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

Core Viewpoint - Onto Innovation Inc. reported better-than-expected first-quarter financial results but issued second-quarter guidance below analyst estimates [1][2]. Financial Performance - Quarterly earnings were $1.51 per share, exceeding the analyst consensus estimate of $1.47 per share [1]. - Quarterly sales reached $267.00 million, surpassing the analyst consensus estimate of $266.30 million [1]. Future Guidance - The company expects second-quarter adjusted earnings to be between $1.21 and $1.35 per share, compared to analysts' estimates of $1.50 per share [2]. - Sales guidance for the second quarter is projected to be between $240.00 million and $260.00 million, while analysts expected $269.10 million [2]. Market Reaction - Following the earnings announcement, Onto Innovation shares fell by 29.1%, trading at $89.90 [3]. Analyst Ratings - Needham analyst Charles Shi maintained a Buy rating but lowered the price target from $230 to $150 [5]. - Benchmark analyst Mark Miller also maintained a Buy rating, reducing the price target from $230 to $190 [5].