NVMI Q2 Deep Dive: Advanced Packaging and Gate-All-Around Propel Results

Semiconductor quality control company Nova (NASDAQ:NVMI) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 40.2% year on year to $220 million. Guidance for next quarter’s revenue was optimistic at $221 million at the midpoint, 2.4% above analysts’ estimates. Its non-GAAP profit of $2.20 per share was 6.5% above analysts’ consensus estimates.

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StockStory’s Take

Nova’s second quarter was marked by robust revenue growth and a positive market reaction, with sales surpassing Wall Street expectations. Management attributed the strong results to record performance in its chemical metrology division and service business, as well as sustained momentum in logic, foundry, and advanced packaging segments. CEO Gabriel Waisman highlighted that the company’s ability to serve multiple revenue streams—driven by technological transitions in semiconductor manufacturing—was key to outperformance. He also emphasized Nova’s diversified business model and ongoing investment in expanding customer partnerships and product capabilities, which underpinned the broad-based growth across markets and regions.

Looking ahead, Nova’s guidance reflects confidence in continued demand for advanced metrology solutions, underpinned by industry shifts such as the adoption of gate-all-around architecture and increased complexity in semiconductor design. Management pointed to ongoing investments in new product development and the integration of the Sentronics portfolio as pillars for future growth. CFO Guy Kizner noted that anticipated margin headwinds from tariffs are now expected to be lower than previously estimated, and Waisman stated, “We believe that next year is going to be even stronger than this year in that respect,” signaling optimism about Nova’s positioning for the remainder of 2025 and beyond.

Key Insights from Management’s Remarks

Management credited record-setting results to strong execution in advanced packaging, chemical metrology, and diversified customer demand, with notable wins in both logic and memory markets.

• Advanced packaging expansion: Nova’s chemical metrology division delivered record results, driven by rising demand for advanced packaging solutions to support increasingly sophisticated semiconductor devices and high-bandwidth memory applications.
• Gate-all-around momentum: The company reported adoption of its platforms across all four key customers pursuing gate-all-around technology, a next-generation transistor architecture. Management reaffirmed its target of $500 million in cumulative gate-all-around revenue by the end of 2026, noting current progress is on track.
• Sentronics integration: The successful integration of Sentronics, a recent acquisition, has broadened Nova’s optical metrology offering and expanded its direct sales reach into new territories. Management highlighted accelerating customer adoption and strong growth potential from this expanded portfolio.
• Service business growth: Nova’s service division posted its tenth consecutive quarter of revenue growth, powered by value-added services that improve productivity and address new customer applications within the installed base.
• Geographic and customer diversity: Product revenue was well distributed, with four customers and four territories each contributing at least 10% of product sales, underscoring the company’s diversified exposure across global markets and customer segments.

Drivers of Future Performance

Management expects continued growth from advanced node adoption, expanded product offerings, and further penetration in memory and packaging markets, while monitoring margin dynamics.

• Ongoing semiconductor complexity: Nova’s outlook is anchored by growing demand for advanced metrology as semiconductor devices become more complex, particularly through the industry’s shift to gate-all-around and advanced packaging. Management believes this will drive increased product adoption across both logic and memory customers.
• Product portfolio expansion: Investments in new tools, such as VeraFlex with active charge compensation and newly integrated Sentronics platforms, are expected to support adoption in advanced 3D NAND and packaging, with management citing positive customer evaluations and repeat orders as leading indicators of future revenue contribution.
• Margin management and tariff impact: While tariffs remain a headwind, management now anticipates their impact on gross margin will be less than previously expected. The company aims to offset cost pressures through a favorable product mix and operational efficiency, but noted that operating expenses are set to rise with continued R&D investment.

Catalysts in Upcoming Quarters

In upcoming quarters, our analysts will focus on (1) the pace of adoption for Nova’s advanced packaging and gate-all-around solutions, (2) the successful rollout and market penetration of new metrology tools such as VeraFlex and Sentronics platforms, and (3) the trajectory of service business growth as value-added offerings scale. Execution in these areas will be crucial for sustaining Nova’s momentum amid evolving semiconductor industry trends.

Nova currently trades at $275.90, up from $257.95 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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