Q1 2024 Earnings Summary
Reported on Jan 4, 2025 (After Market Close)
Pre-Earnings Price$454.84Last close (Oct 25, 2023)
Post-Earnings Price$458.64Open (Oct 26, 2023)
Price Change
$3.80(+0.84%)
- KLA's services business is expected to accelerate growth to their target range of 12%-14% next year, driven by a high attach rate of tools coming off warranty and moving into service contracts, as well as stabilizing and increasing utilization rates in certain parts of their business.
- KLA anticipates sustained demand from China, with over $800 million in deposits for shipments, as infrastructure investments in legacy nodes, wafer, and reticle manufacturing continue, supporting industries like EV where China seeks self-sufficiency.
- KLA's product portfolio is well-positioned to benefit from upcoming technology transitions, such as high-NA EUV adoption, gate-all-around transistors, and advanced packaging architectures, which are expected to drive higher process control intensity and demand for their advanced inspection and metrology tools.
- Reliance on China revenue may decline: KLA's China demand was elevated in the September quarter due to backfilling shipments, but management expects it to "drop somewhat in Q4". This suggests potential decreases in China-related revenues moving forward.
- Uncertainty about 2024 outlook: Management stated they "don't know what '24 is going to look like" and that customers are uncertain as well. This lack of visibility could impact KLA's ability to predict future performance.
- High inventory levels pose risks: Inventory has increased by $500 million over the past 6 months, reaching almost 300 days. This build-up, due to prior commitments based on expected growth that didn't materialize, could be a risk if demand remains weak.