Company Performance - KLA reported quarterly earnings of $8.81 per share, exceeding the Zacks Consensus Estimate of $8.55 per share, and up from $7.33 per share a year ago, representing an earnings surprise of +3.04% [1] - The company posted revenues of $3.21 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.72%, and an increase from $2.84 billion year-over-year [2] - KLA has consistently surpassed consensus EPS estimates over the last four quarters [2] Stock Performance - KLA shares have increased approximately 91.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 17.2% [3] - The current Zacks Rank for KLA is 2 (Buy), indicating expectations for the stock to outperform the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $8.55 on revenues of $3.16 billion, and for the current fiscal year, it is $34.83 on revenues of $12.9 billion [7] - The trend of estimate revisions for KLA was favorable ahead of the earnings release, which may influence future stock movements [5][6] Industry Context - KLA operates within the Electronics - Miscellaneous Products industry, which is currently ranked in the top 20% of over 250 Zacks industries, suggesting a positive outlook for the sector [8] - The performance of KLA's stock may also be influenced by the overall industry outlook [8]

Financial Data and Key Metrics Changes - KLA reported revenue of $3.21 billion for the September quarter, exceeding the guidance midpoint of $3.15 billion [6][11] - Non-GAAP diluted EPS was $8.81, while GAAP diluted EPS was $8.47, both above the guidance midpoint [11] - Gross margin improved to 62.5%, 50 basis points above the guidance midpoint, driven by a stronger product mix and manufacturing efficiencies [12] - Free cash flow reached $3.9 billion with a free cash flow margin of 31% [9] Business Line Data and Key Metrics Changes - Advanced packaging revenue is expected to exceed $925 million for calendar year 2025, representing a 70% year-over-year increase [8] - Service revenue grew to $745 million in the September quarter, up 6% sequentially and 16% year-over-year [8] - Non-GAAP operating margin was reported at 43.2% [12] Market Data and Key Metrics Changes - KLA anticipates mid to high single-digit growth in wafer fab equipment (WFE) for 2025, driven by investments in leading-edge foundry logic and memory [16] - The advanced packaging market is expected to grow more than 20% compared to the previous year [16] - The company estimates a revenue impact of approximately $300 million-$350 million due to export controls affecting certain customers in China [17] Company Strategy and Development Direction - KLA is focusing on expanding its market leadership in advanced packaging and process control, addressing all growth markets in WFE [9][10] - The company emphasizes a disciplined approach to capital allocation, aiming to maximize total shareholder value [10] - KLA's product portfolio is designed to support technology transitions and ensure yield entitlement in high-volume production [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the semiconductor industry's growth in 2026, with expectations for a broader spending profile compared to 2025 [17] - Customer discussions have become more constructive, indicating a growth year for the industry in 2026 [17] - The company remains focused on supporting customers and driving productivity across the enterprise [22] Other Important Information - KLA's total capital return in the September quarter was $799 million, including $545 million in share repurchases and $254 million in dividends [9] - The company announced a $5 billion share repurchase authorization and a 12% increase in quarterly dividends [14][15] Q&A Session Summary Question: Insights on WFE growth outlook - Management noted that the outlook is more about confidence in timing rather than a significant change in magnitude, with constructive discussions around leading-edge investments [29][30] Question: Decline in foundry/logic revenue - The decline is attributed to a reduction in China, which was elevated in the previous quarter, while leading-edge revenue is expected to increase [39][40] Question: Gross margin guidance - The guidance down is primarily due to product mix adjustments, with a consistent tariff impact [44][45] Question: Advanced packaging process control intensity - KLA's share of the advanced packaging market is expected to grow, with increasing process control intensity as designs become more complex [50][52] Question: AI spending impact on WFE - Management agreed that significant AI spending could translate to increased WFE demand, particularly in memory and advanced packaging [56][57] Question: Memory growth expectations - The company expects DRAM investment to grow next year, driven by strong customer announcements and increased spending [98][99] Question: Foundry-related revenue opportunities - There is a broadening of investment discussions with foundries, indicating a shift towards yield improvement tools [102][103]

Financial Data and Key Metrics Changes - KLA reported revenue of $3.21 billion for the September quarter, exceeding the guidance midpoint of $3.15 billion [6][11] - Non-GAAP diluted EPS was $8.81, while GAAP diluted EPS was $8.47, both above the midpoint of their respective guidance ranges [11] - Gross margin improved to 62.5%, driven by a stronger product mix and manufacturing efficiencies [12] - Free cash flow reached $3.9 billion with a free cash flow margin of 31% [9] Business Line Data and Key Metrics Changes - Advanced packaging revenue is expected to exceed $925 million for calendar year 2025, representing a 70% year-over-year increase [8] - Satellite service business revenue grew to $745 million in the September quarter, up 6% sequentially and 16% year over year [8] - Non-GAAP operating margin was reported at 43.2% [12] Market Data and Key Metrics Changes - KLA anticipates mid to high single-digit growth in wafer fab equipment (WFE) for 2025, driven by investments in leading-edge foundry logic and memory [16] - The advanced packaging market is expected to grow more than 20% compared to the previous year [16] - The company estimates a revenue impact of approximately $300 million to $350 million due to export controls affecting certain customers in China [17] Company Strategy and Development Direction - KLA is focusing on expanding its market leadership in advanced packaging and process control, addressing all growth markets in WFE [9][10] - The company emphasizes a disciplined approach to capital allocation aimed at maximizing total shareholder value [10] - KLA's product portfolio is designed to support technology transitions and ensure yield entitlement in high-volume production [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the semiconductor industry's growth in 2026, with expectations for a broader spending profile compared to 2025 [17] - The company noted constructive customer discussions regarding investments in leading-edge technology and process control [29][32] - Management acknowledged challenges from export controls but remains confident in KLA's ability to outperform the WFE market [16][17] Other Important Information - KLA's total capital return in the September quarter was $799 million, including $545 million in share repurchases and $254 million in dividends [9] - The company has a flexible bond maturity profile supported by investment-grade ratings from major rating agencies [13] - KLA's December quarter guidance includes expected total revenue of $3.225 billion, with a gross margin forecast of 62% [18][19] Q&A Session Summary Question: Insights on WFE growth outlook - Management indicated that the outlook is more about confidence in timing rather than a significant change in magnitude, with encouraging signs from leading-edge foundry logic and DRAM investments [29][30] Question: Decline in foundry/logic revenue - The decline is attributed to a reduction in China, which was elevated in the previous quarter, while leading-edge revenue is expected to increase [39][40] Question: Gross margin guidance - The guidance down is primarily due to product mix adjustments, with expectations for long-term operating margins to remain robust [44][46] Question: Advanced packaging process control intensity - Management clarified that KLA's share of the advanced packaging market is growing, with expectations for continued intensity as design complexities increase [50][52] Question: AI spending impact on WFE - Management agreed with the correlation between AI spending and WFE growth, suggesting that packaging investments will also contribute significantly [56][57] Question: Memory growth expectations - Management expects DRAM investments to grow next year, driven by customer announcements and increased spending [98][99] Question: Foundry revenue opportunities outside Taiwan - There is a positive trend in engagement with other foundries, with discussions focused on yield improvement tools and advanced logic investments [102][103]

Financial Data and Key Metrics Changes - KLA reported revenue of $3,210,000,000 for the September quarter, exceeding the guidance midpoint of $3,150,000,000 [6][10] - Non-GAAP diluted EPS was $8.81, while GAAP diluted EPS was $8.47, both above the respective guidance ranges [10] - Gross margin improved to 62.5%, driven by a stronger product mix and manufacturing efficiencies [10] - Cash flow from operations reached a record $1,160,000,000, with free cash flow at $1,070,000,000 [11][12] - Total capital return for the quarter was $799,000,000, including $545,000,000 in share repurchases and $254,000,000 in dividends [8][12] Business Line Data and Key Metrics Changes - Advanced Packaging revenue is expected to exceed $925,000,000 for calendar year 2025, representing a 70% year-over-year increase [7] - Service business revenue grew to $745,000,000, up 6% sequentially and 16% year over year [8] - Non-GAAP operating margin was reported at 43.2% [10] Market Data and Key Metrics Changes - KLA anticipates mid to high single-digit growth in wafer fab equipment (WFE) for 2025, driven by investments in leading-edge foundry logic and memory [15] - Advanced Packaging market is expected to grow more than 20% compared to the previous year [15] - The company estimates a revenue impact of approximately $300,000,000 to $350,000,000 due to export controls affecting certain customers in China [16][17] Company Strategy and Development Direction - KLA's strategy focuses on capitalizing on the growing relevance of process control and AI infrastructure investments [6] - The company aims to address all growth markets in WFE, including memory, advanced packaging, and leading-edge logic [9] - KLA is committed to maximizing total shareholder value through disciplined capital allocation and consistent execution [9][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth outlook for 2026, with expectations for a broader spending profile in WFE and Advanced Packaging [15][16] - The company noted constructive customer discussions regarding investments in process control, particularly in leading-edge technologies [30][31] - Management highlighted the importance of advanced process control as design complexity increases, particularly in custom silicon development [21] Other Important Information - KLA's total cash, cash equivalents, and marketable securities stood at $4,700,000,000, with total debt at $5,900,000,000 [12] - The company announced a 12% increase in its quarterly dividend to $1.9 per share, marking the sixteenth consecutive annual dividend increase [13] Q&A Session Summary Question: Insights on WFE growth outlook - Management indicated that the outlook is becoming clearer as customer lead times improve, with positive signs for leading-edge foundry logic and DRAM investments [28][30] Question: Decline in foundry logic revenue - The decline is attributed to a reduction in China, which was elevated in the previous quarter, while leading-edge revenue is expected to increase [38][39] Question: Gross margin guidance - The decrease in gross margin is primarily due to product mix adjustments, with ongoing tariff impacts also considered [42][44] Question: Advanced packaging process control intensity - Management noted that KLA's share in the advanced packaging market has increased significantly, with expectations for continued growth [50][51] Question: DRAM growth expectations - Management expects DRAM to be a growth area next year, driven by increased customer spending and new market requirements [104][105] Question: Foundry-related revenue opportunities - There is encouragement regarding increased engagement with foundries outside the dominant Taiwanese customer, with ongoing discussions about process control needs [108]

Financial Data and Key Metrics Changes - KLA reported revenue of $3.21 billion for the September quarter, exceeding the guidance midpoint of $3.15 billion [8][9] - Non-GAAP diluted EPS was $8.81, while GAAP diluted EPS was $8.47, both above the midpoint of their respective guidance ranges [8][9] - Gross margin improved to 62.5%, 50 basis points above the midpoint of guidance, driven by a stronger product mix and manufacturing efficiencies [9] - Free cash flow reached $3.9 billion with a free cash flow margin of 31% [6] Business Line Data and Key Metrics Changes - Advanced packaging revenue is expected to exceed $925 million for calendar year 2025, representing a 70% year-over-year increase [5] - Satellite service business revenue grew to $745 million in the September quarter, up 6% sequentially and 16% year over year [5] - Non-GAAP operating margin was reported at 43.2% [9] Market Data and Key Metrics Changes - The advanced packaging market is projected to grow more than 20% compared to the previous year [12] - KLA's share of the wafer fab equipment (WFE) market is expected to grow, with the advanced packaging market now estimated at approximately $11 billion [11][12] - China’s contribution to KLA's revenue is expected to decline to the high 20s percentage range due to export controls and normalization [51] Company Strategy and Development Direction - KLA is focusing on capitalizing on the growing demand for advanced packaging and AI infrastructure investments [4][8] - The company aims to outperform the mid to high single-digit growth rate in WFE for 2025, driven by rising process control intensity [12][17] - KLA's strategy includes consistent capital returns and long-term investment to maximize shareholder value [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the semiconductor industry's growth in 2026, with expectations for a broader spending profile compared to 2025 [13] - The company anticipates a revenue impact of approximately $300 million to $350 million due to export controls affecting certain customers in China [14] - Management noted constructive customer discussions regarding investments in leading-edge logic and DRAM, indicating a positive outlook for the industry [25][76] Other Important Information - KLA's total capital return in the September quarter was $799 million, including $545 million in share repurchases and $254 million in dividends [6] - The company announced a $5 billion share repurchase authorization and a 12% increase in quarterly dividends [10][11] Q&A Session Summary Question: Insights on WFE growth outlook - Management indicated that the outlook is more about confidence in timing rather than a significant change in growth expectations, with positive signs from leading-edge foundry logic and DRAM investments [25][26] Question: Decline in foundry/logic revenue - The decline is attributed to a reduction in China’s contribution, which was elevated in the previous quarter, while leading-edge and memory segments are expected to uptick [31][32] Question: Gross margin guidance - The guidance down is primarily due to product mix adjustments, with expectations for gross margins to remain stable based on consistent factory output [35][36] Question: Advanced packaging process control intensity - Management clarified that KLA's share of the advanced packaging market is growing, with expectations for continued growth in process control intensity as designs become more complex [39][42] Question: DRAM growth expectations - Management expects DRAM to be a growth area next year, driven by increased capital intensity and customer investments [75][76] Question: Foundry-related revenue opportunities - There is encouragement regarding broader investment discussions with foundry customers, particularly those looking to improve yield and process control [78]

Core Insights - KLA Corp has forecasted second-quarter revenue that exceeds Wall Street estimates, driven by strong demand for its chipmaking tools linked to artificial intelligence [1] - The company has highlighted significant risks associated with its business operations in China [1] Revenue Forecast - The anticipated revenue for the second quarter is projected to be above market expectations, indicating robust growth potential in the semiconductor sector [1] - The demand for AI-related technologies is a key factor contributing to this positive outlook [1] Risks - KLA Corp has flagged considerable risks to its operations in China, which may impact future performance [1]

Q1 Fiscal 2026 Earnings Quarter Ended September 30, 2025 • Reported October 29, 2025 KLA Non-Confidential | Unrestricted 1 Forward Looking Statements Statements in this letter other than historical facts, such as statements pertaining to: (i) future industry demand for semiconductors, WFE, and advanced packaging; (ii) our market position for the future and future growth in demand for our products; (iii) our forecast of financial measures for the following quarter and 2025; (iv) our future revenues by custom ...

Exhibit 99.1 FOR IMMEDIATE RELEASE Investor Relations: Media Relations: Kevin Kessel, CFA Mike Dulin Vice President, Investor Relations Corporate Communications (408) 875-6627 michael.dulin@kla.com kevin.kessel@kla.com KLA Corporation Reports Fiscal 2026 First Quarter Results MILPITAS, Calif., October 29, 2025 - KLA Corporation (NASDAQ: KLAC) today announced financial and operating results for its first quarter of fiscal year 2026, which ended on September 30, 2025, and reported GAAP net income of $1.12 bil ...

Core Insights - KLA Corporation reported strong financial results for Q1 FY 2026, with GAAP net income of $1.12 billion and revenues of $3.21 billion, reflecting double-digit year-over-year growth [1][2][4]. Financial Performance - Total revenues for Q1 FY 2026 were $3,210 million, exceeding the guidance midpoint of $3,150 million +/- $150 million [4]. - GAAP net income was $1,121 million, with a diluted EPS of $8.47, compared to $946 million and $7.01 in Q1 FY 2025, marking a significant increase [2][4][12]. - Non-GAAP net income for Q1 FY 2026 was $1,167 million, with a non-GAAP diluted EPS of $8.81, also showing substantial growth from the previous year [2][12]. Segment Performance - The Semiconductor Process Control segment generated revenues of $2,899 million, up from $2,575 million in the same quarter last year [11]. - The Specialty Semiconductor Process segment reported revenues of $120 million, while PCB and Component Inspection segment revenues were $189 million, both showing year-over-year growth [11]. Cash Flow and Capital Returns - Cash flow from operating activities for the quarter was $1.16 billion, with free cash flow of $1.07 billion [4][10]. - Capital returns for the quarter included $799 million in share repurchases and $254 million in dividends paid to stockholders [4][10]. Guidance for Q2 FY 2026 - KLA expects total revenues for Q2 FY 2026 to be in the range of $3.225 billion +/- $150 million, with GAAP gross margin projected at 60.8% +/- 1.0% [5][14]. - The company anticipates GAAP diluted EPS to be in the range of $8.46 +/- $0.78 for the upcoming quarter [5][14].

Group 1: Semiconductor Equipment Industry - There has been a positive trend in the semiconductor equipment sector, with companies like Applied Materials, Lamb Research, and KLA Corp reaching new all-time highs due to strong earnings and favorable market conditions [2] - The rhetoric surrounding the semiconductor industry has improved, which is expected to have a positive impact on the market [2] - Despite a challenging year, the semiconductor equipment sector is anticipated to continue its positive momentum [3] Group 2: Healthcare and Biotech Sector - The healthcare sector, particularly pharmaceuticals and biotech, is viewed favorably as growth opportunities are expected to arise, especially leading into the midterm election year of 2026 [6] - There is a focus on the performance of Merck, particularly regarding its cancer drug Kitruda, with concerns about risks associated with its future performance [8] - The financial services engagement environment is expected to support strong performance from S&P Global, indicating a positive outlook for the healthcare sector [5]