KLA Shares Rise on Q2 Earnings & Revenues Beat, Optimistic Q3 Outlook

Core Insights - KLA Corporation reported strong second-quarter fiscal 2025 results, with non-GAAP earnings of $8.20 per share, exceeding estimates by 6.08% and reflecting an 11.9% year-over-year increase [1][2] - Revenues rose 23.7% year over year to$ 3.08 billion, surpassing the Zacks Consensus Estimate by 4.88%, leading to a 3.71% increase in share price during pre-market trading [2] Segment Performance - Semiconductor Process Control revenues, which account for 89.6% of total revenues, increased 25.6% year over year to $2.76 billion, with a sequential growth of 7% [3] - Specialty Semiconductor Process revenues were$ 160.4 million, up 6.9% year over year and 25% sequentially, while PCB and Component Inspection revenues increased 12.6% year over year to $161.1 million [4] Revenue Breakdown - Product revenues, making up 78.3% of total revenues, increased 25.4% year over year to$ 2.41 billion, while service revenues rose 18.1% year over year to $667.4 million [5] - Wafer Inspection revenues increased 34% year over year to$ 1.56 billion, while Patterning revenues rose 23% year over year to $531 million [6] Geographic Revenue Distribution - Revenue contributions came primarily from China (36%) and Taiwan (29%), followed by Korea (12%), North America (9%), Japan (7%), Europe (4%), and the rest of Asia (3%) [6] Operating Metrics - Non-GAAP gross margin was reported at 61.7%, exceeding guidance by 20 basis points [7] - R&D expenses increased 8% year over year to$ 346.2 million, while SG&A expenses rose 12.6% year over year to $267.1 million [8] Financial Position - As of December 31, 2024, cash and cash equivalents totaled$ 3.78 billion, down from $4.63 billion as of September 30, 2024, with long-term debt remaining at$ 5.88 billion [9] - Cash flow from operating activities was $849.5 million, down from$ 995.2 million in the prior quarter, with free cash flow at $757.2 million [9] Future Guidance - For the third quarter of fiscal 2025, KLA expects revenues of$ 3.0 billion, with non-GAAP earnings projected at $8.05 per share, indicating a year-over-year growth of 45.06% [11][12]