KLA Corp. (NASDAQ:KLAC)

The analysis of the financial metrics over the periods from June 30, 2020, to June 30, 2025, reveals several noteworthy trends and provides insights into the company’s profitability, capital efficiency, and economic value creation.

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrates a consistent upward trajectory over the examined periods, increasing from $1,310,622 thousand in 2020 to $3,852,307 thousand by 2025. This steady growth indicates improving operational profitability and effective cost management, contributing positively to the company's overall financial health.

Cost of Capital

The cost of capital exhibits a gradual increase from 16% in 2020 to 17.03% in 2025. This rise suggests slightly higher expected returns required by investors or potentially increased risk associated with the company's capital base. Despite this increase, the cost of capital remains within a close range, indicating relative stability in the company’s financing environment.

Invested Capital

Invested capital has been steadily increasing over the years, from $6,592,642 thousand in 2020 to $9,244,891 thousand in 2025. This reflects ongoing investments in assets and operations, likely aimed at supporting growth initiatives or capacity expansion. The rise in invested capital must be balanced with returns to maintain financial efficiency.

Economic Profit

Economic profit, which measures value creation over and above the cost of capital, shows significant growth from $255,824 thousand in 2020 to $2,277,974 thousand in 2025. While there is a slight dip in 2024, the overall upward trend indicates that the company consistently generates returns exceeding its cost of capital, thereby creating shareholder value.

In summary, the data indicate strong and increasing operational profitability and value creation. The company has expanded its capital base while maintaining returns above the cost of capital, signaling effective management and successful strategic investments despite a modest rise in the cost of capital over the period.

The financial performance over the reviewed periods demonstrates notable fluctuations and growth patterns in key profitability metrics.

Net Income Attributable to KLA

The net income shows a strong upward trajectory from 1,216,785 thousand US dollars in mid-2020 to 3,381,277 thousand US dollars by mid-2023, indicating a substantial increase in profitability over the initial years. However, there is a decline in mid-2024 to 2,761,896 thousand US dollars, suggesting a temporary setback or increased expenses during this period. This is followed by a significant recovery and peak at 4,061,643 thousand US dollars in mid-2025, marking the highest profit level recorded in these periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT trends closely follow the net income pattern, starting at 1,310,622 thousand US dollars in mid-2020 and rising steadily to 3,464,285 thousand US dollars by mid-2023. There is a minor decline to 3,284,868 thousand US dollars in mid-2024, aligning with the net income dip and possibly indicating operational challenges or market factors impacting earnings. By mid-2025, NOPAT recovers to 3,852,307 thousand US dollars, reflecting improved operational efficiency and profitability.

Overall, the data indicates robust growth in profitability over the five-year span with a minor interruption around mid-2024. The subsequent recovery in the latest period suggests resilience and effectiveness in addressing prior challenges.

The financial data reveals notable fluctuations in the taxation-related expenses over the analyzed periods.

Provision for Income Taxes

This item exhibits a generally increasing trend with some volatility. Starting from approximately 101.7 million USD in mid-2020, the provision saw a significant rise to 283.1 million USD by mid-2021. However, it then decreased to 167.2 million USD in mid-2022 before sharply increasing again to 401.8 million USD in mid-2023. The upward momentum continued, reaching 428.1 million USD in mid-2024 and further increasing to 582.8 million USD by mid-2025. Overall, there is a clear upward trajectory with a notable dip in the middle of the period.

Cash Operating Taxes

Cash operating taxes show a consistent and marked upward trend over the time horizon. Beginning at 224.5 million USD in mid-2020, the figure rose steadily to 360.2 million USD in mid-2021 and further climbed to 553.4 million USD by mid-2022. This increase continued substantially, reaching 805.2 million USD in mid-2023. A temporary decrease occurred in mid-2024 to 600.4 million USD, after which the amount surged again to a peak of 854.9 million USD by mid-2025. Despite the single-year decline in mid-2024, the overall pattern is one of significant growth in cash operating tax payments.

In summary, both provision for income taxes and cash operating taxes show increasing trends over the five-year period, indicative of either growth in taxable income, changes in tax rates, or adjustments in tax accounting. The volatility in the provision for income taxes suggests variability in anticipated tax expenses, while the cash operating taxes generally increase, reflecting the actual cash outflows related to tax payments with a minor temporary decline. These trends highlight growing fiscal obligations and possibly evolving tax strategies or financial conditions during the period analyzed.

The annual financial data reveals several notable trends in the company's capital structure from 2020 to the projected figures in 2025.

Total Reported Debt & Leases

The total reported debt and leases showed some volatility over the period analyzed. Initially, the debt level was approximately $3.57 billion in mid-2020, slightly decreasing to around $3.55 billion in mid-2021. Subsequently, there was a marked increase, with debt nearly doubling to about $6.77 billion by mid-2022. This peak was followed by a decline to approximately $6.06 billion in mid-2023. The debt rose again to an estimated $6.82 billion in mid-2024 before decreasing to roughly $6.09 billion by mid-2025. Overall, the company's debt levels experienced significant fluctuations, suggesting adjustments in financing strategy or capital needs during this period.

Total KLA Stockholders’ Equity

Stockholders’ equity grew from approximately $2.67 billion in mid-2020 to a peak near $3.38 billion in mid-2021. However, it then sharply declined to about $1.40 billion by mid-2022. This sudden drop contrasts with a recovery trend starting in mid-2023, when equity climbed back to nearly $2.92 billion, rising further to approximately $3.37 billion in mid-2024 and ultimately reaching an estimated $4.69 billion in mid-2025. This pattern indicates a strong rebound in equity after a significant contraction, possibly due to operational results, capital injections, or asset revaluations during this timeframe.

Invested Capital

Invested capital shows a consistent upward trend throughout the period examined. Starting at about $6.59 billion in mid-2020, it increased steadily each year to reach an estimated $9.24 billion by mid-2025. This gradual rise suggests ongoing investments in the business's productive assets, reflecting growth initiatives or expansion strategies employed by the company.

In summary, while invested capital demonstrated steady growth, the capital structure evidenced by debt and equity components experienced significant variability. The fluctuations in debt and equity, particularly the sharp decline and subsequent recovery in stockholders’ equity, signal dynamic financial management possibly responding to external conditions or strategic shifts. The overall increase in invested capital alongside these changes implies that the company is actively managing its financial resources to support its operations and growth outlook over the medium term.

The analysis of the annual financial data reveals notable trends in the economic profit, invested capital, and economic spread ratio over the five-year period.

Economic Profit

The economic profit has displayed a significant upward trend from 2020 to 2025. Starting at approximately $256 million in 2020, it surged to over $1 billion by 2021 and continued to increase, peaking at about $2.13 billion in 2022. Although there was a slight decline in 2023 and 2024, the figure rose again in 2025 to approximately $2.28 billion, indicating continued strong profitability overall.

Invested Capital

Invested capital steadily increased throughout the period, rising from around $6.59 billion in 2020 to approximately $9.24 billion in 2025. This gradual growth reflects ongoing investments in assets or capital expenditures supporting business operations, with consistent increments each year.

Economic Spread Ratio

The economic spread ratio demonstrated considerable improvement from 3.88% in 2020 to a peak of 26.36% in 2022, reflecting enhanced efficiency in generating returns above the cost of capital. After a marginal decrease in 2023 and further decline in 2024 to 20.21%, the ratio rebounded to 24.64% in 2025. This fluctuation suggests some variability in operational efficiency or cost management in the mid-period but indicates a recovery toward higher profitability margins by the end of the timeframe.

Overall, the company shows a pattern of increasing economic profit and invested capital, supported by generally strong economic spread ratios. The data suggests effective capital deployment with some periodic variations in profitability efficiency, but a resilient upward trend toward greater economic value generation.

The financial analysis over the examined periods reveals significant growth and fluctuations in key performance indicators.

Economic Profit

The economic profit demonstrates a strong upward trend from 2020 to 2022, increasing from approximately 256 million US dollars to over 2.1 billion US dollars. In 2023, a slight decrease is observed, followed by a further decline in 2024. However, the economic profit rebounds in 2025, reaching its highest value within the data set, close to 2.3 billion US dollars. This suggests that while the company experienced some volatility in recent years, overall economic profit growth remains robust.

Adjusted Revenues

Adjusted revenues follow a generally increasing trajectory throughout the period. Beginning at nearly 5.9 billion US dollars in 2020, revenues rise steadily, peaking around 10.7 billion in 2023. A minor reduction occurs in 2024, after which revenues increase again, reaching approximately 12.1 billion US dollars in 2025. This pattern indicates consistent revenue growth with a small dip in the year 2024, possibly due to external or internal market conditions.

Economic Profit Margin

The economic profit margin improves significantly from 4.35% in 2020 to a peak of 22.29% in 2022. Subsequently, there is a decline to 19.13% in 2023, followed by a further decrease to 17.35% in 2024. The margin recovers slightly to 18.85% in 2025. Despite the fluctuations, the margin remains substantially higher than the initial period, reflecting enhanced profitability efficiency relative to revenues over the years.

In summary, the data indicates notable growth in both economic profit and revenues, with peak profitability margins achieved around 2022. The fluctuations observed in 2023 and 2024 suggest some challenges or changes in cost structure or market conditions, yet the overall financial health appears strong, with recovery signs in 2025.