Q4 2023 KLA Tencor Corp Earnings Call
Okay.
Good afternoon, My name is Chelsea and I will be your conference operator today.
At this time I would like to welcome everyone to the KLA Corporation June quarter, 2023 earnings conference call and webcast.
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Thank you and I will now turn the call over to Kevin Kessel, Vice President of Investor Relations and market analytics. Please go ahead Sir.
Thank you for joining us for our earnings call to discuss the results for the June 2023 quarter in our September quarter outlook joining.
Joining me is our CEO Rick Wallace in RCM.
So Bren Higgins during this call we will discuss our results released today after the market closed along with supplemental materials are all available on our IR website.
This discussion is presented on a non-GAAP financial basis, unless otherwise specified whenever we make for your references they relate to calendar years.
A reconciliation of GAAP to non-GAAP results is in the earnings materials posted on our website.
Our IR website also contains future investor events as well as presentations corporate governance information and links to our SEC filings, including our most recent annual report.
And quarterly reports on Form 10-K and 10-Q.
Our comments today are subject to risks and uncertainties reflected in the risk factor disclosure in our SEC filings.
These forward looking statements, including those we make on the call today are subject to those risks and KLA cannot guarantee those forward looking statements will come true.
Our actual results may differ significantly from those projected in our forward looking statements.
Frank will begin the call with some comments on quarterly highlights and I'll conclude with our financial highlights, including our guidance and outlook I will now turn the call over to our CEO Rick Wallace Rick. Thank you, Kevin let's start with the summary performance in the quarter along with a few highlights further color and detail on my comments and semiconductor demand environment.
Can be found in our shareholder letter released earlier today.
June quarter results exceeded expectations and demonstrated consistent execution, despite the challenging marketplace, specifically revenue of $2 $3 $55 billion.
Finished at the upper end of the guidance range declining 5% on a year over year basis, and 3% sequentially.
GAAP earnings per share was $4 97, and non-GAAP EPS was $5 40 with each finishing at the upper end of their respective guidance ranges.
As near term demand headwinds persist there are some bright spots in particular automotive and other markets served by legacy notes remained strong demonstrating the diversification of demand and growing adoption of semiconductor technology across multiple industries. Additionally process control plays a critical role in enabling our customers to <unk>.
Execute on node technology transitions that are the focus of R&D efforts and that is more resilient to near term pressures.
We work closely with our customers and they continue to prioritize R&D investments. This is important for KLA is our products are heavily relied upon during the R&D process as well as the early ramp phase and faster time to yield is critical.
<unk> remains focused on supporting our customers' requirements, while maintaining critical R&D investments to enable our technology roadmap.
Our June quarter and results are the latest example of successfully meeting or exceeding our commitments and creating value for our customers partners and shareholders specific factors driving <unk> performance. This quarter include Kla's market leadership and process control, which includes some of the most critical and fastest growing segments of WMC.
Growth in market leadership in critical wafer and vertical infrastructure is fueling relative credit for KLA.
For example, revenues from our Unparallel wafer inspection and metrology products installed in wafer and photo mask manufacturing are expected to significantly outperform the overall market.
On the very strong growth in a down year for the industry.
Kelly services business grew to $539 million in between quarter up 5% year over year or.
Our consistent execution despite challenges in the marketplace continues to prove the resiliency of the KLA operating model and the dedication of our global teams.
<unk> remains well positioned for the comprehensive portfolio of products to meet customer requirements.
I'll hand, it to Brian to go through our financial highlights.
Thanks, Rick KLA delivered results at the upper end of the range of guidance and commitments demonstrating consistent execution, despite a challenging marketplace.
Continued focus on meeting customer needs, while expanding market leadership sustaining industry, leading gross and operating margins generating strong free cash flow and maintaining our long term strategy of assertive capital allocations, what makes us successful.
Quarterly revenue was $2 355 billion towards the upper end of the guided range of $2 125 to $3 75 billion.
non-GAAP diluted EPS was $5 40.
Also towards the upper end of the guidance range of $4 23 to $5 43.
GAAP diluted EPS is $4 97 above the midpoint of guidance.
non-GAAP gross margin was 61, 2% <unk> 45 basis points above the midpoint of the guidance range due to product mix as upside in the quarter was driven by higher margin products normalized freight expenses and improving factory utilization overall capacity adjust to current demand expectations.
non-GAAP operating expenses were $543 million slightly higher than guidance due to adjustments to variable compensation.
Total operating expenses comprise $314 million in R&D and $229 million in SG&A.
non-GAAP operating margin was 38, 1% other.
Other income and expense net was $49 million and the quarterly effective tax rate was 12, 4%.
Guided tax rate of 13, 5% non-GAAP EPS would have been <unk>, <unk> lower or $5 33.
Quarterly non-GAAP net income was 743 million GAAP net income was $685 million cash flow from operations was $959 million and free cash flow was $880 million.
As a result free cash flow conversion was strong at 119% and free cash flow margin was 37%.
The company had approximately $137 7 million diluted weighted average shares outstanding at the end of the quarter.
The breakdown of revenue by reportable segments and end markets and major products regions can be found within the shareholder letter and slides.
Switching to the balance sheet KLA ended the quarter with $3 billion to $4 billion in total cash cash equivalents in marketable securities that are 589 billion and a flexible and attractive bond maturity profile supported by a strong investment grade ratings from all three agencies.
Turning to our outlook, our wip outlook for 2023 remains largely unchanged at down approximately 20% from 95 billion to 2022.
While the timing of a meaningful resumption in wip investment growth remains unclear.
Continue to see overall demand stabilizing around current business levels for our semiconductor process control systems business.
Expect this demand profile to continue through the remainder of the year.
Our 2023 Wip estimate reflects a top down assessment of industry demand has fallen and.
In memory, we expect the investments to decline by approximately 40% foundry.
Foundry logic to decline by about 10% overall with legacy investment outperforming the segment overall due principally to automotive and continued demand for legacy design notes.
Kla's primary value proposition is focused on enabling innovation through technology transitions, which our customers continue to prioritize across all business environments.
Our capacity plans are often adjusted due to change in demand expectations technology roadmap investments are more resilient.
This adds additional confidence to our business expectations as customers aligns shipment slots with roadmap requirements.
In this environment, we will continue to focus on meeting customer requirements, maintaining our high level of investment in R&D to advance our product Roadmaps and Kla's market leadership.
And delivering strong relative revenue growth and financial performance.
Moving to guidance now our September quarter guidance is as follows total revenue is expected to be 235 billion plus or minus $125 million.
Foundry logic is forecasted to be approximately 70% and memory is expected to be around 30% of semi PC systems revenue.
And then memory DRAM is expected to be about 90% of the segment mix and match.
10%.
Before cash non-GAAP gross margin to be roughly flat at 61% plus or minus one percentage point is product mix expectations and cost components are consistent with the prior quarter.
Given our current view of a stabilizing demand environment for the remainder of 2023, we expect full year calendar gross margin to trend near 61%.
non-GAAP operating expenses are expected to be approximately $535 million as kosmos measures executed earlier in the calendar year align our current cost structure with top line expectations.
We would expect quarterly operating expenses to remain around this level for the remainder of the calendar year.
Other model assumptions for the September quarter include other income and expense net of approximately $48 million.
<unk> tax rate of approximately 13, 5%.
Finally, GAAP diluted EPS is expected to be $5, <unk> plus or minus 60.
non-GAAP diluted EPS of $5 35.
Plus or minus 60.
EPS guidance is based on a fully diluted share count of approximately 137 million shares.
In conclusion, we continue to see process controls importance to technology transitions and advancements pizza R&D growth and prioritization, despite persistent weakness in our customers' businesses.
We are also exposed to wafer and reticle infrastructure investments that are contributing to our revenue performance.
As a result, KLA remains positioned for strong relative performance versus the industry in 2023.
Looking ahead, we continue to see the business environment stabilizing and remain confident that the secular trends driving long term semiconductor industry demand and investments in WP remains strong and compelling.
Broadening semiconductor demand and simultaneous investments supporting growing semiconductor content across multiple technology nodes remained catalyst for sustainable long term industry growth.
Multiple applications for leading edge road maps are driving competitive dynamics and design challenges requiring more customer engagement and faster time to results.
Technology investment and node transitions reflect the binding semiconductors, and our industry hasn't lowering costs for our customers and enabling their monitor application universe for semiconductor based technology across multiple end markets.
While the global economy, and semiconductor industry are facing challenges KLA is well positioned to deliver strong relative financial performance driven by better than market performance of our <unk> businesses and continued growth in services.
We remain focused on innovation as we execute our portfolio strategy to support our customers' technology, Roadmaps and multiyear investment plans.
But again, the operating model and our execution, we will implement our strategic objectives to drive outperformance.
<unk> are also the foundation for our technology leadership and competitive differentiation.
Our focus on customer success, delivering innovative and differentiated solutions and operational excellence continues to enable us to deliver industry, leading financial and free cash flow performance.
While delivering consistent capital returns to shareholders.
That concludes my remarks, I'll now turn the call back over to Kevin to begin the Q&A.
Thank you Brian Chelsea can you please provide instructions for questions.
Yes, Sir.
At this time, if you would like to ask a question. Please press star one on your telephone keypad.
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Our first question will come from Joe <unk> with Wells Fargo.
Question.
I was wondering if you could maybe talk about the strength that youre seeing in your blank wafer business.
How do you see that looking into next year and is there a risk of maybe some digestion after a pretty strong investment cycle there.
Hey, Joe Thanks for the question. This year has been a strong year for that.
We have a very very strong market position. There. So that's that's been good for US and you are seeing investment from the.
The global players, but also investment in infrastructure in China to provide more domestic supply it tends to invest according to a different cycle I wouldn't exactly call. It counter cyclical, but the lead time to get equipment to actually make silicon wafers takes some time and so you see those those customers continually.
Two.
To invest through to prepare for for future demand, they're also dealing with new capacity.
Requirements related to.
Hybrid bonding at some of the other way wafer to wafer.
Packaging techniques that are out there that that are driving incremental demand as well. So as we look at this year, it's going to continue to grow this year as expected.
To do well and then but I do I do think as we move into next year, we will see some moderation of that investment. So while I don't think it will fall off a lot I don't think we'll see it grow into next year.
Okay. That's helpful.
And another question is a follow up.
You guys saw some pretty significant upside to your memory kind of expectations or at least relative to what you were thinking three months ago, particularly around DRAM. Just wondering if you could maybe comment on what drove that in the quarter.
Sure we had some movement across a number of our customers.
And the number of overall frankly pretty low.
But that was part of it. The other part is we also had some shipment that we weren't expecting to make in the quarter related to.
One of our Chinese DRAM customers.
The clarification of some of the export rules enabled us to ship some additional equipment. There. So that was a factor in the year.
In the upside on the DRAM side.
Got it thank you.
Thank you.
Our next question will come from C J Muse with Evercore.
Yes. Good afternoon. Thank you for taking the question I guess first question can you update us on where optical inspection lead times are.
And given the importance.
That tool set for.
R&D.
Is that something that you expect will sustain it at elevated levels or do you think that.
That should normalize over time.
Thank you James.
The answer is the demand continues to be very strong for a couple of reasons that we've talked about many times and we have.
Bold and increasing the output so we're still booked out through as far as we can see into next year.
Business remained strong the product has had a lot of success dealing with some of the challenges. We're seeing so we expect that to remain elevated and we're working hard to actually increase.
<unk> in order to meet that demand, but that's going to take some time.
Yes lead times, all will come down a little bit I don't know if they'll come down all that much given the drivers of that product line, but as new capacity comes online as we move through 'twenty four and beyond we will see it.
We will see them come down a little bit, but I think youll still see see them remain elevated for some time.
One of the nice.
We've talked about in the past few days that were still running Gen. Four in addition to Gen. Five and Gen. Four is really pretty good adoption in places that we didn't necessarily forecast like automotive. So we still have pretty good tailwind for that.
Very helpful and I guess as my follow up is encouraging to see your semi service business grow sequentially can you kind of comment how you see that playing out in the second half.
What kind of potentially negative impact you're seeing from lower utilization from your memory customers.
Yes.
We're very pleased with the performance and service and it's not atypical for us at a downturn to see service utilized because people are still trying to squeeze out all the yield capability. They have we have seen utilization we had forecast from some customers for a higher level of.
Lower level of utilization asking us to back off a little bit and those have moderated through the year to the point where utilization rates are higher than what had been forecasted by our customers at the beginning of the year, specifically in leading edge.
Leading edge logic foundry, so that has been an upside memories.
Slower in that regard, but it's kind of what we forecasted and with the level of shipments.
Feel very good about our long term forecast for the services business.
Thank you.
Okay.
Thank you.
Our next question comes from Chris <unk> with Keybanc Cowen Your line is open.
Yes, hi, Thanks for taking my question I have two of them first one Rick.
Obviously, you have very strong revenues from China.
Some chatter that the U S. Mike.
Expand the export controls given maybe mature nodes I know right now.
Catherine 40 nanometer and below for foundry logic.
Is there any commentary you can give on that and how to think about it like let's say for example, 14 goes to 28 628 goes to quality is there a way to quantify the impact to your sales and then I had a follow up.
Yes, I want to speculate what the government will do or not do on that we have ongoing conversations.
With them, obviously and really.
We've been supportive of their efforts to try to figure out how to cut off the very leading edge beyond that.
Not conversations we've been having with them, but in terms of quantifying obviously given that most of the business, we havent China's as legacy that would obviously impact.
Our ability to support the legacy.
Got it got it thanks for the drug and then as a follow up.
Based on the numbers it looks like Youre going to outperform wip again this year.
Due to this last couple of years the last couple of years it is more.
Some of your peers the supply chain constrained while you are not.
Obviously theres a lot of technology buys I'm just wondering as you head into next year or the next couple of years as WCS start rebounding.
Is it a risk that some other fabs already bought process control equipment that you could actually underperformed WP.
Well, so I would say that we were supply constrained but for different reasons.
We continue to struggle with the demand that we've had for optical and as I mentioned to a prior question. We continue to see demand for that so it's true that we managed our supply chain.
We still have gaps it wasn't like we got hit with things that we didn't expect we just couldnt ramp as much as some of our customers wanted the process control intensity has gone up I mean, one thing that we clearly forecasted and were seeing play out now.
As <unk> gets adopted and more nodes in all four layers and advanced architectures out, but there is a greater need for process control and Thats really what were experiencing so when we talked about in the analyst day and what we're seeing play out is increased need for process control across all technologies.
We feel good about how that looks as we go forward and some of the.
Stick to the forecast we had for our analyst day for 2026.
Got it thanks very helpful. Thank you.
Thank you.
Our next question will come from Sidney Ho with Deutsche Bank.
Thank you for taking the question and congrats on the good results.
As she will get peers have talked about fab readiness being impacting their shipment this year, especially for <unk> is that something that you're already kind of factored in.
<unk> outlook, you gave a quarter ago. When you also say foundry and logic will be down, 10%, which you reiterated today or are there. Some other offsets that you would point out that Ken.
Yes.
Yes.
It's a good question and it's something that we had already factored in.
Our plans as we looked out what youre seeing is as adjustments to some of the.
The ramp plans and so while there is still some shipments going into.
Some of these facilities.
Fewer tools, but it's something that we had already made.
<unk> already made adjustments for I think.
<unk>, usually using a shorter lead time tools feel it first and then it gets progressively eventually those those delays filter into everybody, but it but it does take some time, so we feel very good about.
The.
Forecast, we provided here in terms of our expectations over the next.
Next couple of quarters.
Okay, great. Thanks, that's helpful.
Follow up.
Speaking of China.
Revenue is now back to the 30% level you talked about some of the shipments that came in a bit earlier, but I wanted to ask a little bit.
A different angle is clearly that there is a big push for self sufficiency in China, but certain tools that are harder to replace and others can you give us maybe a little bit of color on the competitive dynamics there at that somewhat your.
Process control requirements could be satisfied by domestic companies.
Thanks.
Our market share continues to be strong I mean, we started focusing on legacy market opportunities several years ago. In fact restarted some older product lines and they continue to be the most competitive really at all price points in terms of so we feel.
While there is more competition and trailing edge.
We're very well positioned to be able to win and a lot of customers have a lot of confidence around the world and our capabilities. So we feel so good about our ability to compete.
Again stemming competitors out there we've been competing with people for a long time in terms of capabilities. So this is not unique that we would have competition in China and you have to remember our competitive offerings in China or any any other region are really based on a portfolio of products that we can offer. So we can we can offer.
Lots of solutions to our customers to Rick's point, some of our older generation tools, which we've re.
Restarted, but even even.
<unk> configured versions of more recent tools.
And then we allow our customers to manage across.
Their requirements either for economic order for.
More advanced tools more capability. So our go to market in terms of the portfolio benefits us in that region as much as it does anywhere else.
Great. Thank you very much.
Thank you.
Our next question comes from Brian Chin with Stifel.
Yeah.
Hi, there. Thanks, good afternoon, thanks for letting us ask a question.
I guess understanding again that memory investment in general is reduced and it sounds like the.
China memory ship it might've hit there in the June quarter.
But if I were to assume that some of your DRAM activity in coming quarters will be more geared towards <unk> five in applications for high performance high density DRAM for data Center.
Applications.
Are you noticing or anticipating a higher level of process control intensity.
That kind of spend.
So look for more advanced.
For a more advanced DRAM, particularly with the introduction of the it's driven higher intensity levels and there is the infrastructure to support the the.
Introduction of that particularly around the radical quality medical fidelity.
A driver of process control intensity for us over the last.
A couple of years and so I would expect that that will continue to see it I'm not expecting to see an uptick in business for memory customers there'll be some additional business from.
From the Chinese DRAM customer in the second half of the year, but we're not really seeing any changes in overall utilization rates and memory as Rick said earlier, and so I think until our customers start to see the pricing improvement improved their profitability and cash flow I don't think were going to see meaningful investments now.
We'll participate in process node development as we always have and that's going to be the biggest driver.
Contributions from from that market.
Okay.
Helpful. And then maybe just a broader follow up question.
Obviously, there is some underutilization of capacity at the leading foundries in more advanced Finfet nodes.
And this might just be a cyclical phenomenon, but in your conversations with them.
Any changes in how they might elect to deploy capital in support of multiple advanced nodes differently.
Yeah.
Well I mean, they've slowed down for sure we've seen and heard the reports on forecast.
Their investment going down so I think that's been the main one.
What the leading indicators that we're looking at that are encouraging.
I mentioned earlier in this call we've had utilization rates.
Creep back up from what was forecasted just a few months ago. The other thing is we're still seeing a heavy number of design starts and so of course it takes a while for those to filter through but we.
We still anticipate a very large number of designs at the advanced nodes and so that LOE per ton for strong business down the road you can't pick the timing, but I think that the slowdown in terms of their investment is related to.
The overall business environment, but not the fundamental dynamics I think that looks pretty good as we get.
The next few quarters behind us.
Okay. That's helpful. Thank you.
Thank you.
Our next question comes from Tim Arcuri with UBS.
Thanks, a lot Brent can you give the purchase obligation number I think it was about $12 billion last quarter I assume it came down a smidge in book to Bill is still less than one and then also can you tell us how much is sitting out side of 12 months.
Yes.
So the specific details will come through when we file our K here in another week or so, but it was down about a little over $500 million quarter to quarter. So book to Bill was a little less than one we still see some activity in terms of new orders. So the backlog levels are obviously very elevated so it's come down.
It's been coming down right around that $500 million or so per quarter for the last few quarters, but still.
Close to $11 5 billion overall and the beyond 12 months.
Between 40 and 50% of that.
As for delivery beyond the 12 month window.
Cool Thanks for that and then Brian just just the soft guide for December .
It sounds like process control system shipments are pretty flat.
It looks like maybe EPC should be up a smidge because you had said before that EPC, we'd be about down about 20 for the year.
Is that right and I guess part of that.
Was that you had said last call that maybe the process control shipments in December dependent on a couple of projects. So.
So sort of what's the what are the puts and takes on process control shipments in December .
Yes, I don't want to get specific on guiding December but certainly consistent with the prepared remarks, we see stabilizing rate moving forward and obviously, that's plus or minus given the editors of some of our asps.
That can be plus or minus $20 million to $30 million generally overall across the businesses and of course, we drive the business to meet the targets we have.
Overall, and not necessarily trying to deliver to certain numbers across each of the segments that being said service continues to grow and will grow a little bit each quarter just like it generally always has as the install base continues to grow over time and so we see growth in service.
<unk> could potentially be a little bit volatile so so.
I would like to be optimistic we'll see it pick up from current levels as we get closer to the end of the year, but.
Not modeling it today I'd like to see.
Good indicator given its short lead time, it's more capacity centric it is closer to consumers. So it's a decent indicator on on consumer markets, where we see it recover because it weakened earlier and so it should recover sooner perhaps than that.
<unk> part of it.
And then so semi DC I think we'll generally be somewhat consistent with with.
With.
The June quarter result, as it as it flows through into September which is again back to point of a relatively flat guidance quarter on quarter.
Yes, there are some projects at the end of the year, we'll see how those play out could cause the numbers to skew a bit in terms of deliveries into December and so we'll just have to see how that goes as we work closely with those customers.
And so depending on that that could cause potentially maybe the number to be a little bit higher but if you just think about it over and over.
A couple of quarter timeframe.
Yes.
The choice of the word stabilizing was an important one because thats generally how we see.
See the business overall here over the next couple of quarters.
Great.
Thanks, a lot.
Thank you.
As a reminder that is star one to answer the question you.
Our next question will come from Harlan sur with Jpmorgan.
Okay.
Colin Please make sure youre off mute.
Yes, sorry about that good afternoon. Thanks for taking my question, maybe as a follow up to Tim's question.
Sure.
Our view was for process control.
Down roughly kind of mid teens slight relative to <unk>, which was down 20% off of the better June quarter results.
I flatline stabilize that process control for the remainder of the calendar year. After the June quarter looks like a positive control franchise is actually going to be down only 10% to 12%.
The full year, so even better outperformance vs. Ws Pete you mentioned mass inspection their wafer start.
Dynamics like what other product segments are driving the better implied outlook for process control.
Yes, yes, your math is consistent so yes, that's how it will play out assuming the December quarter comes through the way they expect today.
Talking about bare wafer, obviously being a strong driver optical inspection reticle inspection is also a business that isn't declining as much as the overall market.
No.
So we've seen strength in those areas.
It's mostly mostly they are looked at.
Given the percent of investment that's happening in logic and foundry obviously the process control intensity there is higher than it is in memory, so that tends to provide a.
Nice tailwind in terms of the dynamics within WP pointing towards KLA.
So obviously.
Obviously the products, we've talked about are big drivers, but overall.
It is good in terms of the percent spent on our products as a percent of the total.
No I appreciate that.
Sure.
Is that advanced packaging demand is picking up quite strongly driven by all these.
Accelerated continued workloads like AI like HBM cost packaging multi chip stack die configuration.
TSMC Intel all of the memory guys. Those stats you guys supply to all of them.
Are you seeing the demand pick up for our solutions for accelerated compute applications and advanced packaging segment growing this year for the team or is that sort of accelerated compute demand being somewhat offset by some of the more consumer focused end markets.
Yes, good observation and we have seen an increase.
There hasn't been a ton of bright spots with our customers, but that's one and that has happened fairly recently, we've seen an up tick it's a small relatively small number.
As a percent, it's got quite a bit but off of a small number so absolutely we have seen it and we see that directly tied to some accelerated orders for some work that we've done as you know with ATC, explaining some of the products we have.
Semi process control and EPC, absolutely seen that so we're seeing an uptick in that yes, you have the overall packaging market down about 15%, 20% or so but if we look at our packaging business within the company, it's pretty flattish year to year, Rick talked about some of the recent upside we're seeing.
Related to.
Some of the AI drivers that.
Our recurring right now so.
So it's a good an evolving story moving forward as more complexity moves into the package across process, but also process control.
Perfect. Thank you.
Thank you.
Our next question will come from Keith <unk> with Citi.
Hi, Thank you for taking my question.
I have a question on leading edge logic investments.
At Semicon West a couple of weeks ago, when you spoke to.
Flyers, who give expectations that the meeting edge.
Spending it could be up.
The mature nodes into next year.
I assume as process control intensity is higher on meeting what's the mature nodes.
My question to us are there any major product cycles or more accurately.
Or maybe the contribution from areas like auto, which could help perhaps offset your exposure exposure to meeting of investments next year.
Sure I think that.
The <unk>. The one thing you have to keep in mind is we're still supply limited.
Some of our most critical process control products that apply to the leading edge such as optical.
And even some theoretical products, we just cannot.
Still cannot meet demand. So I think we have a natural.
Governor in there in terms of being able to keep that business.
Sustained over the.
The next several quarters based on even.
The current booking environment. So I think Thats one factor and then the other is <unk>.
We still see especially with the new architectures that are being out there and people moving to the next generation transistor architectures, a lot of demand for leading edge in the R&D phase. So we feel pretty good about how we're positioned for that plus other than than one who is primarily focused on capacity.
Yes.
Great. Thank you.
Thank you.
And as a reminder, that is star one to ask a question.
Alright, there are no further questions in the queue at this time I would like to turn the floor back over to Kevin Kessel for any additional or closing remarks.
Yeah.
Perfect. Thank you very much Chelsea and I wanted to thank everyone again for their interest and their time when that was a very busy earnings day. So that's also a very busy day. This was a later column in order to try to accommodate.
As much as we could so.
We look forward to speaking to all of you in the weeks ahead and with that I'll turn it back to Chelsea for any.
Our final remarks.
Thank you ladies and gentlemen, this concludes the KLA Corporation quarter 2023 earnings call and webcast.
Please disconnect. Your line at this time and have a wonderful day.
Okay.
[music].
Okay.
Okay.