KLA Corporation

KLA reported September-quarter revenue of $4.14 billion, up 13% sequentially and 29% year over year. Non-GAAP diluted EPS was $1.22 and GAAP diluted EPS was $1.18. Gross margin was 62.7%, operating margin was 46.1%, operating expenses were $688 million, cash flow from operations was $1.53 billion, and free cash flow was $1.34 billion. The company ended the quarter with $4.7 billion in cash and marketable securities and $5.95 billion of debt. For the December quarter, KLA guided to revenue of $4.7 billion plus or minus $200 million, gross margin of 62.5% plus or minus 1 percentage point, operating expenses of about $710 million, non-GAAP EPS of $1.44 plus or minus $0.11, and GAAP EPS of $1.41 plus or minus $0.11. Management said second-half 2026 revenue growth should be about 25% above the first half, and services revenue was $850 million in the quarter, up 14% year over year.

Rick Wallace said KLA is seeing stronger AI-related demand, especially in leading-edge foundry/logic, advanced packaging, and memory, and that customer engagement is giving the company better visibility into 2026 and 2027. His tone was confident and constructive, emphasizing backlog growth, supply-chain preparation, and the view that KLA is positioned for significant growth in calendar 2027. He also said advanced packaging process control systems revenue is still on track to reach $1.1 billion in 2026 and that the company is investing to support demand through 2027 and beyond.

Bren Higgins focused on the quarter’s financial strength and the setup for further sequential growth. He reiterated the margin profile, including 62.7% gross margin in the quarter and a 62.5% plus or minus 1 point outlook for December, while noting that memory costs remain a headwind to gross margin and that the company is working on memory optimization and other product-cost reductions. He also said KLA ended the quarter with $4.7 billion of cash and marketable securities, $5.95 billion of debt, and is increasing capital spending, including a significant land purchase in India; he said CapEx should trend up over the next few years to roughly $600 million to $800 million annually.

Analysts pressed management on whether KLA can outgrow the wafer equipment market in 2027, and Higgins said the setup looks favorable because of leading-edge logic, DRAM/HBM intensity, and advanced packaging, while also acknowledging the company is still behind on supply in some areas. Questions also focused on gross margin recovery and memory cost pressure; management said margins should improve over time as memory efficiency initiatives, mix, scale, and pricing actions work through, but that the improvement may be more visible into the second half of 2027 and 2028. Other topics included China, where Higgins said the region was about 27% to 29% of revenue in the recent period and should remain a smaller share of the total in 2027, and supply constraints, where Wallace said the bottleneck is often optical components and customer fab readiness, not just KLA’s own capacity.