What's behind KLAC's expense control in 2025?

KLA Corporation's (KLAC) ability to control expenses in 2025 is a result of several strategic measures and financial management practices:

1. Incremental Increase in Operating Expenses: KLA expects operating expenses to increase incrementally by $15 million per quarter in 2025. This controlled increase reflects the company's careful planning and management of cost growth.
2. Optimization of Expense Management: KLA's financial performance and ability to manage costs effectively are evident in its gross and operating margins, which have remained strong at 61% and 41%, respectively. The company's focus on maintaining a favorable product mix has contributed to these margins.
3. Return on Shareholders' Equity: KLA has been actively returning value to shareholders, with significant returns amounting to $2.9 billion in 2024, including $877 million in dividends and share buybacks in the December quarter. This commitment to shareholder returns reflects confidence in the company's financial stability and cash flow generation.
4. Strategic Investments: While incremental increases in operating expenses are expected, these are likely to be balanced by strategic investments in growth areas such as AI, high-performance computing, and advanced packaging. This balance allows KLA to maintain control over expenses while investing in areas that drive long-term growth and profitability.

In summary, KLA's expense control in 2025 is underpinned by a strategic approach to cost management, strong financial performance, and a focus on optimizing operating expenses while investing in growth opportunities.