KLA (KLAC -0.26%), a leading provider of semiconductor process control systems and services, posted standout financial results for its fiscal fourth quarter on July 31, 2025. The company delivered GAAP revenue of $3.175 billion, clearly topping analyst expectations of $3.08 billion (GAAP), and reported non-GAAP earnings per share of $9.38 versus the anticipated $8.56. Both revenue and earnings (GAAP) showed substantial growth compared to Q4 FY2024. KLA achieved record free cash flow and continued strong capital returns, even as it flagged ongoing geopolitical and regulatory risks—particularly relating to China. Management assessed the quarter as robust, though their outlook signals expectations for flattish results amid persistent industry and market uncertainty.
| Metric | Q4 FY25(ended Jun 30, 2025) | Q4 FY25 Estimate1 | Q4 FY24(ended Jun 30, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $9.38 | $8.56 | $6.60 | 42.1% |
| Revenue (GAAP) | $3.17 billion | $3.08 billion | $2.57 billion | 23.6% |
| Net Income (GAAP) | $1,203 million | $836 million | 44.0% | |
| Free Cash Flow (Non-GAAP) | $1,065 million | $832 million | 28.0% | |
| Capital Returns | $680 million | $668 million | 1.8% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q3 2025 earnings report.
Business Overview and Recent Strategy
KLA designs and manufactures tools and systems that help chipmakers analyze, inspect, and control manufacturing processes at a microscopic level. Its products are essential for ensuring that silicon wafers and semiconductor devices meet the stringent requirements needed as chips become more sophisticated, especially in advanced logic and memory production.
The company's recent focus centers on maintaining its technological lead, adapting key products such as e-beam inspection equipment and wafer-level packaging systems for new, high-growth applications like artificial intelligence and advanced memory. Another critical factor is managing geopolitical and regulatory risks, particularly those impacting sales and service in China. KLA's strong customer relationships with top chip producers remain a central part of its business strength, but it also faces cyclical industry swings, supply chain pressures, and evolving compliance demands.
Quarterly Highlights and Drivers
KLA achieved significant revenue and profit growth compared to Q4 FY2024. Revenue (GAAP) of $3.175 billion was up 23.6% year over year, and non-GAAP earnings per share rose 42.1% compared to Q4 FY2024. Non-GAAP EPS was above the high end of the company’s guidance and analyst expectations, while revenue was within the guidance range and above analyst expectations. The strong performance was powered by the Semiconductor Process Control segment, which saw revenue grow 24.7% year over year to $2.88 billion. This segment is the largest in the company and serves advanced logic and memory chip manufacturing, areas facing expanding demand due to ongoing AI infrastructure investments worldwide.
Its services business, which provides essential support and maintenance agreements tied to KLA’s installed systems, was impacted as management noted that service growth has slipped slightly below long-term targets, primarily due to new US export controls affecting access to certain customers in China, which typically represents just under 30% of total revenue.
Notable product wins came from advanced e-beam inspection tools (specialized systems that use tightly focused electron beams to detect the smallest defects in wafers) and wafer-level packaging equipment (systems that enable new ways of connecting multiple chips in one package—crucial for modern AI and memory designs). Annualized revenue from advanced packaging products is now reaching $850 million, demonstrating both rapid customer adoption and KLA’s ability to push technology to new use cases.
The company also flagged a roughly 100 basis point gross margin headwind from recently enacted tariffs, especially those affecting China, with the impact expected per quarter based on management's guidance for calendar 2025. Even so, both operating cash flow and free cash flow notched new quarterly records, with the latter topping $1 billion for the first time. Capital returned to shareholders was $680 million, a mix of dividends and share repurchases, The company now holds approximately $4.5 billion in total cash and marketable securities.
Outlook and What’s Ahead
Management projects revenue at $3.15 billion, plus or minus $150 million, for Q1 FY2026, with non-GAAP earnings per share forecast at $8.53. Gross margin (GAAP) is expected at 62%, plus or minus 1 percentage point, reflecting continued impacts from tariffs and product/service mix. KLA’s leadership continues to highlight market risks, especially from additional US-China regulatory changes and the cyclical nature of capital spending in the chip sector.
The company cautions that export controls impacting product and service deliveries in China could continue to limit growth in certain areas. Leadership anticipates some shift in customer spending patterns for the remainder of calendar year 2025, including a likely modest uptick in memory-related tool investment and a small decline in foundry and logic demand. While the service business is expected to keep growing, its pace may remain below historic averages, with total service growth expected to be around 10%. Management’s full-year view is one of cautious optimism: KLA expects to outperform overall wafer fab equipment market growth, but does not foresee a major inflection in results in the coming quarter. The quarterly dividend was kept steady, with $254 million paid; this level builds on the company’s history of consistent, long-term shareholder returns.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
