ASML (ASML, Financial), a leading Dutch photolithography equipment maker for semiconductors, experienced a decline in its stock price today, falling 8% despite surpassing Q1 earnings expectations. The company's performance echoed its Q4 success, reaching all-time highs in early March, but revealed significant differences that concerned investors.
The company missed its Q1 revenue estimates, reminiscent of its performance in 2022 and early 2023. Its Q2 revenue guidance also did not meet analyst expectations, similar to the previous quarter, but the outlook has become more worrisome. This concern arises particularly because ASML had indicated potential signs of recovery earlier in the year. A notable point of disappointment was the year-over-year decrease in net bookings to €3.6 billion, a 5.3% drop.
Key highlights from ASML's report include:
- Bookings of €3.6 billion, with management explaining the fluctuating nature of order flow. They remain optimistic about a significant recovery by 2025, maintaining their previous forecasts.
- A year-over-year decrease in revenue to €5.29 billion, a 21.6% fall, missing analyst expectations but hitting the company's projected midpoint.
- Gross margins improved slightly to 51.0%, and operating expenses were lower than expected, contributing to ASML's third consecutive earnings beat.
- The company reiterated its FY24 revenue outlook, expecting it to match the €27.6 billion seen in FY23. It anticipates a stronger second half in FY24, despite a less optimistic Q2 revenue guidance of €5.7-6.2 billion.
Despite facing another challenging quarter, ASML is confident about ending FY24 on a strong note, leading into a hopeful rebound in the industry by FY25. However, the company is currently dealing with uncertain demand, particularly in its Logic business, as customers adjust to significant capacity expansions from the previous year. This situation poses concerns as peers like Lam Research (LRCX, Financial), KLA Corp (KLAC, Financial), and Applied Materials (AMAT, Financial) prepare for their Q1 reports.
Even with potential short-term market volatility, ASML stands to benefit from long-term industry growth drivers. The global construction of new semiconductor fabrication plants, all requiring ASML's technology, underscores the company's vital role in the sector's future.
