Onto Innovation Q2 Earnings Call Highlights

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Sun, August 9, 2026 at 2:03 AM GMT+3 6 min read

Key Points

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Strong second-quarter performance: Revenue rose 35% year over year to $343 million, while non-GAAP EPS of $1.93 exceeded the high end of guidance. Gross margin reached 57% and operating margin 30%.
Robust semiconductor demand: Advanced-node revenue increased about 50% sequentially, while advanced packaging and specialty-device demand drove an 80% full-year growth outlook. Dragonfly inspection orders, including more than $200 million from one OSAT customer, support future HBM and 2.5D packaging growth.
Raised outlook and strong visibility: Backlog exceeded $1.1 billion, extending into 2027, prompting management to raise expected second-half revenue growth to at least 25%. Onto forecast third-quarter revenue of $380 million to $400 million and expects operating margin to reach at least 33% by year-end.

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Onto Innovation (NYSE:ONTO) reported second-quarter 2026 results above the high end of its guidance range, with revenue, margins and earnings supported by demand for semiconductor process-control systems used in advanced packaging and leading-edge chip manufacturing.

Chief Executive Officer Michael Plisinski said the company set quarterly revenue records and entered the second half with backlog exceeding $1.1 billion. He said increasing customer visibility prompted Onto Innovation to raise its outlook for second-half revenue growth to at least 25% from the first half, compared with a prior expectation for 15% growth.

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"We set new quarterly revenue records with advanced nodes growing 50% quarter-over-quarter, and our inspection business, dominated by Dragonfly systems, growing by 30%," Plisinski said.

Second-Quarter Financial Results

Chief Financial Officer Brian Roberts said second-quarter revenue totaled $343 million, up 18% sequentially and 35% from a year earlier. The company reported non-GAAP earnings per share of $1.93, which Roberts said was $0.20 above the high end of its prior guidance range.

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Onto Innovation recorded a 57% gross margin, up 130 basis points from the first quarter and 250 basis points from the fourth quarter of 2025. Operating margin reached 30%, an increase of nearly 500 basis points from the beginning of the year, according to Roberts.

The company generated $62 million in operating cash flow during the quarter, slightly exceeding quarterly net income. As of June 30, Onto Innovation held nearly $1.9 billion in cash and short-term investments.

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In May, the company completed a $1.5 billion offering of 0% convertible debt due in 2031, generating roughly $1.2 billion in net cash. It used the remaining amount for approximately $200 million of common-stock repurchases, a capped-call transaction and professional fees, Roberts said.

Advanced Nodes and Packaging Demand

Revenue from advanced-node customers rose about 50% from the first quarter to approximately $120 million. Memory represented roughly 60% of that business and grew about 60% sequentially, while logic revenue increased more than 40%.

Plisinski said demand broadened across memory, logic and NAND customers. He cited expanded adoption of the Atlas G6 platform for transistor metrology at nodes below 2 nanometers, as well as expected second-half shipments to a major DRAM customer for next-generation memory devices.

The company expects advanced-nodes revenue to grow more than 35% for full-year 2026. Plisinski also said the Iris films and integrated metrology product lines are on track for record revenue this year.

Advanced packaging and specialty devices accounted for nearly half of second-quarter revenue. Inspection revenue, led by the Dragonfly family, grew 30% sequentially as customers increased spending on 2.5D logic and high-bandwidth memory, or HBM, applications.

Onto Innovation raised its full-year advanced-packaging growth outlook to approximately 80%, from a previous projection of 50%. Plisinski said the Dragonfly G5 launch has driven demand from HBM manufacturers and outsourced semiconductor assembly and test, or OSAT, providers serving heterogeneous packaging applications.

The company received more than $200 million in Dragonfly orders from one OSAT partner during the quarter. Most of those orders are scheduled for delivery in 2027.

Backlog Extends Into 2027

Plisinski said approximately 60% to 70% of the more than $1.1 billion backlog is tied to 2026, while 30% to 40% covers 2027. He characterized the backlog as evidence of customers' confidence in their expansion plans and their desire to secure equipment supply earlier than historical norms.

Management said the backlog includes demand for advanced packaging across HBM and 2.5D logic, including purchases by OSATs and a widening customer base, as well as continued demand for advanced-node metrology products.

While the company did not provide formal 2027 guidance, Plisinski said discussions with customers have been constructive and Onto Innovation has begun discussing volume purchase agreements for 2027. He said the company does not expect to be capacity constrained, pointing to its in-house factories and extended manufacturing partnerships in Asia.

Roberts said the extended-factory strategy, supply-chain localization, lower labor costs and reduced freight expenses contributed to 2026 margin progress. He added that a greater mix of Dragonfly G5 sales could provide further gross-margin support in 2027 because of the platform's higher average selling price.

Raised Second-Half Outlook

For the third quarter, Onto Innovation forecast revenue of $380 million to $400 million and said fourth-quarter revenue is expected to be higher than third-quarter revenue. At the midpoint of the third-quarter range, the company expects non-GAAP earnings per share of approximately $2.28, based on a 15% non-GAAP tax rate and slightly more than 50 million shares outstanding.

The company expects gross margin to improve by an additional 50 basis points in each of the third and fourth quarters, despite potential pressure from material costs, fuel surcharges and freight expense. It forecast a third-quarter operating margin of 32% and expects to exit 2026 with operating margin of at least 33%.

Onto Innovation also highlighted silicon photonics as an emerging opportunity. The company has received more than $50 million in orders related to the technology, with roughly two-thirds expected to ship in 2027. It estimates its served addressable market in silicon photonics could exceed $500 million by 2030.

The company plans to host an analyst meeting at the New York Stock Exchange on Dec. 17 to discuss market strategies and an updated financial model.

About Onto Innovation (NYSE:ONTO)

Onto Innovation (NYSE:ONTO) is a global supplier of advanced process control and inspection systems for semiconductor and electronics manufacturers. The company's solutions span metrology, inspection, defect review and lithography mask repair, helping customers optimize yield, reduce costs and improve device performance. By integrating high-resolution optical and e-beam tools with sophisticated software analytics, Onto Innovation enables wafer, mask and advanced packaging producers to maintain tight process control across leading-edge nodes and specialty applications.

Key products include high-throughput wafer metrology systems, optical and e-beam defect inspection platforms, mask inspection and repair tools, and data-driven software for yield management and process optimization.

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The article "Onto Innovation Q2 Earnings Call Highlights" was originally published by MarketBeat.

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