KLA Corporation (KLAC) Earnings & Analysis

Latest quarter

KLA reported Q4 FY2026 revenue of $3.7 billion, compared with the consensus of $3.6 billion; revenue as the consensus counts it was $3.7 billion, or 1.31% above the consensus. The company reported adjusted EPS, as the consensus counts it, of $1.05, compared with the consensus of $1.00, or 5.00% above the consensus.

KLA reported that revenue increased 15.2% from $3.2 billion in Q4 FY2025. Rick Wallace said the June-quarter revenue result reflected investment tied to AI infrastructure, leading-edge foundry logic, and process-control demand across memory and advanced packaging. KLA reported diluted EPS of $1.04, up 14.8% from $0.91 a year earlier. The company reported gross margin of 61.4%, down −0.6 percentage points year over year, and operating margin of 42.5%, down −0.1 percentage points. KLA reported free cash flow of $817.1 million, compared with $1.1 billion in Q4 FY2025, a −22.9% change.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Rick Wallace said demand signals had strengthened since KLA’s March Investor Day, citing accelerated data-center investment, AI-compute requirements and adoption of AI-enabled applications. He said customers were using KLA systems and services to support yield learning, productivity and high-volume manufacturing as logic, memory and packaging requirements became more complex.

customer engagement and demand signals continue to strengthen

Wallace said KLA expected advanced-packaging process-control systems revenue of approximately $1.1 billion in calendar 2026, representing growth of more than 70% year over year. He also said the company expected its combined specialty-process, PCB and component-inspection products to grow more than 25% in calendar 2026. Wallace said KLA Services generated $820 million of June-quarter revenue, up 17% year over year, as the installed base expanded.

Bren Higgins said KLA was adding capacity and making working-capital and facilities investments to support expected demand. He said the company expected second-half calendar 2026 revenue to be approximately 20% above the first half as capacity became available in long-lead supply-chain areas. Higgins said KLA was planning for significant calendar 2027 growth as customer investment broadened across leading-edge logic, foundry, DRAM, NAND and advanced packaging.

On pricing and margins, Higgins said a more favorable services mix and manufacturing scale supported June-quarter gross margin, while higher memory-input prices and tariffs were headwinds. In response to questions about pricing, Wallace said input prices had increased and KLA had discussed ways to capture some of the value created for customers while supporting R&D investment. Higgins said the memory-price effect had exceeded 100 basis points in recent quarters and was likely to continue through 2027.

We’re still dealing with some headwinds as related to memory pricing.

Higgins said KLA’s long-term service-revenue growth target was 13% to 15%, and that service revenue was 80% contract-based. He said higher shipment levels in the current year and the following year were expected to support service growth toward the higher end of that range.

Guidance

KLA raised its calendar 2026 expectation for advanced-packaging process-control systems revenue to approximately $1.1 billion, with growth of more than 70% year over year, from its prior expectation of high-50% growth. Bren Higgins also raised KLA’s calendar 2026 wafer-equipment-market expectation, including advanced packaging, to approximately the low $150 billion range from more than $140 billion. KLA anticipates second-half calendar 2026 revenue growth of approximately 20% over the first half.