Bren D. Higgins
Executive Vice President and Chief Financial Officer at KLA
Thanks, Rick. Our results reinforce the success of our execution and strong market position. We continue to focus on meeting customer needs in a robust demand environment while expanding market leadership, growing revenue, increasing gross and operating profit, generating strong free cash flow and maintaining our long-term strategy of productive capital allocation. Quarterly revenue was $2.289 billion at the upper end of the guided range of $2.1 billion to $2.3 billion. Non-GAAP gross margin was above the midpoint of guidance at 62.9% as the various components performed mostly as expected, with upside coming from the higher-than-expected semiconductor process control systems revenue, which enhanced the product mix for the quarter. Non-GAAP diluted EPS was $5.13, also towards the upper end of the guided range of $4.35 to $5.25. GAAP diluted EPS was $4.83. Non-GAAP operating expenses were $484 million, below our expectation of $495 million, mostly due to the pace of new hiring, which was slower than originally planned.
Total operating expenses were comprised of $285 million in R&D and $199 million in SG&A. Given the strong demand backdrop, rapid expansion of our business over the last couple of years and our revenue expectations for the business going forward, we expect to continue to invest in our global infrastructure and systems to scale the KLA operating model to facilitate growth. This includes investing in new product development programs and volume-dependent resources to support our business expansion as we position the company to execute against our long-term structural growth thesis. Furthermore, we, as most companies, are seeing a strong labor market driving cost pressure across our global workforce and adjustments related to our annual merit process that went into effect during March.
As a result, we expect operating expenses to grow to approximately $525 million in the June quarter, and we forecast quarterly operating expenses to trend higher over the balance of 2022, along with our sequential revenue growth expectations. We continue to size the company based on our target operating model which delivers 40% to 50% incremental operating margin leverage on revenue growth over our normalized time horizon. Non-GAAP operating income as a percentage of revenue was once again strong at 41.7% in the March quarter. Other income and expense net was $46 million compared with guidance of $41 million, with the variance from guidance reflecting the mark-to-market impact of a strategic supply investment. For the June quarter, we forecast other income and expense net at approximately $43 million. The quarterly effective tax rate was 14.6%, above our guided tax rate of 13.5%. Non-GAAP earnings per share at the guided tax rate would have been $5.20. Non-GAAP net income was $776 million. GAAP net income was $731 million. Cash flow from operations was $819 million. And free cash flow was $79 million, resulting in free cash flow conversion of 93% and free cash flow margin of 31.4%. Looking at revenue by reportable segments and end markets. Revenue for the Semiconductor Process Control segment, including its associated service business, was $1.98 billion, up 31% year-over-year and down 4% sequentially as expected.
The approximate Semiconductor Process Control system customer segment mix for foundry logic customers was approximately 63%. Memory was approximately 37%, with a further breakdown comprised of 26% from DRAM customers and 11% from NAND. Revenue for our EPC group continues to be driven by strength in automotive, 5G and advanced packaging. Within EPC, the specialty semiconductor process segment, which includes its associated service business, generated revenue of $117 million, up 28% over the prior year and up 4% sequentially. PCB, Display and Component Inspection revenue was $193 million, down 6% year-over-year and up 2% on a sequential basis.
For an additional breakdown of revenue by major products in region, please see the shareholder letter and slides. In terms of the balance sheet, KLA ended the quarter with $2.6 billion in total cash, debt of $3.7 billion and a flexible and attractive bond maturity profile supported by strong investment-grade ratings from all three agencies. We have growing confidence in our business over the long run and are committed to a consistent strategy of cash returns to shareholders that enables growing dividends and increased share repurchases. Over the long term, we target returning at least 70% of free cash flow generated. Our capital return strategy underscores our strong record of predictable and productive capital deployment and remains an important differentiating element of the KLA investment thesis.
Over the last 12 months, KLA has returned $2.3 billion to shareholders, including $1.7 billion in share repurchases and $620 million in dividends paid. KLA has an impressive history of consistent free cash flow generation, high free cash flow conversion and a strong free cash flow margin across all phases of the business cycle and economic conditions. Turning to the outlook. Our overall semiconductor demand and WFE outlook for calendar '22 remains unchanged. We expect the WFE market to grow in the mid-teens to over $100 billion in 2022, off a higher base of approximately $87 billion in calendar '21 after assessing reported results for the December quarter. Although based on pure company March reporting, it appears that industry supply issues will increase the loading in the second half of the year. This reflects the continued broad-based strength of demand across all customer segments.
While we add capacity at KLA and with our suppliers, supply chain shortages continue to constrain our ability to meet customer demand. In addition, the duration and potential expansion of COVID-19-related lockdowns in China are unknown and could adversely impact some suppliers with operations in the affected areas. Furthermore, these lockdowns could delay systems installations and customer acceptance processes due to resource mobility restrictions in the country. In short, the situation is fluid and will be monitored closely. Supplier visibility remains challenging and has not improved over the past three months. We still expect to see quarterly sequential revenue growth throughout calendar 2022 and overall revenue growth for the calendar year to exceed 20%. In addition, we believe that demand will continue to exceed supply through the remainder of the calendar year. KLA is in position to deliver another year of sustainable outperformance in our semiconductor process control business and strong relative growth overall. Looking ahead, we remain encouraged by the strength and sustainability of our current demand profile.
Our bookings momentum and strong backlog positions us to outperform WFE. As in calendar 2021, we are strategically adding capacity across our global manufacturing footprint to support this outlook and our customers' growing process control requirements. Our June quarter guidance is as follows: Total revenue is expected to be in a range of $2.425 billion, plus or minus $125 million. Foundry logic is forecasted to be approximately 56%, and memory is expected to be approximately 44% of semiconductor process control systems revenue. Within memory, DRAM is expected to be about 66% of the segment and NAND is forecasted to be about 34%. We forecast non-GAAP gross margin to be in a range of 61.5% to 63.5% as we expect sequential growth in EPC revenue in the quarter and a slightly weaker product mix within semi process control to dilute margins modestly versus the March quarter.
Longer term, infrastructure investments, labor cost inflation, supply chain strain and rising global logistics costs are surpassing the benefits of economies of scale normally seen in a rising revenue environment. Given expectations for revenue for the year, we continue to expect that calendar '22 gross margins will be in a range of 63%, plus or minus 50 basis points. Other model assumptions for the June quarter include non-GAAP operating expenses of approximately $525 million, other income and expense net of approximately $43 million and an effective tax rate of approximately 13.5%. Finally, GAAP diluted EPS is expected to be in a range of $4.60 to $5. And non-GAAP diluted EPS in a range of $4.93 to $6.03. The EPS guidance is based on a fully diluted share count of approximately 150 million shares. In closing, the secular trends driving semiconductor growth and investments in WFE are compelling despite the current macroeconomic headwinds.
Broad-based customer demand and simultaneous investments across technology nodes are strong and resilient trends. We have confidence in the leading indicators for our business, including our backlog and bookings visibility, which motivates us to invest in expanding our business infrastructure and the required capabilities to support our outlook. Our customers' multiyear investment plans provide an element of stability in the demand outlook for the future. KLA operating model positions us well to outperform our industry and guides our important strategic objectives. These objectives fuel our growth, reliable operational excellence and differentiation across an increasingly diverse product and service offering. They are also the foundation of our sustained technology leadership, wide competitive moat, leading financial performance, long-standing track record of strong free cash flow generation and consistent capital returns to shareholders.
And with that,I'll turn the call back over to Kevin to begin the Q&A session. Kevin?
