Key TakeawaysKLA Corporation warned that the current quarter will be the low point of the year as it faces a challenging market environment.The semiconductor equipment maker posted guidance that was below estimates, even as its quarterly results were better than expected.Shares of KLA fell from their all-time high set yesterday.Shares of KLA Corporation (KLAC) tumbled as the semiconductor equipment maker’s current quarter outlook was lower than expected on “challenging” market conditions.The company anticip ...

KLA Corporation (KLAC) reported second-quarter fiscal 2024 non-GAAP earnings of $6.16 per share, beating the Zacks Consensus Estimate by 4.76%. The figure declined 16.5% year over year.Revenues decreased 16.7% year over year to $2.49 billion, surpassing the Zacks Consensus Estimate by 1.25%. Sequentially, revenues increased 4%.The year-over-year decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process, and PCB, Display and Component Inspection ...

KLA (KLAC) reported $2.49 billion in revenue for the quarter ended December 2023, representing a year-over-year decline of 16.7%. EPS of $6.16 for the same period compares to $7.38 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $2.46 billion, representing a surprise of +1.25%. The company delivered an EPS surprise of +4.76%, with the consensus EPS estimate being $5.88.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 Commission File Number 000-09992 KLA CORPORATION (Exact name of registrant as specified in its charter) Delaware 04-2564110 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One Technology Drive, Milpitas, Califo ...

What do the data tell us about buying at all-time highs? … why stop-losses might be counterproductive … a big win for Louis Navellier’s subscribersDo you put money into this market here at all-time highs?I used to be nervous about buying a stock when it was setting a record (or a new 52-week high). My fear was: “We’re in thin air up here. It feels like heightened risk for a big pullback.”But a study of market history tells us such a fear usually isn’t warranted.Our hypergrowth expert Luke Lango offered some ...

In its upcoming report, KLA (KLAC) is predicted by Wall Street analysts to post quarterly earnings of $5.87 per share, reflecting a decline of 20.5% compared to the same period last year. Revenues are forecasted to be $2.46 billion, representing a year-over-year decrease of 17.7%.Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.Before a ...

The latest trading session saw KLA (KLAC) ending at $556.34, denoting a -1.07% adjustment from its last day's close. This move lagged the S&P 500's daily loss of 0.15%. On the other hand, the Dow registered a loss of 0.42%, and the technology-centric Nasdaq increased by 0.09%.Heading into today, shares of the maker of equipment for manufacturing semiconductors had gained 0.56% over the past month, lagging the Computer and Technology sector's gain of 1.19% and the S&P 500's gain of 3.5% in that time.The inve ...

KLA (KLAC) closed the latest trading day at $552.59, indicating a -1.39% change from the previous session's end. This change lagged the S&P 500's 0.8% loss on the day. Meanwhile, the Dow lost 0.76%, and the Nasdaq, a tech-heavy index, lost 1.18%.Heading into today, shares of the maker of equipment for manufacturing semiconductors had gained 4.31% over the past month, outpacing the Computer and Technology sector's gain of 2.11% and the S&P 500's gain of 3.4% in that time.Market participants will be closely f ...

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited Condensed Consolidated Financial Statements for the quarter ended September 30, 2023, highlighting a year-over-year decrease in revenue and net income due to a semiconductor market slowdown Condensed Consolidated Statements of Operations Highlights (Q1 FY24 vs Q1 FY23) | Financial Metric | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $2,396,956 | $2,724,424 | -12.0% | | Gross Profit | $1,450,065 | $1,683,198 | -13.8% | | Income before income taxes | $851,711 | $1,070,028 | -20.4% | | Net Income attributable to KLA | $741,375 | $1,025,991 | -27.7% | | Diluted Net Income per Share | $5.41 | $7.20 | -24.9% | Condensed Consolidated Balance Sheet Highlights | Account | Sep 30, 2023 (in thousands) | Jun 30, 2023 (in thousands) | | :--- | :--- | :--- | | Total current assets | $8,430,791 | $8,372,032 | | Total assets | $14,136,841 | $14,072,357 | | Total current liabilities | $3,817,743 | $3,742,842 | | Total liabilities | $11,146,624 | $11,152,604 | | Total stockholders' equity | $2,990,217 | $2,919,753 | Condensed Consolidated Statements of Cash Flows Highlights (Q1 FY24 vs Q1 FY23) | Cash Flow Activity | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $883,740 | $1,011,545 | | Net cash used in investing activities | ($391,671) | ($53,475) | | Net cash used in financing activities | ($705,156) | ($705,727) | | Net (decrease) increase in cash and cash equivalents | ($216,295) | $234,372 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes disclose accounting policies, with **$10.85 billion** in remaining performance obligations impacted by market slowdown and U.S. export regulations, and an effective tax rate increase to **13.0%** - As of September 30, 2023, the company had **$10.85 billion** of remaining performance obligations (RPO), representing future product and service deliveries. This is subject to elevated risk of modification or cancellation due to market slowdown and U.S. export regulations targeting China[34](index=34&type=chunk)[35](index=35&type=chunk) - Total long-term debt as of September 30, 2023, was approximately **$5.89 billion**, primarily consisting of various series of Senior Notes with maturities ranging from 2024 to 2062[71](index=71&type=chunk) - The effective tax rate for the quarter was **13.0%**, a significant increase from **4.1%** in the same period last year. The prior year's rate was lower due to a decrease in deferred tax liabilities and unrecognized tax benefits from examination settlements[109](index=109&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) Revenues by Geographic Region (Q1 FY24 vs Q1 FY23) | Region | Q1 2024 Revenue (in thousands) | Q1 2024 % | Q1 2023 Revenue (in thousands) | Q1 2023 % | | :--- | :--- | :--- | :--- | :--- | | China | $1,025,944 | 43% | $839,661 | 31% | | Taiwan | $405,343 | 17% | $748,334 | 27% | | North America | $250,713 | 10% | $233,754 | 9% | | Japan | $227,377 | 10% | $217,709 | 8% | | Korea | $219,821 | 9% | $407,462 | 15% | | Europe and Israel | $168,436 | 7% | $164,073 | 6% | | Rest of Asia | $99,322 | 4% | $113,431 | 4% | [Item 2. MD&A of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **12% year-over-year revenue decline** to a semiconductor market slowdown, with product revenues falling **16%** while service revenues grew **6%**, and maintains a strong liquidity position with **$3.35 billion** in cash - Product revenues decreased primarily due to a macro-driven slowdown causing the semiconductor industry to rebalance its supply chain and reduce capital expenditure plans for calendar 2023[179](index=179&type=chunk)[163](index=163&type=chunk) - Service revenues increased due to a larger installed base of KLA's systems at customer sites[180](index=180&type=chunk) - The U.S. government's 2022 and 2023 BIS Rules impose significant export licensing requirements for advanced semiconductor technology sold to China, which could materially impact future business[165](index=165&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk) Gross Margin Change Analysis (Q1 FY23 to Q1 FY24) | Factor | Contribution to Margin Change (%) | | :--- | :--- | | **Q1 FY23 Gross Margin** | **61.8%** | | Revenue volume of products and services | (1.7)% | | Mix of products and services sold | 0.8% | | Manufacturing labor, overhead and efficiencies | (0.3)% | | Other service and manufacturing costs | (0.1)% | | **Q1 FY24 Gross Margin** | **60.5%** | - As of September 30, 2023, the company had **$3.35 billion** in cash, cash equivalents, and marketable securities. Net cash from operations was **$883.7 million** for the quarter[198](index=198&type=chunk)[199](index=199&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate and foreign currency fluctuations, with a **100 basis point** interest rate increase potentially decreasing its **$1.50 billion** fixed-income portfolio by **$15.5 million** - The company's **$1.50 billion** fixed income securities portfolio is subject to interest rate risk; a uniform **100 bps** increase in market rates would cause a **$15.5 million** decline in fair value[214](index=214&type=chunk) - The fair value of the company's **$5.89 billion** in long-term fixed-rate Senior Notes is subject to interest rate risk, with a fair value of **$5.31 billion** as of September 30, 2023[215](index=215&type=chunk) - The company hedges certain foreign currency exposures. A **10%** adverse move in all relevant exchange rates would decrease the fair value of its hedge contracts by **$97.1 million**, which would be largely offset by gains in the underlying hedged exposures[219](index=219&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of the end of the period, the company's disclosure controls and procedures were effective at a reasonable assurance level[221](index=221&type=chunk) - No changes in internal control over financial reporting were identified during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[225](index=225&type=chunk) [PART II: OTHER INFORMATION](index=47&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with uncertain outcomes that could potentially have a material adverse effect on financial results - The company is involved in various legal proceedings and claims (commercial, IP, customer, labor) in the normal course of business. The outcomes are difficult to predict and could have a material adverse effect on financial results[117](index=117&type=chunk)[227](index=227&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from U.S. export controls impacting China sales, semiconductor industry cyclicality, a concentrated customer base, cybersecurity threats, and geopolitical instability, including the war in Israel - Evolving U.S. export rules (2022 and 2023 BIS Rules) significantly restrict sales and services to certain customers in China, which represented **43%** of revenue in Q1 FY24. Failure to obtain licenses could materially harm business[241](index=241&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk) - The business is exposed to the cyclical nature of the semiconductor industry. Current down-cycles affect customer capital spending, order timing, and revenue predictability[293](index=293&type=chunk) - The customer base is highly concentrated, exposing the company to increased volatility, pricing pressure, and risks tied to the financial health and strategic shifts of a few large customers[288](index=288&type=chunk)[290](index=290&type=chunk) - The company faces significant risk from cybersecurity incidents, which could disrupt operations, lead to theft of intellectual property, and result in significant financial and reputational damage[258](index=258&type=chunk)[259](index=259&type=chunk) - The company has significant operations in Israel and identifies the war between Israel and Hamas as a risk that could materially impact business, operations, and financial results[271](index=271&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **956,272 shares** of common stock and authorized an additional **$2.0 billion** for its repurchase program, leaving **$3.45 billion** available Stock Repurchases for the Three Months Ended September 30, 2023 | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | July 2023 | 231,293 | $466.52 | | August 2023 | 365,551 | $486.55 | | September 2023 | 359,428 | $471.96 | | **Total** | **956,272** | | - The Board of Directors approved a **$2.0 billion** increase to the stock repurchase program in the first quarter of fiscal 2024. As of September 30, 2023, approximately **$3.45 billion** remained available for repurchases[331](index=331&type=chunk) [Item 3. Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[332](index=332&type=chunk) [Item 4. Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[333](index=333&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended September 30, 2023[334](index=334&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and required CEO and CFO certifications - The exhibits filed with this report include CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350[336](index=336&type=chunk)

Financial Data and Key Metrics - Revenue for the September quarter was $2.4 billion, at the upper end of the guidance range [24] - GAAP EPS was $5.41 and non-GAAP EPS was $5.74, both at the upper end of the guidance ranges [24] - Non-GAAP operating margin was 40.2% [32] - Cash flow from operations was $884 million, and free cash flow was $816 million [32] - The company ended the quarter with $3.35 billion in total cash, cash equivalents, and marketable securities [33] - The service business grew to $560 million in the September quarter, with high single-digit percent year-over-year growth expected for 2023 [29] Business Line Data and Key Metrics - The service business grew both sequentially and year-over-year, reaching $560 million in the September quarter [29] - The company's process control portfolio showed strength, particularly in legacy node investment globally and industry infrastructure investment [27] - The rapid growth of AI is enabling differentiation and driving industry growth, with the company leveraging AI to improve system performance [28] Market Data and Key Metrics - The company sees strength in markets served by legacy nodes, despite softness in memory and leading-edge logic and foundry investments [25] - China's market mix is approaching 50%, with new entrants and improving yields potentially driving higher investment in process control [6][7] - The company expects China's wafer infrastructure investment to flatten in 2024, but does not anticipate a significant decline [12] Company Strategy and Industry Competition - The company is focused on enabling innovation through technology advancements and transitions, which customers continue to prioritize across all business environments [44] - The company is leveraging AI expertise to improve inspection, metrology, and data analytics systems, helping customers solve challenges associated with current process technologies [35] - The company is well-positioned to support customers in the transition to gate-all-around architecture, with investments in Gen 4 technology and AI capabilities [93][94] Management Commentary on Operating Environment and Future Outlook - The overall business environment remains relatively stable, with strength in legacy node investment and industry infrastructure investment [25] - The company expects demand to stabilize around current levels into the first half of 2024, with no significant changes anticipated in China shipments [57] - The company is monitoring the slowdown in the electronics market and adjusting capacity plans as needed [26] Other Important Information - The company announced an incremental $2 billion share repurchase authorization, reflecting confidence in the business model and growth strategy [34] - The company increased its quarterly dividend to $1.45 per share, marking the 14th consecutive annual dividend increase [41] - The company is focused on employee safety and well-being, particularly in light of the situation in Israel, and is providing resources and support through the KLA Foundation [22][23] Q&A Session Summary Question: Stability in the first half of 2024 and memory recovery timing [56] - The company expects business levels to remain stable in the first half of 2024, with no significant changes in China shipments [57] - Memory customers indicate historical lows in the market, with no near-term changes expected in capacity increases [60] Question: Service business growth and assumptions for 2024 [62] - The company expects service growth to accelerate to the target range of 12% to 14% in 2024, driven by tools coming off warranty and moving into contracts [63] - Utilization rates are stabilizing and increasing in certain parts of the business, which is a positive indicator for service growth in 2024 [68] Question: China business sustainability and outlook [79] - The company sees sustainability in China's legacy node investments, particularly in industries like EV and infrastructure, with no significant changes expected in the near term [80][81] - The company expects China's business to remain elevated, with a meaningful backlog and deposits for future shipments [83] Question: Gate-all-around architecture opportunities [93] - The company is well-prepared for gate-all-around architecture, leveraging Gen 4 technology and AI capabilities to address inspection and metrology challenges [94][95] - The transition to gate-all-around will drive higher process control intensity, benefiting both inspection and metrology [96] Question: DRAM strength and outlook [98] - DRAM strength in the quarter was driven by shipments to China and R&D investment, with no significant decline expected in the December quarter [99] - The company continues to see strength in optical and macro inspection, with process control intensity remaining high [100] Question: 2024 WFE outlook and inventory management [123] - The company expects WFE investment to remain flat in 2024, with no significant changes anticipated in the near term [110] - Inventory levels are high due to long lead-time parts and commitments to suppliers, but the company is well-positioned for future demand [127][128] Question: OpEx outlook for 2024 [134] - The company expects a modest uptick in OpEx in 2024, in line with general post-living adjustments and long-term investment requirements [136][137] Question: Leading-edge foundry/logic weakness and outlook [139] - The company sees stabilization in leading-edge foundry/logic, with no further declines expected in 2024 [149] - The company expects to see more N3 and N2 activity in 2024, with investment focused on R&D and ramp phases [143]