Executive Summary
Lam Research reported a solid first quarter for 2025 in terms of profitability and cash generation, despite a reported year-over-year headline revenue decline in the data provided. Key metrics show robust margins and strong liquidity: revenue of $4.168 billion, gross margin of 48.05%, operating margin of 30.33%, net income of $1.117 billion, and earnings per share of $0.86. Cash flow from operations was $1.569 billion with free cash flow of $1.458 billion. The company ended the period with $6.067 billion in cash and equivalents and a net cash position (net debt) of approximately -$1.083 billion, highlighting a lightweight balance sheet risk profile for a capital-intensive industry and ample capacity for continued R&D investment and shareholder returns.
The quarterly results exhibit strong profitability and cash generation driven by favorable product mix and cost discipline, with an operating margin near 30% and EBITDA margin around 34%. Revenue is presented with a QoQ increase of about 7.7% but is accompanied by a YoY decline reported as approximately 99.8% in the available data, suggesting a potential base-effect anomaly or reporting artifact rather than a structural deterioration in core operations. The quarter also featured meaningful capital allocation activities, including approximately $997 million of share repurchases and $261 million of dividends, underscoring Lam’s commitment to returning capital to shareholders while maintaining liquidity for strategic investments.
Going forward, Lam’s cash-generative profile and strong balance sheet position it to navigate semiconductor cycle volatility, fund ongoing R&D across core platforms (ALD/CVD/etch/Striker, etc.), and pursue selective buybacks. Investors should monitor order activity, customer capex budgets, and supply-demand dynamics in foundry and memory markets, as well as product-cycle introductions that may influence mix and pricing power.
Key Performance Indicators
QoQ: 11.25% | YoY:-99.73%
QoQ: 10.26% | YoY:-98.48%
Key Insights
Revenue: $4,167.98M; YoY change: -99.75%; QoQ change: +7.66%
Gross Profit: $2,002.68M; Gross Margin: 48.05%; YoY: -99.74%; QoQ: +8.26%
Operating Income: $1,264.20M; Operating Margin: 30.33%; YoY: -99.73%; QoQ: +11.25%
Net Income: $1,116.44M; Net Margin: 26.78%; YoY: -99.73%; QoQ: +9.43%
EPS: $0.86; Diluted EPS: $0.86; YoY: -98.48%; QoQ: +10.26%
EBITDA: $1,433.52M; EBITDA Margin: 34.39%
Cash Flow and Capital Allocation: Operating Cash Flow $1,568.47M; Free Cash Flow $1,457.88M; Capex $-110.59M; C...
Financial Highlights
Revenue: $4,167.98M; YoY change: -99.75%; QoQ change: +7.66%
Gross Profit: $2,002.68M; Gross Margin: 48.05%; YoY: -99.74%; QoQ: +8.26%
Operating Income: $1,264.20M; Operating Margin: 30.33%; YoY: -99.73%; QoQ: +11.25%
Net Income: $1,116.44M; Net Margin: 26.78%; YoY: -99.73%; QoQ: +9.43%
EPS: $0.86; Diluted EPS: $0.86; YoY: -98.48%; QoQ: +10.26%
EBITDA: $1,433.52M; EBITDA Margin: 34.39%
Cash Flow and Capital Allocation: Operating Cash Flow $1,568.47M; Free Cash Flow $1,457.88M; Capex $-110.59M; Cash at End of Period $6,072.08M; Net Cash/Net Debt position: -$1,083.70M (net cash)
Balance Sheet: Total Assets $19,532.49M; Total Liabilities $11,060.60M; Total Stockholders’ Equity $8,471.89M
Liquidity/Leverage: Current Ratio 2.53; Quick Ratio 1.74; Debt to Capitalization 0.370; Debt/Equity 0.588; Dividend Payout Ratio 23.4%
Valuation/Market Multiples (as indicated in the data): P/E ~23.74; P/B ~12.52; Price/Sales ~25.44; Price/FCF ~72.73; Dividend Yield ~0.25%
Other: Gross Margin ~0.4805; Operating Margin ~0.3033; Net Margin ~0.2679; ROE ~13.2%; ROA ~5.72%; Cash Conversion Cycle around 209 days (per ratios)
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.17B |
-99.75% |
7.66% |
| Gross Profit |
2.00B |
-99.74% |
8.26% |
| Operating Income |
1.26B |
-99.73% |
11.25% |
| Net Income |
1.12B |
-99.73% |
9.43% |
| EPS |
0.86 |
-98.48% |
10.26% |
Key Financial Ratios
operatingProfitMargin
30.3%
operatingCashFlowPerShare
$1.21
freeCashFlowPerShare
$1.12
dividendPayoutRatio
23.4%
Management Commentary
Transcript not provided in the dataset. No management quotes from the QQ1 2025 earnings call are available in the supplied material. As a result, specific themes, strategic shifts, or market condition quotes could not be quoted or quoted with attribution. If you can provide the earnings call transcript, I will extract management commentary by themes (strategy, operations, market conditions) and include context and significance with direct quotes.
Forward Guidance
No explicit forward guidance was included in the provided data. Based on the reported fundamentals, Lam remains a cash-generative, financially disciplined leader in semiconductor equipment with a strong balance sheet to weather cyclical swings. The near-term revenue trajectory is highly cyclical and sensitive to foundry/MEMORY capex and broader demand for wafer processing equipment.
Expected drivers and monitoring points:
- Customer capex cycles and booked backlog for core platforms (ALD, CVD, etch, TSV, copper/metal etch, mass metrology).
- End-market demand signals from foundries and memory suppliers, including capacity expansion plans and node migrations.
- Product mix shifts toward higher-value platforms that support advanced nodes and FinFET/DUV applications, which could support stable or improving margins.
- Supply chain normalization and component availability impacting lead times and pricing power.
Assessment: If demand recovers in the second half of 2025 as capex cycles normalize, Lam could see margin-driven upside and continued free cash flow strength. However, a sharper-than-expected downturn in semiconductor equipment demand could pressure utilization and pricing, underscoring the importance of backlog visibility and down-cycle resilience.