Applied Materials : Q2 2026 Non GAAP Reconciliation

Published: 2026-05-14 16:12:25 ET AMAT

Published on 05/14/2026 at 04:12 pm EDT

‌Q2 FY2026 Earnings Call

GAAP to non-GAAP Reconciliations

May 14, 2026

(In millions, except percentages)

April 26,

2026

April 27,

2025

April 26,

2026

April 27,

2025

Non-GAAP Gross Profit

GAAP reported gross profit

$ 3,947 $ 3,485 $ 7,382 $ 6,981

Certain items associated with acquisitions1

6 6 13 13

Non-GAAP gross profit

$ 3,953 $ 3,491 $ 7,395 $ 6,994

Non-GAAP gross margin

50.0 % 49.2 % 49.6 % 49.0 %

Non-GAAP Operating Income

GAAP reported operating income

$ 2,523 $ 2,169 $ 4,354 $ 4,344

Certain items associated with acquisitions1

10 11 21 23

Acquisition integration and deal costs

3 - 3 3

Legal settlement2

- - 253 -

Restructuring charges3

- - 12 -

Non-GAAP operating income

$ 2,536 $ 2,180 $ 4,643 $ 4,370

Non-GAAP operating margin

32.1 % 30.7 % 31.1 % 30.6 %

Non-GAAP Net Income

GAAP reported net income

$ 2,806 $ 2,137 $ 4,832 $ 3,322

Certain items associated with acquisitions1

10 11 21 23

Acquisition integration and deal costs

3 - 3 3

Legal settlement2

- - 253 -

Restructuring charges3

- - 12 -

Realized loss (gain), dividends and impairments on strategic investments, net

15 (18) 29 (27)

Unrealized loss (gain) on strategic investments, net

(685) (80) (1,169) 26

Foreign exchange loss (gain) related to purchase of strategic investment

- 23 - 23

Loss (gain) on asset sale

- (44) - (44)

Income tax effect of share-based compensation4

7 4 (14) (6)

Income tax effects related to intra-entity intangible asset transfers5

32 32 63 706

Resolution of prior years' income tax filings and other tax items

9 (124) 49 (140)

Income tax effect of non-GAAP adjustments6

89 (1) 106 -

Non-GAAP net income

$ 2,286 $ 1,940 $ 4,185

$

3,886

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

Charge of $253 million for settlement with the U.S. Commerce Department Bureau of Industry and Security to resolve a previously disclosed export controls compliance matter.

The restructuring charges related to a workforce reduction plan announced in the fourth quarter of fiscal 2025.

GAAP basis tax benefit related to share-based compensation is recognized ratably over the fiscal year on a non-GAAP basis.

Amount for the six months ended April 27, 2025, included changes to the income tax provision of $62 million from amortization of intangibles and a $644 million remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore in the first quarter of fiscal 2025.

Adjustment to provision for income taxes related to non-GAAP adjustments reflected in income before income taxes.

(In millions, except per share amounts)

April 26,

2026

April 27,

2025

April 26,

2026

April 27,

2025

Non-GAAP Earnings Per Diluted Share

GAAP reported earnings per diluted share

$ 3.51

$ 2.63

$ 6.05

$ 4.08

Certain items associated with acquisitions

0.01

0.01

0.03

0.02

Legal settlement

-

-

0.32

-

Restructuring charges

-

-

0.01

-

Realized loss (gain), dividends and impairments on strategic investments, net

0.08

(0.02)

0.09

(0.03)

Unrealized loss (gain) on strategic investments, net

(0.80)

(0.10)

(1.38)

0.03

Foreign exchange loss (gain) related to purchase of strategic investment

-

0.03

-

0.03

Loss (gain) on asset sale

-

(0.05)

-

(0.05)

Income tax effect of share-based compensation

0.01

-

(0.02)

(0.01)

Income tax effects related to intra-entity intangible asset transfers1

0.04

0.04

0.08

0.87

Resolution of prior years' income tax filings and other tax items

0.01

(0.15)

0.06

(0.17)

Non-GAAP earnings per diluted share

$ 2.86

$ 2.39

$ 5.24

$ 4.77

Weighted average number of diluted shares

799

812

799

815

Amount for the six months ended April 27, 2025, included changes to the income tax provision of $0.08 per diluted share from amortization of intangibles and $0.79 per diluted share from a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore in the first quarter of fiscal 2025.

Three Months Ended Six Months Ended

April 26,

April 27,

April 26,

April 27,

(In millions, except percentages)

2026

2025

2026

2025

Semiconductor Systems Non-GAAP Gross Profit

GAAP reported gross profit

$ 3,264

$ 2,889

$ 6,058

$ 5,875

Certain items associated with acquisitions1

6

6

13

13

Non-GAAP gross profit $ 3,270 $ 2,895 $ 6,071 $ 5,888

Non-GAAP gross margin

54.8 %

53.6 %

54.7 %

53.5 %

Applied Global Services Non-GAAP Gross Profit

GAAP reported gross profit

$ 577

$ 476

$ 1,114

$ 913

Non-GAAP gross profit $ 577 $ 476 $ 1,114 $ 913

Non-GAAP gross margin

34.7 %

33.5 %

34.6 %

32.9 %

Semiconductor Systems Non-GAAP Operating Income

GAAP reported operating income

$ 2,092

$ 1,770

$ 3,519

$ 3,642

Certain items associated with acquisitions1

10

11

21

23

Acquisition integration costs

-

-

-

2

Legal settlement2

-

-

253

-

Non-GAAP operating income

$ 2,102 $ 1,781 $ 3,793

$

3,667

Non-GAAP operating margin

35.2 %

33.0 %

34.2 %

33.3 %

Applied Global Services Non-GAAP Operating Income

GAAP reported operating income

$ 487

$ 378

$ 925

$ 714

Acquisition integration and deal costs

-

-

-

1

Non-GAAP operating income

$ 487 $ 378 $ 925

$

715

Non-GAAP operating margin

29.2 %

26.6 %

28.7 %

25.8 %

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

Charge of $253 million for settlement with the U.S. Commerce Department Bureau of Industry and Security to resolve a previously disclosed export controls compliance matter.

The reconciliation of GAAP and non-GAAP segment results above does not include certain revenues, costs of products sold and operating expenses that are reported within corporate and other and included in consolidated operating income.

April 26,

April 27,

April 26,

April 27,

(In millions) 2026

2025

2026

2025

GAAP reported operating expenses

$ 1,424

$ 1,316

$ 3,028

$ 2,637

Certain items associated with acquisitions1

(4)

(5)

(8)

(10)

Acquisition integration and deal costs

(3)

-

(3)

(3)

Legal settlement2

-

-

(253)

-

Restructuring charges3

-

-

(12)

-

Non-GAAP operating expenses

$ 1,417

$ 1,311

$ 2,752

$ 2,624

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

Charge of $253 million for settlement with the U.S. Commerce Department Bureau of Industry and Security to resolve a previously disclosed export controls compliance matter.

The restructuring charges related to a workforce reduction plan announced in the fourth quarter of fiscal 2025.

(In millions)

GAAP provision for income taxes (a)

$ 419

$ 185

Income tax effect of share-based compensation

(7)

(4)

Income tax effect related to intra-entity intangible asset transfers

(32)

(32)

Resolution of prior years' income tax filings and other tax items

(9)

124

Income tax effect of non-GAAP adjustments

(89)

1

(In millions, except percentages)

April 26,

2026

April 27,

2025

GAAP income (loss) before income taxes (c)

$ 3,225

$ 2,322

Certain items associated with acquisitions

10

11

Acquisition integration and deal costs

3

-

Realized loss (gain), dividends and impairments on strategic investments, net

15

(18)

Unrealized loss (gain) on strategic investments, net

(685)

(80)

Foreign exchange loss (gain) related to purchase of strategic investment

-

23

Loss (gain) on asset sale

-

(44)

Non-GAAP income before income taxes (d)

$ 2,568

$ 2,214

GAAP effective income tax rate (a/c)

13.0 %

8.0 %

Non-GAAP effective income tax rate (b/d)

11.0 %

12.4 %

April 26,

(In millions) 2026

January 25,

2026

October 26,

2025

July 27,

2025

April 27,

2025

Non-GAAP Free Cash Flow1

Cash provided by operating activities

$ 845

$ 1,686 $ 2,828 $ 2,634

$ 1,571

Capital expenditures

(635)

(646) (785) (584)

(510)

Non-GAAP free cash flow

$ 210

$ 1,040 $ 2,043 $ 2,050

$ 1,061

Twelve Months Ended

(In millions)

Non-GAAP Free Cash Flow1

October 26,

2025

October 27, October 29, October 30,

2024 2023 2022

October 31,

2021

Cash provided by operating activities

$ 7,958

$ 8,677 $ 8,700 $ 5,399

$ 5,442

Capital expenditures

(2,260)

(1,190) (1,106) (787)

(668)

Non-GAAP free cash flow

$ 5,698

$ 7,487 $ 7,594 $ 4,612

$ 4,774

Twelve Months Ended

(In millions)

Non-GAAP Free Cash Flow1

October 25,

2020

October 27,

2019

October 28,

2018

October 29,

2017

October 30,

2016

Cash provided by operating activities

$ 3,804

$ 3,247

$ 3,787

$ 3,789

$ 2,566

Capital expenditures

(442)

(441)

(622)

(345)

(253)

Non-GAAP free cash flow

$ 3,362

$ 2,806

$ 3,165

$ 3,444

$ 2,313

October 31,

August 1,

(In millions) 2021

2021

Non-GAAP Free Cash Flow1

Cash provided by operating activities

$ 1,148

$ 1,686

Capital expenditures

(206)

(137)

Non-GAAP free cash flow

$ 942

$ 1,549

Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities less capital expenditures.

‌Non-GAAP outlook for the third quarter of fiscal 2026 (including non-GAAP gross margin, operating margin, operating expenses and EPS) excludes known charges related to completed acquisitions of approximately $11 million, includes the normalized tax benefit of share-based compensation of approximately $4 million and includes a net income tax benefit related to intra-entity intangible asset transfers of approximately $32 million, but does not reflect any items that are unknown at this time, such as any additional charges related to acquisitions or other non-operational or unusual items, as well as other tax related items, which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Disclaimer

Applied Materials Inc. published this content on May 14, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 14, 2026 at 20:11 UTC.