Doug Bettinger
Executive Vice President and Chief Financial Officer at Lam Research
Excellent. Thank you, Tim. Good afternoon, everyone, and thank you for joining the call today. We delivered strong results in the September 2023 quarter. Our revenue came in above the midpoint of our guided range, and gross margin, operating income and earnings per share, all exceeded the high-end of guidance. We're pleased with the company's execution during the year where memory WFE investment has declined by unprecedented amounts.
Let's look at the details of our September quarter financial results. Revenue for the September quarter was $3.48 billion, which was up 9% from the prior quarter and down more than 30% from a year ago. Our deferred revenue balance at quarter end was $1.69 billion, which was a decrease of approximately $150 million from the June quarter, mainly related to revenue recognized tied to customer advance payments. We continue to have a higher deferred revenue balance versus historic levels given these advance payments. We expect to recognize revenue in the December quarter for a portion of these deposits, which is comprehended in our guidance. Within calendar year 2024, I believe the deferred revenue balance will trend to more normalized levels.
Let's now look at the segments. From a segment perspective, September quarter systems revenue in memory was 38%, which is an increase from the prior quarter level of 27%. The growth in the memory segment was driven by DRAM, which increased sequentially coming in at 23% of systems revenue compared with 9% that we saw in the June quarter. As we've noted in prior quarters, non-volatile memory spending is at historic lows in 2023. And for the September quarter, this segment represented 15% of systems revenue, which was down from the 18% that we saw last quarter. The spending levels in NAND are at dollar levels, we have not seen since planar NAND was the predominant technology.
The Foundry segment represented 36% of our systems revenue, lower than the percentage of concentration in the June quarter of 47%. The decrease is related to timing of leading-edge investments within calendar year 2023. We performed well in the segment during the year, but this quarter's spending coming mainly from mature node customers.
And finally, the logic and other segment was 26% of our systems revenue in the September quarter, which was flat with the prior quarter level. Investments in this segment. We're heavily focused in the specialty device areas including sensors, analog and power devices.
I'll now discuss the regional composition of our total revenue. The China region came in at a high watermark of 48% up from 26% in the prior quarter. The majority of the China revenue this quarter was from domestic Chinese customers and we currently expect we will have another strong China geographic concentration profile in the December quarter as well.
Our next largest geographic region concentration was Korea had 16% of revenue in the September quarter and that compares with a 24% that we saw in June. Our Customer Support Business Group generated revenue in the September quarter totaling approximately $1.4 billion, which was down 5% from the June quarter and 25% lower than the September quarter and calendar year 2022. Memory customers continue to operate their fabs at very low utilization rates. And customers are holding off on upgrading tools until there's more digestion of the outstanding inventory that is in the industry.
The specialty technology market has been a bright spot this year and we see that part of our business up year-over-year as we close calendar year 2023. Spares and the reliant product line continues to be the two largest components of CSBG. I'll turn to the gross margin performance. The September quarter came in at 47.9% above our guided range and higher than the June quarter level, a 45.7%. Our strong gross margin performance compared to the prior quarter was driven primarily by favorable customer mix. We've improved elements of our cost structure during the year and are on track with our plan to improve gross margin from the March quarter level by approximately 1 percentage point as we exit calendar year 2023.
September quarter operating expenses came in at $622 million, up from the prior quarter amount of $590 million. R&D as a percentage of spending was somewhat higher versus the June quarter coming in at over 68% of our spending. The increased investment was focused on key technology inflections and development engagements with our customers. We will continue to invest in programs across multiple market segments to support our long-term strategic objectives for continued company outperformance.
Operating margin for the current quarter was 30.1% higher than the June quarter level of 27.3% and more than 100 basis points over the high-end of our guidance because of that strong gross margin performance. The non-GAAP tax rate for the quarter was 13.4% in line with our expectations. Our estimate for the December 2023 quarter as well as for calendar year 2024 is for the tax rate to be in the low to mid-teens range.
Other income and expense for the September quarter came in at $7 million in income compared with $7 million in expense in the June quarter. The favorable fluctuations and OI&E was due to a variety of factors, including rising interest rates, generating income on our cash balance. While OI&E will continue to be subject to market related fluctuations that will cause some level of volatility quarter-by-quarter.
Let me now pivot to capital return side of things. We allocated approximately $830 million to open market share repurchases and paid $230 million in dividends in the September quarter. I'll highlight that in September, we announced a 16% growth in our dividend, in line with our plan to deliver disciplined annual dividend growth. Since paying our first dividend in 2014, we have now raised the dividend amount 9 times. We returned over 120% of free cash flow in the quarter and we have $2.7 billion remaining under our board authorized share repurchase plan. Calendar year-to-date, we've returned 83% of our free cash flow to shareholders.
September quarter diluted earnings per share was $6.85 over the high end of our guided range. Diluted share count was 133 million shares, on track with our expectations and down from the June quarter.
Let me pivot to the balance sheet, our cash and short-term investments at the end of the September quarter totaled $5.2 billion, down from $5.6 billion in the June quarter. The main driver of the cash decrease was obviously our capital return activity. I just mentioned we also purchased buildings at our company headquarters as well as our Bay Area, California factory for approximately $250 million, retiring the leases that are on the balance sheet. [Indecipherable] cash was somewhat offset by improvement in days sales outstanding, which were 73 days in the September quarter, down from the 80 days that we saw in the June quarter.
Inventory turns were flat with the prior quarter level at 1.5 times. We continue to work to bring our inventory down, but as we've noted in prior quarter, we expect this to occur at a slower pace than we've done in the past. Our non-cash expenses for the September quarter included approximately $67 million for equity compensation, $76 million in depreciation and $14 million in amortization. Capital expenditures for the September quarter came in at $77 million, which was flat with the June quarter. Spending in September was primarily centered on product development activities and lab expansions in the United States and Asia.
We ended the September quarter with approximately 17,200 regular full-time employees, which was a decrease of 200 people from the prior quarter. Most of this decrease is related to the restructuring actions we took earlier in the calendar year with the timing of the headcount reduction occurring in the September quarter.
Let me now turn to our non-GAAP guidance for the December 2023 quarter. We're expecting revenue of $3.7 billion, plus or minus $300 million. Gross margin of 47%, plus or minus 1 percentage points. This level of gross margin reflects a continued favorable customer mix, albeit not quite as favorable as we saw in September.
Operating margin of 29.5%, plus or minus 1 percentage point. The operating expenses embedded in this guidance increase from the September level, due to growth in R&D. But also just mentioned that the June 2024 quarter will be higher as it includes an extra week in the fiscal quarter, which occurs every few years. It's going to be a 14 week quarter in March.
And finally, earnings per share of $7, plus or minus $0.75 based on a share count of approximately 132 million shares. With our December quarter guidance, we see solid performance in both revenue and profitability. Lam is delivering strong financial results and technology leadership to our customers as we develop solutions for the next industry inflections.
And before I wrap up, I'd just like to mention two things as you think about modeling our business into 2024. The first is that we're currently experiencing favorable customer mix that may not continue at the same level going into next year. This may create near-term headwinds for gross margin. Second, given all the opportunities we see in long-term technology inflections, like date all around, dry resist, advanced packaging, changing metallization schemes and continuing [Phonetic] the evolution of other 3D structures like DRAM. 2024 maybe an R&D spending growth year to take advantage of these future opportunities that we see.
As a result, it's possible that the historic leverage we've delivered takes a temporary pause. We will obviously continue to aggressively drive the operational efficiencies that we always have. And our longer-term profitability objectives remain unchanged.
Operator, that concludes our prepared remarks. Tim and I would now like to open up the call for questions.
