[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]

Financial Performance - Total net sales for Q1 2025 were $167.3 million, a decrease of 4% from $174.5 million in Q1 2024 [121]. - Gross profit for Q1 2025 was $68.5 million, representing a gross margin of 41%, down from 43% in Q1 2024 [121]. - Operating income for Q1 2025 was $14.1 million, a decrease of 36% from $22.0 million in Q1 2024 [121]. - Net income for Q1 2025 was $11.9 million, down 45% from $21.9 million in Q1 2024 [121]. Revenue Breakdown - Semiconductor revenue increased by 3% year-over-year in Q1 2025, accounting for 74% of total revenue, driven by system shipments in Advanced Packaging and HBM manufacturing [107]. - Sales in the Data Storage market declined by 63% year-over-year to $6.7 million in Q1 2025, while Scientific & Other market sales increased by 48% to $22.4 million [122]. - The Compound Semiconductor market saw a 31% decline in sales to $14.4 million in Q1 2025 compared to $21.0 million in Q1 2024 [122]. - Approximately 86% of net sales for the three months ended March 31, 2025, were to customers outside the United States, up from 84% in the prior year [144]. - Sales denominated in currencies other than the U.S. dollar represented approximately 6% of total net sales for the three months ended March 31, 2025, compared to 3% in 2024 [144]. Expenses and Cost Management - Research and development expenses decreased by 4% to $28.5 million in Q1 2025, reflecting cost management initiatives [124]. - The tax expense for the three months ended March 31, 2025, was $3.0 million, up from $0.9 million in the prior period, with an effective tax rate aligned with the U.S. statutory rate [130]. Cash Flow and Liquidity - Cash and cash equivalents increased to $174.9 million as of March 31, 2025, from $145.6 million at December 31, 2024, while total cash resources reached $353.5 million [131]. - Net cash provided by operating activities was $20.0 million for the three months ended March 31, 2025, compared to $9.4 million in the same period of 2024, driven by net income of $11.9 million [133]. - Cash flows from investing activities resulted in a net inflow of $14.5 million for the three months ended March 31, 2025, compared to $20.7 million in 2024 [134]. Debt and Financing - The company has $25.0 million of 3.75% convertible senior notes maturing on June 1, 2027, and $230.0 million of 2.875% convertible senior notes maturing on June 1, 2029 [136]. - The company increased its revolving credit facility from $150 million to $225 million on August 2, 2024, with no immediate plans to draw down [137]. Market Outlook - The company anticipates a decline in revenue from China in 2025 due to moderated customer engagement and ongoing tariff impacts [114]. Investment Portfolio - A 100 basis point increase in interest rates would decrease the fair value of the investment portfolio by $1.2 million, based on a fair value of approximately $178.4 million [140]. - The company had $23.0 million of accumulated undistributed earnings from non-U.S. subsidiaries, with $10.6 million subject to foreign withholding taxes if distributed [131].