KLA(KLAC) - 2025 Q4 - Annual Results

Financial Highlights and Business Outlook Q4 & Fiscal Year 2025 Performance Summary KLA reported strong financial results for the fourth quarter and full fiscal year of 2025, with significant year-over-year growth in revenue and earnings per share. The company highlighted the growing relevance of its technologies in supporting the AI infrastructure buildout and achieved a record quarterly free cash flow of over $1 billion - CEO Rick Wallace attributed the strong results to the compelling opportunity in semiconductor capital equipment, driven by the AI infrastructure buildout and innovation in foundry/logic, memory, and advanced packaging markets[3] - The company achieved record financial flows in Q4, with cash flow from operations at $1.16 billion and free cash flow reaching $1.06 billion, surpassing the $1 billion mark for the first time in a quarter[4] Q4 Fiscal 2025 Performance Highlights | Metric | Q4 FY 2025 | Q3 FY 2025 | Q4 FY 2024 | | :--- | :--- | :--- | :--- | | GAAP Results | | | | | Total Revenues | $3,175 million | $3,063 million | $2,569 million | | Net Income | $1,203 million | $1,088 million | $836 million | | Diluted EPS | $9.06 | $8.16 | $6.18 | | Non-GAAP Results | | | | | Net Income | $1,244 million | $1,121 million | $893 million | | Diluted EPS | $9.38 | $8.41 | $6.60 | Full Fiscal Year 2025 Performance Highlights | Metric (GAAP) | Fiscal Year 2025 | Fiscal Year 2024 | | :--- | :--- | :--- | | Total Revenues | $12.16 billion | $9.81 billion | | Net Income | $4.06 billion | $2.76 billion | | Diluted EPS | $30.37 | $20.28 | First Quarter Fiscal 2026 Guidance KLA anticipates revenues for the first quarter of fiscal 2026 to be in the range of $3.15 billion, plus or minus $150 million. The company also provided guidance for GAAP and Non-GAAP gross margin and diluted earnings per share Q1 Fiscal 2026 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenues | $3.15 billion +/- $150 million | | GAAP Gross Margin | 60.7% +/- 1.0% | | Non-GAAP Gross Margin | 62.0% +/- 1.0% | | GAAP Diluted EPS | $8.28 +/- $0.77 | | Non-GAAP Diluted EPS | $8.53 +/- $0.77 | Consolidated Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, KLA's total assets grew to $16.07 billion from $15.43 billion in the prior year. This was accompanied by a decrease in total liabilities to $11.38 billion and a significant increase in total stockholders' equity to $4.69 billion, up from $3.37 billion year-over-year Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total current assets | $10,698,789 | $10,031,144 | | Total assets | $16,067,926 | $15,433,566 | | Total current liabilities | $4,085,795 | $4,660,774 | | Total liabilities | $11,375,473 | $12,065,238 | | Total stockholders' equity | $4,692,453 | $3,368,328 | Condensed Consolidated Statements of Operations For the fiscal year ended June 30, 2025, KLA's total revenues increased to $12.16 billion from $9.81 billion in fiscal 2024. Net income rose substantially to $4.06 billion, or $30.37 per diluted share, compared to $2.76 billion, or $20.28 per diluted share, in the previous year, reflecting strong growth in both product and service revenues Fiscal Year Performance Comparison (in thousands, except per share data) | Metric | Twelve Months Ended June 30, 2025 | Twelve Months Ended June 30, 2024 | | :--- | :--- | :--- | | Product Revenues | $9,472,854 | $7,482,679 | | Service Revenues | $2,683,308 | $2,329,568 | | Total Revenues | $12,156,162 | $9,812,247 | | Income Before Taxes | $4,644,448 | $3,190,032 | | Net Income | $4,061,643 | $2,761,896 | | Diluted EPS | $30.37 | $20.28 | Q4 Performance Comparison (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $3,174,741 | $2,568,735 | | Net Income | $1,202,849 | $836,446 | | Diluted EPS | $9.06 | $6.18 | Condensed Consolidated Statements of Cash Flows In the fourth quarter of fiscal 2025, KLA generated $1.16 billion in cash from operating activities, a notable increase from $892.6 million in the same period last year. The company utilized cash for investing activities, including capital expenditures and securities purchases, and for financing activities, primarily through $425.7 million in stock repurchases and $254.0 million in dividend payments - Key financing activities in Q4 FY2025 included common stock repurchases of $425.7 million and dividend payments of $254.0 million[11] Q4 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,164,991 | $892,615 | | Net cash used in investing activities | ($325,345) | ($138,792) | | Net cash used in financing activities | ($629,813) | ($618,861) | | Net increase in cash and cash equivalents | $220,886 | $128,962 | Supplemental Financial Information Segment Information The Semiconductor Process Control segment continues to be the primary revenue driver for KLA, contributing $10.95 billion in fiscal year 2025, up from $8.73 billion in the prior year. The Specialty Semiconductor Process and PCB, Display and Component Inspection segments also experienced year-over-year revenue growth Revenues by Reportable Segment (in thousands) | Segment | Twelve Months Ended June 30, 2025 | Twelve Months Ended June 30, 2024 | | :--- | :--- | :--- | | Semiconductor Process Control | $10,947,359 | $8,733,556 | | Specialty Semiconductor Process | $587,107 | $528,701 | | PCB and Component Inspection | $621,721 | $552,491 | | Total Segment Revenues | $12,156,187 | $9,814,748 | Reconciliation of GAAP to Non-GAAP Financial Measures KLA provides non-GAAP financial measures to offer investors insight into its core operating performance by excluding items such as acquisition-related charges, restructuring costs, and asset impairments. This section details the reconciliation of GAAP net income, EPS, and gross margin to their non-GAAP counterparts, as well as calculations for free cash flow and capital returns - The company presents non-GAAP information to enhance understanding of financial and business trends by excluding certain costs and expenses not indicative of core operating results, such as acquisition-related charges, restructuring, and goodwill impairment[19] Net Income and EPS Reconciliation For Q4 FY2025, KLA's GAAP net income of $1.20 billion reconciles to a non-GAAP net income of $1.24 billion. This adjustment primarily reflects the exclusion of acquisition-related charges. Consequently, non-GAAP diluted EPS was $9.38, compared to GAAP diluted EPS of $9.06 GAAP to Non-GAAP Net Income Reconciliation (in thousands) | Description | Q4 FY 2025 | Q4 FY 2024 | | :--- | :--- | :--- | | GAAP net income | $1,202,849 | $836,446 | | Acquisition-related charges | $50,677 | $58,777 | | Restructuring, severance, etc. | $2,133 | $17,721 | | Tax effects & discrete items | ($11,237) | ($20,135) | | Non-GAAP net income | $1,244,422 | $892,809 | GAAP to Non-GAAP Diluted EPS Reconciliation | Description | Q4 FY 2025 | Q4 FY 2024 | | :--- | :--- | :--- | | GAAP net income per diluted share | $9.06 | $6.18 | | Non-GAAP net income per diluted share | $9.38 | $6.60 | Free Cash Flow and Capital Returns In Q4 FY2025, KLA generated $1.06 billion in free cash flow, calculated from $1.16 billion in operating cash flow less $100.4 million in capital expenditures. The company returned $679.7 million to shareholders during the quarter through dividends and stock repurchases Free Cash Flow Reconciliation (in thousands) | Description | Q4 FY 2025 | FY 2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,164,991 | $4,081,903 | | Capital expenditures | ($100,408) | ($335,259) | | Free cash flow | $1,064,583 | $3,746,644 | Capital Returns (in thousands) | Description | Q4 FY 2025 | FY 2025 | | :--- | :--- | :--- | | Payments of dividends to stockholders | $253,965 | $904,594 | | Common stock repurchases | $425,697 | $2,149,946 | | Capital returns | $679,662 | $3,054,540 | Guidance Reconciliation For its Q1 FY2026 guidance, KLA provides reconciliations for EPS and gross margin. The projected GAAP diluted EPS of $7.51-$9.05 is adjusted to a non-GAAP range of $7.76-$9.30. The GAAP gross margin guidance of 59.7%-61.7% is adjusted to a non-GAAP range of 61.0%-63.0%, primarily due to acquisition-related charges Q1 FY2026 GAAP to Non-GAAP Diluted EPS Guidance Reconciliation | Description | Low | High | | :--- | :--- | :--- | | GAAP net income per diluted share | $7.51 | $9.05 | | Adjustments (Acquisition, Restructuring, Tax) | $0.25 | $0.25 | | Non-GAAP net income per diluted share | $7.76 | $9.30 | Q1 FY2026 GAAP to Non-GAAP Gross Margin Guidance Reconciliation | Description | Low | High | | :--- | :--- | | GAAP gross margin | 59.7% | 61.7% | | Acquisition-related charges | 1.3% | 1.3% | | Non-GAAP gross margin | 61.0% | 63.0% | Notes and Disclosures Forward-Looking Statements This section contains a standard safe harbor provision, cautioning that forward-looking statements, including financial guidance, are subject to numerous risks and uncertainties. It outlines various factors that could cause actual results to differ materially, such as global economic conditions, trade restrictions, industry cyclicality, and cybersecurity threats - The company's forward-looking statements, including its Q1 FY2026 guidance, are based on current expectations and are subject to a number of risks that could cause actual results to differ materially[8] - Identified risks include weakening financial markets, international trade restrictions (particularly with China), intellectual property disputes, cybersecurity threats, and the cyclical nature of the semiconductor industry[8] Use of Non-GAAP Financial Information KLA explains its rationale for using non-GAAP financial measures, stating they provide a clearer view of core operational performance for both management and investors. The report details the specific adjustments made, such as excluding amortization of acquired intangible assets, restructuring charges, goodwill impairments, and their related tax effects - Non-GAAP financial information is provided to supplement GAAP results and enhance the user's understanding of the company's operating performance and future prospects[19] - Specific adjustments to reconcile GAAP to non-GAAP results include acquisition-related charges (e.g., amortization of intangible assets), restructuring and severance costs, impairment of goodwill, and the income tax effects of these adjustments[19]