Onto Innovation's Q1 Earnings Beat on Solid Y/Y Top-Line Improvement

Onto Innovation Inc. ONTO reported first-quarter 2025 earnings per share of $1.51, which beat the Zacks Consensus Estimate by 2.7%. The bottom line compared favorably with the prior-year quarter's $1.18.

Quarterly revenues of $267 million beat the Zacks Consensus Estimate by 0.6% and increased 16.5% year over year. This marks the company’s seventh straight quarter of top-line growth, driven by expansions in advanced nodes and packaging for AI compute engines and cloud enterprise servers.

Specialty devices and advanced packaging revenues (48% of total revenues) of $129 million tanked 24% sequentially. The contraction was due to tough comparisons and evolving customer requirements in AI packaging and 2.5D applications.

Onto Innovation Inc. Price, Consensus and EPS Surprise

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

Revenues from the Advanced nodes (35%) market skyrocketed 96% quarter over quarter to $93 million, driven by strength across leading-edge DRAM, NAND memory and gate-all-around (GAA) transistors.

Revenues from Software and services (17%) fell 5% sequentially to $44 million. 

The Iris film metrology platform continued its momentum, with revenues increasing more than 25% quarter over quarter, fueled by new customer wins. Iris remains on track to achieve record full-year revenues. Also, Onto shipped multiple 3D bump metrology systems during the quarter, with more shipments planned in the second quarter to an expanding list of customers

Management highlighted the negative impact of the Trump administration's tariffs on Onto Innovation due to the U.S.-based manufacturing of its products, affecting both incoming costs and export costs. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Margin Details

Non-GAAP operating expenses totaled $70.4 million, up 13.9% year over year, slightly under the midpoint of the projected $69–$72 million guidance.

Non-GAAP gross profit rose to $146.9 million from $119.1 million in the year-earlier quarter. Non-GAAP gross profit margin expanded to 55% from 52%.

Non-GAAP operating income was $76.5 million compared with $57.3 million in the year-ago quarter. Non-GAAP operating margin was 29%, up from 25% in the previous-year quarter.

Balance Sheet

As of March 29, 2025, the company had $850.6 million in cash, cash equivalents and marketable securities with $174.5 million of total current liabilities compared with $852.3 million and $170 million, respectively, as of Dec. 28, 2024.

Accounts receivable were $291.6 million.

As of March 29, 2025, Onto generated a record $92 million in cash from operations, representing 35% of revenues.

Q2 2025 Guidance

Management expects revenues in the range of $240-$260 million. The Zacks Consensus Estimate is pegged at $264.6 million. 

Non-GAAP earnings per share are projected to be between $1.21 and $1.35. We expect the metric to be $1.48.

GAAP earnings per share are expected to range from 99 cents to $1.13.

Advanced nodes revenues are expected to decline moderately in the second quarter and specialty devices and advanced packaging markets are projected to decrease slightly, with growth resuming in the fourth quarter after a pause in the third quarter.

ONTO’s Zacks Rank

Onto Innovation currently has a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies

Badger Meter, Inc. BMI reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.

In the past year, shares of BMI have gained 18.8%.

Cadence Design Systems CDNS reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.

Shares of Cadence have gained 9.6% in the past year.

Woodward, Inc. WWD reported second-quarter fiscal 2025 adjusted net EPS of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.

In the past six months, shares of WWD have gained 13.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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