- 2025 Revenue Growth: $12.745 billion, up 17% YoY, with EPS rising 29% to $8.85 (non-GAAP).
- Capital Returns: $797 million returned to shareholders in December quarter via $548 million share buybacks and $250 million dividends.
- 2026 Revenue Guidance: Mid-single-digit growth to $3.35 billion (±$150M) in March quarter, with non-GAAP EPS of $9.80 (±$0.78).
- Segment Performance: Inspection up 25%, patterning up 12%, and process control systems outperforming WFE growth at 20% YoY.
- Gross Margin Trends: Expected to rise to 63%+ long-term, with March quarter guidance at 61.75% (±1.00%).
Guidance and Outlook for 2026
The company expects the industry to grow in the high single to low double digits in 2026, reaching approximately $120 billion. KLA is poised for mid-single digit revenue growth in 2026, with an accelerating growth rate in the second half of the year. For the March quarter, the company guided revenue of $3.35 billion, plus or minus $150 million, with a gross margin of 61.75%, plus or minus one percentage point. Non-GAAP diluted EPS is expected to be $9.8, plus or minus $0.78. The company's business model is designed to deliver 40% to 50% incremental operating margin leverage on revenue growth over the long run.
Valuation and Growth Prospects
With a P/E Ratio of 41.2 and an EV/EBITDA of 32.33, the market has priced in significant growth expectations for KLA. The company's ROE of 95.22% and ROIC of 36.95% indicate strong profitability. Analysts estimate next year's revenue growth at 18.8%, suggesting that the current valuation may be justified if the company can meet these expectations. KLA's growth prospects are driven by increasing process control intensity, particularly in advanced logic and DRAM, as well as opportunities in its service businesses.
Drivers of Growth
The growth in inspection and patterning is driven by the increasing complexity of advanced technologies, such as High-Bandwidth Memory (HBM) and Artificial Intelligence (AI). The company sees opportunities in its service businesses as customers look to maximize uptime and performance. DRAM process control intensity is increasing with EUV and HBM, and the company expects foundry logic to see a broadening of customers, materializing in growth. KLA expects to gain share in the market, particularly in leading-edge foundry logic and advanced packaging.
Challenges and Opportunities
The company faces supply constraints, particularly in the first half of 2026, due to long lead times for optical components and facility readiness dynamics. However, KLA expects growth to accelerate in the second half, with a growth rate of high single digits to low double digits. The company is confident about its 12% to 14% normalized service growth target and sees opportunities in China, with revenue potentially recovering after being impacted by affiliate rules.