KLA(US:KLAC)2025-10-31 20:07Financial Performance - Total revenues for the three months ended September 30, 2025, were $3,209.7 million, an increase from $2,841.5 million in the same period of 2024, representing a year-over-year growth of approximately 12.9%[157] - Net income for the three months ended September 30, 2025, was $1,121.0 million, up from $945.9 million in the same period of 2024, reflecting a year-over-year increase of approximately 18.5%[157] - Income before income taxes for the three months ended September 30, 2025, was $1.31 billion, an increase from $1.08 billion in the same period of 2024[182] - Provision for income taxes increased to $188.4 million in Q3 2025 from $132.8 million in Q3 2024, resulting in an effective tax rate of 14.4%, up from 12.3%[182] Revenue Breakdown - The services business accounted for approximately 23% of total revenues in the first quarter of fiscal 2026, driven largely by recurring "subscription-like" contracts[152] - Product revenues rose by 12% to $2,465,006,000, while service revenues increased by 16% to $744,690,000 during the same period[164] - Semiconductor Process Control segment revenues accounted for approximately 90% of total company revenue, increasing by 13% to $2,899,392,000[168] - PCB and Component Inspection segment revenues surged by 37% to $189,488,000, driven by advanced packaging products related to AI[168] - Revenues from Taiwan skyrocketed by 72% to $793,608,000, increasing its share of total revenues from 16.3% to 24.7%[170] Cost and Expenses - Gross margin for the three months ended September 30, 2025, was 61.3%, compared to 59.6% for the same period in 2024, indicating an improvement of 1.7 percentage points[157] - R&D expenses rose by 12% to $360,461,000, primarily due to increased employee-related expenses and engineering project material costs[174] - SG&A expenses increased by 7% to $268,988,000, with notable rises in supplies, facilities-related expenses, and depreciation[176] - Interest expense decreased by 14% to $71,075,000, attributed to reduced interest following a $750 million debt repayment[179] - Other expense (income), net showed a net fair value gain of $8.7 million, influenced by favorable foreign exchange fluctuations[181] Cash Flow and Capital Management - Cash, cash equivalents, and marketable securities totaled $4.68 billion as of September 30, 2025, compared to $4.49 billion as of June 30, 2025[186] - Net cash provided by operating activities was $1.16 billion for Q3 2025, up from $995.2 million in Q3 2024, driven by higher customer collections[187] - Net cash used in investing activities increased to $410.0 million in Q3 2025 from $171.0 million in Q3 2024, primarily due to higher net purchases of available-for-sale securities[188] - Net cash used in financing activities was $881.8 million in Q3 2025, compared to $837.7 million in Q3 2024, largely due to increased dividend payments[189] - Working capital increased to $6.85 billion as of September 30, 2025, up by $238.2 million from $6.61 billion as of June 30, 2025[198] Shareholder Returns - The company repurchased $545.1 million in shares and paid $254.0 million in dividends during the three months ended September 30, 2025, marking the 16th consecutive annual dividend increase[160] - The company declared a quarterly cash dividend of $1.90 per share in Q3 2025, up from $1.45 per share in the same period of 2024, totaling $254.0 million in dividends paid[191] Market and Industry Trends - The semiconductor industry is experiencing significant growth driven by high-performance computing and data centers, particularly due to the adoption of AI technologies[154] - Future growth is expected to be supported by increasing complexity and value of semiconductor packages, particularly for AI and high-performance computing applications[154] - Geopolitical factors, including government regulations and tariffs, have adversely impacted the company's results, but gross margin and overall financial performance improved in the three months ended September 30, 2025, compared to the same period in 2024[155] Company Structure - The company is organized into three reportable segments: Semiconductor Process Control, Specialty Semiconductor Process, and PCB and Component Inspection, each contributing to its diverse revenue streams[159] - As of September 30, 2025, the company had senior unsecured notes totaling $5.95 billion, with due dates ranging from fiscal 2029 through fiscal 2063[192] - The company maintained a credit rating of A from Fitch and S&P, and A2 from Moody's as of September 30, 2025, reflecting stable financial performance[199]