ASML Holding N.V. earnings

Management highlights

### Demand & Market Dynamics - Continued strong end-market demand for lithography systems, driven by AI growth across advanced logic and memory, has prompted customers to upward revise 2026 capital expenditure plans. - Strong demand is visible across both advanced logic and DRAM segments, with customers announcing aggressive long-term capacity expansion plans supported by long-term customer agreements that improve demand visibility. - In logic, customers are expanding 3nm capacity for AI accelerators, 4nm/5nm capacity for broader AI chip demand, ramping 2nm capacity for next-generation HPC and mobile applications, and planning 1.4nm node development, driving higher lithography intensity and advanced lithography demand. - In DRAM, ongoing supply shortages that have lifted DDR and HBM prices are driving major fab expansion, and rising lithography intensity as customers migrate to advanced nodes (with low NA EUV replacing multi-patterning immersion for cost efficiency) further boosts demand. ### Capacity Expansion Plans - 2027 low NA EUV capacity is planned for a 30% increase, and the company is investigating an additional 30% low NA EUV capacity increase for 2028; 30% 2027 immersion system capacity is planned, with a potential further 30% expansion for 2028 under investigation. - All planned and investigated capacity increases can be implemented within ASML's existing clean room footprint via process optimization, with new campus capacity not coming online until after 2028. - All capacity increases are being planned preemptively based on strong customer demand signals, and the company will continue to adjust capacity upward if demand requires it. ### Technology Roadmap Progress - High NA EUV platform maturity is progressing toward high-volume manufacturing requirements, and ASML recently announced Intel Foundry has selected ASML high NA EUV technology for its production roadmap, marking a key milestone for the platform. - Adoption of ASML's optical and metrology products is accelerating across key customers, driven by higher process control requirements at advanced nodes. ### Capital Return - ASML paid a 2025 final dividend of €2.70 per share, bringing total 2025 dividend to €7.50 per share. The 2026 first quarterly interim dividend of €1.88 per share will be paid August 5, 2026. - The company repurchased ~€1.1 billion of shares in Q2 2026 under the 2026-2028 share buyback program.

Guidance

• Q3 2026 guidance: Total net sales between 11 billion and 12 billion euros, install-based management sales of ~2.9 billion euros, gross margin between 55% and 57%, R&D expenses of ~1.2 billion euros, and FG&A expenses of ~0.4 billion euros. • Full-year 2026 guidance was upward revised from prior levels to total net sales between 43 billion and 45 billion euros, with gross margin between 54% and 56%. • 2026 expected effective annual tax rate is ~17%. • For 2027, low NA EUV orders are nearly fully booked, and the company expects positive mix and volume drivers that point toward improving gross margin versus 2026, though formal 2027 guidance has not been provided. • Longer-term strategy updates will be presented at the Capital Market Day scheduled for June 10, 2027.

Segment performance

In Q2 2026, ASML reported total net sales of 9.3 billion euros, with net system sales of 6.6 billion euros and install-based management sales of 2.8 billion euros (30.1% of total net sales). Within net system sales: - EUV systems: €3.8 billion (40.9% of total net sales), including one high NA system sale. The company expects full-year 2026 EUV net system sales growth of over 45% year-over-year, with ~65 low NA EUV system shipments planned. - Non-EUV systems: €2.8 billion (30.1% of total net sales), split between immersion DPV (130 full-year 2026 shipments planned, flat with 2025 output) and dry DPV (shipments up markedly year-over-year). Full-year 2026 non-EUV net system sales are expected to grow ~25% year-over-year. Install-based management sales are expected to grow over 30% full-year 2026, driven by service for the expanding EUV install base and customer demand for performance/productivity upgrades. China-related business is expected to make up ~20% of 2026 total net sales, aligned with overall business growth. Net system sales were split 51% to logic and 49% to memory in Q2 2026. Full-year 2026 guidance calls for advanced logic-related net system sales growth of over 25%, and memory-related net system sales growth of over 75%.

Risks & headwinds

• Forward-looking statements about demand, capacity and product development involve material inherent uncertainty and risks, as referenced in the company's SEC filings. • Platform maturity for high NA EUV is still progressing, and the technology is not yet ready for widespread high-volume manufacturing insertion, which could delay adoption. • Capacity expansion relies on alignment with third-party supply chain partners, particularly for key components from Zeiss, which could limit the pace of output increases if suppliers cannot meet timelines. • Demand for advanced capacity is still fluctuating for 2027 and 2028, so final capacity requirements remain uncertain, and mismatches between supply and customer demand could create operational or financial headwinds.

Analyst Q&A

• Q: Given TSMC's comment that high NA systems are too expensive, is there scope for low NA EUV pricing adjustments to align with customer value? Will any pricing changes occur soon? Do you need new clean room space for the 2028 30% capacity increase?

  A: ASML's value-based pricing strategy still holds: high NA single exposure will deliver lower cost per patterning than low NA multi-patterning once the platform reaches full maturity, so no pricing re-alignment between high NA and low NA is needed. The Intel high NA design-in confirms the platform is progressing well. For low NA, ongoing productivity improvements give ASML pricing flexibility in the current high-value market environment, with pricing impacts phasing in over time as new orders are booked, not immediately. All planned 2028 capacity increases can be achieved by optimizing existing clean room space, no new facilities are required for this incremental capacity.

• Q: Is the planned 30% 2027 low NA EUV capacity increase the maximum your supply chain can support, or could it rise further if demand holds? What does this mean for high NA capacity planning?

  A: The 30% increase reflects the current balance of expected demand and supply capacity. If demand continues to rise, ASML will look for ways to add further output, as it has done successfully over the past several quarters. The 30% unit increase translates to ~45% productivity growth because of the shift to higher-throughput E and S models, plus existing tool upgrades deliver additional installed base productivity gains. Capacity is optimized across all product lines, and ASML retains flexibility to adjust high NA output to match future customer adoption timelines.

• Q: Are you currently undershipping relative to demand, and do you wait for firm purchase orders before adding capacity? Will the D-model EUV be completely phased out this year, and will that improve 2027 gross margin?

  A: Demand for 2027 and 2028 is still evolving, so matching capacity to demand is an ongoing process, but current capacity is aligned with visible demand. ASML does not wait for full firm orders to plan capacity: it is already investigating the 2028 30% increase based on strong demand signals, and is preemptively preparing to meet expected demand. D-model EUV production will be essentially complete this year, with at most 1-2 units shipping in 2027. The 2027 EUV mix shifting entirely to higher-margin E and S models will create a positive mix effect that supports higher gross margin.

• Q: How much coverage do you already have for the 2028 110 low NA unit target, and what is the split of 2026 75% DRAM sales growth between HBM intensity gains and overall volume growth?

  A: ASML does not disclose specific coverage levels, but the 110 unit target is only being investigated because customer demand signals are strong enough to support that level of output, which is an indicator of very robust market dynamics. 2026 DRAM demand growth comes from a combination of higher overall volume for both DDR and HBM, plus rising lithography intensity as advanced DRAM nodes (like 1B and 1C) use more EUV and immersion layers. It is difficult to split the growth precisely, but both factors are strong contributors, and this dynamic is expected to continue for the next several years.

• Q: As customers move to greenfield fab expansion in 2027-2028 after this year's constrained upgrade-driven growth, will ASML grow faster than overall wafer fab equipment (WFE) spending?

  A: ASML does not comment on overall WFE growth. Lithography intensity is rising across both advanced logic and advanced DRAM, as single-expose EUV replaces older multi-patterning processes, so demand for ASML's systems increases per wafer processed. This underlying dynamic supports ongoing strong growth for ASML relative to broader WFE trends.