Executive Summary
Micron Technology Inc (MU) reported its Q1 2024 financial results with revenues of approximately $4.7 billion, representing an 18% sequential growth and 16% year-over-year. This performance was bolstered by improved pricing dynamics and a strong demand environment driven by applications in generative AI. CEO Sanjay Mehrotra emphasized that Micron is at the beginning of a multi-year growth phase, catalyzed by AI, which is expected to transform various market sectors. Despite a disappointing gross profit margin near 1% and an operating loss of $955 million, the outlook is optimistic, with expectations for pricing to continue strengthening throughout the fiscal year 2024, ultimately leading to improved margins and financial performance. Management articulated confidence in navigating supply-demand challenges, particularly with AI as a dominant demand driver.
Key Performance Indicators
QoQ: 91.95% | YoY:-103.92%
QoQ: 23.37% | YoY:-907.14%
QoQ: 13.71% | YoY:-570.65%
QoQ: 14.50% | YoY:-558.82%
Key Insights
**Revenue Performance**: Q1 2024 revenues were approximately $4.7 billion (up 18% QoQ and up 16% YoY). DRAM revenue accounted for 73% of total revenue, at $3.4 billion, up 24% sequentially. **Gross Margin**: Achieved a gross margin of near 1%, improved from near-breakeven in the previous quarter, primarily due to pricing improvements and a better mix of DRAM products. **Operating Income**: Recorded an operating loss of $955 million with an operating margin of -20%, indicating continued challenge...
Financial Highlights
Revenue Performance: Q1 2024 revenues were approximately $4.7 billion (up 18% QoQ and up 16% YoY). DRAM revenue accounted for 73% of total revenue, at $3.4 billion, up 24% sequentially. Gross Margin: Achieved a gross margin of near 1%, improved from near-breakeven in the previous quarter, primarily due to pricing improvements and a better mix of DRAM products. Operating Income: Recorded an operating loss of $955 million with an operating margin of -20%, indicating continued challenges in profitability. Net Income: The net loss for the quarter was $1.234 billion, with a diluted EPS of -$1.12. Management projects positive cash flows significantly later in FY24, highlighting CapEx restraints in response to pricing improvements. Liquidity and Debt: Cash and equivalents were approximately $9.8 billion, with total debt at $13.5 billion, affirming a stable financial position despite operational losses.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.73B |
15.69% |
17.86% |
| Gross Profit |
-35.00M |
-103.92% |
91.95% |
| Operating Income |
-1.13B |
-907.14% |
23.37% |
| Net Income |
-1.23B |
-570.65% |
13.71% |
| EPS |
-1.12 |
-558.82% |
14.50% |
Key Financial Ratios
operatingProfitMargin
-23.9%
operatingCashFlowPerShare
$1.27
freeCashFlowPerShare
$-0.36
dividendPayoutRatio
-10.5%
priceEarningsRatio
-16.96
Management Commentary
Market Demand and Growth: CEO Sanjay Mehrotra stated, "We are in the very early stages of a multi-year growth phase catalyzed and driven by generative AI... Micron is well positioned to leverage this growth." This sets a positive outlook for future revenues driven by AI-related sales.
Supply Discipline: Mehrotra noted the importance of "staying very disciplined with our supply and capacity investments as our pricing is still far from levels associated with necessary ROI." This comment indicates a cautious but strategic approach to expanding production amidst pricing recovery.
Technology Advancements: The company is progressing in the rollout of advanced technology nodes, with a strong focus on AI applications, as emphasized by Mehrotra: "We expect improved margins and financial performance throughout 2024 and record industry TAM in calendar 2025."
"We are in the very early stages of a multi-year growth phase catalyzed and driven by generative AI... Micron is well positioned to leverage this growth."
â Sanjay Mehrotra
"We intend to stay very disciplined with our supply and capacity investments as our pricing is still far from levels associated with necessary ROI."
â Sanjay Mehrotra
Forward Guidance
Management has provided a positive outlook for fiscal Q2 of 2024, projecting revenue to be in the range of $5.3 billion, with a gross margin anticipated around 13%. As they continue to limit bit shipments to maintain pricing momentum, the firm expects prices for both DRAM and NAND to grow, backed by tightening supply-demand conditions coupled with strong AI market influences. Looking ahead into 2024, the pipeline indicates potential for increased margins and a trajectory towards profitability as inventory dynamics normalize and demand surges.