0000723125-25-000021
SEC filingRevenue surged 37% YoY to $9.3B, driven by DRAM ASP and bit growth, with gross margin expanding 1100 bps to 38%.
Micron's third quarter of fiscal 2025 demonstrated robust financial performance, with total revenue reaching $9.301 billion, a 15% sequential increase from $8.053 billion in Q2 2025 and a 37% year-over-year surge from $6.811 billion in Q3 2024. The revenue growth was broad-based, driven by improvements across end markets, particularly strong sequential growth in consumer-oriented and data center markets, especially for HBM products. DRAM revenue increased 15% sequentially, fueled by over 20% bit shipment growth, partially offset by a low-single-digit ASP decline due to a higher consumer-oriented mix. NAND revenue rose 16% sequentially, driven by mid-20% bit shipment growth, partially offset by a high-single-digit ASP decline. Year-over-year, DRAM sales jumped 51% on mid-20% ASP growth and low-20% bit shipment increases, while NAND sales grew 4% on low-30% bit shipment growth, offset by low-20% ASP declines.
Gross margin expanded significantly, reaching 38% in Q3 2025, up from 37% in Q2 2025 and 27% in Q3 2024. The sequential improvement was driven by better DRAM margins from an increased mix of HBM and manufacturing cost reductions, partially offset by NAND margin declines from lower ASPs. Year-over-year, the 1100 bps expansion was primarily due to higher DRAM ASPs, manufacturing cost reductions, and an increased mix of high-margin cloud products, particularly HBM. Operating income rose to $2.169 billion (23% margin) from $719 million (11% margin) in the prior year, reflecting strong operational leverage. Net income improved to $1.885 billion from $332 million in Q3 2024, with diluted EPS benefiting from tax incentives.
Segment performance highlighted the strength of the Compute and Networking Business Unit (CNBU), which generated $5.069 billion in revenue, up 97% year-over-year, driven by higher ASPs and bit shipments in cloud server markets, including HBM. CNBU operating income surged to $2.182 billion, representing a 43% margin. The Storage Business Unit (SBU) saw a 7% revenue increase to $1.451 billion, but reported an operating loss of $9 million due to NAND ASP declines. The Mobile Business Unit (MBU) revenue declined 2% to $1.551 billion, with operating income of $217 million, as lower ASPs offset higher bit shipments. The Embedded Business Unit (EBU) revenue fell 5% to $1.227 billion, with operating income of $98 million, also impacted by ASP declines. The mix shift toward data center and HBM products is a key driver of margin expansion.
Management highlighted a strategic reorganization of business units to a market-segment-focused structure, effective in Q4 2025, with recast segment reporting expected in the 2025 Annual Report. Capital expenditures for 2025 are estimated at approximately $14 billion, net of government incentives, to support growth in DRAM, HBM, and NAND capacity. The company is investing heavily in U.S. manufacturing under the CHIPS Act, with up to $6.4 billion in grants for fabs in Idaho, New York, and Virginia. Management expects cash, investments, operating cash flows, and available financing to be sufficient for at least the next 12 months. The effective tax rate for 2026 is expected to be in the high-teens percentage range due to Pillar Two implementation in Singapore.
As of May 29, 2025, Micron held $10.2B in cash and equivalents, along with $2.1B in marketable securities, for total liquidity of $12.3B. Total debt stood at $15.5B, resulting in net debt of $3.2B. Shareholders' equity increased to $50.7B from $45.1B in August 2024, driven by retained earnings. Inventory declined slightly to $8.7B, with a notable shift: work in process decreased, while finished goods fell to $1.2B. Customer prepayments and contract liabilities plummeted to $146M from $907M, reflecting the drawdown of prepayments as product was shipped ($777M recognized in revenue).
No explicit non-cancelable purchase commitments were disclosed in the Notes. However, the company has significant lease obligations: $3.1B in finance lease liabilities and $672M in operating leases. Additionally, $1.02B of future lease obligations (primarily gas supply arrangements and equipment leases) have been executed but not yet commenced. The CHIPS Act funding agreements provide up to $6.4B in grants but impose restrictions on share repurchases and dividends, and include potential upside sharing payments.
Micron did not repurchase any shares in the first nine months of fiscal 2025, with $2.81B remaining under the $10B authorization. Dividends were maintained at $0.115 per share quarterly, totaling $392M. Debt management was active: $4.4B issued (including new 2032 and 2035 notes and a term loan) and $3.3B repaid, for a net cash inflow of $1.1B. Capital expenditures surged to $10.2B, representing 39% of sales, primarily for facility construction and equipment.
Revenue by technology: DRAM $7,071M (76% of total), NAND $2,155M (23%), Other $75M (1%). Segment results for Q3 2025 show a pronounced shift toward data center: CNBU revenue more than doubled year-over-year to $5,069M, with operating margin of 43%. In contrast, mobile (MBU) and embedded (EBU) declined. The company announced a reorganization effective Q4 2025 into four new segments (Cloud Memory, Core Data Center, Mobile & Client, Automotive & Embedded). For the nine months, data center and networking accounted for 55% of revenue, up from 30% a year ago, while mobile's share fell to 15%.
CFO of $11.8B contrasts sharply with net income of $5.3B, reflecting high non-cash charges (depreciation & amortization of $6.2B and stock compensation of $0.7B). The operating cash flow conversion ratio is robust at 2.2x net income.
Capital expenditures of $10.2B consumed 86% of CFO, underscoring Micron’s heavy investment in DRAM and NAND technology transitions. The capex-to-CFO ratio increased from 103% in the prior period to 86%, indicating improved coverage despite higher spending.
Working capital changes were a net use of $0.8B (receivables +$0.1B, inventories +$0.1B, other current assets +$0.2B, payables +$0.0B, other current liabilities -$0.7B, other +$0.4B). The large swing in other current liabilities reflects timing of payments. Government incentives of $1.3B provided a boost to investing cash flows.
Dividends of $0.4B were modest relative to CFO (3.4% payout ratio). No share repurchases were reported in the cash flow statement. Financing activities turned positive due to net debt issuance of $0.8B.
Overall, strong operating cash generation, elevated capex, and conservative capital returns characterize the period.