Onto Innovation's Q1 Earnings Beat on Solid Y/Y Top-Line Improvement

Core Insights - Onto Innovation Inc. reported Q1 2025 earnings per share of $1.51, exceeding the Zacks Consensus Estimate by 2.7% and up from $1.18 in the prior year [1] - Quarterly revenues reached $267 million, surpassing the Zacks Consensus Estimate by 0.6% and reflecting a 16.5% year-over-year increase, marking the seventh consecutive quarter of revenue growth [1] Revenue Breakdown - Specialty devices and advanced packaging revenues, accounting for 48% of total revenues, fell 24% sequentially to $129 million due to challenging comparisons and changing customer needs in AI packaging and 2.5D applications [2] - Revenues from the Advanced nodes market, which represents 35% of total revenues, surged 96% quarter-over-quarter to $93 million, driven by strong demand in leading-edge DRAM, NAND memory, and gate-all-around transistors [3] - Software and services revenues, making up 17% of total revenues, decreased 5% sequentially to $44 million [3] Product Performance - The Iris film metrology platform saw over 25% revenue growth quarter-over-quarter, supported by new customer acquisitions, and is on track for record full-year revenues [4] - Multiple 3D bump metrology systems were shipped during the quarter, with additional shipments planned for Q2 to a growing customer base [4] Financial Metrics - Non-GAAP operating expenses totaled $70.4 million, a 13.9% increase year-over-year, slightly below the guidance range [5] - Non-GAAP gross profit rose to $146.9 million from $119.1 million in the previous year, with gross profit margin expanding to 55% from 52% [5] - Non-GAAP operating income increased to $76.5 million compared to $57.3 million in the year-ago quarter, with operating margin rising to 29% from 25% [5] Balance Sheet - As of March 29, 2025, the company held $850.6 million in cash and marketable securities, with total current liabilities of $174.5 million [6] - Accounts receivable stood at $291.6 million, and the company generated a record $92 million in cash from operations, representing 35% of revenues [6] Q2 2025 Guidance - Management anticipates revenues between $240 million and $260 million, with the Zacks Consensus Estimate at $264.6 million [7] - Non-GAAP earnings per share are projected to be between $1.21 and $1.35, while GAAP earnings per share are expected to range from $0.99 to $1.13 [8] - Advanced nodes revenues are expected to decline moderately in Q2, with slight decreases in specialty devices and advanced packaging markets, but growth is anticipated to resume in Q4 [8]