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KLA's (KLAC) Q2 Earnings & Revenues Beat Estimates, Fall Y/Y
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KLA Corporation (KLAC - Free Report) reported second-quarter fiscal 2024 non-GAAP earnings of $6.16 per share, beating the Zacks Consensus Estimate by 4.76%. The figure declined 16.5% year over year.
Revenues decreased 16.7% year over year to $2.49 billion, surpassing the Zacks Consensus Estimate by 1.25%. Sequentially, revenues increased 4%.
The year-over-year decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process, and PCB, Display and Component Inspection segments.
In terms of reportable segments, Semiconductor Process Control revenues (88.2% of total revenues) decreased 17.4% year over year to $2.19 billion. Sequentially, revenues increased 3%.
Foundry & Logic accounted for about 56%, while Memory constituted about 44% of Semiconductor Process Control revenues. Within memory, approximately 89% was from DRAM and 11% was from NAND.
Specialty Semiconductor Process revenues (6% of total revenues) were $150.1 million, down 5.1% year over year. Revenues jumped 18% on a sequential basis. This group is benefiting from strong demand in automotive, 5G and advanced packaging.
PCB, Display and Component Inspection revenues (5.8% of total revenues) plunged 15.8% year over year to $143 million. Limited capacity investments in consumer electronics end markets hurt top-line growth. Sequentially, revenues increased 5%.
KLA shares were down 6% in after-hours trading. The company’s shares have outperformed the Zacks Computer & Technology sector in the past six-month period. While KLAC shares have gained 33%, the Computer & Technology sector has increased 14.3%.
Top Line Details
Product revenues (accounted for 77.3% of total revenues) decreased 22% year over year to $1.92 billion. Service revenues (22.7% of total revenues) increased 8.5% year over year to $564.9 million.
In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 47% and 17%, respectively, of KLA’s total revenues for the fiscal second quarter.
Wafer Inspection revenues declined 7% year over year but increased 15% sequentially to $1.17 billion. Patterning revenues declined 50% year over year and 21% sequentially to $430 million.
In terms of regional breakdown of revenues, China, Taiwan, Japan and Korea accounted for 41%, 15%, 12% and 12% of the total revenues for the fiscal second quarter, respectively. Further, North America, Europe and the Rest of Asia accounted for 11%, 5%, and 4%, respectively.
Operating Details
In second-quarter fiscal 2024, the non-GAAP gross margin was 62.6%, 10 basis points (bps) above the guidance range.
Research and development (R&D) expenses decreased 3.7% year over year to $320.4 million. As a percentage of sales, R&D expenses expanded 170 bps year over year to 13%.
Selling, general and administrative (SG&A) expenses decreased 2.4% year over year to $237.2 million. As a percentage of sales, SG&A expenses expanded 140 bps year over year to 9.5%.
Non-GAAP operating expenses were $544 million, slightly above the estimated $540 million for the reported quarter. Non-GAAP operating expenses were comprised of $320 million in R&D and $224 million in SG&A expenses.
The fiscal second-quarter non-GAAP operating margin was 40.7%, up 50 bps sequentially.
Balance Sheet
As of Dec 31, 2023, cash, cash equivalents and marketable securities totaled $3.34 billion compared with $3.24 billion as of Sep 30, 2023.
Long-term debt at the end of the fiscal second quarter was $5.14 billion, down from $5.89 billion reported in the previous quarter.
Cash flow from operating activities was $622.2 million for the reported quarter, down from $883.7 billion in the prior quarter. Free cash flow was $545.4 million for the fiscal second quarter.
During the fiscal second quarter, KLAC paid out $197 million in dividends and repurchased $438 million worth of shares.
Third-Quarter Fiscal 2024 Guidance
For third-quarter fiscal 2024, revenues are expected to be $2.34 billion, plus/minus $125 million. The Zacks Consensus Estimate for revenues is pegged at $2.36 billion, indicating a 13.35% decline year over year.
KLA expects non-GAAP earnings of $5.26 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $5.39 per share, suggesting a year-over-year decline of 23.65%.
KLA expects a non-GAAP gross margin of 61.5%, plus/minus 1%. Operating expenses in the March quarter are expected to be approximately $545 million.
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KLA's (KLAC) Q2 Earnings & Revenues Beat Estimates, Fall Y/Y
KLA Corporation (KLAC - Free Report) reported second-quarter fiscal 2024 non-GAAP earnings of $6.16 per share, beating the Zacks Consensus Estimate by 4.76%. The figure declined 16.5% year over year.
Revenues decreased 16.7% year over year to $2.49 billion, surpassing the Zacks Consensus Estimate by 1.25%. Sequentially, revenues increased 4%.
The year-over-year decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process, and PCB, Display and Component Inspection segments.
In terms of reportable segments, Semiconductor Process Control revenues (88.2% of total revenues) decreased 17.4% year over year to $2.19 billion. Sequentially, revenues increased 3%.
Foundry & Logic accounted for about 56%, while Memory constituted about 44% of Semiconductor Process Control revenues. Within memory, approximately 89% was from DRAM and 11% was from NAND.
KLA Corporation Price, Consensus and EPS Surprise
KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote
Specialty Semiconductor Process revenues (6% of total revenues) were $150.1 million, down 5.1% year over year. Revenues jumped 18% on a sequential basis. This group is benefiting from strong demand in automotive, 5G and advanced packaging.
PCB, Display and Component Inspection revenues (5.8% of total revenues) plunged 15.8% year over year to $143 million. Limited capacity investments in consumer electronics end markets hurt top-line growth. Sequentially, revenues increased 5%.
KLA shares were down 6% in after-hours trading. The company’s shares have outperformed the Zacks Computer & Technology sector in the past six-month period. While KLAC shares have gained 33%, the Computer & Technology sector has increased 14.3%.
Top Line Details
Product revenues (accounted for 77.3% of total revenues) decreased 22% year over year to $1.92 billion. Service revenues (22.7% of total revenues) increased 8.5% year over year to $564.9 million.
In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 47% and 17%, respectively, of KLA’s total revenues for the fiscal second quarter.
Wafer Inspection revenues declined 7% year over year but increased 15% sequentially to $1.17 billion. Patterning revenues declined 50% year over year and 21% sequentially to $430 million.
In terms of regional breakdown of revenues, China, Taiwan, Japan and Korea accounted for 41%, 15%, 12% and 12% of the total revenues for the fiscal second quarter, respectively. Further, North America, Europe and the Rest of Asia accounted for 11%, 5%, and 4%, respectively.
Operating Details
In second-quarter fiscal 2024, the non-GAAP gross margin was 62.6%, 10 basis points (bps) above the guidance range.
Research and development (R&D) expenses decreased 3.7% year over year to $320.4 million. As a percentage of sales, R&D expenses expanded 170 bps year over year to 13%.
Selling, general and administrative (SG&A) expenses decreased 2.4% year over year to $237.2 million. As a percentage of sales, SG&A expenses expanded 140 bps year over year to 9.5%.
Non-GAAP operating expenses were $544 million, slightly above the estimated $540 million for the reported quarter. Non-GAAP operating expenses were comprised of $320 million in R&D and $224 million in SG&A expenses.
The fiscal second-quarter non-GAAP operating margin was 40.7%, up 50 bps sequentially.
Balance Sheet
As of Dec 31, 2023, cash, cash equivalents and marketable securities totaled $3.34 billion compared with $3.24 billion as of Sep 30, 2023.
Long-term debt at the end of the fiscal second quarter was $5.14 billion, down from $5.89 billion reported in the previous quarter.
Cash flow from operating activities was $622.2 million for the reported quarter, down from $883.7 billion in the prior quarter. Free cash flow was $545.4 million for the fiscal second quarter.
During the fiscal second quarter, KLAC paid out $197 million in dividends and repurchased $438 million worth of shares.
Third-Quarter Fiscal 2024 Guidance
For third-quarter fiscal 2024, revenues are expected to be $2.34 billion, plus/minus $125 million. The Zacks Consensus Estimate for revenues is pegged at $2.36 billion, indicating a 13.35% decline year over year.
KLA expects non-GAAP earnings of $5.26 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $5.39 per share, suggesting a year-over-year decline of 23.65%.
KLA expects a non-GAAP gross margin of 61.5%, plus/minus 1%. Operating expenses in the March quarter are expected to be approximately $545 million.
Zacks Rank & Other Stocks to Consider
Currently, KLA carries a Zacks Rank #2 (Buy).
Shopify (SHOP - Free Report) , Pinterest (PINS - Free Report) and AvidXchange (AVDX - Free Report) are some other top-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 25.8% in the past six-month period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
Pinterest shares have gained 37.7% in the past six-month period. PINS is set to report its fourth-quarter 2023 results on Feb 8.
AvidXchange shares have declined 9.5% in the past six-month period. AVDX is set to report its fourth-quarter 2023 results on Feb 28.