KLA Posts Fiscal Q1 Revenue of $4.14 Billion Above Guidance Midpoint

KLA Corporation (KLAC ) on October 28, 2026 announced financial results for its fiscal 2027 first quarter, which ended September 30, 2026, reporting GAAP net income of $1.55 billion, or $1.18 per diluted share, on revenue of $4.14 billion. Revenue was above the midpoint of the company’s guidance range of $4.0 billion plus or minus $200 million, and GAAP diluted EPS of $1.18 and non-GAAP diluted EPS of $1.22 were both above the midpoints of their respective guidance ranges.

Non-GAAP net income for the quarter was $1,603 million. In the prior quarter, KLA reported revenue of $3,658 million and GAAP diluted EPS of $1.04, and in the year-ago quarter it reported revenue of $3,210 million and GAAP diluted EPS of $0.85. The company noted that all per-share amounts have been retroactively adjusted to reflect its ten-for-one stock split, which took effect June 11, 2026.

“KLA’s September quarter beat the midpoint of guidance across all key metrics, demonstrating the accelerated growth we expected for the second half of calendar 2026,” said Rick Wallace, president and CEO. Wallace said process control remains critical to the AI ecosystem buildout, citing increases in leading-edge foundry and logic designs, device size and value, memory complexity and performance requirements, and the growing importance of advanced packaging.

Segment, Product, and Regional Detail

Product revenue was $3,285 million and service revenue was $851 million in the quarter, according to the income statement in the release. By reportable segment, Semiconductor Process Control revenue was $3,754 million, Specialty Semiconductor Process revenue was $139 million, and PCB and Component Inspection revenue was $242 million.

In its quarterly Letter to Shareholders, KLA stated that Semiconductor Process Control revenue, including associated services, rose 29% year over year and 15% sequentially and accounted for 91% of total revenue. Specialty Semiconductor Process revenue rose 16% year over year but fell 13% sequentially to $140 million, and PCB and Component Inspection revenue rose 28% year over year while holding flat sequentially. Total revenue rose 13% sequentially and 29% year over year, the letter states.

By product category, the letter reports Wafer Inspection revenue of $2,111 million, up 37% year over year and equal to 51% of total revenue; Patterning revenue of $862 million, up 29% and representing 21% of revenue; and Services revenue of $850 million, up 14% and 20% of revenue. PCB and Component Inspection systems revenue rose 43% year over year to $168 million, and Specialty Semiconductor Process systems revenue was $114 million, up 13% from a year earlier but down 17% sequentially, with the letter stating that sequential growth in that category will resume in the December quarter.

The Semi Process Control systems-only mix was approximately 72% Foundry/Logic and 28% Memory, according to the letter. In descending order, the regional revenue split was China at 34%, Taiwan at 25%, North America at 15%, Korea at 12%, Rest of Asia at 5%, Europe at 5%, and Japan at 4%. KLA said it expects China to decline as a percentage of total revenue in the December quarter and to represent approximately the high-20s percent of total revenue for calendar 2026.

KLA reported a non-GAAP gross margin of 62.7% and a GAAP gross margin of 61.9% for the quarter. Non-GAAP operating margin rose 240 basis points sequentially to 46.1%, which the company said is the first time it has exceeded 46%; GAAP operating margin was 45.0%. Non-GAAP operating expenses were $688 million, including $395 million in research and development and $293 million in selling, general and administrative expense, and the non-GAAP effective tax rate was 14.1%.

Cash flow from operating activities was $1.53 billion for the quarter and $4.51 billion for the last twelve months, and free cash flow was $1.34 billion and $4.04 billion, respectively. The letter describes the quarterly free cash flow as a record. Capital returns totaled $1.24 billion in the quarter, comprising $936 million in share repurchases and $305 million in dividends, and $3.79 billion over the last twelve months. According to the letter, September-quarter share repurchases were the second-highest on record, behind the $3 billion accelerated share repurchase completed in the June 2022 quarter, and $8,812 million remained under the repurchase authorization.

KLA ended the quarter with $4.7 billion in total cash, cash equivalents, and marketable securities and $5.95 billion of debt, and the letter notes investment-grade ratings of A2 from Moody’s (MCO ), A- from S&P, and A from Fitch. The balance sheet in the release shows long-term debt of $5,723 million and total assets of $18,405 million as of September 30, 2026.

December-Quarter Guidance and Market Outlook

For the fiscal second quarter ending December 31, 2026, KLA guided revenue of $4.7 billion plus or minus $200 million, GAAP gross margin of 61.8% plus or minus one percentage point, non-GAAP gross margin of 62.5% plus or minus one percentage point, GAAP diluted EPS of $1.41 plus or minus $0.11, and non-GAAP diluted EPS of $1.44 plus or minus $0.11.

Model assumptions in the letter include non-GAAP operating expenses of approximately $710 million, other income and expense of approximately $25 million in net expense, a non-GAAP tax rate of 14.5%, and a diluted share count of approximately 1.306 billion shares. Foundry/Logic revenue from semiconductor customers is forecast at approximately 60% of Semiconductor Process Control systems revenue from those customers, with Memory at approximately 40%; within memory, DRAM is expected to account for approximately 84% and NAND for 16%.

KLA also said it is raising its expectation for the wafer equipment market, including advanced packaging, to approximately the mid-$150 billion range for calendar 2026, and that it currently expects the market to exceed $200 billion in calendar 2027. The letter states that calendar-2026 Advanced Packaging process control systems revenue remains on track for approximately $1.1 billion, representing more than 70% year-over-year growth, and that the Services business remains on track for its 17th consecutive year of annual revenue growth. The company said growth in the second half of calendar 2026 over the first half is approximately 25%.

KLA said it would discuss the results and outlook on a conference call beginning at 2 p.m. Pacific Time on October 28, 2026, with a webcast available on its investor relations website.