Onto Innovation(ONTO)2025-05-08 21:30Financial Data and Key Metrics Changes - Onto Innovation achieved a record revenue of 92 million, converting 100% of operating income into cash, with a gross margin of 55% for the first quarter [12][14] - Cash and short-term investments at the end of the first quarter were 93 million, a 96% increase over Q4, accounting for 35% of total revenue [12] - Specialty Devices and Advanced Packaging revenue decreased by 24% from Q4 to 44 million, down 5% compared to Q4, making up 17% of total revenue [12] Market Data and Key Metrics Changes - The Advanced Nodes market showed significant growth, while Specialty Devices and Advanced Packaging faced a decline due to tough comparisons from the previous year [17][26] - The company anticipates a moderate decline in revenue from Advanced Node customers in Q2, with expectations for NAND and DRAM spending to remain steady [16][18] Company Strategy and Development Direction - The company is accelerating strategic programs to improve business continuity by establishing manufacturing capabilities in Asia, with shipments expected to begin in the second half of 2025 [5] - New product innovations in 2D inspection, 3D metrology, and optical metrology are seen as critical for enabling advancements in AI and cloud applications [19] Management's Comments on Operating Environment and Future Outlook - Management noted that tariffs are impacting incoming costs, but they are actively working to mitigate these through supply chain optimization [15] - The company expects revenue growth to resume in Q4 after a low point in Q3, with confidence in broad-based expansions in Advanced Nodes [18] Other Important Information - The company plans to maintain inventory levels at 1.6 to 1.8 turns for 2025, with expectations for inventory to stay relatively flat in Q2 [14] - The effective tax rate for the full year is expected to be between 14% to 16% [16] Q&A Session Summary Question: Follow-up on high bandwidth memory (HBM) market - Management indicated no significant changes in the HBM market since the last calls, with continued investments and product adoptions [21][23] Question: Expectations for advanced packaging and specialty devices in the second half of the year - Management noted that advanced packaging faced tough comparisons and allocations of tool slots negatively impacted short-term performance [25][26] Question: Impact of reciprocal tariffs on shipments - Management stated that there has been no significant impact from reciprocal tariffs at this time, with exceptions made for semiconductor equipment [29][30] Question: Clarification on Q2 guidance and business segments - Management confirmed that Advanced Nodes revenue is expected to decline slightly, while Specialty Devices and Advanced Packaging are impacted by lithography shipments [47][48] Question: Update on lithography and market interest - Management reported strong interest in wide field high-resolution optics and panel packaging, with developments expected to take two years to hit volume [50] Question: Performance of the new 2.5D tool - Management expressed confidence in the new tool's performance and its ability to meet evolving customer requirements [36][38] Question: Clarification on Q3 being a low watermark - Management clarified that Q3 is expected to be a low point for total revenue, not just Advanced Nodes [44] Question: Overall outlook compared to previous expectations - Management acknowledged some choppiness in the middle part of the year but indicated that most segments are performing in line with expectations [66][67]