Executive Summary
KLA Corporation reported a solid QQ4 2024 (June quarter) with revenue reaching $2.566B, marking sequential and year-over-year growth driven by stronger demand at the leading edge and favorable product mix. The company delivered a gross margin of approximately 62% and GAAP diluted EPS of $6.18 (non-GAAP $6.60), topping guidance midpoints. Management attributed the outperformance to a richer product mix, higher volumes, and ongoing monetization of AI-enabled process control capabilities, including a sizable advance in advanced packaging opportunities, now estimated at over $500M for calendar 2024. Free cash flow remained robust at $832M for the quarter, with 12-month free cash flow of about $3B (roughly 31% FCF margin). The quarter also showcased improving services profitability and utilization across segments, consistent with rising end-market demand.
Looking ahead, management reaffirmed a constructive medium-term outlook. They expect the WFE market to be in the mid-$90B range for calendar 2024, with the second half stronger than the first, and they signaled a return to growth in 2025 across logic/foundry and memory, aided by AI-driven demand and a continued ramp in leading-edge nodes. September quarter guidance called for revenue of $2.75B +/- $150M, with ~80% Foundry/Logic and ~20% Memory; gross margin around 61.5% +/- 1pp; GAAP EPS near $6.69 +/- $0.60 and non-GAAP EPS around $7 +/- $0.60. While near-term results reflect a diversified mix and favorable pricing/mix dynamics, the longer-term thesis rests on expanding opportunities in advanced packaging, memory process control (HBM/DDR3...), and sustainment of share gains in a strengthening leading-edge environment. Investors should monitor WFE demand signals, memory recovery timing (particularly DRAM/HBM), packaging adoption, and policy/regulatory developments affecting China exposure.
Key Performance Indicators
Key Insights
Revenue: $2.566B in Q4 2024; YoY +8.96%, QoQ +8.95%.
Gross Profit: $1.592B; Gross Margin 62.04%; YoY +14.37%, QoQ +14.36%.
Operating Income: $1.052B; Operating Margin 41.01%; YoY +27.70%, QoQ +24.07%.
Net Income: $836.4M; Net Margin 32.59%; YoY +22.17%, QoQ +39.05%.
EPS (GAAP): $6.18 (diluted); EPS (Non-GAAP): $6.60.
Cash Flow: Operating Cash Flow $892.6M; Free Cash Flow $831.9M; 12-month FCF ~$3.0B (FCF Margin ~31%).
Balance Sheet: Cash and equivalents end of period $1.98B; Total debt $6.82B; N...
Financial Highlights
Revenue: $2.566B in Q4 2024; YoY +8.96%, QoQ +8.95%.
Gross Profit: $1.592B; Gross Margin 62.04%; YoY +14.37%, QoQ +14.36%.
Operating Income: $1.052B; Operating Margin 41.01%; YoY +27.70%, QoQ +24.07%.
Net Income: $836.4M; Net Margin 32.59%; YoY +22.17%, QoQ +39.05%.
EPS (GAAP): $6.18 (diluted); EPS (Non-GAAP): $6.60.
Cash Flow: Operating Cash Flow $892.6M; Free Cash Flow $831.9M; 12-month FCF ~$3.0B (FCF Margin ~31%).
Balance Sheet: Cash and equivalents end of period $1.98B; Total debt $6.82B; Net debt ~$4.84B; Total assets $15.43B; Total stockholders’ equity $3.37B.
Capital Allocation: Common stock repurchased $470.3M; common stock issued $96.5M; dividends paid $197.5M.
Other metrics: RPO declined from peak ~ $13B to ~ $10B; Q4 service revenue $614M, +4% sequential and +14% YoY; September quarter guide implies more balanced mix with ~80% Foundry/Logic and ~20% Memory.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.57B |
8.96% |
8.95% |
| Gross Profit |
1.59B |
14.37% |
14.36% |
| Operating Income |
1.05B |
27.70% |
24.07% |
| Net Income |
836.45M |
22.17% |
39.05% |
| EPS |
6.22 |
24.40% |
39.46% |
Key Financial Ratios
operatingProfitMargin
41%
operatingCashFlowPerShare
$6.64
freeCashFlowPerShare
$6.19
dividendPayoutRatio
23.6%
Management Commentary
The earnings call underscored several thematic drivers and management assurances. Key themes include:
- AI and advanced packaging as growth accelerants: Rick Wallace highlighted that AI is enabling higher wafer volumes, more complex designs, and increased need for process control; the company raised its advanced packaging revenue forecast to over $500M for calendar 2024, up from ~ $400M previously.
- Leading-edge demand and share gains: Management noted improving demand at the leading edge and reiterated confidence in increasing share of WFE, supported by Gen 4/5 BBP and the broader 40-year BBP legacy.
- 2025 growth trajectory: The team signaled a transition from stabilization to growth in 2025, with expectations for growth in both Logic/Foundry and Memory as AI-driven demand sustains investment in leading-edge nodes.
- 2024 guidance refinement and operational discipline: The September quarter guidance coalesces around revenue $2.75B +/- $150M, mid- to high-60s to low-60s gross margins driven by mix, and a continued emphasis on R&D investments aligned to growth opportunities in advanced packaging and memory.
- Strengthening Services: Services revenue grew 4% sequentially to $614M, with a 14% YoY increase, signaling higher utilization and stickiness from installed bases.
- China and regional dynamics: The call acknowledged ongoing China activity with a relatively flat near-term trajectory, and management emphasized that growth is driven by leading-edge opportunities and global demand, rather than a China-only note.
"KLA results returned to sequential and year-over-year revenue growth, demonstrating an improving industry environment. Foundry/Logic, the continuation of scaling and incorporation of new technologies and slowly rising capital intensity continues to be a long-term tailwind."
— Richard Wallace
"Today, we're raising that estimate to more than $500 million in total advanced packaging revenue across the entire KLA portfolio on the momentum we're experiencing."
— Richard Wallace
Forward Guidance
Key near-term guidance and outlook:
- September quarter (calendar 2024): Total revenue of $2.75B +/- $150M; Foundry/Logic ~80% of semiconducting process control revenue; Memory ~20%, with DRAM ~83% and NAND ~17% of Memory segment. Gross margin 61.5% +/- 1pp; Operating expenses ~ $565M; GAAP diluted EPS $6.69 +/- $0.60 and non-GAAP EPS $7.00 +/- $0.60; fully diluted share count ~135M.
- Margin stability: Management expects consolidated non-GAAP gross margins to remain around the mid-61% range for 2024, with quarterly variability driven by mix.
- 2025 and beyond: Management framed 2025 as a year of growth, aided by continued strength in leading-edge investments, improvements in memory (including DRAM and HBM) and AI-driven packaging momentum; WFE is anticipated to be in the mid-$90B range for 2024 with the second half stronger than the first; potential drivers include EUV adoption continuing in memory, packaging, and higher process-control intensity as nodes scale.
- Key factors to monitor: demand cadence at leading edges (2nm/3nm ramp and N2/N3 transitions), packaging adoption pace, memory cycle timing (HBM, DDR, NAND), China regulatory environment, and ongoing macroeconomic demand signals. Overall, the company appears positioned for moderate top-line growth and accretive FCF in the coming years, albeit with a high-quality, relatively cyclical risk profile tied to WFE cycles and product-mix sensitivity.