Technology · Semiconductors
ASML Holding (ASML)
ASML is the chip-equipment maker: backlog and bookings lead revenue, with a large installed-base service business and concentrated customers. FY2025, in euros.
Selborne Research · · Company Profile
Educational analysis. This profile is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Snapshot
- FY2025 Revenue
- €32.7B
- Gross Margin
- 52.8% (FY2025)
- Operating Margin
- 34.6% (FY2025)
- Installed-Base Share
- 25.1% of sales (FY2025)
- System Backlog
- €38.8B (FY2025)
- Net Bookings
- €28.0B (FY2025)
- Inventory Days
- 271 (FY2025)
- Four Customers Share
- 61.2% of sales (FY2025)
Business Overview
ASML Holding is the equipment maker whose backlog shows the cycle before tool revenue does. FY2025 revenue was €32.7B. Gross margin was 52.8% (from 44.7% in FY2019) and operating margin 34.6%. R&D was 14.4% of revenue, capex 4.8% and stock-based compensation 0.6%. Free cash flow was €11.1B.
Service and upgrades on the installed base were €8.2B, or 25.1% of sales. System backlog was €38.8B, up from €35.9B; net bookings were €28.0B, up from €18.9B. (ASML also reports RPO of €46.5B; the system backlog is the company's own order-book measure used here.) Four customers were 61.2% of sales (€20.0B). Inventory days were 271; cash conversion cycle was 221 days.
How the Numbers Read
Bookings at €28.0B and backlog at €38.8B are the forward demand signal; tool revenue follows with a lead time. Installed-base services were 25.1% of sales. Capex at 4.8% of revenue is low beside a foundry or memory maker: ASML sells the tools rather than owning the fabs.
Four customers at 61.2% of sales concentrate both the order book and the downturn. Inventory was 271 days. Gross margin rose from 44.7% in FY2019 to 52.8%. The wafer-fab equipment cycle guide places backlog and services in that sequence.
How the Model Values This Kind of Company
An equipment maker is valued on the order book: customer chip-industry capex times the company's share of tool spend. Tools ship after a lead time, so backlog today is tomorrow's system revenue.
Capex intensity is low relative to chip makers; inventory days are high. Stock pay is charged, and terminal value uses mid-cycle free cash flow, not a bookings peak. A reverse DCF on a fictional company shows what mid-cycle margin a typed price implies.
What to Watch in the Financials
System backlog and net bookings. €38.8B and €28.0B in FY2025 (from €35.9B and €18.9B). Bookings lead shipments; a bookings drop shows before revenue.
Installed-base share of sales. 25.1%. A rising share cushions tool cyclicality; a falling share does the reverse.
Four-customer concentration. 61.2% of sales. Order timing at that group moves the book.
Inventory days. 271.
Key Risks
Customer concentration. Four customers at 61.2% of sales mean a pause in foundry or logic capex hits orders and backlog together.
Equipment cycle lag. Bookings can fall while revenue still rises on the old backlog, then reverse.
Long inventory cycle. 271 days of inventory ties up capital in tools that ship only when customers take them.
Reporting basis. Figures are in euros; system backlog and RPO (€46.5B) are different measures and should not be mixed without care.
A chip DCF carries the industry cycle through ten explicit years, then strikes the terminal value on what the business earns in a normal year, because the latest margin may sit at a peak or a trough.
- 17 sections, from the business models and the industry cycle to capital intensity, memory, inventory, equipment orders, stock pay and a reverse DCF
- 44 pages
- a chip designer, a foundry, a memory maker and an equipment maker, all fictional
- 4 worked valuations
- listed chip companies on filed margins, capital intensity, inventory days and stock pay, each with its fiscal year
- 6-company screen
The Excel model is the primer's through-cycle DCF live across 13 sheets: a chip designer, a foundry, a memory maker and an equipment maker, all fictional, plus a column for a company of your own in any of five business-model modes. Each mode turns the industry cycle into revenue its own way: units and selling prices, capacity times utilisation times revenue per wafer, bit demand against bit supply, orders and installed-base services, or wafer starts for a materials supplier. Depreciation sits in cost of goods for fab owners, capacity arrives two years after the capex that pays for it, and the terminal value is struck on mid-cycle cash flow. A reverse DCF reads the margin and the growth a price requires, and the sensitivity grids re-run the model in every cell.
See what's in the Semiconductors Sector Primer →£25 PDF · £59 with the Excel model · £159 for all three Technology industries
Learn the Concepts
Understand the valuation frameworks and metrics used in this analysis.
Days of Inventory by Chip Company
Ranked days of inventory for six chip filers from year-end balances, with DSO, DPO and fiscal year. Business model explains most of the spread.
The Wafer Fab Equipment Cycle
Equipment spend follows chipmaker capex, so it lags and leads the chip cycle. SEMI history and ASML backlog, bookings and service share.