KLA Corporation earnings

Management highlights

Rick noted Haley delivered strong results across the board, with AI as a core driver. KLA achieved number one position in process control for advanced wafer-level packaging in 2025. Service business has strategic importance with rising customer expectations. KLA held investor day in March, introduced new long-term revenue growth targets, 2030 financial model, increased capital allocation, and announced 17th consecutive dividend increase and $7 billion share repurchase authorization. Brent discussed financial highlights, revenue above guidance midpoint, gross margin 62.2% above guidance midpoint, operating expenses higher than expected, and industry outlook with wafer equipment market expected to exceed $140 billion in 2026 and strong business momentum leading into 2027.

Guidance

For 2026, expect sequential revenue growth to accelerate, leading to high teen revenue growth year-over-year and semiconductor process control systems business to grow over 20%. June quarter guidance is for revenue of $3.575 billion, plus or minus $200 billion. Gross margin for the quarter is forecasted to be 61.75% plus or minus one percentage point. Operating expenses are forecasted to be approximately $665 million in the June quarter. Non-GAAP diluted EPS is expected to be $9.87 plus or minus $1, and GAAP diluted EPS is expected to be $9.66 plus or minus $1.

Segment performance

KLA's March quarter revenue was $3.415 billion, up 4% sequentially and 11% year-over-year. Service business was $775 million, up 16% year-over-year but down 1% sequentially. Semiconductor process control product portfolio revenue for advanced packaging is expected to grow from ~$635 million in 2025 to ~$1 billion in 2026. Foundry logic revenue from semiconductor customers is forecasted to increase to approximately 82% and memory is expected to be approximately 18% of semi-process control systems revenue to semiconductor customers. In memory, DRAM is expected to account for roughly 84%, with NAND accounting for the remaining 16%.

Risks & headwinds

Comments today are subject to risks and uncertainties reflected in the disclosure of risk factors in SEC filing. Forward-looking statements are subject to those risks, and actual results may differ significantly from projected in forward-looking statements. The impact of news flow about bans for certain entities on the company is fairly immaterial and contemplated in the guidance provided. Broader thoughts on China: overall spending in China is more or less flat, and China growth rate is probably lower than overall WFE growth rate.

Analyst Q&A

• Q: CJ Muse asked about extended lead times and visibility into 2027,

  A: TJ said it's broad-based with backlogs building and strong customer engagement.

• Q: Stacey Rasgun asked about 2030 model and China trajectory,

  A: Rick and Brent discussed semi-revenue growth driven by pricing and China spending being flat.

• Q: Harlan Suhr asked about 2026 WFE better outlook and services growth,

  A: Brent said it's broad-based across segments and service trending in line with target range.

• Q: Chris Senker asked about demand being real vs anticipation,

  A: Mariano said customers are opening fabs and support resources are in place.

• Q: Joe Quattrochi asked about process control sales vs service,

  A: Brent said it drives both process control sales and service.

• Q: Timothy Arcuri asked about outgrowing WFE and high NA,

  A: Brent and Rick discussed alignment with WFE growth and no change in INA forecast.

• Q: Charles Shi asked about metrology technology debate,

  A: Rick said industry moves to highest capability tool and x-ray adoption is slow.

• Q: Srini Pajuri asked about WFE number and China WFE,

  A: Brent parsed out end markets and China grows at slower rate than overall WFE.

• Q: Shane Brett asked about margin and advanced packaging,

  A: Brent said pricing is based on value and advanced packaging market growing.

• Q: Edward Yang asked about DRAM gross margin headwind and AI CapEx assumptions,

  A: Brent said supply is secured and there's massive semiconductor capacity shortage.

• Q: Chris Caso asked about supply cap and gross margins,

  A: Brent said demand is ahead of supply and gross margin guidance is consistent with factors like memory pricing and tariff dynamics.