KLA (KLAC) investor relations material

Strategic Outlook and Industry Drivers

• AI and high-performance computing are driving a massive transformation, fueling demand across logic, memory, and advanced packaging, with process control intensity rising due to increased complexity and larger die sizes.

• Process control share of wafer fab equipment (WFE) is forecast to rise from 7.4% in 2025 to ~9% by 2030, reflecting increased complexity and demand.

• Advanced packaging and high-bandwidth memory are key growth vectors, with process control intensity in memory now matching high-end logic and market share in advanced packaging quadrupling over four years.

• The company is less sensitive to logic vs. memory mix due to rising process control needs in both segments, and expects to benefit regardless of which technology or customer wins.

• Server and storage segments are expected to represent over 50% of semiconductor revenue by 2030.

Financial Guidance and Capital Allocation

• 2030 revenue target is $26 billion ±$2.5 billion, with non-GAAP EPS of $84 and operating margins of 45%-47%.

• 2026 revenue is projected to grow in the high teens year-over-year, with Q3 FY2026 guidance at $3.35B ± $150M and non-GAAP gross margin at 61.75% ± 1%.

• Service revenue CAGR guidance is raised to 13%-15%, aiming to double service revenue to nearly $6 billion by 2030, with over 80% of service revenue from multi-year contracts.

• Capital returns target is set at greater than 90% of free cash flow, with $11 billion in share repurchase authorization, a new $7B buyback, and a 21% dividend increase announced.

• R&D intensity is expected to improve to 11% of revenue by 2030, with SG&A declining to 7%, reflecting operational leverage and productivity gains.

Technology Leadership and Business Model

• Heavy investment in R&D and applications engineering underpins a broad, customizable portfolio, enabling rapid innovation and customer collaboration.

• Proprietary hardware, custom optics, and AI-driven defect detection are core differentiators, with over 1,600 applications engineers deployed globally.

• The installed base of over 57,000 tools and long tool lifetimes (median 24 years) drive durable, recurring service revenue, with lifetime service revenue exceeding tool revenue.

• AI and data analytics are increasingly integrated into both product and service offerings, enhancing process control, efficiency, and customer outcomes.

• Collaboration, innovation, and execution are central to the operating model, supporting share gains, process control intensity, and financial outperformance.