Kla Corporation ((KLAC)) has held its Q4 earnings call. Read on for the main highlights of the call.
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KLA Corporation’s recent earnings call revealed a strong performance, marked by significant revenue growth, robust free cash flow, and impressive earnings per share (EPS). Despite facing challenges like tariff impacts on gross margins and reduced demand from China, the company remains optimistic about its future, buoyed by positive customer discussions for 2026.
Record Revenue and Free Cash Flow
KLA Corporation reported a remarkable revenue of $3.175 billion and a record free cash flow exceeding $1 billion for the June 2025 quarter. This achievement signifies a 24% year-over-year growth in revenue, underscoring the company’s robust financial health and effective strategic execution.
Advanced Packaging and Process Control Leadership
The company’s leadership in advanced packaging and process control is evident, with expected revenue from advanced packaging surpassing $925 million in 2025, up from a previous estimate of $850 million. Additionally, KLA’s Service business experienced a 14% year-over-year growth, reaching $703 million.
Strong EPS Performance
KLA’s earnings per share performance was notably strong, with non-GAAP diluted EPS at $9.38, exceeding the guidance range, and GAAP diluted EPS at $9.06, hitting the upper end of the guidance range. This reflects the company’s ability to deliver value to its shareholders.
Increased Capital Returns
The June quarter saw KLA returning $680 million in capital to shareholders, comprising $426 million in share repurchases and $254 million in dividends. This demonstrates the company’s commitment to enhancing shareholder value through strategic capital allocation.
Positive Outlook for 2026
KLA’s early customer discussions indicate a positive outlook for 2026, with expectations for continued investment in advanced logic and packaging, driven by the growing demand for AI technologies. This positions the company well for sustained growth in the coming years.
Tariff Impact on Gross Margins
The company anticipates a 50 to 100 basis point headwind on gross margins due to global tariffs, which is below the original estimate of a 100 basis point impact. This reflects KLA’s ability to mitigate some of the adverse effects of tariffs on its financial performance.
Challenges in China Market
KLA is facing challenges in the Chinese market, with expectations of lower overall demand and reduced investment levels following elevated investments in 2023 and 2024. This presents a potential headwind for the company’s growth in this key market.
Forward-Looking Guidance
Looking ahead, KLA Corporation projects revenue of $3.15 billion for the September quarter, plus or minus $150 million, with a gross margin forecasted at 62%, plus or minus 1 percentage point. The company anticipates continued strong growth, driven by increasing investments in AI infrastructure, and expects to outperform the mid-single-digit WFE growth rate in 2025.
In conclusion, KLA Corporation’s earnings call highlighted a strong financial performance, with significant revenue growth and robust EPS. Despite challenges such as tariff impacts and reduced demand from China, the company remains optimistic about future growth, supported by positive customer discussions and strategic investments in advanced technologies. KLA’s commitment to shareholder value and its leadership in advanced packaging and process control position it well for sustained success.