NEW YORK, July 29, 2026, 06:59 EDT
- KLA shares were seen at $174.25 in premarket trading, down 8.7%.
- KLA Corporation reported a 15.2% increase in quarterly revenue, while free cash flow declined by 23.2%.
- Revenue guidance for September exceeded expectations, while margin growth was still constrained.
KLA shares continued to drop ahead of Wednesday’s U.S. trading session, falling 8.7% in premarket activity to $174.25. The stock was set for a two-day loss of 14.3% from Monday’s closing price.
The company exceeded forecasts for sales and adjusted earnings. Revenue came in at $3.66 billion, ahead of the anticipated $3.60 billion. Adjusted earnings were $1.05 per share, topping consensus by five cents.
Guidance for September-quarter revenue topped expectations. The midpoint was set at $4.0 billion, above analysts’ average estimate of $3.92 billion. However, shares declined.
Anticipation for results was elevated, with KLA’s shares rising over 57% so far this year ahead of Tuesday’s announcement. CFRA analyst Brooks Idlet described the results as “not eye-popping by any means.” Reuters
The clearer indicator for investors was in cash generation. Sales increased by 15.2%, but free cash flow declined by 23.2%.
| Metric | Q4 FY2026 | Q4 FY2025 | Change |
|---|---|---|---|
| Revenue | $3.658 billion | $3.175 billion | +15.2% |
| GAAP net income | $1.363 billion | $1.203 billion | +13.3% |
| Operating cash flow | $906 million | $1.165 billion | -22.2% |
| Free cash flow | $817 million | $1.065 billion | -23.2% |
| Free-cash-flow margin | 22.3% | 33.5% | -11.2 points |
| Operating cash flow/net income | 66.5% | 96.9% | -30.4 points |
The calculations above are based on company data. All per-share figures account for the ten-for-one stock split in June.
Operating cash flow accounted for 66.5% of net income, down from 96.9% the previous year. Movements in operating assets and liabilities used roughly $749 million.
Chief Financial Officer Bren Higgins attributed the cash outflow to working-capital needs and facility investments. Such usage aligns with expanding capacity, but it still leaves inventory and collection risks in place.
Management provided a preliminary backlog estimate close to $12.5 billion, which represents about 92% of projected revenue for fiscal 2026. This level of visibility offers investors some reassurance, even as quarterly cash conversion shows softness.
KLA distributed $876 million via share repurchases and dividends, surpassing its quarterly free cash flow by $59 million. For the entire year, total shareholder returns did not reach the year’s free cash flow.
The midpoint for September revenue points to a 9.4% increase from the prior quarter. Guidance for gross margin edges up by only 0.1 percentage point from June’s 62.4%. Investors seemed to expect greater incremental leverage.
Indicators of demand stayed solid. KLA forecasts advanced-packaging systems revenue will reach close to $1.1 billion this year, surpassing 2025 by over 70%. Services revenue climbed 17% to $820 million.
Chief Executive Rick Wallace stated that momentum is “accelerating in the second half of calendar 2026.” He anticipates this strength will persist through 2027. KLA Corporation
The decline was part of a wider pullback in the equipment sector. Shares of Applied Materials Inc. NASDAQ:AMAT slid 7.9% on Tuesday. Lam Research Corp. NASDAQ:LRCX declined 7.5%. ASML Holding N.V. NASDAQ:ASML was down 4.4%.
Potential risks are stricter regulations in China, tariffs, fluctuations in memory prices, and extended lead times for components. Customer spending continues to be both cyclical and focused. Premarket prices may experience significant changes before trading starts at 09:30 EDT.
Related articles: NASDAQ:AMAT
