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KLA Corporation is a leading supplier of process control and yield management solutions for the semiconductor and related electronics industries . The company provides a range of inspection, metrology, and software products, along with services that help manufacturers optimize their production processes . KLA is organized into three main segments: Semiconductor Process Control, Specialty Semiconductor Process, and PCB and Component Inspection . Additionally, KLA's service business is a significant part of their operations, driven by long-term subscription contracts .
- Semiconductor Process Control - Offers a comprehensive portfolio of inspection, metrology, and software products, as well as related services, to help manufacturers achieve target yields throughout the fabrication process .
- Specialty Semiconductor Process - Focuses on advanced vacuum deposition and etch process tools used by manufacturers of microelectromechanical systems (MEMS), radio frequency (RF) communication semiconductors, and power semiconductors for automotive and industrial applications .
- PCB and Component Inspection - Provides products and services for inspecting, testing, and measuring PCBs, IC substrates, and packaged ICs .
- Given that your gross margin is forecasted to decline to 61.5% plus or minus 1% in the September quarter , can you elaborate on the weaker anticipated product mix and whether you expect further margin pressure in the coming quarters?
- Your 12-month shippable RPO decreased by about $70 million quarter on quarter, remaining flattish compared to last quarter ; what factors contributed to this decline, and how confident are you in bookings increasing over the next few quarters?
- With China revenues expected to remain relatively flat , while peers indicate that China mature nodes are in a digesting mode and calendar Q1 was the peak , are you anticipating any slowdown in China sales into next year, and how might this impact your overall growth?
- The revenue guidance range for the September quarter has widened to plus or minus $150 million from the usual $125 million ; does this reflect increased uncertainty or volatility in your business, and can you provide more color on the factors influencing this wider range?
- Advanced packaging revenue run rate has increased to $500 million from $400 million three months ago ; is this growth primarily due to market expansion, or are you gaining share in new markets like macro inspection where competitors have traditionally been stronger, and how sustainable is this growth?
Competitors mentioned in the company's latest 10K filing.
- Applied Materials, Inc. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers .
- ASML Holding N.V. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers .
- Hitachi High-Technologies Corporation - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers .
- Onto Innovation, Inc. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers .
- Lasertec, Inc. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers .
| Customer | Relationship | Segment | Details |
|---|---|---|---|
Taiwan Semiconductor Manufacturing Company Limited (TSMC) | Major semiconductor foundry partner. | Semiconductor Process Control. | In FY 2024, accounted for 13% of total revenue.More than 10% in FY 2023 & FY 2022.More than 10% of net accounts receivable as of June 30, 2024 & 2023. |
Samsung Electronics Co., Ltd. | Major electronics manufacturer. | Semiconductor Process Control. | More than 10% in FY 2023 & FY 2022, possibly 15% or 18% in FY 2023.More than 10% of net accounts receivable as of June 30, 2023. |
Recent developments and announcements about KLAC.
Financial Reporting
- Revenue: $3.08 billion, exceeding the guidance midpoint of $2.95 billion.
- Net Income: $1.1 billion.
- Non-GAAP EPS: $8.20, above the guidance midpoint.
- Gross Margin: 61.7%.
- Operating Margin: 42.3%.
- Free Cash Flow: $757 million.
- Cash and Marketable Securities: $3.8 billion, with $5.9 billion in debt.
- KLA expects the wafer fabrication equipment (WFE) market to grow by a mid-single-digit percentage in 2025, driven by investments in leading-edge logic, high-bandwidth memory, and advanced packaging.
- Growth is anticipated despite reduced demand from China due to elevated investment levels in prior years.
- KLA is focused on delivering a differentiated product portfolio aligned with customer technology roadmaps, aiming to outperform the WFE market's growth rate.
- The company continues to emphasize operational excellence, customer success, and innovative solutions to maintain industry-leading free cash flow and consistent capital returns.
- China Services Impact: Analysts inquired about the recurring nature of services revenue from China. Management confirmed that while there are headwinds, growth is expected to resume after the March quarter.
- $500 Million Restrictions Impact: Most of the impact was attributed to logic projects, with minimal effect on memory.
- Process Control Growth: KLA's process control business outperformed the WFE market in 2024, and management expects continued growth in 2025, driven by leading-edge technology investments and advanced packaging.
- NAND Market: While the NAND market remains at low levels, there has been a slight uptick in activity, with expectations for modest growth in 2025.
- KLA's strong financial performance and strategic positioning highlight its resilience and leadership in the semiconductor equipment market.
- The company is well-positioned to capitalize on growth opportunities in advanced technologies like AI, high-performance computing, and advanced packaging.
- Challenges such as export restrictions and reduced demand from China are being mitigated through strategic adjustments and long-term planning.
Earnings Call
KLA Corporation has released its December 2024 earnings call transcript, providing key insights into its financial performance and strategic outlook. Here are the highlights:
Financial Performance:
Forward Guidance:
Strategic Initiatives:
Analyst Q&A Highlights:
Key Takeaways:
For more details, the full transcript and supplemental materials are available on KLA's investor relations website.
Earnings Report
KLA Corporation has released its fiscal 2025 second quarter earnings results. Total revenues for the quarter were $3.08 billion, which is at the upper end of the guidance range of $2.95 billion +/- $150 million. The GAAP diluted EPS was $6.16, while the Non-GAAP diluted EPS was $8.20, near the upper end of the guidance range. The GAAP EPS was impacted by a $239.1 million impairment charge for goodwill and purchased intangible assets, equating to $1.76 per diluted share.
The company reported a GAAP net income of $824.5 million and a GAAP net income per diluted share of $6.16 on revenues of $3.08 billion. The cash flow from operating activities for the quarter was $849.5 million, and the free cash flow was $757.2 million. Capital returns for the quarter were $876.9 million.
KLA's results were above the midpoint of their guidance ranges despite challenges from new U.S. government export controls. The company is experiencing growth momentum, particularly in AI and high-performance computing investments, which aligns with their portfolio of solutions.
For the third quarter of fiscal 2025, KLA expects total revenues to be in the range of $3.0 billion +/- $150 million. The GAAP gross margin is expected to be between 60.6% +/- 1.0%, and the Non-GAAP gross margin is expected to be between 62.0% +/- 1.0%. The GAAP diluted EPS is projected to be $7.77 +/- $0.60, and the Non-GAAP diluted EPS is projected to be $8.05 +/- $0.60.
Corporate Leadership
Leadership Change
Oreste Donzella, Executive Vice President and Chief Strategy Officer of KLA Corporation, will transition to a part-time senior advisor role starting April 14, 2025. He will remain in his current position until April 13, 2025, to assist with the transition of his duties. No immediate changes to his employment terms will occur until then. No successor has been announced yet .