KLA (KLAC) Q3 2026 earnings summary

Executive summary

• Achieved Q3 FY26 revenue of $3.415 billion, up 11% year-over-year and 4% sequentially, exceeding guidance midpoint, driven by AI, advanced packaging, and memory demand.

• Non-GAAP diluted EPS was $9.40, GAAP diluted EPS was $9.12, both above guidance midpoints.

• Maintained #1 market share in semiconductor process control, with significant gains in advanced wafer-level packaging and other inspection segments.

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

• Continued strong capital returns with $626 million in share repurchases and $249 million in dividends paid in the quarter.

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).

• Free cash flow for the quarter was $622 million; $4.01 billion over the past 12 months, with a 31% margin.

• Operating expenses were $670 million, with $389 million in R&D and $281 million in SG&A.

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

Outlook and guidance

• Q4 FY26 revenue guidance: $3.575 billion ±$200 million; non-GAAP EPS: $9.87 ±$1; GAAP EPS: $9.66 ±$1.

• Gross margin forecasted at 61.75% ±1 percentage point, with DRAM chip cost headwinds expected to impact margins by ~100 basis points through 2026.

• Dividend to increase to $2.30 per share starting May 2026.

• Wafer equipment market expected to exceed $140 billion in 2026, with 2027 growth rate projected to be higher than 2026.

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