KLA Corporation Q3 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

KLA Corporation March Quarter 2026 Earnings Summary

Financial Highlights

  • Revenue: $3.415 billion, up 4% sequentially and 11% year-over-year (vs. March 2025 quarter), driven by leading-edge foundry/logic and high-bandwidth memory investments.
  • Non-GAAP diluted EPS: $9.40; GAAP diluted EPS: $9.12 (both above guidance midpoints).
  • Gross margin: 62.2% (45 bps above guidance midpoint), supported by favorable service mix and manufacturing scale.
  • Service revenue: $775 million, up 16% year-over-year but down 1% sequentially due to timing; reflects long-term growth tailwind from advanced tools.
  • Free cash flow: $622 million in quarter; $4 billion over trailing 12 months (31% margin). Capital returned: $875 million in quarter ($626M repurchases + $249M dividends); $3.2 billion over trailing 12 months.
  • Operating margin: 42.6%; operating expenses $670 million (R&D $389M, SG&A $281M).

Business Performance & Market Position

  • Achieved #1 position in process control for advanced wafer-level packaging (2025); advanced packaging revenue expected to grow from ~$635 million (2025) to ~$1 billion (2026), exceeding prior estimates.
  • Market share gains in 2025: overall wafer equipment, process control, bare wafer inspection, optical patterned wafer inspection, and e-beam inspection; advanced packaging share up 14 percentage points with ~70% YoY revenue growth.
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Operator: Good afternoon. My name is Leo, and I will be your conference operator today. At this time, I would like to welcome everyone to the KLA Corporation March Quarter 2026 Earnings Conference Call. I will now turn the call over to Kevin Kessel, Vice President of Investor Relations and Market Analytics. Please go ahead. Kevin Kessel: Welcome to the March 2026 quarterly earnings call for KLA. I'm joined by our CEO, Rick Wallace; and CFO, Brent Higgins. We will discuss today's results as well as our outlook, which we released after the market closed and is available on our website along with supplemental materials. We are presenting today's discussion and metrics on a non-GAAP financial basis unless otherwise specified. We will not reference fiscal years in our discussion, all full year references we may refer to calendar years. The earnings material contain a detailed reconciliation of GAAP to non-GAAP results. KLA's IR website also contains future events presentations, corporate governance information and links to our SEC filings. Our comments today are subject to risks and uncertainties reflected in the disclosure of risk factors in our SEC filings. Any forward-looking statements, including those we make on the call today, are also subject to those risks, and KLA cannot guarantee those forward-looking statements will come true. Our actual results may differ significantly from those projected in our forward-looking statements. We will begin the call with Rick providing co
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