KLA Corporation Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

KLA Corporation KLAC reported first-quarter fiscal 2026 non-GAAP earnings of $8.81 per share, beating the Zacks Consensus Estimate by 3.04%. The figure surged 20.2% year over year.

Revenues increased 13% year over year to $3.21 billion, surpassing the Zacks Consensus Estimate by 1.72%.

KLAC’s Q1 Segmental Details

In terms of reportable segments, Semiconductor Process Control revenues (90.3% of total revenues) increased 12.6% year over year and 1% sequentially to $2.89 billion.

Foundry & Logic accounted for about 74%, whereas Memory constituted about 26% of Semiconductor Process Control revenues.

KLA Corporation Price, Consensus and EPS Surprise

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

Specialty Semiconductor Process revenues (3.7% of total revenues) were $119.8 million, down 6.7% year over year and 16% sequentially.

PCB and Component Inspection revenues (5.9% of total revenues) increased 37.3% year over year to $189.5 million, and up 23% on a sequential basis.

KLAC Top-Line Details

Product revenues (which accounted for 76.8% of total revenues) rose 12.2% year over year to $2.46 billion. Service revenues (23.2% of total revenues) increased 15.6% year over year and 6% sequentially to $744.7 million.

In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 48% and 21%, respectively, of KLA’s total revenues in the fiscal first quarter. 

Wafer Inspection revenues increased 12% year over year but decreased 13% sequentially to $1.53 billion. Patterning revenues moved up 16% year over year and 47% sequentially to $668 million. 

In terms of the regional breakdown of revenues, Taiwan and China led revenue contributions with 25% and 39%, respectively. Korea accounted for 9%, Japan 9%, and North America 9%. Europe contributed 5%, whereas the remaining 3% came from the rest of Asia.

KLA’s Operating Details

In the first quarter of fiscal 2026, the non-GAAP gross margin was 62.5%, 50 basis points above the midpoint of the guidance range.

Research and development (R&D) expenses increased 11.5% year over year to $360.5 million. As a percentage of revenues, R&D expenses decreased 10 basis points (bps) on a year-over-year basis to 11.2%.

Selling, general and administrative (SG&A) expenses increased 7.1% year over year to $269 million. As a percentage of revenues, SG&A expenses decreased 50 bps year over year to 8.4%.

The fiscal first-quarter non-GAAP operating expenses were $618.

The fiscal first-quarter non-GAAP operating margin was 43.2%.

KLAC Balance Sheet & Cash Flow

As of Sept. 30, 2025, cash, cash equivalents, and marketable securities totaled $4.68 billion compared with $4.49 billion as of June 30, 2025.

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

Cash flow from operating activities was $1.16 billion, unchanged from the figure reported in the previous quarter. The free cash flow was $1.07 billion for the fiscal first quarter.

In the fiscal first quarter, KLAC repurchased $545 million worth of shares and paid $254 million in dividends. 

On April 30, 2025, KLAC announced a $5 billion share repurchase authorization.

KLAC Provides Positive 2Q26 Guidance

For second-quarter fiscal 2026, revenues are expected to be $3.225 billion, plus/minus $150 million. 

KLA expects non-GAAP earnings of $8.70 per share, plus/minus 78 cents.

The company expects a non-GAAP gross margin of 62%, plus/minus 1%. Operating expense is expected to be roughly $635 million in the fiscal second quarter.

Zacks Rank & Other Stocks to Consider

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

BILL Holdings BILL, Advanced Energy AEIS, and Akamai Technologies AKAM are some other top-ranked stocks that investors can consider in the broader sector. Each stock carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bill Holdings’ shares have plunged 42% in the year-to-date period. BILL is set to report its first-quarter fiscal 2026 results on Nov. 6.

Advanced Energy is set to report third-quarter 2025 results on Nov. 4. Advanced Energy shares have surged 79.9% year to date.

Akamai Technologies is set to report third-quarter 2025 results on Nov. 6. Akamai Technologies shares have plunged 23.7% year to date.

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