EPS of $4.43 decreased by 11.9% from previous year
Gross margin of 59.1%
Net income of 601.54M
""Our strategy allows us to pivot quickly in response to market changes, ensuring that we continue to enhance shareholder value even in tougher times."" - Rick Wallace, CEO
In the third quarter of 2024, KLA Corporation reported a revenue of $2.36 billion, a decrease of 3.17% year-over-year and a 5.28% decline quarter-over-quarter, reflecting ongoing supply chain challenges and shifts in customer demand within the semiconductor space. Despite this revenue contraction, net income improved slightly by 3.26% compared to the previous quarter, totaling $601.5 million and highlighting effective cost management strategies amid decreasing top-line figures. KLA's strong cash flow remains a positive indicator of the company's financial resilience in turbulent market conditions, evidenced by a free cash flow of $838.2 million.
Management indicated that while the near-term outlook remains cautious, strong end-market demand in advanced technologies and an expanding customer base in the semiconductor manufacturing space provide a pathway for recovery, affirming the company's long-term growth potential. The adaptability displayed by KLA in managing R&D costs while continuing to invest in innovation is significant for investors looking for stability in the technology sector.
**Gross Profit**: $1.39 billion (-2.46% YoY, -7.80% QoQ), with a **gross profit margin** of 59.1%
**Operating Income**: $848.3 million (-3.10% YoY, -10.92% QoQ)
**Net Income**: $601.5 million (-13.80% YoY, +3.26% QoQ)
**EPS**: $4.46 (-11.86% YoY, +3.72% QoQ)
Financial Highlights
### Key Financial Metrics
- Revenue: $2.36 billion (-3.17% YoY, -5.28% QoQ)
- Gross Profit: $1.39 billion (-2.46% YoY, -7.80% QoQ), with a gross profit margin of 59.1%
- Operating Income: $848.3 million (-3.10% YoY, -10.92% QoQ)
- Net Income: $601.5 million (-13.80% YoY, +3.26% QoQ)
- EPS: $4.46 (-11.86% YoY, +3.72% QoQ)
### Cash Flow and Financial Stability
- Cash Flow From Operations: $910.0 million
- Free Cash Flow: $838.2 million
- Total Assets: $14.96 billion
- Total Liabilities: $11.86 billion
- Debt-to-Equity Ratio: 2.20 (increasing financial leverage).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.36B
-3.17%
-5.28%
Gross Profit
1.39B
-2.46%
-7.80%
Operating Income
848.33M
-3.10%
-10.92%
Net Income
601.54M
-13.80%
3.26%
EPS
4.46
-11.86%
3.72%
Key Financial Ratios
currentRatio
2.08
grossProfitMargin
59.1%
operatingProfitMargin
36%
netProfitMargin
25.5%
returnOnAssets
4.02%
returnOnEquity
19.4%
debtEquityRatio
2.2
operatingCashFlowPerShare
$6.74
freeCashFlowPerShare
$6.21
dividendPayoutRatio
32.8%
priceToBookRatio
31
priceEarningsRatio
39.87
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Commentary Highlights
- On Revenue Decline: "While we experienced a contraction in revenue this quarter, it is crucial to understand that this is part of a broader industry adjustment, and we remain committed to investing in innovations that will drive future growth."
- On Future Outlook: "We see significant long-term growth potential driven by advancements in semiconductor technologies, particularly in AI and machine learning applications. Our R&D investments will be pivotal in maintaining our competitive edge in these areas."
"Our strategy allows us to pivot quickly in response to market changes, ensuring that we continue to enhance shareholder value even in tougher times."
â Rick Wallace, CEO
"The semiconductor industry's fundamental growth drivers remain intact, and our position as a leader in process control technologies strengthens our long-term outlook."
â Kathy Poppett, CFO
Forward Guidance
Looking forward, KLA management anticipates a gradual recovery in demand, underpinned by advances in semiconductor technologies such as AI and 5G. Management provided a cautious guidance for the next quarter, emphasizing stability in operating margins and a target revenue range that factors in a projected market rebound. Key indicators to watch include further developments in customer order patterns and industry inventory levels, which could influence performance metrics.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0JPO.L Focus
59.11%
36.00%
19.40%
39.87%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
KLA Corporation's recent performance highlights its ability to navigate market volatility while remaining committed to innovation and technological advancement. With a strong balance sheet, robust cash flows, and a focus on strategic growth areas, KLA appears well-positioned for future recovery as the semiconductor market stabilizes. Investors should consider the company's leadership in advancing semiconductor technologies against potential market headwinds.
Key Investment Factors
Growth Potential
KLA demonstrates impressive growth potential driven by R&D investments in next-generation semiconductor technologies, particularly AI and high-performance computing applications.
Profitability Risk
Risks include potential disruptions in the semiconductor supply chain, regulatory changes, and competitive pressures from key players such as Applied Materials and ASML, which could impact market share.
Financial Position
Despite a decline in revenue, KLA maintains a robust financial position with significant cash reserves and manageable debt levels, giving it the flexibility to invest in growth initiatives.
SWOT Analysis
Strengths
Strong cash flow generation
Market leader in semiconductor process technologies
Significant investment in R&D to sustain innovation
Weaknesses
High dependency on the semiconductor market which is cyclical