• Total Revenue: $8.1 billion, down 8% sequentially, up 38% year-over-year.
• DRAM Revenue: $6.1 billion, up 47% year-over-year, 76% of total revenue.
• NAND Revenue: $1.9 billion, up 18% year-over-year, 23% of total revenue.
• Gross Margin: 37.9%, down 160 basis points sequentially.
• Operating Income: $2 billion, operating margin of 24.9%.
• Adjusted EBITDA: $4.1 billion, EBITDA margin of 50.7%.
• Non-GAAP EPS: $1.56, above guidance range.
• Operating Cash Flow: Over $3.9 billion.
• Capital Expenditures: $3.1 billion, net of government incentives.
• Free Cash Flow: $857 million.
• Ending Inventory: $9.0 billion or 158 days.
• Total Debt: $14.4 billion, with a weighted average maturity of 2032.
• Liquidity: $12.1 billion, including untapped credit facility.
• Fiscal Q3 Revenue Guidance: $8.80 billion, plus or minus $200 million.
• Fiscal Q3 Gross Margin Guidance: 36.5%, plus or minus 100 basis points.
• Fiscal Q3 EPS Guidance: $1.57 per share, plus or minus $0.10.

• Warning! GuruFocus has detected 3 Warning Sign with MU.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Micron Technology Inc (NASDAQ:MU) achieved record revenues in data center DRAM, with HBM revenue growing more than 50% sequentially to over $1 billion.
• The company remains the only one globally to ship low-power DRAM into the data center in high volume, showcasing its pioneering innovation.
• Micron's 1-beta DRAM technology leads the industry, and the launch of the 1-gamma node has shown significant improvements in power, performance, and bit-density.
• The company is making disciplined investments to capitalize on AI-driven growth opportunities, including expanding HBM capacity and constructing new facilities.
• Micron's HBM3E delivers a 30% power reduction compared to competitors, and the company has begun volume production of HBM3E 12 high, focusing on ramping capacity and yield.

Negative Points

• Fiscal Q2 revenue was down 8% sequentially, and the gross margin decreased due to pricing in consumer-oriented segments, especially in NAND.
• NAND revenue decreased 17% sequentially, with prices decreasing in the high-teens percentage range.
• The company faces challenges with NAND underutilization, which continues to weigh on gross margins.
• Operating expenses are projected to increase by over 10% in fiscal 2025 to support high-value products, impacting profitability.
• Micron's inventory days increased to 158 days, up from the prior quarter, indicating potential inefficiencies in inventory management.

Q & A Highlights

Q: Should we expect gross margin improvements starting in fiscal Q4 and potentially beyond? A: Mark Murphy, CFO, explained that while Q3 margins are down due to a higher mix of consumer-oriented volumes and lower pricing, conditions have improved. He anticipates gross margins to rise somewhat in Q4, driven by improved market conditions and growth in high-value products like HBM, despite ongoing NAND underutilization challenges.

Q: What is driving the increased industry bit demand outlook for DRAM in calendar 2025? A: Sanjay Mehrotra, CEO, noted that improved customer inventory levels, increased AI implementation in smartphones and PCs, and strong data center demand, particularly for HBM and high-density DIMMs, are contributing to the higher bit demand outlook.

Q: Can you provide details on the fiscal Q3 guidance, specifically the revenue growth from DRAM versus NAND? A: Mark Murphy stated that while both DRAM and NAND are expected to see bit growth, the revenue growth bias is towards DRAM due to HBM and data center exposure.

Q: How sustainable are the current industry pricing dynamics, and are recent memory price improvements driven by true demand? A: Sanjay Mehrotra highlighted that improved demand trends in smartphones and PCs, driven by AI adoption, along with tight leading-edge DRAM supply and supply actions in NAND, are creating a favorable demand/supply environment. This supports sustainable pricing improvements.

Q: How will the transition from HBM3E 8-high to 12-high impact gross margins? A: Sanjay Mehrotra explained that while HBM3E 12-high is more complex, it carries a premium over 8-high and is expected to be accretive to DRAM margins. The company is focused on ramping 12-high capacity and yield, with the majority of shipments shifting to 12-high in the second half of the calendar year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.