KLA Corporation KLAC reported fiscal third-quarter 2026 non-GAAP earnings of $9.40 per share, up 11.8% year over year, beating the Zacks Consensus Estimate by 2.60%.
Revenue rose 11.5% year over year to $3.42 billion and topped the consensus mark by about 0.91%. A key industry datapoint supporting the quarter’s tone was KLA’s process control market leadership.
KLAC Segment Mix Shows Broad-Based Demand
Semiconductor Process Control remained the clear engine of results. Segment revenue totaled $3.08 billion (90.3% of total revenues), up 12.6% year over year and 3% sequentially, underscoring solid demand across inspection, metrology and related services.
Within Semiconductor Process Control, the company described end-market mix as roughly 62% foundry/logic and 38% memory on a systems basis.
KLA Corporation Price, Consensus and EPS Surprise
KLA Corporation price-consensus-eps-surprise-chart | KLA Corporation Quote
Specialty Semiconductor Process revenues (4.8% of total revenues) were $164 million, up 5% year over year and 17% sequentially.
PCB and Component Inspection revenues (4.9% of total revenues) decreased 1% year over year to $167 million but increased 10% on a sequential basis.
KLAC Top-Line Details
Product revenues (which accounted for 77.3% of total revenues) rose 10.3% year over year to $2.64 billion. Service revenues (22.7% of total revenues) increased 15.8% year over year to $775 million.
In terms of major products, Wafer Inspection and Patterning Systems (including metrology and reticle inspection) accounted for 51% and 18%, respectively, of KLA’s total revenues in the fiscal third quarter.
Wafer Inspection revenues increased 16% year over year and 11% sequentially to $1.74 billion. Patterning revenues moved down 3% year over year and 12% sequentially to $615 million.
In terms of the regional breakdown of revenues, Taiwan and China led revenue contributions with 26% and 24%, respectively. Korea accounted for 20%, Japan 5% and North America 12%. Europe contributed 7%, whereas the remaining 6% came from the Rest of Asia.
KLAC Margin Profile Holds Firm Despite Spend
In the third quarter of fiscal 2026, the non-GAAP gross margin was 62.2%, 45 basis points above the midpoint of the guidance range.
Research and development (R&D) expenses increased 15% year over year to $388.8 million. As a percentage of revenues, R&D expenses decreased 30 basis points (bps) on a year-over-year basis to 11.4%.
Selling, general, and administrative (SG&A) expenses increased 17% year over year to $291.1 million. As a percentage of revenues, SG&A expenses increased 40 bps year over year to 8.5%.
The fiscal third-quarter non-GAAP operating expenses were $670 million.
The fiscal third-quarter non-GAAP operating margin was 42.6%.
KLAC Balance Sheet & Cash Flow
As of March 31, 2026, cash, cash equivalents, and marketable securities totaled $4.95 billion compared with $5.20 billion as of Dec. 31, 2025.
Long-term debt at the end of the fiscal third quarter was $5.88 billion, unchanged from the figure reported in the previous quarter.
Cash flow from operations was $707.5 million for the quarter, and free cash flow was $622.3 million, providing ample room for capital deployment.
KLA returned $874.8 million to shareholders in the fiscal third quarter, including $626 million in share repurchases and $249 million in dividends.
KLAC Provides Positive 4Q26 Guidance
For the fourth quarter of fiscal 2026, KLA expects revenues of $3.575 billion plus or minus $200 million. The company’s non-GAAP earnings outlook is $9.87 plus or minus $1.00, with non-GAAP gross margin projected at 61.75% plus or minus 1%.
The outlook also included model assumptions that point to steady investment levels, with non-GAAP operating expenses expected to be around $665 million. KLA expects foundry/logic to represent approximately 82% of Semiconductor Process Control systems revenue to semiconductor customers in the June quarter, with memory at about 18%, reflecting a mix shift that could influence both revenue composition and near-term margin dynamics.
KLAC Zacks Rank & Stocks to Consider
KLA currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices ADI, Advanced Energy AEIS, and Arista Networks ANET. Each stock currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have gained 43.5% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Shares of Advanced Energy have surged 72.6% in the year-to-date period. Advanced Energy is slated to report first-quarter 2026 results on May 4.
Arista Networks shares have gained 28.7% in the year-to-date period. Arista Networks is set to report first-quarter 2026 results on May 5.
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