ASML Holding N.V. (ASML) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call and Q&A reveal strong demand for ASML's products, particularly EUV tools, and optimistic growth expectations despite some headwinds. The company is well-prepared for increased demand, with plans to expand capacity and align with customer needs. Positive factors include robust order intake, strategic alignment with market trends, and strong financial metrics. However, lack of specific guidance on certain aspects and potential mix-related margin pressures introduce some caution. Overall, the sentiment is positive, driven by growth prospects and strategic positioning.
Key Financial Performance
Q4 2025 Total Net Sales EUR 9.7 billion, within guidance.
Q4 2025 Net System Sales EUR 7.6 billion, including EUR 3.6 billion from EUV system sales (2 High NA systems) and EUR 4 billion from non-EUV system sales. Driven by Logic (70%) and Memory (30%).
Q4 2025 Installed Base Management Sales EUR 2.1 billion, as guided.
Q4 2025 Gross Margin 52.2%, within guidance.
Q4 2025 R&D Expenses EUR 1.3 billion, slightly higher than expected due to higher nonrecurring personnel costs and a grant recognition shift to 2026.
Q4 2025 SG&A Expenses EUR 375 million, higher than guided due to nonrecurring salary-related costs, sale of receivables, and pull-in of IT spending.
Q4 2025 Effective Tax Rate 18%.
Q4 2025 Net Income EUR 2.8 billion, 29.2% of total net sales, resulting in EPS of EUR 7.35.
Q4 2025 Free Cash Flow EUR 10.9 billion, significantly higher than previous quarters, with most cash inflow at the end of the quarter.
Q4 2025 Net Bookings EUR 13.2 billion, split between EUR 7.4 billion EUV systems and EUR 5.8 billion non-EUV systems. Memory accounted for 56% and Logic for 44%.
Full Year 2025 Net Sales EUR 32.7 billion, with a gross margin of 52.8%.
Full Year 2025 EUV System Sales EUR 11.6 billion, 39% higher than 2024.
Full Year 2025 Deep UV System Sales EUR 12 billion, decreased 6% year-over-year.
Full Year 2025 Metrology and Inspection System Sales EUR 825 million, increased 28% from 2024.
Full Year 2025 Logic System Revenue EUR 16.1 billion, 22% higher than 2024.
Full Year 2025 Memory System Revenue EUR 8.4 billion, 2% lower than 2024.
Full Year 2025 Installed Base Management Sales EUR 8.2 billion, 26% higher than 2024.
Full Year 2025 R&D Spending EUR 4.7 billion, 14% of sales.
Full Year 2025 SG&A Expenses EUR 1.3 billion, 4% of sales.
Full Year 2025 Net Income EUR 9.6 billion, 29.4% of net sales, resulting in EPS of EUR 24.73.
Full Year 2025 Free Cash Flow EUR 11 billion.
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Operating Highlights
EUV system sales: EUV system sales realized from 48 systems, including High NA, were EUR 11.6 billion, which was 39% higher than 2024. The NXE:3800E ramped in 2025, supporting productivity gains and replacement of complex multi-patterning with single exposed EUV for multiple layers on current and future DRAM.
Metrology and inspection system sales: Sales increased 28% from 2024 to EUR 825 million, driven by customer investments in process control strategy.
High NA systems: Intel announced the qualification and acceptance of their EXE:5200B system for high-volume manufacturing for leading-edge nodes. More systems are expected to be released in 2026.
Advanced logic and DRAM demand: Increased demand due to AI-related infrastructure and data center buildup. Customers are migrating to more litho-intensive nodes (e.g., 3-nanometer and 2-nanometer) and adopting more EUV layers for DRAM nodes.
China market share: China's share in total net sales for 2026 is expected to align with the current system backlog, around 20%.
R&D investment: R&D spending increased to EUR 4.7 billion in 2025, about 14% of sales, to support innovation across the product portfolio.
Installed Base Management: Revenue grew 26% in 2025 to EUR 8.2 billion, driven by service revenue from the growing installed base of EUV systems and customer performance upgrades.
AI impact on demand: AI is driving increased demand for advanced lithography products, especially EUV systems, and supporting a shift in product mix towards higher litho intensity.
Share buyback program: A new share buyback program of up to EUR 12 billion was announced, effective until December 31, 2028.
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Risk or Challenges
R&D Expenses: R&D expenses were slightly higher than expected at EUR 1.3 billion due to higher nonrecurring personnel costs and the recognition of a grant that shifted into 2026. This could impact operational efficiency and financial planning.
SG&A Expenses: SG&A expenses came in higher than guided at EUR 375 million, driven by higher nonrecurring salary-related costs, the sale of receivables, and pull-in of certain IT spending. This could strain operational budgets.
Supply Chain Constraints: The transcript mentions tight supply conditions for HBM and DDR products through at least 2026, which could impact production timelines and customer satisfaction.
China Market Dependency: The company expects the China region to account for around 20% of total net sales in 2026. This dependency could pose risks due to geopolitical tensions and regulatory uncertainties.
High NA Technology Qualification: While progress is being made, the qualification of High NA technology for logic and DRAM applications is still in R&D stages, which could delay its commercial deployment and revenue realization.
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Guidance & Outlook
Q1 2026 Net Sales: Expected to be between EUR 8.2 billion and EUR 8.9 billion.
Q1 2026 Installed Base Management Sales: Expected to be around EUR 2.4 billion.
Q1 2026 Gross Margin: Expected to be between 51% and 53%.
Q1 2026 R&D Expenses: Expected to be around EUR 1.2 billion.
Q1 2026 SG&A Expenses: Expected to be around EUR 0.3 billion.
Full Year 2026 Net Sales: Expected to be between EUR 34 billion and EUR 39 billion.
Full Year 2026 Gross Margin: Expected to be between 51% and 53%.
EUV Revenue Growth in 2026: Expected to increase significantly due to dynamics in advanced logic and DRAM.
Non-EUV Revenue in 2026: Expected to remain similar to 2025 levels.
China Region Share in 2026 Net Sales: Expected to align with the current system backlog, approximately 20%.
Metrology and Inspection Business Growth in 2026: Expected to grow significantly as customers invest in process control strategies.
Installed Base Management Revenue Growth in 2026: Expected to grow due to increasing service revenue from EUV systems and performance upgrades.
High NA Systems in 2026: More systems expected to be released to customers, supporting preparation for high-volume manufacturing.
Long-Term Revenue Opportunity (2020s): Expected between EUR 44 billion and EUR 60 billion with a gross margin of 56% to 60%.
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Shareholder Return Plan
Second Interim Dividend: ASML declared a second interim dividend over 2025 of EUR 1.60 per ordinary share.
Total Dividend for 2025: ASML intends to declare a total dividend for the year 2025 of EUR 7.50 per ordinary share, a 17% increase compared to 2024.
Interim Dividend Payment Date: An interim dividend of EUR 1.60 per ordinary share will be made payable on February 18, 2026.
Final Dividend Proposal: A final dividend proposal of EUR 2.70 per ordinary share will be presented to the Annual General Meeting.
Q4 2025 Share Repurchase: ASML purchased shares for a total amount of around EUR 1.7 billion in Q4 2025.
2025 Share Buyback Program: ASML completed a total of EUR 7.6 billion in share repurchases out of the up to EUR 12 billion program.
Total Shareholder Return in 2025: ASML returned EUR 8.5 billion to shareholders through a combination of dividends and share buybacks in 2025.
New Share Buyback Program: ASML announced a new share buyback program effective January 2026, to be executed by December 31, 2028, with an amount up to EUR 12 billion.
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Key Q&A
Q:What factors are influencing ASML's outlook for calendar 2026, particularly regarding Low NA tools?
A:The outlook is influenced by the progress customers are making in completing their fabs, ASML's ability to execute and ramp up production, and the demand for tools. Timing of clean room space additions and lead times for components like lenses also play a role.
Q:Is there any change in ASML's vision for High NA tool revenue in 2026, and what is the adoption outlook?
A:There are no major changes compared to the previous quarter. Customers are testing the tools with limited product wafers, and decisions for new orders are expected in the second half of 2027. Both DRAM and logic customers are progressing well, with no clear indication of which will adopt first.
Q:What variables influence ASML's 2026 revenue growth guidance of 4% to 19%?
A:The growth is influenced by customers' progress in completing fabs, ASML's ability to execute, and the demand for tools. The readiness of customers to take tools and ASML's capacity ramp-up are key factors.
Q:What is ASML's manufacturing capacity for Low NA EUV tools, and how is it being ramped up?
A:ASML has infrastructure in place to respond to demand within 12-18 months. The company is gradually increasing its move rate quarter-on-quarter, with a focus on training and supply chain alignment. The capacity is expected to increase sustainably beyond 2026.
Q:How is ASML addressing customers' medium-term plans and visibility into equipment needs?
A:ASML is aligning its move rate plans with customers' indications of demand, which are consistent with public statements. Customers are providing strong indications of demand for 2027, and ASML is incorporating this into its capacity planning.
Q:What are ASML's assumptions for the top end of its 2026 sales guidance, particularly regarding China?
A:China is expected to account for 20% of sales across the range, approximately EUR 8 billion at the top end. Key drivers include customers' readiness to take tools, ASML's execution, and strong demand for upgrades.
Q:What is the outlook for EUV and memory orders, and how does it relate to DRAM and DDR5?
A:Memory orders are strong for both Deep UV and EUV. DRAM is expected to see increased EUV layers, benefiting from demand for capacity and simplified processes. The number of EUV layers is expected to grow over time.
Q:What is ASML's EUV manufacturing capacity, and does it constrain growth for 2026?
A:ASML's capacity is dynamic and gradually increasing. The company is ramping up its move rate quarter-on-quarter, and while capacity is not a constraint for 2026, the range of revenue guidance reflects the gradual ramp-up process.
Q:How does ASML view the risk of High NA adoption being delayed due to industry capacity constraints?
A:ASML does not see a risk of delay. The adoption process includes R&D qualification and phased insertion, allowing customers to prepare for High NA without being affected by short-term capacity constraints.
Q:What is ASML's view on the potential impact of 4 F-square DRAM structures on EUV demand?
A:ASML expects 4 F-square structures to require more advanced lithography, increasing both Deep UV and EUV layers. Customers are optimizing technology over several nodes to avoid operational cliffs, and EUV is seen as beneficial for simplifying processes and increasing capacity.
Q:What are the headwinds and tailwinds for ASML's 2026 gross margin?
A:Headwinds include a less favorable mix of Deep UV tools, with more dry tools and fewer immersion tools, as well as a mix of EUV tools including older models. Tailwinds include higher EUV tool numbers and potential strong demand for upgrades.
Q:What is the expected timing of deliveries within ASML's backlog for 2026?
A:The second half of 2026 is expected to be stronger than the first half, driven by customers' readiness to take tools and ASML's ramp-up of move rates. A significant portion of the backlog is for 2027.
Q:What is ASML's view on the adoption of EUV layers in logic roadmaps like A16, A14, and A10?
A:ASML expects EUV layers to increase with each generation, particularly at A14 and A10, as customers focus on enabling future technology.
Q:How is ASML managing its capacity planning for EUV tools beyond 2026?
A:ASML has built long lead time items like factories and equipment, allowing flexibility to respond to demand. The company is gradually increasing its move rate and aligning with customer demand to avoid being a bottleneck.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the revenue recognition for High NA tools in 2026, stating only that it would be slightly more than the current year. Additionally, they did not quantify the exact number of EUV tools expected to ship in 2026 or provide a detailed breakdown of the gross margin impact from various factors.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Base sale
DRAM EUV
EUR Installed
EUR cash
EUR program
EUR sale
EUR share
EUR system
EUV revenue
EUV system
Installed Base
Memory
RD
SGA EUR
UV EUV
buildup
capacity expansion
cash flow
demand product
dividend EUR
flow EUR
increase
inspection
nanometer node
node nanometer
outlook
product portfolio
road map
segment
statement
support
system EUR
system sale
system volume
volume manufacturing
ASML Transcript
ASML Holding N.V. (ASML) Q1 2026 Earnings Call Transcript
Positive4-15
The earnings call summary reveals strong financial performance with a 10% increase in revenue and a 51.5% gross margin. The company also achieved a significant increase in net income and operating cash flow. The absence of any discussed risks in the Q&A section and the lack of market cap information suggest a generally positive outlook. The guidance for 2026 indicates expectations of further growth, particularly in EUV revenue and metrology business. These factors combined point to a positive sentiment and likely stock price increase in the short term.
ASML Holding N.V. (ASML) Q1 2026 Earnings Call Transcript
Positive4-15
The earnings call summary indicates strong financial performance with a 10% YoY revenue increase and improved gross margins. The Q&A section further supports a positive outlook, with guidance for Q2 2026 aligning with these strong results. The semiconductor market's growth and ASML's capacity expansion plans are promising, and there's no indication of negative sentiment from analysts. The company's strategic focus on EUV systems and customer alignment suggests continued demand. Overall, these factors contribute to a positive sentiment, likely resulting in a stock price increase of 2% to 8% over the next two weeks.
ASML Holding N.V. (ASML) Q4 2025 Earnings Call Transcript
Positive1-30
The earnings call reflects strong financial performance with increased revenue, net income, and operating cash flow. The company projects robust growth in the semiconductor market, particularly in AI and 5G, with significant EUV segment growth. Positive guidance for 2026 with increased revenue and gross margin expectations supports a positive outlook. The announcement of a new share buyback program and increased dividends further boosts investor confidence. Despite the lack of specific shareholder return discussion, overall sentiment is positive, indicating a likely stock price increase in the short term.
ASML Holding N.V. (ASML) Q4 2025 Earnings Call Transcript
Positive1-28
The earnings call and Q&A reveal strong demand for ASML's products, particularly EUV tools, and optimistic growth expectations despite some headwinds. The company is well-prepared for increased demand, with plans to expand capacity and align with customer needs. Positive factors include robust order intake, strategic alignment with market trends, and strong financial metrics. However, lack of specific guidance on certain aspects and potential mix-related margin pressures introduce some caution. Overall, the sentiment is positive, driven by growth prospects and strategic positioning.
ASML Slides
ASML Report
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