[Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) This statement outlines the nature of forward-looking information, the inherent uncertainties in financial reporting, and potential factors that could cause actual results to differ materially - This report contains forward-looking statements based on management's expectations, estimates, projections, and assumptions, identified by words like "expects," "anticipates," and "plans"[9](index=9&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, which may differ from actual results. Operating results for the three and six months ended **June 30, 2025**, are not necessarily indicative of the full year[10](index=10&type=chunk) - Factors that could cause actual results to differ materially include changes in U.S. and foreign trade policies (including tariffs), risks of global operations (e.g., U.S.-China trade disputes), inability to obtain export licenses, unfavorable market conditions, significant competition, rapid technological change, dependency on consumer electronics and automobiles, concentrated customer base, industry cyclicality, inaccurate demand estimation, reliance on limited suppliers, and risks associated with outsourcing activities[11](index=11&type=chunk)[13](index=13&type=chunk) [PART I—FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Veeco Instruments Inc.'s unaudited consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024 (Balance Sheets), and June 30, 2025, and 2024 (Statements of Operations, Comprehensive Income, and Cash Flows), along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total assets | $1,251,577 | $1,274,705 | $23,128 | 1.8% | | Total liabilities | $480,807 | $418,509 | $(62,298) | -13.0% | | Total stockholders' equity | $770,770 | $856,196 | $85,426 | 11.1% | | Cash and cash equivalents | $145,595 | $188,902 | $43,307 | 29.7% | | Short-term investments | $198,719 | $165,890 | $(32,829) | -16.5% | | Accounts receivable, net | $96,834 | $106,524 | $9,690 | 10.0% | | Inventories | $246,735 | $258,984 | $12,249 | 5.0% | | Total current liabilities | $192,282 | $155,238 | $(37,044) | -19.3% | | Current portion of long-term debt | $26,496 | $— | $(26,496) | -100.0% | | Long-term debt | $249,702 | $225,441 | $(24,261) | -9.7% | | Additional paid-in capital | $1,227,134 | $1,288,709 | $61,575 | 5.0% | | Accumulated deficit | $(458,455) | $(434,775) | $23,680 | -5.2% | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This statement reports the company's revenues, expenses, and net income over specific periods, reflecting operational performance | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net sales | $166,104 | $175,879 | $(9,775) | -5.6% | $333,396 | $350,363 | $(16,967) | -4.8% | | Gross profit | $68,727 | $75,390 | $(6,663) | -8.8% | $137,194 | $150,809 | $(13,615) | -9.0% | | Operating income | $12,370 | $16,722 | $(4,352) | -26.0% | $26,518 | $38,767 | $(12,249) | -31.6% | | Net income | $11,733 | $14,944 | $(3,211) | -21.5% | $23,680 | $36,798 | $(13,118) | -35.6% | | Basic EPS | $0.20 | $0.27 | $(0.07) | -25.9% | $0.41 | $0.66 | $(0.25) | -37.9% | | Diluted EPS | $0.20 | $0.25 | $(0.05) | -20.0% | $0.40 | $0.61 | $(0.21) | -34.4% | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, providing a complete view of changes in equity from non-owner sources | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net income | $11,733 | $14,944 | $(3,211) | -21.5% | $23,680 | $36,798 | $(13,118) | -35.6% | | Total other comprehensive income (loss), net of tax | $30 | $(12) | $42 | -350.0% | $138 | $(140) | $278 | -198.6% | | Total comprehensive income | $11,763 | $14,932 | $(3,169) | -21.2% | $23,818 | $36,658 | $(12,840) | -35.0% | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement details the inflows and outflows of cash from operating, investing, and financing activities over specific periods | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net cash provided by (used in) operating activities | $29,034 | $17,816 | $11,218 | 63.0% | | Net cash provided by (used in) investing activities | $24,058 | $10,781 | $13,277 | 123.1% | | Net cash provided by (used in) financing activities | $(9,982) | $(13,220) | $3,238 | -24.5% | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $43,170 | $15,333 | $27,837 | 181.5% | | Cash, cash equivalents, and restricted cash - end of period | $188,989 | $174,453 | $14,536 | 8.3% | [Note 1 — Basis of Presentation](index=11&type=section&id=Note%201%20%E2%80%94%20Basis%20of%20Presentation) This note outlines the accounting principles and standards used in preparing the unaudited interim consolidated financial statements - The unaudited Consolidated Financial Statements are prepared in accordance with **U.S. GAAP** for interim financial information[26](index=26&type=chunk) - Interim quarters are reported on a **13-week basis**, with the fourth quarter ending on **December 31**[27](index=27&type=chunk) - The Company adopted **ASU 2024-04** (Debt with Conversion and Other Options) prospectively for the three and six months ended **June 30, 2025**, applying it to the repurchase of the **2027 Notes**[30](index=30&type=chunk) - The Company is evaluating **ASU 2024-03** (Disaggregation of Income Statements Expenses), which will be effective for annual periods beginning after **December 15, 2026**[31](index=31&type=chunk) [Note 2 — Income Per Common Share](index=13&type=section&id=Note%202%20%E2%80%94%20Income%20Per%20Common%20Share) This note explains the calculation of basic and diluted earnings per share, including the impact of potentially dilutive securities - Basic income per share is calculated by dividing net income by the weighted average number of shares outstanding, while diluted income per share includes the dilutive effect of outstanding options, share-based awards, and convertible notes[33](index=33&type=chunk) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income per common share: Basic | $0.20 | $0.27 | $0.41 | $0.66 | | Net income per common share: Diluted | $0.20 | $0.25 | $0.40 | $0.61 | | Diluted weighted average shares outstanding (in thousands) | 60,237 | 62,535 | 60,072 | 61,733 | | Potentially dilutive shares excluded (in thousands) | 1,803 | 226 | 1,099 | 26 | [Note 3 — Assets](index=15&type=section&id=Note%203%20%E2%80%94%20Assets) This note provides detailed information on the company's various asset categories, including short-term investments, inventories, and property, plant, and equipment - Short-term investments are classified as available-for-sale and reported at fair value, with unrealized gains and losses presented in accumulated other comprehensive income[35](index=35&type=chunk) | Asset Category (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :---------------------------- | :----------- | :----------- | :----- | :------- | | Short-term investments | $198,719 | $165,890 | $(32,829) | -16.5% | | Inventories | $246,735 | $258,984 | $12,249 | 5.0% | | Property, plant, and equipment, net | $113,789 | $111,098 | $(2,691) | -2.4% | | Intangible assets, net | $8,832 | $7,189 | $(1,643) | -18.6% | | Goodwill | $214,964 | $214,964 | $0 | 0.0% | - Accounts receivable, net, includes an allowance for doubtful accounts of **$1.0 million** at both **June 30, 2025**, and **December 31, 2024**[42](index=42&type=chunk) [Note 4 — Liabilities](index=20&type=section&id=Note%204%20%E2%80%94%20Liabilities) This note details the company's liabilities, including accrued expenses, contract liabilities, and long-term debt, with specifics on convertible notes and credit facilities | Liability Category (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Accrued expenses and other current liabilities | $55,195 | $47,412 | $(7,783) | -14.1% | | Contract liabilities | $64,986 | $57,675 | $(7,311) | -11.2% | | Current portion of long-term debt | $26,496 | $— | $(26,496) | -100.0% | | Long-term debt | $249,702 | $225,441 | $(24,261) | -9.7% | - The **2025 Notes** matured on **January 15, 2025**, and were settled by issuing **1.1 million shares** of common stock[55](index=55&type=chunk) - The remaining **$25.0 million** aggregate principal amount of **2027 Notes** was settled on **May 15, 2025**, for approximately **1.6 million common shares** and **$5.4 million cash**, resulting in a **$0.7 million induced conversion expense**[56](index=56&type=chunk)[57](index=57&type=chunk) - The Company has **$230.0 million** of **2.875% convertible senior notes due 2029** outstanding, convertible at an initial rate of **34.21852 shares per $1,000 principal amount** under specified conditions[58](index=58&type=chunk)[61](index=61&type=chunk) - The revolving credit facility was increased to **$250 million** on **June 16, 2025**, and matures on **June 16, 2030**. No amounts were outstanding as of **June 30, 2025**, or **December 31, 2024**[71](index=71&type=chunk)[77](index=77&type=chunk) [Note 5 — Commitments and Contingencies](index=28&type=section&id=Note%205%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines the company's contractual obligations, purchase commitments, bank guarantees, and potential impacts of legal proceedings | Operating Lease Liabilities (in thousands) | Amount | | :--------------------------------------- | :----- | | Total future minimum lease payments | $51,214 | | Less: Imputed interest | $(13,886) | | Total | $37,328 | - Cash outflows from operating leases for the six months ended **June 30, 2025**, were **$3.7 million**, up from **$3.4 million** in the comparable **2024** period[81](index=81&type=chunk) - The Company had purchase commitments of **$140.4 million** at **June 30, 2025**, substantially all due within one year[83](index=83&type=chunk) - Outstanding bank guarantees and standby letters of credit totaled **$8.7 million** at **June 30, 2025**[84](index=84&type=chunk) - Legal proceedings are not expected to have a **material adverse effect** on the Company's financial position, results of operations, or cash flows[85](index=85&type=chunk) [Note 6 — Equity](index=31&type=section&id=Note%206%20%E2%80%94%20Equity) This note details changes in stockholders' equity, including net income, share-based compensation, and the impact of convertible note settlements | Stockholders' Equity (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :---------------------------------- | :----------- | :----------- | :----- | :------- | | Total Stockholders' Equity | $770,770 | $856,196 | $85,426 | 11.1% | | Accumulated Other Comprehensive Income | $1,522 | $1,660 | $138 | 9.1% | - Key drivers of the increase in stockholders' equity for the six months ended **June 30, 2025**, include net income of **$23.7 million**, share-based compensation expense of **$18.9 million**, and the settlement of **2025** and **2027 Notes** through common stock issuance[87](index=87&type=chunk) - The increase in Accumulated Other Comprehensive Income was primarily due to foreign currency translation adjustments[88](index=88&type=chunk) [Note 7 — Share-based Compensation](index=32&type=section&id=Note%207%20%E2%80%94%20Share-based%20Compensation) This note provides information on the company's share-based compensation expense and the balance of non-vested equity awards | Share-based Compensation Expense (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :---------------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Total | $9,651 | $9,233 | $418 | 4.5% | $18,859 | $17,315 | $1,544 | 8.9% | - The balance of non-vested restricted shares and performance shares increased from **2,604 thousand** at **December 31, 2024**, to **2,777 thousand** at **June 30, 2025**[90](index=90&type=chunk) [Note 8 — Income Taxes](index=33&type=section&id=Note%208%20%E2%80%94%20Income%20Taxes) This note details the company's income tax expense and effective tax rates, including the impact of tax benefits and recent legislative changes | Income Tax Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :---------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Income tax expense (in thousands) | $889 | $2,127 | $(1,238) | -58.2% | $3,926 | $3,023 | $903 | 29.9% | | Effective tax rate | 7.04% | 12.46% | -5.42% | -43.5% | 14.22% | 7.59% | 6.63% | 87.3% | - The effective tax rates for both periods were favorably impacted by tax benefits related to **Foreign-Derived Intangible Income** and research and development tax credits[93](index=93&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted on **July 4, 2025**, is not currently expected to materially impact the Company's financial position, results of operations, or cash flows in the current fiscal year[94](index=94&type=chunk) [Note 9 — Segment Reporting and Geographic Information](index=33&type=section&id=Note%209%20%E2%80%94%20Segment%20Reporting%20and%20Geographic%20Information) This note provides a breakdown of the company's sales by operating segment, end-market, and geographic region - The Company operates and measures its results in **one operating segment**: the development, manufacture, sales, and support of semiconductor and thin film process equipment[95](index=95&type=chunk) | Sales by End-Market (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Semiconductor | $123,874 | $109,936 | $13,938 | 12.7% | $247,697 | $230,320 | $17,377 | 7.5% | | Compound Semiconductor | $14,197 | $18,223 | $(4,026) | -22.1% | $28,594 | $39,225 | $(10,631) | -27.1% | | Data Storage | $12,354 | $33,960 | $(21,606) | -63.6% | $19,059 | $51,977 | $(32,918) | -63.3% | | Scientific & Other | $15,679 | $13,760 | $1,919 | 13.9% | $38,046 | $28,841 | $9,205 | 31.9% | | Total | $166,104 | $175,879 | $(9,775) | -5.6% | $333,396 | $350,363 | $(16,967) | -4.8% | | Sales by Geographic Region (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :---------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | United States | $21,852 | $42,744 | $(20,892) | -48.9% | $45,914 | $70,612 | $(24,698) | -35.0% | | EMEA | $18,533 | $23,802 | $(5,269) | -22.1% | $30,870 | $32,290 | $(1,420) | -4.4% | | China | $27,490 | $65,376 | $(37,886) | -58.0% | $98,382 | $129,684 | $(31,302) | -24.1% | | Rest of APAC | $98,186 | $43,935 | $54,251 | 123.5% | $158,162 | $117,155 | $41,007 | 35.0% | | Rest of World | $43 | $22 | $21 | 95.5% | $68 | $622 | $(554) | -89.1% | | Total | $166,104 | $175,879 | $(9,775) | -5.6% | $333,396 | $350,363 | $(16,967) | -4.8% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year, including an executive summary, business updates across key markets, and detailed analysis of revenue, expenses, and liquidity [Executive Summary](index=37&type=section&id=Executive%20Summary) This summary introduces Veeco as an innovative semiconductor process equipment manufacturer and highlights long-term growth drivers for the industry - Veeco is an innovative manufacturer of semiconductor process equipment, specializing in ion beam, laser annealing, lithography, MOCVD, and single wafer wet processing technologies[106](index=106&type=chunk) - The Semiconductor industry is forecasted for **long-term growth**, driven by secular trends such as artificial intelligence, high-performance computing, mobile connectivity, and automotive electrification[107](index=107&type=chunk) [Business Update](index=37&type=section&id=Business%20Update) This section discusses industry trends, Veeco's performance in the Semiconductor market, and revenue expectations for various end-markets - Growth in the Semiconductor industry and increasing technological complexity are expected to drive **long-term growth** in **Wafer Fab Equipment (WFE)** spending, benefiting Veeco[108](index=108&type=chunk) - Veeco's Semiconductor business has outperformed WFE growth for **four consecutive years**, driven by investments in advanced logic and memory, including high-performance **AI chips** and **High-Bandwidth Memory (HBM)**[109](index=109&type=chunk) - Semiconductor revenue increased by **13%** in **Q2 2025**, primarily due to increased system shipments of **Ion Beam Deposition LDD systems** for mask blanks and **Advanced Packaging wet processing systems**[111](index=111&type=chunk)[112](index=112&type=chunk) - The Company anticipates growth in leading-edge investment driven by new nodes and **AI-related demand**, but expects a continued decline in **China revenue** for the second half of **2025**[119](index=119&type=chunk) - Data Storage revenue declined in **Q2 2025**, with an expected **$60 to $70 million** reduction in **2025 revenue** due to customers not investing in new system capacity[121](index=121&type=chunk)[123](index=123&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance for the three and six months ended June 30, 2025, versus the prior year [Results of Operations (Three Months Ended June 30, 2025 and 2024)](index=41&type=section&id=Results%20of%20Operations%20-%20Three%20Months) This section analyzes the company's financial performance for the three months ended June 30, 2025, compared to the same period in 2024 | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net sales | $166,104 | $175,879 | $(9,775) | -5.6% | | Gross profit | $68,727 | $75,390 | $(6,663) | -8.8% | | Operating income | $12,370 | $16,722 | $(4,352) | -26.0% | | Net income | $11,733 | $14,944 | $(3,211) | -21.5% | | Interest income, net | $905 | $349 | $556 | 159.3% | | Income tax expense | $889 | $2,127 | $(1,238) | -58.2% | - Sales decreased primarily due to declines in the Data Storage (**-64%**) and Compound Semiconductor (**-22%**) markets, partially offset by increases in Semiconductor (**+13%**) and Scientific & Other (**+14%**)[127](index=127&type=chunk) - Gross margins decreased from **43% to 41%** due to lower sales volume and higher manufacturing costs, partially offset by favorable product mix[128](index=128&type=chunk) - Net interest income increased due to reduced interest expense on the **2025 Notes** (matured) and **2027 Notes** (settled)[132](index=132&type=chunk) [Results of Operations (Six Months Ended June 30, 2025 and 2024)](index=45&type=section&id=Results%20of%20Operations%20-%20Six%20Months) This section analyzes the company's financial performance for the six months ended June 30, 2025, compared to the same period in 2024 | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net sales | $333,396 | $350,363 | $(16,967) | -4.8% | | Gross profit | $137,194 | $150,809 | $(13,615) | -9.0% | | Operating income | $26,518 | $38,767 | $(12,249) | -31.6% | | Net income | $23,680 | $36,798 | $(13,118) | -35.6% | | Interest income, net | $1,741 | $1,054 | $687 | 65.2% | | Income tax expense | $3,926 | $3,023 | $903 | 29.9% | - Sales decreased primarily due to declines in the Data Storage (**-63%**) and Compound Semiconductor (**-27%**) markets, partially offset by increases in Semiconductor (**+8%**) and Scientific & Other (**+32%**)[137](index=137&type=chunk) - Gross margins decreased from **43% to 41%** due to lower volume, unfavorable product mix, and higher manufacturing costs[140](index=140&type=chunk) - Net interest income increased due to reduced interest expense on the **2025 Notes** (matured) and **2027 Notes** (settled)[144](index=144&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, investment portfolio, cash flow activities, and ability to meet future financial obligations | Cash & Investments (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----- | :------- | | Cash and cash equivalents | $145,595 | $188,902 | $43,307 | 29.7% | | Restricted cash | $224 | $87 | $(137) | -61.2% | | Short-term investments | $198,719 | $165,890 | $(32,829) | -16.5% | | Total | $344,538 | $354,879 | $10,341 | 3.0% | - Management believes projected cash flow from operations, combined with cash and short-term investments, will be sufficient to meet working capital requirements and contractual obligations for the **next twelve months**[148](index=148&type=chunk) | Cash Flow Activity (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | YoY Change | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Net cash provided by operating activities | $29,034 | $17,816 | $11,218 | 63.0% | | Net cash provided by investing activities | $24,058 | $10,781 | $13,277 | 123.1% | | Net cash used in financing activities | $(9,982) | $(13,220) | $3,238 | -24.5% | - The Company has **$230.0 million** outstanding principal balance of **2.875% convertible senior notes due June 1, 2029**[152](index=152&type=chunk) - The revolving credit facility was increased to **$250 million** in **June 2025** and extended to **June 16, 2030**, with no immediate plans to draw down[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the Company's exposure to market risks, specifically interest rate risk and currency exchange risk, and the strategies employed to manage these risks [Interest Rate Risk](index=52&type=section&id=Interest%20Rate%20Risk) This section describes the company's exposure to interest rate fluctuations, primarily affecting its fixed-income investment portfolio - The Company's exposure to market rate risk primarily relates to its investment portfolio of fixed-income securities, which had a fair value of approximately **$165.9 million** at **June 30, 2025**[156](index=156&type=chunk) - A **100 basis point increase** in interest rates would result in a **$1.0 million decrease** in the fair value of the investment portfolio[156](index=156&type=chunk) [Currency Exchange Risk](index=52&type=section&id=Currency%20Exchange%20Risk) This section discusses the company's exposure to foreign currency exchange rate fluctuations, particularly for international sales - Approximately **87%** of total net sales for the three months ended **June 30, 2025**, and **86%** for the six months ended **June 30, 2025**, were to customers located outside the United States[159](index=159&type=chunk) - Most sales outside the United States are denominated in **U.S. dollars**, leading to an **immaterial impact** on consolidated results from a **10% change** in foreign exchange rates[160](index=160&type=chunk) - The Company may use monthly forward derivative contracts to mitigate currency risk, but these are not designated as hedges[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=52&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of the reporting date - The principal executive and financial officers concluded that the Company's disclosure controls and procedures were **effective** as of **June 30, 2025**[161](index=161&type=chunk) [Changes in Internal Control Over Financial Reporting](index=52&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports no material changes in the company's internal control over financial reporting during the quarter - There were **no changes** in internal control over financial reporting during the quarter ended **June 30, 2025**, that materially affected or are reasonably likely to materially affect internal control[162](index=162&type=chunk) [PART II—OTHER INFORMATION](index=54&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the Company is involved in various legal proceedings in the normal course of business, but does not expect their ultimate resolution to have a material adverse effect on its financial position, results of operations, or cash flows - The Company is involved in various legal proceedings arising in the normal course of business[165](index=165&type=chunk) - The ultimate resolution of these matters is not believed to have a **material adverse effect** on the Company's consolidated financial position, results of operations, or cash flows[165](index=165&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section refers to previously disclosed risk factors, indicating no material changes from those presented in prior SEC filings - There have been **no material changes** from the risk factors previously disclosed in the Safe Harbor Statement, the **2024 Form 10-K**, and the quarterly report on **Form 10-Q** for the quarter ended **March 31, 2025**[166](index=166&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - **No unregistered sales** of equity securities or use of proceeds to report[167](index=167&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - **No defaults** upon senior securities to report[168](index=168&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine Safety Disclosures are **not applicable**[169](index=169&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) This section discloses Rule 10b5-1 trading arrangements adopted by the CEO and SVP during the fiscal quarter ended June 30, 2025 - On **May 20, 2025**, CEO William J. Miller adopted a **Rule 10b5-1 trading plan** for the sale of **200,000 shares** of common stock between **September 2, 2025**, and **March 1, 2028**[170](index=170&type=chunk) - On **June 4, 2025**, SVP Adrian Devasahayam adopted a **Rule 10b5-1 trading plan** for the sale of **11,911 shares** of common stock between **September 4, 2025**, and **June 2, 2026**[171](index=171&type=chunk) - **No "non-Rule 10b5-1 trading arrangements"** were adopted, modified, or terminated by directors and Section 16 officers during the fiscal quarter ended **June 30, 2025**[172](index=172&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Securities and Exchange Commission as part of this Form 10-Q, including amendments to the Loan and Security Agreement and various certifications - Exhibits include the **Fourth Amendment to Loan and Security Agreement** (dated **June 16, 2025**), **Veeco Amended and Restated Senior Executive Change in Control Policy** (effective **July 29, 2025**), and certifications from the Chief Executive Officer and Chief Financial Officer[174](index=174&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) This section formally attests to the accuracy and completeness of the report, signed by the company's principal executive and financial officers - The report was signed on behalf of Veeco Instruments Inc. by **William J. Miller, Ph.D., Chief Executive Officer**, and **John P. Kiernan, Senior Vice President and Chief Financial Officer**, on **August 6, 2025**[176](index=176&type=chunk)[177](index=177&type=chunk)

[Second Quarter 2025 Financial Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20Overview) Veeco's Q2 2025 financial results are presented, highlighting key performance metrics and CEO insights into market drivers [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Veeco reported its second quarter 2025 financial results, showing a decrease in revenue and net income compared to the same period last year, both on a GAAP and Non-GAAP basis Q2 2025 Financial Performance (U.S. Dollars in millions, except per share data) | U.S. Dollars in millions, except per share data | Q2 '25 | Q2 '24 | | :------------------------------------ | :----- | :----- | | **GAAP Results** | | | | Revenue | $166.1 | $175.9 | | Net income | $11.7 | $14.9 | | Diluted earnings per share | $0.20 | $0.25 | | **Non-GAAP Results** | | | | Operating income | $23.1 | $28.3 | | Net income | $21.5 | $25.4 | | Diluted earnings per share | $0.36 | $0.42 | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Veeco's CEO, Bill Miller, highlighted strong financial results for the quarter, attributing the performance to the rapid expansion of High-Performance Computing and AI technologies, specifically mentioning shipments for Advanced Packaging and EUV mask blanks - Veeco's strong financial results were fueled by the rapid expansion of **High-Performance Computing and AI technologies**[2](index=2&type=chunk) - Performance was driven by shipments of wet processing and lithography systems for **Advanced Packaging** and Ion Beam Deposition systems for **EUV mask blanks**[2](index=2&type=chunk) [Third Quarter 2025 Guidance and Outlook](index=2&type=section&id=Third%20Quarter%202025%20Guidance%20and%20Outlook) Veeco provides its financial guidance for the third quarter of 2025, outlining projected revenue and earnings per share [Q3 2025 Financial Guidance](index=2&type=section&id=Q3%202025%20Financial%20Guidance) Veeco provided financial guidance for the third quarter of 2025, projecting revenue in a range of $150 million to $170 million, with corresponding GAAP and Non-GAAP diluted earnings per share Q3 2025 Financial Guidance Range | Metric | Q3 2025 Guidance Range | | :-------------------------- | :--------------------- | | Revenue | $150M - $170M | | GAAP diluted earnings per share | $0.04 - $0.22 | | Non-GAAP diluted earnings per share | $0.20 - $0.35 | [About Veeco](index=2&type=section&id=About%20Veeco) Veeco is an innovative manufacturer of semiconductor process equipment, providing technologies such as laser annealing, ion beam, MOCVD, single wafer etch & clean, and lithography, which are integral to the fabrication and packaging of advanced semiconductor devices - Veeco is an innovative manufacturer of **semiconductor process equipment**[5](index=5&type=chunk) - Key technologies include **laser annealing, ion beam, metal organic chemical vapor deposition (MOCVD), single wafer etch & clean, and lithography**[5](index=5&type=chunk) - These technologies play an integral role in the fabrication and packaging of **advanced semiconductor devices**, with Veeco holding leading technology positions in its served markets[5](index=5&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section serves as a disclaimer, outlining that the press release contains forward-looking statements based on management's expectations, which are subject to various risks and uncertainties. Factors such as demand levels, global economic conditions, trade issues, supply chain dependencies, and the ability to develop new products could cause actual results to differ materially - Forward-looking statements are based on management's expectations, estimates, projections, and assumptions[6](index=6&type=chunk) - Statements are subject to **risks and uncertainties** and are not guarantees of future performance[6](index=6&type=chunk) - Factors that could cause actual results to differ include **demand for products, global economic conditions, trade issues (e.g., U.S.-China disputes), dependency on third-party suppliers, timing of customer orders, and ability to develop new products**[6](index=6&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Veeco's condensed consolidated statements of operations and balance sheets, detailing financial performance and position [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations show a year-over-year decline in net sales, gross profit, operating income, and net income for both the three and six months ended June 30, 2025, compared to 2024 Condensed Consolidated Statements of Operations (U.S. Dollars in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $166,104 | $175,879 | $333,396 | $350,363 | | Gross profit | $68,727 | $75,390 | $137,194 | $150,809 | | Operating income | $12,370 | $16,722 | $26,518 | $38,767 | | Net income | $11,733 | $14,944 | $23,680 | $36,798 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets indicate an increase in total assets and stockholders' equity, alongside a decrease in total liabilities, as of June 30, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets (U.S. Dollars in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $188,902 | $145,595 | | Total current assets | $791,892 | $764,532 | | Total assets | $1,274,705 | $1,251,577 | | Total current liabilities | $155,238 | $192,282 | | Total liabilities | $418,509 | $480,807 | | Total stockholders' equity | $856,196 | $770,770 | [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines Veeco's Non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents for various periods [Explanation of Non-GAAP Financial Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) Non-GAAP financial measures are presented to adjust for certain items not calculated in accordance with GAAP, such as share-based compensation, restructuring charges, and acquisition-related costs. These measures aim to provide clearer comparisons of historical and competitive operating results and are used by management for evaluation and forecasting - Non-GAAP financial measures exclude items like **share-based compensation, restructuring charges, non-cash asset impairments, and acquisition-related costs**[14](index=14&type=chunk) - These measures facilitate meaningful comparisons to **historical operating results, competitors' results, and analyst estimates**[15](index=15&type=chunk) - Management uses **Non-GAAP Operating income (loss)** for incentive compensation and future period forecasting[15](index=15&type=chunk) [Q2 2025 GAAP to Non-GAAP Reconciliation](index=6&type=section&id=Q2%202025%20GAAP%20to%20Non-GAAP%20Reconciliation) This section reconciles Veeco's GAAP financial data to Non-GAAP for Q2 2025, detailing adjustments primarily for share-based compensation and amortization to derive Non-GAAP gross profit, operating expenses, operating income, and net income Q2 2025 GAAP to Non-GAAP Reconciliation (U.S. Dollars in thousands) | Metric (in thousands) | GAAP | Non-GAAP Adjustments (Share-Based Compensation) | Non-GAAP Adjustments (Amortization) | Non-GAAP Adjustments (Other) | Non-GAAP | | :-------------------- | :------- | :---------------------------------------------- | :---------------------------------- | :--------------------------- | :------- | | Net sales | $166,104 | | | | $166,104 | | Gross profit | $68,727 | $1,991 | | | $70,718 | | Gross margin | 41.4 % | | | | 42.6 % | | Operating expenses | $56,357 | $(7,660) | $(821) | $(255) | $47,621 | | Operating income | $12,370 | $9,651 | $821 | $255 | $23,097 | | Net income | $11,733 | $9,651 | $821 | $(670) | $21,535 | [Q2 2025 Other Non-GAAP Adjustments](index=6&type=section&id=Q2%202025%20Other%20Non-GAAP%20Adjustments) This sub-section details the specific components of 'Other Non-GAAP Adjustments' for Q2 2025, which include a subtotal of $255 thousand, non-cash interest expense of $292 thousand, other (income) expense, net of $653 thousand, and a non-GAAP tax adjustment of $(1,870) thousand Q2 2025 Other Non-GAAP Adjustments (U.S. Dollars in thousands) | Three months ended June 30, 2025 | Amount (in thousands) | | :------------------------------- | :-------------------- | | Other | $255 | | Subtotal | $255 | | Non-cash interest expense | $292 | | Other (income) expense, net | $653 | | Non-GAAP tax adjustment | $(1,870) | | Total Other | $(670) | [Q2 2025 Net Income per Common Share Reconciliation](index=6&type=section&id=Q2%202025%20Net%20Income%20per%20Common%20Share%20Reconciliation) This reconciliation details the calculation of GAAP and Non-GAAP diluted net income per common share for Q2 2025, showing the adjustments for interest expense on convertible senior notes and the impact of capped call transactions on diluted shares Q2 2025 Net Income per Common Share Reconciliation (U.S. Dollars in thousands, except per share amounts) | Metric (in thousands, except per share amounts) | GAAP | Non-GAAP | | :---------------------------------------------- | :----- | :------- | | Net income | $11,733 | $21,535 | | Interest expense associated with 2027 Convertible Senior Notes | $125 | $113 | | Net income available to common shareholders | $11,858 | $21,648 | | Diluted weighted average shares outstanding | 60,237 | 60,018 | | Net income per common share: | | | | Basic | $0.20 | $0.36 | | Diluted | $0.20 | $0.36 | [Q2 2024 GAAP to Non-GAAP Reconciliation](index=7&type=section&id=Q2%202024%20GAAP%20to%20Non-GAAP%20Reconciliation) This section provides the reconciliation of Veeco's GAAP financial data to Non-GAAP for Q2 2024, outlining adjustments for share-based compensation, amortization, and other items to arrive at Non-GAAP gross profit, operating expenses, operating income, and net income Q2 2024 GAAP to Non-GAAP Reconciliation (U.S. Dollars in thousands) | Metric (in thousands) | GAAP | Non-GAAP Adjustments (Share-based Compensation) | Non-GAAP Adjustments (Amortization) | Non-GAAP Adjustments (Other) | Non-GAAP | | :-------------------- | :------- | :---------------------------------------------- | :---------------------------------- | :--------------------------- | :------- | | Net sales | $175,879 | | | | $175,879 | | Gross profit | $75,390 | $1,445 | | | $76,835 | | Gross margin | 42.9 % | | | | 43.7 % | | Operating expenses | $58,668 | $(7,788) | $(1,825) | $(494) | $48,561 | | Operating income | $16,722 | $9,233 | $1,825 | $494 | $28,274 | | Net income | $14,944 | $9,233 | $1,825 | $(570) | $25,432 | [Q2 2024 Other Non-GAAP Adjustments](index=7&type=section&id=Q2%202024%20Other%20Non-GAAP%20Adjustments) This sub-section details the specific components of 'Other Non-GAAP Adjustments' for Q2 2024, including changes in contingent consideration of $494 thousand, non-cash interest expense of $316 thousand, and a non-GAAP tax adjustment of $(1,380) thousand Q2 2024 Other Non-GAAP Adjustments (U.S. Dollars in thousands) | Three months ended June 30, 2024 | Amount (in thousands) | | :------------------------------- | :-------------------- | | Changes in contingent consideration | $494 | | Subtotal | $494 | | Non-cash interest expense | $316 | | Non-GAAP tax adjustment | $(1,380) | | Total Other | $(570) | [Q2 2024 Net Income per Common Share Reconciliation](index=7&type=section&id=Q2%202024%20Net%20Income%20per%20Common%20Share%20Reconciliation) This reconciliation details the calculation of GAAP and Non-GAAP diluted net income per common share for Q2 2024, showing adjustments for interest expense on various convertible senior notes and the impact of capped call transactions on diluted shares Q2 2024 Net Income per Common Share Reconciliation (U.S. Dollars in thousands, except per share amounts) | Metric (in thousands, except per share amounts) | GAAP | Non-GAAP | | :---------------------------------------------- | :----- | :------- | | Net income | $14,944 | $25,432 | | Interest expense associated with 2025 and 2027 Convertible Senior Notes | $512 | $466 | | Net income available to common shareholders | $15,456 | $25,898 | | Diluted weighted average shares outstanding | 62,535 | 62,101 | | Net income per common share: | | | | Basic | $0.27 | $0.45 | | Diluted | $0.25 | $0.42 | [Q2 2025 and 2024 GAAP Net Income to Non-GAAP Operating Income Reconciliation](index=9&type=section&id=Q2%202025%20and%202024%20GAAP%20Net%20Income%20to%20Non-GAAP%20Operating%20Income%20Reconciliation) This section provides a direct reconciliation from GAAP Net income to Non-GAAP Operating income for both Q2 2025 and Q2 2024, detailing the impact of share-based compensation, amortization, and other adjustments Q2 2025 and 2024 GAAP Net Income to Non-GAAP Operating Income Reconciliation (U.S. Dollars in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | | GAAP Net income | $11,733 | $14,944 | | Share-based compensation | $9,651 | $9,233 | | Amortization | $821 | $1,825 | | Changes in contingent consideration | — | $494 | | Interest (income) expense, net | $(905) | $(349) | | Other | $908 | — | | Income tax expense (benefit) | $889 | $2,127 | | Non-GAAP Operating income | $23,097 | $28,274 | [Q3 2025 Guidance GAAP to Non-GAAP Reconciliation](index=9&type=section&id=Q3%202025%20Guidance%20GAAP%20to%20Non-GAAP%20Reconciliation) This section reconciles the Q3 2025 financial guidance from GAAP to Non-GAAP, showing projected adjustments for share-based compensation and amortization across net sales, gross profit, operating expenses, operating income, net income, and diluted EPS Q3 2025 Guidance GAAP to Non-GAAP Reconciliation (U.S. Dollars in millions, except per share amounts) | Metric (in millions, except per share amounts) | GAAP Range ($) | Non-GAAP Adjustments (Share-based Compensation) | Non-GAAP Adjustments (Amortization) | Non-GAAP Adjustments (Other) | Non-GAAP Range ($) | | :--------------------------------------------- | :------------- | :---------------------------------------------- | :---------------------------------- | :--------------------------- | :----------------- | | Net sales | 150 - 170 | | | | 150 - 170 | | Gross profit | 59 - 70 | 2 | — | — | 61 - 72 | | Gross margin | 39% - 41% | | | | 40% - 42% | | Operating expenses | 57 - 58 | (8) | (1) | — | 48 - 49 | | Operating income | 2 - 12 | 10 | 1 | — | 13 - 24 | | Net income | 3 - 13 | 10 | 1 | (2) | 12 - 21 | | Income per diluted common share | 0.04 - 0.22 | | | | 0.20 - 0.35 | [Q3 2025 Guidance GAAP Net Income to Non-GAAP Operating Income Reconciliation](index=9&type=section&id=Q3%202025%20Guidance%20GAAP%20Net%20Income%20to%20Non-GAAP%20Operating%20Income%20Reconciliation) This sub-section provides a direct reconciliation from GAAP Net income to Non-GAAP Operating income for the Q3 2025 guidance, detailing projected adjustments for share-based compensation, amortization, and income tax expense (benefit) Q3 2025 Guidance GAAP Net Income to Non-GAAP Operating Income Reconciliation (U.S. Dollars in millions) | Metric (in millions) | Guidance for the three months ending September 30, 2025 | | :------------------------------ | :------------------------------------------------------ | | GAAP Net income | $3 - $13 | | Share-based compensation | $10 - $10 | | Amortization | $1 - $1 | | Income tax expense (benefit) | $(1) - $1 | | Non-GAAP Operating income | $13 - $24 | [Veeco Contacts](index=2&type=section&id=Veeco%20Contacts) This section provides contact information for investor relations and media inquiries Veeco Contacts | Role | Name | Phone | Email | | :-------- | :-------------- | :------------- | :------------------ | | Investors | Anthony Pappone | (516) 500-8798 | apappone@veeco.com | | Media | Brenden Wright | (410) 984-2610 | bwright@veeco.com |

Financial Performance - Veeco Instruments Inc. reported Q2 2025 revenue of $166.1 million, a decrease of 5.5% from $175.9 million in Q2 2024 [2][4] - GAAP net income for Q2 2025 was $11.7 million, or $0.20 per diluted share, down from $14.9 million, or $0.25 per diluted share in the same period last year [2][4] - Non-GAAP net income for Q2 2025 was $21.5 million, or $0.36 per diluted share, compared to $25.4 million, or $0.42 per diluted share in Q2 2024 [2][4] Business Drivers - The financial performance was attributed to the rapid expansion of High-Performance Computing and AI technologies, with significant shipments of wet processing and lithography systems for Advanced Packaging and Ion Beam Deposition systems for EUV mask blanks [2][4] Guidance and Outlook - For Q3 2025, Veeco expects revenue in the range of $150 million to $170 million, with GAAP diluted earnings per share anticipated between $0.04 and $0.22, and Non-GAAP diluted earnings per share expected between $0.20 and $0.35 [5][36]

Core Insights - Seeking Alpha introduces Alpha Ignite as a new contributing analyst platform, encouraging individuals to share investment ideas for publication and potential earnings [1] Group 1 - The article highlights the opportunity for contributors to gain exposure and access to exclusive features by submitting investment ideas [1] - It emphasizes the potential for contributors to earn money through published articles [1] - The platform aims to foster a community of analysts, both professional and individual, to share insights and investment strategies [1]

Veeco's Overview - Veeco's 2024 revenue is projected to be approximately $710 million[6] - The company anticipates its Served Available Market (SAM) to reach approximately $43 billion[9] - Veeco projects a Compound Annual Growth Rate (CAGR) of approximately 15% for its SAM[10] Semiconductor Market - The semiconductor SAM is expected to grow to approximately $20 billion[9] - Laser Spike Annealing (LSA) SAM is projected to grow from approximately $600 million to approximately $750 million, with a projected CAGR of approximately 20%[12] - Nanosecond Annealing (NSA) SAM is projected to grow from $0 million to approximately $450 million[12] - Ion Beam Deposition (IBD) for EUV mask blanks is expected to grow from approximately $50 million to approximately $100 million[12] - IBD300 for Front End Semi is expected to grow from $0 million to approximately $350 million[12] Compound Semiconductor Market - The compound semiconductor SAM is expected to grow to approximately $18 billion[9] - SiC Power Electronics SAM is projected to grow from approximately $350 million to approximately $650 million[33] - GaN Power Electronics SAM is projected to grow from approximately $100 million to approximately $300 million[33] - MicroLED SAM is projected to grow from $0 million to approximately $200 million[33] Financial Performance - Semiconductor revenue is expected to increase from 37% of total revenue in 2020 to over 60% in 2024[40]

Group 1 - Investors in Veeco Instruments Inc. (VECO) should monitor the stock closely due to significant activity in the options market, particularly the Dec. 19, 2025 $15 Call, which has high implied volatility [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a major rally or sell-off [2] - Currently, Veeco Instruments holds a Zacks Rank 3 (Hold) in the Electronics - Manufacturing Machinery industry, which is in the bottom 6% of the Zacks Industry Rank [3] Group 2 - Over the past 30 days, no analysts have increased earnings estimates for the current quarter, while two have lowered their estimates, resulting in a decrease in the Zacks Consensus Estimate from 34 cents per share to 22 cents [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

Core Viewpoint - Veeco Instruments Inc. has completed exchange transactions for its outstanding 3.75% Convertible Senior Notes due 2027, enhancing its financial flexibility and reducing ongoing interest expenses and outstanding debt [1][2]. Financial Transactions - The company exchanged $25.0 million of 2027 Notes, which represented approximately 1.8 million underlying shares of common stock, for about 1.6 million newly issued shares and approximately $5.4 million in cash, including accrued and unpaid interest [2]. Regulatory Compliance - The exchanges were conducted under an exemption from registration as per Section 4(a)(2) of the Securities Act of 1933 [3]. Company Overview - Veeco is a manufacturer of semiconductor process equipment, specializing in technologies such as laser annealing, ion beam, single wafer etch & clean, lithography, and metal organic chemical vapor deposition (MOCVD) [4].

Company Performance - Veeco Instruments reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, but down from $0.45 per share a year ago, representing an earnings surprise of 15.63% [1] - The company posted revenues of $167.29 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.39%, but down from $174.48 million year-over-year [2] - Over the last four quarters, Veeco has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Outlook - Veeco shares have declined approximately 28.4% since the beginning of the year, compared to a decline of 4.7% for the S&P 500 [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $0.34 for the coming quarter and $1.35 for the current fiscal year [7] Industry Context - The Electronics - Manufacturing Machinery industry, to which Veeco belongs, is currently ranked in the bottom 6% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Data and Key Metrics Changes - Revenue for the quarter totaled $167 million, which is above the midpoint of guidance, but down 4% year-over-year and 8% sequentially [5][17] - Non-GAAP operating income was $24 million, and non-GAAP EPS was $0.37, exceeding the high end of guidance [5] - Gross margin was approximately 42%, in line with guidance, while operating expenses were approximately $46 million, below guidance [20][23] Business Line Data and Key Metrics Changes - The Semiconductor business grew 10% sequentially and 3% year-over-year, representing 74% of total revenue [17] - Advanced Packaging saw significant growth, with expectations to double revenue to about $150 million in 2025 [28] - Revenue from the Compound Semiconductor market declined to $14 million, accounting for 9% of total revenue [18] Market Data and Key Metrics Changes - Revenue from China customers was flat in Q1 compared to Q4, increasing their share of total revenue from 39% to 42% [19] - Revenue from the Asia Pacific region (excluding China) increased from 31% to 36%, driven by sales to semiconductor customers in Taiwan [19] - The United States accounted for 15% of revenue, while EMEA contributed 7% [19] Company Strategy and Development Direction - The company aims to capitalize on long-term semiconductor industry growth, focusing on laser annealing and ion beam deposition technologies [10][12] - Strategic wins include being awarded Intel's 2025 EPYC supplier award, which validates the company's position in the semiconductor industry [6] - The company is focused on expanding its served available market (SAM) in laser annealing and advanced packaging due to increasing demand driven by AI and high-performance computing [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term strategy despite uncertainties from recently enacted tariffs, which are causing some customers to delay shipments [9][22] - The company anticipates that gate all around and advanced packaging revenue could double in 2025 compared to 2024 [24] - Management noted that while there are headwinds from the mature node business in China, there are still growth opportunities in leading-edge investments [24] Other Important Information - Cash and short-term investments at the end of the quarter were $353 million, an increase from $345 million [21] - The company is monitoring tariff impacts closely and is working with customers to mitigate potential disruptions [22] Q&A Session Summary Question: Could you elaborate on the advanced packaging orders for your lithography tools? - The company announced $35 million in lithography orders, driven by advanced packaging and AI applications, with expectations for significant year-over-year growth in 2025 [28] Question: What is driving the recent strength in the lithography business? - The growth is primarily due to capacity buys from customers, particularly OSATs and IDMs, driven by demand for AI and high bandwidth memory [31] Question: Can you discuss the impact of tariffs on shipments to China? - Some customers are delaying shipments due to tariffs, with an anticipated $15 million impact on Q2 guidance [32][22] Question: What parts of the semiconductor business are expected to grow in 2025? - The company expects growth in advanced packaging and high bandwidth memory, which could offset declines in other areas [36][64] Question: Are there any updates on GaN power applications? - The company is making progress with a customer for GaN power applications, with plans to start pilot production in 2026 [50] Question: What is the outlook for the second half of the year? - The company anticipates that second half revenue could be flattish, with strength in gate all around and advanced packaging potentially offsetting headwinds from China [56]

Financial Data and Key Metrics Changes - Revenue totaled $167 million, above the midpoint of guidance, down 4% year-over-year and 8% sequentially [16] - Non-GAAP operating income was $24 million, and non-GAAP EPS was $0.37, exceeding the high end of guidance [4] - Gross margin was approximately 42%, in line with guidance, while operating expenses were approximately $46 million, below guidance [19] Business Line Data and Key Metrics Changes - The Semiconductor business grew 10% sequentially and 3% year-over-year, representing 74% of total revenue [16] - Advanced Packaging saw significant growth, with expectations to double revenue to about $150 million in 2025 [28] - Compound Semiconductor revenue declined to $14 million, accounting for 9% of total revenue [17] Market Data and Key Metrics Changes - Revenue from China customers was flat in Q1, increasing their share from 39% to 42% of total revenue [18] - Revenue from the Asia Pacific region (excluding China) increased from 31% to 36%, driven by sales to semiconductor customers in Taiwan [18] - The United States accounted for 15% of revenue, while EMEA represented 7% [18] Company Strategy and Development Direction - The company aims to capitalize on long-term semiconductor industry growth, focusing on laser annealing and ion beam deposition technologies [8] - Strategic wins include being awarded Intel's 2025 EPYC supplier award, validating the company's position in the semiconductor industry [5] - The company is expanding its served available market (SAM) in laser annealing and advanced packaging, driven by demand for AI and high-performance computing [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term strategy despite uncertainties from recently enacted tariffs affecting customer shipments and costs [7][21] - The company anticipates growth in 2025, particularly in gate all around and advanced packaging, potentially doubling revenue in these areas [23][24] - Management noted that while there are headwinds in the mature node business in China, opportunities exist in GaN power and scientific research areas [24] Other Important Information - Cash and short-term investments at the end of the quarter were $353 million, with cash flow from operations totaling $20 million [20] - The company is monitoring tariff impacts closely and is working with customers to mitigate potential disruptions [21] Q&A Session Summary Question: Could you elaborate on the advanced packaging orders for lithography tools? - The company announced $35 million in lithography orders, driven by advanced packaging and AI applications, expecting significant year-over-year growth in 2025 [28][29] Question: What is the impact of tariffs on shipments to China? - Some customers are delaying shipments due to tariffs, with an anticipated $15 million impact on Q2 guidance [33][34] Question: What parts of the semiconductor business are expected to grow in 2025? - The company expects growth in advanced packaging and high bandwidth memory, potentially offsetting declines in other areas [36][65] Question: Are there any updates on GaN power applications? - The company is making progress with a customer for GaN power, with plans to start pilot production in 2026 [51] Question: What is the outlook for second-half revenue? - The company anticipates second-half revenue to be flattish, with strengths in advanced packaging and gate all around potentially offsetting challenges in China [56][57]