KLA Corporation Q4 FY2025 earnings call

• KLA's results were strong in the June quarter with revenue at $3.175 billion, non-GAAP diluted EPS at $9.38, and record free cash flow over $1 billion. • KLA is central to enabling customers' AI infrastructure build-out, with leadership in process control relevant to semiconductor scaling, new architectures, and materials. • Growth in leading-edge foundry, logic, HBM, and advanced packaging contributed to performance. • Services business grew to $703 million in the June quarter, up 5% sequentially and 14% year-over-year. • Strong cash flow and capital returns, with quarterly free cash flow over $1 billion and total capital return in the June quarter at $680 million.

In the June quarter, KLA's revenue was $3.175 billion. Advanced packaging systems related revenue is expected to exceed $925 million in 2025, up from $850 million previously. Services business grew to $703 million in the June quarter, up 5% sequentially and 14% year-over-year. Revenue growth was 24% year-over-year driven by sustained investment in leading-edge foundry, logic, and HBM. Advanced packaging contributed significantly to revenue growth, with its share in overall revenue increasing due to strong demand from AI infrastructure build-out.

• September quarter revenue expected to be $3.15 billion, plus or minus $150 million. • Gross margin forecasted at 62%, plus or minus 1 percentage point, affected by systems revenue mix and global tariffs. • For 2025, gross margins expected to remain approximately 62.5%. • Operating expenses forecasted at approximately $615 million in the September quarter. • GAAP diluted EPS expected to be $8.28, plus or minus $0.77, and non-GAAP diluted EPS at $8.53, plus or minus $0.77 for the September quarter.

• Geopolitical trends pose uncertainties. • Global tariffs present a risk to gross margin, with an initial estimate of 50 to 100 basis point impact, and the long-term tariff situation remains unclear. • Impact of native China activity on business performance is a risk factor.

Q: Thomas James O'Malley asked about broadening of leading-edge opportunities and market share gains for 2026.

A: Richard P. Wallace said it's due to more designs at leading edge, larger die, and packaging, with customers investing more. Bren D. Higgins added on confidence in business inflection due to larger die creating defect density challenges and high-performance compute driving investment.

Q: Joseph Michael Quatrochi asked about sample rates and process control intensity in new node ramping.

A: Richard P. Wallace explained multiple ramps due to different designs, die sizes, and high value of wafers, making it different from traditional node ramping. Bren D. Higgins added on design levels limiting equipment reuse and technical challenges.

Q: Timothy Michael Arcuri asked about RPO and service growth.

A: Bren D. Higgins said RPO is around $7.9 billion, down due to normalization of lead time, and service is expected to grow in the 10% plus range for the year with sequential growth continuing.

Q: Brian Edward Chin asked about advanced packaging focus and inspection/metrology in it.

A: Bren D. Higgins said most share gains in advanced packaging have been in logic with CoWoS, seeing momentum in HBM, and inspection has higher sampling rates due to defect concerns while metrology has lower sampling rates due to larger design rules.