KLA Corporation
KLAC · Nasdaq
Dec 2026
Next quarter
Expected to report Jan 28, 2027 — estimated from last year’s reporting date.
Consensus is $1.44 EPS for Dec 2026 across 7 estimates, ranging $1.43 to $1.45.
KLAC Sep 2026
- 3.39%
- +5.45%
- $1.18
- $1.22
- —
- $4.14B
Reported results
- $4.14B
- 61.85%
- $1.55B
- $1.18
Highlights
- Record quarter: Revenue was $4.136 billion, up 13% sequentially and 29% year over year, and above the $4.0 billion midpoint of guidance.
- EPS beat: Non-GAAP diluted EPS was $1.22, 3.4% above the $1.18 consensus; GAAP diluted EPS was $1.18. Net income was $1.549 billion.
- Demand is accelerating: Management expects the wafer equipment market, including advanced packaging, to reach the mid-$150 billion range in calendar 2026 and exceed $200 billion in 2027.
- December outlook steps up: Revenue guidance is $4.7 billion ±$200 million, with non-GAAP diluted EPS of $1.44 ±$0.11 and GAAP diluted EPS of $1.41 ±$0.11.
- Process control leads: Semiconductor Process Control revenue rose 15% sequentially and 29% year over year to $3.754 billion; management cited leading-edge foundry/logic, memory and advanced packaging.
- Record operating leverage: Non-GAAP operating margin reached 46.1%, up 240 basis points sequentially and above 46% for the first time; non-GAAP gross margin was 62.7%.
- Advanced packaging and services add breadth: Calendar 2026 advanced-packaging process-control systems revenue remains on track for at least $1.1 billion, up more than 70%; services revenue was $851 million, up 14% year over year.
- Strong cash generation and returns: Operating cash flow was $1.531 billion and free cash flow $1.336 billion; repurchases and dividends totaled $1.241 billion in the quarter.
Analysis
KLA’s September quarter marked the acceleration management had anticipated for the second half of calendar 2026. Revenue reached a record $4.136 billion, up 13% from the June quarter and 29% from a year earlier, and exceeded the $4.0 billion midpoint of its guidance range. Non-GAAP diluted EPS of $1.22 beat the $1.18 consensus by 3.4%; GAAP EPS was $1.18, versus $1.04 sequentially and $0.85 year over year. Non-GAAP operating margin hit a company record 46.1%, while non-GAAP gross margin was 62.7%.
The central story is rising AI-related process-control demand, with growth led by Semiconductor Process Control and supported by more complex leading-edge devices, memory and advanced packaging. Management said demand and backlog growth are running ahead of supply, but long-lead-time capacity is coming online; it expects sequential growth over the next several quarters. Its December guidance calls for $4.7 billion in revenue and $1.44 non-GAAP EPS at the midpoint. The industry outlook also strengthened: KLA now sees wafer equipment spending in the mid-$150 billion range in 2026 and above $200 billion in 2027. Cash generation remained substantial, funding $1.241 billion of quarterly capital returns.
Demand and supply
- Market outlook: Management raised its 2026 wafer equipment market expectation, including advanced packaging, to approximately the mid-$150 billion range and expects the market to exceed $200 billion in 2027.
- Visibility: The company described backlog and sales-funnel visibility as exceptionally strong and expects sequential growth over the next several quarters, with significant growth in calendar 2027. It characterized 2027 growth as likely more linear than the sharp second-half step-up in 2026.
- Capacity remains the constraint: Management said demand exceeded what KLA could ship during 2026; average lead times are around 12 months, with some product lines longer. It has been expanding supplier capacity and investing across its factories, while noting that customer clean-room and facility readiness can also delay deliveries.
- Regional mix: China revenue was $1.426 billion, or 34.5% of the quarter, up 49% sequentially. Management expects China to be in the high-20% range in the December quarter and the low-20% range in 2027 as growth outside China outpaces it.
Process control and packaging
- Core segment: Semiconductor Process Control generated $3.754 billion, up 15% sequentially and 29% year over year, on demand across leading-edge foundry/logic, memory and advanced packaging.
- Technology intensity: Management pointed to more leading-edge designs, including 2-nanometer and future nodes, and higher process-control intensity in DRAM and HBM. It said yield and performance requirements are increasing inspection needs, including in new memory fabs.
- Advanced packaging: KLA remains on track for at least $1.1 billion of advanced-packaging process-control systems revenue in calendar 2026, representing more than 70% growth and nearly twice the market’s growth rate, according to management. More front-end-like processes and hybrid bonding are also shifting demand toward higher-sensitivity tools.
- Adjacent businesses: PCB and Component Inspection revenue was $242 million, up 28% year over year but essentially flat sequentially. Specialty Semiconductor Process revenue was $139 million, down 13% sequentially due mainly to shipment timing, but up 16% year over year.
Margins and investment
- Record operating margin: Non-GAAP operating margin increased 240 basis points sequentially to 46.1%, exceeding 46% for the first time. Management reiterated a long-term model of 40%–50% incremental operating margin on revenue growth.
- Gross-margin trade-offs: Non-GAAP gross margin was 62.7%. December-quarter guidance is 62.5% ±1 percentage point; management cited persistently high memory costs as a headwind, while pursuing memory-efficiency and product-cost initiatives.
- Recovery timing: KLA’s stated long-term gross-margin target is 63%–64%. Management expects improvement as new-product pricing, manufacturing scale and cost actions take effect, but said memory costs remain challenging and pointed to the second half of 2027 into 2028 for progress toward the target.
- Spending to support growth: December-quarter operating expenses are forecast at approximately $710 million. Quarterly capital expenditures were $195 million, including a significant land purchase in India; management expects annual capex to trend toward $600 million–$800 million over the next few years.
Services and cash returns
- Services growth: Revenue was $851 million, up 4% sequentially and 14% year over year, supported by a larger installed base and customers’ focus on tool performance and availability. Management expects services to remain toward the high end of its long-term growth range.
- Cash generation: Operating cash flow was $1.531 billion and free cash flow was $1.336 billion, compared with $906 million and $817 million, respectively, in the June quarter. The trailing-twelve-month figures were $4.512 billion of operating cash flow and $4.038 billion of free cash flow.
- Capital returns: KLA repurchased $936 million of stock and paid $305 million in dividends, for $1.241 billion of quarterly capital returns. It ended September with $8.81 billion of repurchase authorization remaining.
- Balance sheet: Cash, cash equivalents and marketable securities totaled $4.741 billion against $5.950 billion of debt at September 30.
December quarter outlook
- Revenue and EPS: KLA expects revenue of $4.7 billion ±$200 million, GAAP diluted EPS of $1.41 ±$0.11 and non-GAAP diluted EPS of $1.44 ±$0.11.
- Margins: Guidance is for GAAP gross margin of 61.8% ±1 percentage point and non-GAAP gross margin of 62.5% ±1 percentage point.
- Customer mix: Foundry/logic is expected to represent approximately 60% and memory 40% of semiconductor process-control systems revenue to semiconductor customers; within memory, the expected mix is 84% DRAM and 16% NAND.
