Core Insights - KLA's international operations are crucial for understanding its financial resilience and growth potential, especially given the interconnected global economy [2][3] Revenue Performance - KLA's total revenue for the quarter reached $3.06 billion, marking a 29.8% year-over-year increase [4] - Revenue contributions from various international markets show significant trends, with notable surprises in several regions [3] International Revenue Breakdown - Rest of Asia generated $100.44 million, representing 3.28% of total revenue, with an 11.6% surprise compared to projections [5] - Korea contributed $378.55 million, or 12.36% of total revenue, but fell short of the $420.01 million estimate by 9.87% [6] - Taiwan's revenue was $988.47 million, accounting for 32.27%, exceeding expectations by 9.83% [7] - Japan's contribution was $338.65 million, or 11.06%, surpassing the $300 million forecast by 12.88% [8] - China generated $792.88 million, constituting 25.89% of total revenue, but was 11.9% below the $900.01 million estimate [9] - Europe & Israel contributed $170.06 million, making up 5.55% of total revenue, with a significant surprise of 41.71% over the $120 million estimate [10] Future Revenue Expectations - Analysts predict KLA's total revenue for the current fiscal quarter to be $3.07 billion, a 19.5% increase from the prior year [11] - Expected revenue shares from various regions include Rest of Asia (3.9%), Korea (13.8%), Taiwan (27.5%), Japan (9.8%), China (29.5%), and Europe & Israel (3.9%) [12] - For the entire year, total revenue is forecasted at $12.04 billion, reflecting a 22.7% improvement from the previous year [13] Strategic Considerations - KLA's reliance on international markets presents both opportunities and challenges, necessitating close monitoring of revenue trends to forecast future prospects [14] - The impact of global interconnections and geopolitical factors on earnings predictions is significant for companies with overseas operations [15]

Core Viewpoint - The technology sector has significantly increased share buyback activities, with S&P 500 tech companies spending $253 billion on buybacks in 2024, representing nearly 27% of total buyback spending across all sectors [1]. Group 1: Company Buyback Announcements - KLA announced a $5 billion increase to its share buyback authorization, bringing its total buyback capacity to just under $5.5 billion, which is nearly 6% of its market capitalization [4]. - Dell Technologies revealed a $10 billion increase to its share repurchase authorization, which is approximately 15% of its $66 billion market cap [6][7]. - Alphabet announced a substantial $70 billion share buyback program, which represents about 3.5% of its market cap of around $2 trillion [10][11]. Group 2: Dividend Increases - KLA increased its quarterly dividend by almost 12%, with an indicated yield of around 1.1% [5]. - Dell Technologies announced an 18% increase to its quarterly dividend, now just under $0.53 per share, yielding around 2.2% [8]. - Alphabet's dividend increase was modest at 5%, with a quarterly dividend of $0.21, resulting in a yield of just over 0.5% [12]. Group 3: Market Sentiment and Analyst Ratings - KLA is recognized as a leader in chip inspection and metrology equipment, with a MarketRank of 93rd percentile and a moderate buy rating [3]. - Dell Technologies holds a MarketRank of 100th percentile, indicating strong market sentiment with a projected earnings growth of 17.75% [7]. - Alphabet has a MarketRank of 80th percentile, with a moderate buy rating and projected earnings growth of 14.94% [11].

Group 1 - KLA (KLAC) has reached a key level of support and recently broke out above the 50-day moving average, indicating a short-term bullish trend [1] - KLAC has moved 21.1% higher over the last four weeks and is currently rated as a Zacks Rank 2 (Buy) stock [2] - There have been 10 positive earnings estimate revisions for KLAC compared to none lower for the current fiscal year, with the consensus estimate also moving up [2][3] Group 2 - The combination of positive earnings estimate revisions and favorable technical indicators suggests that KLAC may experience further gains in the near future [3]

Core Viewpoint - KLA (KLAC) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. KLA's Earnings Outlook - For the fiscal year ending June 2025, KLA is expected to earn $32.04 per share, reflecting a 35% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for KLA has risen by 2.1%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - KLA's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Revenue and Growth - The company reported that services revenue accounted for approximately 23% of total revenues, driven by an increase in the installed base of KLA systems [161]. - Total revenues for the three months ended March 31, 2025, were $3,063.0 million, a 30% increase from $2,359.8 million in the same period of 2024 [191]. - Product revenues for the three months ended March 31, 2025, were $2,393.8 million, a 35% increase from $1,769.4 million in the same period of 2024 [191]. - Service revenues for the three months ended March 31, 2025, increased to $669.2 million, up 13% from $590.5 million in the same period of 2024 [193]. - Total revenues for the nine months ended March 31, 2025, reached $8,981.4 million, a 24% increase from $7,243.5 million in the same period of 2024 [191]. - Revenue from customers in China accounted for 34% of total revenues for the nine months ended March 31, 2025, and 26% for the three months ended March 31, 2025 [194]. - The company experienced a significant revenue increase in Taiwan, with revenues rising 128% to $988.5 million for the three months ended March 31, 2025 [192]. - Total revenues for reportable segments increased by $703.8 million, or 30%, for the three months ended March 31, 2025, compared to the same period in 2024, reaching $3,063,869 thousand [195]. Financial Performance - Gross margin improved to 61.6% for the three months ended March 31, 2025, compared to 57.9% in the same period of 2024 [191]. - Net income for the three months ended March 31, 2025, was $1,088.4 million, up from $601.5 million in the same period of 2024, reflecting a significant increase of 81% [1]. - Diluted net income per share increased to $8.16 for the three months ended March 31, 2025, compared to $4.43 in the same period of 2024 [1]. - Gross profit in the Semiconductor Process Control segment increased by $421.7 million, or 31%, for the three months ended March 31, 2025, compared to the same period in 2024 [202]. - Gross profit in the PCB and Component Inspection segment increased by 102% for the nine months ended March 31, 2025, compared to the same period in 2024 [202]. Expenses and Charges - R&D expenses for the three months ended March 31, 2025, increased by $16.5 million, or 5%, compared to the same period in 2024, totaling $338,043 thousand [204]. - SG&A expenses for the three months ended March 31, 2025, increased by $11.4 million (5%) to $248.9 million compared to $237.5 million in the same period of 2024 [208]. - SG&A expenses for the nine months ended March 31, 2025, rose by $52.6 million (7%) to $767.0 million compared to $714.4 million in the same period of 2024 [209]. - A goodwill and purchased intangible assets impairment charge of $239.1 million was recorded in the PCB and Component Inspection segment during the second quarter of fiscal 2025 [210]. - The company recorded a goodwill impairment charge of $230.4 million in the PCB and Component Inspection segment during the second quarter of fiscal 2025 [182]. Government Regulations and Market Conditions - The U.S. government has imposed export licensing requirements on certain semiconductor technologies for customers in China, impacting the company's ability to provide products and services [166]. - The 2023 BIS Rules, effective November 2023, update export controls on advanced computing semiconductors and manufacturing equipment, further complicating compliance for the company [170]. - The company is continuously assessing the impact of government regulations and tariffs on financial results, particularly concerning operations in China [174]. - The recent imposition of tariffs by the U.S. government is expected to adversely impact the company's results of operations, with ongoing uncertainty regarding their duration and extent [173]. - Recent improvements in the semiconductor environment are attributed to rising semiconductor content across end-markets and strategic investments in legacy nodes [164]. Cash Flow and Capital Management - Cash, cash equivalents, and marketable securities totaled $4.03 billion as of March 31, 2025, a decrease of $475.4 million from June 30, 2024, primarily due to stock repurchases and debt repayment [226]. - Net cash provided by operating activities was $2.92 billion for the nine months ended March 31, 2025, compared to $2.42 billion in the same period of 2024 [224]. - Net cash provided by operating activities increased to $2.92 billion for the nine months ended March 31, 2025, up from $2.42 billion in the same period of 2024, reflecting a $501 million increase primarily due to higher customer collections [230]. - Net cash used in investing activities improved to $122.9 million for the nine months ended March 31, 2025, compared to a cash outflow of $(1.34) billion in the prior year, driven by a $1.48 billion increase in net proceeds from the sale of available-for-sale securities [231]. - Net cash used in financing activities rose to $3.16 billion for the nine months ended March 31, 2025, compared to $1.16 billion in the same period of 2024, largely due to a $750 million increase in debt repayment and $458.8 million in common stock repurchases [232]. Investments and Credit - As of March 31, 2025, the company had $5.95 billion in senior unsecured notes, with compliance to all covenants under the Indenture [233]. - The company has an unsecured Revolving Credit Facility of up to $1.50 billion, with no outstanding borrowings as of March 31, 2025, and a leverage ratio of 1.08 to 1.00 [234]. - The company maintains a credit rating of A from Fitch Inc. and S&P Global Ratings, and A2 from Moody's Investors Service as of March 31, 2025 [240]. - The company intends to indefinitely reinvest $65.9 million of cash held by foreign subsidiaries, with $999.3 million of total cash held abroad [227]. - As of March 31, 2025, the company had an investment portfolio of fixed income securities valued at $2.02 billion, subject to interest rate risk [243]. Sustainability Initiatives - The company entered into a long-term virtual power purchase agreement in January 2025 to support its goal of 100% renewable electricity by 2030 [241].

KLA Corporation (KLAC) reported third-quarter fiscal 2025 non-GAAP earnings of $8.41 per share, beating the Zacks Consensus Estimate by 4.34%. The figure soared 59.9% year over year.Revenues increased 29.8% year over year to $3.06 billion, surpassing the Zacks Consensus Estimate by 1.92% and rising from the mid-point of the company’s guidance.KLA Corp’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the surprise being 6.35%, on average. (Find the latest EPS estimates and surprises ...

Group 1 - The analyst has 5 years of experience managing a technology fund and has a background in Mechanical Engineering [1] - The focus of the analysis is on investment opportunities in the semiconductor sector, robotics, and energy [1] - The investment strategy emphasizes growth at a reasonable price with a mid- to long-term horizon, targeting companies in oligopolistic sectors with high barriers to entry [1] Group 2 - The analyst has previously worked in the oil and gas sector before transitioning to global equities [1] - The analyst completed CFA Level II in 2024, indicating a commitment to professional development in investment management [1] - The analyst aims to provide small investors with valuable investment ideas through published articles [1]

For the quarter ended March 2025, KLA (KLAC) reported revenue of $3.06 billion, up 29.8% over the same period last year. EPS came in at $8.41, compared to $5.26 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $3.01 billion, representing a surprise of +1.92%. The company delivered an EPS surprise of +4.34%, with the consensus EPS estimate being $8.06.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectatio ...

Financial Data and Key Metrics Changes - KLA reported revenue of $3,060,000,000 for the March quarter, exceeding the guidance midpoint of $3,000,000,000, with a non-GAAP diluted EPS of $8.41 and GAAP diluted EPS of $8.16 [7][15] - The gross margin was 63%, about 50 basis points higher than the guidance midpoint, driven by a stronger product mix within the Process Control segment [15][21] - Free cash flow for the quarter was $990,000,000, with a total of $3,500,000,000 over the past twelve months, resulting in a free cash flow margin of 30% [13][18] Business Line Data and Key Metrics Changes - KLA's advanced packaging revenue grew to over $500,000,000 in calendar 2024 and is expected to exceed $850,000,000 in calendar 2025, reflecting strong customer adoption [12] - The services business grew to $669,000,000 in March, marking a 13% year-over-year increase, despite challenges from U.S. Government export controls [12][47] - The Process Control segment maintained a strong global share, with a notable increase in advanced wafer level packaging market share, moving from third position in 2019 to a leading position in 2025 [10][11] Market Data and Key Metrics Changes - KLA's market share in the WFE and process control markets remained strong, with a 30% year-over-year revenue increase attributed to investments in leading-edge logic and high bandwidth memory [11][19] - The company expects WFE to grow by mid-single digits percentage in 2025, driven by investments in leading-edge foundry and logic, partially offset by lower demand from China [19][24] - KLA's exposure to the Chinese market was approximately 26% in March, with expectations of it being around 30% for the year, despite potential declines due to export controls [56][57] Company Strategy and Development Direction - KLA's strategy focuses on capital return, with a commitment to increasing dividends and share repurchases, announcing a 12% increase in quarterly dividends and a new $5,000,000,000 share repurchase authorization [14][18] - The company aims to leverage its unique product portfolio to support technology transitions and ensure high-volume production, particularly in advanced packaging and AI infrastructure [20][24] - KLA plans to postpone its Investor Day to early to mid-2026, hoping for a more stable macro environment to discuss growth strategies [9][33] Management's Comments on Operating Environment and Future Outlook - Management noted that despite macro uncertainties, there has been no change in customer demand or investment plans, indicating confidence in continued growth [8][9] - The company highlighted the importance of AI as a key driver for growth, with increasing complexity in semiconductor design and production [11][62] - Management expressed optimism about the 2026 outlook, citing ongoing investments in AI infrastructure and the need for capacity expansion among customers [61][70] Other Important Information - KLA's balance sheet remains strong, with $4,000,000,000 in cash and cash equivalents, and a debt of $5,900,000,000, supporting growth strategies and capital returns [18] - The company is adapting its product offerings to meet the evolving needs of the advanced packaging market, particularly in high bandwidth memory and hybrid bonding technologies [51][93] Q&A Session Summary Question: Impact of tariffs on equipment and systems - Management acknowledged the fluidity of tariff impacts and the potential headwinds on gross margins, particularly in the service business, while emphasizing their ability to manage global manufacturing operations [27][30][34] Question: Growth outlook for services - The services business is expected to grow in the low double digits for the year, slightly below long-term targets due to export control impacts [46][48] Question: Competitive positioning in advanced packaging - KLA has seen significant growth in advanced packaging, particularly in CoAOS, and is well-positioned to capitalize on the increasing demand for high bandwidth memory [49][51] Question: Revenue expectations from China - Management expects China to contribute around 30% of revenue for the year, with potential fluctuations due to macroeconomic factors [56][57] Question: Factors influencing gross margin guidance - The increase in gross margin guidance is attributed to product mix improvements and scale benefits from advanced packaging, despite tariff impacts [72][74]

KLA (KLAC) Q3 2025 Earnings Call April 30, 2025 05:00 PM ET Speaker0 Good afternoon. My name is Margot, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the KLA Corporation March Quarter twenty twenty five Earnings Conference Call and Webcast. All participants' lines have been placed in a listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer Thank you. I will now turn the call over to Kevin Kessel, Vice Pre ...