When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?Let's take a look at what these Wall Street heavyweights have to say about Onto Innovation (ONTO) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.Onto Innovation currently has an average brokerage recom ...

Core Insights - The performance of Onto Innovation's international operations is crucial for assessing its financial resilience and growth prospects [1][2] - The company's total revenue for the quarter ended June 2025 was $253.6 million, reflecting a 4.7% increase [4] International Revenue Breakdown - Taiwan contributed $65.62 million, accounting for 25.9% of total revenue, which was a surprise of -19.99% compared to the expected $82.01 million [5] - Japan generated $33.77 million, representing 13.3% of total revenue, with a surprise of +163.4% against the forecast of $12.82 million [6] - Europe brought in $12.85 million, making up 5.1% of total revenue, which was a surprise of -15.1% compared to the projected $15.13 million [7] - Southeast Asia accounted for $13.82 million, or 5.5% of total revenue, with a surprise of -1.96% against the expected $14.1 million [8] - South Korea contributed $82.65 million, representing 32.6% of total revenue, with a surprise of +13.62% compared to the forecast of $72.74 million [9] Future Revenue Projections - Analysts project total revenue for the current fiscal quarter to be $218.37 million, a decline of 13.4% from the same quarter last year [10] - For the full year, total revenue is expected to reach $993.72 million, indicating a rise of 0.7% from the previous year [11][12] Conclusion - The dependency on global markets for revenue presents both opportunities and challenges for Onto Innovation, making the monitoring of international revenue trends essential for predicting future performance [13][14]

Core Insights - Onto Innovation Inc. (ONTO) reported Q2 2025 earnings per share (EPS) of $1.25, missing the Zacks Consensus Estimate by 1.6% and down from $1.32 in the prior year [1][8] - Quarterly revenues reached $253.6 million, exceeding the Zacks Consensus Estimate by 1.5% and reflecting a 5% year-over-year increase, driven by growth in advanced nodes and AI-packaging [1][8] Revenue Breakdown - Specialty devices and advanced packaging revenues accounted for 46% of total revenues, totaling $117 million [2] - Revenues from the Advanced nodes market, which represented 35% of total revenues, were $89 million, supported by strong demand in leading-edge DRAM and NAND memory, although GAA transistor demand slowed as anticipated [2] - Software and services revenues, making up 19% of total revenues, amounted to $48 million [3] Acquisition Details - ONTO announced the acquisition of Semilab International's materials analysis business for $475 million in cash and 706,215 shares of common stock, pending regulatory approvals [4] - The acquisition is expected to generate $130 million in revenues in 2025 and enhance gross and operating margins, with non-GAAP EPS projected to increase by over 10% in the first year post-acquisition [5] Margin and Financial Performance - Operating expenses rose to $89.9 million, a 13.2% increase year-over-year [6] - Non-GAAP gross profit increased to $138.3 million, with a gross profit margin of 54.5%, up from 53.2% in the previous year [6] - Non-GAAP operating income was $65.6 million, with a non-GAAP operating margin of 25.9%, down from 26.6% year-over-year [6] Balance Sheet Overview - As of June 28, 2025, ONTO had $894.9 million in cash and marketable securities, compared to $850.6 million as of March 29, 2025 [6] - Total current liabilities decreased to $155.8 million from $174.5 million in the same period [6] - Accounts receivable stood at $285.3 million, with cash generated from operations reaching a record $58 million, reflecting a 95% cash conversion of non-GAAP net income [7] Q3 2025 Guidance - ONTO expects Q3 total revenues to be between $210 million and $225 million, with a consensus estimate of $217.8 million, anticipating a slowdown in advanced node spending [9] - Non-GAAP EPS is projected to range from 75 cents to 95 cents, while GAAP EPS is expected between 52 cents and 72 cents [10] - Non-GAAP operating margin is anticipated to be between 18% and 21% [10] Tariff Impact and Strategy - ONTO expects to incur tariff expenses of $2 million to $3 million in both Q3 and Q4 due to inbound tariffs [11] - The company is implementing a region-for-region strategy, rapidly establishing manufacturing capabilities in several Asian markets, with shipments expected to commence in the current quarter [11]

Financial Data and Key Metrics Changes - Onto Innovation reported revenue of $253.6 million for Q2 2025, representing a 5% year-over-year increase [14] - Gross margin for Q2 was 54.5%, which would have been approximately 55% excluding $1.1 million in tariff-related expenses [15][17] - Operating margin was 25.9%, near the high end of the expected range, attributed to productivity gains in R&D and operations [15] - Earnings per share for the quarter was $1.25, impacted by unfavorable foreign exchange losses and an increase in the effective tax rate to 16% [16] Business Line Data and Key Metrics Changes - Advanced nodes revenue was $89 million, accounting for 35% of Q2 revenue [16] - Specialty devices and advanced packaging revenue reached $117 million, representing 46% of total revenue [16] - Software and services revenue was $48 million, or 19% of total revenue [16] Market Data and Key Metrics Changes - The company expects a rebound in revenue in the fourth quarter, consistent with levels reported in the first two quarters of 2025 [11][13] - Demand for AI packaging is anticipated to drive a significant increase in revenue, with expectations of at least a 50% quarter-over-quarter increase in Q4 [10] - Advanced node spending is expected to pause in Q3 but is projected to increase in Q4, with advanced nodes revenue expected to nearly double compared to 2024 [12][18] Company Strategy and Development Direction - Onto Innovation announced a strategic agreement to acquire product lines from Semi Lab International, expected to close pending regulatory approvals [4][6] - The acquisition is projected to add over $130 million in annual revenue and be immediately accretive to gross and operating margins [6] - The company is focusing on expanding its portfolio in inspection and metrology systems to address new challenges in advanced nodes and packaging [5][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a revenue rebound in Q4, driven by strong customer demand and increased spending in AI packaging [11][13] - The company is taking a prudent approach to manage operating costs while ensuring R&D capabilities are not significantly impacted [21] - The ramp-up of a regional manufacturing strategy is expected to enhance operational resilience and mitigate tariff-related exposure [20][24] Other Important Information - Cash from operations was $58 million, representing a 95% cash conversion of non-GAAP net income for the quarter [17] - The company ended the quarter with approximately $895 million in cash and investments, an increase of $44 million from Q1 [17] - Anticipated tariff expenses for Q3 and Q4 are expected to be around $2 million to $3 million each quarter [19] Q&A Session Summary Question: Follow-up on Next Gen Dragonfly and customer milestones - Management confirmed significant milestones achieved with a key customer and ongoing reliability testing before shipping high-quality products [28][30] Question: Factors influencing Q4 revenue range - The revenue range for Q4 is primarily driven by customer demand rather than specific programs, with strong demand for AI packaging tools noted [33][34] Question: Next Gen Dragonfly shipping timeline and growth potential - Tools are on track to be shipped this year, with expectations for strong growth driven by various applications [37][40] Question: Subsurface defect inspection demand - Demand for subsurface defect inspection is coming from multiple customers across various applications, not limited to one customer [46][48] Question: Importance of Next Gen Dragonfly platform - The platform is considered crucial for defending existing positions in high-performance metrology, with significant advancements over previous technologies [50] Question: Semi Lab acquisition and growth expectations - The acquisition is expected to provide above-average growth opportunities, with synergies to be discussed post-closing [80][82]

[Executive Summary & Business Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Business%20Highlights) Onto Innovation delivered a **strong second quarter** with revenue exceeding guidance, expanded market footprint in advanced metrology, and announced a strategic acquisition, with the CEO projecting future growth in advanced nodes and AI packaging [Second Quarter Business Highlights](index=1&type=section&id=1.1%20Second%20Quarter%20Business%20Highlights) Onto Innovation delivered a **strong second quarter**, exceeding revenue guidance and expanding its market footprint in advanced metrology and inspection systems, particularly for AI packaging, complemented by the strategic acquisition of synergistic product lines from Semilab - Delivered a **strong second quarter**, with revenue exceeding the midpoint of previously announced guidance range[6](index=6&type=chunk) - Expanded Dragonfly® 3Di metrology footprint, shipping tools to **more than 10 customers** for applications including co-packaged optics and advanced 2.5D logic packaging[6](index=6&type=chunk) - Achieved strong adoption of sub-surface defect inspection, shipping **over 20 Dragonfly systems** for advanced AI packaging applications in the quarter[6](index=6&type=chunk) - Announced acquisition of synergistic product lines from Semilab International Zrt. for **$545 million** in cash and stock, expected to add **over $130 million** in annual revenue and be **immediately accretive to earnings per share** upon closing[6](index=6&type=chunk) [CEO Commentary](index=1&type=section&id=1.2%20CEO%20Commentary) CEO Michael Plisinski highlighted increasing customer value through innovative product development, projecting a **near doubling of advanced node revenue in 2025**, expanded 3Di metrology positions, and anticipating Q3 as a low point before Q4 AI packaging spend accelerates revenue into 2026 - Expected **near doubling of revenue in 2025** in advanced nodes markets[3](index=3&type=chunk) - **Expanded positions in Dragonfly's 3Di interconnect metrology** and validated sensitivity and scan time performance in next-generation inspection Dragonfly system[3](index=3&type=chunk) - The pending Semilab acquisition is expected to further increase the breadth and depth of the company's portfolio[3](index=3&type=chunk) - **Third quarter revenue is likely to represent a low watermark for the year**[3](index=3&type=chunk) - Expects an **acceleration in AI packaging spend in the fourth quarter**, **returning total Q4 revenue to Q1/Q2 levels** with **continued momentum into 2026**[3](index=3&type=chunk) [Financial Performance Overview](index=1&type=section&id=2.%20Financial%20Performance%20Overview) Onto Innovation reported a **5%** year-over-year revenue increase in Q2 2025 and **10%** in H1 2025, with non-GAAP metrics showing robust operational performance despite some GAAP declines [Three Months Ended June 28, 2025 (Q2 2025)](index=1&type=section&id=2.1%20Three%20Months%20Ended%20June%2028%2C%202025%20%28Q2%202025%29) For Q2 2025, Onto Innovation reported a **5%** year-over-year revenue increase to **$253.6 million**, with GAAP gross margin and net income declining, while non-GAAP metrics showed improvement or stability after adjustments Q2 2025 Financial Highlights (GAAP vs. Non-GAAP) | Metric | Q2 2025 (GAAP) | Q2 2024 (GAAP) | YoY Change (GAAP) | Q2 2025 (Non-GAAP) | Q2 2024 (Non-GAAP) | YoY Change (Non-GAAP) | | :----------------------- | :------------- | :------------- | :---------------- | :----------------- | :----------------- | :-------------------- | | Revenue | $253.6M | $242.3M | +5% | $253.6M | $242.3M | +5% | | Gross Margin | 48.2% | 52.9% | -4.7 pp | 54.5% | 53.2% | +1.3 pp | | Operating Income | $32.2M | $48.8M | -34% | $65.6M | $64.5M | +1.7% | | Operating Margin | 12.7% | 20.2% | -7.5 pp | 25.9% | 26.6% | -0.7 pp | | Net Income | $33.9M | $52.9M | -35.9% | $61.3M | $65.4M | -6.3% | | Diluted EPS | $0.69 | $1.07 | -35.5% | $1.25 | $1.32 | -5.3% | [Cash and Investments](index=2&type=section&id=2.1.1%20Cash%20and%20Investments) Onto Innovation generated **$57.9 million** in cash from operations for Q2 2025, ending the quarter with **$895 million** in cash and short-term investments - Generated cash from operations of **$57.9 million** for the second quarter of 2025[8](index=8&type=chunk) - Ended the second quarter with **$895 million** of cash and short-term investments on hand[8](index=8&type=chunk) [Six Months Ended June 28, 2025 (H1 2025)](index=2&type=section&id=2.2%20Six%20Months%20Ended%20June%2028%2C%202025%20%28H1%202025%29) For H1 2025, Onto Innovation's revenue grew **10%** year-over-year to **$520.2 million**, with GAAP net income slightly down, but non-GAAP operating income and net income showing robust growth H1 2025 Financial Highlights (GAAP vs. Non-GAAP) | Metric | H1 2025 (GAAP) | H1 2024 (GAAP) | YoY Change (GAAP) | H1 2025 (Non-GAAP) | H1 2024 (Non-GAAP) | YoY Change (Non-GAAP) | | :----------------------- | :------------- | :------------- | :---------------- | :----------------- | :----------------- | :-------------------- | | Revenue | $520.2M | $471.2M | +10% | $520.2M | $471.2M | +10% | | Gross Margin | 51.0% | 52.3% | -1.3 pp | 54.8% | 52.7% | +2.1 pp | | Operating Income | $95.4M | $91.6M | +4.1% | $142.1M | $121.8M | +16.7% | | Operating Margin | 18.3% | 19.4% | -1.1 pp | 27.3% | 25.9% | +1.4 pp | | Net Income | $98.0M | $99.8M | -1.8% | $136.1M | $123.8M | +10% | | Diluted EPS | $1.99 | $2.01 | -1.0% | $2.77 | $2.49 | +11.2% | [Financial Outlook](index=2&type=section&id=3.%20Financial%20Outlook) Onto Innovation provides Q3 2025 guidance, forecasting revenue between **$210 million** and **$225 million**, with projected gross margin of **53% to 55%** and diluted EPS ranges [Third Quarter 2025 Guidance](index=2&type=section&id=3.1%20Third%20Quarter%202025%20Guidance) For Q3 2025, Onto Innovation forecasts revenue between **$210 million** and **$225 million**, with gross margin of **53% to 55%**, and diluted EPS ranging from **$0.52 to $0.72** (GAAP) and **$0.75 to $0.95** (non-GAAP) Q3 2025 Financial Guidance | Metric | Low End | High End | | :----------------------- | :------ | :------- | | Revenue | $210M | $225M | | Gross Margin | 53% | 55% | | GAAP Diluted EPS | $0.52 | $0.72 | | Non-GAAP Diluted EPS | $0.75 | $0.95 | [Non-GAAP Financial Measures](index=3&type=section&id=4.%20Non-GAAP%20Financial%20Measures) This section discusses Onto Innovation's use of non-GAAP financial measures to provide a clearer view of operational performance by excluding specific non-recurring items for transparency and comparability [Discussion of Non-GAAP Financial Measures](index=3&type=section&id=4.1%20Discussion%20of%20Non-GAAP%20Financial%20Measures) Onto Innovation uses non-GAAP financial measures to clarify ongoing operational performance by excluding items like amortization of intangibles and M&A expenses, aiming for greater transparency and comparability, though not as a GAAP substitute - Non-GAAP financial measures exclude amortization of intangibles, merger and acquisition-related expenses and benefits, litigation expenses and benefits, and restructuring costs[13](index=13&type=chunk) - These items are excluded because they are outside normal operations, difficult to forecast, or not representative of ongoing operations[13](index=13&type=chunk) - Non-GAAP measures are used for analyzing business performance, making operating decisions, forecasting, and determining compensation, providing useful supplemental data for transparency and comparability[14](index=14&type=chunk) - Limitations include that non-GAAP measures are not prepared in accordance with GAAP, may differ from those used by other companies, and exclude items that could materially impact reported financial results[21](index=21&type=chunk) [Corporate Information](index=3&type=section&id=5.%20Corporate%20Information) This section provides details on Onto Innovation's Q2 2025 webcast and conference call, outlines forward-looking statements and associated risks, and describes the company's leadership in process control technologies [Webcast & Conference Call Details](index=3&type=section&id=5.1%20Webcast%20%26%20Conference%20Call%20Details) Onto Innovation hosted a conference call and live webcast on **August 7, 2025**, to discuss Q2 2025 financial results, with replay details available online - Conference call held on **August 7, 2025**, at 4:30 p.m. Eastern Time[11](index=11&type=chunk) - Dial-in information: **(888) 394-8218** (U.S.) or **+1 (646) 828-8193** (International), **Conference ID 8788805**[11](index=11&type=chunk) - Live webcast and **one-year** replay available at www.ontoinnovation.com[11](index=11&type=chunk)[12](index=12&type=chunk) [Forward-Looking Statements](index=4&type=section&id=5.2%20Forward-Looking%20Statements) This section contains forward-looking statements about Onto Innovation's future performance, growth, and market outlook, which are subject to various risks and uncertainties, and the company does not commit to updating them - Statements cover business momentum, future growth, technology development, product acceptance, manufacturing practices, semiconductor market outlook, and future quarterly financial outlook[22](index=22&type=chunk) - Risks and uncertainties include economic environments, customer capital spending fluctuations, supply chain management, political/economic/legal/regulatory changes, intellectual property protection, natural disasters, global trade issues, customer relationships, and the ability to consummate and integrate acquisitions like Semilab[22](index=22&type=chunk) - Onto Innovation does not assume any obligation to update the forward-looking information, except as required by law[23](index=23&type=chunk) [About Onto Innovation](index=5&type=section&id=5.3%20About%20Onto%20Innovation) Onto Innovation, headquartered in Wilmington, Massachusetts, leads in process control, offering advanced technologies to optimize yield, device performance, quality, and reliability across the semiconductor value chain - Onto Innovation is a leader in process control, combining **global scale** with an **expanded portfolio of leading-edge technologies**[24](index=24&type=chunk) - Offerings include unpatterned wafer quality, 3D metrology, macro defect inspection, metal interconnect composition, factory analytics, and lithography for advanced semiconductor packaging[24](index=24&type=chunk) - Aims to optimize customers' critical path of progress by addressing yield, device performance, quality, and reliability issues[24](index=24&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=6.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Onto Innovation's condensed consolidated balance sheets, statements of operations, non-GAAP financial summary, and detailed reconciliations for Q2 and H1 2025, including Q3 2025 guidance [Condensed Consolidated Balance Sheets](index=6&type=section&id=6.1%20Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show Onto Innovation's financial position as of June 28, 2025, with total assets slightly increasing due to higher cash and investments, while liabilities decreased and stockholders' equity grew Condensed Consolidated Balance Sheets (in thousands) | Asset/Liability/Equity | June 28, 2025 | December 28, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash, cash equivalents and marketable securities | $894,936 | $852,328 | | Accounts receivable, net | $285,329 | $308,142 | | Inventories | $270,219 | $286,979 | | Total current assets | $1,494,406 | $1,477,522 | | Net property, plant and equipment | $132,987 | $123,868 | | Goodwill and intangibles, net | $440,603 | $457,437 | | Total assets | $2,140,266 | $2,117,091 | | Accounts payable and accrued liabilities | $87,627 | $106,236 | | Total current liabilities | $155,781 | $170,089 | | Total liabilities | $177,000 | $191,209 | | Stockholders' equity | $1,963,266 | $1,925,882 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=6.2%20Condensed%20Consolidated%20Statements%20of%20Operations) This section presents GAAP condensed consolidated statements of operations for the three and six months ended June 28, 2025, detailing revenue, gross profit, operating expenses, and net income to provide a comprehensive view of financial performance Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $253,597 | $242,327 | $520,204 | $471,172 | | Cost of revenue | $131,475 | $114,091 | $254,849 | $224,651 | | Gross profit | $122,122 | $128,236 | $265,355 | $246,521 | | Operating expenses: | | | | | | Research and development | $35,292 | $27,044 | $63,322 | $53,599 | | Sales and marketing | $14,910 | $18,921 | $34,626 | $37,184 | | General and administrative | $25,003 | $19,705 | $47,788 | $37,065 | | Amortization | $8,446 | $13,112 | $16,891 | $26,224 | | Restructuring and other | $6,224 | $621 | $7,347 | $879 | | Total operating expenses | $89,875 | $79,403 | $169,974 | $154,951 | | Operating income | $32,247 | $48,833 | $95,381 | $91,570 | | Interest income, net | $8,631 | $8,496 | $17,897 | $15,857 | | Other (expense) income, net | $(1,137) | $(60) | $(1,880) | $734 | | Income before provision for income taxes | $39,741 | $57,269 | $111,398 | $108,161 | | Provision for income taxes | $5,830 | $4,320 | $13,392 | $8,359 | | Net income | $33,911 | $52,949 | $98,006 | $99,802 | | Earnings per share: | | | | | | Basic | $0.69 | $1.07 | $2.00 | $2.02 | | Diluted | $0.69 | $1.07 | $1.99 | $2.01 | | Weighted average shares outstanding: | | | | | | Basic | 48,925 | 49,342 | 49,053 | 49,286 | | Diluted | 49,016 | 49,674 | 49,213 | 49,656 | [Non-GAAP Financial Summary](index=8&type=section&id=6.3%20Non-GAAP%20Financial%20Summary) This section summarizes Onto Innovation's non-GAAP financial results for the three and six months ended June 28, 2025, highlighting key adjusted metrics like gross profit, operating income, and diluted EPS for an alternative performance view Non-GAAP Financial Summary (in thousands, except percentage and per share amounts) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $253,597 | $242,327 | $520,204 | $471,172 | | Gross profit | $138,313 | $128,974 | $285,181 | $248,082 | | Gross margin as percentage of revenue | 54.5% | 53.2% | 54.8% | 52.7% | | Operating expenses | $72,698 | $64,444 | $143,071 | $126,253 | | Operating income | $65,615 | $64,530 | $142,110 | $121,829 | | Operating margin as a percentage of revenue | 25.9% | 26.6% | 27.3% | 25.9% | | Net income | $61,303 | $65,354 | $136,112 | $123,806 | | Diluted earnings per share | $1.25 | $1.32 | $2.77 | $2.49 | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=6.4%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations between U.S. GAAP and non-GAAP financial measures for gross profit, operating income, net income, and diluted EPS, including adjustments for Q3 2025 guidance [Gross Profit, Operating Expenses, Operating Income Reconciliation](index=8&type=section&id=6.4.1%20Gross%20Profit%2C%20Operating%20Expenses%2C%20Operating%20Income%20Reconciliation) This sub-section reconciles U.S. GAAP to non-GAAP gross profit, operating expenses, operating income, gross margin, and operating margin for the three and six months ended June 28, 2025 Reconciliation of U.S. GAAP Gross Profit, Operating Expenses, Operating Income, Gross Margin And Operating Margin To Non-GAAP (in thousands, except percentages) | Metric | June 28, 2025 (GAAP) | June 28, 2025 (Non-GAAP) | June 29, 2024 (GAAP) | June 29, 2024 (Non-GAAP) | | :-------------------------------- | :------------------- | :----------------------- | :------------------- | :----------------------- | | **Three Months Ended:** | | | | | | U.S. GAAP gross profit | $122,122 | $138,313 | $128,236 | $128,974 | | Non-GAAP gross profit | | $138,313 | | $128,974 | | U.S. GAAP gross margin as a percentage of revenue | 48.2% | 54.5% | 52.9% | 53.2% | | U.S. GAAP operating income | $32,247 | $65,615 | $48,833 | $64,530 | | Non-GAAP operating income | | $65,615 | | $64,530 | | U.S. GAAP operating margin as a percentage of revenue | 12.7% | 25.9% | 20.2% | 26.6% | | **Six Months Ended:** | | | | | | U.S. GAAP gross profit | $265,355 | $285,181 | $246,521 | $248,082 | | Non-GAAP gross profit | | $285,181 | | $248,082 | | U.S. GAAP gross margin as a percentage of revenue | 51.0% | 54.8% | 52.3% | 52.7% | | U.S. GAAP operating income | $95,381 | $142,110 | $91,570 | $121,829 | | Non-GAAP operating income | | $142,110 | | $121,829 | | U.S. GAAP operating margin as a percentage of revenue | 18.3% | 27.3% | 19.4% | 25.9% | [Net Income and EPS Reconciliation](index=9&type=section&id=6.4.2%20Net%20Income%20and%20EPS%20Reconciliation) This sub-section reconciles U.S. GAAP to non-GAAP net income and diluted earnings per share for the three and six months ended June 28, 2025 Reconciliation of U.S. GAAP Net Income To Non-GAAP Net Income And Non-GAAP Net Income Per Diluted Share (in thousands, except share and per share data) | Metric | June 28, 2025 (GAAP) | June 28, 2025 (Non-GAAP) | June 29, 2024 (GAAP) | June 29, 2024 (Non-GAAP) | | :-------------------------------- | :------------------- | :----------------------- | :------------------- | :----------------------- | | **Three Months Ended:** | | | | | | U.S. GAAP net income | $33,911 | $61,303 | $52,949 | $65,354 | | Non-GAAP net income | | $61,303 | | $65,354 | | Non-GAAP diluted earnings per share | $0.69 | $1.25 | $1.07 | $1.32 | | **Six Months Ended:** | | | | | | U.S. GAAP net income | $98,006 | $136,112 | $99,802 | $123,806 | | Non-GAAP net income | | $136,112 | | $123,806 | | Non-GAAP diluted earnings per share | $1.99 | $2.77 | $2.01 | $2.49 | [Third Quarter 2025 Guidance Reconciliation](index=9&type=section&id=6.4.3%20Third%20Quarter%202025%20Guidance%20Reconciliation) This sub-section provides a reconciliation of Onto Innovation's U.S. GAAP to non-GAAP guidance for the third quarter of 2025 Supplemental Information - Reconciliation of Third Quarter 2025 U.S. GAAP To Non-GAAP Guidance ($ in millions, except percentages and per share data) | Metric | Low End GAAP | Low End Non-GAAP | High End GAAP | High End Non-GAAP | | :-------------------------------- | :----------- | :--------------- | :------------ | :---------------- | | Estimated U.S. GAAP Operating Income | $22.60 | | $33.90 | | | Estimated non-GAAP Operating Income | | $36.80 | | $48.10 | | Estimated U.S. GAAP Operating Margin | 11% | | 15% | | | Estimated non-GAAP Operating Margin | | 18% | | 21% | | Estimated U.S. GAAP EPS | $0.52 | | $0.72 | | | Estimated non-GAAP EPS | | $0.75 | | $0.95 |

Group 1 - Onto Innovation's stock closed at $102.31, reflecting a +1.38% increase, outperforming the S&P 500's loss of 0.13% [1] - The company has seen a 0.69% gain in stock price over the past month, while the Computer and Technology sector gained 4.69% and the S&P 500 gained 3.39% [1] Group 2 - The upcoming earnings report is scheduled for August 7, 2025, with an expected EPS of $1.27, indicating a 3.79% decrease from the same quarter last year [2] - Revenue is forecasted at $249.75 million, showing a 3.06% increase compared to the previous year [2] Group 3 - For the full year, earnings are projected at $5.13 per share and revenue at $993.68 million, reflecting changes of -3.93% and +0.64% respectively from the prior year [3] - Recent analyst estimate revisions are crucial as they indicate shifting business dynamics, with positive revisions suggesting optimism about profitability [3][4] Group 4 - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has shown that 1 ranked stocks have averaged a +25% annual return since 1988 [5] - Currently, Onto Innovation holds a Zacks Rank of 3 (Hold), with the EPS estimate having decreased by 0.13% over the past month [5] Group 5 - Onto Innovation's Forward P/E ratio is 19.68, aligning with the industry average, indicating no significant deviation in valuation [6] - The company's PEG ratio stands at 0.66, consistent with the Nanotechnology industry's average, which is part of the Computer and Technology sector [7] Group 6 - The Nanotechnology industry has a Zacks Industry Rank of 91, placing it in the top 37% of over 250 industries, suggesting strong performance potential [7][8]

Company Overview - Onto Innovation (ONTO) ended the recent trading session at $96.95, showing a -1.77% change from the previous day's closing price, which is less than the S&P 500's daily loss of 0.01% [1] - Prior to today's trading, shares of Onto Innovation had gained 1.78%, lagging behind the Computer and Technology sector's gain of 7.44% and the S&P 500's gain of 5.37% [1] Financial Performance - Onto Innovation is projected to report earnings of $1.27 per share, representing a year-over-year decline of 3.79%, with a consensus estimate for revenue of $249.75 million, up 3.06% from the prior-year quarter [2] - Full-year Zacks Consensus Estimates call for earnings of $5.14 per share and revenue of $994.52 million, indicating year-over-year changes of -3.75% and +0.73%, respectively [3] Analyst Insights - Recent revisions to analyst forecasts for Onto Innovation are important as they reflect changing business trends, with positive alterations indicating analyst optimism regarding the business and profitability [3] - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks Onto Innovation at 3 (Hold), with the Zacks Consensus EPS estimate remaining stagnant over the past month [5] Valuation Metrics - Onto Innovation has a Forward P/E ratio of 19.22, which shows no noticeable deviation compared to its industry's Forward P/E of 19.22 [6] - The company has a PEG ratio of 0.64, indicating a favorable valuation relative to its expected earnings growth rate, consistent with the average PEG ratio of nanotechnology stocks [7] Industry Context - The Nanotechnology industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 92, placing it in the top 38% of all 250+ industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Company Performance - Onto Innovation's stock decreased by 1.08% to $101.76, underperforming the S&P 500's loss of 0.33% on the same day [1] - Over the past month, Onto Innovation's stock has increased by 2.87%, which is lower than the Computer and Technology sector's gain of 5.24% and the S&P 500's gain of 4.07% [1] Upcoming Earnings - Onto Innovation is expected to report earnings of $1.27 per share, reflecting a year-over-year decline of 3.79% [2] - The consensus estimate for revenue is $249.75 million, which represents a 3.06% increase from the prior-year quarter [2] Full Year Projections - For the full year, earnings are projected at $5.14 per share, indicating a decline of 3.75% from the previous year, while revenue is expected to reach $994.52 million, showing a slight increase of 0.73% [3] - Recent revisions to analyst forecasts for Onto Innovation should be monitored, as they may indicate changes in short-term business dynamics [3] Valuation Metrics - Onto Innovation has a Forward P/E ratio of 20.03, which aligns with its industry's Forward P/E of 20.03 [6] - The company has a PEG ratio of 0.67, matching the average PEG ratio for the Nanotechnology industry [6] Industry Overview - The Nanotechnology industry is part of the Computer and Technology sector and holds a Zacks Industry Rank of 91, placing it in the top 37% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - Onto Innovation Inc. (ONTO) has finalized an agreement to acquire Semilab International's materials analysis business for approximately $545 million, which includes $475 million in cash and 706,215 shares of common stock [1][9] - The acquisition is expected to enhance Onto Innovation's capabilities in materials characterization and wafer contamination monitoring, addressing the growing demand for precise materials analysis in the semiconductor industry [1][3] Financial Impact - The Semilab business is projected to generate $130 million in revenue in 2025, with a compound annual growth rate (CAGR) of around 20% since 2021 [3] - The integration of Semilab's business is anticipated to improve Onto Innovation's gross margin, operating margin, and non-GAAP EPS by more than 10% in the first year post-acquisition [3][9] Strategic Alignment - This acquisition aligns with Onto Innovation's strategy of investing in high-margin and high-growth segments of the semiconductor value chain, supporting its long-term commitment to shareholder value [4] - The technological synergy between Onto Innovation's existing tools and Semilab's offerings is expected to enhance product capabilities, particularly in advanced semiconductor nodes [5] Market Context - The demand for real-time, precise materials analysis is increasing as semiconductor manufacturers utilize more complex materials for advanced applications, including AI and power devices [3] - Onto Innovation's recent acquisitions, including Lumina Instruments and the lithography business from Kulicke and Soffa, are part of a broader strategy to expand its market presence and capabilities in the semiconductor sector [6][7] Operational Considerations - A detailed transition service agreement has been established to ensure a smooth handover for customers, with the acquisition subject to regulatory approvals in the U.S. and Hungary, expected to close in the second half of 2025 [2][8]

Company Overview - Onto Innovation is a high-tech capital equipment company specializing in optical process solutions for semiconductor and related markets[6] - The company has a trailing twelve month (TTM) revenue of $846 million[7] - The company's TTM adjusted EPS is $3.99[7] - The company has over 10,000 employees[7] - The company has over 1,500 active metrology & inspection tools installed[7] Market Trends and Growth Drivers - The AI server market is expected to grow at a compound annual growth rate (CAGR) of 42%[9] - Chiplet packaging is expected to grow at a CAGR of 80%[9] - Global EV charging station is expected to grow at a CAGR of 46%[9] - The company estimates its Total Available Market (TAM) will increase threefold due to the AI era, reaching $12.3 billion[12] Financial Guidance and Long-Term Model - The company's Q2 2024 revenue guidance is between $230 million and $240 million[32] - The company's Q2 2024 gross margin guidance is between 52% and 54%[32] - The company's Q2 2024 diluted EPS guidance is between $1.14 and $1.26[32] - The company's long-term organic operating model targets $1.8 billion in revenue[33]