[KLAC] KLA: Earnings Preview on Whether New Tools Can Carry a $4 Billion Quarter

KLA (KLAC) sells inspection and metrology tools and related services that help chipmakers find nanometer-scale defects and raise yields[1]. Ahead of KLA earnings, the Drillr earnings calendar shows the company reporting on 2026-10-28 for its fiscal first quarter of 2027, the quarter ending September 30, 2026 (2027 财年第一季度(截至 2026 年 9 月 30 日的季度))[2]. In the latest disclosed quarter, ended June 30, 2026, revenue was $3.66 billion, up 15% year over year, GAAP net income was $1.36 billion and GAAP diluted EPS was $1.04; operating cash flow was $906.4 million and free cash flow was $817.1 million[3]. On July 28, 2026, the company guided the September quarter to revenue of $4.0 billion plus or minus $200 million, GAAP gross margin of 61.6% plus or minus 1 percentage point and non-GAAP diluted EPS of $1.16 plus or minus $0.10[3], and on the call it put operating expenses at about $690 million[4]. The consensus compiled by the Drillr earnings calendar as of September 28 stands at revenue of $4.038 billion and EPS of $1.18, both slightly above the midpoints of company guidance; for the prior quarter, the same measure was $1.00 and the actual result was $1.05[2].

Three things matter most in this report. First, what makes up the $4.0 billion quarter: in fiscal 2026, service revenue grew 16% while product revenue grew only 10.4%[5], so if the September increase comes mainly from new wafer inspection and patterning tools, leading-edge nodes are raising inspection intensity per line; otherwise the step up leans more on the installed base. Second, whether gross margin holds near the 61.6% guide: management said on the call that higher memory component costs already weigh on gross margin by slightly more than 100 basis points and could persist through 2027[4], which decides how much revenue growth reaches profit. Third, whether cash keeps pace with earnings: fiscal 2026 net income rose 19%, while operating cash flow edged up only from $4.08 billion to $4.14 billion[6], and if inventory and receivables keep absorbing cash during the ramp, the practice of returning about 90% of free cash flow through buybacks and dividends comes under strain.

Company Background and Business Structure

KLA is a leading supplier of semiconductor process control and yield management products, covering inspection and metrology of wafers, reticles and integrated circuits, and its service revenue comes mainly from recurring, subscription-like maintenance contracts[1]. The company completed a ten-for-one stock split after the market close on June 11, 2026, and per-share figures disclosed since then are restated on a post-split basis[3]. The business is highly international: North America contributed only 13.0% of fiscal 2026 revenue, so about 87% came from outside the United States, including 29.8% from China, 26.8% from Taiwan and 13.5% from Korea[7]. Customers are concentrated as well, with one customer accounting for about 19% of total revenue in both fiscal 2026 and fiscal 2025[8].

KLA reports three segments, and Semiconductor Process Control dominates. In fiscal 2026, Semiconductor Process Control revenue was $12.24 billion, Specialty Semiconductor Process revenue was $584 million and PCB and Component Inspection revenue was $750 million[9]. By product category, wafer inspection brought in $6.63 billion, or 49% of total revenue; patterning (metrology and reticle inspection) $2.71 billion, or 20%; services $3.13 billion, or 23%; and other revenue, mainly refurbished and legacy systems and upgrades, $153 million[10]. The Specialty Semiconductor Process segment sells etch and deposition tools to specialty chip customers such as power and compound semiconductor makers, while PCB and Component Inspection serves manufacturers of PCBs, advanced packaging and other electronic components[1].

Revenue recognition and payment terms shape how the quarterly numbers move. KLA recognizes tool revenue when it delivers the system and transfers control, and contracts generally require payment of 70% to 90% within 30 to 60 days of shipment, with the rest due within 30 days of acceptance[11]. Tools assembled in the United States rely heavily on imported components, and tariffs have already raised cost of revenues[12]; to secure key parts, the company held purchase commitments of about $5.97 billion as of June 30, 2026, most of them due within 12 months[13].

Financial History and Current Position

KLA has come through a downturn and a strong rebound over the past three fiscal years. Total revenue rose from $9.81 billion in fiscal 2024 to $12.16 billion in fiscal 2025, a 24% gain, and then grew another 12% to $13.58 billion in fiscal 2026[10]. Fiscal 2026 product revenue was $10.45 billion and service revenue was $3.13 billion; net income increased from $4.06 billion in fiscal 2025 to $4.83 billion, and diluted EPS on a post-split basis was $3.66[5].

Margins improved slightly as revenue grew, because expenses rose more slowly than sales. Gross margin was 61.3% in fiscal 2026, up 0.4 percentage point from 60.9% in fiscal 2025[14]. R&D expense was $1.53 billion and SG&A was $1.13 billion that year, so revenue minus cost of revenues and those two expense lines gives operating profit of about $5.66 billion, an operating margin of about 41.7%[5].

Cash flow grew far more slowly than profit. Fiscal 2026 operating cash flow was $4.14 billion, only a little above $4.08 billion a year earlier and about 86% of net income; after $376 million of capital expenditures, free cash flow was about $3.77 billion, or about 78% of net income[6]. The company said higher shipments lifted customer collections by about $1.2 billion, but payments on accounts payable also rose by about $1.1 billion[15]; over the same year, receivables increased by $642 million and inventory by $466 million[6].

Capital returns consumed nearly all free cash flow, while the balance sheet carries moderate leverage. KLA repurchased $2.29 billion of stock and paid $1.06 billion in dividends in fiscal 2026, about $3.35 billion in total and about 89% of free cash flow; it had $9.74 billion of repurchase authority left at the end of June and raised the quarterly dividend to $0.230 per share in the fiscal third quarter[16]. As of June 30, 2026, cash, cash equivalents and marketable securities totaled $4.90 billion[15], senior notes outstanding were $5.95 billion in principal, the $1.5 billion revolving credit facility was undrawn, and the company noted that part of the remaining buybacks may be financed with new debt[17]. In the latest quarter, the fiscal fourth quarter ended June 30, 2026, revenue of $3.66 billion was above $3.42 billion in the prior quarter and $3.18 billion a year earlier[3].

Operating Model

KLA's revenue has two parts, tools and services, and each has a different driver. Tool revenue depends on how many lines chipmakers build or upgrade in leading-edge foundry/logic, DRAM and high-bandwidth memory, and advanced packaging, and on how many inspection and metrology steps each line needs; the annual report says leading-edge nodes such as 2 nanometers are raising process complexity and process control intensity[18]. Service revenue depends mainly on the number of systems installed at customer sites and how heavily they are used, as well as on renewal rates[19]. Because each tool is expensive and revenue is recognized on delivery, the timing of large customer shipments makes quarterly revenue jump around, while service revenue follows the installed base and usually lags tool deliveries by one or more quarters.

Gross margin reflects three forces: revenue volume, mix and costs. The fiscal 2026 gross margin bridge shows revenue volume adding 0.5 percentage point and manufacturing efficiencies adding 0.2 point, while product and service mix subtracted 0.2 point and other service and manufacturing costs subtracted 0.1 point[14]. That last item combines higher installation and warranty costs and tariff-driven cost increases, partly offset by lower inventory-related charges[20]. Operating profit equals gross profit minus R&D and SG&A, which consist mostly of engineering pay, so operating margin rises when revenue grows faster than those expenses.

Working capital is the key to the cash model. Operating cash flow equals net income plus non-cash items such as depreciation and stock-based compensation, minus the increase in working capital[6]. Because tool payments arrive in stages after shipment and acceptance[11], receivables rise first when revenue steps up quickly; the company has also increased purchase commitments to secure long-lead components, and the annual report says this affects the timing of costs and working capital needs[18]. These uses of cash depress operating cash flow first and reverse only after tools are delivered and paid for.

Industry and Competitive Position

Process control is one of the major wafer fab equipment categories alongside lithography, etch and deposition, and KLA faces well-resourced rivals. The annual report names Applied Materials, ASML, Hitachi High-Tech, Lasertec and Onto Innovation as competitors and acknowledges that some may have greater financial, research and manufacturing resources than KLA[21]. KLA's own competitive tools are long-term customer relationships, a worldwide service network and heavy R&D spending[21]; the annual report gives no market share by product, so these filings cannot show how large KLA's lead is in any single product market.

All three demand themes on the customer side tie back to AI. The annual report attributes growth to EUV adoption in high-volume logic and DRAM production, to leading-edge nodes such as 2 nanometers raising process control intensity, and to rising complexity and value of packages for AI and high-performance computing chips, which is lifting the advanced packaging business[18]. Semiconductor Process Control revenue grew 12% in fiscal 2026, which the company attributed to leading-edge investment by foundry/logic and memory customers supporting AI and high-performance computing, and to adoption of its advanced packaging products[22]. By region, Taiwan grew 13.7%, Korea grew 26.2% on high-bandwidth memory and advanced DRAM investment, and North America grew 29.0%[23].

China is KLA's largest single region and also where its competitive position faces the most outside constraints. Under U.S. export controls, KLA mainly serves domestic Chinese chipmakers' investment in mature nodes, and China revenue was flat in fiscal 2026[23], while its share fell from 42.8% in fiscal 2024 to 29.8%[7]. The annual report also warns that export restrictions may make it easier for China-based competitors to develop and sell their own products and take share[24].

Core Debates

Is KLA's guided $4.0 billion quarter being built by leading-edge chipmakers buying more inspection and metrology tools, or by services and the installed base?

This question decides how solid the September-quarter step up is. Total revenue grew 12% in fiscal 2026, with services up 16% and products up only 10.4%[5], so product growth was actually slower; yet the $4.0 billion guidance midpoint implies roughly 25% growth over $3.21 billion in the September 2025 quarter[3], far above the full-year rate. If wafer inspection, patterning tools and leading-edge regions drive this step, 2 nanometer logic, high-bandwidth memory and advanced packaging are raising process control content per line; if services and other revenue drive it, growth depends more on the installed base and the new level is harder to sustain.

The current evidence supports both readings, and it cannot yet say which one dominates. The annual report says fiscal 2026 growth came mainly from product revenue driven by leading-edge investment, while service revenue rose 16% on a larger installed base[19]; within product categories, patterning grew 23% and wafer inspection only 7%, for a combined $9.34 billion, up about 11%[10]. Taiwan, Korea and North America together accounted for 53.3% of revenue[7], and all three grew faster than the company overall[23]. The opposite reading holds just as well: slower growth in core wafer inspection and faster growth in services than products suggest that a sizable part of the year's growth came from servicing existing tools, and the September step may mainly reflect delivery timing at a few large customers.

This debate reaches the income statement through product revenue and expense leverage. AI-driven investment in 2 nanometer logic, high-bandwidth memory and advanced packaging means each new line needs more inspection and metrology steps, so leading-edge customers buy more wafer inspection and patterning tools and revenue in Taiwan, Korea and North America rises; once product revenue steps up, R&D and SG&A are spread over more sales and operating margin rises[18]. If the increase comes mainly from services, tool deliveries have not scaled with it. For quarterly comparison, the September 2025 quarter had product revenue of $2.47 billion and service revenue of $745 million, and the June 2026 quarter had product revenue of $2.84 billion and service revenue of $820 million[5]; what remains open is that the 10-K gives product categories only annually, so the September-quarter mix has to wait for the 10-Q.

Four readings in the report can test this. The first is whether revenue lands inside the $3.8 billion to $4.2 billion guidance range and at or above $4.0 billion[3]; the second is whether product revenue or service revenue grows faster year over year; the third is whether combined wafer inspection and patterning growth exceeds 11%; the fourth is whether the combined share of Taiwan, Korea and North America stays at or above 53.3%. If revenue comes in below $4.0 billion with services still outgrowing products, or if wafer inspection keeps lagging patterning and services, the view that leading-edge tool demand is accelerating weakens; a delayed pickup by the customer that accounts for about 19% of revenue[8], or long optical component lead times slowing shipments, could produce that result on its own.

Can KLA's China revenue hold near $4 billion a year under U.S. export controls?

China remains KLA's largest single region, and its path decides whether the shift in revenue mix hurts the total. China contributed $4.05 billion of revenue in fiscal 2026, versus $4.04 billion in fiscal 2025 and $4.20 billion in fiscal 2024, or about $1.01 billion per quarter on average[7]. The annual report states plainly that China's share of revenue may keep declining because of current and future Commerce Department rules[25]. If China revenue holds steady in dollars and its share falls only because other regions grow, the mix improves without hurting the total; if wider controls cut the dollar amount, growth from leading-edge customers must first fill that gap.

The annual report shows a flat result, but two opposing forces sit behind it. The company explained that continued mature-node investment by domestic Chinese chipmakers largely offset the effect of export controls on certain advanced technology transactions[23]. At the same time, some products bound for China have been held up by U.S. Customs and Border Protection[25], and the Affiliates Rule, which extends controls to entities 50% or more owned by listed parties, was suspended in November 2025 for one year, until November 2026[26]. Another reading is that the flat total hides a change in structure: Specialty Semiconductor Process revenue slipped from $587 million to $584 million, which the company attributed to lower investment by Chinese customers[22], and customer deposits fell from $636 million to $430 million[27], which may partly reflect deposits returned after cancelled orders, although the annual report does not attribute the whole decline to China.

Export controls reach the financial statements through shipments, deposits and backlog. As long as domestic Chinese chipmakers buy inspection, metrology and specialty process tools within the scope of export licenses, China revenue can hold; if the U.S. adds more entities to its lists, reinstates the Affiliates Rule or customs keeps holding shipments, shipments and revenue recognition slip, the company must return deposits and backlog shrinks[24]. That would lower China revenue and Specialty Semiconductor Process revenue and hurt capacity utilization and expense absorption. What remains open is that the Affiliates Rule suspension ends in November 2026, while this report covers a quarter that fell entirely inside the suspension.

The main test in this report will come from the 10-Q's regional revenue and risk disclosures. Readers should check whether China revenue falls more than 10% year over year, whether China's share drops below 29.8% while the dollar amount holds, whether the 10-Q discloses new licensing obstacles, detained shipments or returned deposits, and whether Specialty Semiconductor Process revenue turns positive year over year. China revenue that does not fall year over year, with no new control-related order cancellations in the 10-Q, would support the view that the dollar amount is stable; reinstatement of the Affiliates Rule after it expires, more Chinese entities added to control lists, or domestic competitors gaining share under the controls[24] would each weaken it.

Can KLA hold a roughly 61% gross margin against rising component costs and tariffs?

KLA's earnings leverage rests on a high gross margin, so the margin's direction decides whether revenue growth turns into matching EPS growth. Fiscal 2026 gross margin was 61.3%[14], and operating profit was about $5.66 billion[5]. The September-quarter GAAP gross margin guide of 61.6% already reflects cost pressure[3]; if volume leverage and pricing from the revenue step up offset component inflation, EPS grows in line with revenue, and if the cost drag widens, less of each revenue dollar reaches profit.

The full-year margin bridge looks steady, but it may hide second-half pressure. Gross margin rose 0.4 percentage point in fiscal 2026, with revenue volume adding 0.5 and manufacturing efficiencies adding 0.2, while mix subtracted 0.2 and other service and manufacturing costs subtracted 0.1[14]; based on revenue and cost of revenues in the earnings releases, gross margin was about 61.3% in the September 2025 quarter and about 61.4% in the June 2026 quarter[5]. The annual report says tariffs have raised the cost of imported components for products built in the United States and that the company is responding through operational adjustments and pricing, though these measures need time to take effect[12]. Another reading is that component inflation reaches cost of revenues only after existing inventory is used up, and management also said on the call that the memory component drag is slightly more than 100 basis points and could last through 2027[4], so the impact from the September quarter onward may be larger than the full-year figures show.

The net of costs and pricing reaches EPS through gross margin. Higher prices for purchased parts such as memory chips and optical components, together with import tariffs, raise cost of revenues and turn the "other service and manufacturing costs" line of the bridge negative; the company passes costs through with pricing on new products and modest increases on existing ones, while the revenue step up spreads fixed manufacturing costs and keeps the volume line positive[20]. The net of the two decides whether gross margin can stay above the 61.3% annual level, and it flows to EPS through an operating margin of about 41.7%. What remains open is that the annual report's cost line combines tariffs, installation and warranty, and inventory charges, so the effect of memory component inflation cannot be isolated.

When results arrive, gross margin and the margin drivers in the 10-Q are the most direct readings. Readers should check whether GAAP gross margin is at or above 61.6%, whether the drag from other service and manufacturing costs in the 10-Q exceeds 1 percentage point, whether the volume contribution outweighs the cost drag, and whether management mentions new price increases or cost recovery. On quarterly revenue of $4.0 billion, each 1 percentage point of gross margin is worth about $40 million of gross profit; further increases in memory chip prices, higher or broader tariffs[12], or a larger share of lower-margin businesses such as advanced packaging and PCB would each put pressure on the view that the margin will hold.

As KLA stockpiles components and ships more tools, will its profit growth turn into matching cash?

Cash conversion decides whether KLA can sustain its capital returns without borrowing. The company returns about 90% of free cash flow through buybacks and dividends[16], yet in fiscal 2026 net income rose 19% while operating cash flow barely grew[6]. If cash flow keeps trailing profit as revenue steps up in the September quarter, working capital is absorbing more cash during the ramp, and either the pace of buybacks or the level of debt will feel it.

The annual report supports both a reading of rising cash absorption and a reading of deliberate up-front investment. Fiscal 2026 operating cash flow was $4.14 billion, and the company said higher shipments added about $1.2 billion of customer collections while payments on accounts payable rose by about $1.1 billion[15]. Inventory stood at $3.65 billion at the end of June, with raw materials up 24% from $1.49 billion to $1.85 billion; net receivables rose 28% from $2.26 billion to $2.89 billion, far faster than 12% revenue growth, and long-term receivables added another $181 million[27]. The other reading is that this is intentional up-front spending: the annual report says the company increased purchase commitments partly to secure supply of key components[18], and once shipments go out, inventory turns into revenue and cash flow catches up with a lag.

Working capital reaches capital returns through operating cash flow. Rising leading-edge demand and long lead times for optical and other components led KLA to sign about $5.97 billion of purchase commitments and build raw material inventory[13]; as shipments increase, receivables rise before collections arrive, so operating cash flow grows more slowly than net income and free cash flow covers buybacks and dividends less comfortably. Growth in customer prepayments and deferred revenue can partly offset this; deferred system revenue stood at $933 million at the end of June 2026, up from $817 million a year earlier[28]. What remains open is how long the capacity ramp will last and when inventory will start turning into revenue.

This report can test the question through the cash flow statement and the balance sheet. Readers should check whether operating cash flow is at or above the $1.16 billion of the year-ago quarter[6], whether inventory and receivables grow faster than revenue by quarter-end, whether buybacks and dividends exceed free cash flow in the quarter, and whether long-term receivables keep rising. Operating cash flow of at least $1.16 billion and at least 85% of net income would support the view that cash will catch up; customers delaying acceptance so that receivables and deferred costs pile up, excess component stock leading to inventory write-downs if demand slows, or growth in long-term receivables with extended payment terms would each weaken it.

Risks and Falsifiers

Customer concentration is the biggest source of quarterly deviation from guidance. One customer accounted for about 19% of total revenue in both fiscal 2026 and fiscal 2025[8], while the quarterly guidance range is only plus or minus $200 million, about 5% of the midpoint[3]; because tool revenue is recognized when control transfers on delivery[11], a delayed acceptance or pickup at any leading-edge customer could push quarterly revenue well away from guidance. This risk falls on total revenue and product revenue; September-quarter revenue of at least $4.0 billion, a Taiwan share at or above fiscal 2026's 26.8%[7], and product revenue growing faster than services would show that concentration has not caused a shock.

The capital return and leverage risk is that buybacks depend on free cash flow. In fiscal 2026 KLA repurchased $2.29 billion of stock and paid $1.06 billion in dividends against free cash flow of about $3.77 billion[16]; it carries $5.95 billion of senior notes principal and $4.90 billion of cash and marketable securities, and the annual report says part of the remaining buybacks may be financed with new debt[17]. If cash conversion worsens, buybacks may have to rely on borrowing; combined quarterly buybacks and dividends no greater than the quarter's free cash flow, with no increase in long-term debt in the 10-Q, would falsify this concern.

Wider U.S. export controls or reinstatement of the Affiliates Rule could leave some Chinese customer orders undeliverable. China revenue was $4.05 billion in fiscal 2026, or 29.8% of the total[7]; if export licenses are not granted, the company must return deposits and reduce backlog[24]. This risk would directly lower China revenue and Specialty Semiconductor Process revenue; China revenue that does not fall year over year next quarter, with no new control-related order cancellations in the 10-Q, would falsify it.

Component inflation and tariffs raising cost of revenues while price increases lag is the main gross margin risk. Fiscal 2026 cost of revenues was $5.26 billion[5], and tariffs have already raised the cost of imported components for products assembled in the United States[12]; on quarterly revenue of $4.0 billion, each 1 percentage point of gross margin lost removes about $40 million of gross profit. A GAAP gross margin of at least 61.6% in the quarter, with the cost drag no larger than 0.5 percentage point, would falsify this risk.

Continued growth in working capital during the ramp is a shared risk for cash flow and capital returns. In fiscal 2026 receivables rose by $642 million and inventory by $466 million[6], purchase commitments were about $5.97 billion[13], and buybacks plus dividends totaled $3.35 billion[16]; if operating cash flow keeps trailing profit, capital returns will have to lean on existing cash or new debt. Quarterly operating cash flow of at least $1.16 billion and at least 85% of net income would falsify this risk.

What to Watch Next

• Revenue step up: total revenue against the $3.8 billion to $4.2 billion guide and $3.21 billion in the September 2025 quarter; falling below $4.0 billion while services outgrow products would weaken the case for accelerating leading-edge tool demand.
• Tool mix: combined wafer inspection and patterning growth against about 11% in fiscal 2026; growth above 11% supports a tool-driven step, while wafer inspection lagging again weakens it.
• Leading-edge regions: the combined share of Taiwan, Korea and North America against 53.3% in fiscal 2026; holding at or above that level supports demand from leading-edge customers.
• China: China revenue against $4.05 billion, or 29.8%, in fiscal 2026; no year-over-year decline and no new order cancellations support a stable dollar amount, while a drop of more than 10% weakens it.
• Export rules: the Affiliates Rule suspension through November 2026 and any new licensing obstacles, detained shipments or returned deposits disclosed in the 10-Q.
• Gross margin: GAAP gross margin against 61.3% in fiscal 2026 and the 61.6% guide; a cost drag above 1 percentage point would weaken the view that the margin holds.
• Cash conversion: operating cash flow against $1.16 billion in the September 2025 quarter and 85% of net income; inventory and receivables growing faster than revenue would weaken the view that cash catches up.
• Capital returns: buybacks and dividends, about 89% of free cash flow in fiscal 2026; exceeding quarterly free cash flow while long-term debt rises would show buybacks starting to depend on borrowing.

Conclusion

Two forces drive KLA's business: tool spending by leading-edge chipmakers on 2 nanometer logic, high-bandwidth memory and advanced packaging, and service contracts that grow with the installed base. Fiscal 2026 revenue was $13.58 billion, gross margin was 61.3% and net income rose 19% to $4.83 billion[5], but operating cash flow barely grew and about 89% of free cash flow went to buybacks and dividends[16]. The $4.0 billion September-quarter guide puts several threads on the same set of statements: whether new tools drive the revenue step up, whether China revenue can hold its roughly $4 billion annual level under export controls, whether gross margin can stay near 61.6% as component costs rise, and whether profit turns into matching cash.

Since the latest annual report, only one outside assessment with independent judgment could be verified word for word, so coverage is very thin. In an August 8 article, Simply Wall St treated June-quarter record revenue of $3.66 billion, gross margin of about 62%, quarterly service revenue of $820 million and a backlog of about $12.5 billion as concrete support for the bullish case, while arguing that bearish concerns remain unresolved: the company depends heavily on one very strong equipment spending cycle, memory component inflation has already cost about 100 basis points of gross margin and could last through 2027, some Chinese customers still cannot be served, and long-lead supply bottlenecks persist[29]. The article maps directly onto the gross margin and China debates and is consistent with the company's 61.6% gross margin guide and the annual report's statement that China's share may keep falling, but it adds no new data; the "more than $1.1 billion" of advanced packaging revenue it cites is the company's expectation for calendar 2026, not a realized figure. The article offers no independent analysis of the source of the revenue step up, service growth or cash conversion, and a single publisher's view does not amount to a market consensus.

One combination of upcoming readings would clearly strengthen the current understanding: September-quarter revenue of at least $4.0 billion, product revenue growing faster than services, a combined Taiwan, Korea and North America share of at least 53.3%, no year-over-year decline in China revenue, gross margin of at least 61.6%, and operating cash flow of at least $1.16 billion and at least 85% of net income. Conversely, revenue below $4.0 billion with services still leading growth, a cost drag above 1 percentage point, or inventory and receivables continuing to outgrow revenue while buybacks exceed quarterly free cash flow would show that this revenue step up has weaker quality and weaker cash support than the annual report suggests.

Sources

[1] KLAC 10-K filed 2026-08-06 · executive summary and three reportable segments · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[2] Drillr earnings calendar · KLAC 2026-10-28 estimates (last updated 2026-09-28) · 2026-09-28 · Drillr earnings calendar · https://gateway.drillr.ai/mcp/private

[3] KLAC 8-K filed 2026-07-28 · first quarter fiscal 2027 guidance and June 2026 quarter results · 2026-07-28 · KLA · https://www.sec.gov/Archives/edgar/data/319201/000031920126000024/exhibit991earningsrelease7.htm

[4] KLAC June quarter 2026 earnings call 2026-07-28 · September quarter outlook · 2026-07-28 · KLA · https://gateway.drillr.ai/mcp/private

[5] KLAC 10-K filed 2026-08-06 · consolidated statements of operations FY2024-FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[6] KLAC 10-K filed 2026-08-06 · consolidated statements of cash flows FY2024-FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[7] KLAC 10-K filed 2026-08-06 · revenues by region FY2024-FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[8] KLAC 10-K filed 2026-08-06 · customer concentration and product categories · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[9] KLAC 10-K filed 2026-08-06 · segment revenues, costs and profit FY2024-FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[10] KLAC 10-K filed 2026-08-06 · revenues by major product category FY2024-FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[11] KLAC 10-K filed 2026-08-06 · payment terms and contract liabilities · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[12] KLAC 10-K filed 2026-08-06 · tariffs and cost of revenues · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[13] KLAC 10-K filed 2026-08-06 · purchase commitments June 30 2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[14] KLAC 10-K filed 2026-08-06 · gross margin bridge FY2025 to FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[15] KLAC 10-K filed 2026-08-06 · liquidity and operating cash flow drivers FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[16] KLAC 10-K filed 2026-08-06 · capital returns and repurchase authority · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[17] KLAC 10-K filed 2026-08-06 · senior notes and revolving credit facility · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[18] KLAC 10-K filed 2026-08-06 · industry demand drivers, purchase commitments and FY2027 outlook · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[19] KLAC 10-K filed 2026-08-06 · revenue and service revenue drivers FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[20] KLAC 10-K filed 2026-08-06 · gross margin drivers including tariffs · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[21] KLAC 10-K filed 2026-08-06 · competition · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[22] KLAC 10-K filed 2026-08-06 · segment revenue drivers FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[23] KLAC 10-K filed 2026-08-06 · regional revenue changes FY2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[24] KLAC 10-K filed 2026-08-06 · China revenue share and export license risk · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[25] KLAC 10-K filed 2026-08-06 · China share outlook and customs delays · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[26] KLAC 10-K filed 2026-08-06 · BIS rules and the Affiliates Rule · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[27] KLAC 10-K filed 2026-08-06 · inventory, customer deposits and other balance sheet components · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[28] KLAC 10-K filed 2026-08-06 · consolidated balance sheets June 30 2026 · 2026-08-06 · 10-K · https://www.sec.gov/Archives/edgar/data/319201/000031920126000027/klac-20260630.htm

[29] Simply Wall St 2026-08-08 · KLA (KLAC) Stock Climbs As AI Demand Lifts Margins Despite China Risk · 2026-08-08 · Simply Wall St · https://simplywall.st/stocks/us/semiconductors/nasdaq-klac/kla/news/kla-klac-stock-climbs-as-ai-demand-lifts-margins-despite-chi