Onto Innovation's Q3 Earnings Top Estimates, Plunge Y/Y, Shares Slide

Onto Innovation Inc. (ONTO) reported third-quarter 2025 earnings of 92 cents per share, which beat the Zacks Consensus Estimate by 5.8%. The bottom line, however, compared unfavorably with the prior-year quarter's $1.34.

Onto Innovation reported third-quarter revenues of $218.2 million, representing a 13.5% decline year over year. The top line almost matched the consensus mark of $218.24 million. However, the figure surpassed the midpoint of ONTO’s guidance, demonstrating resilience in execution and customer demand in select advanced technology nodes.

Specialty devices and advanced packaging revenues (52% of total revenues) were $113 million. Sales are expected to rebound to about $150 million in the fourth quarter, bringing full-year revenue to just more than $500 million.

Revenues from the Advanced nodes (25%) were $54 million as DRAM and NAND sales declined sequentially. For 2025, advanced node revenues are expected to double to about $300 million from $148.5 million in 2024.

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 (23%) were $51 million.

A major highlight of the quarter was Onto’s Dragonfly 3Di technology being qualified by two significant high-bandwidth memory customers. This technology also secured orders for 2.5D logic applications, which are essential for supporting the packaging needs of AI accelerators and advanced GPUs. Additionally, it shipped initial Atlas G6 OCD systems to several leading logic and memory customers during the quarter. More shipments are planned for the fourth quarter, indicating ongoing demand.

Onto expects about 18% revenue growth at the midpoint of its fourth guidance, mainly driven by strong 2.5D packaging demand, with revenue from these customers nearly doubling from this quarter. Revenues from advanced nodes are also expected to increase with higher DRAM and logic spending.

However, in response to falling top and bottom line performances and potential tariff headwinds ahead, ONTO’s shares slipped almost 3% in trading and closed at $131.75 on Nov. 6, 2025.

Margin Details

Non-GAAP gross margin came in at 54% compared with 54.5% in the previous-year quarter, reflecting about a one-point reduction due to tariff impacts.

Non-GAAP operating expenses were $71.9 million, up 6.5% from $67.5 million in the prior-year quarter.

Non-GAAP operating income was $46.1 million compared with $70 million in the year-ago quarter.

Non-GAAP operating margin was 21.1%, down from 27.8% in the previous-year quarter, but surpassed the high end of guidance, driven by continued focus on managing variable costs.

Liquidity

As of Sept. 27, the company had $983.9 million in cash, cash equivalents and marketable securities with $162.9 million of total current liabilities compared with $894.9 million and $155.8 million, respectively, as of June 28, 2025.

Accounts receivable were $260.2 million.

As of Sept. 27, Onto Innovation generated a record $83.4 million in cash from operations, representing a cash conversion of 185% of non-GAAP net income.

The company did not repurchase shares in the quarter due to the pending Semilab acquisition. Upon closing in the coming weeks, Onto will pay $432.3 million in cash and issue 641,771 shares, valuing the deal at about $495 million based on the June 27, 2025, closing price—roughly $50 million lower than the original terms.

Outlook for Q4 2025: Momentum Rebuilding

For the fourth fiscal quarter, Onto provided a positive outlook that suggests improving market conditions and sequential growth. Management expects revenues in the range of $250-$265 million, showcasing 15% to 21% sequential uptick.

At the midpoint of its revenue guidance, Onto expects gross margin to improve about 50 basis points sequentially. The outlook also factors in a one-point tariff impact, or roughly $2.5 million in costs, mainly from inbound tariffs on raw material imports. Gross margin is projected at 53.5%-55%.

Non-GAAP operating margin is expected to recover to between 24% and 26%, with operating expenses around $77 million.

Non-GAAP earnings per share are predicted to be between $1.18 and $1.33. GAAP earnings per share are expected to range from 85 cents to $1.00.

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

Flex Ltd. (FLEX) reported second-quarter fiscal 2026 adjusted EPS of 79 cents, which surpassed the Zacks Consensus Estimate by 5.3%. The bottom line compared favorably with 64 cents posted in the prior-year quarter. Revenues increased 4% year over year to $6.8 billion. Also, it beat the consensus mark by 2%. The uptick was driven by strong data center growth in both the cloud and power end markets, despite a complex macroeconomic environment.

Fortive Corporation (FTV) reported third-quarter 2025 adjusted EPS of 68 cents from continuing operations, which surpassed the Zacks Consensus Estimate of 58 cents. The bottom line increased 15.3% year over year. Revenues increased 2.3% year over year to $1.03 billion. The top line beat the Zacks Consensus Estimate by 2.1%. Core revenues jumped 1.9%.

PTC Inc (PTC) reported fourth-quarter fiscal 2025 non-GAAP earnings per share (EPS) of $3.47, up 126% year over year. The figure beat the Zacks Consensus Estimate by 63%. Revenues came in at $894 million, rising 43% year over year (up 39% at constant currency or cc). The top line beat the consensus estimate by 20.2%. Management projected revenues in the $725-$785 million band. For fiscal 2025, PTC’s revenues jumped 19% year over year to $2.7 billion.

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