ASML reported record third-quarter net sales of €11.7 billion on Wednesday, "towards the high end of our guidance," chief executive Christophe Fouquet said in the company's results release. Gross margin was 57.5 per cent, up from 54.0 per cent in the second quarter, which Fouquet attributed to installed base sales of €3.3 billion, above guidance, from demand for productivity upgrades. Net income was €4.96 billion, against €2.92 billion in the second quarter.
That net income figure needs one adjustment. ASML's financial statements show a €510 million gain on equity investments in the quarter, against none in any of the previous four. On the call, according to a transcript published by Motley Fool, chief financial officer Roger Dassen said about €500 million came from a higher valuation of ASML's stake in Mistral AI. Take the gain out and net income is about €4.45 billion before any tax effect, by this publication's arithmetic. Income from operations, which excludes it, was €5.17 billion, a 44.4 per cent margin.
What the guidance says
ASML guided fourth-quarter net sales to €14.2 billion to €15.2 billion, with a gross margin of around 57 per cent. Against €11.66 billion in the third quarter, that is growth of roughly 22 to 30 per cent in one quarter, by our arithmetic. For 2026 it now expects €44 billion to €45 billion with a gross margin around 56 per cent. In July the range was €43 billion to €45 billion, so the bottom has moved up and the top has not. Against 2025 net sales of €32.7 billion, the range implies growth of 35 to 38 per cent; Dassen put it at around 36 per cent on the call.
Dassen said the fourth-quarter gross margin would be "a little bit lower" than the third, primarily because of ramp costs, and that ASML would not give a 2027 margin figure until January, according to the transcript.
China, and the number nobody publishes
Our preview noted that China was 16 per cent of first-half sales against management's full-year view of about 20 per cent, which implied a higher share in the second half. The filed release and financial statements give no regional breakdown. On the call, per the transcript, Dassen said he expects "the China region to account for around 20% of our total net sales this year," and that demand there "remains very strong." That is management's spoken view, not a filed number, and the third-quarter China share itself was not in the text we could read.
ASML no longer publishes bookings, so the order book has to be read indirectly. Two signals came out on Wednesday. The first is in the release. Fouquet said that "our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers," and that "some customers are expressing an interest in placing orders with us for 2029 and even 2030." Per the transcript, Dassen said ASML has not yet accepted those orders while it builds a picture of demand.
The second is the balance sheet, and it is ASML's own number. Non-current contract liabilities rose to €9.3 billion at the end of the quarter from €3.6 billion three months earlier, an increase of about €5.7 billion. Dassen confirmed on the call that the line includes customer down payments and called it "a bit of a lagging indicator" of order intake. Cash followed. The cash flow statement shows €11.8 billion from operations in the quarter, against €1.7 billion in the second; Dassen put free cash flow at €11.4 billion, "underpinning the strong order momentum of our customers."
The mix underneath
ASML sold 113 new lithography systems in the quarter, against 86 in the second, and eight used ones. Net system sales were €8.4 billion and installed base sales €3.3 billion, according to the results presentation. The presentation does not give an EUV split in text; on the call, per the transcript, Dassen said EUV system sales were €4.1 billion, including one High-NA system, and non-EUV systems €4.3 billion.
Memory is the faster-growing customer group on management's account. Dassen said ASML expects memory system sales to grow around 75 per cent in 2026 and logic around 10 per cent, according to the transcript. He also said ASML had raised prices on what it calls the most critical products for its customers, with no effect on 2026, and that it would not look to repeat that "every year or so."
Capacity and returns
In July ASML said it planned to raise low-NA EUV and DUV immersion capacity by 30 per cent in 2027 and was investigating a further 30 per cent for 2028. The release says it is now investigating ways to go beyond that for 2028. ASML bought back about €4.1 billion of shares in the quarter and will pay an interim dividend of €1.88 a share on 4 November.
Several things remain unsaid. No bookings figure, no 2027 revenue range and no export-control commentary appeared in the release or in the transcript we read. ASML has said the 2027 margin view comes in January, and its Capital Markets Day on 10 June 2027 is where it plans to update its longer-term views. If the order book is as full as the down payments suggest, January is where it should start to show.
Net sales, gross margin, net income, installed base sales, systems sold, guidance, the capacity statement, the buyback, the interim dividend and the Christophe Fouquet quotations are from ASML's third-quarter 2026 results release of 14 October 2026, furnished to the SEC on Form 6-K. Net system sales of €8.4 billion are from the results presentation in the same filing. The equity-investment gain, contract liabilities, cash flows and the 2025 comparison are from ASML's US GAAP financial statements in that filing. The EUV and non-EUV split, the attribution of the gain to Mistral AI, the China share, the memory and logic outlook, pricing comments, free cash flow as stated and all remarks by chief financial officer Roger Dassen come from a transcript of the earnings call published by Motley Fool; they do not appear in the text of ASML's filed release and have not been checked against ASML's audio. The July guidance is from ASML's second-quarter release, as cited in Cranberry's preview. Growth rates and net income excluding the gain are this publication's arithmetic. The analysis is our own.
Topics marketsASMLsemiconductorsEUVChinaearningsAI
