01—Abstract
Summary
Summary of the 10-Q filed January 28, 2022. Cited figures are marked; the original filing is the authoritative source.
KLA Corporation (KLAC) reported strong financial results for the quarter and six months ended December 31, 2021.
Total revenues surged by 43% year-over-year to $2.35 billiona for the quarter and 39% to $4.44 billion for the six-month period. This growth was primarily driven by robust demand across its Semiconductor Process Control (SPC) segment, which saw a 49% revenue increase, and continued expansion in the Specialty Semiconductor Process and Electronics, Packaging, and Components (EPC) segments. The company's net income attributable to KLA also saw substantial growth, increasing by 57% to $717.4 million for the quarter and 103% to $1.79 billion for the six-month period, reflecting improved profitability on higher sales volumes and gross margins.
KLA's strong operational performance is supported by significant investments in R&D and a solid balance sheet with substantial cash and marketable securities. The company's outlook remains positive, with management citing sustained demand for semiconductors driven by secular trends like AI, High-Performance Computing, and 5G.
While acknowledging supply chain constraints, KLA is actively managing these challenges. The company continued its capital return strategy through stock repurchases and dividend payments, demonstrating a commitment to shareholder value.
02—Key points
Key Highlights
- Total revenues increased significantly, up 43% to $2.35 billion for the quarter and 39% to $4.44 billion for the six months ended December 31, 2021, compared to the prior year periods.
- Net income attributable to KLA grew substantially, rising 57% to $717.4 million for the quarter and 103% to $1.79 billion for the six months, driven by higher revenues and improved gross margins.
- The Semiconductor Process Control (SPC) segment was a key growth driver, with revenues increasing by 49% year-over-year to $2.05 billion for the quarter.
- Gross margin improved to 61.4% for the quarter and 61.2% for the six months, up from 59.4% and 59.5% respectively, reflecting strong operational leverage.
- The company maintained a strong liquidity position with $2.81 billion in cash, cash equivalents, and marketable securities as of December 31, 2021.
- KLA returned capital to shareholders through $429.9 million in stock repurchases and $159.1 million in dividend payments during the three months ended December 31, 2021.
- Remaining performance obligations stood at a substantial $8.35 billion as of December 31, 2021, indicating strong future revenue visibility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2022filed January 28, 2022Financial Statements
Q2 FY2022 against Q2 FY2021
| Line item | Q2 FY2022Q2 FY2021 | Change |
|---|---|---|
| Revenue | $2.35B$1.65B | +42.5% |
| Cost of Revenue | $908.16M$669.73M | +35.6% |
| Gross Profit | $1.44B$981.14M | +47.2% |
| R&D Expenses | $265.03M$229.06M | +15.7% |
| SG&A Expenses | $213.48M$181.91M | +17.4% |
| Interest Expense | $37.85M$38.88M | −2.6% |
| Net Income | $717.44M$457.25M | +56.9% |
| EPS (Basic) | $0.47$0.30 | +60.1% |
| EPS (Diluted) | $0.47$0.29 | +60.2% |
| Shares Outstanding (Basic) | 1.51B1.54B | −2.0% |
| Shares Outstanding (Diluted) | 1.52B1.56B | −2.1% |
05—Questions
Frequently Asked Questions
What drove the significant revenue increase in the quarter?
The substantial increase in revenue was primarily driven by strong demand across KLA's product portfolio, particularly in the Semiconductor Process Control (SPC) segment, and continued growth in advanced packaging, 5G infrastructure, and specialty semiconductor markets. This broad demand reflects ongoing customer investments in advanced technologies and new semiconductor manufacturing processes.
How did the company's profitability change, and what contributed to it?
Profitability saw a significant improvement, with net income attributable to KLA increasing by 57% year-over-year for the quarter. This was driven by higher revenue volumes coupled with an improved gross margin, which rose to 61.4%. The company effectively leveraged its operational scale and managed costs to translate increased sales into stronger profit growth.
What is the company's outlook regarding future demand and potential challenges?
KLA anticipates continued strong demand driven by secular trends in semiconductors, including AI, High-Performance Computing, and 5G, which necessitate investments in advanced logic and memory devices, as well as complex packaging technologies. However, the company is also navigating supply chain constraints, which have led to extended lead times and component shortages, requiring proactive planning and increased purchase commitments.
How is KLA managing its capital and returning value to shareholders?
KLA maintains a strong liquidity position with $2.81 billion in cash, cash equivalents, and marketable securities. The company actively returns capital to shareholders through its stock repurchase program, having spent $429.9 million on repurchases during the quarter, and through consistent dividend payments, with $159.1 million distributed in the same period. The company also has a significant backlog of $8.35 billion in remaining performance obligations, indicating strong future revenue visibility.
06—Continue