10-QPeriod: Q2 FY2025

KLA CORP Quarterly Report for Q2 Ended Dec 31, 2024

Filed January 31, 2025For Securities:KLAC

Summary

KLA Corporation (KLAC) reported strong revenue growth of 24% year-over-year for the second quarter of fiscal year 2025, reaching $3.08 billion. This growth was primarily driven by robust demand in its Semiconductor Process Control segment, particularly in wafer inspection and patterning products, with significant contributions from customers in Taiwan and North America. Service revenues also saw a healthy increase of 18% due to a larger installed base. The company's financial performance was also bolstered by a significant increase in net income, up 42% to $824.5 million, leading to diluted earnings per share of $6.16. Despite a substantial goodwill and intangible asset impairment charge of $230.4 million related to its PCB and Component Inspection segment, the company maintained a strong gross margin of 60.3% and generated robust operating cash flow. However, investors should note the ongoing geopolitical and regulatory headwinds, particularly the U.S. government's enhanced export controls targeting China. These regulations have led to a reduction in the company's Remaining Performance Obligations (RPO) by $430 million and pose a risk to future sales in that region. The company also continues to manage its capital structure, with significant debt outstanding but a strong liquidity position, including $3.78 billion in cash, cash equivalents, and marketable securities, and an undrawn revolving credit facility.

Financial Highlights

49 data points
Beta

Revenue

$3.08B

60.3% Gross Margin

Net Income

$824.53M

26.8% Net Margin

EPS (Diluted)

$0.62

Total Assets

$15.00B

Cash & Equivalents

$1.84B

Free Cash Flow

$757.19M

Financial Statements
Beta
Revenue$3.08B
Cost of Revenue$1.22B
Gross Profit$1.86B
R&D Expenses$346.16M
SG&A Expenses$267.08M
Net Income$824.53M
EPS (Basic)$0.62
EPS (Diluted)$0.62
Shares Outstanding (Basic)1.33B
Shares Outstanding (Diluted)1.34B

Key Highlights

  • 1Total revenues increased by 24% year-over-year to $3.08 billion in Q2 FY25.
  • 2Net income surged by 42% to $824.5 million, with diluted EPS of $6.16.
  • 3The Semiconductor Process Control segment remains the dominant revenue driver, up 26% year-over-year.
  • 4Service revenues increased by 18% year-over-year, reflecting growth in the installed base.
  • 5A goodwill and intangible asset impairment charge of $230.4 million was recorded in the PCB and Component Inspection segment.
  • 6The company has $3.78 billion in cash, cash equivalents, and marketable securities as of December 31, 2024.
  • 7Remaining Performance Obligations (RPO) were reduced by $430 million due to updated U.S. export control regulations impacting sales to China.

Frequently Asked Questions

KLA Corporation reported total revenues of $3.08 billion for the three months ended December 31, 2024, a 24% increase compared to $2.49 billion in the same period last year. This growth was primarily driven by strong performance in the Semiconductor Process Control segment.

Net income for the quarter increased significantly by 42% to $824.5 million, resulting in diluted earnings per share of $6.16, up from $4.28 in the prior year's comparable quarter. This improved profitability was achieved despite a substantial goodwill and intangible asset impairment charge.

The enhanced U.S. export control regulations targeting China have resulted in a reduction of KLA's Remaining Performance Obligations (RPO) by approximately $430 million. The company is actively seeking export licenses but acknowledges the material risk these regulations pose to future sales and operations in China.

KLA Corporation maintains a strong liquidity position with $3.78 billion in cash, cash equivalents, and marketable securities as of December 31, 2024. The company also has an undrawn $1.5 billion revolving credit facility. Operating cash flow remains robust.

Yes, KLA recorded a goodwill and purchased intangible asset impairment charge of $230.4 million in the PCB and Component Inspection segment during the quarter due to a continued deterioration of long-term forecasts for that business. This charge impacted the overall profitability but was managed within the context of strong top-line growth.