Kla Corporation ((KLAC)) has held its Q3 earnings call. Read on for the main highlights of the call.
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KLA Corporation’s recent earnings call painted a picture of robust financial health, marked by record revenue, earnings per share (EPS), and cash flow. The company showcased impressive growth in advanced packaging and services, although it acknowledged challenges posed by global trade uncertainties and tariffs, which have impacted gross margins and led to the postponement of the Investor Day.
Revenue and EPS Exceed Expectations
KLA Corporation reported a revenue of $3.06 billion for the March quarter, surpassing the guidance midpoint of $3 billion. The non-GAAP diluted EPS stood at $8.41, while the GAAP diluted EPS was $8.16, both reaching the upper end of their respective guidance ranges. This performance underscores KLA’s ability to exceed market expectations.
Advanced Packaging Growth
The company’s advanced packaging segment demonstrated significant growth, with revenue surpassing $500 million in calendar 2024. KLA anticipates this figure to exceed $850 million by calendar 2025, reflecting strong market demand and the company’s competitive positioning in this sector.
Service Business Growth
KLA’s Services business continued its impressive growth trajectory, achieving $669 million in revenue for the March quarter, a 13% increase year-over-year. This marks the 52nd consecutive quarter of year-over-year growth, highlighting the resilience and consistent performance of this segment.
Record-Free Cash Flow
The company reported a record quarterly free cash flow of $990 million. Over the past 12 months, KLA generated $3.5 billion in free cash flow, maintaining a robust free cash flow margin of 30%.
Continued Market Leadership
KLA maintained its strong global market share in the wafer fabrication equipment (WFE) and process control markets for calendar 2024, with a notable growth of nearly 250 basis points over the past five years, reinforcing its leadership position.
Global Trade Uncertainty and Tariffs
The earnings call highlighted the impact of global trade uncertainties and tariffs, which have been a 100 basis point headwind per quarter on gross margins. These challenges underscore the complex international trade environment KLA operates within.
Impact of Export Controls
Newly announced U.S. government export controls have affected KLA’s service revenue growth in the March quarter, reflecting the broader geopolitical challenges impacting the tech industry.
Postponement of Investor Day
Due to macroeconomic uncertainties, KLA has postponed its Investor Day from June 2025 to early to mid-calendar 2026, indicating a cautious approach in the face of unpredictable market conditions.
Forward-Looking Guidance
Looking ahead, KLA has provided guidance for the June quarter, projecting revenue of $3.075 billion and a gross margin of 63%. The company also announced a new $5 billion share repurchase authorization and a 12% dividend increase, signaling confidence in its future performance and commitment to returning value to shareholders.
In conclusion, KLA Corporation’s earnings call reflected a strong financial performance, driven by record revenue and EPS, alongside significant growth in advanced packaging and services. Despite challenges from global trade uncertainties and tariffs, the company remains a market leader with a robust outlook, as evidenced by its forward-looking guidance and shareholder return initiatives.