Revenue: Q3 2024 revenue was $2.36 billion, above the guidance range midpoint.
Earnings Per Share (EPS): Non-GAAP diluted EPS was $5.26, surpassing the midpoint guidance of $4.83. GAAP diluted EPS was higher at $4.43 compared to the midpoint guidance of $4.06.
Margins: Non-GAAP gross margin stood at 59.8%, topping the revised guidance. Excluding a specific charge, the gross margin would have been 62.4%.
Charges: Included a $62 million charge for excess and obsolete inventory related to exiting the flat panel display business, impacting EPS by $0.40.
Free Cash Flow: Quarterly free cash flow amounted to $838 million, with the last 12 months’ free cash flow hitting $3.1 billion, representing a free cash flow margin of 32%.
Future Guidance
Revenue Guidance: For the June quarter, revenue is expected to be around $2.5 billion, plus or minus $125 million.
EPS Guidance: GAAP diluted EPS is anticipated to be $5.66, plus or minus $0.60. Non-GAAP diluted EPS forecasted at $6.07, plus or minus $0.60.
Gross Margin: Non-GAAP gross margin for June quarter projected in the range of 61.5%, plus or minus 1 percentage point.
Market Mix: In the June quarter, foundry/logic revenue from semiconductor customers is forecasted to constitute approximately 82%, with memory expected to be about 18% of semi-process control systems revenue.
Operating Expenses: For June quarter, non-GAAP operating expenses are expected around $550 million.
Trends, Market Conditions, Sentiment
Industry Outlook: Stabilized market conditions with expectations of business improvement through the year as customer business across multiple end markets improves.
Investments and Technology Transitions: Discussions with customers about future leading-edge capacity investments are encouraging, highlighting a focus on technology transitions and advanced packaging applications for AI and other technologies.
Services Growth: The services business grew to $590 million for the quarter, indicating strong demand for KLA’s services.
Market Share and China: A slight decline in market share was driven primarily by loss of access to the China market due to U.S. government export controls. However, the leadership in process control and critical markets is still strong.
Capital Intensity and Demand: Continuous investments in foundry/logic and rising capital intensity are seen as long-term tailwinds. Advanced packaging and services are expected to outgrow the overall market.
Notable Quotes
”Market conditions have stabilized, and we expect our business to improve as we progress through the year.” - Rick Wallace, CEO
”We’re encouraged by the improvement in our customers’ business across multiple end markets, which is driving discussions with our customers about future opportunities for leading-edge capacity investments.” - Rick Wallace, CEO
”KLA’s quarterly results continue to demonstrate our sustained process control leadership and the success of our broad portfolio and product strategies.” - Bren Higgins, CFO
”In alignment with this, KLA’s business is improving and the long-term secular trends driving semiconductor industry demand and investments in WFE remain intact in both legacy and leading-edge markets.” - Bren Higgins, CFO
