KLA Corporation delivered a strong QQ2 2025 performance anchored by resilient demand at the leading edge of semiconductor manufacturing and ongoing momentum in advanced packaging. Revenue of $3.08 billion topped guidance and grew meaningfully YoY, while non-GAAP Diluted EPS of $8.20 surpassed the midpoint of guidance. Gross margin reached 61.7% with an operating margin of 42.3%, supporting a robust free cash flow of $757 million for calendar 2024 and a solid balance sheet to fund future growth. Management underscored AI as a key catalyst, with AI-related compute efficiency expected to bolster adoption of KLA’s inspection and metrology platforms, particularly at leading-edge nodes and in high-value packaging ecosystems.
Looking ahead, KLA outlined a cautious but constructive 2025 trajectory. The company guided for Q3 (March quarter) revenue of about $3.0 billion +/- $150 million, with Foundry/Logic and Memory mix at roughly 73% and 27% respectively, and a non-GAAP gross margin of about 62% +/- 1 percentage point. Management highlighted an estimated $500 million +/- $100 million China export-control impact for 2025 (roughly 70% of which affects systems), with some upside from licensing opportunities but a base-case with meaningful headwinds. The longer-term view remains supportive: anticiapted WFE market growth in the mid-single digits for 2025, ongoing ramp of N2 and HBM/advanced packaging, and continued strong service growth. Investors should monitor: (1) China regulatory developments and licensing timelines, (2) progression of AI-enabled demand and packaging opportunities, (3) share gains at leading-edge nodes, and (4) the servicing business’s growth trajectory as fabs re-optimize capacity post-China access changes.
Overall, KLAC’s QQ2 outcomes reinforce its leadership in process control, its leverage to AI-driven semiconductor growth, and its capability to translate top-line momentum into meaningful free cash flow and capital returns, even as it navigates a meaningful China regulatory impact. The company appears well-positioned to outpace the broader WFE market in 2025, albeit with notable macro and policy risk overlays that require ongoing management attention.