We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
KLA Q3 Earnings Surpass Estimates, Revenues Increase Year over Year
Read MoreHide Full Article
Key Takeaways
KLA beat Q3 estimates with EPS of $9.40 and revenue up 11.5% year over year to $3.42B.
KLAC saw strong Semiconductor Process Control demand, driving 90% of revenue and rising 12.6% year over year.
KLA issued upbeat Q4 guidance with revenue outlook of $3.575B and EPS projected at $9.87.
KLA Corporation (KLAC - Free Report) reported fiscal third-quarter 2026 non-GAAP earnings of $9.40 per share, up 11.8% year over year, beating the Zacks Consensus Estimate by 2.60%.
Revenue rose 11.5% year over year to $3.42 billion and topped the consensus mark by about 0.91%. A key industry datapoint supporting the quarter’s tone was KLA’s process control market leadership.
KLAC Segment Mix Shows Broad-Based Demand
Semiconductor Process Control remained the clear engine of results. Segment revenue totaled $3.08 billion (90.3% of total revenues), up 12.6% year over year and 3% sequentially, underscoring solid demand across inspection, metrology and related services.
Within Semiconductor Process Control, the company described end-market mix as roughly 62% foundry/logic and 38% memory on a systems basis.
Specialty Semiconductor Process revenues (4.8% of total revenues) were $164 million, up 5% year over year and 17% sequentially.
PCB and Component Inspection revenues (4.9% of total revenues) decreased 1% year over year to $167 million but increased 10% on a sequential basis.
KLAC Top-Line Details
Product revenues (which accounted for 77.3% of total revenues) rose 10.3% year over year to $2.64 billion. Service revenues (22.7% of total revenues) increased 15.8% year over year to $775 million.
In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 51% and 18%, respectively, of KLA’s total revenues in the fiscal third quarter.
Wafer Inspection revenues increased 16% year over year and 11% sequentially to $1.74 billion. Patterning revenues moved down 3% year over year and 12% sequentially to $615 million.
In terms of the regional breakdown of revenues, Taiwan and China led revenue contributions with 26% and 24%, respectively. Korea accounted for 20%, Japan 5% and North America 12%. Europe contributed 7%, whereas the remaining 6% came from the Rest of Asia.
KLAC Margin Profile Holds Firm Despite Spend
In the third quarter of fiscal 2026, the non-GAAP gross margin was 62.2%, 45 basis points above the midpoint of the guidance range.
Research and development (R&D) expenses increased 15% year over year to $388.8 million. As a percentage of revenues, R&D expenses decreased 30 basis points (bps) on a year-over-year basis to 11.4%.
Selling, general, and administrative (SG&A) expenses increased 17% year over year to $291.1 million. As a percentage of revenues, SG&A expenses increased 40 bps year over year to 8.5%.
The fiscal third-quarter non-GAAP operating expenses were $670 million.
The fiscal third-quarter non-GAAP operating margin was 42.6%.
KLAC Balance Sheet & Cash Flow
As of March 31, 2026, cash, cash equivalents, and marketable securities totaled $4.95 billion compared with $5.20 billion as of Dec. 31, 2025.
Long-term debt at the end of the fiscal third quarter was $5.88 billion, unchanged from the figure reported in the previous quarter.
Cash flow from operations was $707.5 million for the quarter, and free cash flow was $622.3 million, providing ample room for capital deployment.
KLA returned $874.8 million to shareholders in the fiscal third quarter, including $626 million in share repurchases and $249 million in dividends.
KLAC Provides Positive 4Q26 Guidance
For the fourth quarter of fiscal 2026, KLA expects revenues of $3.575 billion plus or minus $200 million. The company’s non-GAAP earnings outlook is $9.87 plus or minus $1.00, with non-GAAP gross margin projected at 61.75% plus or minus 1%.
The outlook also included model assumptions that point to steady investment levels, with non-GAAP operating expenses expected to be around $665 million. KLA expects foundry/logic to represent approximately 82% of Semiconductor Process Control systems revenue to semiconductor customers in the June quarter, with memory at about 18%, reflecting a mix shift that could influence both revenue composition and near-term margin dynamics.
Shares of Analog Devices have gained 43.5% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Shares of Advanced Energy have surged 72.6% in the year-to-date period. Advanced Energy is slated to report first-quarter 2026 results on May 4.
Arista Networks shares have gained 28.7% in the year-to-date period. Arista Networks is set to report first-quarter 2026 results on May 5.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
KLA Q3 Earnings Surpass Estimates, Revenues Increase Year over Year
Key Takeaways
KLA Corporation (KLAC - Free Report) reported fiscal third-quarter 2026 non-GAAP earnings of $9.40 per share, up 11.8% year over year, beating the Zacks Consensus Estimate by 2.60%.
Revenue rose 11.5% year over year to $3.42 billion and topped the consensus mark by about 0.91%. A key industry datapoint supporting the quarter’s tone was KLA’s process control market leadership.
KLAC Segment Mix Shows Broad-Based Demand
Semiconductor Process Control remained the clear engine of results. Segment revenue totaled $3.08 billion (90.3% of total revenues), up 12.6% year over year and 3% sequentially, underscoring solid demand across inspection, metrology and related services.
Within Semiconductor Process Control, the company described end-market mix as roughly 62% foundry/logic and 38% memory on a systems basis.
KLA Corporation Price, Consensus and EPS Surprise
KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote
Specialty Semiconductor Process revenues (4.8% of total revenues) were $164 million, up 5% year over year and 17% sequentially.
PCB and Component Inspection revenues (4.9% of total revenues) decreased 1% year over year to $167 million but increased 10% on a sequential basis.
KLAC Top-Line Details
Product revenues (which accounted for 77.3% of total revenues) rose 10.3% year over year to $2.64 billion. Service revenues (22.7% of total revenues) increased 15.8% year over year to $775 million.
In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 51% and 18%, respectively, of KLA’s total revenues in the fiscal third quarter.
Wafer Inspection revenues increased 16% year over year and 11% sequentially to $1.74 billion. Patterning revenues moved down 3% year over year and 12% sequentially to $615 million.
In terms of the regional breakdown of revenues, Taiwan and China led revenue contributions with 26% and 24%, respectively. Korea accounted for 20%, Japan 5% and North America 12%. Europe contributed 7%, whereas the remaining 6% came from the Rest of Asia.
KLAC Margin Profile Holds Firm Despite Spend
In the third quarter of fiscal 2026, the non-GAAP gross margin was 62.2%, 45 basis points above the midpoint of the guidance range.
Research and development (R&D) expenses increased 15% year over year to $388.8 million. As a percentage of revenues, R&D expenses decreased 30 basis points (bps) on a year-over-year basis to 11.4%.
Selling, general, and administrative (SG&A) expenses increased 17% year over year to $291.1 million. As a percentage of revenues, SG&A expenses increased 40 bps year over year to 8.5%.
The fiscal third-quarter non-GAAP operating expenses were $670 million.
The fiscal third-quarter non-GAAP operating margin was 42.6%.
KLAC Balance Sheet & Cash Flow
As of March 31, 2026, cash, cash equivalents, and marketable securities totaled $4.95 billion compared with $5.20 billion as of Dec. 31, 2025.
Long-term debt at the end of the fiscal third quarter was $5.88 billion, unchanged from the figure reported in the previous quarter.
Cash flow from operations was $707.5 million for the quarter, and free cash flow was $622.3 million, providing ample room for capital deployment.
KLA returned $874.8 million to shareholders in the fiscal third quarter, including $626 million in share repurchases and $249 million in dividends.
KLAC Provides Positive 4Q26 Guidance
For the fourth quarter of fiscal 2026, KLA expects revenues of $3.575 billion plus or minus $200 million. The company’s non-GAAP earnings outlook is $9.87 plus or minus $1.00, with non-GAAP gross margin projected at 61.75% plus or minus 1%.
The outlook also included model assumptions that point to steady investment levels, with non-GAAP operating expenses expected to be around $665 million. KLA expects foundry/logic to represent approximately 82% of Semiconductor Process Control systems revenue to semiconductor customers in the June quarter, with memory at about 18%, reflecting a mix shift that could influence both revenue composition and near-term margin dynamics.
KLAC Zacks Rank & Stocks to Consider
KLA currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices (ADI - Free Report) , Advanced Energy (AEIS - Free Report) , and Arista Networks (ANET - Free Report) . Each stock currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have gained 43.5% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Shares of Advanced Energy have surged 72.6% in the year-to-date period. Advanced Energy is slated to report first-quarter 2026 results on May 4.
Arista Networks shares have gained 28.7% in the year-to-date period. Arista Networks is set to report first-quarter 2026 results on May 5.