KLA Corporation — Fiscal 2027 First Quarter Earnings Summary

Financial Performance:

• Total revenues for Q1 FY2027 were $4.14 billion, exceeding the guidance midpoint of $4.0 billion; this represents a 28.9% increase from $3.21 billion in Q1 FY2026.
• GAAP net income was $1.55 billion ($1.18 per diluted share), compared to $1.12 billion ($0.85 per diluted share) in Q1 FY2026.
• Non-GAAP net income was $1.60 billion ($1.22 per diluted share), compared to $1.17 billion ($0.88 per diluted share) in Q1 FY2026.
• Cash flow from operating activities was $1.53 billion for the quarter and $4.51 billion for the trailing twelve months.
• Free cash flow was $1.34 billion for the quarter and $4.04 billion for the trailing twelve months.
• Capital returns totaled $1.24 billion for the quarter and $3.79 billion for the trailing twelve months.
• Total assets were $18.40 billion as of September 30, 2026, compared to $17.95 billion as of June 30, 2026.
• Long-term debt was $5.72 billion as of September 30, 2026, down from $5.89 billion as of June 30, 2026.
• Deferred system revenue was $843.0 million and deferred service revenue was $634.2 million as of September 30, 2026.

Guidance and Future Outlook:

• Q2 FY2027 total revenues are expected to be $4.7 billion +/- $200 million.
• Q2 FY2027 GAAP gross margin is expected to be 61.8% +/- 1.0%.
• Q2 FY2027 Non-GAAP gross margin is expected to be 62.5% +/- 1.0%.
• Q2 FY2027 GAAP diluted EPS is expected to be $1.41 +/- $0.11.
• Q2 FY2027 Non-GAAP diluted EPS is expected to be $1.44 +/- $0.11.
• Management anticipates accelerated growth for the second half of calendar 2026 and expects the company to remain well-positioned as it approaches the end of calendar 2026 and looks forward to calendar 2027.

Business Segments and Product Lines:

• Semiconductor Process Control segment revenue was $3.75 billion for the quarter.
• Specialty Semiconductor Process segment revenue was $139.5 million for the quarter.
• PCB and Component Inspection segment revenue was $242.2 million for the quarter.
• Process control, PCB, and component inspection businesses are benefiting from technology transitions and rigorous performance requirements in high-performance computing.
• Growth drivers include increases in leading-edge designs across foundry and logic, device size and value, memory complexity and performance requirements, and the importance of advanced packaging.

Market and Competitive Landscape:

• KLA's process control business is described as critical to the AI ecosystem buildout.
• The company maintains a market-leading product portfolio and associated services offerings.
• The company operates in the electronics industry, providing solutions for manufacturing wafers, reticles, integrated circuits, packaging, and printed circuit boards.

Risks and Challenges:

• Risks include vulnerability to weakening financial markets, global economy conditions, and international operations.
• Regulatory risks involve evolving Bureau of Industry and Security rules, tariffs, trade restrictions, and uncertainty regarding tariff authority.
• Operational risks include cybersecurity threats, reliance on critical information systems, and disruptions from third-party service providers.
• Geopolitical risks include the war between Ukraine and Russia, armed conflict in Iran, and military activity in the Middle East.
• Business risks include customer concentration, industry cyclicality, component availability (including rare earth elements and DRAM chip shortages), and intellectual property disputes.
• Financial risks include fluctuations in foreign currency exchange rates, interest rates, and debt structure.

Management Commentary and Tone:

• Rick Wallace, President and CEO, stated that KLA beat the midpoint of guidance across all key metrics, demonstrating expected accelerated growth.
• Management expressed confidence in the company's growth profile driven by AI ecosystem buildout and technology transitions.
• The tone indicates strong performance and confidence in addressing compelling opportunities in the semiconductor and electronics manufacturing sectors.

Other Key Points:

• A ten-for-one stock split was effective June 11, 2026; all per share amounts have been retroactively adjusted to reflect this split.
• Common stock repurchases for the quarter were $935.8 million, and dividends paid were $305.1 million.
• Capital expenditures for the quarter were $194.8 million.
• Acquisition-related charges for the quarter were $43.0 million, primarily including amortization of intangible assets.
• Pillar Two undertaxed profits rule taxes impact for the quarter was $20.2 million.
• Discrete tax items for the quarter were $5.8 million.
• The company will discuss results and outlook on a conference call at 2:00 p.m. Pacific Time on October 28, 2026.