ASML, the Dutch manufacturer of lithography machines used by chipmakers, reported third-quarter revenue of €11.66 billion, slightly below the anticipated €11.72 billion. Despite this marginal miss, the company announced net profits that significantly beat forecasts, reaching €4.96 billion against an expected €4.1 billion. Following the announcement, ASML’s shares experienced an initial drop of approximately 4%.
ASML’s Mixed Q3 Results Performance
The third-quarter results from ASML, a company listed on Euronext Amsterdam and Nasdaq, presented a mixed picture primarily due to the revenue figure. While net sales came in just under market expectations, the firm’s profitability demonstrated considerable strength. The gross margin stood at 57.5%, exceeding the roughly 56.1% expected by analysts. This suggests that ASML is not only achieving high sales volumes but also maintaining robust unit economics.
A notable contribution to this strong profitability was the performance of Installed Base Management sales, which include service, upgrades, and options for machines already sold. These sales reached €3.3 billion, surpassing the company’s earlier assumptions. This growing segment of recurring revenue helps to reduce ASML’s reliance on the delivery cycle of new machines. The company also reported an acceleration in operational activity, selling 113 new lithography systems and 8 used systems in Q3, compared to 86 new and 5 used in the previous quarter.
Future Demand and Production Capacity
ASML’s report also provided an optimistic outlook for the future. The company improved its 2026 guidance for the third consecutive quarter, raising its full-year gross margin expectation to around 56% from its previous range of 54% to 56%. For the fourth quarter, ASML forecasts sales between €14.2 billion and €15.2 billion, with a projected gross margin of approximately 57%. Its EUV business is expected to grow by more than 45% this year, with the non-EUV segment expanding by around 20% year-over-year.
Looking further ahead, management indicated that some customers are expressing interest in equipment deliveries as far out as 2029 and 2030, offering an exceptionally long period of demand visibility for an industrial company. However, ASML acknowledged that its currently planned production capacity for 2027 and 2028 will not be sufficient to fully meet this projected customer demand, and the company is evaluating the possibility of further expansion. This shift in focus suggests that the main constraint on growth is not demand for ASML systems, but rather the company’s and its supply chain’s ability to scale production quickly enough.
FAQ
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What were ASML’s Q3 revenue figures?
ASML reported Q3 revenue of €11.66 billion, which was slightly below the anticipated €11.72 billion.
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How did ASML’s net profit compare to expectations?
Net profit for Q3 reached €4.96 billion, clearly beating the forecast of €4.1 billion.
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What is ASML’s outlook for Q4?
For Q4, ASML forecasts sales between €14.2 billion and €15.2 billion, with a gross margin of approximately 57%.
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What are ASML’s long-term demand projections?
Management indicated customer interest for equipment deliveries as far out as 2029 and 2030, showing strong long-term demand visibility.