KLA Corporation reported a solid QQ3 2025 performance, delivering revenue of $3.063B, non-GAAP EPS of $8.41, and GAAP EPS of $8.16, all at the upper end of guided ranges. The quarter benefited from continued demand at the leading edge for logic and high-bandwidth memory, along with a resilient advanced packaging portfolio, which contributed to more than $500M of annualized advanced packaging revenue in 2024 and an expectation to exceed $850M in calendar 2025. The Services business remained a steady contributor, advancing 13% YoY to $669M in QQ3, despite export-control headwinds that tempered growth in some regions. Free cash flow remained exceptionally strong at $990M for the quarter and $3.5B over the trailing 12 months, reinforcing KLAC’s capital-return framework and balance-sheet strength.
Management signaled continued confidence in AI-driven demand as a secular growth driver, noting that process-control leadership and product breadth position KLA to outperform the mid-single-digit WFE growth backdrop in 2025. However, near-term visibility is tempered by tariff-related margin headwinds (roughly 100 basis points quarterly) and China exposure, which the company quantified at roughly 26% of QQ3 revenue and expected to approach 30% for the full year. The company also elected to postpone its Investor Day to early 2026 amid macro uncertainty, underscoring a prudent stance on capital-allocation timing until the environment stabilizes.
Looking forward, KLA provides a June quarter guide of $3.075B +/- $150M revenue with a 63% gross margin (plus/minus one percentage point) and a GAAP EPS of $8.28 +/- $0.78. For calendar 2025, the margin target is 62.5% +/- 50 basis points, with an anticipated Pillar 2 tax-rate shift to about 14% in the second half. Management expects core AI-driven growth to persist, with continued outperformance versus WFE growth and ongoing opportunities in advanced packaging, including memory stack implementations and hybrid bonding. Given the strong cash-generation profile, strategic portfolio, and balance-sheet flexibility, KLAC remains well-positioned to capitalize on AI infrastructure spend while managing near-term macro and policy risks.