Applied Materials, Inc. (NASDAQ:AMAT) stock fell 4.01% (As on May 20, 11:05:12 AM UTC-4, Source: Google Finance) after the company misses the market’s expectations for the second quarter of FY 22. On a non-GAAP adjusted basis, the company reported gross margin of 47.0 percent and operating income of $1.91 billion or 30.6 percent of net sales. All are down due to higher input costs. The company generated $415 million in cash from operations and returned $2.01 billion to shareholders including $1.80 billion in share repurchases and $211 million in dividends. The company continues to face supply issues that includes shortage of silicon components as well as certain other parts. Therefore, AMAT forecast third-quarter revenue and profit below estimates, signaling that supply bottlenecks, exacerbated by the COVID-19 lockdowns in China, would hamper its ability to meet demand for its chipmaking tools. Further, there has been weakness in consumer demand for products like smartphones, PCs and TVs. Sales in its display and adjacent markets segment rose 1.6% to $385 million in the quarter ended May 1.
AMAT in the second quarter of FY 22 has reported the adjusted earnings per share of $1.85, beating the analysts’ estimates for the adjusted earnings per share of $1.89, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 12 percent to $6.25 billion in the second quarter of FY 22, beating the analysts’ estimates for revenue of $6.35 billion. Semi systems revenue grew 12% but faced covid related supplier shutdowns. Semi Systems non-GAAP operating margin declined 200 basis points year on year due to increases in manufacturing costs and R&D program spending. In the second quarter, the company’s installed base grew by 8% year on year and is over 40,000 systems. He systems under subscription agreement grew by 11% year over year to over 15,000. The average tenure of the agreements grew from 2.3 years last quarter to 2.5 years in Q2 and the subscription renewal rate was 92%.
For the third quarter ending in August, Applied Materials expects its per-share earnings to range from $1.59 to $1.95. Analysts surveyed by Zacks had forecast adjusted earnings per share of $2.04. The company expects revenue to be in the range of $5.85 billion to $6.65 billion for the fiscal third quarter. Analysts surveyed by Zacks had expected revenue of $6.68 billion