Q1 2026 KLA Corp Earnings Call Transcript
Key Points
- KLA Corp (KLAC) delivered strong financial results with revenue of $3.21 billion and non-GAAP diluted EPS of $8.81, both exceeding guidance midpoints.
- The company is benefiting from the growing relevance of process control and AI infrastructure investment, with significant momentum in advanced packaging.
- Advanced packaging-related revenue is expected to exceed $925 million for 2025, marking a 70% year-over-year increase.
- KLA's service business continues to grow robustly, with services revenue reaching $745 million in the September quarter, up 16% year-over-year.
- Strong cash flow generation with a record $1.066 billion in cash flow from operations and $3.9 billion in free cash flow over the past 12 months.
- The company faces potential revenue impact due to extended export controls from the US government, affecting certain customers in China, with an estimated impact of $300 million to $350 million for 2026.
- Gross margin guidance for the December quarter is slightly lower at 62%, influenced by product mix and tariff impacts.
- China's revenue contribution is expected to decrease, with projections for it to settle in the mid-20% range in 2026, down from higher levels in previous quarters.
- The advanced packaging market, while growing, presents a more dilutive gross margin compared to other segments.
- KLA Corp (KLAC) is facing challenges in mitigating tariff impacts, which currently affect gross margins by 50 to 100 basis points.
Good afternoon. My name is Stephanie, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the KLA Corporation September quarter 2025 post-Earnings conference call.
(Operator Instructions)
Thank you. I will now turn the call over to Kevin Kessler, Vice President of Investor Relations and Market Analytics for KLA. Please go ahead.
Welcome to the September 2025 quarterly earnings call. I'm joined by our CEO, Rick Wallace; and our CFO, Bren Higgins. We will discuss today's results as well as our December quarter outlook, which was released after the market close and is available on our website along with the supplemental materials. We are presenting today's discussion and metrics on a non-GAAP financial basis unless otherwise specified. All full year references made refer to calendar years. The earnings materials contain a detailed reconciliation of GAAP to non-GAAP results.
KLA's IR website also contains future events, presentations,
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