Q2 2024 Earnings Summary
- All leading-edge customers are bullish about 2025, expecting growth as advanced logic ramps up, indicating potential for significant growth for KLA in 2025.
- KLA is confident about future growth due to increased customer engagements, design starts, and plans for leading-edge technology ramps, expecting improvements toward the end of the year and into next year.
- KLA has a significant backlog of orders beyond 12 months, tied to customers' planned projects opening in 2025, indicating customers' commitment to future capital investments and potential for future revenue growth.
- KLAC experienced a significant customer project delay, with a $200 million revenue pushout from the March quarter to potentially beyond 12 months, impacting short-term growth expectations.
- The company's book-to-bill ratio remained below 1 for the fifth consecutive quarter, at 0.9, indicating weaker order intake relative to revenue, and has a $5 billion backlog beyond 12 months, reflecting reduced near-term visibility.
- KLAC's display business, though 1.5% of revenue, contributes less than 1.5% to profitability and faces structural challenges, leading the company to consider strategic alternatives, which could impact future profitability.
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Revenue Pushout
Q: How did the $200 million project delay affect revenue?
A: A customer project worth $200 million was delayed by about 12 months, impacting March quarter revenue. This shipment shift affected Q1 but gives confidence for sequential growth into June ,. -
Second Half Growth
Q: Will revenue improve in the second half of 2024?
A: Despite a weaker first half, we expect sequential growth in the second half of 2024, driven by improvements in leading-edge investments and a balanced contribution from DRAM and foundry , ,. -
Process Control Intensity
Q: Will process control systems outgrow WFE this year?
A: We expect process control intensity to be roughly flat in 2024, aligning with WFE's marginal growth ,. Our performance should match the overall market. -
China Revenue Outlook
Q: How will China revenue perform this year?
A: China revenue is expected to be flattish year-over-year ,. Infrastructure investments may decline, but other segments, such as memory, will offset this. -
Display Business Divestiture
Q: What are your plans for the display business?
A: We're considering strategic alternatives for our display business, which accounts for about 1.5% of revenue but less than 1.5% of profitability ,. The sector faces structural profitability challenges. -
High NA EUV Impact
Q: How will High NA EUV adoption affect your business?
A: Increased EUV adoption is positive for KLA, enhancing process control intensity. High NA EUV is progressing as planned, and we're encouraged by its development. -
Memory Utilization Trends
Q: Has memory utilization changed, and how does it affect services?
A: Memory utilization remains low but shows signs of improvement. Service revenue stays strong as customers maintain high utilization of our equipment. -
Book-to-Bill and RPO Dynamics
Q: Why is book-to-bill below one, and what's the RPO outlook?
A: Book-to-bill remains below one due to orders tied to future projects beyond 12 months. RPO is about $10.6 billion, with 45–50% slated for shipment beyond 12 months. -
Equipment Reuse Impact
Q: Will customers reusing equipment impact growth?
A: Equipment reuse is less impactful due to technology upgrades needed for advanced nodes like 3nm and 2nm. We expect consistent demand for new tools. -
Optical Inspection Lead Times
Q: What are current optical inspection lead times?
A: Gen 4 lead times are still over 12 months, but we expect supply to increase this year. Gen 5 lead times have normalized between 7 and 9 months.
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