Financial Trends -- 9/10
Near-textbook financial-trends profile. Revenue re-accelerating off the FY2024 WFE downcycle trough --
from -2% (cal 2024Q1) to a sustained 22-34% YoY band (+23.8% cal 2026Q1) -- on AI-led leading-edge
foundry and HBM/DRAM. GAAP gross margin +230bps (47.5% to 49.8%) and GAAP operating margin ~+710bps
(27.9% to a record 35.0%); operating income rising faster than revenue. Share count declining ~3.6%
via buyback, long-term debt falling, FCF positive and +27% YoY at ~29% margin on a net-cash balance
sheet. No penalty modifiers trigger.
Weight: 25%
GAAP Op Margin
35.0%
Record | ~+710bps over 5 qtrs
FY2025 FCF
$5.41B
+27.2% YoY | ~29% margin
Share Count
Declining
-3.6% via buyback | Net cash
Quarterly Revenue Trajectory (calendar basis)
Revenue re-accelerating off the FY2024 WFE trough.
From -2% YoY (cal 2024Q1) to a sustained 22-34% band across the last five quarters, driven by
AI-led leading-edge foundry (system mix ~35% to ~54-60%) and HBM/DRAM node migrations. YoY ticked
down from the cal-2025Q2 peak of +33.6% but the absolute trajectory remains firmly up.
Quarterly Margins & Operating Income
| Metric | 2024Q2 | 2024Q3 | 2024Q4 | 2025Q1 | 2025Q2 | 2025Q3 | 2025Q4 | 2026Q1 |
|---|---|---|---|---|---|---|---|---|
| GAAP Gross Margin | 47.5% | 48.0% | 47.4% | 49.0% | 50.1% | 50.4% | 49.6% | 49.8% |
| GAAP Op Margin | 29.1% | 30.3% | 30.5% | 33.1% | 33.7% | 34.4% | 33.9% | 35.0% |
| Operating Income | $1,127M | $1,264M | $1,334M | $1,562M | $1,741M | $1,829M | $1,810M | $2,047M |
| Non-GAAP Dil. EPS | — | $0.86 | $0.91 | $1.04 | $1.33 | $1.26 | $1.27 | $1.47 |
Margins expanding well beyond the 100bps threshold.
GAAP gross margin +230bps (47.5% to 49.8%) and GAAP operating margin ~+710bps (27.9% to a record
35.0%) over the window, on foundry/DRAM mix shift and operating leverage. Operating income is
rising faster than revenue, so no "revenue up / operating income down" penalty applies.
Annual Financial Summary (FY ends ~late June)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $14,626M | $17,227M | $17,429M | $14,905M | $18,436M |
| Rev YoY | — | +17.8% | +1.2% | -14.5% | +23.7% |
| GAAP Gross Margin | 46.5% | 45.7% | 44.6% | 47.3% | 48.7% |
| GAAP Op Margin | 30.6% | 31.2% | 29.7% | 28.6% | 32.0% |
| Operating Income ($M) | $4,482M | $5,382M | $5,175M | $4,264M | $5,901M |
| Net Income ($M) | $3,908M | $4,605M | $4,511M | $3,828M | $5,358M |
| LT Debt ($M) | $4,990M | $4,998M | $5,003M | $4,479M | $3,730M |
Key trends
- Revenue recovered and re-accelerating: $14.6B (FY2021) to a $17.4B FY2023 peak, a -14.5% FY2024 WFE-downcycle trough, then +23.7% to $18.4B in FY2025 -- now sustaining a 22-34% YoY band into cal 2026Q1
- Margins expanding through the recovery: GAAP gross margin +230bps and GAAP operating margin ~+710bps over the last five quarters to a record 35.0%
- Net-cash, deleveraging balance sheet: long-term debt fell from ~$5.0B (FY2021) to $3.73B (FY2025)
- Share count declining: diluted shares down ~3.6% over five quarters via consistent buyback, no dilution
System Revenue Mix (% of systems)
Mix shift toward leading-edge foundry drives the margin uplift.
Foundry (AI logic / GAA build-out) climbed from ~35% to ~54-60% of systems over the past year,
with Memory re-accelerating in the latest quarter on HBM/DRAM node migrations. Logic/IDM faded.
Revenue Composition -- Systems vs. Services (cal 2026Q1)
- 36% of revenue is a low-cyclicality services annuity (CSBG) tied to Lam's installed base of >100k chambers -- a recurring cushion under the systems cycle
Free Cash Flow ($M, Annual)
FCF positive and growing. FY2025 FCF of $5.41B (+27.2% YoY)
at a ~29% FCF margin, with strong OCF conversion. LRCX reports cash flow on a fiscal-YTD cumulative
basis, so a clean per-calendar-quarter FCF series is not directly comparable; the most recent
fiscal-Q1 (cal 2026Q1) standalone FCF was $809.8M
positive (OCF $1,141M
less capex $332M)
in a heavy-capex ramp quarter.
Share Count & Buybacks (Diluted Shares, post-split, $K)
- Share count declining steadily: 1.304B (2024Q3) to 1.257B (2026Q1), ~3.6% cumulative reduction, buyback-driven
- No dilution: seven consecutive quarters of share-count reduction; dividend also raised $0.23 to $0.26
Caveats -- No Penalty Modifiers
| Caveat | Detail | Penalty |
|---|---|---|
| Cyclical Recovery Component | Part of the YoY acceleration is recovery off a depressed FY2024 WFE trough rather than pure secular linearity | None |
| YoY Rate Ticked Down | YoY growth eased from the cal-2025Q2 peak of +33.6% to +23.8% (cal 2026Q1) -- still a high, sustained band | None |
Neither caveat is operational deterioration.
The absolute trajectory, margin expansion, buyback, and FCF growth all point the right way, and
no penalty modifiers (revenue-up/OI-down, debt growth, dilution) trigger. The composite quality
gate -- positive AND growing FCF -- is YES.
Score Rationale
Score of 9/10 reflects a near-textbook high-quality financial profile. No penalty modifiers applied.
Supports 9/10:
- Revenue re-accelerating off the FY2024 WFE trough to a sustained 22-34% YoY band (+23.8% cal 2026Q1) on AI-led foundry and HBM/DRAM
- GAAP gross margin +230bps and GAAP operating margin ~+710bps to a record 35.0%; operating income rising faster than revenue
- FCF positive and growing ($4.26B to $5.41B, +27.2% YoY) at a ~29% margin
- Share count declining ~3.6% over five quarters, buyback-driven, no dilution
- Long-term debt falling ($5.0B to $3.73B, FY21-FY25); net-cash balance sheet
- 36%-of-revenue CSBG services annuity provides a low-cyclicality cushion
Why not a 10:
- The acceleration is partly a cyclical recovery off a depressed FY2024 base rather than pure secular linearity
- The sequential YoY rate, while high, ticked down from the cal-2025Q2 peak of +33.6%
Data sourced from Daloopa. Fiscal year ends ~late June; latest reported = FY2026Q3 (calendar 2026Q1). All financials in USD.