LAM RESEARCH CORP (LRCX)
SIC breadcrumb: Manufacturing > Industrial And Commercial Machinery And Computer Equipment > SIC 3559 Special Industry Machinery, NEC
SEC company page: https://www.sec.gov/edgar/browse/?CIK=707549. Latest filing source: 0000707549-25-000075.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 18,435,591,000 | USD | 2025 | 2025-08-11 |
| Net income | 5,358,217,000 | USD | 2025 | 2025-08-11 |
| Assets | 21,345,260,000 | USD | 2025 | 2025-08-11 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-08-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000707549.json. Derived margins are computed from the extracted annual SEC facts.
| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 8,013,620,000 | 11,076,998,000 | 9,653,559,000 | 10,044,736,000 | 14,626,150,000 | 17,227,039,000 | 17,428,516,000 | 14,905,386,000 | 18,435,591,000 | |
| Net income | 914,049,000 | 1,697,763,000 | 2,380,681,000 | 2,191,430,000 | 2,251,753,000 | 3,908,458,000 | 4,605,286,000 | 4,510,931,000 | 3,827,772,000 | 5,358,217,000 |
| Operating income | 1,074,256,000 | 1,902,132,000 | 3,213,299,000 | 2,464,732,000 | 2,673,802,000 | 4,482,023,000 | 5,381,822,000 | 5,174,860,000 | 4,263,913,000 | 5,900,968,000 |
| Gross profit | 2,618,922,000 | 3,603,359,000 | 5,165,032,000 | 4,358,459,000 | 4,608,693,000 | 6,805,306,000 | 7,871,807,000 | 7,776,925,000 | 7,052,791,000 | 8,979,059,000 |
| Diluted EPS | 5.22 | 9.24 | 13.17 | 13.70 | 15.10 | 26.90 | 32.75 | 3.32 | 2.90 | 4.15 |
| Assets | 12,264,315,000 | 12,122,765,000 | 12,492,433,000 | 12,001,333,000 | 14,559,047,000 | 15,892,152,000 | 17,195,632,000 | 18,781,643,000 | 18,744,728,000 | 21,345,260,000 |
| Liabilities | 6,162,246,000 | 5,135,453,000 | 5,773,035,000 | 7,278,029,000 | 9,375,558,000 | 9,864,964,000 | 10,917,266,000 | 10,571,471,000 | 10,205,274,000 | 11,483,641,000 |
| Stockholders' equity | 5,894,517,000 | 6,817,451,000 | 6,501,851,000 | 4,673,865,000 | 5,172,494,000 | 6,027,188,000 | 6,278,366,000 | 8,210,172,000 | 8,539,454,000 | 9,861,619,000 |
| Cash and cash equivalents | 5,039,322,000 | 2,377,534,000 | 4,512,257,000 | 3,658,219,000 | 4,915,172,000 | 4,418,263,000 | 3,522,001,000 | 5,337,056,000 | 5,847,856,000 | 6,390,659,000 |
| Net margin | 21.19% | 21.49% | 22.70% | 22.42% | 26.72% | 26.73% | 25.88% | 25.68% | 29.06% | |
| Operating margin | 23.74% | 29.01% | 25.53% | 26.62% | 30.64% | 31.24% | 29.69% | 28.61% | 32.01% |
Financial Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
Latest 10-K MD&A
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations contains forward-looking statements, which are subject to risks, uncertainties, and changes in condition, significance, value, and effect. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including but not limited to those discussed in “Risk Factors” and elsewhere in this 2025 Form 10-K and other documents we file from time to time with the Securities and Exchange Commission. (See “Cautionary Statement Regarding Forward-Looking Statements” in Part I of this 2025 Form 10-K.)
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides a description of our results of operations and should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this 2025 Form 10-K. MD&A consists of the following sections:
Executive Summary provides a summary of the key highlights of our results of operations and our management’s assessment of material trends and uncertainties relevant to our business.
Results of Operations provides an analysis of operating results.
Critical Accounting Policies and Estimates discusses accounting policies that reflect the more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
Liquidity and Capital Resources provides an analysis of cash flows, contractual obligations, and financial position.
Executive Summary
Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. We have built a strong global presence with core competencies in areas like nanoscale manufacturing enablement, chemistry, plasma and fluidics, advanced systems engineering and a broad range of operational disciplines. Our products and services are designed to help our customers build smaller and better performing devices that are used in a variety of electronic products, including mobile phones, personal computers, cloud and enterprise servers, wearables, automotive vehicles, and data storage devices.
Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as NVM, DRAM, and logic devices. Their continued success is part of our commitment to driving semiconductor breakthroughs that define the next generation. Our core technical competency is integrating hardware, process, materials, software, and process control, enabling results on the wafer.
Semiconductor manufacturing, our customers’ business, involves the fabrication of multiple dies or integrated circuits on a wafer. This involves the repetition of a set of core processes and can require hundreds of individual steps. Fabricating these devices requires a sequence of highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.
Demand from cloud computing, artificial intelligence, 5G, the Internet of Things, and other markets is driving the need for increasingly powerful and cost-efficient semiconductors. At the same time, there are growing technical challenges with traditional two-dimensional scaling. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical scaling strategies like three-dimensional architecture as well as multiple patterning to enable shrinks.
We believe we are in a strong position with our leadership and expertise in deposition, etch, and clean markets to facilitate some of the most significant innovations in semiconductor device manufacturing. Our Customer Support Business Group provides products and services to maximize installed equipment performance, predictability, and operational efficiency. Several factors create opportunities for sustainable differentiation for us: (i) our focus on research and development, with several on-going programs relating to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with semi-ecosystem partners, including our close-to-customer focus; (iv) our ability to identify and invest in the breadth of our product portfolio to meet technology inflections; and (v) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.
Wafer fabrication equipment spending levels were strong in the 2025 fiscal year driven by an increase in both the memory and non-memory market segments. In the short term, volatility in the semiconductor industry environment from trade restrictions, tariffs, as well as other direct and indirect risks and uncertainties, have had, and in the future may have, a negative impact on our revenue and operating margin. Over the longer term, we believe that secular demand for semiconductors, combined with technology inflections in our industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, will drive sustainable growth and lead to an increase in the served available market for our products and services in the deposition, etch, and clean businesses.
Lam Research Corporation 2025 10-K 29
Table of Contents
On October 2, 2024, the Company effected a ten-for-one stock split of its common stock and a proportional increase in the number of authorized shares. All references made to share or per share amounts throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations have been retroactively adjusted to reflect the stock split.
The following table summarizes certain key financial information for the periods indicated below:
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except per share data, percentages and basis points)
Revenue
$
18,435,591
$
14,905,386
$
17,428,516
$
3,530,205
23.7
%
$
(2,523,130)
(14.5)
%
Gross margin
$
8,979,059
$
7,052,791
$
7,776,925
$
1,926,268
27.3
%
$
(724,134)
(9.3)
%
Gross margin as a percent of total revenue
48.7
%
47.3
%
44.6
%
+ 140 bps
+ 270 bps
Total operating expenses
$
3,078,091
$
2,788,878
$
2,602,065
$
289,213
10.4
%
$
186,813
7.2
%
Net income
$
5,358,217
$
3,827,772
$
4,510,931
$
1,530,445
40.0
%
$
(683,159)
(15.1)
%
Net income per diluted share
$
4.15
$
2.90
$
3.32
$
1.25
43.1
%
$
(0.42)
(12.7)
%
Fiscal year 2025 revenue increased 23.7% compared to fiscal year 2024, driven by strong customer demand for semiconductor equipment systems as well as customer support-related revenues from customer investments across memory and non-memory markets. Gross margin as a percentage of revenue increased in fiscal year 2025 compared to fiscal year 2024 largely due to improved factory efficiencies and favorable product mix, partially offset by increased transformational charges. The increase in operating expenses in fiscal year 2025 compared to fiscal year 2024 was driven by higher employee-related costs primarily as a result of increased headcount, increased spending on transformational activities, and higher outside service expense.
Fiscal year 2024 revenue decreased 14.5% compared to fiscal year 2023. Systems and customer-support related revenues declined in fiscal year 2024 primarily from weakness in the non-volatile memory market, partially offset by strength in DRAM as well as increased revenue generation from our China regional customers. Gross margin as a percentage of revenue increased in fiscal year 2024 compared to fiscal year 2023 largely due to a more favorable customer mix, lower spending on material costs, and higher field resource utilization, partially offset by lower factory efficiencies. The increase in operating expenses in fiscal year 2024 compared to fiscal year 2023 was driven by higher employee-related costs primarily as a result of increased research and development-related headcount, increased spending on transformational activities, higher deferred compensation plan-related costs, and increased spending on supplies.
We aim to balance the requirements of our customers with the availability of resources, as well as performance to our operational and financial objectives. As a result, from time to time, we exercise discretion and judgment as to the timing and prioritization of manufacturing and deliveries of products, which has impacted, including in the current fiscal year, and may in the future impact, the timing of revenue recognition with respect to such products.
Our cash and cash equivalents and restricted cash balances totaled approximately $6.4 billion as of June 29, 2025, compared to $5.9 billion as of June 30, 2024. Cash flows provided from operating activities were $6.2 billion for fiscal year 2025 compared to $4.7 billion for fiscal year 2024. Cash flows provided from operating activities in fiscal year 2025 were primarily used for $3.4 billion in treasury stock purchases, including net share settlement of employee stock-based compensation; $1.1 billion in dividends paid to our stockholders; $759 million of capital expenditures; and $507 million of principal payment on debt instruments and debt issuance costs.
Results of Operations
Revenue
Year Ended
June 29,
2025
June 30,
2024
June 25,
2023
Revenue (in millions)
$
18,436
$
14,905
$
17,429
China
34
%
42
%
26
%
Korea
22
%
19
%
20
%
Taiwan
19
%
11
%
20
%
Japan
10
%
10
%
10
%
United States
7
%
7
%
9
%
Southeast Asia
5
%
6
%
8
%
Europe
3
%
5
%
7
%
Lam Research Corporation 2025 10-K 30
Table of Contents
Revenue increased in fiscal year 2025 compared to fiscal year 2024 due to increased equipment spending by our customers across Memory and Foundry market segments as well as increased customer support-related revenue for upgrades, spares, and services. Revenue decreased in fiscal year 2024 compared to fiscal year 2023 mainly due to decreases in non-volatile memory spending, partially offset by increases in DRAM spending by our customers.
The deferred revenue balance increased to $2.7 billion as of June 29, 2025 compared to $1.6 billion as of June 30, 2024 primarily due to an increase in advance deposits from newer customers.
The following table presents our revenue disaggregated between system and customer support-related revenue:
Year Ended
June 29,
2025
June 30,
2024
June 25,
2023
(in thousands)
Systems Revenue
$
11,491,280
$
8,921,643
$
10,695,897
Customer support-related revenue and other
6,944,311
5,983,743
6,732,619
$
18,435,591
$
14,905,386
$
17,428,516
Please refer to Note 4: Revenue of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K for additional information regarding the composition of the two categories into which revenue has been disaggregated.
The percentage of leading- and non-leading-edge equipment and upgrade revenue from each of the markets we serve was as follows:
Year Ended
June 29,
2025
June 30,
2024
June 25,
2023
Foundry
45
%
40
%
38
%
Memory
42
%
42
%
42
%
Logic/integrated device manufacturing
13
%
18
%
20
%
Gross Margin
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except percentages and basis points)
Gross margin
$
8,979,059
$
7,052,791
$
7,776,925
$
1,926,268
27.3
%
$
(724,134)
(9.3)
%
Percent of revenue
48.7
%
47.3
%
44.6
%
+ 140 bps
+ 270 bps
The increase in gross margin as a percentage of revenue for fiscal year 2025 compared to fiscal year 2024 was largely due to improved factory efficiencies and favorable product mix, partially offset by increased transformational charges.
The increase in gross margin as a percentage of revenue for fiscal year 2024 compared to fiscal year 2023 was due to a more favorable customer mix, reduced spending on material costs, and higher field resource utilization, partially offset by lower factory efficiencies.
Research and Development
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except percentages and basis points)
Research & development
$
2,096,387
$
1,902,444
$
1,727,162
$
193,943
10.2
%
$
175,282
10.1
%
Percent of revenue
11.4
%
12.8
%
9.9
%
- 140 bps
+ 290 bps
We continued to make significant R&D investments focused on leading-edge deposition, etch, clean, and other semiconductor manufacturing processes. The increase in R&D expense during fiscal year 2025 compared to fiscal year 2024 was primarily driven by an increase of $118 million in employee-related costs mainly as a result of increased headcount and $35 million in higher outside service expense, inclusive of transformational and lab-related activities.
Lam Research Corporation 2025 10-K 31
Table of Contents
The increase in R&D expense during fiscal year 2024 compared to fiscal year 2023 was primarily driven by an increase of $58 million in employee-related costs primarily as a result of increased headcount, $33 million in spending for supplies, $18 million in deferred compensation plan-related costs, and $13 million in spending for transformational activities.
Selling, General, and Administrative
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except percentages and basis points)
Selling, general, and administrative ("SG&A")
$
981,704
$
868,247
$
832,753
$
113,457
13.1
%
$
35,494
4.3
%
Percent of revenue
5.3
%
5.8
%
4.8
%
- 50 bps
+ 100 bps
The increase in SG&A expense during fiscal year 2025 compared to fiscal year 2024 was primarily driven by an increase of $112 million in employee-related costs as a result of increased headcount.
The increase in SG&A expense during fiscal year 2024 compared to fiscal year 2023 was primarily driven by an increase of $30 million in transformational activity spend.
Restructuring Charges, Net
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except percentages and basis points)
Restructuring charges, net
$
—
$
61,562
$
120,316
$
(61,562)
(100.0)
%
$
(58,754)
(48.8)
%
Percent of revenue
—
%
0.4
%
0.7
%
- 40 bps
- 30 bps
In fiscal year 2023, we initiated a restructuring plan, that continued into fiscal year 2024, designed to better align our cost structure with our outlook for the economic environment and business opportunities. Under the plan, we terminated approximately 1,760 employees, incurring expenses related to employee severance and separation costs. Employee severance and separation costs are primarily related to severance, non-cash severance, including equity award compensation expense, pension and other termination benefits. Additionally, we made a strategic decision to relocate certain manufacturing activities to pre-existing facilities. The restructuring plan was substantially complete as of June 30, 2024.
Restructuring charges decreased during fiscal year 2024 compared to fiscal year 2023 primarily due to lower employee severance and separation costs. Please refer to Note 20: Restructuring charges, Net of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K for additional information.
Other Income (Expense), Net
Other income (expense), net, consisted of the following:
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except percentages)
Interest income
$
231,331
$
251,938
$
138,984
$
(20,607)
(8.2)
%
$
112,954
81.3
%
Interest expense
(178,203)
(185,236)
(186,462)
$
7,033
(3.8)
%
$
1,226
(0.7)
%
Gains on deferred compensation plan related assets, net
39,121
58,767
20,186
$
(19,646)
(33.4)
%
$
38,581
191.1
%
Foreign exchange losses, net
(26,412)
(4,837)
(7,078)
$
(21,575)
446.0
%
$
2,241
(31.7)
%
Other, net
(8,676)
(24,323)
(31,280)
$
15,647
(64.3)
%
$
6,957
(22.2)
%
$
57,161
$
96,309
$
(65,650)
$
(39,148)
(40.6)
%
$
161,959
(246.7)
%
Interest income decreased in fiscal year 2025 compared to fiscal year 2024 primarily due to lower interest rates, partially offset by higher cash balances. Interest income increased in fiscal year 2024 compared to fiscal year 2023 primarily because of higher yields and higher cash balances.
Interest expense decreased in fiscal year 2025 compared to fiscal year 2024 primarily due to the maturity of $500 million of the Company’s senior notes in March 2025. Interest expense was flat in fiscal year 2024 compared to fiscal year 2023.
Lam Research Corporation 2025 10-K 32
Table of Contents
The gains on deferred compensation plan related assets, net were driven by fluctuations in the fair market value of the underlying funds for all periods presented.
Foreign exchange fluctuations were primarily due to currency movements against portions of our unhedged balance sheet exposures for all periods presented.
The variation in other, net for the fiscal year 2025 compared to fiscal years 2024 and 2023 was primarily driven by fluctuations in the fair market value of equity investments.
Income Tax Expense
Our provision for income taxes and effective tax rate for the periods indicated were as follows:
Year Ended
Change
June 29,
2025
June 30,
2024
June 25,
2023
FY25 vs. FY24
FY24 vs. FY23
(in thousands, except percentages and basis points)
Income tax expense
$
599,912
$
532,450
$
598,279
$
67,462
12.7
%
$
(65,829)
(11.0)
%
Effective tax rate
10.1
%
12.2
%
11.7
%
- 210 bps
+ 50 bps
The decrease in the effective tax rate in fiscal year 2025 as compared to fiscal year 2024 was primarily due to the recognition of previously unrecognized tax benefits from lapses of statutes of limitation in fiscal year 2025 and the change in level and proportion of income in higher and lower tax jurisdictions.
The increase in the effective tax rate in fiscal year 2024 compared to fiscal year 2023 was primarily due to the change in level and proportion of income in higher and lower tax jurisdictions.
International revenues account for a significant portion of our total revenues, such that a material portion of our pre-tax income is earned and taxed outside the United States. International pre-tax income is taxable in the United States at a lower effective tax rate than the federal statutory tax rate. Please refer to Note 7: Income Taxes of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law by U.S. President Donald Trump. The impact on income taxes due to change in legislation is required, under Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted, which is during our fiscal year 2026. In general, the OBBBA introduces changes to U.S. taxation, including changes in the taxation of non-U.S. income. We are currently assessing the potential implications of these changes to our fiscal year 2026 Consolidated Financial Statements.
Deferred Income Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Our gross deferred tax assets were $1,897 million and $1,516 million at the end of fiscal years 2025 and 2024, respectively. These gross deferred tax assets were offset by gross deferred tax liabilities of $197 million and $218 million and a valuation allowance primarily representing our entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in California of $424 million and $389 million at the end of fiscal years 2025 and 2024, respectively. The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2025 and 2024 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries.
We evaluate if the deferred tax assets are realizable on a quarterly basis and will continue to assess the need for changes in valuation allowances, if any.
Uncertain Tax Positions
We re-evaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Any change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.
Lam Research Corporation 2025 10-K 33
Table of Contents
Critical Accounting Policies and Estimates
A critical accounting policy is defined as one that has both a material impact on our financial condition and results of operations and requires us to make difficult, complex and/or subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make certain judgments, estimates and assumptions that could affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on historical experience and on various other assumptions we believe to be applicable and evaluate them on an ongoing basis to ensure they remain reasonable under current conditions. Actual results could differ significantly from those estimates, which could have a material impact on our business, results of operations, and financial condition. Our critical accounting estimates include:
•the recognition and valuation of revenue;
•the valuation of inventory, which impacts gross margin; and
•the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, which impact our provision for income tax expenses.
We believe that the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements regarding the critical accounting estimates indicated above. See Note 2: Summary of Significant Accounting Policies of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K for additional information regarding our accounting policies.
Revenue Recognition: We generally consider documentation of terms with an approved purchase order as a customer contract, provided that collection is considered probable, which is assessed based on the creditworthiness of the customer as determined by credit checks, payment histories, and/or other circumstances. The transaction price for our contracts with customers is allocated among the identified performance obligations and consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved. Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage which are based on contractual terms outlined in volume purchase agreements and other factors known at the time. We generally invoice customers at shipment and for professional services as provided. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less. Revenue is recognized in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.
Inventory Valuation: Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual cost on a first-in, first-out basis. Inventory in excess of management’s estimated usage requirement and obsolete inventory is written down to its estimated net realizable value if less than cost. Estimates of net realizable value include but are not limited to customer demand, management’s forecasts related to our future manufacturing schedules, technological and/or market obsolescence, general semiconductor market conditions, and possible alternative uses.
Income Taxes: Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. The assessment of valuation allowances against our deferred tax assets includes estimation and judgement with respect to future operating results and market conditions. We have an accounting policy election to record deferred taxes related to Global Intangible Low-Taxed Income (“GILTI”).
We recognize the benefit from a tax position only if it is more likely than not that the position will be sustained upon audit based solely on the technical merits of the tax position. We have a policy to include interest and penalties related to uncertain tax positions as a component of income tax expense.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note 3: Recent Accounting Pronouncements of our Consolidated Financial Statements, included in Part II, Item 8 of this 2025 Form 10-K.
Liquidity and Capital Resources
Total gross cash, cash equivalents, and restricted cash balances were $6.4 billion at the end of fiscal year 2025 compared to $5.9 billion at the end of fiscal year 2024. This increase was primarily due to cash provided by operating activities, partially offset by Common Stock repurchases in connection with our stock repurchase program, dividends paid, capital expenditures, and principal payments on debt instruments.
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Cash Flows from Operating Activities
Net cash provided by operating activities of $6.2 billion during fiscal year 2025 consisted of (in thousands):
Net income
$
5,358,217
Non-cash charges:
Depreciation and amortization
386,277
Deferred income taxes
(363,247)
Equity-based compensation expense
343,371
Changes in operating asset and liability accounts
441,801
Other
6,845
$
6,173,264
Significant changes in operating asset and liability accounts, net of foreign exchange impact, included the following sources of cash: increases in deferred gross profit of $1.1 billion, accrued expenses and other liabilities of $328 million, and accounts payable of $212 million. These sources of cash are offset by the following uses of cash: increases in accounts receivable of $859 million, prepaid expenses and other current assets of $207 million, and inventory of $181 million.
Cash Flows from Investing Activities
Net cash used for investing activities during fiscal year 2025 was $708 million, primarily consisting of $759 million in capital expenditures.
Cash Flows from Financing Activities
Net cash used for financing activities during fiscal year 2025 was $4,937 million, primarily consisting of $3,422 million in Common Stock repurchases, including net share settlement on employee stock-based compensation; $1,150 million of dividends paid; and $507 million of principal payments on debt instrument and debt issuance costs, partially offset by $143 million of stock issuance and treasury stock reissuances associated with our employee stock-based compensation plans.
Liquidity
Given that the semiconductor industry is highly competitive and has historically experienced rapid changes in demand, we believe that maintaining sufficient liquidity reserves is important to support sustaining levels of investment in R&D and capital infrastructure. Anticipated cash flows from operations based on our current business outlook, combined with our current levels of cash and cash equivalents as of June 29, 2025, are expected to be sufficient to support our anticipated levels of operations, investments, debt service requirements, capital expenditures, capital redistributions, and dividends through at least the next twelve months. However, factors outside of our control, including uncertainty in the global economy and the semiconductor industry, as well as disruptions in credit markets, have in the past, are currently, and could in the future, impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers, and creditors.
In March 2025, $500 million principal value of our 2025 Notes were settled upon maturity using available cash on hand.
In January 2025, we entered into a Third Amended and Restated Credit Agreement. The amendment increased the unsecured revolving credit facility commitment from $1.5 billion to $2.0 billion and extended the maturity of the facility from June 2026 to January 2030. The facility provides for an expansion option that will allow us, subject to certain requirements, to request an increase in the facility of up to an additional $750 million, for a potential total commitment of $2.75 billion. Please refer to Note 14, “Long-term Debt and Other Borrowings" to our Consolidated Financial Statements, included in Part II, Item 8 of this 2025 Form 10-K for additional information.
In the longer term, liquidity will depend to a great extent on our future revenues and our ability to appropriately manage our costs based on demand for our products and services. While we have substantial cash balances, we may require additional funding and need or choose to raise the required funds through borrowings or public or private sales of debt or equity securities. We believe that, if necessary, we will be able to access the capital markets on terms and in amounts adequate to meet our objectives. However, domestic and global macroeconomic and political conditions could cause disruptions to the capital markets and otherwise make any financing more challenging, and there can be no assurance that we will be able to obtain such financing on commercially reasonable terms or at all.
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Off-Balance Sheet Arrangements and Contractual Obligations
We have certain obligations to make future payments under various contracts, some of which are recorded on our balance sheet and some of which are not. Certain obligations that are recorded on our balance sheet in accordance with GAAP include our long-term debt, operating leases and finance leases; refer to Notes 14 and 15 of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K for further discussion. Our off-balance sheet arrangements and our transition tax liability are presented as purchase obligations, refer to Note 17 of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K for further discussion. In addition, in the ordinary course of business, we issue purchase orders based on estimates of our production needs, many times well in advance of delivery dates. The commitments under these open purchase orders are not included in the off-balance sheet commitments disclosed in the Notes to the Consolidated Financial Statements, as we generally have the option to cancel the purchase orders at our convenience, reschedule, and/or adjust quantities based on our business needs. As of June 29, 2025, we expect to fulfill approximately $387 million within one year related to these arrangements.