KLAC · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

KLA CORP · 2026-10-29 · Importance 18 · Surprise 14

Gross margin increased to 61.9% in Q1 FY27 from 61.4% in Q4 FY26 and 61.3% in Q1 FY26. Sequentially, revenue volume added 0.6 percentage points, product and service mix added 0.5 points, and manufacturing labor, overhead, and efficiencies added 0.3 points, while other service and manufacturing costs reduced margin by 0.9 points. Year over year, revenue volume added 1.7 points and manufacturing efficiencies added 0.6 points, offset by a 1.2-point unfavorable mix effect and a 0.5-point reduction from other costs. Higher employee-related costs from increased headcount were partly offset by absorption benefits from higher manufacturing volumes; other costs included tariffs and customer-support costs.

Key facts

• KLA's gross margin increased from 61.4% in the three months ended June 30, 2026 to 61.9% in the three months ended September 30, 2026. source
• Sequential gross-margin change included a 0.6 percentage-point benefit from revenue volume, 0.5 points from product and service mix, 0.3 points from manufacturing labor, overhead, and efficiencies, and a 0.9-point reduction from other service and manufacturing costs. source
• Year-over-year gross-margin change included a 1.7 percentage-point benefit from revenue volume, a 1.2-point reduction from product and service mix, a 0.6-point benefit from manufacturing labor, overhead, and efficiencies, and a 0.5-point reduction from other service and manufacturing costs. source
• Manufacturing labor, overhead, and efficiency impacts included higher employee-related costs from increased headcount, partially offset by absorption benefits from higher manufacturing volumes. source