Doug Bettinger
Executive Vice President, Chief Financial Officer at Lam Research
Excellent. Thank you, Tim. Good afternoon, everyone, and thank you for joining our call today during what I know is a very busy earnings season.
We executed well in the June 2023 quarter with revenue coming in above the midpoint of our guided range and our profitability metrics exceeding the high end of guidance. Though we continued to work through a challenging WFE investment year, most notably with very low memory spending, our focus on improving our operational efficiencies is showing up favorably in our results. We're laser-focused on what's in our direct control and executing well.
Let me dig into revenue. June quarter revenue came in at $3.2 billion, a decrease from the prior quarter as we expected. Systems revenue declined quarter-over-quarter as we had reduced levels of deferred revenue with the improvement in supply chain constraints. We closed the June quarter with $1.8 billion in deferred revenue on the balance sheet, which was a decrease of $165 million sequentially. We've got all the deferred revenue related to outstanding back order parts completely back to normal levels.
As we discussed last quarter, though, our deferred revenue balance is currently still at higher than historic levels. The deferred revenue balance decreased -- increased customer cash in advanced deposits tied to orders from newer customers. We expect a significant portion of these deposits to convert to revenue during the second half of calendar year 2023.
Let me now turn to the revenue segment details. Memory as a percentage of systems revenue in the June quarter was low at 27%, which was a decline from the prior quarter level of 32% and our lowest concentration percentage for this segment in the last decade. The DRAM segment within memory remained flat at 90% of systems revenue. And NAND came down to 18% of systems revenue, down from the March quarter level of 23%. We continue to expect NAND spending to remain at low levels for the remainder of the 2023 calendar year. And I just mentioned, NAND spending is at the lowest levels we've seen since the advent of the 3D NAND architecture.
Consistent with the prior quarter, we see strong concentration of systems revenue in the foundry segment with the June quarter revenue percentage at 47% versus 46% that we saw in the March quarter. Investments were biased towards leading-edge devices. There also continues to be robust spending to support more mature specialty nodes.
We had a record level of concentration in the logic and other segment with 26% of systems revenue in the June quarter, compared with 22% in the prior quarter. There was broad-based spending in areas such as advanced packaging, microprocessors, analog, image sensors and power applications. These are areas where we've demonstrated strong momentum with our technology solutions, and I'd just point out that they are broadly distributed geographically.
With respect to the regional composition of our total revenue, the China region was 26% of the total, which was up a little bit from the prior quarter, which is 22%. China domestic customers hold the majority of the China regional revenue in the June quarter. The result was strong concentration of investments for our customers in the Korea and Taiwan region, which comprised 24% and 20% of our total revenues, respectively, in the June quarter. The U.S. region declined from the record level that we saw last quarter, largely due to the timing of customer projects.
The Customer Support Business Group revenue in the June quarter totaled approximately $1.5 billion, which was a decrease of 7% from the prior quarter level and 8% lower than the June quarter in calendar 2022. CSBG represented 47% of our June quarter revenue. This is a historically high concentration percentage driven largely by continued strength in the specialty node investments which are serviced by Reliant Systems business. The Reliant and spares businesses continue to represent the largest individual portions of CSBG revenues. Both our spares and service businesses had been negatively impacted by low fab utilization levels, particularly at our memory customers.
On the profitability side of things, our June quarter gross margin came in at 45.7%, above our guided range and up from 44% that we saw in the March quarter. The quarter-on-quarter increase was related to cost and efficiency improvements, as well as a favorable product mix. We continue to expect to make further progress on our operational execution as we go forward.
Operating expenses for June came in at $590 million, which was down from the $608 million in the March quarter, although it was a little bit higher than our original estimates coming into the quarter. Investing in research and development continues to be a top priority for Lam with over two-thirds of our operating expense concentrated in R&D. We're focused on extending our product differentiation and ensuring that our competitiveness remains very strong.
The June quarter operating margin came in at 27.3%, which was over the guidance range largely because of our strong gross margin performance. The non-GAAP tax rate for the quarter came in low at 7.5% due to a more favorable jurisdictional mix of income and provision true-ups that occurred at the end of our fiscal year. We estimate the tax rate for the remainder of the 2023 calendar year will be in the low- to mid-teens level. And as always, this rate will have some fluctuation quarter to quarter.
Other income and expense for the June quarter was approximately $7 million in expense, consistent with the prior quarter amount and primarily related to our strong cash balances as well as higher interest rates. And I'd just point out, from a return on cash standpoint, we're now realizing higher interest rates on our cash balances than we're paying on the longer-term duration debt in our capital structure. And as we've discussed in the past, OI&E is subject to market-related fluctuations that will cause some level of quarterly volatility.
On our capital return activities, we allocated approximately $906 million to open market share buyback and we paid $232 million in dividends in the June quarter. We have $3.5 billion remaining on our Board authorized share buyback plan. For the June quarter, we returned 109% of free cash flow, and we're very much in line with our long-term capital return plans of returning 75% to a 100% of free cash flow.
June quarter diluted earnings per share came in at $5.98, over the high end of our guidance range. This was enabled from stronger revenue, improved gross margin and that lower tax rate. Diluted share count was 134 million shares, on track with our expectations and down from the March quarter.
Let me now pivot to the balance sheet. Cash and short-term investments, including restricted cash, totaled $5.6 billion, which was flat with the March quarter. Days sales outstanding were 80 days in the June quarter. June quarter inventory turns came down from the prior quarter level of 1.9 times to 1.5 times. While we did bring inventory down slightly during the June quarter, the balance is elevated from historic levels. As business volumes reduce, we need to cancel a significant volume of purchase orders with our suppliers. As we work through these cancellations, we're taking more inventory than we need in the near term. This ongoing process will keep inventory higher than we'd like this year, frankly. We do expect inventory to come down though, albeit more slowly than we may have historically been able to drive it to.
Non-cash expenses for the June quarter included approximately $68 million in equity compensation, $76 million in depreciation and $14 million for amortization. Capital expenditures were $79 million, which was down from the March quarter by approximately $41 million. Spending mainly centered on product development activities and our global web infrastructure.
We ended the June quarter with approximately 17,400 regular full-time employees, which was a decrease of approximately 1,300 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 showing up in the June quarter. Overall, we're on track with our transformation initiatives to improve our operations. And as we stand at the end of the quarter, we incurred approximately $143 million year-to-date out of an anticipated $250 million estimated range for calendar year 2023.
Let me now turn to our non-GAAP guidance for the September 2023 quarter. We're expecting revenue of $3.4 billion, plus or minus $300 million. Gross margin of 46.5%, plus or minus 1 percentage point. This improvement in gross margin is a function of our operational efforts as well as a beneficial mix. Operating margins of 28%, plus or minus 1 percentage point. We're purposely spending a little more in R&D in the second half of 2023. And finally, earnings per share of $6.05, plus or minus $0.75, based on a declining share count of approximately 133 million shares.
So, let me summarize. The results this quarter demonstrate, I think, that we're on a solid path to strengthen our operations and our profitability profile. We're improving and optimizing all elements of the Company and solidifying Lam's business foundation to ensure we're well-positioned for outperformance when WFE growth resumes. And I'll just reiterate what Tim said. We continued to see WFE a little bit second half weighted this year.
Operator, with that, that concludes my prepared remarks. Tim and I would now like to open up the call for questions.
