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01/10 16:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
KLA reported strong financial performance with record revenue, high EPS, and robust cash flow. The company provided optimistic guidance for 2025, highlighted by a 27% YoY revenue increase. Despite concerns about tariffs and export controls affecting margins, KLA's strategic investments in AI and advanced packaging show promise. The market responded positively to capital returns and the company's ability to adapt globally. The Q&A revealed some uncertainties, but overall, the sentiment remains positive due to strong fundamentals and growth prospects.
Revenue $3.06 billion, up 30% year-over-year due to increased investment in leading-edge logic and high-bandwidth memory.
Non-GAAP diluted EPS $8.41, up from the previous year, finishing at the upper end of guidance.
GAAP diluted EPS $8.16, up from the previous year, finishing at the upper end of guidance.
Gross Margin 63%, about 50 basis points higher than the midpoint of guidance due to stronger product mix within the Process Control segment.
Operating Expenses $575 million, about $10 million below the guidance midpoint due to lower than expected prototype material expenses.
Operating Margin 44.2%, reflecting strong revenue growth and effective cost management.
Net Income $1.12 billion, reflecting strong operational performance.
Cash Flow from Operations $1.1 billion, indicating strong cash generation capabilities.
Free Cash Flow $990 million, with a free cash flow margin of 30%, ranking amongst the top 10% of companies in the S&P 500.
Total Capital Returns $733 million, comprised of $507 million in share repurchases and $226 million in dividends.
Total Capital Returns (12 months) $3 billion, demonstrating a strong commitment to returning capital to shareholders.
Advanced Packaging Revenue Over $500 million in calendar 2024, expected to exceed $850 million in calendar 2025.
Services Business Revenue $669 million, up 13% year-over-year, marking the 52nd consecutive quarter of year-over-year growth.
Total Cash, Cash Equivalents and Marketable Securities $4 billion, providing a strong liquidity position.
Debt $5.9 billion, with a flexible and attractive bond maturity profile.
Advanced Packaging Revenue: KLA's advanced packaging revenue grew to over $500 million in calendar 2024 and is now expected to exceed $850 million in calendar 2025.
AI Infrastructure: KLA's products and services are uniquely positioned to enable growth at the leading edge, including the ongoing build-out of AI infrastructure.
Market Share in Process Control: KLA's share of Process Control has grown by nearly 250 basis points over the past five years, with a significant increase in the advanced wafer-level packaging market.
WFE Market Outlook: KLA forecasts WFE to grow by a mid-single-digit percentage from approximately $99 million to $100 billion level in calendar 2024.
Free Cash Flow: Quarterly free cash flow was $990 million, with a total of $3.5 billion over the past 12 months, reflecting a free cash flow margin of 30%.
Service Business Growth: KLA Services business grew to $669 million in the March quarter, marking its 52nd consecutive quarter of year-over-year growth.
Investor Day Postponement: KLA has postponed its Investor Day from June 18 to early to mid-calendar 2026 due to macroeconomic uncertainties.
Capital Return Strategy: KLA announced a new $5 billion share repurchase authorization and a 12% increase in its quarterly dividend to $1.90 per share.
Global Trade Uncertainty: KLA faces unprecedented global trade uncertainty which may have second-order effects on macro demand in the future.
Regulatory Issues: New market access restrictions from the U.S. government export controls impacted service revenue growth in the March quarter.
Economic Factors: There is notable macro uncertainty across many sectors globally, which could affect KLA's business operations.
Gross Margin Impact: Global tariffs are expected to create a roughly 100 basis point headwind to gross margin per quarter.
Tax Rate Changes: Adoption of global taxation Pillar 2 is expected to increase the effective tax rate to approximately 14% in the second half of the calendar year.
Advanced Packaging Revenue Growth: KLA's advanced packaging revenue grew to over $500 million in calendar 2024 and is now expected to exceed $850 million in calendar 2025.
Capital Return Strategy: Total capital returns in the March quarter was $733 million, comprised of $507 million in share repurchases and $226 million in dividends.
Dividend Increase: KLA announced the 16th consecutive annual dividend increase, which is up 12% to $1.90 a share per quarter.
Share Repurchase Authorization: A new $5 billion share repurchase authorization was announced, raising total repurchase authorization to $5.46 billion.
Market Share Growth: KLA's share of Process Control has grown by nearly 250 basis points over the past five years.
Revenue Guidance for June Quarter: Total revenue is expected to be $3.075 billion, plus or minus $150 million.
Gross Margin Guidance: Gross margin is forecasted to be 63%, plus or minus one percentage point.
GAAP EPS Guidance for June Quarter: GAAP diluted EPS is expected to be $8.28 plus or minus $0.78.
Non-GAAP EPS Guidance for June Quarter: Non-GAAP diluted EPS is expected to be $8.53 plus or minus $0.78.
2025 Gross Margin Guidance: Expected gross margins for the year to be approximately 62.5% plus or minus 50 basis points.
WFE Market Growth Outlook: Forecast WFE to grow by a mid-single-digit percentage from approximately $99 million to $100 billion level in calendar 2024.
Quarterly Dividend: $1.90 per share, annualized dividend of $7.60, representing a 12% increase.
Share Repurchase Authorization: New $5 billion share repurchase authorization, raising total repurchase authorization to $5.46 billion.
Share Repurchases in Q3 2025: $507 million in share repurchases during the March quarter.
Total Capital Returns in Q3 2025: $733 million, comprised of $507 million in share repurchases and $226 million in dividends.
Total Capital Returns over the Past 12 Months: $3 billion.
The earnings call summary shows mixed sentiments. While there are positive indicators like expected revenue growth and strategic investments, concerns about declining foundry/logic sales and margin guidance adjustments temper optimism. The Q&A reveals uncertainties around China sales and RPO disclosures, affecting investor confidence. Overall, the sentiment is balanced, suggesting limited short-term stock movement.
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