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01/10 16:15
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial performance with record high revenues and operating margins, as well as a significant increase in services revenue. The Q&A section highlights growth in advanced packaging and process control systems, with optimistic guidance for future growth and strategic positioning. While there are some uncertainties, particularly in China, the overall sentiment is positive, supported by strong shareholder return plans and optimistic future revenue targets. The positive aspects outweigh the concerns, likely resulting in a stock price increase.
Revenue $3.175 billion, representing a 24% year-over-year growth. The growth was driven by sustained strong investment in leading-edge foundry and logic and high bandwidth memory (HBM).
Non-GAAP diluted EPS $9.38, above its guidance range. This reflects strong operational performance and revenue growth.
GAAP diluted EPS $9.06, at the upper end of the guidance range, indicating strong financial performance.
Free Cash Flow $1.065 billion, a record high for the quarter. This was driven by strong operational cash flow and disciplined capital allocation.
Services Revenue $703 million, up 14% year-over-year. Growth was attributed to increasing demand for advanced packaging and process control solutions.
Operating Margin 44.2%, reflecting efficient cost management and strong revenue performance.
Gross Margin 63.2%, slightly above the midpoint of guidance, supported by favorable revenue mix.
Operating Expenses $603 million, including $353 million in R&D and $250 million in SG&A, slightly above the guidance midpoint due to ongoing investments in product development and infrastructure.
Net Income $1.24 billion (Non-GAAP) and $1.2 billion (GAAP), reflecting strong profitability.
Capital Return $680 million in the quarter, including $426 million in share repurchases and $254 million in dividends, demonstrating a commitment to shareholder returns.
Advanced Packaging Portfolio: Revenue expected to exceed $925 million in calendar 2025, up from $850 million last quarter and over $500 million last year.
Market Share: KLA is expanding market share in critical markets for customers, driven by investments in AI and advanced packaging.
Revenue Growth: Revenue grew 24% year-over-year in the June quarter, reaching $3.175 billion.
Free Cash Flow: Achieved record free cash flow of $1.065 billion for the quarter, with a 12-month free cash flow of $3.75 billion.
Capital Returns: Returned $680 million in the June quarter, including $426 million in share repurchases and $254 million in dividends.
AI Infrastructure: KLA is positioned at the center of enabling AI infrastructure build-out, focusing on high bandwidth memory and advanced packaging.
Customer Engagement: Customer discussions indicate solid growth expectations for 2025 and 2026, with a focus on technology transitions and capacity planning.
Tariffs and Global Trade Uncertainty: The company faces a 50 to 100 basis point impact on gross margins due to announced global tariffs. The long-term tariff situation remains unclear, posing a risk to cost structures and profitability.
Geopolitical Trends: Near-term geopolitical trends are acknowledged as a potential risk, though specifics are not detailed. These trends could impact customer engagement and business forecasts.
China Demand: Lower overall demand from China is expected to partially offset growth in other areas, which could impact revenue and market share.
Operating Expenses: Operating expenses are forecasted to increase to support product development and infrastructure investments, which could pressure margins if revenue growth does not meet expectations.
Customer Demand Stability: While customer discussions remain constructive, any material changes in customer demand or announced investment plans could adversely affect the company's performance.
Revenue Expectations: KLA's September quarter revenue is expected to be $3.15 billion, plus or minus $150 million. For calendar 2025, gross margins are expected to remain approximately 62.5%.
Market Trends and Growth: KLA anticipates mid-single-digit growth in WFE (Wafer Fab Equipment) for 2025, driven by increasing investment in leading-edge logic, high bandwidth memory, and advanced packaging. Early customer discussions suggest 2026 will be a growth year for the industry.
Segment Performance: Foundry/logic revenue from semiconductor customers is forecasted to be approximately 75%, with memory at 25% of Semi Process Control systems revenue. Within memory, DRAM is expected to be about 79% and NAND the remaining 21%.
Capital Expenditures and Investments: Operating expenses for the September quarter are forecasted to be approximately $615 million, with continued investments in product development and infrastructure to support expected revenue growth.
Strategic Plans and Operational Changes: KLA plans to focus on enabling technology transitions, accelerating process node capacity ramps, and ensuring yield entitlement and high-volume production. The company is also assessing the impact of global tariffs and identifying mitigation actions to reduce exposure over time.
Quarterly Dividends: $254 million in dividends were distributed in the June quarter.
Annual Dividend Increase: On April 30, 2025, KLA announced its 16th consecutive annual dividend increase, up 12% to $1.90 per share per quarter or an annualized dividend of $7.60 per share.
Share Repurchases in June Quarter: $426 million in share repurchases were completed in the June quarter.
New Share Repurchase Authorization: A new $5 billion share repurchase authorization was announced on April 30, 2025.
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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