KLA Corp.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 29 January 2026: press release. Guidance figures: 3 raised, 4 lowered. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue reached $3.30 billion: Total revenues were $3.30 billion, against $3.08 billion a year earlier and $3.21 billion in the prior quarter; six-month revenue was $6.51 billion. Source
• Diluted EPS higher than a year earlier: GAAP diluted EPS was $8.68, against $6.16 a year earlier; non-GAAP diluted EPS was $8.85, against $8.20. Source
• Semiconductor Process Control was most revenue: Semiconductor Process Control revenue was $3.00 billion, against $2.76 billion a year earlier and $2.90 billion in the prior quarter. Source
• Service revenue rose about 18%: Service revenue was $786.1 million, against $667.4 million a year earlier; it was about 24% of total revenues. Source
• Operating and free cash flow: Operating cash flow was $1.37 billion for the quarter and free cash flow $1.26 billion; twelve-month free cash flow was $4.38 billion. Source
• Capital returns near $800 million: Capital returns were $797.4 million for the quarter: dividends of $249.7 million and common stock repurchases of $547.8 million. Source

“KLA delivered a record quarter and calendar 2025 for revenue, non-GAAP operating income, and free cash flow generation.”

Rick Wallace, president and CEO of KLA Corporation

Guidance

What changed from last quarter

• Guidance raised: Revenue guidance midpoint raised to $3.35 billion from $3.225 billion. Source
• Guidance raised: GAAP diluted EPS guidance midpoint raised to $8.85 from $8.46. Source
• Guidance raised: Non-GAAP diluted EPS guidance midpoint raised to $9.08 from $8.70. Source
• Guidance lowered: GAAP gross margin guidance midpoint lowered to 60.62% from 60.8%. Source
• Guidance lowered: Non-GAAP gross margin guidance midpoint lowered to 61.75% from 62.0%. Source

Results and growth drivers

• Revenue reached $3.30 billion: Total revenues were $3.30 billion, against $3.08 billion a year earlier and $3.21 billion in the prior quarter; six-month revenue was $6.51 billion. Source
• Diluted EPS higher than a year earlier: GAAP diluted EPS was $8.68, against $6.16 a year earlier; non-GAAP diluted EPS was $8.85, against $8.20. Source
• No impairment charge this quarter: GAAP net income was $1.15 billion, against $824.5 million a year earlier, when a $239.1 million goodwill and intangible impairment tied to the PCB business was recorded. Source
• Non-GAAP net income held near prior quarter: Non-GAAP net income was $1.17 billion, against $1.17 billion in the prior quarter and $1.10 billion a year earlier. Source

Segments and revenue mix

• Semiconductor Process Control was most revenue: Semiconductor Process Control revenue was $3.00 billion, against $2.76 billion a year earlier and $2.90 billion in the prior quarter. Source
• Specialty Semiconductor Process lower than last year: Specialty Semiconductor Process revenue was $140.6 million, against $160.4 million a year earlier, and up from $119.8 million in the prior quarter. Source
• PCB and Component Inspection lower than last year: PCB and Component Inspection revenue was $152.2 million, against $161.1 million a year earlier and $189.5 million in the prior quarter. Source
• Currency effect on revenue was minor: Effects of changes in foreign currency exchange rates on total revenues were a $254 thousand reduction for the quarter. Source

“This performance was fueled by our differentiated product portfolio and solid company execution in an environment where the relevance of process control at the leading edge for foundry/logic and memory is increasing.”

Rick Wallace, president and CEO of KLA Corporation

Products and services

• Service revenue rose about 18%: Service revenue was $786.1 million, against $667.4 million a year earlier; it was about 24% of total revenues. Source
• Product revenue rose about 4%: Product revenue was $2.51 billion, against $2.41 billion a year earlier; six-month product revenue was $4.98 billion. Source
• Non-current deferred service revenue fell: Non-current deferred service revenue was $270.5 million at December 31, 2025, down from $348.8 million at June 30, 2025. Source

Costs, margins and tax

• Cost of revenues rose: Costs of revenues were $1.27 billion, against $1.22 billion a year earlier, and include $38.1 million of acquisition-related charges. Source
• SG&A rose modestly: Selling, general and administrative expense was $279.9 million, against $267.1 million a year earlier. Source
• Interest expense declined: Interest expense was $69.7 million, against $75.0 million a year earlier. Source
• Tax provision higher than last year: Provision for income taxes was $184.6 million, against $148.0 million a year earlier. Source
• Withholding tax item from new law: Non-GAAP tax items included an $8.4 million reduction this quarter, against a $15.1 million addition in the prior quarter, tied to withholding taxes under new legislation. Source

“As we look forward to calendar year 2026, KLA is a key enabler of the AI ecosystem and continues to uniquely benefit from the AI infrastructure buildout across all major growth vectors, including foundry/logic, memory, advanced packaging, and services.”

Rick Wallace, president and CEO of KLA Corporation

Demand and order book

• Deferred system revenue increased: Deferred system revenue was $858.1 million at December 31, 2025, up from $818.8 million at September 30 and $816.8 million at June 30. Source
• Receivables fell and added cash: Accounts receivable, net, fell to $2.07 billion from $2.28 billion at September 30; the receivables line in operating cash flow was a $191.2 million inflow. Source
• Inventories rose from June: Inventories were $3.28 billion, up from $3.21 billion at June 30, 2025, and down from $3.30 billion at September 30. Source

Cash, capital and returns

• Operating and free cash flow: Operating cash flow was $1.37 billion for the quarter and free cash flow $1.26 billion; twelve-month free cash flow was $4.38 billion. Source
• Capital spending rose year on year: Capital expenditures were $105.6 million, against $92.3 million a year earlier; twelve-month capital expenditures were $384.0 million. Source
• Capital returns near $800 million: Capital returns were $797.4 million for the quarter: dividends of $249.7 million and common stock repurchases of $547.8 million. Source
• Diluted share count declined: Diluted weighted-average shares were 132.0 million, against 133.9 million a year earlier and 132.4 million in the prior quarter. Source
• Cash and marketable securities higher: Cash and cash equivalents were $2.45 billion and marketable securities $2.76 billion; long-term debt was $5.89 billion at December 31, 2025. Source

Strategy and investment

• Positioned as process control leader: Management described KLA as the market leader in process control and well positioned to take advantage of a long-term trend. Source
• R&D spending increased: Research and development expense was $383.9 million, against $346.2 million a year earlier, up about 11%. Source
• Acquired intangibles keep amortizing: Purchased intangible assets, net, were $348.0 million, down from $444.8 million at June 30; management said amortization of past acquisitions will recur until fully amortized. Source

Coming up, as management said on 29 January 2026

• March-quarter guidance issued: Guidance covers the third quarter of fiscal 2026, ending in March 2026, with supporting assumptions in the company's published materials. Source

Earlier plans management reported on

• Ahead: Revenue and both EPS measures were above the midpoints of the guidance ranges given in the prior release. Source
• On track: The prior release said relative revenue growth versus the industry in calendar 2025 was on pace.

Other quarters

• Q4 FY2026 earnings call
• Q3 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.