Financial Analysis

COMMITMENTS AND CONTINGENCIES Factoring. We have factoring agreements with financial institutions to sell certain of our trade receivables and promissory notes from customers without recourse. We do not believe we are at risk for any material losses as a result of these agreements. In addition, we periodically sell certain letters of credit (LC), without recourse, received from customers in payment for goods and services. The following table shows total receivables sold under factoring agreements and proceeds from sales of LC for the indicated periods: Three Months Ended March 31, Nine Months Ended March 31, (In thousands) 2026 2025 2026 2025 Receivables sold under factoring agreements $ 109,405 $ 59,734 $ 286,197 $ 143,439 Proceeds from sales of LC $ 22,128 $ 20,188 $ 43,122 $ 55,525 Factoring and LC fees for the sale of certain trade receivables were recorded in other expense (income), net and were not material for the periods presented. KLA may continue servicing the receivables that are sold. Purchase Commitments. We maintain commitments to purchase inventory from our suppliers as well as goods, services and other assets in the ordinary course of business. Our liability under these purchase commitments is generally restricted to a forecasted time-horizon as mutually agreed between the parties. This forecasted time-horizon can vary among different suppliers. Our estimate of our significant purchase commitments primarily for material, services, supplies and asset purchases …

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EQUITY AND LONG-TERM INCENTIVE COMPENSATION PLANS As of March 31, 2026, 9.3 million shares remained available for issuance under the KLA Corporation 2023 Incentive Award Plan (2023 Plan). In addition, we have an Employee Stock Purchase Plan (ESPP), which enables eligible employees to purchase our common stock. We also offer a cash-based long-term incentive program (Cash LTI) to eligible employees. For details of the 2023 Plan, ESPP and Cash LTI plans, refer to Note 10 Equity, Long-Term Incentive Compensation Plans and Non-Controlling Interest to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Equity Incentive Plans - General Information The following table summarizes the combined activity under our equity incentive plans: (In thousands) Available For Grant (1) Balance as of June 30, 2025 9,574 Restricted stock units granted (2) (324) Restricted stock units granted adjustment (3) 53 Restricted stock units canceled 41 Balance as of March 31, 2026 9,344 __________________ (1) The number of restricted stock units (RSU) reflects the application of the award multiplier of 2.0x to calculate the impact of the award on the shares reserved under the 2023 Plan. (2) Includes RSUs granted to senior management during the nine months ended March 31, 2026 with performance-based vesting criteria (in addition to service-based vesting criteria for any of such RSUs that are deemed to have been earned) (performance-based RS …

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FAIR VALUE MEASUREMENTS Our financial assets and liabilities are measured and recorded at fair value, except for our debt and certain equity investments in privately held companies. Equity investments without a readily available fair value are accounted for using the measurement alternative. The measurement alternative is calculated as cost minus impairment, if any, plus or minus changes resulting from observable price changes. See Note 7 Debt to our Condensed Consolidated Financial Statements for disclosure of the fair value of our Senior Notes, as defined in that Note. Our non-financial assets, such as goodwill, intangible assets, and land, property and equipment, are recorded at fair value only if an impairment is recognized in the current period. We assess for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. For goodwill, we assess for impairment annually. Fair Value of Financial Instruments. We have evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The fair value of our cash equivalents, accounts receivable, accounts payable and other current assets and liabilities approximate their carrying amounts due to the relatively short maturity of these items. Fair Value Hi …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

GOODWILL AND PURCHASED INTANGIBLE ASSETS Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in business combinations. The following table presents changes in goodwill carrying value by reportable segment during the nine months ended March 31, 2026: (In thousands) Semiconductor Process Control Specialty Semiconductor Process Printed Circuit Board (PCB) and Component Inspection Total Balances as of June 30, 2025 $ 759,885 $ 681,858 $ 350,450 $ 1,792,193 Foreign currency adjustments (1,452) (816) (1,442) (3,710) Balances as of March 31, 2026 $ 758,433 $ 681,042 $ 349,008 $ 1,788,483 As of March 31, 2026, and June 30, 2025, goodwill is net of accumulated impairment losses of $277.6 million and $70.5 million in the Semiconductor Process Control and PCB and Component Inspection reportable segments, respectively. Goodwill is not subject to amortization but is tested for impairment annually, as well as whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In testing goodwill for impairment, we utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. When performing the qualitative assessment, we consider the following factors: stock price or market capitalization, changes in the industry and competitive environment, budget-to-actual revenue and prof …

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INCOME TAXES The following table provides details of income taxes: Three Months Ended March 31, Nine Months Ended March 31, (Dollar amounts in thousands) 2026 2025 2026 2025 Income before income taxes $ 1,416,761 $ 1,264,433 $ 4,056,540 $ 3,315,649 Provision for income taxes $ 215,771 $ 176,017 $ 588,828 $ 456,855 Effective tax rate 15.2 % 13.9 % 14.5 % 13.8 % Our effective tax rate was lower than the U.S. federal statutory rate during the three and nine months ended March 31, 2026, primarily due to the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rate and the proportion of U.S. earnings eligible for the Foreign Derived Intangible Income deduction. In the normal course of business, we are subject to examination by tax authorities throughout the world. We are subject to U.S. federal income tax examinations for all years beginning from the fiscal year ended June 30, 2022 and are under U.S. federal income tax examination for the fiscal year ended June 30, 2018. We have completed the federal income tax examination for the fiscal years ended June 30, 2019 and June 30, 2020. We are subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2021. We are also subject to examinations in other major foreign jurisdictions, including Singapore and Israel, for all years beginning from the calendar year ended December 31, 2019. We have completed the audit in Israel for calendar year ended December 3 …

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LITIGATION AND OTHER LEGAL MATTERS We are named, from time to time, as a party to lawsuits and other types of legal proceedings and claims in the normal course of our business. Actions filed against us include commercial, intellectual property (IP), customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In general, legal proceedings and claims, regardless of their merit, and associated internal investigations (especially those relating to IP or confidential information disputes) are often expensive to prosecute, defend or conduct, and may divert managements attention and other Company resources. Moreover, the results of legal proceedings are difficult to predict, and the costs incurred in litigation can be substantial, regardless of outcome. We believe the amounts provided in our Condensed Consolidated Financial Statements are adequate in light of the probable and estimated liabilities. However, because such matters are subject to many uncertainties and the ultimate outcomes are not predictable, there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in our Condensed Consolidated Financial Statements or will not have a material adverse effect on our results of operations, financial condition or cash flows. …

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LEASES We have operating leases for facilities, vehicles and other equipment. Our facility leases are primarily used for administrative functions, research and development (R&D), manufacturing, and storage and distribution. Our finance leases are not significant. Our existing leases do not contain significant restrictive provisions or residual value guarantees; however, certain leases contain provisions for the payment of maintenance, real estate taxes or insurance costs by us. Our leases have remaining lease terms ranging from less than one year to 27 years, including periods covered by options to extend the lease when it is reasonably certain that the option will be exercised. Lease expense was $16.6 million and $44.5 million for the three and nine months ended March 31, 2026, respectively, and $13.1 million and $38.0 million for the three and nine months ended March 31, 2025, respectively. Expenses related to short-term leases, which were not recorded on the Condensed Consolidated Balance Sheets, were not material for the three and nine months ended March 31, 2026 and 2025. As of March 31, 2026 and June 30, 2025, the weighted-average remaining lease term was 6.7 and 6.2 years, respectively, and the weighted-average discount rate for operating leases was 3.77% and 4.06% as of March 31, 2026 and June 30, 2025, respectively. Supplemental cash flow information related to leases was as follows: Nine Months Ended March 31, In thousands 2026 2025 Operating cash outflows from …

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DEBT The following table summarizes our debt as of March 31, 2026 and June 30, 2025: As of March 31, 2026 As of June 30, 2025 Amount (In thousands) Effective Interest Rate Amount (In thousands) Effective Interest Rate Fixed-rate 4.100% Senior Notes due on March 15, 2029 $ 800,000 4.159 % $ 800,000 4.159 % Fixed-rate 4.650% Senior Notes due on July 15, 2032 1,000,000 4.657 % 1,000,000 4.657 % Fixed-rate 4.700% Senior Notes due on February 1, 2034 500,000 4.777 % 500,000 4.777 % Fixed-rate 5.650% Senior Notes due on November 1, 2034 250,000 5.670 % 250,000 5.670 % Fixed-rate 5.000% Senior Notes due on March 15, 2049 400,000 5.047 % 400,000 5.047 % Fixed-rate 3.300% Senior Notes due on March 1, 2050 750,000 3.302 % 750,000 3.302 % Fixed-rate 4.950% Senior Notes due on July 15, 2052 1,450,000 5.023 % 1,450,000 5.023 % Fixed-rate 5.250% Senior Notes due on July 15, 2062 800,000 5.259 % 800,000 5.259 % Total 5,950,000 5,950,000 Unamortized discount (22,239) (23,338) Unamortized debt issuance costs (40,698) (42,405) Total $ 5,887,063 $ 5,884,257 Reported as: Long-term debt 5,887,063 5,884,257 Total $ 5,887,063 $ 5,884,257 Senior Notes and Debt Redemption The original discounts on the senior, unsecured long-term notes listed in the table above (collectively, Senior Notes) are being amortized over the life of the debt. Interest is payable semi-annually as follows: on January 15 and July 15 of each year for the Senior Notes due July 15, 2032, 2052, and 2062; on February 1 and August 1 …

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Recent Accounting Pronouncements Recently Adopted In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures . The new guidance requires enhanced disclosures about significant segment expenses. This standard update is effective for our annual reports beginning in the fiscal year ended June 30, 2025, and interim period reports beginning in the first quarter of the fiscal year ending June 30, 2026. We adopted ASU 2023-07 starting with our annual report for the fiscal year ended June 30, 2025, for annual reporting and from July 1, 2025, for interim periods on a retrospective basis. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The new guidance removes all references to prescriptive and sequential software development stages or project stages throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed, and the software will be used to perform the function intended. The standard update is effective for our annual and interim reports beginning in the first quarter of our fiscal year ending June 30, 2028. Early adoption is permitted as of the …

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RESTRUCTURING CHARGES From time to time, management approves restructuring plans including workforce reductions in an effort to streamline operations. Restructuring charges were $0.2 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively. Restructuring charges were $0.9 million and $5.6 million for the nine months ended March 31, 2026 and 2025, respectively. The charges for fiscal years 2026 and 2025 include severance and related charges for the restructuring of the former PCB and Display operating segment, as a result of exiting the Display business. As of March 31, 2026 and June 30, 2025, the accrual for restructuring charges was $4.9 million and $5.9 million, respectively.

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REVENUE The following table represents the opening and closing balances of accounts receivable, net, contract assets, long-term accounts receivable, net, and contract liabilities as of the indicated dates. As of As of (Dollar amounts in thousands) March 31, 2026 June 30, 2025 $ Change % Change Accounts receivable, net $ 2,304,454 $ 2,263,915 $ 40,539 2 % Contract assets $ 100,906 $ 105,081 $ (4,175) (4) % Long-term accounts receivable, net $ 78,210 $ $ 78,210 100 % Contract liabilities $ 1,448,905 $ 1,713,689 $ (264,784) (15) % Our payment terms and conditions vary by contract type, although terms generally include a requirement of payment of 70% to 90% of total contract consideration within 30 to 60 days of shipment, with the remainder payable within 30 days of acceptance. The change in contract assets during the nine months ended March 31, 2026 was mainly due to $91.1 million of contract assets reclassified to accounts receivable, net, as our right to consideration for these contract assets became unconditional, partially offset by $87.2 million of revenue recognized for which the payment is subject to conditions other than passage of time. Contract assets are included in other current assets on our Condensed Consolidated Balance Sheets. The change in contract liabilities during the nine months ended March 31, 2026 was mainly due the recognition as revenue of $1.18 billion that was included in contract liabilities as of June 30, 2025, partially offset by an increase in the …

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SEGMENT REPORTING AND GEOGRAPHIC INFORMATION ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. Our operating segments are aggregated into reportable segments based on several factors including, but not limited to, customer base, homogeneity of products, technology, delivery channels and similar economic characteristics. We have three reportable segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. Semiconductor Process Control The Semiconductor Process Control segment offers a comprehensive portfolio of inspection, metrology and data analytics products, and related services, which helps integrated circuit (IC) manufacturers achieve target yield throughout the entire semiconductor fabrication process, from R&D to final volume production. Our differentiated products and services are designed to provide comprehensive solutions that help our customers accelerate development and production ramp cycles, achieve higher and more stable semiconductor die yields and improve their overall profitability. Specialty Semiconductor Process The Specialty Semiconductor Process segment develops and sells advan …

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STOCK REPURCHASE PROGRAM Our Board of Directors has authorized a program that permits us to repurchase our common stock, including an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026. The stock repurchase program has no expiration date and may be suspended at any time. The intent of the program is, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our ESPP as well as to return excess cash to our stockholders. Any and all share repurchase transactions are subject to market conditions and applicable legal requirements. Under the authoritative guidance, share repurchases are recognized as a reduction to retained earnings to the extent available, with any excess recognized as a reduction of capital in excess of par value. In addition, the Inflation Reduction Act of 2022 introduced a 1% excise tax imposed on certain stock repurchases made after December 31, 2022 by publicly traded companies. The excise tax is recorded as part of the cost basis of treasury stock repurchased after December 31, 2022 and, as such, is included in stockholders equity. As of March 31, 2026, an aggregate of $10.31 billion of authorization was available for repurchase under the stock repurchase program. Share repurchases for the indicated periods (based on the trade date of the applicable repurchase) were as follows: Three Months Ended March 31, Nine Months Ended March 31, (In thousa …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing