Executive Summary
Micron Technology (MU) reported a significant rebound in financial performance for Q2 of fiscal year 2024. With revenues reaching $5.82 billion, the company experienced a robust year-over-year growth of 57.7% and a sequential increase of 23.2%. The return to profitability was underscored by a net income of $793 million, leading to an earnings per share (EPS) of $0.72. Management highlighted key drivers for this performance, including strong demand in AI and data center markets, improved pricing conditions, and a disciplined approach to capacity management and cost control. Notably, the company's gross margin expanded to 20%, a stark recovery compared to the previous quarter, reflecting the regained pricing power within the semiconductor space.
Key Performance Indicators
QoQ: 3 182.86% | YoY:189.47%
QoQ: 164.26% | YoY:134.11%
QoQ: 164.29% | YoY:133.80%
Key Insights
**Revenue**: $5.82 billion, up 57.7% YoY and 23.2% QoQ.
**Gross Profit**: $1.08 billion, yielding a gross margin of 20%, up from -1.4% last quarter.
**Net Income**: $793 million compared to a net loss of $1.14 billion in the prior year.
**EPS**: $0.72, a drastic improvement from -$1.91 YoY.
**Operating Income**: $204 million with an operating margin of 4%, turning positive a quarter earlier than expectations.
**Total Debt**: $13.7 billion, lower borrowing costs due to recent refinancin...
Financial Highlights
Revenue: $5.82 billion, up 57.7% YoY and 23.2% QoQ.
Gross Profit: $1.08 billion, yielding a gross margin of 20%, up from -1.4% last quarter.
Net Income: $793 million compared to a net loss of $1.14 billion in the prior year.
EPS: $0.72, a drastic improvement from -$1.91 YoY.
Operating Income: $204 million with an operating margin of 4%, turning positive a quarter earlier than expectations.
Total Debt: $13.7 billion, lower borrowing costs due to recent refinancing.
Management cited improvements in DRAM pricing as a critical factor, with DRAM revenue now accounting for 71% of total revenue. NAND revenue also showed strong recovery, climbing to $1.6 billion, a 27% increase sequentially.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
5.82B |
57.70% |
23.23% |
| Gross Profit |
1.08B |
189.47% |
3 182.86% |
| Operating Income |
-33.00M |
98.57% |
97.07% |
| Net Income |
793.00M |
134.11% |
164.26% |
| EPS |
0.72 |
133.80% |
164.29% |
Key Financial Ratios
operatingProfitMargin
-0.57%
operatingCashFlowPerShare
$1.1
freeCashFlowPerShare
$-0.15
Management Commentary
- Market Conditions: Sanjay Mehrotra, CEO, stated that "Micron has returned to profitability and delivered positive operating margin a quarter ahead of expectation." He emphasized the sharp upward trend in AI server demand and overall sector pricing recovery.
- Future Outlook: Mark Murphy, CFO, projected continued improvement in margins and EPS, with positively influenced cash flows expected in the latter half of fiscal 2024. He stated, "We expect solid sequential improvement in fiscal Q3 gross margins due to robust price increases across both DRAM and NAND."
- Innovative Leadership: Mehrotra mentioned, "Micron is at the forefront of ramping the industry's most advanced technology nodes in both DRAM and NAND," indicating the company’s commitment to maintain competitive technological advantages.
"We expect DRAM and NAND pricing levels to increase further throughout calendar year 2024 and expect record revenue and much improved profitability now in fiscal year 2025." - Sanjay Mehrotra, CEO
— Sanjay Mehrotra, CEO
"We plan fiscal Q3 capital expenditures to be higher than in the second quarter. Our full-year fiscal 2024 CapEx plan is unchanged at a range between $7.5 billion and $8 billion." - Mark Murphy, CFO},
— Mark Murphy, CFO
Forward Guidance
Management has provided a positive outlook for fiscal Q3 and beyond, expecting revenue to range between $6.6 billion +/- $200 million with gross margins projected around 26.5%. Continuous improvement in operating income, with management highlighting strong demand in AI and indications of a normalized supply environment by mid-2024. Potential challenges include maintaining competitive pricing as demand for HBM escalates, impacting supply availability for DRAM and NAND products. Overall, the long-term growth trajectory remains optimistic amid increasing visibility in key markets.