KLA Corporation Q4 Earnings Surpass Estimates, Revenues Increase Y/Y

KLA Corporation KLAC reported fourth-quarter fiscal 2025 non-GAAP earnings of $9.38 per share, beating the Zacks Consensus Estimate by 10%. The figure surged 42.1% year over year.

Revenues increased 23.6% year over year to $3.17 billion, surpassing the Zacks Consensus Estimate by 3.21%.

KLAC’s Q4 Segmental Details

In terms of reportable segments, Semiconductor Process Control revenues (90.6% of total revenues) increased 24.7% year over year and 5% sequentially to $2.88 billion.

Foundry & Logic accounted for about 69%, whereas Memory constituted about 31% of Semiconductor Process Control revenues. Within memory, about 75% came from DRAM and 25% from NAND.
 

KLA Corporation Price, Consensus and EPS Surprise

KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote

Specialty Semiconductor Process revenues (4.5% of total revenues) were $142 million, up 17% year over year but down 9% sequentially.

PCB and Component Inspection revenues (4.9% of total revenues) increased 10.1% year over year to $154.1 million, but were down 9% on a sequential basis.

KLAC Top-Line Details

Product revenues (accounted for 78% of total revenues) surged 26.5% year over year to $2.47 billion. Service revenues (22% of total revenues) increased 14.4% year over year and 5% sequentially to $702.6 million.

In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 56% and 14%, respectively, of KLA’s total revenues in the fiscal fourth quarter. 

Wafer Inspection revenues increased 52% year over year and 18% sequentially to $1.77 billion. Patterning revenues moved down 16% year over year and 29% sequentially to $453 million. 

In terms of the regional breakdown of revenues, Taiwan and China led revenue contributions with 27% and 30%, respectively. Korea accounted for 15%, Japan 12%, and North America 9%. Europe contributed 4%, whereas the remaining 3% came from the rest of Asia.

KLA’s Operating Details

In the fourth quarter of fiscal 2025, the non-GAAP gross margin was 63.2%, slightly above the midpoint of the guidance range.

Research and development (R&D) expenses increased 8.4% year over year to $353 million. As a percentage of revenues, R&D expenses decreased 160 basis points (bps) on a year-over-year basis to 11.1%.

Selling, general and administrative (SG&A) expenses increased 3% year over year to $262.7 million. As a percentage of revenues, SG&A expenses decreased 170 bps year over year to 8.3%.

Non-GAAP operating expenses were $603 million, roughly $8 million above the guidance midpoint.

The fiscal fourth-quarter non-GAAP operating margin was 44.2%.

KLAC Balance Sheet & Cash Flow

As of June 30, 2025, cash, cash equivalents, and marketable securities totaled $4.49 billion compared with $4.03 billion as of March 31, 2025.

Long-term debt at the end of the fiscal fourth quarter was $5.88 billion, unchanged from the figure reported in the previous quarter.

Cash flow from operating activities was $1.16 billion for the reported quarter, up from $1.07 billion in the prior quarter. The free cash flow was $1.06 billion for the fiscal fourth quarter.

In the fiscal fourth quarter, KLAC repurchased $426 million worth of shares.

KLAC Provides Positive 1Q26 Guidance

For first-quarter fiscal 2026, revenues are expected to be $3.15 billion, plus/minus $150 million. The Zacks Consensus Estimate for revenues is pegged at $3.05 billion, indicating 7.2% year-over-year growth.

KLA expects non-GAAP earnings of $8.53 per share, plus/minus 77 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $8.15 per share, suggesting year-over-year growth of 11.2%.

The company expects a non-GAAP gross margin of 62%, plus/minus 1%. Operating expense is expected to be roughly $615 million in the fiscal first quarter.

KLA expects advanced packaging-related revenues to exceed $925 million in 2025, up from its previous estimate of $850 million. Process control represents over 70% of this revenue.

For 2025, KLA still expects a mid-single-digit growth in WFE from approximately $100 billion in 2024.

Zacks Rank & Stocks to Consider

Currently, KLA carries a Zacks Rank #2 (Buy). 

Arista Networks ANET, Bumble BMBL and DoorDash DASH are top-ranked stocks in the broader Zacks Computer & Technology sector. Each of the three stocks sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks is scheduled to report its second-quarter 2025 results on Aug. 5. Both Bumble and DoorDash are scheduled to report their respective second-quarter 2025 results on Aug. 6.

In terms of share price movement, DoorDash and Arista Networks have returned 48.5% and 11.5%, respectively, year to date. Bumble shares dropped 4.5% over the same timeframe.

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This article originally published on Zacks Investment Research (zacks.com).

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