Onto Innovation's Q2 Earnings Miss Estimates, Top Line Up 5% Y/Y

Onto Innovation Inc. ONTO reported second-quarter 2025 earnings per share of $1.25, which missed the Zacks Consensus Estimate by 1.6%. The bottom line compared unfavorably with the prior-year quarter's $1.32.

Quarterly revenues of $253.6 million beat the Zacks Consensus Estimate by 1.5% and increased 5% year over year. The top-line growth was driven by expansions in advanced nodes and AI-packaging.

Specialty devices and advanced packaging revenues (46% of total revenues) were $117 million. Revenues from the Advanced nodes (35%) market were $89 million, driven by strength across leading-edge DRAM and NAND memory while demand for gate-all-around (“GAA”) transistors slowed down as expected. 

Onto Innovation Inc. Price, Consensus and EPS Surprise

Onto Innovation Inc. price-consensus-eps-surprise-chart | Onto Innovation Inc. Quote

Revenues from Software and services (19%) were $48 million. 

ONTO’s acquisition of the materials analysis business of Semilab International (announced in June) enhances its portfolio in materials characterization and wafer contamination monitoring. The deal includes $475 million in cash and 706,215 shares of Onto Innovation common stock, valued based on its closing price as of June 27, 2025. The acquisition is subject to regulatory approvals in the United States and Hungary and expected to close in the second half of 2025.

The business is anticipated to generate $130 million in revenues in 2025 and its integration into Onto Innovation is expected to immediately be accretive to gross and operating margins and lift non-GAAP earnings per share (EPS) by more than 10% in the first year after the closing.

ONTO’s Margin Details

Operating expenses totaled $89.9 million, up 13.2% year over year. 

Non-GAAP gross profit rose to $138.3 million from $128.9 million in the year-earlier quarter. Non-GAAP gross profit margin expanded to 54.5% from 53.2%.

Non-GAAP operating income was $65.6 million compared with $64.5 million in the year-ago quarter. Non-GAAP operating margin was 25.9%, down from 26.6% in the previous-year quarter

ONTO’s Balance Sheet

As of June 28, 2025, the company had $894.9 million in cash, cash equivalents and marketable securities and $155.8 million of total current liabilities compared with $850.6 million and $174.5 million, respectively, as of March 29, 2025.

Accounts receivable were $285.3 million.

As of June 28, 2025, Onto Innovation generated a record $58 million in cash from operations, representing cash conversion of 95% of non-GAAP net income. 

ONTO did not buy back shares in the second quarter, given the pending acquisition of certain product lines from Semilab,

Q3 2025 Guidance

ONTO expects third quarter total revenues to be between $210 million and $225 million. The Zacks Consensus Estimate is pegged at $217.8 million. This includes an anticipated slowdown in advanced node spending. Management anticipates acceleration in AI packaging spend in the fourth quarter and revenues from the same are expected to increase at least 50% quarter-over-quarter. Management expects this recovery in AI logic packaging and power revenue to push specialty device & advanced packaging revenues back to peak 2024 levels. 

Non-GAAP earnings per share are predicted to be between 75 cents and 95 cents. The Zacks Consensus Estimate is pegged at $1.27.

GAAP earnings per share are expected to range from 52 cents to 72 cents. 

Non-GAAP operating margin is expected to be in the range of 18% to 21%. 

Primarily due to inbound tariffs, ONTO expects to incur tariff expenses of $2 million to $3 million in both third and fourth quarters. With a focus on its region-for-region strategy, ONTO is rapidly installing manufacturing capability alongside partners in several Asian markets. It anticipates commencing shipments of tools from these new facilities in the current quarter, with nearly half of the product volume shipped internationally by the first half of 2026.

ONTO’s Zacks Rank

Onto Innovation currently has a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies in Broader Tech Space

Cadence Design Systems CDNS reported second-quarter 2025 non-GAAP EPS of $1.65, which beat the Zacks Consensus Estimate by 5.1%. The bottom line increased 28.9% year over year, exceeding management’s guidance of $1.55-$1.61.

Revenues of $1.275 billion beat the Zacks Consensus Estimate by 1.3% and increased 20.3% year over year. The figure surpassed CDNS’ view of $1.25-$1.27 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.

SAP SE SAP reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $1.63 per share.

Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues of €9.03 billion ($10.24 billion) on a non-IFRS basis, representing a 9% year-over-year increase (up 12% at constant currency). The Zacks Consensus estimate was pegged at $10.37 billion.

Seagate Technology Holdings plc STX reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.

Non-GAAP revenues of $2.44 billion beat the Zacks Consensus Estimate by 1.6%. Revenues were above the midpoint of guidance, rising 30% year over year. Seagate’s performance this quarter reflects the tailwinds of massive data growth, driven by hyperscale cloud customers, AI workloads and edge computing, all of which require scalable, reliable and high-density storage solutions. For fiscal 2025, STX reported revenues of $9.1 million, a 39% year-over-year increase.

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