# How ASML makes money

CXProWealth Business Lens · ASML (ASML) · FY2025

Read from the 20-F for the period 2025-01-01 to 2025-12-31, filed 2026-02-25 with the SEC (accession 0001628280-26-011378): https://www.sec.gov/Archives/edgar/data/937966/000162828026011378/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $32.7B
- Operating income: $11.3B (operating margin 34.6%)
- Net income: $9.6B (net margin 29.4%)
- Gross margin: 52.8%
- Free cash flow: $11.1B (33.9% of revenue)
- Cash conversion (operating cash flow / net income): 1.32x
- Capital expenditure: 4.8% of revenue

## Where the money goes (FY2025)

- EXE → Total net sales: $1.2B
- NXE → Total net sales: $10.4B
- ArF immersion → Total net sales: $10.3B
- ArF dry → Total net sales: $427.0M
- KrF → Total net sales: $1.0B
- I-line → Total net sales: $307.3M
- Metrology & Inspection → Total net sales: $824.6M
- Net service and field option sales → Total net sales: $8.2B
- Total net sales → Total cost of sales: $15.4B
- Total net sales → Gross profit: $17.3B
- Gross profit → Research and development (R&D) costs: $4.7B
- Gross profit → Selling, general and administrative (SG&A) costs: $1.3B
- Gross profit → Income from operations: $11.3B
- Income from operations → Income before income taxes: $11.3B
- Interest and other, net → Income before income taxes: $104.7M
- Income before income taxes → Income tax expense: $2.0B
- Income before income taxes → Income after income taxes: $9.4B
- Income after income taxes → Net income: $9.4B
- Profit from equity method investments → Net income: $216.7M

## Where the revenue comes from

### Products and services (Consolidated Statements of Operations)

| Member | Value | Share |
|---|---:|---:|
| Net system sales | $24.5B | 74.8% |
| Net service and field option sales | $8.2B | 25.1% |

The members sum to total revenue.

### Products and services (Revenue from contracts with customers - Net System Sales per Technology (Details))

| Member | Value | Share |
|---|---:|---:|
| NXE | $10.4B | 31.9% |
| ArF immersion | $10.3B | 31.5% |
| EXE | $1.2B | 3.5% |
| KrF | $1.0B | 3.1% |
| Metrology & Inspection | $824.6M | 2.5% |
| ArF dry | $427.0M | 1.3% |
| I-line | $307.3M | 0.9% |

The members do not sum to total revenue.

### Segments (Segment disclosure - Net Sales for New and Used Systems (Details))

| Member | Value | Share |
|---|---:|---:|
| New systems | $23.9B | 73.1% |
| Used systems | $575.7M | 1.8% |

The members do not sum to total revenue.

### Regions (Segment disclosure - Net Sales and Long-Lived Assets by Geographic Region (Details))

| Member | Value | Share |
|---|---:|---:|
| Emea | $524.3M | 1.6% |
| Rest of Asia | $2.7M | 0.0% |

The members do not sum to total revenue.

### MajorCustomers (Revenue from contracts with customers - Net System Sales per End-Use (Details))

| Member | Value | Share |
|---|---:|---:|
| Logic | $16.1B | 49.1% |
| Memory | $8.4B | 25.7% |

The members do not sum to total revenue.

## Income statement, as filed

| Line | FY2025 | Of revenue |
|---|---:|---:|
| Total net sales | 32,700,000,000 | 100% |
|   Net system sales | 24,474,300,000 |  |
|   Net service and field option sales | 8,193,000,000 |  |
| Total cost of sales | (15,409,300,000) |  |
|   Net system sales | (11,384,000,000) |  |
|   Net service and field option sales | (4,025,300,000) |  |
| **Gross profit** | 17,258,000,000 |  |
| Research and development (R&D) costs | (4,698,800,000) |  |
| Selling, general and administrative (SG&A) costs | (1,257,800,000) |  |
| **Income from operations** | 11,301,400,000 |  |
| Interest and other, net | 104,700,000 |  |
| **Income before income taxes** | 11,406,100,000 |  |
| Income tax expense | (2,013,400,000) |  |
| **Income after income taxes** | 9,392,700,000 |  |
| Profit from equity method investments | 216,700,000 |  |
| **Net income** | 9,609,400,000 |  |
| Basic net income per ordinary share (in EUR per share) | 24.7 |  |
| Diluted net income per ordinary share (in EUR per share) | 24.7 |  |
| Basic (in shares) | 388,500,000 |  |
| Diluted (in shares) | 388,900,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2025 | $32.7B | $11.3B | $9.6B | $12.7B | $1.6B | $11.1B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: — (year before —): too short a history to read
- Operating income: — (year before —): too short a history to read
- Net income: — (year before —): too short a history to read
- Free cash flow: — (year before —): too short a history to read

## Key insights

### EUV passed immersion DUV as ASML's largest product line

NXE sales of €10.4B rose 33.0% and edged past ArF immersion at €10.3B, while the older DUV lines fell by up to half.

NXE, the EUV scanner, brought in €10.4B: 31.9% of total net sales and 42.7% of net system sales, up 33.0% and 4.18 points of revenue share. ArF immersion, the most advanced DUV scanner, brought in €10.3B, up 6.7%, and lost 2.63 points of share. EXE, the High-NA platform, rose 148.8% to €1.16B. The filing attributes the rise to "greater NXE and NXT immersion adoption supported by leading-edge foundry investments for AI demand". _(from the filing)_
The older lines moved the other way. KrF fell 49.7% to €1.0B, ArF dry fell 44.9% to €427M and I-line fell 16.8% to €307M. The filing describes this as a "decrease in the sales volumes of other DUV lithography systems." _(from the filing)_
Analysis: the mix moved toward the tool that has no substitute and away from lines that face competitors. Gross margin rose 1.57 points to 52.78% in the same year, which fits that shift. The filing does not report margin by product line, so the link between mix and margin is a reading, not a reported fact. _(analysis)_

### Service sales equal 72.5% of operating income

Service and field option sales of €8.2B grew 26.2%, faster than the company's 15.6%, and now match 72.5% of operating income.

Net service and field option sales rose 26.2% to €8.2B, 25.1% of total net sales, a gain of 2.11 points of share. The filing gives the reasons: "the growing installed base of systems", "higher levels of lithography tool use for certain customers, and more NXE field upgrades." Used systems added a further €576M of system sales. _(from the filing)_
Analysis: service sales are revenue, not profit, and the filing does not report a service margin. Set against €11.3B of income from operations, the €8.2B shows how large the stream has become, not how much of the profit it earns. Each system sold adds to the installed base it is drawn from, so it follows the fleet more than the year's orders. _(analysis)_
Caveat: part of this year's growth came from higher tool use, which rises and falls with fab utilization. The test of service as a cushion is a year when system sales fall and customers run their fleets less hard. _(analysis)_

### Operating income grew 25.3% on 15.6% more sales

Every cost line grew slower than sales, so income from operations reached €11.3B and 34.56% of revenue, up 2.68 points.

Cost of sales rose 11.9% while gross profit rose 19.1%, taking gross margin to 52.78%, up 1.57 points. Research and development rose 9.2% and its share of revenue fell 0.84 points; selling, general and administrative costs rose 7.9% and their share fell 0.27 points. Income from operations rose 25.3% to €11.3B from €9.0B. _(from the filing)_
Net income rose 26.9% to €9.6B from €7.6B. Basic earnings per share were €24.73 against €19.25, a larger gain than net income because basic shares fell to 388.5M from 393.3M. Income tax of €2.0B was 17.7% of income before taxes of €11.4B. _(from the filing)_
Analysis: the company did not cut its cost base. Research and development still grew to €4.7B. The margin gain came from sales outrunning costs that kept rising, and the same arithmetic tends to work in reverse in a year when sales fall. _(analysis)_

### Capital spending took only 12.4% of operating cash

Operating cash flow of €12.7B was 1.32 times net income, and after €1.6B of capital spending free cash flow reached €11.1B, 33.9% of revenue.

Capital expenditure was €1.6B, 4.8% of total net sales and 12.4% of operating cash flow of €12.7B. Free cash flow was €11.1B, 33.9% of revenue and 115% of net income of €9.6B. _(from the filing)_
Analysis: ASML designs and integrates its systems and buys much of their content from suppliers, so its own factories need little capital relative to sales. The filing states that components and subassemblies are each "obtained from a single supplier or a limited number of suppliers", which is the other side of the same choice. _(analysis)_
Caveat: the record holds one year of cash flow, so there is no prior-year comparison. Cash above net income can also reflect the timing of customer payments and working capital, which the figures here do not break out. _(analysis)_

### Competitive edge

- **The sole supplier of a tool chipmakers cannot replace** ASML is the only maker of EUV scanners, and as NXE reached 42.7% of system sales, gross margin rose to 52.78%.
- **Today's machines fund a €4.7B research budget** Research and development of €4.7B took 27.2% of gross profit, far above €1.26B for selling and administration, while EXE sales rose 148.8% to €1.16B.

### What to watch

- **Four customers each buy more than a tenth** Four customers each exceeded a tenth of total net sales and logic was 65.6% of system sales, so one buyer's plans move ASML's revenue.
- **Single-source suppliers stand behind the systems** The filing says components are each obtained from one or a few suppliers, exposing ASML to shortages, weaker pricing control and late deliveries.
- **This year's growth rests on AI-driven leading-edge spending** The filing ties the rise to AI-related foundry and memory investment, while the older DUV lines fell by up to half and China's sales declined.

## Investor view

**EUV became ASML's largest product line, as NXE system sales rose 33.0% and passed immersion DUV**

### How it makes money

ASML sells lithography systems, the machines that print circuit patterns onto silicon wafers, and then services the fleet it has sold. Of €32.7B in total net sales, net system sales were €24.5B (74.8%) and net service and field option sales were €8.2B (25.1%). Almost all system revenue came from new machines: €23.9B, against €576M from used systems. _(from the filing)_
Two technologies carry the system business. NXE, the EUV scanner, brought in €10.4B (31.9% of total net sales) and ArF immersion, the most advanced DUV scanner, €10.3B (31.5%). EXE, the High-NA EUV platform, added €1.16B (3.5%). The older DUV lines are now small: KrF €1.0B, ArF dry €427M and I-line €307M, with Metrology & Inspection at €825M. _(from the filing)_
The buyers are a short list of chipmakers. Logic customers accounted for €16.1B of system sales and memory customers for €8.4B, so logic was 65.6% of net system sales. The segment note says four customers each individually exceeded a tenth of total net sales. _(from the filing)_
Of each euro of sales, 47.1% went to cost of sales, 14.4% to research and development and 3.85% to selling, general and administrative costs, leaving 34.6% as income from operations. Research and development, at €4.7B, is more than three times the €1.26B spent on selling and administration. _(from the filing)_

### What shifted

Total net sales rose 15.6% to €32.7B from €28.3B. The filing attributes the rise "primarily" to "greater NXE and NXT immersion adoption supported by leading-edge foundry investments for AI demand", with "EXE systems being delivered to and installed at more customers" and higher service sales. NXE grew 33.0% and gained 4.2 points of revenue share; ArF immersion grew 6.7%. _(from the filing)_
The older DUV lines shrank sharply: KrF fell 49.7% to €1.0B, ArF dry 44.9% to €427M and I-line 16.8% to €307M. The filing calls this a "decrease in the sales volumes of other DUV lithography systems." By region, China remained the largest market but its sales fell, while "Taiwan and South Korea recorded the largest absolute geographic sales growth." _(from the filing)_
Service grew faster than the company. Net service and field option sales rose 26.2% to €8.2B and gained 2.1 points of revenue share. The filing gives three reasons: "the growing installed base of systems", "higher levels of lithography tool use for certain customers, and more NXE field upgrades." _(from the filing)_
Costs grew slower than sales at every line. Cost of sales rose 11.9% while gross profit rose 19.1%. Research and development rose 9.2% and its share of revenue fell 0.84 points; selling and administration rose 7.9%. Income from operations rose 25.3% to €11.3B, and its share of revenue rose 2.68 points. _(from the filing)_
Net income rose 26.9% to €9.6B from €7.6B. Per share the gain was larger: basic earnings were €24.73 against €19.25, because diluted shares fell to 388.9M from 393.6M. Interest and other income was €104.7M against €19.8M, and income tax of €2.0B was 17.7% of income before taxes of €11.4B. _(from the filing)_

### Risks in the filing

Customer concentration. The filing reports that four customers each individually exceeded a tenth of total net sales, and that its three largest customers held a large share of accounts receivable and finance receivables at year end. A change in the spending plans of any one of them moves ASML's sales directly. _(from the filing)_
Supplier concentration. The filing names a "vulnerability due to certain concentrations": components and subassemblies are each "obtained from a single supplier or a limited number of suppliers." It lists the consequences as "a potential inability to obtain an adequate supply of required components", "reduced control over pricing, and the risk of untimely delivery of these components and subassemblies." _(from the filing)_
Dependence on customers' investment cycles and regions. The filing's own account of the year ties growth to leading-edge foundry spending for AI and to memory investment, and records lower volumes for other DUV systems. Sales are concentrated in a few Asian markets, with China the largest region and Taiwan and South Korea the fastest growing. _(from the filing)_
Of these, customer and end-market concentration is already visible in the numbers: logic was 65.6% of system sales, and the older DUV lines that serve a wider set of buyers fell by up to half. Supplier risk does not show this year, since cost of sales grew slower than revenue and gross margin rose. It would surface first as delayed shipments rather than as lower prices. _(analysis)_

## Founder view: mechanisms

### Sole supplier at the customer's bottleneck

ASML is the only maker of EUV scanners, and leading-edge chipmakers cannot print their smallest features in volume without them. A tool with no substitute is priced against the value of the chips it makes possible, not against a rival's quote. As the mix moves toward that tool and away from older lines that have competitors, margin rises even while parts of the business shrink. _(analysis)_

### Every machine sold becomes a service stream

A scanner stays in a fab for many years. ASML services it, sells upgrades that raise its output, and refurbishes older units for resale. That revenue follows the size and use of the installed base rather than this year's orders, so each system sold adds to a stream that keeps paying after the sale. _(analysis)_

### Today's product funds the next, seeded with a few buyers

ASML pays for the next generation out of the gross profit of the current one, and introduces it to a handful of leading customers first. Those customers pay for early High-NA systems while they qualify them, which shares the cost of the transition and tells ASML what to fix before volume. The roadmap is financed by the installed generation, not by outside capital. _(analysis)_

### Integrate rather than own, and profit turns into cash

ASML designs and integrates its systems and buys much of their content from suppliers, some of them single sources. Its own factories need little capital relative to sales, so most operating profit arrives as cash. The trade-off is dependence: the supply chain it does not own is the risk the filing names. _(analysis)_

## Member research

Signed-in members read, on the page: what ASML's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- ASML 20-F for the period to 2025-12-31: https://www.sec.gov/Archives/edgar/data/937966/000162828026011378/ (2026-02-25)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02