KLA (KLAC) Q3 2026 earnings summary

Executive summary

• Revenue for Q3 FY26 was $3.415 billion, up 11% year-over-year and 4% sequentially, exceeding guidance midpoint, driven by strong demand in leading-edge Foundry Logic, DRAM, and AI infrastructure buildout.

• Non-GAAP diluted EPS was $9.40 and GAAP diluted EPS was $9.12, both above guidance midpoints; non-GAAP net income reached $1.24 billion.

• Maintained #1 market share in semiconductor process control, with significant gains in Advanced Wafer-Level Packaging and a 58% share in 2025.

• Board approved a 17th consecutive annual dividend increase and an additional $7 billion share repurchase authorization.

• Strong business momentum attributed to AI, custom silicon, and advanced packaging, with robust capital returns through increased dividends and buybacks.

Financial highlights

• Gross margin was 62.2% (non-GAAP), 45 basis points above guidance midpoint; GAAP gross margin was approximately 61%.

• Operating margin reached 42.6% (non-GAAP); operating expenses included $389 million in R&D and $281 million in SG&A.

• Free cash flow for the quarter was $622 million, with a 31% margin over the last twelve months.

• Cash flow from operations was $707.5 million for the quarter and $4.40 billion for the last twelve months.

• Ended the quarter with $5.95 billion in debt and $1.79 billion in cash and equivalents.

Outlook and guidance

• Q4 FY26 revenue guidance is $3.575 billion ±$200 million; non-GAAP gross margin at 61.75% ±1 percentage point.

• Non-GAAP diluted EPS for Q4 expected at $9.87 ±$1; GAAP EPS at $9.66 ±$1.

• Long-term revenue CAGR target revised up to 13%-17% through 2030, with services revenue CAGR of 13%-15%.

• 2030 target model: $26 billion revenue, ~63.5% gross margin, 45-47% operating margin, $84 EPS (non-GAAP).

• Expect sequential revenue growth throughout 2026, with high teen year-over-year growth and Semiconductor Process Control systems business to grow over 20%.