KLA Corporation KLAC reported second-quarter fiscal 2024 non-GAAP earnings of $6.16 per share. This figure beat the Zacks Consensus Estimate by 4.76% but marked a decline of 16.5% year over year.
The revenues decreased 16.7% year over year to $2.49 billion, surpassing the Zacks Consensus Estimate by 1.25%. The year-over-year decline in the top line was attributed to softness in the Semiconductor Process Control, Specialty Semiconductor Process, and PCB, Display and Component Inspection segments.
Segment Performance
In terms of reportable segments, Semiconductor Process Control revenues (88.2% of total revenues) decreased 17.4% year over year to $2.19 billion but increased 3% sequentially. Foundry & Logic accounted for about 56%, while Memory constituted about 44% of Semiconductor Process Control revenues.
Specialty Semiconductor Process revenues (6% of total revenues) were $150.1 million, down 5.1% year over year, but jumped 18% on a sequential basis. PCB, Display and Component Inspection revenues (5.8% of total revenues) plunged 15.8% year over year to $143 million but increased 5% sequentially. Limited capacity investments in consumer electronics end markets hurt top-line growth.
Stock Performance and Market Comparisons
KLA shares were down 6% in after-hours trading. The company’s shares have outperformed the Zacks Computer & Technology sector in the past six-month period. While KLAC shares have gained 33%, the Computer & Technology sector has increased 14.3%.
Revenue Breakdown and Regional Performance
Product revenues (accounted for 77.3% of total revenues) decreased 22% year over year to $1.92 billion. Service revenues (22.7% of total revenues) increased 8.5% year over year to $564.9 million.
In terms of regional breakdown of revenues, China, Taiwan, Japan and Korea accounted for 41%, 15%, 12% and 12% of the total revenues for the fiscal second quarter, respectively.
Operational and Financial Highlights
In second-quarter fiscal 2024, the non-GAAP gross margin was 62.6%, 10 basis points (bps) above the guidance range. KLA reported research and development (R&D) expenses decreased 3.7% year over year to $320.4 million, while non-GAAP operating margin was 40.7%, up 50 bps sequentially.
As of Dec 31, 2023, cash, cash equivalents and marketable securities totaled $3.34 billion, and long-term debt at the end of the fiscal second quarter was $5.14 billion.
Guidance and Market Analysis
For third-quarter fiscal 2024, revenues are expected to be $2.34 billion, plus/minus $125 million, and non-GAAP earnings of $5.26 per share, plus/minus 60 cents. KLA carries a Zacks Rank #2 (Buy).
Other Opportunities and Recommendations
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
