Kla Corp 10-Q for FY2027 Q1

Kla Corp (KLAC)

10-Q 2026-10-29 For: 2026-09-30

Added on October 29, 2026

About this 10-Q

Kla Corp filed this 10-Q on October 29, 2026, covering the quarter ended September 30, 2026 (FY2027 Q1).

Headline figures

Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.14B; up 28.9% from $3.21B a year earlier
Net income: $1.55B; up 38.1% from net income of $1.12B a year earlier
Diluted EPS: $1.18; up 38.8% from $0.85 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	KLAC	The Nasdaq Stock Market, LLC
		The Nasdaq Global Select Market


		Page Number

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026	3
	Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2026 and 2025	4
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2026 and 2025	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2026 and 2025	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2026 and 2025	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46

SIGNATURES		47


(In thousands)	September 30, 2026		June 30, 2026
ASSETS
Current assets:
Cash and cash equivalents	$	1,531,950	$	1,649,842
Marketable securities	3,209,241		3,252,566
Accounts receivable, net	3,072,087		2,889,208
Inventories	4,090,426		3,648,538
Other current assets	669,711		941,636
Total current assets	12,573,415		12,381,790
Land, property and equipment, net	1,541,331		1,380,550
Goodwill, net	1,789,683		1,788,758
Deferred income taxes	1,054,617		1,037,224
Purchased intangible assets, net	212,598		255,835
Other non-current assets	1,233,091		1,107,378
Total assets	$	18,404,735	$	17,951,535
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	740,743	$	623,668
Deferred system revenue	843,008		932,901
Deferred service revenue	634,232		604,127

Other current liabilities	2,337,103		2,144,231
Total current liabilities	4,555,086		4,304,927
Long-term debt	5,723,289		5,887,415
Deferred tax liabilities	452,541		473,648
Deferred service revenue	230,562		238,111
Other non-current liabilities	919,850		697,614
Total liabilities	11,881,328		11,601,715
Commitments and contingencies (Notes 8, 13 and 14)
Stockholders’ equity:
Common stock and capital in excess of par value	2,585,416		2,700,409
Retained earnings	3,997,397		3,683,864
Accumulated other comprehensive loss	(59,406)		(34,453)


Total stockholders’ equity	6,523,407		6,349,820
Total liabilities and stockholders’ equity	$	18,404,735	$	17,951,535


	Three Months Ended September 30,
(In thousands, except per share amounts)	2026		2025
Revenues:
Product	$	3,285,469	$	2,465,006
Service	850,546		744,690
Total revenues	4,136,015		3,209,696
Costs and expenses:
Costs of revenues	1,577,791		1,243,070
Research and development	395,096		360,461
Selling, general and administrative	301,458		268,988

Interest expense	67,927		71,075

Other expense (income), net	(30,339)		(43,374)
Income before income taxes	1,824,082		1,309,476
Provision for income taxes	275,494		188,436

Net income	$	1,548,588	$	1,121,040


Net income per share
Basic	$	1.19	$	0.85
Diluted	$	1.18	$	0.85
Weighted-average number of shares:
Basic	1,305,330		1,317,567
Diluted	1,311,064		1,323,808


	Three Months Ended September 30,
(In thousands)	2026		2025
Net income	$	1,548,588	$	1,121,040
Other comprehensive income (loss):
Currency translation adjustments:
Cumulative currency translation adjustments	4,962		4,640
Income tax provision	(1,578)		(716)
Net change related to currency translation adjustments	3,384		3,924
Cash flow hedges:
Net unrealized gains (losses) arising during the period	(13,014)		3,364
Reclassification adjustments for net gains included in net income	(6,148)		(12,212)
Income tax benefit	2,826		2,404
Net change related to cash flow hedges	(16,336)		(6,444)
Net change related to unrecognized gains and transition obligations in connection with defined benefit plans	410		146
Available-for-sale securities:
Net unrealized gains (losses) arising during the period	(15,887)		2,446
Reclassification adjustments for net (gains) losses included in net income	85		(97)
Income tax (provision) benefit	3,391		(505)
Net change related to available-for-sale securities	(12,411)		1,844
Other comprehensive loss	(24,953)		(530)

Total comprehensive income	$	1,523,635	$	1,120,510


(Mark one)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


KLA CORPORATION
(Exact name of registrant as specified in its charter)


	Common Stock and Capital in Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
(In thousands, except per share amounts)	Shares	Amount
Balances as of June 30, 2026	1,306,983	$	2,700,409	$	3,683,864	$	(34,453)	$	6,349,820
Net income	—	—		1,548,588		—		1,548,588

Other comprehensive loss	—	—		—		(24,953)		(24,953)
Net issuance under employee stock plans	1,194	(188,932)		—		—		(188,932)
Repurchase of common stock	(4,914)	(10,134)		(932,784)		—		(942,918)
Cash dividends ($0.230 per share) and dividend equivalents declared	—	—		(302,271)		—		(302,271)

Stock-based compensation expense	—	84,073		—		—		84,073


Balances as of September 30, 2026	1,303,263	$	2,585,416	$	3,997,397	$	(59,406)	$	6,523,407


	As of		As of
(Dollar amounts in thousands)	September 30, 2026		June 30, 2026		$ Change		% Change
Accounts receivable, net	$	3,072,087	$	2,889,208	$	182,879	6	%
Contract assets	$	129,900	$	131,673	$	(1,773)	(1)	%
Long-term accounts receivable, net	$	266,755	$	180,729	$	86,026	48	%
Contract liabilities	$	1,707,802	$	1,775,139	$	(67,337)	(4)	%


(In thousands)	Less than 12 months		12 to 24 months		24 months or greater		Total
Contract liabilities	$	1,477,240	$	167,971	$	62,591	$	1,707,802


			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
As of September 30, 2026 (In thousands)	Total		(Level 1)		(Level 2)
Assets
Cash equivalents:
Corporate debt securities	$	7,523	$	—	$	7,523
Money market funds and other	1,132,489		1,132,489		—


Sovereign securities	995		—		995
Municipal securities	1,000		—		1,000


Marketable securities:
Corporate debt securities	1,306,637		—		1,306,637
Municipal securities	15,851		—		15,851
Sovereign securities	32,924		—		32,924
U.S. Government agency securities	78,809		78,809		—
U.S. Treasury securities	1,358,138		1,319,886		38,252

Equity securities	33,289		33,289		—

Total cash equivalents and marketable securities(1)	3,967,655		2,564,473		1,403,182
Other current assets:
Derivative assets	11,550		—		11,550

Other non-current assets:
Executive Deferred Savings Plan assets	411,061		385,237		25,824

Long-term accounts receivable, net	266,755		—		266,755
Total financial assets(1)	$	4,657,021	$	2,949,710	$	1,707,311
Liabilities
Other current liabilities:
Derivative liabilities	$	(25,198)	$	—	$	(25,198)
Interest rate swap liabilities	(3,443)		—		(3,443)


Other non-current liabilities:

Interest rate swap liabilities	(162,201)		—		(162,201)
Total financial liabilities	$	(190,842)	$	—	$	(190,842)


			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
As of June 30, 2026 (In thousands)	Total		(Level 1)		(Level 2)
Assets
Cash equivalents:
Municipal securities	$	6,016	$	—	$	6,016
Corporate debt securities	6,075		—		6,075
Money market funds and other	1,233,035		1,233,035		—




Sovereign securities	999		—		999
Marketable securities:
Corporate debt securities	1,297,450		—		1,297,450
Municipal securities	17,403		—		17,403
Sovereign securities	39,219		—		39,219
U.S. Government agency securities	75,742		75,742		—
U.S. Treasury securities	1,355,711		1,275,725		79,986

Equity securities	46,772		46,772		—

Total cash equivalents and marketable securities(1)	4,078,422		2,631,274		1,447,148
Other current assets:
Derivative assets	41,821		—		41,821
Interest rate swap assets	2,534		—		2,534
Other non-current assets:
Executive Deferred Savings Plan assets	416,389		398,414		17,975
Interest rate swap assets	6,990		—		6,990
Long-term accounts receivable, net	180,729		—		180,729
Total financial assets(1)	$	4,726,885	$	3,029,688	$	1,697,197
Liabilities
Other current liabilities:
Derivative liabilities	$	(12,546)	$	—	$	(12,546)



Other non-current liabilities:
Interest rate swap liabilities	(10,107)		—		(10,107)
Total financial liabilities	$	(22,653)	$	—	$	(22,653)


(In thousands)	Currency Translation Adjustments		Unrealized Gains (Losses) on Available-for-Sale Securities		Unrealized Gains (Losses) on Derivatives		Unrealized Gains (Losses) on Defined Benefit Plans		Total
Balance as of September 30, 2026	$	(66,136)	$	(19,245)	$	34,106	$	(8,131)	$	(59,406)

Balance as of June 30, 2026	$	(69,520)	$	(6,834)	$	50,442	$	(8,541)	$	(34,453)


AOCI Components		Three Months Ended
	Location in the Condensed Consolidated Statement of Operations	September 30,
		2026		2025
Unrealized gains on cash flow hedges from foreign exchange and interest rate contracts	Revenues	$	1,916	$	210
	Costs of revenues and operating expenses	3,473		11,244
	Interest expense	759		758

	Net gains reclassified from AOCI	$	6,148	$	12,212
Unrealized gains (losses) on available-for-sale securities	Other expense (income), net	$	(85)	$	97


FORM			10-Q


	As of		As of
(In thousands)	September 30, 2026		June 30, 2026
Accounts receivable, net:
Accounts receivable, gross	$	3,103,627	$	2,920,238
Allowance for credit losses	(31,540)		(31,030)
	$	3,072,087	$	2,889,208
Inventories:
Customer service parts	$	639,024	$	622,714
Raw materials	2,126,927		1,849,676
Work-in-process	1,076,942		937,724
Finished goods	247,533		238,424
	$	4,090,426	$	3,648,538
Other current assets:
Deferred costs of revenues	$	219,239	$	257,175
Prepaid expenses	143,971		224,515
Contract assets	129,900		131,673
Prepaid income and other taxes	60,938		169,090
Other current assets	115,663		159,183
	$	669,711	$	941,636
Land, property and equipment, net:
Land	$	202,532	$	86,654
Buildings and leasehold improvements	1,333,186		1,254,196
Machinery and equipment	1,479,287		1,418,112
Office furniture and fixtures	86,252		86,119
Construction-in-process	181,063		224,431
	3,282,320		3,069,512
Less: accumulated depreciation	(1,740,989)		(1,688,962)
	$	1,541,331	$	1,380,550
Other non-current assets:
Executive Deferred Savings Plan(1) assets	$	411,061	$	416,389
Operating lease right of use assets	345,151		335,065
Long-term accounts receivable, net	266,755		180,729
Other non-current assets	210,124		175,195
	$	1,233,091	$	1,107,378
Other current liabilities:
Compensation and benefits	$	574,679	$	491,108
Customer deposits	493,816		430,128
Executive Deferred Savings Plan(1) liabilities	413,197		417,257
Income taxes payable	142,281		83,996


As of September 30, 2026 (In thousands)	Amortized Cost		Fair Value
Due within one year	$	1,418,011	$	1,415,383
Due after one year through three years	1,782,443		1,760,569
Total	$	3,200,454	$	3,175,952


(In thousands)	Semiconductor Process Control		Specialty Semiconductor Process		Printed Circuit Board (“PCB”) and Component Inspection		Total
Balances as of June 30, 2026	$	758,216	$	681,090	$	349,452	$	1,788,758





Foreign currency adjustments	(426)		216		1,135		925
Balances as of September 30, 2026	$	757,790	$	681,306	$	350,587	$	1,789,683


As of September 30, 2026 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Corporate debt securities	$	1,321,654	$	438	$	(7,932)	$	1,314,160
Money market funds and other	1,132,489		—		—		1,132,489
Municipal securities	16,901		—		(50)		16,851
Sovereign securities	33,969		1		(51)		33,919
U.S. Government agency securities	79,159		34		(384)		78,809
U.S. Treasury securities	1,374,698		49		(16,609)		1,358,138


Subtotal	3,958,870		522		(25,026)		3,934,366
Add: Time deposits(1)	436,957		—		—		436,957
Less: Cash equivalents	1,195,373		—		(2)		1,195,371
Marketable securities(2)	$	3,200,454	$	522	$	(25,024)	$	3,175,952


As of September 30, 2026 (In thousands)	Fair Value		Gross Unrealized Losses
Corporate debt securities	$	977,020	$	(7,932)
Municipal securities	16,851		(50)
Sovereign securities	27,886		(51)
U.S. Government agency securities	55,819		(384)
U.S. Treasury securities	1,297,852		(16,609)
Total	$	2,375,428	$	(25,026)


(In thousands)	As of September 30, 2026						As of June 30, 2026
Category	Gross Carrying Amount		Accumulated Amortization and Impairment		Net Amount		Gross Carrying Amount		Accumulated Amortization and Impairment		Net Amount
Existing technology	$	1,531,180	$	1,381,291	$	149,889	$	1,531,405	$	1,346,585	$	184,820
Customer relationships	324,426		292,593		31,833		323,297		283,438		39,859
Trade name/trademark	98,238		98,192		46		98,238		98,192		46
Order backlog and other	8,612		2,829		5,783		8,612		2,549		6,063
Intangible assets subject to amortization	1,962,456		1,774,905		187,551		1,961,552		1,730,764		230,788
In-process research and development	43,907		18,860		25,047		43,907		18,860		25,047
Total	$	2,006,363	$	1,793,765	$	212,598	$	2,005,459	$	1,749,624	$	255,835


Fiscal Year Ending June 30:	Amortization (In thousands)
2027 (remaining nine months)	$	85,822
2028	49,123
2029	35,566
2030	14,760
2031	1,514
2032 and thereafter	766
Total	$	187,551


	As of September 30, 2026				As of June 30, 2026
	Amount (In thousands)		Effective Interest Rate		Amount (In thousands)		Effective Interest Rate
Fixed-rate 4.100% Senior Notes due on March 15, 2029	$	800,000	4.159	%	$	800,000	4.159	%
Fixed-rate 4.650% Senior Notes due on July 15, 2032	1,000,000		4.657	%	1,000,000		4.657	%
Fixed-rate 4.700% Senior Notes due on February 1, 2034	500,000		4.777	%	500,000		4.777	%
Fixed-rate 5.650% Senior Notes due on November 1, 2034	250,000		5.670	%	250,000		5.670	%
Fixed-rate 5.000% Senior Notes due on March 15, 2049	400,000		5.047	%	400,000		5.047	%
Fixed-rate 3.300% Senior Notes due on March 1, 2050	750,000		3.302	%	750,000		3.302	%
Fixed-rate 4.950% Senior Notes due on July 15, 2052	1,450,000		5.023	%	1,450,000		5.023	%
Fixed-rate 5.250% Senior Notes due on July 15, 2062	800,000		5.259	%	800,000		5.259	%


Total	5,950,000				5,950,000
Fair value of interest rate swaps	(165,645)				(584)
Unamortized discount	(21,507)				(21,873)
Unamortized debt issuance costs	(39,559)				(40,128)
Total	$	5,723,289			$	5,887,415
Reported as:

Long-term debt	5,723,289				5,887,415
Total	$	5,723,289			$	5,887,415


	Three Months Ended September 30,
In thousands	2026		2025
Operating cash outflows from operating leases	$	15,664	$	13,571
Right of use assets obtained in exchange for new operating lease liabilities	$	16,834	$	10,186


(In thousands)			Available For Grant(1)
Balance as of June 30, 2026			91,482

Restricted stock units granted(2)			(1,863)
Restricted stock units granted adjustment(3)			524
Restricted stock units canceled			224

Balance as of September 30, 2026			90,367


	Shares(1) (In thousands)	Weighted-Average Grant Date Fair Value
Outstanding RSUs as of June 30, 2026(2)	10,021	$	77.11
Granted(3)	931	$	192.90
Granted adjustments(4)	(262)	$	46.99


Vested and released	(2,202)	$	50.47

Forfeited	(112)	$	79.44
Outstanding RSUs as of September 30, 2026(2)	8,376	$	98.13


	Asset Derivatives					Liability Derivatives
	Balance Sheet	As of		As of		Balance Sheet	As of		As of
	Location	September 30, 2026		June 30, 2026		Location	September 30, 2026		June 30, 2026
(In thousands)		Fair Value					Fair Value
Derivatives designated as hedging instruments

Foreign exchange contracts	Other current assets	$	7,696	$	28,423	Other current liabilities	$	(12,860)	$	(5,385)
Interest rate contracts	Other current assets	—		2,534		Other current liabilities	(3,443)		—
Interest rate contracts	Other non-current assets	—		6,990		Other non-current liabilities	(162,201)		(10,107)
Total derivatives designated as hedging instruments		7,696		37,947			(178,504)		(15,492)
Derivatives not designated as hedging instruments
Foreign exchange contracts	Other current assets	3,854		13,398		Other current liabilities	(12,338)		(7,161)
Total derivatives not designated as hedging instruments		3,854		13,398			(12,338)		(7,161)
Total derivatives		$	11,550	$	51,345		$	(190,842)	$	(22,653)


As of September 30, 2026							Gross Amounts of Derivatives Not Offset in the Condensed Consolidated Balance Sheets
(In thousands)	Gross Amounts of Derivatives		Gross Amounts of Derivatives Offset in the Condensed Consolidated Balance Sheets		Net Amount of Derivatives Presented in the Condensed Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives - assets	$	11,550	$	—	$	11,550	$	(9,893)	$	—	$	1,657
Derivatives - liabilities	$	(190,842)	$	—	$	(190,842)	$	9,893	$	—	$	(180,949)


(Dollar amounts in thousands, except net income per share)	Three Months Ended
	September 30, 2026		June 30, 2026		March 31, 2026		December 31, 2025		September 30, 2025
Total revenues	$	4,136,015	$	3,657,556	$	3,415,078	$	3,297,146	$	3,209,696
Costs of revenues	$	1,577,791	$	1,413,108	$	1,327,672	$	1,271,210	$	1,243,070
Gross margin	61.9%		61.4%		61.1%		61.4%		61.3%
Net income(1)	$	1,548,588	$	1,363,059	$	1,200,990	$	1,145,682	$	1,121,040
Diluted net income per share(2)	$	1.18	$	1.04	$	0.91	$	0.87	$	0.85


	Three Months Ended,				Q1 FY27 vs. Q4 FY26
(Dollar amounts in thousands)	September 30, 2026		June 30, 2026
Revenues:
Product	$	3,285,469	$	2,837,151	$	448,318	16	%
Service	850,546		820,405		30,141		4	%
Total revenues	$	4,136,015	$	3,657,556	$	478,459	13	%
Costs of revenues	$	1,577,791	$	1,413,108	$	164,683	12	%
Gross margin	61.9%		61.4%


	Three Months Ended,						Q1 FY27 vs. Q1 FY26
(Dollar amounts in thousands)	September 30, 2026			September 30, 2025
Revenues:
Product	$	3,285,469		$	2,465,006		$	820,463	33	%
Service	850,546			744,690			105,856		14	%
Total revenues	$	4,136,015		$	3,209,696		$	926,319	29	%
Costs of revenues	$	1,577,791		$	1,243,070		$	334,721	27	%
Gross margin	61.9		%	61.3		%


Rating Agency			Rating
Fitch Inc.			A
Moody’s Investors Service			A2
S&P Global Ratings			A-


Period	Total Number of Shares Purchased	Average Price Paid per Share(3)		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs(1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2)(3)
July 1, 2026 to July 31, 2026	1,583,942	$	206.32	1,583,942	$	9,415,487,309
August 1, 2026 to August 31, 2026	1,867,466	$	187.19	1,867,466	$	9,065,924,684
September 1, 2026 to September 30, 2026	1,462,790	$	177.14	1,462,790	$	8,806,808,110
Total	4,914,198			4,914,198