KLA (KLAC) Q4 Earnings call transcript Jul 24, 2024

KLA Corporation, a leading provider of process control solutions for semiconductor manufacturing, reported solid financial results for the June 2024 quarter, with revenue, gross margin, and EPS all above their respective guidance midpoints. The company's CEO, Rick Wallace, emphasized the company's confidence in its plan for steady improvement throughout the remainder of 2024 and into 2025.

AI and Memory Markets Driving Growth Opportunities

KLA's portfolio of broadband plasma (BBP) products, also known as Gen 4 and Gen 5, has shown significant momentum, marking 4 years of innovation for the company's patterned wafer inspection business. The company's focus on AI adoption and its role in enabling KLA's business has been a key driver of growth. KLA estimates that the opportunity for advanced packaging revenue across its entire portfolio will exceed $500 million by the end of calendar year 2024. This represents a significant increase from the previous estimate of $400 million, indicating strong demand for KLA's solutions in the AI high-bandwidth memory market.

Daily Service Business and Free Cash Flow

The daily service business grew to $614 million in the June quarter, up 4% sequentially and 14% year-over-year. Utilization rates of existing installed capacity are steadily rising across all business segments, signaling improving market demand. KLA's strong financial performance was also reflected in its free cash flow, which reached $832 million for the last 12 months, demonstrating the company's sustained process control leadership and successful execution of its broad portfolio strategies.

Looking Ahead: Confidence in the Future

KLA's outlook for the remainder of 2024 and into 2025 remains optimistic, with expectations for growth in leading-edge investments in both logic/foundry and memory markets. The company's focus on supporting customer requirements, executing on progress roadmaps, and preparing for growth at the leading edge is expected to continue driving KLA's financial and free cash flow performance.

Investor and Analyst Insights

During the earnings call, key shareholders and investors asked questions about the company's strategy for the memory market, particularly in relation to the impact of advanced packaging and the potential for growth in the Chinese market. KLA's management team provided detailed insights into the company's approach to these areas, highlighting the company's confidence in its ability to capitalize on opportunities in the semiconductor industry's transition to advanced technologies.

Conclusion

KLA Corporation's strong performance in the June 2024 quarter, coupled with its optimistic outlook for the future, underscores the company's strategic focus on AI, memory, and daily service business. With a robust portfolio of innovative solutions and a clear path for growth, KLA is well-positioned to continue its leadership role in the semiconductor manufacturing sector.