The **Product Revenues** in **Q3 2024** were significantly lower due to a **broad macro-driven slowdown** in the semiconductor industry, which led to a rebalancing of the supply chain and a reduction in inventory levels. In addition, **customers such as memory device manufacturers and foundry/logic clients** curtailed their capital expenditure plans, further impacting revenue performance.  **[0000319201-24-000012_klac-20240331.htm:49]** **[20240425CG96894:3]** 

Why was Revenues: Product significantly lower in Q3 2024?

The increase in Q4 2024 Net Income was driven by **higher revenue**—with strong performance in the Semiconductor Process Control segment and growth in service revenue—as well as **improved gross margins** (at 62.5%), **lower operating expenses** relative to revenue due to disciplined cost management, and a **lower effective tax rate** of 12.6%. Additionally, **stable non-GAAP adjustments** minimized the impact of acquisition-related charges and restructuring costs.  **[20240724CG68181:0]** **[0000319201-24-000018_exhibit991earningsrelease7.htm:0]** **[0000319201-24-000018_exhibit991earningsrelease7.htm:7]** 

What drove the increase in Net Income in Q4 2024?

The decline in **Full Year Net Income** in **FY 2024** was primarily driven by a combination of factors. **Total revenues** decreased by **7%** compared to FY 2023, with significant declines in key segments such as a **6% drop** in the Semiconductor Process Control segment and a **13% drop** in the PCB and Component Inspection segment, reflecting a macro-driven slowdown and market softening. In addition, the company recorded **$289,474 thousand** in impairment charges for goodwill and purchased intangible assets, a charge that was not present in FY 2023. Moreover, **higher interest expenses** (increasing from **$296,940 thousand** in FY 2023 to **$311,253 thousand** in FY 2024) and the impact of geographic revenue shifts—most notably, a change in revenue concentration from regions with higher margins—further contributed to the decline in net income.  **[0000319201-24-000021_klac-20240630.htm:82]** **[0000319201-24-000021_klac-20240630.htm:100]** **[0000319201-24-000018_exhibit991earningsrelease7.htm:7]** **[20240724CG68181:3]** 

Why did Full Year Net Income decline in FY 2024?

The lower EPS in FY 2024 was primarily driven by a significant **decrease in net income** (from **$3,387,277 thousand in FY 2023** to **$2,761,896 thousand in FY 2024**) and a change in the **weighted-average number of basic shares outstanding** (from **139,483 thousand to 135,345 thousand**). Although the reduction in outstanding shares typically boosts EPS, the decline in net income had a more pronounced effect, resulting in the overall lower EPS for FY 2024.  **[0000319201-24-000021_klac-20240630.htm:142]** 

What factors contributed to the lower EPS in FY 2024?

The significant jump in **Total Revenues** for Q1 2025 was driven by several factors. **Strong demand for products**, especially in the **Wafer Inspection** and **Patterning** categories, substantially boosted revenues. The **Semiconductor Process Control segment** experienced a notable increase of **21%**, representing a major share of total revenues. Additionally, **increased service revenues** due to an expanded installed base, significant **geographic revenue growth** in **North America** and **China** (with increases of **100%** and **17%**, respectively), as well as the impact of a **market recovery** and advancements in technologies like **AI**, all contributed to the overall revenue jump.  **[0000319201-24-000027_klac-20240930.htm:45]** **[0000319201-24-000027_klac-20240930.htm:44]** 

What led to the jump in Total Revenues in Q1 2025?

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KLA’s **cash and cash equivalents dropped in Q2 2025** primarily because of significant cash outflows. These included **stock repurchases of $1.22 billion**, **debt repayments of $750 million**, **dividend payments amounting to $424.9 million**, **capital expenditures of $152.7 million**, and **tax withholding payments of $75.9 million**. These outflows were partially offset by **$1.84 billion of net cash provided by operating activities**.  **[0000319201-25-000006_klac-20241231.htm:59]** **[0000319201-25-000006_klac-20241231.htm:2]** 

Why did Cash and cash equivalents drop in Q2 2025?

The decrease in Total assets in Q2 2025 was primarily driven by a **decline in marketable securities**, which fell by **$584,739 thousand** as the company used cash for stock repurchases, debt repayment, and dividend payments. Additionally, there was a **reduction in cash and cash equivalents** by **$138,851 thousand** for similar financing activities, along with decreases in **goodwill** (down **$230,429 thousand** due to an impairment charge) and **purchased intangible assets** (reduced by **$120,119 thousand** also influenced by the impairment charge), which together outweighed partial increases in accounts receivable and land, property, and equipment.  **[0000319201-25-000004_exhibit991earningsrelease1.htm:5]** **[0000319201-25-000006_klac-20241231.htm:2]** **[0000319201-25-000006_klac-20241231.htm:59]** 

What drove the decrease in Total assets in Q2 2025?

The documents do not pinpoint specific factors for the spike in accounts receivable in Q2 2025. However, they note that similar increases can generally result from factors such as **increased sales**, **changes in payment terms**, or **delays in collections**—potentially linked to higher revenue in the period. This implies that if the company experienced a revenue boost in Q2 2025, it could have led to more receivables if payments were not immediately collected.  **[20250130CG08268:0]** **[0000319201-25-000004_exhibit991earningsrelease1.htm:5]** 

What factors contributed to the spike in Accounts receivable in Q2 2025?

The decline in **Goodwill** in Q2 2025 was primarily due to a **goodwill impairment charge** driven by a continued deterioration in the long-term forecast for the PCB business, as well as an internal reorganization impacting the composition of reporting units.  **[0000319201-25-000006_klac-20241231.htm:18]** **[0000319201-25-000006_klac-20241231.htm:47]** **[0000319201-25-000006_klac-20241231.htm:56]** 

Why did Goodwill decline in Q2 2025?

5a71bb91941fd27c81c9ef71157146704e0b38525fc62773a2f060fa045baf3c

KLAC's operating cash flow in Q2 2024 dropped sharply primarily due to **significantly lower net income**—with GAAP net income falling from **$978,795 thousand** to **$582,534 thousand** largely because of a **$219 million impairment charge** on goodwill and intangible assets. In addition, there were **unfavorable changes in working capital**, including a smaller reduction in accounts receivable and a significant decrease in other liabilities, which negatively affected cash flow despite some offsetting deferred revenue increases and the non-cash nature of the impairment charge.  **[0000319201-24-000003_exhibit991earningsrelease1.htm:6]** 

What drove Operating Cash Flow to drop so sharply in Q2 2024?

The impairment charge in Q3 2024 was prompted by a **strategic decision to exit the Display business** after a **significant deterioration in the long-term forecast for the PCB and Display businesses**, along with the **cancellation of a major new technology project by a significant customer**. This led to a **$70.5 million goodwill impairment charge** being recorded in the quarter.  **[0000319201-24-000012_klac-20240331.htm:54]** **[0001193125-24-070222_d810936d8k.htm:1]** **[0000319201-24-000009_exhibit991earningsrelease0.htm:10]** 

What prompted the recognition of an impairment charge in Q3 2024?

The documents indicate that **no specific reasons** were provided for the lower capital expenditures in Q4 2024, even though it notes that the amount in Q4 2024 was **$60,745 thousand** compared to **$78,683 thousand** in Q4 2023.  **[0000319201-24-000018_exhibit991earningsrelease7.htm:6]** 

What contributed to the lower Capital Expenditures in Q4 2024?

The documents indicate that the Purchases of Available-for-Sale Securities were **much higher in Q3 2024** compared to Q3 2023, but they do not provide a specific reason for the increase. They do mention that such changes are typically influenced by factors like **shifts in investment strategy**, **changes in cash management policies**, or **adjustments to optimize returns on excess cash**.  **[0000319201-24-000009_exhibit991earningsrelease0.htm:6]** 

Why were Purchases of Available-for-Sale Securities so much higher in Q3 2024?

The positive Investing Cash Flow in Q2 2025 was driven primarily by a substantial **increase in net proceeds from the sale of available-for-sale securities (approximately $933.2 million)** and a smaller but notable **increase in net proceeds from sales of trading securities (about $2.4 million)**. In addition, a **decrease in capital expenditures (roughly $7.9 million)** helped improve the cash flow, even though it was partially offset by a **decrease in proceeds from the sale of assets (around $4.9 million)**.  **[0000319201-25-000006_klac-20241231.htm:60]** 

What factors led to the positive Investing Cash Flow in Q2 2025?

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Net Income (USD, thousands)

Impairment of goodwill and purchased intangible assets (USD, thousands)

Depreciation and Amortization (USD, thousands)

Unrealized foreign exchange (gain) loss and other (USD, thousands)

Stock-based Compensation Expense (USD, thousands)

Settlement of treasury lock agreement (USD, thousands)

Net Cash Provided by Operating Activities (USD, thousands)

Business acquisitions, net of cash acquired (USD, thousands)

Capital Expenditures (USD, thousands)

Proceeds from Sale of Available-for-Sale Securities (USD, thousands)

Proceeds from Maturity of Available-for-Sale Securities (USD, thousands)

Purchases of Trading Securities (USD, thousands)

Proceeds from Sale of Trading Securities (USD, thousands)

Proceeds from other investments (USD, thousands)

Net Cash Provided by (Used in) Investing Activities (USD, thousands)

Proceeds from issuance of debt, net of issuance costs (USD, thousands)

Common Stock Repurchases (USD, thousands)

Payment of Dividends to Stockholders (USD, thousands)

Tax Withholding Payments Related to Vested and Released Restricted Stock Units (USD, thousands)

Net Cash Used in Financing Activities (USD, thousands)

Effect of Exchange Rate Changes on Cash and Cash Equivalents (USD, thousands)

Net Decrease / (Increase) in Cash and Cash Equivalents (USD, thousands)

Income Taxes Paid, Net (USD, thousands)

Interest Paid (USD, thousands)

Deferred Income Taxes (USD, thousands)

Contingent Consideration Payable and Other, Net (USD, thousands)

Cash and Cash Equivalents at Beginning of Period (USD, thousands)

Cash and Cash Equivalents at End of Period (USD, thousands)

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Revenues: Product [USD, thousands]

Revenues: Service [USD, thousands]

Total Revenues [USD, thousands]

Costs of Revenues [USD, thousands]

Research and Development [USD, thousands]

Selling, General and Administrative [USD, thousands]

Impairment of Goodwill and Purchased Intangible Assets [USD, thousands]

Interest Expense [USD, thousands]

Other Expense (Income), Net [USD, thousands]

Income Before Income Taxes [USD, thousands]

Provision for Income Taxes [USD, thousands]

Net Income [USD, thousands]

Net Income Per Share Attributable to KLA - Basic [USD]

Net Income Per Share Attributable to KLA - Diluted [USD]

Weighted-Average Number of Shares - Basic [thousands]

Weighted-Average Number of Shares - Diluted [thousands]

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Cash and cash equivalents (USD, thousands)

Marketable securities (USD, thousands)

Accounts receivable, net (USD, thousands)

Inventories (USD, thousands)

Other current assets (USD, thousands)

Total current assets (USD, thousands)

Land, property and equipment, net (USD, thousands)

Goodwill, net (USD, thousands)

Deferred income taxes (USD, thousands)

Purchased intangible assets, net (USD, thousands)

Other non-current assets (USD, thousands)

Total assets (USD, thousands)

Accounts payable (USD, thousands)

Deferred system revenue (USD, thousands)

Deferred service revenue (USD, thousands)

Current portion of long-term debt (USD, thousands)

Other current liabilities (USD, thousands)

Total current liabilities (USD, thousands)

Long-term debt (USD, thousands)

Deferred tax liabilities (USD, thousands)

Other non-current liabilities (USD, thousands)

Total liabilities (USD, thousands)

Common stock and capital in excess of par value (USD, thousands)

Retained earnings (USD, thousands)

Accumulated other comprehensive loss (USD, thousands)

Total stockholders’ equity (USD, thousands)

Total liabilities and stockholders’ equity (USD, thousands)

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Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

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b5dca89dcc66bd98b5ce65e1725537e2a0bba08da0300e767a8bf214f05933df

KLA (KLAC)

Financials