KLA CORP

Previous wording

•The war between Ukraine and Russia, escalation of hostilities in the Middle East, and the significant military activity in those regions;

Current wording

•The war between Ukraine and Russia, the armed conflict in Iran and elsewhere in the Middle East, and the significant military activity in those regions;

Previous wording

We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, and related service, software and other offerings, support R&D and manufacturing of integrated circuits (“IC”), wafers and reticles. Our products, services and expertise are used by our customers to measure, detect, analyze and resolve critical and nanometric level product defects, helping them to manage manufacturing process challenges and to obtain higher finish product yields at lower cost. We also offer advanced technology solutions to address various manufacturing needs of printed circuit boards (“PCB”), specialty semiconductor devices and other electronic components, including advanced packaging, light-emitting diode (“LED”), power devices, compound semiconductor, and data storage industries, as well as general materials research. In addition, our services business has grown consistently year-over-year and accounted for approximately 24% of our total revenues in the second quarter of fiscal 2026. Our services revenue, which is generated largely from recurring “subscription-like” contracts, increases the value of our contract offerings and extension of system lifetimes resulting from growth in legacy semiconductor markets.

Current wording

We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, and related service, software and other offerings, support R&D and manufacturing of integrated circuits (“IC”), wafers and reticles. Our products, services and expertise are used by our customers to measure, detect, analyze and resolve critical and nanometric level product defects, helping them to manage manufacturing process challenges and to obtain higher finished product yields at lower cost. We also offer advanced technology solutions to address various manufacturing needs of printed circuit boards (“PCB”), specialty semiconductor devices and other electronic components, including advanced packaging, light-emitting diode (“LED”), power devices, compound semiconductor, and data storage industries, as well as general materials research. In addition, our services business has grown consistently year-over-year and accounted for approximately 23% of our total revenues in the third quarter of fiscal 2026. Our services revenue, which is generated largely from recurring “subscription-like” contracts, increases the value of our contract offerings and extension of system lifetimes resulting from growth in legacy semiconductor markets.

Previous wording

As we close calendar year 2025, the semiconductor industry continues to experience significant market expansion and diversification. High-performance computing and data centers, fueled by widespread adoption of AI, are driving industry growth. We expect this momentum to continue into calendar year 2026. AI is a technology inflection point driving innovation and demand at the leading edge, and we believe our portfolio of products is uniquely positioned to support leading-edge demand and the ongoing AI buildout. Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic. End-market demand drivers that are expected to continue to benefit KLA in the long term include adoption of extreme ultraviolet lithography (“EUV”) in high volume manufacturing for Logic and DRAM memory (including high-bandwidth memory), which drives new process control requirements and growth in key markets for KLA. Demand for advanced semiconductor technologies, particularly evident in the 2-nanometer node, which is seeing higher levels of investment and process control intensity, continues to drive investments in AI. Increasing complexity and value of semiconductor packages, particularly for AI and high-performance computing applications, is also driving significant growth in our advanced packaging business. The digitization of all industries, including 5G markets, advances in healthcare and industrial applications, together with the increasing adoption of electric vehicles and intelligence in automobiles, are powering leading-edge design node technology investments and capacity expansions.

Current wording

The semiconductor industry continues to experience significant market expansion and diversification. High-performance computing and data centers, fueled by widespread adoption of AI, are driving industry growth. We expect this momentum to continue during calendar year 2026. AI is a technology inflection point driving innovation and demand at the leading edge, and we believe our portfolio of products is uniquely positioned to support leading-edge demand and the ongoing AI buildout. Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic. End-market demand drivers that are expected to continue to benefit KLA in the long term include adoption of extreme ultraviolet lithography (“EUV”) in high volume manufacturing for Logic and DRAM memory (including high-bandwidth memory), which drives new process control requirements and growth in key markets for KLA. Demand for advanced semiconductor technologies, particularly evident in the 2-nanometer node, which is seeing higher levels of investment and process control intensity, continues to drive investments in AI. Increasing complexity and value of semiconductor packages, particularly for AI and high-performance computing applications, is also driving significant growth in our advanced packaging business. The digitization of all industries, including 5G markets, advances in healthcare and industrial applications, together with the increasing adoption of electric vehicles and intelligence in automobiles, are powering leading-edge design node technology investments and capacity expansions.

Previous wording

While we continue to invest in technological innovation, factors such as delays from customers in adopting new chips and technology methods could impact process control capital intensity. Pushouts or cancellations of deliveries to our customers could cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges. Geopolitical factors, such as government regulations and tariffs, have had an adverse impact on our results of operations. However, despite these headwinds, our gross margin and overall financial performance improved in the three months ended December 31, 2025 compared to the three months ended December 31, 2024. Looking ahead to calendar year 2026, while we expect continued revenue growth, escalating costs for DRAM chips used in the Company’s image computers is likely to negatively impact our gross margin.

Current wording

While we continue to invest in technological innovation, factors such as delays from customers in adopting new chips and technology methods could impact process control capital intensity. Pushouts or cancellations of deliveries to our customers could cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges. Geopolitical factors, such as government regulations and tariffs, have had an adverse impact on our results of operations. However, despite these headwinds, our total revenues and net income improved in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Looking ahead, while we expect continued revenue growth in calendar year 2026, escalating costs for DRAM chips used in the Company’s image computers will continue to negatively impact our gross margin, though we expect this impact to be transitory.

Previous wording

We are continuously assessing the aggregate potential impact of government regulations and tariffs on our financial results and operations. See Part II, Item 1A “Risk Factors” below, and also Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2025 for more information regarding how such actions by the U.S. government or another country could significantly impact our ability to provide our products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations.

Current wording

We are continuously assessing the aggregate potential impact of government regulations, tariffs and other geopolitical risks on our financial results and operations. See Part II, Item 1A “Risk Factors” below, and also Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2025 for more information regarding how such actions by the U.S. government or another country could significantly impact our ability to provide our products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations.

Previous wording

(1)For the explanation why our net income increased to $1.15 billion in the three months ended December 31, 2025 compared to the three months ended December 31, 2024, refer to the “Results of Operations” section below, as the change is a result of movements in various income statement line items.

Current wording

(1)For the explanation why our net income increased to $1.20 billion in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, refer to the “Results of Operations” section below, as the change is a result of movements in various income statement line items.

Previous wording

(3)Diluted net income per share is computed independently for each of the quarters presented based on the weighted-average fully diluted shares outstanding for each quarter. Therefore, the sum of quarterly diluted net income per share information may not equal annual (or other multiple-quarter calculations of) diluted net income per share.

Current wording

(2)Diluted net income per share is computed independently for each of the quarters presented based on the weighted-average fully diluted shares outstanding for each quarter. Therefore, the sum of quarterly diluted net income per share information may not equal annual (or other multiple-quarter calculations of) diluted net income per share.

Previous wording

We continue to focus on returning cash to our investors, making $547.8 million in share repurchases and paying $249.7 million in dividends in the three months ended December 31, 2025. We increased the dividend in the fourth quarter of fiscal 2025 to $1.90 per share per quarter, which was our 16th consecutive annual dividend increase. Refer to the “Liquidity and Capital Resources” section below for more information on our strong cash flow generation and strategy of returning excess cash to our stockholders.

Current wording

We continue to focus on returning cash to our investors, making $626.0 million in share repurchases and paying $248.8 million in dividends in the three months ended March 31, 2026. 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. As of March 31, 2026, we had $10.31 billion of repurchase authority remaining. In March 2026, we also announced an increase in the dividend level to $2.30 per share per quarter, which was our 17th consecutive annual dividend increase. Refer to the “Liquidity and Capital Resources” section below for more information on our strong cash flow generation and strategy of returning excess cash to our stockholders.

Previous wording

Total revenues increased 7% in thethree months ended December 31, 2025 compared tothe three months ended December 31, 2024, primarily due to an 18% increase in service revenues attributable to growth in our installed base of tools, and a 4% increase in product revenues from higher investments from our memory customers, particularly in DRAM led by high-bandwidth memory, and strong customer adoption of our advanced packaging portfolio of products. The increase in revenues was partially offset by lower shipments to foundry/logic customers driven by the timing of fab readiness.

Current wording

Total revenues increased 11% in thethree months ended March 31, 2026 compared tothe three months ended March 31, 2025, primarily due to the increase in product revenues, and is attributable to higher investments from our memory customers, particularly in DRAM, led by high-bandwidth memory, and steady growth in foundry/logic. An increase in service revenues of 16%, due to continued growth in our installed base of tools, also contributed to higher total revenues compared to the same period in the prior year.

Previous wording

Total revenues increased by 10%in thesix months ended December 31, 2025 compared to thesix months ended December 31, 2024, primarily due to the increase in our product revenues, and is attributable to higher investments by our memory customers and strong customer adoption of our advanced packaging portfolio of products. An increase in service revenues of 17%, as a result of continued growth of our installed base of tools, also contributed to higher total revenues compared to the same period in the prior year.

Current wording

Total revenues increased 10%in thenine months ended March 31, 2026 compared to thenine months ended March 31, 2025, primarily due to the increase in our product revenues, and is attributable to higher investments by our memory customers, particularly in DRAM, led by high-bandwidth memory, strong customer adoption of our advanced packaging portfolio of products, and steady growth in foundry/logic. An increase in service revenues of 16%, as a result of continued growth of our installed base of tools, also contributed to higher total revenues compared to the same period in the prior year.

Previous wording

Revenues from our Semiconductor Process Control segment for the three andsix months ended December 31, 2025 increased by 9% and 11%, respectively, compared to the same period in the prior year, primarily due to increased revenue from our memory customers, particularly related to DRAM, higher revenue from advanced packaging, along with higher service revenues from an increasing number of tools in our installed base.

Current wording

Revenues from our Semiconductor Process Control segment for the three months ended March 31, 2026 increased by 13% compared to the same period in the prior year, primarily due toincreased revenue from our memory customers, particularly related to DRAM, led by high-bandwidth memory, growth in foundry/logic, along with higher service revenues from an increasing number of tools in our installed base. Revenues in this segment increased by 11% for the nine months ended March 31, 2026 compared to the same period in the prior year, primarily due to increased revenue from our memory customers, particularly related to DRAM, led by high-bandwidth memory, higher revenue from advanced packaging, along with higher service revenues from an increasing number of tools in our installed base.

Previous wording

Revenues from our Specialty Semiconductor Process segment for the three andsix months ended December 31, 2025 decreased by 12% and 10%, respectively, compared to the same period in the prior year, primarily due to lower volume of products sold, particularly to customers in China, partially offset by higher service revenues from an increasing number of tools in our installed base.

Current wording

Revenues from our Specialty Semiconductor Process segment for the three months ended March 31, 2026 increased by 5% compared to the same period in the prior year, primarily due to timing of shipments and higher service revenues from an increasing number of tools in our installed base. Revenues in this segment decreased by 5% during the nine months ended March 31, 2026 compared to the same period in the prior year, attributable to lower volume of products sold, particularly in China, partially offset by higher service revenues from an increasing number of tools in our installed base.

Previous wording

Revenues from our PCB and Component Inspection segment decreased by 6% during the three months ended December 31, 2025 compared to the same period in the prior year, primarily due to revenues from our Display business being included in the prior year results, a business which has since been exited. The decrease was partially offset by increased revenues from advanced packaging and higher service revenues from growth in our installed base of tools. Revenues in this segment increased by 14% during the sixmonths ended December 31, 2025 compared to the same period in the prior year, due to increased revenue from advanced packaging and higher service revenues from growth in our installed base, partially offset by the exit of the Display business as noted previously.

Current wording

Revenues from our PCB and Component Inspection segment decreased by 1% during the three months ended March 31, 2026 compared to the same period in the prior year, primarily due to revenues from our Display business being included in the prior year results, a business which has since been exited. The decrease was mostly offset by increased revenues from PCB products, along with higher service revenues from growth in our installed base of tools. Revenues in this segment increased by 9% during the nine months ended March 31, 2026 compared to the same period in the prior year, due to increased revenue from advanced packaging and PCB and component inspection products, along with higher service revenues from growth in our installed base, partially offset by the exit of the Display business.

Previous wording

Revenues from our customers in China decreased 9% and 1% in the three and six months ended December 31, 2025, respectively, compared to the same period in the prior year, primarily due to the effects of U.S. export controls and regulations, partially offset by continued legacy node demand.

Current wording

Revenues from our customers in China increased 5% and by less than 1% in the three and nine months ended March 31, 2026, respectively, compared to the same periods in the prior year, primarily due to continued legacy node demand, partially offset by the effects of U.S. export controls and regulations.

Previous wording

Revenues from our customers in Taiwan decreased 4% in the three months ended December 31, 2025 compared to the same period in the prior year, primarily due to the timing of shipments. Overall revenues from customers in Taiwan increased by 22% in the six months ended December 31, 2025, compared to the same period in the prior year, primarily due to increased investments in process control to meet leading-edge demand driven by innovation and growth of AI.

Current wording

Revenues from our customers in Taiwan decreased 12% in the three months ended March 31, 2026 compared to the same period in the prior year, primarily due to the timing of shipments. Revenues from customers in Taiwan increased 8% in the nine months ended March 31, 2026, compared to the same period in the prior year, primarily due to increased investments in process control to meet leading-edge demand driven by innovation and growth of AI.

Previous wording

Revenues from our customers in Korea increased 34% and 31% in the three and six months ended December 31, 2025, respectively, compared to the same period in the prior year, primarily due to increased investments from our memory customers. Revenues from our customers in North America increased 38% in the three months ended December 31, 2025 compared to the same period in the prior year, primarily due to increased investments from memory and legacy node customers. Overall revenues from customers in North America decreased 12% in the six months ended December 31, 2025, compared to the same period in the prior year, primarily due to lower shipments to foundry/logic customers partially offset by increased investments from memory customers. The remaining regions accounted for less than 10% of total revenues individually in the periods presented.

Current wording

Revenues from our customers in Korea increased 80% and 50% in the three and nine months ended March 31, 2026, respectively, compared to the same periods in the prior year, primarily due to increased investments from our memory customers. Revenues from our customers in North America increased 40% in the three months ended March 31, 2026 compared to the same period in the prior year, due to increased investments from both memory and foundry/logic customers. Revenues from customers in North America increased 2% in the nine months ended March 31, 2026, compared to the same period in the prior year, primarily due to increased investments from memory customers and continued legacy node demand, partially offset by lower shipments to foundry/logic customers. Revenues from our customers in Japan decreased 47% in the three months ended March 31, 2026 compared to the same period in the prior year, due to decreased investments from customers in the semiconductor process control segment. The remaining regions accounted for less than 10% of total revenues individually in the periods presented.

Previous wording

Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues. Changes in gross margin from the mix of products and services sold reflect the impact of changes within the composition of product and service offerings. Changes in gross margin from manufacturing labor, overhead and efficiencies reflect our ability to manage costs and drive productivity as we scale our manufacturing activity to respond to customer requirements and amortization of intangible assets. Changes in gross margin from other service and manufacturing costs include the impact of tariffs, customer support costs, including the efficiencies with which we deliver services to our customers, and the effectiveness with which we manage our production plans and inventory risk. Other service and manufacturing costs included lower inventory-related charges partially offset by the impact of tariffs during the three months ended December 31, 2025, compared to the same period in the prior year. Other service and manufacturing costs reflect the impact of tariffs which was partially offset by lower inventory-related charges during thesix months ended December 31, 2025, compared to the same period in the prior year.

Current wording

Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues. Changes in gross margin from the mix of products and services sold reflect the impact of changes within the composition of product and service offerings. Changes in gross margin from manufacturing labor, overhead and efficiencies reflect our ability to manage costs and drive productivity as we scale our manufacturing activity to respond to customer requirements and amortization of intangible assets. In both the three and nine months ended March 31, 2026, manufacturing labor, overhead and efficiencies included increased employee-related costs due to increases in headcount offset by absorption benefits from better build plans, compared to the same periods in the prior year. Changes in gross margin from other service and manufacturing costs include the impact of tariffs, customer support costs, including the efficiencies with which we deliver services to our customers, and the effectiveness with which we manage our production plans and inventory risk. In both the three and nine months ended March 31, 2026, other service and manufacturing costs included higher installation and warranty costs and increased costs due to tariffs, partially offset by lower inventory-related charges, compared to the same periods in the prior year.

Previous wording

R&D expenses during the three months ended December 31, 2025 increased compared to the three months ended December 31, 2024 primarily due to increases in employee-related expenses of $26.3 million as a result of additional headcount and higher employee compensation and benefit costs and engineering project material costs of $12.9 million.

Current wording

R&D expenses during the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025 primarily due to increases in employee-related expenses of $35.7 million as a result of additional headcount and higher employee compensation and benefit costs, and engineering project material costs of $7.3 million.

Previous wording

R&D expenses during the six months ended December 31, 2025 increased compared to the six months ended December 31, 2024 primarily due to increases in employee-related expenses of $51.9 million as a result of additional headcount and higher employee compensation and benefit costs and engineering project material costs of $24.6 million.

Current wording

R&D expenses during the nine months ended March 31, 2026 increased compared to the nine months ended March 31, 2025 primarily due to increases in employee-related expenses of $87.6 million as a result of additional headcount and higher employee compensation and benefit costs, and engineering project material costs of $31.9 million.

Previous wording

SG&A expenses during the three months ended December 31, 2025 increased compared to the three months ended December 31, 2024 primarily due to increases in facilities-related expense of $7.2 million and supplies and materials expense of $6.9 million.

Current wording

SG&A expenses during the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025 primarily due to increases in provision for credit losses of $23.1 million, employee-related expenses of $14.9 million as a result of additional headcount and higher employee compensation and benefit costs, and facilities-related expense of $6.6 million.

Previous wording

SG&A expenses during the six months ended December 31, 2025 increased compared to the six months ended December 31, 2024 primarily due to increases in supplies and materials expense of $14.3 million and facilities-related expense of $13.6 million.

Current wording

SG&A expenses during the nine months ended March 31, 2026 increased compared to the nine months ended March 31, 2025 primarily due to increases in provision for credit losses of $26.1 million, facilities-related expense of $20.3 million, and employee-related expenses of $17.6 million as a result of additional headcount and higher employee compensation and benefit costs.

Previous wording

Restructuring charges were $0.3 million and $2.1 million for the three months ended December 31, 2025 and 2024, respectively. Restructuring charges were $0.7 million and $5.0 million for the six months ended December 31, 2025 and 2024, respectively. For additional information, refer to Note 17 “Restructuring Charges” to our Condensed Consolidated Financial Statements.

Current wording

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. For additional information, refer to Note 17 “Restructuring Charges” to our Condensed Consolidated Financial Statements.

Previous wording

The change in other expense (income), net during the three months ended December 31, 2025 compared to the three months ended December 31, 2024 was primarily due to a net fair value loss of $5.6 million from an equity security and unfavorable foreign exchange fluctuations of $5.3 million, partially offset by higher interest income of $1.9 million.

Current wording

The change in other expense (income), net during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to a net fair value gain of $31.9 million from an equity security, favorable foreign exchange fluctuations of $12.4 million, and higher interest income of $4.1 million.

Previous wording

Interest expense during the three months ended December 31, 2025 decreased compared to the three months ended December 31, 2024 primarily due to reduced interest expense following our $750.0 million debt repayment in the second quarter of fiscal 2025.

Current wording

Interest expense during the nine months ended March 31, 2026 decreased compared to the nine months ended March 31, 2025 primarily due to reduced interest expense following our $750.0 million debt repayment in the second quarter of fiscal 2025.

Previous wording

The change in other expense (income), net during the six months ended December 31, 2025 compared to the six months ended December 31, 2024 was primarily due to lower interest income of $8.4 million, partially offset by a net fair value gain of $3.2 million from an equity security and favorable foreign exchange fluctuations of $1.0 million.

Current wording

The change in other expense (income), net during the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025 was primarily due to a net fair value gain of $35.1 million from an equity security, favorable foreign exchange fluctuations of $13.4 million, partially offset by lower interest income of $4.3 million.

Previous wording

Excluding the goodwill impairment charge during the six months ended December 31, 2024, the effective tax rate during the six months ended December 31, 2025 was higher compared to the six months ended December 31, 2024 primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates and a decrease in the proportion of U.S. earnings eligible for the Foreign Derived Intangible Income deduction, partially offset by a decrease in our Global Intangible Low-Taxed Income.

Current wording

The effective tax rate during the three months ended March 31, 2026 was higher compared to the three months ended March 31, 2025, primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates and a decrease in the proportion of U.S. earnings eligible for the Foreign Derived Intangible Income deduction, partially offset by a decrease in our Global Intangible Low-Taxed Income.

Previous wording

The effective tax rate during the three months ended December 31, 2025 was lower compared to the three months ended December 31, 2024, primarily due to a $230.4 million goodwill impairment charge during the three months ended December 31, 2024 which is non-deductible for income tax. Excluding the goodwill impairment charge, tax expense as a percentage of income taxes during the three months ended December 31, 2025 was higher compared to the three months ended December 31, 2024 primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates.

Current wording

The effective tax rate during the nine months ended March 31, 2026 was higher compared to the nine months ended March 31, 2025, primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates and a decrease in the proportion of U.S. earnings eligible for the Foreign Derived Intangible Income deduction, partially offset by a decrease in our Global Intangible Low-Taxed Income and a $230.4 million goodwill impairment charge during the nine months ended March 31, 2024 which is non-deductible for income tax.

Previous wording

As of December 31, 2025, our cash, cash equivalents and marketable securities totaled $5.21 billion, compared to the $4.49 billion balance as of June 30, 2025. Refer to below discussions of sources and uses of cash during the six months ended December 31, 2025. As of December 31, 2025, $1.25 billion of our $5.21 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We have recorded appropriate provisions for income or withholding taxes that may result from future repatriations of this balance.

Current wording

As of March 31, 2026, our cash, cash equivalents and marketable securities totaled $4.96 billion, compared to the $4.49 billion balance as of June 30, 2025. Refer to below discussions of sources and uses of cash during the nine months ended March 31, 2026. As of March 31, 2026, $1.09 billion of our $4.96 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We have recorded appropriate provisions for income or withholding taxes that may result from future repatriations of this balance.

Previous wording

We typically finance our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the six months ended December 31, 2025 was $2.53 billion compared to $1.84 billion during the six months ended December 31, 2024. This increase was primarily due to an increase in customer and other collections of approximately $1.2 billion primarily driven by higher shipments and a decrease in income tax payments of $55 million; partially offset by increases in accounts payable payments of approximately $460 million and employee-related payments of approximately $100 million.

Current wording

We typically finance our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the nine months ended March 31, 2026 was $3.24 billion compared to $2.92 billion during the nine months ended March 31, 2025. This increase was primarily due to an increase in customer and other collections of approximately $960 million primarily driven by higher shipments, a decrease in income tax payments of approximately $73 million and a decrease in other tax payments of approximately $30 million; partially offset by increases in accounts payable payments of approximately $580 million and employee-related payments of approximately $165 million.

Previous wording

Net cash used in investing activities during the six months ended December 31, 2025 was $522.7 million compared to $442.7 million of net cash provided during the six months ended December 31, 2024. This increase in cash used was primarily due to increases in net purchases of available-for-sale securities of $931.8 million, and capital expenditures of $48.7 million, partially offset by a $16.8 million increase in proceeds from capital-related government assistance.

Current wording

Net cash used in investing activities during the nine months ended March 31, 2026 was $1.02 billion compared to $122.9 million of net cash provided during the nine months ended March 31, 2025. This increase in cash used was primarily due to increases in net purchases of available-for-sale securities of $1.11 billion, and capital expenditures of $51.8 million, partially offset by a $16.5 million increase in proceeds from capital-related government assistance.

Previous wording

Net cash used in financing activities during the six months ended December 31, 2025 was $1.63 billion compared to $2.42 billion during the six months ended December 31, 2024. This decrease in cash used was primarily due to a $750.0 million debt repayment during the six months ended December 31, 2024 and a decrease in common stock repurchases of $124.7 million, partially offset by increases in payment of dividends and dividend equivalents of $78.8 million and tax withholding payments related to vested and released restricted stock units (“RSU”) of $11.0 million.

Current wording

Net cash used in financing activities during the nine months ended March 31, 2026 was $2.51 billion compared to $3.16 billion during the nine months ended March 31, 2025. This decrease in cash used was primarily due to a $750.0 million debt repayment during the nine months ended March 31, 2025 and a decrease in common stock repurchases of $5.5 million, partially offset by increases in payment of dividends and dividend equivalents of $101.9 million and tax withholding payments related to vested and released restricted stock units (“RSU”) of $12.7 million.

Previous wording

The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the six months ended December 31, 2025 and 2024. The total amount of stock repurchases during the six months ended December 31, 2025 and 2024 were $1.09 billion and $1.22 billion, respectively. The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our Employee Stock Purchase Program as well as to return excess cash to our stockholders. As of December 31, 2025, an aggregate of $3.94 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $5.00 billion in the fourth quarter of fiscal 2025.

Current wording

The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the nine months ended March 31, 2026 and 2025. The total amount of stock repurchases during the nine months ended March 31, 2026 and 2025 were $1.72 billion for both periods. The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our Employee Stock Purchase Program as well as to return excess cash to our stockholders. As of March 31, 2026, an aggregate of $10.31 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026.

Previous wording

During the three months ended December 31, 2025, our Board of Directors declared a regular quarterly cash dividend of $1.90 per share on our outstanding common stock, which was paid on December 2, 2025 to our stockholders of record as of the close of business on November 17, 2025. During the same period in fiscal year ended June 30, 2025, our Board of Directors declared and paid a regular quarterly cash dividend of $1.70 per share on our outstanding common stock. The total amount of regular quarterly cash dividends and dividend equivalents paid during the three months ended December 31, 2025 and 2024 was $249.7 million and $226.8 million, respectively. The total amount of regular quarterly cash dividends and dividend equivalents paid during the six months ended December 31, 2025 and 2024 was $503.7 million and $424.9 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights as of December 31, 2025 and June 30, 2025 was $13.7 million and $13.3 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 9 “Equity and Long-term Incentive Compensation Plans” to our Condensed Consolidated Financial Statements.

Current wording

During the three months ended March 31, 2026, our Board of Directors declared a regular quarterly cash dividend of $1.90 per share on our outstanding common stock, which was paid on March 3, 2026 to our stockholders of record as of the close of business on February 17, 2026. During the same period in fiscal year ended June 30, 2025, our Board of Directors declared and paid a regular quarterly cash dividend of $1.70 per share on our outstanding common stock. The total amount of regular quarterly cash dividends and dividend equivalents paid during the three months ended March 31, 2026 and 2025 was $248.8 million and $225.8 million, respectively. The total amount of regular quarterly cash dividends and dividend equivalents paid during the nine months ended March 31, 2026 and 2025 was $752.5 million and $650.6 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights as of March 31, 2026 and June 30, 2025 was $15.8 million and $13.3 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 9 “Equity and Long-term Incentive Compensation Plans” to our Condensed Consolidated Financial Statements.

Previous wording

We have in place a Credit Agreement (“Credit Agreement”) for an unsecured Revolving Credit Facility (“Revolving Credit Facility”) with a maturity date of July 3, 2030 that allows us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of December 31, 2025, we had no outstanding borrowings under the Revolving Credit Facility. We were in compliance with all covenants under the Credit Agreement as of December 31, 2025 (the net leverage ratio was 0.56 to 1.00, compared to a maximum net leverage ratio of 3.25 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter). Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2026.

Current wording

We have in place a Credit Agreement (“Credit Agreement”) for an unsecured Revolving Credit Facility (“Revolving Credit Facility”) with a maturity date of July 3, 2030 that allows us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of March 31, 2026, we had no outstanding borrowings under the Revolving Credit Facility. We were in compliance with all covenants under the Credit Agreement as of March 31, 2026 (the net leverage ratio was 0.54 to 1.00, compared to a maximum net leverage ratio of 3.25 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter). Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2026.

Previous wording

For details regarding our debt and other material cash commitments, refer to Note 7 “Debt” and Note 14 “Commitments and Contingencies,” respectively, to our Condensed Consolidated Financial Statements. For additional details regarding our material cash requirements, refer to “Material Cash Requirements” in the “Liquidity and Capital Resources” section of Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report Form on 10-K for the fiscal year ended June 30, 2025.

Current wording

For details regarding our debt and other material cash commitments, refer to Note 7 “Debt” and Note 14 “Commitments and Contingencies,” respectively, to our Condensed Consolidated Financial Statements. For additional details regarding our material cash requirements, refer to “Material Cash Requirements” in the “Liquidity and Capital Resources” section of Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Previous wording

Working capital was $7.28 billion as of December 31, 2025, which represents an increase of $668.3 million compared to our working capital of $6.61 billion as of June 30, 2025. As of December 31, 2025, our principal sources of liquidity consisted of $5.21 billion of cash, cash equivalents and marketable securities, as well as $1.50 billion availability under our Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in the global and regional economies and the semiconductor, semiconductor-related and electronic device industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations for at least the next 12 months.

Current wording

Working capital was $7.60 billion as of March 31, 2026, which represents an increase of $986.4 million compared to our working capital of $6.61 billion as of June 30, 2025. As of March 31, 2026, our principal sources of liquidity consisted of $4.96 billion of cash, cash equivalents and marketable securities, as well as $1.50 billion availability under our Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in the global and regional economies and the semiconductor, semiconductor-related and electronic device industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations for at least the next 12 months.