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- **Revenue Growth**: Q1 2026 revenue up 15% YoY to $3.21B, driven by AI and advanced packaging.
- **EPS Performance**: Non-GAAP EPS of $8.81, GAAP EPS of $8.47, both beating expectations.
- **Advanced Packaging**: 2025 revenue to reach $925M (+70% YoY), with $11B market growing faster than WFE.
- **Service Strength**: Service revenue up 16% YoY to $745M, underpinning resilience.
- **China Impact**: 2026 revenue loss of $300-350M due to export controls, China share to mid-20s.
- **2026 Outlook**: First half flat/modestly up, accelerating in H2, outperforming WFE growth.
- **Margin Dynamics**: 62% gross margin in Q1, long-term 40-50% operating margin leverage.
- **DRAM Investment**: HBM driving 50%+ YoY growth in DRAM process control spend.
- **Tariff Mitigation**: 50-100bps margin impact, operational adjustments underway.


**【CEO Summary Section】**
- Q1 2026 revenue of $3.21 billion, up 15% YoY, driven by AI infrastructure and advanced packaging growth.
- Non-GAAP EPS of $8.81, GAAP EPS of $8.47, both exceeding expectations.
- Advanced packaging revenue expected to reach $925 million in 2025, up 70% YoY.
- Service business grew 16% YoY to $745 million, highlighting resiliency.
- Record free cash flow of $1.07 billion, with $3.9 billion over 12 months.
- Capital returns of $799 million in Q1, including $545M share buybacks.

**【CFO Financial Commentary】**
- Q1 revenue guidance exceeded at $3.21 billion, with gross margin of 62.5%.
- Non-GAAP operating expenses of $618 million, with R&D at $360 million.
- December quarter guidance: $3.225 billion ±$150M, gross margin 62% ±1ppt.
- 2025 WFE growth expected mid- to high single digits, outperformed by KLA.
- China-related revenue impact of $300-350 million in 2026 due to export controls.
- Advanced packaging market estimated at $11 billion, growing faster than core WFE.

**【Q&A Highlights】**
- **WFE Growth Outlook**: 2026 expected to be a growth year, with first half flat to modestly up, accelerating in H2.
- **China Impact**: Q1 China revenue at 39%, expected to normalize to mid-20s in 2026.
- **Gross Margin**: 62% for Q1, mix-driven decline in 2026, but long-term 40-50% operating margin leverage.
- **DRAM Investment**: DRAM WFE intensity rising due to HBM, with KLA seeing 50%+ YoY growth in Q1.
- **Advanced Packaging**: KLA's 6% share of $11B market, intensity higher than front-end over time.
- **Tariff Impact**: 50-100bps margin headwind, mitigated by operational adjustments.
- **Customer Engagement**: Foundries and memory fabs increasing process control spend for yield optimization.


KLA Corporation (KLAC) Q1 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

KLAC

KLAC fundamentals

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