yearNAND spending in China with restricted customers will not be shippedLeading edge foundry expected strongDRAM expected plus or minus after strong 2024

Chris Sankar · Cowan & Company

China export controls impact quantification for 2025; WFE growth split between systems and CSBG

China export controls restrict ~$700M in forecasted revenue, mostly second-half weighted in 2025. Lead times unchanged. CSBG headwinds from Reliant offset by strong upgrade year, particularly in NAND. Will not provide specific CSBG vs systems breakdown.

$700 million forecasted revenue impact from China export controlsImpact mostly second-half weighted in 2025NAND spending largely upgrade-relatedStrong upgrade product line within CSBG to offset Reliant headwinds

CJ Muse · Cantor Fitzgerald

Rank order of incremental drivers (NAND upgrades, advanced packaging); clarification on annualizing March guidance for full-year growth

NAND most impactful YoY driver from both upgrades and new tools (carbon gap fill for 200+ layer stacking, MOLLE for 300+ layers). Advanced packaging also strong. Declined to provide quarter-by-quarter guidance or validate annualized revenue methodology. Noted second-half waiting of China customer revenue loss.

NAND largest YoY incremental driverTwo-thirds of bits still manufactured below 200 layersCarbon gap fill tool key to multi-tier stacking in 200-300 layer generationsMOLLE tool emerges for 300+ layer nodes

Harlan Sir · JP Morgan

Advanced packaging 2024 actual revenue; HBM growth profile given 50-70% demand growth and process node transitions; Malaysia facility ramp and incremental margin benefit

Advanced packaging finished 2024 above $1B, will grow again in 2025. HBM3 transitioning to 3E/4, die count 8→12→16. Delivered 100+ bps margin improvement already from Asia operations strategy; more upside ahead but offset by customer concentration headwinds. Malaysia strategy proactive, driven by global ops team.

Advanced packaging 2024 >$1B, growing in 2025100+ basis points gross margin improvement delivered from Asia operations strategyHBM3 to 3E to potentially 4 at end of 2025Die progression 8→12→16

Toshi Yahari · Goldman Sachs

Outperformance vs WFE driven by Etch/Deposition mix expansion or market share wins; CSBG Reliant outlook for 2025

Outperformance from mix (Etch/Dep becoming more important) plus share gains through new applications (carbon gap fill, market expansion like Ether tool). CSBG Reliant down YoY due to lost China customers and low mature node spending outside China; offset by upgrade strength making total CSBG ~flat. Equipment intelligence/cobots emerging opportunity.

Both mix shift and market share gains drive outperformanceCarbon gap fill is new application expanding SAMEther tool win represents entry into new marketsReliant down YoY; CSBG total ~flat for calendar 2025

What to watch into next quarter

Sep-quarter revenue delivery vs. the $5.20B ±$300M guide: the midpoint implies essentially flat sequential revenue against a record Q4 print.

Gross-margin hold: Q4 non-GAAP gross margin was 50.3% and the Sep guide is 50.0% ±1%. Watch whether the customer-mix dynamic compresses the print to the low end or whether operations leverage offsets it.

China revenue trajectory: $1.81B this quarter (35% of total). Watch the sequential direction and mix share into the Sep quarter.

Deferred revenue: $2.68B balance, including $342M of Japan shipments not yet accepted. Watch the size and trajectory of this balance as a leading indicator of forward systems revenue cadence.

Systems vs. CSBG mix: systems grew 58% YoY while CSBG was roughly flat. Watch whether CSBG re-accelerates or remains the slower lane.

Sources

Lam Research Q4 FY2025 earnings press release (period ended June 29, 2025), filed with the SEC: https://www.sec.gov/Archives/edgar/data/707549/000070754925000068/lrcx_exhibitx991xq4x2025.htm

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