Semiconductor manufacturing equipment maker KLA Corporation (NASDAQ:KLAC) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 23.6% year on year to $3.17 billion. Guidance for next quarter’s revenue was optimistic at $3.15 billion at the midpoint, 2.8% above analysts’ estimates. Its non-GAAP profit of $9.38 per share was 9.7% above analysts’ consensus estimates.
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KLA Corporation (KLAC) Q2 CY2025 Highlights:
- Revenue: $3.17 billion vs analyst estimates of $3.08 billion (23.6% year-on-year growth, 3% beat)
- Adjusted EPS: $9.38 vs analyst estimates of $8.55 (9.7% beat)
- Revenue Guidance for Q3 CY2025 is $3.15 billion at the midpoint, above analyst estimates of $3.06 billion
- Adjusted EPS guidance for Q3 CY2025 is $8.53 at the midpoint, above analyst estimates of $8.15
- Free Cash Flow Margin: 33.5%, up from 32.4% in the same quarter last year
- Inventory Days Outstanding: 242, down from 244 in the previous quarter
- Market Capitalization: $122.3 billion
"KLA delivered strong across-the-board results for the June quarter including generating record quarterly free cash flow. These results reflect the unique and compelling opportunity within semiconductor capital equipment for KLA's continued role in enabling and supporting the AI infrastructure buildout," said Rick Wallace, president and CEO of KLA Corporation.
Company Overview
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ:KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, KLA Corporation grew its sales at an excellent 15.9% compounded annual growth rate. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. KLA Corporation’s annualized revenue growth of 7.6% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, KLA Corporation reported robust year-on-year revenue growth of 23.6%, and its $3.17 billion of revenue topped Wall Street estimates by 3%. Beyond the beat, this marks 5 straight quarters of growth, implying that KLA Corporation is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 10.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 2.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, KLA Corporation’s DIO came in at 242, which is 15 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from KLA Corporation’s Q2 Results
We were impressed by how significantly KLA Corporation blew past analysts’ EPS expectations this quarter. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $878.80 immediately after reporting.
So do we think KLA Corporation is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.