KLAC - Earnings call transcript Q3 2024

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Operator

Good afternoon. My name is Doug, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the KLA Corporation March quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions].

I will now turn the call over to Kevin Kessel, Vice President of Investor Relations and Market Analytics. ahead. go Please

Kevin Kessel

Bren joining XXXX for am call discuss our to by Thank in our the March CFO, and Wallace; results CEO, I June the our you Rick earnings Higgins. quarter joined outlook.

We materials. and website, on close the available today's will the our supplemental results discuss with after market released along IR

to years. otherwise full year GAAP references KLA's Today's to including events, discussion on and and recent results. IR presented XX-K future corporate reconciliation All presentations, investor are non-GAAP contain a report non-GAAP Forms detailed to specified. website also calendar Earnings and metrics financial materials a basis, the unless contains are and governance information XX-Q. quarterly annual our linked reports on filings, SEC most of

are the those to KLA reflected those our come subject those factors in we uncertainties and today, forward-looking disclosures to statements risks, call filings. the risk are today Any statements, in SEC risks subject make and Our forward-looking including guarantee true. of comments cannot will on

actual in our from forward-looking those results projected significantly statements. may Our differ

CEO, Bren Wallace. the the Rick by comments call followed now including additional to I financial some highlights, over our introductory begin call our turn with Rick? outlook. will with will Rick

Richard Wallace

will I Thank you, quarter share highlights results and address KLA's Kevin. Today, the as as review a outlook. March well and reports market new broader industry

of above XX decision midpoint panel of range. March EPS guidance with the the the adjusted results, provided our KLA's and the of to midpoint was non-GAAP GAAP, billion flat conjunction revenue were above $X.XX guidance business. in both exit on the we

the as multiple We're we capacity investments. we customers' expect and year. business leading-edge which improvement about for progress by driving opportunities end is with markets, in the through across discussions our our future have improve to business encouraged conditions stabilized, customers Market our

market long-term At These parties offers global state show our strength customers provide challenges our the that demands. consistent a our are their declined of market approximately KLA's productivity and unique to control third industry. of U.S. in year, in X%, each year, the reports by government by XX% process into leadership that primarily access market demonstrate insights the XXXX of KLA address new of reports significant published their portfolio share additional the technology diverse of in capabilities to as a following while XXXX, driven market loss share by gain meeting start controls. nearly This export result China

process of strategies the KLA's That said, the in WFE in earnings March our KLA's as power our expressed bottomed leadership critical of of in our We're prior and most and the confident portfolio. customer-focused quarter call. the control consistent markets some market revenues that reflect and success quarterly

capital investments simultaneous multiple and continue to be tailwind. slowly intensity long-term across a foundry/logic, nodes In rising

advanced process increasing AI with technology demand our technologies both and other the advanced Overall inspection for requirements for process applications the and tool drive complexity packaging metrology systems. from for growth, and more control along increasing need capability will products. Additionally, in drive demand

rates in run generate meaningfully and to going forward. expect above we packaging business business approximately growth $XXX advanced growth will WFE this rate achieve in Our of the rate million XXXX,

our free was over business XX cash flow services, $XXX cash million, free X% margin the In a Quarterly year-over-year. the period. billion quarter, XX% free million last sequentially and $X.X $XXX with flow months up flow XX% grew the and to was in cash of

further. customer transition leading-edge the our with for broad continue and continue leadership discuss Customers financials executing sustained of road KLA's will our requirements, the offerings. maps and now focus product environment, the continue process will and highest preparing and strategies. product In and success Bren in leading and KLA portfolio technology results to to quarterly this at invest value aligns outlook this supporting growth demonstrate to industry control KLA's edge. prioritize on our on product

Bren Higgins

Thank complexity Despite was changing industry and to Quarterly midpoint the the execution of consistent $X.XX $X.X environment, adapt challenges current demonstrated customers' billion, global team. revenue the you, the ] a to requirements. Rick. show of [ guidance meeting our quarterly billion. ability resourcefullness KLA and KLA's results continues to above of

Non-GAAP The strategic company's the and diluted on guidance the negatively above March GAAP million panel exit by display flat and business impacted March guidance impact were This a of $X.XX, related EPS on to $X.XX. obsolete charge diluted EPS In above EPS. both XX. midpoint charge $X.XX, diluted $XX inventory midpoint for decision was excess a was non-GAAP the EPS $X.XX. of $X.XX GAAP the quarter, the announced to had

this diluted end top margin been would range. guidance the was XX.X%, EPS non-GAAP have of above gross $X.XX. Excluding item, revised the Non-GAAP

Excluding the gross XX.X% non-GAAP margin FPD would and roughly been sequentially. flat charge, have

and the flow $XXX net expense $XXX was have were Quarterly margin million, been operating Non-GAAP $XXX in Non-GAAP million. operations million was free from Non-GAAP was $X.XX $XXX other $X.XX. $XX cash $XXX in sequentially or net operating income at expenses million. million and flat income would SG&A. rate million non-GAAP higher was was net tax $XXX GAAP comprised tax effective expense EPS $XXX and XX.X%. of non-GAAP flow R&D at the guided million XX.X%. XX.X% Cash was rate million, Non-GAAP a was and quarterly income

within major and The breakdown can reportable of and and markets be found products by shareholder letter regions the and segments revenue slides.

agencies. senior notes prior balance total securities, and due from all purposes, senior -- Turning proceeds the attractive general of equivalents ended strong company February notes debt quarter issued in billion maturity. and XXXX. $X.X operating sheet. $XXX The indebtedness maturity X, a flexible cash, notes bond and the $XXX of KLA net including and X.XX% ratings profile by billion to outstanding XXXX at for to the expects repayment million use in from or due in to the the X.X% of corporate marketable million cash X the On KLA $X.X supported of investment-grade with

business discussions recent reports we end are customer indicated last profitability. by these industry supported and improving encouraged quarter, March our improve an the is demand plans, through bottomed outlook. expect looking from levels environment growth the progress we in of We around customer and to 'XX, which to we future our revenue balance market Moving business perspective ahead the a the trends, we as by in with quarter further resuming June of constructive and calendar investment Consistent remain as believe their quarter, through year.

of roughly as guidance revenue or be remains follows: half than billion, percentage the foundry/logic gross to KLA's expected is $XXX customers half. modestly be semi-process is We the mix systems forecasted our XXXX, the expect to memory, stronger and of WFE to forecasted minus remaining year flat calendar from expected the minus $X.X DRAM is from XX.X% margin outlook point to demand be semiconductor XXXX will up plus control plus the to based range be memory expectations. and and For first be of second is on XX% revenue. product XX%. Non-GAAP be of that unchanged. to mix about in calendar high-level NAND the is XX% Within million, approximately June XX% quarter still X revenue segment of or

modeling the services top calendar growth expectations, to For and are be non-GAAP outlook, forecasted our stable $XXX growth mix, gross by based industry we are . forecasted adjustment process driven quarter-to-quarter the the mix line in on expected Variability quarter March margins quarter. mid operating fluctuations. relatively as in million June product expenses typically in around XXXX, systems product be current Non-GAAP XX% range. to approximately occurred higher merit is

expected growth million expect we of million continue to incremental growth. $XX revenue Looking $X in supported to for by remainder the XXXX, ahead, operating expenses quarterly calendar

Other diluted plus And and million million GAAP of non-GAAP guidance shares. or of quarter minus $X.XX. to for June a plus minus expense count share diluted model diluted approximately include EPS a $X.XX, non-GAAP other is expense. the of is EPS expected based $X.XX, or be assumptions on $X.XX. approximately income EPS XXX.X fully net $XX

conclusion, customers' In the the differentiated anticipates improvement map that public customers' longer-term delivering over drives are XX ago, and road we from on growth indicators focused months. our portfolio KLA conversations ranging product articulated expectations. reports few with past we technology to encouraged our of a as the remains requirements weeks

model drive are guiding which the best-in-class KLA execution, objectives, to to strategic operating implement With geared outperformance. KLA continues

for innovative With and importance to solutions as The KLA's flow is the past mix, years increasing long-term are few of device enabling and well outlook yield success, advancements solidified environment. delivering free continuing deliver in on capital and and a optimizing process technology able industry-leading cash control operational improve. differentiated semiconductor across have growth excellence, and demand confidence bodes KLA financial volume to customer This trends our industry near-term performance consistently. focus production high the design and return

in investments and That secular is let's prepared improving business both In remarks. driving alignment demand in with the and the remain this, semiconductor leading-edge trends industry and long-term Q&A. the begin legacy intact markets. concludes Kevin, KLA's WFE

Kevin Kessel

can instructions provide Thank for you you, please Operator, [indiscernible]. Bren.

Operator

We'll question [Operator JPMorgan. Instructions] take from now our Harlan Sur first with

Harlan Sur

Last maybe this first was more as mature infrastructure node half spending year more by year and well. of focused

it into on accelerate, be both like advanced year, As you your outlook to this this starting improving in second reflected for does and and spending rate, half logic is year. feel of and confidence to step momentum the foundry memory calendar appears

shaping role but advanced initial mean Like Given assume migrations. your up and the views. to team, I profile technology-driven outlook next these forecast are time, a the I good relatively your more team. in the longer should visibility customer critical which enabling for 'XX discussions wanted calendar your lead get technology be it's how advanced for year, for

Richard Wallace

discussions our the memory leading-edge Great. we This different Absolutely, of while we've kind logic than Harlan, a thanks for for are had is and with Rick. question. customers. having now

-- they a availability, that we're we for scheduling prepare tool seeing really resources, conversations increased don't and talking while. behind, get the sure had of seeing for making demand demand, are about As haven't they for they're increased ramp they

is of that to the I the indicated, but the having. demand still rising stability the think we're year, we as in see 'XX real as beyond of with we and conversations build-out kind are build-outs come going we some through see --

discussions, leading indicators, really work. advanced So starts, R&D indicators, design good node

the So good we pretty feel about setup.

Harlan Sur

business utilization in industry the on Great. And the did upward see clearly trajectory. with is continued you an growth services

that Has of talked You've services sort the XX% relative XX% on last value-added upper of of record number of growth the range I profile to more end the sort the services being Has coming on know improved ahead? given target this just think, that got I call. the challenges you customers, view last the wanting warranty earnings complexity year to offerings tools and changed? call? at about off

Bren Higgins

off -- conversion say contract rate We of Harlan, strong tools had and is lot would look, utilization rates would into a warranty, I our it's very come and we're see momentum say, about continuing they to I of are Bren. improving. go XX%.

overall. growth So that's are of the Customers lives extending which service bodes positive. well long-term systems, very for

So we years. as as forward I we to over about we have, end range next the move sure few for the pretty we I think we're track good lower that upper think and than here, closer feel end the the

Operator

We'll next from our Cantor Muse take question C.J. Fitzgerald. with

Christopher Muse

I from memory. the logic on which first mix massive shift near-term a for pretty question, time guess June, a you to question expect

part I pushed the And June underlying think June you of to Or quarter? speak pickup I So the revenue perhaps some see that, China you a guess as that, within quarter, the about rec in beyond to from you drivers? talked domestic do quarter. prior the of can memory

parts So there. curious the moving about

Bren Higgins

in in front, I would more very memory We're flow their as heavy our with half, profitability meaningful as positive change. now expect that the I to profile, as improve. of we rest goes, up cash significant But conversations Rick seeing starting than move of way. a far half China the through improve. But we're bit half second on having non-China any while year. investments real it's the but it in customers don't and changing we're businesses see indicated, it second the memory long-term think tick overall, the might plans, seeing could Yes. I as Nothings terms we say don't first little a

XX%. maybe a think we XX%, logic/foundry to XXXX. you right going look our back business, bit were And over little If I be in we're around at

mix be to this going similar it's a pretty think I year. overall

Christopher Muse

that? it accelerating throughout a is percentage about revenues line What's perhaps of Excellent. relates -- in rate your we And terms EPC. I driving be to 'XX. handset-related thinking commentary remainder logic can you then speak as really Arizona. around of calendar pilot, the growth guess to top there there half-on-half? sort should X-nanometer main in of And the drivers

Bren Higgins

you investment think covered right? We I in early them, will Yes. C.J., most some X-nanometer. of see

You the build-out. have X-nanometer

You Arizona. investment have you the that in mentioned

think business think that I the So versus second first the in end half through it's We're going half overall half, to single good year. the Right guiding, those digits the not for as logic/foundry ballpark. at versus are second but we in range all I up first the I segment. now, progress high half pretty that when look is

front, EPC a the little On is I stronger. think bit it

have as we in part year first EPC do half in year. think, move there, the the seasonality of But as You second well. I see of some we'll the some the improvement through

Richard Wallace

quarter-on-quarter. of course, growing And service is

So you've got that as effect well.

Operator

from next Krish our Sankar TD question take Cowen. we'll And with

Sreekrishnan Sankarnarayanan

is KLA, expectation obviously, kind [indiscernible] be the said them. WFE. quarter, to One could higher for you digits some of last [indiscernible] 'XX on grow mid-single these Two of [indiscernible]. overall of to going thanks based calendar that And revenues

I your a just revenue curious that some profile on Given that overall -- to have And year then kind have side. you I'm this do follow-up. think exposure for of about how year-over-year?

Bren Higgins

Yes.

WFE modestly as on view about level, And of up it talked adds I everybody that, So the -- we up. think, look when depends at to differently. WFE and flat you your

Our billion was view slightly slightly year. how from from or probably $XX there terms billion, then that of to WFE we're looking is flat up this $XX at it's up in there and to

WFE to the And about. March, the going in the we've PC some to given I about in service in It improvement put, EPC. modestly to business. saw up, to or the less way that our we June flat that guide some it. semi more think into we've given We're going increase is So that's were improvement think talked outperformance incremental modest this see simply see we in seen

this share little roughly mostly think to EPC business a EPC overall And overall, saw line the in we all I going translates where semi in with fairly into in up going be from market consistent, for bit to probably the market maybe is what performing our we that be is semi So think year. 'XX.

Sreekrishnan Sankarnarayanan

you China. follow-up of same -- a Q-over-Q. from China say gross curious it. points helpful. is on overall I memory revenues? quick you June did filtrated basis And That's time, if the And down Got think along XX Give very how it. lead Got to then you long a March do kind [indiscernible] I'm so be would margins about China path,

kind mix? it of this. Is on from product it's said You just curious mainly China? I'm

Bren Higgins

Yes. mostly to No, it's related we the decision quarter-on-quarter, to there. FPD took related down from the adjustment mix the product inventory that

business. just product our mostly So semi across it's mix PC

the to normal quarter-on-quarter is then services the You do and have some the growth across rest margin. the gross gross margin mix the in portfolio. We service but the operating the just portfolio. accretive profiles believe to a is margin, we have it's dilutive overall product across And Different margin little is dilutive.

I we some engage revenue depending is depending range we give. guidance can as given the somewhere guided why give on customers on fluctuation. end we which always so It And room in with that . But revenuing like for quarter. around ship came last XX%, above we're in it how and the systems. There's up upside, XX.X% things we a think quarter, cause appropriate, -- we is what saw think I range

So It's of really actual product about more to there's the acceptance the and getting customers. we're all product nothing shipping the about regions. of It's . mix products particular mix more

Sreekrishnan Sankarnarayanan

for rest or? year, the the similar [indiscernible] of range

Bren Higgins

So China is interesting.

I think over flattish course the probably year. of it's the

of market end flattish it of Second The total non-China as year bit we our half growth a the coming the a most first is the or half. as with down mix. mix the changing is in see we from in less see terms the customers. of more come But percent

Operator

question next Stifel. our Brian Chin with take from We'll

Brian Chin

chips or all of some this magnitude roll solidified maybe of or projects? out announcements [indiscernible] U.S. but the these -- what any sort your build continuing in, to greenfields to on timing of I earlier, asked questions. few the latest I of these is has guess, with is thinking

Richard Wallace

York, today It's announcements. those in example, a when announced Well, timing yes, there was quite for New out. one's that you look see. have even, at many But the to that the been X ways projects, exciting for

of but customers building demand. U.S., we the timing, to, the to relative on this, funding So still chance they're under they're approval the to I capacity the based excited their the the market reshore think about talk

the So to think investment They're of I wafer that driven how of size really demand. based terms doesn't it's the the capacity overall [indiscernible] affect and what the overall starts market. investment. And gauging happens is it the many in -- what is point on by

are we'd independent of to we So when location the stick business customers environment the that for to those the about comments what investments. relatively the -- make see choosing what

Brian Chin

in Got you around that in size on boundaries revenue calendar and packaging, it. market be in 'XX? calendar packaging what $XXX advanced did letter fair. across That's And your does I call, advanced shareholder maybe I 'XX, could And the that portfolio? your notice is, guess, highlighted I served which then know versus you million rate would cross represent then growth how certainly addressable the

Bren Higgins

Yes.

So it's greater than XX%.

portfolio. around in It's expectation little close also tools It's that's broad about specialty go have on somewhere our we're $XXX the We those [indiscernible] terms is excited from the see than $XXX a we XX-XX about control, customers, each the meaningfully of a faster a forward, but semiconductor So 'XX. pretty to we which process of over to which 'XX. [ and in I across ] of growth WFE. in rate feel down opportunity contribution for And inspection million think to part sell the process portfolio, right? -- business. metrology, in

Richard Wallace

that with The is edge. which which for accelerating efforts. a those with are speed opportunity, of leading are One there's couple Yes. their requiring customers I degree packaging are think factors the And at play.

really from leading packaging sense edge. be business make need it challenges standpoint, Our to ability a make to the

that are really applications competing markets still in are there's we're competitors for. by that lower-end that not packaging So served number a of

for quickly year on, last with has an we've but already been it so, to how accelerating. was that with conversation So in been it's increased do or new it technologies the customers but has having meetings come leading this about, talked the

So that they as pertains race applications. of be there's a into But exactly I there's that will to hard capability of AI the think point. huge And the at it's it as this necessity much for what to clear getting -- especially order of growth a rate view it's it pretty the customers, in the very to demand. some judge many market, new competitive

But has a would of on I and it demands. in will goes We're and our that, its customers new depending of solutions well it's to to So engaged. those and to There's continue us customers. for comes as capability execute developing requests some WFE those stands how driver own the say lot huge for right go that a it. against it conjunction down outgrow meet how it it potential the to we think we adoption now, beyond on with

Operator

question Tim UBS. next Arcuri with our We'll take from

Timothy Arcuri

I NX, wanted Rick. to ask about

So until about -- of ramp whatnot will -- although customers is a volume in there not 'XX, certainly be will recently the probably some and there in customers 'XX. that talk has lot to NX going been be crypto big for

So there will be capacity that gets installed next year.

timing, in business? guess you help you any your of of year that Is that starts of I asking for to NX so about Is So -- more the business. much yet? when this seeing that Are do will driver specifically question think is, just like I'm how my back thing? half your it a be

Richard Wallace

with customers end the It And terms have our our timing. critical feeling being going being conversations are seen the of question. part we're pull. forward pulled conversations customers needs about of those are X Great we because -- is market Yes. having in optimism in, definitely is of

KLA highest orders customers 'XX. it's out. volume right some toward conversations, as seeing it -- in for for I those be bulk the meaningful see 'XX coming and to already you're it of the we're end that So 'XX But -- with start will we'll in business the think figure that of

design seeing big power -- big starts It's thing a for X-nanometer the The Tim, node. other it's a of favorable number we're advanced as is know, you node. a

frankly, customers a the of AI those sites being our around it's customers, are able power to center driver now. in big around build for data some related and so so terms even -- of for customers And a lot challenges right of

seeing node, through going be lot a NX think going as to to 'XX we the that. be it then we we're will in So and a significant definitely of already We're very go and see activity, big 'XX. a is but factor

Timothy Arcuri

Got Got it. it.

And flattish Perfect. it you they're China, take ask and the just mean then you're getting it sounds downtick Bren, in is you I about of like to it's sort think Okay. allowed I think want just of tools. to China every stronger keeps back I half said the -- doesn't be to year. said, to of [indiscernible] going and China quarter, take to because tools going loans -- going

on mix just customers? the China. be of really all [indiscernible] or is is that, that XX bit built, -- I because more half these question my than XX been back in the mean names. around Is are So new not a has going this if part there's of new

happens, are coming a And back you're does half year? next the we've thinking of is which headlines back these newly so downside what there's year? in to But around then or for fabs the additions, list entity it. seen named that if that for potential of this is half it headlines this the are if of the happen, a sort lot about -- lot filling been on of of And year if it

Bren Higgins

come about DRAM very the I make in and of what whatever and mix. from with resources I not rules down. U.S. that sure further compliant. government continuing being It's to the don't pretty spend we're closely are and that about the lot about a export decent were come we're talked a Tim, time Well, might want or to to controls, work speculate regards hypotheticals government to

think probably wafer the -- the little half. second the down is half bit the infrastructure in I think a second wafer infrastructure I in

out, up is [indiscernible] flattish net it's the think up I is basically when profile. the infrastructure overall. probably you then all a And it and logic/foundry --

you take of that but you systems, call have China part the -- are also -- new continuing that in more mix, I'll them, projects number have you to also a legacy have mix. the mature customer customers do The of

to So levels. year like half be Obviously, I half even kind those or feels continues like it less see -- [indiscernible] to today. see mean it's quarter, But this profile as the And I some continuing I in through year. more beyond of are healthy, current this movement. that's how think think think, given we'll any at we things we

Operator

. Charles We'll take question next our Shi with from Needham

Yu Shi

build I want what question ask to a on to was discussed with earlier. the team

look it volume production like? at ramp the that said going which you XXXX, definitely with for the revenue NX. that in TSMC of But how 'XX. kind for XXXX that, So in the to guys you you probably is higher will And the to time 'XX was you of was I for compared if ramp line X-nanometer for look terms alluded XX-nanometer me think be X occurs higher year a to that And XXXX. than volume

this a kind volume the fact And be production? they high-volume I high wonder just [indiscernible] from the Was move high a little point the customers? entry you you why to closer I of want really you what's capacity the that that the changed volume mean, at to to bit time, compared said discussion of with the the some coming 'XX? for So think will with

Richard Wallace

Yes, a to things consider it's question. there's NX. when And couple thinking a of about great

minds our customers' in AI race all, for very capability. of clear First a is now this

the other familiar And not for players design but we're so starts with, happening, too just most several ones capability. you see design

very different So demand environment. you have . a

environment in to You phenomenon constrained have constrained you build the have the now also somewhat get a KLA early. the as even last facilities. we ability by capacity factor pulled But is

these our facilities need be to to So we're rest. qualify some systems you front-end the able loaded of into because

calendar pressure a meet demand of So end going 'XX And supporting are as those the why of node factors. of it that to they're the business. POs through to more that it believe we're the and we've volume we but they a them, go concerned this we're That's support those when a lot and -- see more start that while quite toward year of customers, of what to with the there in than we'll different very we're seeing. be get is in of end some out and about about going plan as nodes, they seeing we talking will 'XX -- is to seen supporting because for

it's different of we point talk know of the much many remarkably but course, get broader we specifically terms to design And the it's number and It for in X there as remarkable pretty designs going consistent how this don't are at process, starts. even customers. is in customers of these application that to their

Yu Shi

with Maybe of a process more you're second conversation control. the control customers the you capability into maybe ask the advanced of packaging question, put your I side like [indiscernible] of there, about building the packaging more constructive advanced [indiscernible] want to to sounds capabilities having more the KLA

ramping for you see the from overall terms where perspective, you -- idea, areas what facing SOIC color, a do control do wrapping biggest in are up get but of more the hope challenges you KLA? little to up really I think and the So bit customers opportunities maybe just maybe [indiscernible], for process provide kind of

Richard Wallace

we to One, you of from talking give with back guys are ago had EUV was forward that's and we that calendar and X critical the I'll said X is capabilities think part necessarily the Yes. you that part capability on market. and the that take more talk end, end and with bought KLA consider historically tools and years end cost you back-end than said ramping They're continuous And that's X make for need concerned me, the for case we're the year, more remember of front-end packaging. [indiscernible] are often exposure of this last traditionally fast we I that your concerned support literally of end. their the you to topics a beginning what was the some modified customer, they and it. the big the was designs just is folks to our to they end And to EUV we is with of to and front that us the were our IQOS, color advanced and back back responsible of were note. a a -- they our year things when was these And of a other people, the end. that giving ramping case differentiation, have about we need customers meeting in then part it cost. a And and critical tools of and with why what theory the work that and And front-end capability stories. need us had the of with of not at back you meeting guys [indiscernible] to I because of in lot the I about. X the One us a

drivers that's as has at pretty what's to And success And dynamic have driving the you the the of it. of part this the all shifted requirement if again, go AI. I considerably. with look that's biggest on advanced those to and for So all packaging the going X is work solutions,

to But become front people the the end and in cases, ago handling relevant. our But years to work specifically we and of on back And as end. that capability. it So have asking modifications some to we know, be front-end with in going have was the them and make bringing worked specifically to a some back-end in kind with that operating more than work. very capability we've more tools inspection anticipated we're make more few they've for used conditions you these the to seeing some that more of we done front trend customers this having of challenges in that end, and

definitely ability competitive we're those from be the realize and our And demand. to we're seeing systems will that, some to a gating cases, that. in So support standpoint, the is demand on it, positioned and do for not uniquely to The modify there. us revenue item

it's major So we the good pretty feel focus and opportunity, about company. for the a area

Operator

Research. our next Wolfe Chris with question take We'll Caso from

Christopher Caso

some you're perhaps saying improvement a I regards significant. with are with in non-China Just memory. what what this but guess, regard to to memory, question follow-up nothing I up, going up. I year, understand your to your you're 'XX? think starting And expectation prepared the customers you some improvement see for potential year. We're in What's for go be prices next to into as perhaps telling utilization

Bren Higgins

all very you right? up seeing want things pricing Utilizations You're you're see, customers seeing are Chris, utilization. were taking improve, Yes, to the low.

And so next of that and cash capacity then been be ultimately, expect flow to what improve translate seeing into profitability amount We're fair there's and out a investment year. that's the there. we will

there. year. improving driven I leading of next investment is of edge DRAM the the And related I into in memory. think market year, think this course, bandwidth -- and device then, see expect the ways, or in market translate to we're high drivers seeing by But that to it's more part more DRAM will of some the

Christopher Caso

Got it.

about right come it? year? follow-up, high of I a way of you XX% utilization regard rates here. think As of XX% Is thinking we've change make a the of out Does expectation that services service, with to where for your last kind Again, that improve talked the that that your the end still view about quarter, seen being target. to

Bren Higgins

certainly it's in year. factor a the growth Well, this seeing we're that

$XXX to range of bottom. the of pretty So million $XXX open between I thought been than that top somewhere be that XXXX. million we'd year versus this in think And we're I've incremental the to service that I end closer

on and ensure they're rely factor. us a volume, lot. our matter to is is capital, a given our process nature when of constrained. -- the And environments lower of and that in it relatively particularly complexity capital control optimizing the yields to customers systems, the their the So mix tend

redundancy, utilizations dropped improve. it And as continue are to have we tools much never but where more our as seeing process they so

market a so in good and I the about health think terms of the overall sign of And it's year. next growth drivers into confidence some our

Operator

from Wells next question our with take We'll Fargo. Quatrochi Joe

Joseph Quatrochi

guess, to target conversation ability confidence lead last the opportunity in Wondering you the the seem could recovery of with give your memory obviously, how comment, does you and next just if and customers months just reach market, in thinking times of positive into I size in terms to about several that the pretty your NX your the year model? looking about you over and thinking XXXX

Bren Higgins

both the terms suppliers our that We've in have of good. Well, own 'XX, confidence demand the a key investments lot capacity, made that of I environment. pretty 'XX is company capacity think and to in to kind our around ensure also support our of but

why capacity -- the that keep has we are of place. So ensure because to corrected market today that the it's commitments continue they the to inventory reasons levels of -- and in my X made suppliers higher than some the even grow we've where

of investments little about we feel to think don't make in today terms we I So have. the frankly, very we leverage they're -- because I ability have And of investments, to that able margins. to really lot the a bit a be headwind big trajectory. good of think, to think a what we'll of support our I

over So couple opportunity environment growth kind if I we think the time, is see the leverage over we years. the also that next of compelling expect of

Joseph Quatrochi

Okay.

us you follow-up, exiting quick a RPO if was As Bren, could I give quarter? wondering the

Bren Higgins

Joe. without be conference It quarterly wouldn't question, call a your

the So we're X.X-ish, $X.X quarter-on-quarter. are to file about tomorrow, million It million. the going or down think, billion. was $XXX I [indiscernible] -- in about morning Deposits $XXX sometime

Operator

We Tom Barclays. with O'Malley will our next question from take

Thomas O'Malley

customer. potentially get guys to there's end. packaging, take some rate talk discussion a the you obviously solutions and we those them back your have But on I to had want how Can already a the about the takes? the say, back ready. you're growth the Obviously, from lot solutions Can end of moment you're to about long tool that about end back address how advanced actually front and bringing big about timing that the hey, you tools talk you think those some about call in talked selling conversations been seeing to adjustments that from of bringing there? the you you of There's a to when a to end.

Richard Wallace

have had We're back the we just are clear. be specific customers That some about an yes, the in actually they end. where products started mean tools our that more being front will accelerated let's end name conversation used And want. we tools I of from Sure. ago. seeing that some already -- a while

the you're on couple I months, where modifying much be from already it it could you be could tool years kind being a specializing X can depends it used and and something that of application in of range -- a give So whether depending on that's very it.

have So it are we really do -- depends. that I think already there. some that But

capabilities amount of from some SPTS. actually those part are the -- [indiscernible] our of from from of and probably that tools end the So front half of process were

those move where technology. it. then -- to are be need customers have really of case those it's And examples we specifications some to in forward upgraded is the as also So -- tools later the

talked So to grow. that's think [indiscernible] It's Bren for why, that We net-net, back a belief a continue driver to was positive. for it a the the our it year, opportunity going continue and was growth last from us. time big growth grow. for segment packaging going acquisition in will it's about was to

where that's takes it. long to very it how So on we it's tool-specific are But [indiscernible].

Bren Higgins

integrates transition the going are substrate support as We that to also into package. substrate new the have products the

systems capability, for capability, maintain add sampling the capability lines layers. a so will you're inspection it going opportunity for will the and more need and drive systems. to rate, there systems creates be ASP you time so advanced to you sell -- tends On spaces in so add they if more hit, the same connecting inspection more an us as higher a throughput and the or shrink to but any volume the you and need then have sensitivity, metrology more It for side

all So how about factor these all factors it's terms all of long-term are opportunities. a think terms in we in of the positive

Thomas O'Malley

that year. then ] of Super X helpful. TBT my is the the you've And second kind [ just on given for

half, you being similar mix 'XX, second the that about of kind of single year talked digits. first half -- XX%. high foundry/logic calendar over So you said to and about

If those some just growth terms to the down you profile? Could half, in in any you color, to thinking memory. obviously of your clues, really percentage in and we DRAM half. how NAND a strong the take you be June, March contribution memory But the DRAM second bit in about should see its growth went with obviously, help second us

Bren Higgins

Yes.

be first second to going than it's the much think half the China, than first, bit don't I second would earlier -- expect half it a not will potentially said that expected the in [indiscernible] to half. think stronger be the I like I investments DRAM I little in but because in lower

Operator

from with Instructions] take our [Operator I'll question next Pajjuri Srini Raymond James.

Srinivas Pajjuri

impacted late, so already if there's Bren, to of just that you current I any asked, last any I'm these have questions year. quarter, apologize. that the including out in little the think that a revenue if I if Sorry, been kind push for I customer update you're or But year's guidance? had a wondering your change customer joined

Bren Higgins

the March was work, had March. Yes, it to a the quarter frankly, in but affected quarter around December affected shortfall quarter, around, some the quarter the March obviously, in we and little shifting as bit December make the shifting the

into think we really much we at But least planning [indiscernible] change. it. until it from to view, 'XX. customer that now, I from a don't has We of see could expect great, and So I things in surprise. anything some put get can changed. don't see support I could we activity mean, right point look, 'XX,

Srinivas Pajjuri

foundry -- flattish. it I same your then time, EUV nanometer, be helps the is think And aggressively it. that around. get I on Obviously, X to Got the into -- transitioning somewhat ] all you but think [ count the layer going are customers at

sort for kind it of any on is of a should So we I'm -- layers, terms just intensity flattish wondering go in if control what expect impact nonevent of keep kind will guess, you process kind Or GA of you? I it the, impact? of and have to EUV

Richard Wallace

can our mean, yield. are customers about the It's also don't want an they avoid to dynamic, so it, they you event. our think process I if definitely and intensity to ramp customers -- control add want

-- trade-off. the that's are those the So

question prototyping going they're the order in sampling because areas keep end capability where process there's there have And of to to early the smaller capability measurement front will, the it. process, some measure how and They're at bring ramp role. they increase up they more what if to they have maintain and much new using do challenges the control. stage drives in are to So have or more to and and And of that's the to with when some definitely additional really also FinFET. or is their design more to inspect debug ramp pilot, the you they

in so a of the able we've inspector talked But the about be past to optical not X only And Gen that modifications change support FinFET. the process. it's in to

integration we successfully do increase for process the [indiscernible]. see with control to don't doing the but will different matter, who how Anybody But still tries much a we control though intensity to having dramatic intensity because process in we'll intensity process a to up. the overall it's benefit increase an they layers challenges see we EUV have been think going it, When learning that of node leaders modest their from the in be increase, there'll -- consistent done the though, else jump for there. that [indiscernible] volume. process are control model have So be go we scenarios

many drive on in customers. So supporting for depending our our time, aggregate, people over are how it will up intensity it

than environment, X-nanometer a certainly what a the design expecting more we and years likely in at saw first robust ramp. also We're steeper few

design addition designs. than architecture, you steeper but have what in means just more to a metrology, the it few a you gate-all-around volume integration robust see of when just the environment, inspection more challenge also which process the challenges ramp but also from customers' more will So earlier, and

So on of a fronts. we're encouraged number

Operator

from Sankar question another Cowen. take We'll Krish with TD

Sreekrishnan Sankarnarayanan

just you metrology quantify your around High-K optical a had revenues around. I gate gate and all way the 'XX? Rick, to exposure for GenX all you the your in Metal be calendar gave. follow-up Is think what have Clearly, on to could inspection

Richard Wallace

I is haven't it what we -- we about really up, think node requirement. that. We Chris. look at it making the do don't be I'd Yes. mean

you X, standpoint, all if you it to from all So think around. gate that attribute

I where up, and process a And specific NX. why obviously, specifically in we yet, for that's don't see prior the big the said for all consistent corresponding change that's So we've answer, control don't as we had intensity rising have round. blended. that's and number [indiscernible] XXXX driver think node for But about intensity but we the increase pushing but around share that slightly And the know are with per customers we model KLA. process control

Sreekrishnan Sankarnarayanan

Got like it. I helpful. it. in. That's squeeze And just more could if X then Got

kind X curious of times. Gen Just about lead your

changed? X that of we coming there to time months. to China like a X said still you are [indiscernible] view the last it it year the assume Or is might X X kind Is times as slowing, months? moderate lead that like Has If is think I progresses. in? is

Richard Wallace

across demanded It's we recently nodes. specifically Gen around. configurable for gate non-upgradable version all is highly X And a a very system. fact, entered in

the because So, revenue -- weren't supply last any that It's been and supply, system, incremental of a demand. just terms in it's in year I this challenged ability product which that meet key able from a get has would to to year lot say get to of [indiscernible] will components. some supply we extendability. we see increase

I'll increase see that year. this

And the position times to XX-month will customers. range a so our we're in lot for we make product, to all that sure are help. still lead of although that [indiscernible] to in XX- do probably of a think that to a support it's which to [indiscernible] different across it think has requirements on multiple broadband and extendability inspection and testament demand of system, favorability But its ability multiple very the I meet nodes. has the scale plans a fronts, I it to

Bren Higgins

about to referring do And ago, Krish. Gen a the you what you, were quarter I X Thank think, to months X, said Bren. X Krish, we

change X, is know X don't any Gen right. same ballpark I on the . All there's in [indiscernible] if [indiscernible] Gen So

our that a for I over attention. that, everyone want call end We call. will it's thank know the and So your We With to time day. our busy us very to operator, back to of the to conclude. brings pass

Operator

have This the this line at Corporation Please a disconnect Call Webcast. Earnings conclude XXXX does KLA and March and day. your time, wonderful

KLA (KLAC) 25 Apr 242024 Q3 Earnings call transcript