Onto Innovation Inc. reported third‑quarter 2025 revenue of $218.2 million, a 13.5% decline from $252.2 million in Q3 2024. The drop was driven by weaker demand in the advanced packaging segment and a shift in customer mix toward lower‑margin specialty devices, while revenue from advanced nodes and software services remained flat or modestly up. The company’s gross margin fell to 54.0% from 54.5% year‑ago, largely because a 1‑percentage‑point tariff impact reduced the cost of raw materials for high‑performance packaging. GAAP operating margin contracted to 21.1% from 27.8%, reflecting the margin squeeze in packaging and the higher cost of capital equipment for new product qualification. Non‑GAAP operating margin, however, remained near 21.5%, indicating that core operating leverage was largely preserved.
GAAP diluted earnings per share were $0.57, beating the consensus estimate of $0.71 by $0.14. Non‑GAAP diluted EPS of $0.92 surpassed the $0.87 estimate by $0.05, a 5.7% beat. The earnings beat was driven by disciplined cost control—particularly in manufacturing and R&D spend—and by the successful qualification of the Dragonfly 3Di metrology system for high‑bandwidth memory customers, which added incremental revenue without a proportional increase in operating costs. The company also avoided one‑time charges that had impacted prior periods, helping to preserve profitability.
Cash and short‑term investments rose to $983.9 million from $894.9 million at the end of 2024, giving Onto a robust liquidity cushion. The company’s free‑cash‑flow generation remained strong, with operating cash flow of $210 million and a net cash burn of $15 million, underscoring its ability to fund capital expenditures and potential acquisitions. Management highlighted that the cash position will support the planned expansion of offshore manufacturing facilities, which are expected to increase gross margin by 1–2 percentage points in 2026.
Looking ahead, Onto guided Q4 2025 revenue to $250 million–$265 million, a 15–21% sequential increase, and non‑GAAP EPS to $1.18–$1.33, up 30–45% from the current quarter. The guidance reflects confidence in a rebound in AI‑driven chip demand and a gradual recovery in advanced packaging orders. Management also reiterated its full‑year 2025 revenue outlook of $4.4 billion, up from the prior guidance of $4.3 billion, and full‑year non‑GAAP operating income of $2.1 billion, signaling a positive trajectory for profitability.
CEO Michael Plisinski emphasized the strategic importance of the 3Di qualification, noting that “the system has successfully completed full qualification at two high‑bandwidth memory customers, positioning Onto as a leader in advanced packaging process control.” CFO Brian Roberts added that “gross margin of 54% includes a 1‑percentage‑point tariff impact, and operating margin of 21.1% exceeded the top end of our guidance range, underscoring our focus on variable‑cost control.” These comments reinforce the company’s narrative that disciplined cost management and strategic product wins are driving resilience amid a challenging market environment.
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