KLA Corporation KLAC reported fourth-quarter fiscal 2024 non-GAAP earnings of $6.60 per share, beating the Zacks Consensus Estimate by 8.55%. The figure jumped 25.5% year over year.
Revenues increased 9.1% year over year to $2.57 billion, surpassing the Zacks Consensus Estimate by 2.57%. Sequentially, revenues increased 9%.
In terms of reportable segments, Semiconductor Process Control revenues (89.8% of total revenues) increased 10% year over year to $2.31 billion. Sequentially, revenues increased 10%.
Foundry & Logic accounted for about 82%, while Memory constituted about 18% of Semiconductor Process Control revenues. Within memory, approximately 82% was from DRAM and 22% was from NAND.
Specialty Semiconductor Process revenues (4.7% of total revenues) were $121.3 million, down 6% year over year. Revenues fell 7% on a sequential basis.
KLA Corporation Price, Consensus and EPS Surprise
KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote
PCB, Display and Component Inspection revenues (5.5% of total revenues) increased 8.6% year over year to $140 million.
Top-Line Details
Product revenues (accounted for 76.1% of total revenues) increased 7.6% year over year to $1.96 billion. Service revenues (23.9% of total revenues) increased 14% year over year to $613.9 million.
In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 46% and 21%, respectively, of KLA’s total revenues for the fiscal fourth quarter.
Wafer Inspection revenues increased 23% year over year and 18% sequentially to $1.17 billion. Patterning revenues declined 7% year over year but inched up 1% sequentially to $542 million.
In terms of regional breakdown of revenues, China and Taiwan accounted for 44% and 20% of revenues, respectively. Each of Japan and Korea accounted for 7% of revenues. Further, North America contributed 12% of revenues. Each of Europe and the Rest of Asia accounted for 5% of revenues.
Operating Details
In fourth-quarter fiscal 2024, the non-GAAP gross margin was 62.5%, 10 basis points (bps) above the guidance range.
Research and development (R&D) expenses increased 2.7% year over year to $325.8 million. As a percentage of sales, R&D expenses decreased 80 bps year over year to 12.7%.
Selling, general and administrative (SG&A) expenses increased 1.7% year over year to $255.1 million. As a percentage of sales, SG&A expenses decreased 70 bps year over year to 9.9%.
Non-GAAP operating expenses were $552.5 million, up 1.5% sequentially. Non-GAAP operating expenses comprised $323.5 million in R&D and $229 million in SG&A expenses.
The fiscal fourth-quarter non-GAAP operating margin was 41%, up 50 bps sequentially.
Balance Sheet
As of Jun 30, 2024, cash, cash equivalents and marketable securities totaled $4.5 billion compared with $4.3 billion as of Mar 31, 2024.
Long-term debt at the end of the fiscal fourth quarter was $5.88 billion, down from $6.7 billion reported in the previous quarter.
Cash flow from operating activities was $892.6 million for the reported quarter, down from $910 million in the prior quarter. Free cash flow was $831.9 million for the fiscal fourth quarter.
During the fiscal fourth quarter, KLAC paid out $197.5 million in dividends and repurchased $470.3 million worth of shares.
First-Quarter Fiscal 2025 Guidance
For first-quarter fiscal 2025, revenues are expected to be $2.75 billion, plus/minus $150 million. The Zacks Consensus Estimate for revenues is pegged at $2.40 billion, indicating 1.99% growth year over year.
KLA expects non-GAAP earnings of $7 per share, plus/minus 60 cents. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $5.65 per share, suggesting year-over-year growth of 4.63%.
KLA expects a non-GAAP gross margin of 61.5%, plus/minus 1%. Operating expenses are expected in the September quarter between $559 million and $571 million.
Zacks Rank & Other Stocks to Consider
Currently, KLA carries a Zacks Rank #2 (Buy).
KLA shares were up 1.88% in pre-market trading. The company’s shares have outperformed the Zacks Computer & Technology sector year to date. While KLAC shares have gained 30%, the Computer & Technology sector has returned 23.8%.
Arista Networks ANET, Apple AAPL and Cognizant CTSH are some other top-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.
Arista Networks sports a Zacks Rank #1 (Strong Buy) at present, while Apple and Cognizant carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks’ shares have gained 38.4% year to date. ANET is set to report its second-quarter 2024 results on Jul 30.
Apple shares have gained 13.5% year to date. AAPL is set to report its third-quarter fiscal 2024 results on Aug 1.
Cognizant shares have declined 3.7% year to date. CTSH is set to report its second-quarter 2024 results on Jul 31.
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