KLA (KLAC) 24 Jul 242024 Q4 Earnings call transcript

Company Profile

Participants

Kevin Kessel	executive
Richard Wallace	executive
Bren Higgins	executive
Vivek Arya	analyst
Christopher Muse	analyst
Harlan Sur	analyst
Atif Malik	analyst
Christopher Caso	analyst
Sreekrishnan Sankarnarayanan	analyst
Joseph Quatrochi	analyst
Toshiya Hari	analyst
Joseph Moore	analyst
Srinivas Pajjuri	analyst
Brian Chin	analyst
Blayne Curtis	analyst
Timothy Arcuri	analyst

Call transcript

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Operator

Good afternoon. My name is David, and I'll be your conference operator today. At this time, I would like to welcome everyone to the KLA Corporation June 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

earnings and our our discuss June Higgins. the Rick Welcome September call quarter results Bren CFO, the and by outlook. XXXX Wallace to our to I'm CEO, joined

results will along ir.kla.com materials. released We supplemental today's after market available with close the at and discuss

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

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

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

Rick the call financial followed additional with outlook. begin including introductory some our Bren highlights, by comments with will

Let Rick? the Rick me CEO, Wallace. call over to turn our

Richard Wallace

and highlights Kevin. company above midpoints. revenue, cover will you, few this solid out mostly were a played quarter strong Quarter Thank KLA's demand quarter. execution. their with June gross business customer EPS I and guidance margin for all respective expected as

customers for this edge at We continue steady leading for of into the to our see throughout remainder and calendar XXXX. the environment the signs remain market improvement confident of and year strengthening in plan

AI to a In of memory memory support technologies improving markets and return industry improving intensity environment, an capital year-over-year and scaling and the XXXX. expected This an slowly the memory, growth high-bandwidth investments environment. demonstrating and to rising quarter, in to of KLA sequential returned development for tailwind. for be growth, results Foundry/logic supply-demand long-term technology new continuation incorporation revenue continues

from This Gen of for patterned to plasma BBP our years portfolio and also innovation X or wafer also strong marks of another quarter performance products, business. X. marked which year June BBP The inspection X quarter refer Gen our of we broadband as

We this industry. the for keeping discovery differentiation at see continue product the of semiconductor forefront the to significant line

We expect relative strong year growth continue family in momentum to product this delivering XXXX. performance calendar

that to revenue, reach which are entire more is control enabler estimated the driver complex continues higher calendar AI experiencing. on approximately be we XXXX. and intensity. exiting would packaging advanced annualized growing KLA's and for and supported Today, AI a in die increase momentum the chip larger wafer an $XXX in portfolio KLA process packaging business. in $XXX Last in we're size more demands, manufacturing, the designs, KLA than across advanced that adoption volume million revenue opportunity driving million raising estimate quarter, total we to

AI is the KLA in further performance our of enabling the differentiate improvement systems. Additionally, to continuous products our and

demand existing rising service million sequentially improves. to steadily business Daily market as segments XX% X% up June quarter, capacity year-over-year. the grew are all in of Utilization rates across business end $XXX installed and

process progress for flow free preparing industry Daily on period. $XXX executing the portfolio billion, continue was free leadership this supporting road months continue environment, quarterly and free on demonstrate Finally, maps growth customer KLA leading at the success requirements, results product In with The focus and the our broad of cash to will flow over same strategies. edge. specific of to cash was flow our XX XX% last margin million. cash sustained $X control

I'll call now Bren go outlook. to to highlights hand through over the financial and the

Bren Higgins

the to EPS the team. and revenue ability consistent customers' respective at than to the their was execution end guidance guidance and to leadership resourcefulness diluted market billion, $X.X our of requirements. volume guidance. growth Gross midpoint quarterly guidance KLA's continues Quarterly XX.X% of KLA midpoints. of meet adapt changing Rick. above $X.XX combined higher EPS the Thanks, our serve Non-GAAP revenue the to global results margin billion. and demonstrated above mix was richer with diluted upper model product both upside GAAP $X.XX, range was was as $X.XX a

XX%. XX.X%. net company weighted were were and net net markets, income $XXX cash was expenses and The major of in was million. million cash million, $XXX comprised income expense and a rate million, shareholder breakdown flow shares Operating free can quarter. Operating had products reportable diluted $XXX million found flow R&D the at margin expense the million effective Operating SG&A. million, tax and and was Quarterly expenses $XXX million in of non-GAAP by end $XX $XXX was outstanding income GAAP $XXX The was quarterly regions end the $XXX and within letter of was average be from million. segments, slides. XXX.X revenue was operations Other the

quarter marketable investment-grade from cash, the and in $X.X equivalents strong bond balance a total Debt ratings with and the billion and to of securities. X Turning agencies. major profile rating flexible billion cash KLA by supported ended $X.X all attractive sheet. maturity

Moving through is to June calendar transitioning 'XX resumption and to expect in stabilization our remainder a began outlook. we into growth, of We period the quarter, of to our and continue XXXX. from believe a which our business of

improvement semiconductor investment over by and the support profitability calendar customers' year. of term. the to translate XXXX, capital ultimately remain growth in improvement This over the encouraged this in equipment medium into revenue will For we course our new

unchanged. outlook largely high-level the remains Our industry for

than expectation to calendar be the in the Our half. that for range stronger of million will the be market WFE half first and is mid-$XX the the year second

we to expect both too growth in leading-edge calendar principally do on year in expectations of and through investments XXXX, specific memory. growth by for in overly While a logic/foundry early be it's

forward. be DRAM is customers is about confident memory business be memory, Within be systems be to mix KLA's and of to process segment remaining XX%. the guidance revenue XX%; expected Daily approximately in semiconductor the from relative approximately to control forecasted of Given XX% moving as billion, minus is September revenue. to our is momentum, quarter or NAND semi expected million; and XX% Total $XXX performance foundry/logic revenue is plus we opportunities expected follows: $X.XX are

Gross margin in the as top calendar plus our gross product product expectations for system range. forecasted of typically revenue stable offset are expected still XX% last mix remain 'XX, with point, quarter-to-quarter based higher is in mix, weaker mid relatively margins on line driven growth modeling minus XX.X% mix. is volumes Consistent higher quarter, range be current services we and growth by forecasted anticipated outlook, comments the around Variability percentage non-GAAP fluctuations. product X by to industry the or to

September with approximately incremental continue we approximately $XXX expectations million our for expenses line R&D growth and to be quarterly make million in XX% of as $XX and revenue Look margin in important revenue XX% forecasted investments This the incremental calendar are remainder the supported expected by million quarter into ahead, business in expenses operating to expect growth 'XX $XX to support operating to growth. and is we our XXXX. to Operating scaling model.

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

we requirements We a of map is customers' optimistic portfolio and anticipates remain a continue road throughout seen improvement of transitioned technology KLA remainder from stabilization calendar 'XX differentiated XXXX. In growth. conclusion, and one indicators of our into on that growth period delivering expectations. to of that the our will longer-term have the has focused product drives business

KLA operational continues flow drives which success, delivering With financial objectives, the are industry-leading is outperformance. what execution, KLA and on KLA's to and solutions and best-in-class focus innovative differentiated implement free guiding to excellence consistently. capital cash operating to allows return drive geared us and performance model strategic customer

growth confidence has in fab enabling scaling control but an of long-term across as in business of trends is semiconductor increasing the concludes KLA's prepared and bodes improving in That industry result for advancements. the integration continuing to process the environment near-term and high technology in remarks. also remain increasing This optimizing in WFE investments production this, demand and process the demand with well with improving alignment In secular industry device KLA's Return design compelling. driving improve. just are ramp, semiconductor trends importance long-term yield mix. complexity not is and our volume This time to solidified outlook,

Q&A. Let's begin the

Kevin Kessel

begin Thank Operator, and you, Bren. we're you ready provide the Q&A to instructions for session.

Operator

Instructions] question will take our of with Vivek [Operator Securities. America Arya now first Bank from We

Vivek Arya

KLA a after the they X their what than they've and also expect years, they a for years. factor accelerate their new first of said you wallet? does of number curious, your for And your be maps. in to TSMC number and of X-nanometer of WFE first I'm in think in bigger XXXX mean heard road kind X X outlook X XXXX? tape, share X-nanometer recently, of expect AI terms the this I to saw for be or And higher the what Rick, do for customers

Richard Wallace

our Yes, terms to. of in when terms of those with same market for still activity them early reticles Thanks, reticle of reticle having lots the those customers we design inspection course, conversations we're more the then in Vivek. are in world, definitely in we're there starts, and early see in

as we've of going well. and other in then strengthening 'XX. And into seen But really 'XX question, thing in terms it's MX the your is

some by the the So that. we're those drivers from of in of driving about AI remarks we are driven seeing same terms being prepared I think in talked of what both factors

that of afforded increase opportunities So to it does lead us to continue to the additional WFE challenges. goal our by is process our be supported the by control percent believe

So shape pretty I good that. think we're with in

these brought a The from size, and of which creates challenge in die inspection, perspective other you of is it's are online as ramped and driven up. yield know, more being AI incentive advanced more for are larger especially these course, processes chips as a thing, bigger some

anything 'XX terms So it's reach is 'XX Bren, to they add? of we see most when of HPM. leading into in what

Bren Higgins

of I encouraged most by that in that with process of parts, also tends at the monitoring our No, Rick. a in be design control with things high environment, that mix the to think of our customers higher terms participation say is you would production one level. the given I it, -- happens of that start the we're cover

continuous process a to that design trying environment be that's control in they node. investment positive ramp to rules manage for they're ways, design different as and So the tends testing robust

Richard Wallace

a MX, in which that's strengthening of new the out in -- wasn't business. that additional is playing what's forecasted new we our how rollout strength Remember, it's and to tone would And about Maybe early the related Vivek, earlier the to it a we starting And were they sense that from their why our seeing customers. year, demand we customers. positive that's more bit talked was as believe, -- little as in are strength we from MX. see the

think both I to period are So adding we're in consistent belief in on the that good leading demand a for our of those acceleration edge.

Vivek Arya

it. Got

raised to break that Now terms that how it out exiting basis? is million would wanted advanced that Or I of full the you you year? just clarify, specialty $XXX and then million. to on full So $XXX packaging, is inspection year on from clarification an in for it metrology?

Bren Higgins

it's a question. Yes, good

So level the business expectation in our for that's XXXX.

expect it million. we did do, closer isn't what So $XXX was what a to we above is year, but which last significantly run necessarily, which rate to

mid-XX% would continue first strong the see think year I we through momentum. of half rate So packaging. least growth next continuing around that to demand with would at

us. an really it's opportunity So for

and capability more a interest seeing broadband into end. we're on back we're focus Certainly, seeing of more lot moving customer the as

encouraging an moving it's forward. So opportunity

I growth of next rate relative over few WFE to will be the the growth higher think the rate years.

is it, pulling first conversations one of career is assist. the the packaging that, is I'm So off] silicon we're one packaging now had seeing. you've from is they sure but capability, part things, as AI bottlenecks front-end to because And start for front of us end Bren said, of want the what being for [come packaging we part in customers heard time the in the used into of my Vivek, also

of but also the I about AI So driving X just to and really also, the plans not execute course, need of driver, you packaging all talked people HPM silicon a for -- have. we fully being it's those think on

the it business specialty process of terms control also the So And of to . as process say you then in our process of chemical business. XX% in XX% classic process is of have your on question our control. well. in XX% mix, about, some and control About -- semiconductor I'd exposure process remaining part it is

Operator

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

Christopher Muse

your greenfield but NAND, within sort XXXX. it's In greenfields? thoughts And would initial love early, XXXX kind DRAM HBM your of for then versus later for talked frame? versus questions, DRAM, about to seeing and know the DDRX expectations to prepared hear remarks, returning of growth memory same And for NAND? how accounts you're separating and you in any I conversion in time maybe

Bren Higgins

is for not We're year XXXX Well, lot a seeing of transition overall. growth memory. really a

Some investment in in China. that's the happened DRAM and some front

So XXXX expect view, I WFE is think from when of more a growth to point see there. we

that DRAM next and particularly I into year. around think talked you the drivers being drivers, about HBM

But our we course we're certainly next as significantly over financial think models investment pricing translate performance will move of I see business that we into improved going improve, and this so seeing with year. customers' year. the the as up into

a right it, it. less DRAM a in level. flash of bullish operating than pretty absolute on certainly WFE market, see we recovery by an we low do closer the But see flash as to led on next but off think parts we're We'll I it's into although now, both basis. year, get more

like And there have. saw think much we AI year still in we our utilization an didn't was that see the discussions Yes. what leverage some I silicon of because in where of increase customers last really early

in that's memory. of Some

don't until really to we on HBM. see into 'XX 'XX be and added So capacity significantly starting

as later, flash. see said, the conversion, Brent don't capacity you then but you DRAM associated it's HBM really So get before and

Christopher Muse

again, curious, helpful. obviously, complexity size. confidence remarks, no in talked side, the prepared follow-up, performance. larger Very foundry/logic given around about the then your of the as you in question outperformance? And share the But side on logic/foundry of the kind a buyer into the relative love as relative And and mitigate of of takes increased wallet enough that. around memory that to that kind is to there and Would mix, puts hear allow you see

Bren Higgins

pretty investment, call seeing of relative C.J. I'll what China. overall year particularly performance levels feel pretty this heavy we that's good, a Yes, year, this still We're and in legacy in is

too, the move than that KLA you HBM. were investments; position, expect start We that particularly leading we given edge markets our the and the talking and we faster edge we ramp spend. to also to as much initial into that foundry investment year to to then we're entry grow and So expect see and certain in next logic share and the and about well of leading scale overall overall positioned pretty see drive would DRAM

each you also advanced DRAM, -- have also as a for you die device moving packaging first of those put you chips start increased together, all, to but HBM sampling it get of not that of properly. EUV is creates to ensure a as is tends the only use you potential opportunities have the DRAM forward, -- the introduction that have functioning but to of you chips,

introduction control the So we've process from a point DRAM of improve intensity EUV. seen view since of

well And see would as as so I to we forward. that move expect continue

company we think the year. move about I positioning as of pretty yes So, next into feel good the relative we

Richard Wallace

reason we're less leading that things of repair of the on you the was DRAM, it's repair. been. and had effective And that if memory of in years, one part C.J. many remember, seeing, adoption many, seems is because than it haven't we So seen lower

a And so to control driving try need -- going factor of But to -- customers. that. that get that. they're Obviously, some they're of going have expecting through that process greater is for to our because larger that's need a for that's they're

introduction the into pellicles. of have with and And you have -- memory, issues they associated EUV, print also of as get you Brent because said, check

into So it I but know the it's print very more drives much weeds, check.

adoption at the while it to be most setting than least for maybe control process advanced the So up DRAM. better is historical

Operator

next our from JPMorgan. question Harlan take we'll And with Sur

Harlan Sur

the Rick, year? guidance mean, prior better the last is this other in advanced better qualitative for steps in incrementally your investments. quarter? appears reflected technology year into coming deployment reflected call, second be indicators this Any obviously grows September improved? Near to your look team outlook say, anticipate the on expectations, versus on to node growth let's the as next. spending mentioned that relative are quarter, I in does your next year, into sequential I then your into accelerating, December you the know, And in of earnings the half confidence strong As and XXXX calendar team has view X-nanometer you term,

Richard Wallace

here. start I'll Harlan,

in do when growth sequential talked about through the December we growth of the last as expectation being quarter we we quarter expect First, quarter, and sequential the discussed the year. March bottom

more would of So that's of see We'll incrementally we say margin, into out we're December things when bullish how things the see quarter. next certainly funnel looks in like. into the terms the year. I play you terms how look opportunities at that what in on

to have next strength into that As funnel the our we in we've seen seen out, outlook support year. fill

Harlan Sur

Perfect. for intensity. to capabilities, my memory. follow-up, that you Rick But as was of this process are lower are there control has is mentioned, memory pushing always sort a and And a what but logic-like into then dynamics follow-on had saying, advanced right,

more for advanced You DRAM, the very is and the at That's mentioned but logic chip, And which a NAND right, NAND, processed in to that's layer bottom sort the against logic example, that becoming EUV bonding right? bond in staff, advanced of adoption chip this stack, HBM mean, technology is DRAM, required is together. from periphery increasingly appears and [indiscernible] be I nightmare like in and the yield NAND process is technology controller logic of perspective. more whole manufacturability separately then then using it being

can intensity to you I But memory these I to? if over XX%. of these intensity next like higher. does trending been way driving memory the where trends But quantify, years, historically, mean, about look are dynamics see that you control sort of process kicking appear mean, I totality, in know few all any it at memory that has intensity

Bren Higgins

pretty terms you Harlan. of And forward. excited us Yes. in It's opportunity advancements cover the did question, that moving all have a good

intensity of the seen to for a over or have will, last see But full those you to what improvement -- that so. we're in, of terms investment lean waiting We our if is improve customers. years by in to couple into cycle

And of we can I here, and X. we're is some a the probably opportunities into we of in today. things the deliver talked and forward, of XX% last And other if think and or the were where we moving think I capabilities things of historically think excess as in number so creates today question you year, think next we some development XX% that it look in have are covering the products we I that around execute that I talked about about probably

Richard Wallace

that Yes. if really you few into figure in And the still logic from off XD just go take get get design you so customers hard, rules all repair those advanced fully go it and really you DRAM the Harlan, around happens backwards years is not it's contrast ago, a modeled pushing out. XD, if you customers more and and still it expected that you Like our in right? think foundry nor in growth are lithography, DRAM intensity back trying for working. similar reasons. logic factors haven't and pushing or the is leading-edge But to because and we about

But But recognize on also. value add those customers, And there's the high feel HBM bonding they so leading why we control to for issue process through but more is our this a there at to leading engagement Bren's just that question, point, going they huge need more an the more and the is us packaging that's don't know, cycles, and then it implementation. the edge, believe characterization happening you in they've of in is to been until be increased bullish capability.

that, plenty still other a of think going that sure is, lot for ways, of opportunities, making So Then out. to are proving that answer actually of In there's factors. the are those part many we're solutions opportunities. our the work I there and

Operator

We'll apologize next -- with take our Citi. I question Malik Harlan from Atif Sur from

Atif Malik

on for one gate-all intensity. around-PDC first The Rick

XX peers have XX% intensity peers at increase about to map And X-nanometer gate-all-around from talked about down have metrology that's Some actually in XX X-nanometer. inspection EUV the to reticle of or your coming talked X-nanometer.

curious how you're you're intensity? does PVC when these reticle X imply And share your at put So together, the looking we on trends that overall gaining that I'm side?

Richard Wallace

let bit. a So me unpack little that

case this to be that integration new configuration seen, that support think the gate-all-around Gen the it it about and now, creates to talked for and for some that in is the to issues new I we've able so time we've a adoption X definitely around resolve challenges that. of

what because customers there is voltage and also the being -- a for largely a need used There's threshold. an have intensity more in control increase -- than So to use are to driver. It's that's [indiscernible]. different we the metrology approach

So VT control becomes more important.

And a also it. so that's part of

thickness film measurement accept also hire. and management You

outlined there's would we all how of control modeled control share anticipate, before that the overall, into than when that's nothing but kind rolled of XXXX we process that toward forward increasing plan So model different that's going overall really our there. in process we intensity our terms performance we've and intensity

Bren Higgins

Atif, FinFET to high last the KLA to the planar if when from industry and transitioned you it share local back structures. look was WFE,

So that's of do immaturity and the it drive intensity higher typically, change, drive architecture of level. does change just control a the process changes to the happening because

historically, So proven. it's

inspection lot the more Rick metrology XX% on side. opportunities, about only So not XX% but critical more layers, you're layers depositing talked a to

a in of are Those think dynamics, while create still going terms you areas, constant. challenging And it's opportunities. to litho -- pretty a scaling view. of from number have are of we layers in control So the layers point still defect

opportunities. we're bullish the So about pretty

lot our into said last a in feeding into confidence in what of it's think questions moving -- year. over few next we've here of I the terms

Atif Malik

Great.

revenues? Or a plus Is As a than function bit of else? there guide is revenue follow-up, is something minus wider just $XXX usual, versus Bren, $XXX million a that higher million. the

Bren Higgins

function adjustment to different higher revenue quarters or move ranges, the about of an X% make some we It's as of so. because the revenues. point, start we At and a levels. higher just Yes, through

was up the and is and So -- there's X%. guidance, the other X% it another higher then nothing decided indicative in X% to June revenue than in we that

prudent was raise it to range. the that So

we to have integers are also do that remember large. that quite have You

plasma $XX on they broadband you think our depending about If configuration. could be anywhere even million the systems, plus

overall. moving out terms impact and in our in tools So of can an have

it's really the just revenue else. anything more level So not related and increasing to

Operator

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

Christopher Caso

trends general, your on seeing question in node. comments I China an think revenue second is first for the guess, mature I you're China guess half. that about in prior specifically well, the And were -- expectation in I flat

You talked about your you're and seeing if view of edge? still the that's what leading outside

Richard Wallace

might dollar quarter, Yes. be versus basis And right? said half then last to first It still the But the to it's the on with move in absolute half. not as about dollar half, the second flat. will absolute the half relative an start growing percent the I basis, first second

got customers. what on with could newer of projects be Now issue lot depending happens, rev and requal new you've an a

to I it very to a view, point in not of and it's which look of you last half-to-half quarter, take shows a if up comment on. at similar just where going step what So said terms But I'm a take quarter. back

Christopher Caso

a comments made of recognize impact that the the timing side? control? probably implementation than you Got be the control? install earlier that seeing impact of process that, there's could you bit remind little mean, I around some of then bit folks timing when you secondly, And Anything on that schedules? given past. see one, sort would your NA noise it. you on, about And with been a us for regard following about different And on then you in in some high NA the of I to little process about high

Richard Wallace

difference the scaling. that for high most think going you're difference obvious -- I NA the continue to Well, is

challenges the both and and you're to smaller So shop reticle going [indiscernible]. with have qualification the you're get takes in mass that and going defects form associated requal new and to

factors shift. but get that really mix you seen. those get just it's we've the high And trends the also of continue, an you'll will NA, all So extension when

You'll NA to have high be initially then X.XX. you'll and are others some the layers going have of that

We when I see from hearing the any terms what of customers think be implementation, the happening in seeing happens. anything, the there's in in that. HVM work consistent If we for don't of what there potential acceleration we're before is timing. believed and delay characterization with will HVM very terms

we ultimately, technology the technology see what often longer existing But about -- that's customers it's like And all cost and effective. more has more and transitions, it's drives the upgrades economics. extends

of that I edge what happen high will NA if of bias then then X.XX think in and after. life extending they that, the the the comes is efficacy leading so and they'll toward the do And can

nothing has No if our for potential view. delay So really additional changed in some the anything, implementation. in acceleration,

Operator

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

Sreekrishnan Sankarnarayanan

one China I China insight to the thanks to is different on way. of in Bren and Rick and kind First actually question the revenues. a a on just wanted ask

I time a you quarter? better factor in shift also, others? that margin a into And September to year, have think down One lead and gross of insight a in digesting nodes just peak. in about And that? next peers your China are said is mode of have how [indiscernible] than International long smidge a was calendar today a given seeing that follow-up. and mature sales QX the might then China you a a I'm kind especially your curious, are And

Bren Higgins

China, view, said of it's like looks a flat. On Krish. relatively I I earlier, Yes, it half-to-half -- think point from

So A I greenfield don't there. level see that lot project activity we're the seeing of change. any that's real timing of on given dependent

business on or my our next seeing is with more As levels we view what move early year. we're consistent into this year, less

confidence terms we of in what next look we some in I me gives year. what we in the think funnel, have when what have you deposits, into order backlog, see at

And in There's while you of June our driver quarter. is lot portfolio of what gross quarter. all level, also we KLA infrastructure It up gross gross it's you're see seeing It's portfolio variability same within I we're region same quarter, can more It's margin, initially the an families. product it from it When the adjustment we investments. the product so quarter-to-quarter. -- in So logic/foundry a margin margins, and mix I the changing. even themselves. margin year-to-year. On the families not about biggest talk product a our multiple within mix, when -- nodes consistent bit outperformed September and than change. carry obviously with in little particularly not overall you configurable don't the that. pretty be Obviously, the in had some the not profile, the mix it's mix. margin but with was will memory a products at systems, in on. terms it But bearing modeled from the mix customer profile selling seems could the highly across that that end look There's gross being

really it's So else. it function that is of than anything a

incremental you'll could bit I any margin, incremental we general quarter, June And stronger. have year quarter the variability, performance as around nothing at what gross was That's expectations we put the quarter little our KLA's given think mid the in different as And of the gross in plus in but a it were But than to did margin in of 'XX, moving consistent expectation. this comments, then here. XX% for very see. with see that move XX% which and of forward range. minus, forward, last business terms I that's grow or we see course, continue usually

Sreekrishnan Sankarnarayanan

that the really function are helpful, Very rate X which macro inspection, for growing? And market from Got the ago. like growth you you peers And some a are like like panel or can the run probably you targeting curious markets $XXX doing year? also like I which of Thanks color, Or of out? follow-up just into that? Are your advanced months extrapolate those if Bren. the feel better advanced is years newer like also competitors markets few incremental Is of on packaging. like that's level this into packaging, million a like revenue then packaging targeting it. a $XXX this million kind your helping this than

Richard Wallace

Yes.

in or again, think And package that you the of market it's I no is think I if call reasons some hear, that think mentioned acceleration. the shortage the that what's for there's an I with gaps, question been you packaging on going there's overall earlier growing, AI about the that and related. all

investment been yield it's not there. is years what just design that -- would the lithography the of cost-wise pretty considered that especially ago not or much higher. Is rules happening because lot risk, a So what's many not it macro, there's the and it's not advanced have and historically at --

a that years we the you when one year ago, customers is of need product last this asked, are What are front saying, challenges a KLA end road our bought interest. advanced company in now and applied customers capability in of started the be packaging, happened talking why with market. of we about have doing maps into a us you and and Many lot and your bothering, is even excitement packaging to workshops customer accelerated accelerated that not our some

our shortages, hard they really in very products, our processing, it also but in both many have because of our driving they're So control. and it's across process

it's growth it. significant see So been the the to and of speed

beyond. the in growth trend that's for As annual but 'XX expect annualized the and calendar towards the that's to we continue number said, -- 'XX, we'd

Bren Higgins

growth of memory And as the our I logic increase to side. is of complexity value is you they know, high-bandwidth of think about position of And the in forward has Most excited one bonding amount. do one on that process complexity. offerings, market moving higher supporting move in more we're fair techniques, hybrid the you things more been a the the the KLA as

by the get we as what might those and 'XX into we're look encouraged so like out opportunities frame. time 'XX And

next is industry a in about level the so packaging Obviously, thinking of terms and panel on. lot what's

But into that's that so R&D in we goes doing there's obviously will And be work so company. -- that. the that

those opportunities, think just several market over the years. And the so Rick's that of in showcasing, available the I opportunities this point, that are what's next to part are think I

Richard Wallace

point. one final Just

end. our capability. are Some coming our customers a at from lower this in competitors of are cases, the And at their of the top end -- many requirements

is, what systems, cases, we're so some the what from in end And capability, they're hearing where the even at is bottom also our want road our though, of customers map. buying they

their traditional going to a capability ability map they now the knowledge that that like scaling now time because map road the think no I that question the buy they you with are to packaging. with want road more is upgrade going requirements look expectation can over it that forward. as There's continue So and

Operator

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

Joseph Quatrochi

to quarter, relative to of think about mixes Is XX% half-on-half to the more systems bit being tailing higher the understand, looking December growth kind of for I I the kind high they're year foundry/logic. for just closer and single about digit and double-digit last sequential that the kind that, to about at process a maybe of last think that growth guide low I control it thinking quarter now? into assume want is fair talked then the you calendar quarter now that you like duck September thinking talked quarter, rate than for about

Bren Higgins

Yes.

is So overall. December, high the don't our think to low fronts, on way double so about guide but for performance those think single want probably year to I right digit digit, again, the I

June higher, ago, So to than thought better what we higher think few we was. we a I certainly guide the had in we did that than relative months was expectations as saw September consensus

I I incremental year. revealing growth the funnel mix logic is in and I foundry at I the the XX%. overall some of is So look closer earlier that to second the of likely through think business, When about optimism the half think here talked incremental

semiconductor revenue it process or to So ends XX. customers XX control or semiconductor shipments But XX-XX XX, was to how year see closer approximate last we'll is it up. and --

Joseph Quatrochi

think those I can model to for of the Or as Perfect. going demand lead that X, how we about mean, Gen in is next times a given strength of that the that? X, terms And should pulled you're tools That's of the Is kind mean some be helpful. about, year? I into then Gen XXXX? follow-up, enter talking into

Bren Higgins

online. capacity constrained Those around we've Well, we are X. are been come products Gen where supply more certainly seeing

online. new as So comes capacity

that us, we I through challenges expect year, there would growth for getting we we and think point demand, are this are given a one rate as frankly, seeing the year. of it's the -- into move supply next and and run of from quarterly and back the level were limited of constraints XXXX supply we view, in incremental to see as continue that

overall fairly and market, the year the on year. both I'm business part next than this that So faster growing of bullish

areas are our earlier of is one of about that presence said growing our So in those share relative the of certain and confidence in markets I of overall I fast think the wafer extremely to overall relative is those. that terms that's market one inspection high-end certainly

Operator

We'll Hari take from our with Toshiya next Goldman Sachs. question

Toshiya Hari

on I in wanted and seeing region. to the double you're what quick China

But to any side about what making, for as et expecting overall of half? cetera, Or a by application, standouts of and in You mask gave or as whether you it outlook think second you're about half, the type, wafer the maybe be you geo. positive the the trends you out lot you other negative guys color by side? foundry, terms DRAM, making, customer in the first think flattish in the saw or stand applications

Bren Higgins

first stronger be was second DRAM the in probably half. expect and in that little a would I half will the wafers weaker.

reticle it's bit I logic stronger think foundry then the stronger. on offsetting the side, little is And memory. weaker a

Richard Wallace

automotive. Some in weakness

Toshiya Hari

peers, peers, your XX% business, a higher as that. to your year-over-year. grew really outperforming good think of services too. and then off a And on to and you follow-up guys see relative you're base it. your Got that's I

still I'm is end follow-up, across that toward to is mistaken. base Or You more the not for there your a if talked about the simply customer quick it? XX% the rates growing the improving? Is as to year, of remainder utilization range? high XX% right just And

Bren Higgins

Yes.

rates a utilization are certainly factor. So

course year. steadily across seen those segments we've all the of this So in improve

a been of that's so incremental driver revenue. And

'XX The about or contract. renewal have good to or contract attach 'XX our and off of this pretty the tools shipments we come and in shipped warranty that XX%. was gone and that had is the visibility we thing, other -- we In into rate

driver. up warranty that tools contract a into as those go that's So a

So pretty service business. visibility we've the into good had

from We've denominated had of FX local have some do because in particularly currency, the revenue Japan. a in headwind you service

And there's closer yes, the the go range. next out the the the rate, range top that of to the end target like top think we we're as trending of So And I headwinds to think the I of towards been couple XX% range. growth guidance put of the years, some part over we frankly. But for we're there. feel than end I bottom of sort

Operator

Joe from Morgan question next our Moore with take We'll Stanley.

Joseph Moore

a of one also had is by the dominated I China pretty business assume? multinational in a sovereigns, you I had business China mostly China today sizable the follow-ups. couple point, At

Bren Higgins

We're very Yes. China. a in little multinational business

Joseph Moore

terms trailing to seem keeping be to edge sovereign competitors China on process China with then that having exposure. business mean, focus, happened of And the I what's side, you And Okay. of seen control shift all of to a more in pace your intensity?

well. the edge focus off the drop I might process that technology. you on quite thought So doing be seem to have given lagging would intensity control

Richard Wallace

what up then on Sure. high of relatively It's definitely the have as not huge against the leading case would edge. in small sites, as a see starts. you really wafer size-wise But you number of against you're often not small percent

one that's factor. So

infrastructure factor terms that of are people adding wafer. in it's is mask shops of The some other whether or the

serve. helps So in pretty it's, it's much that's for why us, aggregate,

Bren Higgins

on not there there, supporting there's those equipment We're fabs. Joe, with sort no our happening right? is that's question, multinational really but And business activity the business of multinational of is -- I mean, customers real service, most that this

Operator

next Srini And from then Pajjuri. we'll take our question

Srinivas Pajjuri

demand -- in obviously, long XXXX Rick, one the actually, stable. China WFE. of about Couple board, across is question improving is

So terms sense makes money as WFE assumptions, concerned? in far in making chips to in that that grow -- be of next I'm are half. your of will Because you coming year. the sort just what seems wondering check is assumptions in, as the second

Just your explicit from money in being getting XXXX? wondering we're is spent if that, signals that an customers

Richard Wallace

Yes.

customers based then build counting But just capacity our The on more to are that, CHIP expensive. the it no There's is fabs going entirely they market, going But forecasts our our demand in to act it's to that we're it's getting building be on places of on dependence going that us they're what That act not demand. any independent their plans. of offset that. contributing be buy Our be receive -- money. to are cost is to they'll tell based if money not and equipment market they're overall CHIP to make accordingly. on customers back to going

Srinivas Pajjuri

on your approaching in point? technology Rick. want just that wrong that a mask market at market for that that guys were as I get curious, I'm I PMI of you're about understanding to you inspection. get to what here, exited questions strategy for is? question, that My just some how and more maybe but then time, maybe time And and involved I'm thoughts to market your is

Richard Wallace

Yes.

had do have need because with, ways in need company nodes, We the we've it real you in analysis high when heavily. involved the introduced a technology and heavily a market. involved gets The we -- that with It's is really It's problems. question NA actinic the that long our conclusion there's to of reticles. the debate for based market we're is we've not the been seen on, existing really market all that [indiscernible] still started we're that on X for deal in inspection the

the One the accident is quality. line of Xxx challenges the a had that is we've flagship reticle extensions product time, for One to long the that.

that is the for. we're the about used that's reticles print then Gen where last reticle And customers, talked we're verifying still our very And we've and that product the using right Xxx. using still check in with the resolution. the now, the e-beam one and an goodness -- wafers high for of is one basically the being what of tool, that's other application highest onto printing X sensitivity inspection characterization tool The it's in that's

NA, in it high the intercept our ability pretty to of the some product high identified we're years high we've for comes is still that which actinic volume of the or When investment [indiscernible] confident NA, manufacturing away. to

Operator

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

Brian Chin

XX-month Rick, quarter? seeing your terms ask of this questions. and about sequential this Just revenue increase Are in RPO want inflections bookings? and And to shippable growth. did also a not you year-over-year it's few

Richard Wallace

about quarter on on quarter, down specifics another the so all close file here million have XX-K It quarter. that compared was we'll in X. to that or flattish flat, $XX the we'll last So pretty to week pretty

seeing start to what think just probably last quarters, increase. But funnel, I I we'll from we're the it likely down slightly to few the expect next quarter. it over see given in yes, would

Brian Chin

of market year months. of you a not grow obviously, the It's helpful. average typical you of That's over the process the advanced kind made step-up and in past a I'm control past you And disclosures ballpark in Can you're as on the in to Okay. advanced forecast the packaging overall. of sure is? expect probably about how XX% share lot sort is point guess process probably your what packaging, calls years on maybe even you've And then large market starting sense ahead. the X the control saw a well XX%, of I TAM share But at -- now. and your couple

Richard Wallace

for we Bren did let Rick. control years But process of I'll just not it's about the us. with deal because also the SPTS tools specifics. It's acquisition This process is ago. X

Bren Higgins

WFE. Yes. than Look, market we -- grow part right the will this of now, our that faster overall is view

intensity as capital WFE the revenue to part slowly So if market next run, will faster grow that long over years, a rising this the of than than few grow that. likely the bit faster the semiconductor look expect you in little we

we only seeing sell quantifying broad done inspection point. a number but the this at process it of we're portfolio also on we of that's side market, So move up To we've the point, a Rick's parts tools. have

control sell well. process capability chemical also We some as

we terms HBM, better earlier, coming it we're market share relative I about ways. as we And to as transitions in So of some opportunity positioned approaching forward. technology said, of in the multiple this our market that the the like moving talked memory in we're think I are that, to part of relates think

Operator

our We'll Blayne with from Jefferies. question next take Curtis

Blayne Curtis

you the on EPC. ask outlook want I for to

bit were have in came last time. little for Might growth I think looking you below. a

since if one. the forecast, all we're going calendar you curious 'XX update through that Just could

Bren Higgins

semiconductor Yes. in a a dipped it June that's more specialty of quarter-to-quarter, but issue. little the bit quarter, timing On

our little exposure. the for down. And has is power bit think a some but business related in business year. -- plans automotive would we and QX has business of where business semi there's in in has diversified in as dip expectation up, for still exit XXXX. as pick in we of a exit to I second of is our revenue much June, expect come that have manufacturing that panel recovers and that, half. Flat but stronger seen our pretty modest and that so market that a has packaging We've still growth a likely That we the announced

is front, centric, sluggish, to that which And been On still that's mobility. not but relatively has the we obviously have improved much more market it's -- more consumer PCB much. a bit, tied

growth as phone unit we see will And the that future cell drive so into improvements business. more

and a of added a Now there strong very period. -- COVID lot had capacity was that that 'XX, during 'XX business into

capacity. is industry of some still off the so And working that

Now service in exposure. we do business, have that

penetration So PCB you world. the have contract pretty good in

I contributions that systems had So aggregate have few year business been from point the we've year-to-year. a service the that there is But of think points of revenue business overall a last would the or view while has that so. part slower, been over up

I think call it's -- we'll mid-single low digits. to

Richard Wallace

hear wanted were was ask I thought maybe it know process. just already China. I I of others then that And names, of in and there's the to -- that would facilities you're less new hearing from be been on a more couple questions think I build-out

another about money And obviously, talked greenfield of in. potentially slug You coming there's there.

of you Are back? frenzy that never So any we all creating that, as just a you look might more. heard year that before, of of companies. seeing about out think you names before had new you come how these curious view kind I'm that

Bren Higgins

new from business new some customers. still there's Well,

you The in from investment thing is do China. in China see other legacy that's mature happening customers our

supporting many supply where specific for those response to customers markets their forward. expectations of typically in so moving And been and driven many, are years. we've for in by And businesses engaged demand

also here, do forward. customers you more moving those have investing So I think,

into new too. some And there's do ones ones, with but second move then certain also you phases

So this and it's as remainder a mix pretty look year next into broad of year. at the I

Operator

our Arcuri take with last we'll from UBS. question And Tim today

Timothy Arcuri

I X. had

China. my Bren, question So on

[indiscernible]. kind some So there's the is [indiscernible] commerce there's the maybe against forthcoming use suggest non-U.S. the would some why suppliers been it would trying to to FDPR, reason like some they diplomatic there's of that the recent some of U.S. foreign use that news. Obviously, and news maybe want a

how about for it's assume do even accounted all handicap I guidance your And for you But don't it? of you for that and at kind you going you that? know about I even [indiscernible] what you come. how is the when you're do how that? of kind So because think think know to like even for and not do that likelihood to hard that's

Bren Higgins

Tim, some for a news I time. been mean, there's lot Yes, of

participate here right, could speculation And in about so and what hypotheticals happen. you're I or could not can't

very U.S. continue will the government. closely with assess to we So

our Of customers we be as we'll course, company we compliance. do whatever need follow are. regulations well everything to we do, do the confines within the the in to of the in and We'll laws support

and assess the is be in the the long So term know happens, when something term. the we'll let near might sort impact and impact and over of if what you what

Richard Wallace

AI with an a of know and lot, the acceleration things seeing we're of about Tim, one the Well, talked we is we the I because this, edge. know you where are at leading the drivers,

our the business really the levels not to propel years. it's right few it's going in in legacy, a foundry, and at which has especially NX, been our now, packaging that's we're plus lot HBM. on the what's of about expectations overrepresented business forward, and think in leading-edge we so we're seeing terms leading around historical our if going the seeing may be in we're of been plus But edge last the So seeing stuff driving what much NX

investors. drive things about and KLA should drive So those if opportunities 'XX, for I 'XX, our think drive going that be to performance good are our the

Bren Higgins

leading back we'll what plus design call of If XX% XXXX, you rules, below. or advanced go to our business edge was XX-nanometer

business expectation next and going we move from the of to drive that's into the year of our course a with of we side, the as on think So leading-edge hundreds beyond. logic the memory over ramp customers that, next year our and

Timothy Arcuri

Okay. last then And thing.

RPO, based a book-to-bill was below on touch the So book-to-bill just X%.

quarter that up actually sounds And the that is it going start been it's below to you seventh start going X. book-to-bill be think finally to above we're to to X. this like is drift So

be that dynamic where kind a this some there off now mid-'XX kind in to of been this we've could shipping think it getting and ever of like back begin we to big drift kind was massive to of there are XXXX? we just and book-to-bill that customers see above since. So back slug shipping of not you where in where of And start happened we point are of slug the orders off that there bookings of in seems of and can is X, to coming middle start

Bren Higgins

Yes.

-- I that on we funnel profile see good. pretty the I think will think order based looks the

customers and not of And always the what's indicative are the orders of of then size when KLA, going the the being orders. in But size that up given ASPs even it Now of of on comes number said, billion about at from to its of types all yes, today. it terms just RPO peak of certain products. to XX went down the $XX

that still that order looks over So but the quite moving couple quarters, decent. large, profile it's at the that would looks of next forward least expect it I

So yes, I it. to reasonable think see way that's a

Operator

closing the Kessel for or remarks. back additional turn I'll any floor now to Kevin over

Kevin Kessel

We'll quarter appreciate we interest. you and right. conferences. On of this many your behalf All at of time KLA, be your through seeing

to Relations follow-up to to that, If With you team. turn call. the Investor please do out I'll KLA any conclude back the it have questions, reach the operator

Operator

Quarter XXXX at a This day. KLA have and your disconnect and Earnings Corporation wonderful concludes Webcast. line June this time Call the Please

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