Bren Higgins
Executive Vice President and Chief Financial Officer at KLA
Thanks, Rick. KLA's September quarter results demonstrate market leadership combined with the consistent execution and dedication of our global team. Quarterly revenue was $2.84 billion, above the guidance mid-point of $2.75 billion. Non-GAAP diluted EPS was $7.33 and GAAP diluted EPS was $7.01, both above their respective guidance midpoints.
Gross margin was 61.2%, slightly below the mid-point of the guidance range as the systems product mix was modestly weaker-than-expected. Operating expenses were $560 million. Operating expenses were comprised of $322 million in R&D and $238 million in SG&A. Operating margin was 41.5%. Other income and expense debt was a $41 million expense with the downside from guidance attributed to the mark-to-market effect of a strategic supply investment.
The quarterly effective tax rate was 13.2%. Quarterly non-GAAP net income was $988 million. GAAP net income was $946 million. Cash flow from operations was $995 million, and free cash flow was $935 million. The breakdown of revenue by reportable segments and end markets, major products and regions can be found within the shareholder letter and slides.
Moving to the balance sheet. KLA ended the quarter with $4.6 billion in total cash, debt of $6.7 billion and a flexible and attractive bond maturity profile supported by strong investment-grade ratings from all three major rating agencies. Our debt levels are expected to decline in the December quarter as the company retires its November 2024 bonds at maturity.
Moving to our outlook. In the near term, the industry outlook remains positive for our business. Our quarter-to-quarter performance is also consistent with the views we articulated at the beginning of the year. For calendar '24, supported by recent customer announcements, our expectation is for the WFE market to increase modestly from the mid to the high $90 billion range for the calendar year, based on our internal analysis of reported results and guidance across our peers and customers. Our perspective on calendar 2025 expectations is mostly unchanged from what we articulated last quarter.
While we will not be overly specific on expectations for next calendar year until we report in January, we do continue to expect another year of growth, fueled principally by growth and investment in both leading edge Foundry/Logic and Memory, mostly DRAM, offset by lower China demand as customers absorb the equipment investments made over the past couple of years. Given KLA's business momentum, market share opportunities and higher expected process control intensity at the leading edge across all segments, we are confident we can maintain our relative WFE market outperformance in calendar 2025.
KLA's December quarter guidance is as follows: total revenue is expected to be $2.95 billion, plus or minus $150 million. Foundry/Logic revenue from semiconductor customers is forecasted to be approximately 76%, and Memory is expected to be approximately 24% of Semi Process Control systems revenue to semiconductor customers. Within Memory, DRAM is expected to be about 76% of the segment mix and NAND for the remaining 24%.
Non-GAAP gross margin is forecasted to be 61.5%, plus or minus 1 percentage point or up 30 basis points sequentially at the mid-point on slightly higher revenue and more favorable product mix expectations. Non-GAAP operating expenses are forecasted in the December quarter to be approximately $580 million as we continue to make important R&D and scaling investments to support expected revenue growth.
Looking ahead, we expect approximately $15 million in incremental quarterly spend and operating expenses over the next several quarters, supported by our product development roadmap requirements, revenue growth expectations and further balanced against our 40% to 50% incremental operating margin leverage business model over the long-run.
Other model assumptions for the December quarter include non-GAAP other income and expense net of approximately a $33 million expense. GAAP diluted EPS is expected to be $7.45 plus or minus $0.60, and non-GAAP diluted EPS of $7.75 plus or minus $0.60. EPS guidance is based on a fully-diluted share count of approximately 134 million shares.
In conclusion, we are guiding to our third consecutive quarter of sequential revenue growth and improving market demand at the leading edge and expect annual growth to continue in calendar 2025. KLA remains focused on delivering a differentiated product portfolio that addresses customers' technology roadmap requirements and drives our longer-term relevancy and growth expectations. KLA's focus on customer success, delivering innovative and differentiated solutions and operational excellence for what drives industry-leading financial and free cash flow performance and allows us to return capital consistently.
The return of semiconductor scaling leads to increasing complexity and new technologies that have strengthened our confidence in the rising importance of Process Control for enabling new technology advancements. This is not just in improving time-to-results in process integration and fab ramp, but also in optimizing yield across a high volume manufacturing environment with high semiconductor device design mix.
In addition, our service business continues to increase its relevance as system lifetime increases and customer expectations for increased tool availability and performance is a growing long-term tailwind. This bodes well for KLA's long-term growth outlook and industry demand trends favoring KLA are continuing to improve. In alignment with this, KLA's business is well-positioned and the long-term secular trends driving semiconductor industry demand and investments in WFE are very promising.
That concludes our prepared remarks. Let's begin with Q&A.
