Kla Stock Earnings Reports

KLA reported a strong September quarter (Q1 FY2026) with revenue of $3.21 billion and non-GAAP EPS of $8.81 (GAAP EPS $8.47), modestly above guidance. Gross margin was 62.5% and non-GAAP operating margin 43.2%. Services continue to be a resilient revenue stream ($745 million, +16% YoY). Cash flow was robust: operating cash flow $1.16 billion and free cash flow $1.07 billion for the quarter, with trailing 12‑month free cash flow of $3.9 billion (31% margin). Capital returns remain a priority: $799 million returned in the quarter (repurchases + dividends) and a $5 billion buyback authorization plus a 12% dividend increase announced earlier in the year.

Key strategic takeaways: KLA is seeing broader, multi-segment demand beyond traditional leading‑edge logic — notably strong acceleration in advanced packaging and memory (HBM/DRAM). Management estimates advanced packaging revenue for calendar 2025 will exceed $925 million (+~70% YoY) and positions the advanced‑packaging served market at roughly $11 billion. They expect to outperform the mid‑ to high‑single‑digit WFE market in 2025 due to rising process‑control intensity and expanded SAM.

Guidance and outlook: December‑quarter revenue guide is $3.225 billion ± $150 million, gross margin ~62%, operating expense ~$635 million, and non‑GAAP EPS $8.70 ± $0.78. Management is constructive on calendar 2026 being a growth year, with first half roughly flat-to-modestly up vs. 2H 2025 and accelerating growth in the second half. They disclosed an estimated negative revenue impact from recent U.S. export controls (reduced market access to certain China customers) of ~$300–$350 million spread roughly evenly across the December quarter and calendar 2026.

Other operational points: lead times have normalized/converged to roughly 7–9 months; KLA is engaging more broadly with additional foundry/logic players as leading‑edge investment diversifies geographically; packaging adoption is driven by customer willingness to deploy front‑end–class inspection in the back end due to the high value and yield sensitivity of advanced packages. Management expects ongoing strong service growth (mid‑teens contribution to the business over time) and reiterated long‑term operating leverage targets (40–50% incremental operating margin on revenue growth).