Q3 2026 KLA Corp Earnings Call Transcript
Key Points
- KLA Corp (KLAC) reported strong revenue growth of 11% year over year, reaching $3.415 billion, driven by increased investment in leading-edge foundry logic and High-Bandwidth Memory.
- The company achieved the number one position in Process Control for Advanced Wafer-Level Packaging for 2025, with significant market share gains.
- KLA's Service business grew 16% year over year, highlighting consistent long-term growth and predictable cash flow.
- Free cash flow over the past 12 months was $4 billion, with a free cash flow margin of 31%, supporting a robust capital return strategy.
- KLA increased its global market share in both the overall wafer equipment and Process Control markets, with a 70% year-over-year revenue growth in Advanced Wafer-Level Packaging.
- Operating expenses were higher than expected, primarily due to prototype materials timing and other reserve adjustments.
- The Service business saw a slight sequential decline of 1% due to the timing of revenue recognition.
- Gross margin faced a headwind from elevated DRAM chip costs, impacting the company's image processing computers.
- The company anticipates a persistent negative impact on gross margins due to elevated memory pricing through at least calendar 2026.
- KLA's operating expenses are expected to grow by roughly $15 million sequentially throughout the calendar year, prioritizing next-generation product development and infrastructure investments.
Please standby. You're meeting is about to begin.
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 and webcast. (Operator Instructions)
I will now turn the call over to Kevin Kessel, Vice President of Investor Relations and Market Analytics. Please go ahead.
Welcome to the March 2026 quarterly earnings call for KLA. Iâm joined by our CEO, Rick Wallace; and CFO, Bren Higgins. We will discuss todayâs results as well as our outlook, which we released after the market close and is available on our website along with supplemental materials. We are presenting todayâs 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 make refer to calendar years. The earnings material contains a detailed reconciliation of GAAP to non-GAAP
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