EPS of $0.30 increased by 117.3% from previous year
Gross margin of 26.9%
Net income of 332.00M
""Improving market conditions and strong price and cost execution drove the financial outperformance." - Mark Murphy, CFO" - Mark Murphy
Micron Technology Inc (MU) Q3 2024 Results: Strong Performance Driven by AI Demand
Executive Summary
Micron Technology Inc (MU) delivered impressive fiscal third quarter results for 2024, showing a significant recovery from prior downturns largely attributed to increased demand for AI-related products. The company reported total revenues of $6.81 billion, which represented a 17% increase quarter-over-quarter and an astounding 82% year-over-year growth. This growth was primarily driven by their Data Center segment's revenue, which more than doubled year-over-year due to robust AI integration. Management expressed confidence in sustained growth going into fiscal 2025 backed by strategic investments and technology advancements in DRAM and NAND products, primarily aimed at supporting AI-driven demand across multiple sectors including data centers and automotive solutions.
Key Performance Indicators
Revenue
6.81B
QoQ: 16.95% | YoY:81.53%
Gross Profit
1.83B
26.90% margin
QoQ: 69.79% | YoY:374.25%
Operating Income
691.00M
QoQ: 2 193.94% | YoY:144.13%
Net Income
332.00M
QoQ: -58.13% | YoY:117.55%
EPS
0.30
QoQ: -58.33% | YoY:117.34%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $6.81 billion (Up 16.95% QoQ | Up 81.53% YoY)
**Net Income:** $0.33 billion (EPS: $0.30, Up 117.34% YoY but down 58.33% QoQ due to seasonality)
Financial Highlights
Q3 2024 Financial Metrics:
- Revenue: $6.81 billion (Up 16.95% QoQ | Up 81.53% YoY)
- Gross Profit: $1.83 billion (Gross Margin: 26.9%, Up 8 percentage points QoQ)
- Operating Income: $0.69 billion (Operating Margin: 10.5%, up 10 percentage points QoQ)
- Net Income: $0.33 billion (EPS: $0.30, Up 117.34% YoY but down 58.33% QoQ due to seasonality)
Management indicated that DRAM and NAND revenues are benefiting from tight supply conditions and rising prices. The increased prices (approximately 20% rise in both DRAM and NAND segments) significantly bolstered profitability despite a slight decline in bit shipments for DRAM, demonstrating effective pricing strategy management. Micron's ability to maintain a healthy gross margin amidst rising costs was highlighted as a vital operational achievement, demonstrating resilience in a fluctuating market.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.81B
81.53%
16.95%
Gross Profit
1.83B
374.25%
69.79%
Operating Income
691.00M
144.13%
2 193.94%
Net Income
332.00M
117.55%
-58.13%
EPS
0.30
117.34%
-58.33%
Key Financial Ratios
currentRatio
3.41
grossProfitMargin
26.9%
operatingProfitMargin
10.1%
netProfitMargin
4.87%
returnOnAssets
0.5%
returnOnEquity
0.75%
debtEquityRatio
0.32
operatingCashFlowPerShare
$2.24
freeCashFlowPerShare
$0.36
dividendPayoutRatio
38.6%
priceToBookRatio
3.16
priceEarningsRatio
105.27
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Insights from Management Commentary:
1. Robust AI Demand: "Rapidly growing AI demand enabled us to grow our revenue by over 50% on a sequential basis, and we grew share in high-margin AI-related product categories such as HBM and data center SSDs." - Sanjay Mehrotra, CEO
2. Future Growth Confidence: "We foresee significant revenue records in fiscal 2025, with profitability improvements underpinned by shifts to higher-margin products driven by demand in AI and data centers." - Mark Murphy, CFO
3. Operational Resilience: Despite operational disruptions following the recent Taiwan earthquake, the company was able to recover quickly and stay on track with manufacturing goals, affirming effective crisis management.
"Improving market conditions and strong price and cost execution drove the financial outperformance." - Mark Murphy, CFO
â Mark Murphy
"Enabling AGI will require training ever-increasing model sizes with trillions of parameters and sophisticated servers for inferencing. We are one of the biggest beneficiaries of this multi-year growth opportunity driven by AI." - Sanjay Mehrotra, CEO
â Sanjay Mehrotra
Forward Guidance
Micron anticipates fiscal Q4 revenues to be approximately $7.6 billion, supported by continuing positive pricing trends and a favorable supply-demand environment. The firm projects DRAM bit shipments to remain stable, while NAND shipments are expected to increase slightly. Management remains optimistic about achieving further gross margin expansion in fiscal 2025, emphasizing their strategic investments in AI-related technologies as critical drivers. Notably, CapEx is projected to rise significantly to mid-30% range of revenue in fiscal 2025, reflecting aggressive investments in R&D and expansions in manufacturing capacity.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MU Focus
26.90%
10.10%
0.75%
105.27%
NVDA
74.60%
62.30%
29.30%
44.63%
INTC
15.00%
-68.20%
-16.70%
-1.54%
TSM
57.80%
47.50%
8.15%
19.07%
MRVL
23.00%
-46.40%
-5.06%
-27.13%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Micron is strategically positioned to capitalize on the burgeoning demand for AI technologies, particularly in data centers, where revenue growth is expected to continue underpinned by strong pricing and improved margins. The company is not only advancing its technology pipeline but is also strategically aligning its capacity expansion to meet projected market demand. Continuous investment into advanced manufacturing and tight management of operational costs will be essential for sustaining profitability in the face of competition and market cyclicality. As such, investors should closely monitor Micron's execution on its growth strategies and its ability to navigate the evolving market landscape.
Key Investment Factors
Growth Potential
Micron's entrance into lucrative AI markets suggests significant growth, particularly as data center demand continues to surge. The expected market CAGR for HBM is above 50%, indicating a massive potential upside in revenue and profitability.
Profitability Risk
Risks include dependence on a cyclical semiconductor market and potential supply chain disruptions, as seen with the Taiwan earthquake. Additionally, fluctuating global demand might affect future profitability if the AI boom moderates.
Financial Position
With $9.2 billion in cash and investments, Micron maintains robust liquidity. Total debt of $13.3 billion with a manageable leverage ratio indicates a healthy balance sheet capable of supporting future expansions.
SWOT Analysis
Strengths
Strong leadership in DRAM and NAND technologies
Significant revenue growth driven by AI-related products
Healthy balance sheet with strong liquidity
Weaknesses
High exposure to the volatile semiconductor market
Recent declines in specific market segments affecting overall performance
Opportunities
Growing demand for AI applications in data centers
Strategic government partnerships to boost manufacturing capabilities (CHIPS Act)
Increased adoption of AI technologies across various sectors
Threats
Potential supply chain disruptions
Intensifying competition in the semiconductor industry