Core Insights - Onto Innovation (NYSE: ONTO) faced a significant setback in November, which increased its appeal but did not create a compelling investment situation yet [1]. Group 1 - The investing group "Value In Corporate Events" focuses on providing members with opportunities related to IPOs, mergers & acquisitions, earnings reports, and changes in corporate capital allocation [2]. - The group covers approximately 10 major events each month, aiming to identify the best investment opportunities [2].

Core Viewpoint - Onto Innovation Inc. reported better-than-expected first-quarter financial results but issued second-quarter guidance below analyst estimates [1][2]. Financial Performance - Quarterly earnings were $1.51 per share, exceeding the analyst consensus estimate of $1.47 per share [1]. - Quarterly sales reached $267.00 million, surpassing the analyst consensus estimate of $266.30 million [1]. Future Guidance - The company expects second-quarter adjusted earnings to be between $1.21 and $1.35 per share, compared to analysts' estimates of $1.50 per share [2]. - Sales guidance for the second quarter is projected to be between $240.00 million and $260.00 million, while analysts expected $269.10 million [2]. Market Reaction - Following the earnings announcement, Onto Innovation shares fell by 29.1%, trading at $89.90 [3]. Analyst Ratings - Needham analyst Charles Shi maintained a Buy rating but lowered the price target from $230 to $150 [5]. - Benchmark analyst Mark Miller also maintained a Buy rating, reducing the price target from $230 to $190 [5].

Core Insights - Onto Innovation Inc. reported Q1 2025 earnings per share of $1.51, exceeding the Zacks Consensus Estimate by 2.7% and up from $1.18 in the prior year [1] - Quarterly revenues reached $267 million, surpassing the Zacks Consensus Estimate by 0.6% and reflecting a 16.5% year-over-year increase, marking the seventh consecutive quarter of revenue growth [1] Revenue Breakdown - Specialty devices and advanced packaging revenues, accounting for 48% of total revenues, fell 24% sequentially to $129 million due to challenging comparisons and changing customer needs in AI packaging and 2.5D applications [2] - Revenues from the Advanced nodes market, which represents 35% of total revenues, surged 96% quarter-over-quarter to $93 million, driven by strong demand in leading-edge DRAM, NAND memory, and gate-all-around transistors [3] - Software and services revenues, making up 17% of total revenues, decreased 5% sequentially to $44 million [3] Product Performance - The Iris film metrology platform saw over 25% revenue growth quarter-over-quarter, supported by new customer acquisitions, and is on track for record full-year revenues [4] - Multiple 3D bump metrology systems were shipped during the quarter, with additional shipments planned for Q2 to a growing customer base [4] Financial Metrics - Non-GAAP operating expenses totaled $70.4 million, a 13.9% increase year-over-year, slightly below the guidance range [5] - Non-GAAP gross profit rose to $146.9 million from $119.1 million in the previous year, with gross profit margin expanding to 55% from 52% [5] - Non-GAAP operating income increased to $76.5 million compared to $57.3 million in the year-ago quarter, with operating margin rising to 29% from 25% [5] Balance Sheet - As of March 29, 2025, the company held $850.6 million in cash and marketable securities, with total current liabilities of $174.5 million [6] - Accounts receivable stood at $291.6 million, and the company generated a record $92 million in cash from operations, representing 35% of revenues [6] Q2 2025 Guidance - Management anticipates revenues between $240 million and $260 million, with the Zacks Consensus Estimate at $264.6 million [7] - Non-GAAP earnings per share are projected to be between $1.21 and $1.35, while GAAP earnings per share are expected to range from $0.99 to $1.13 [8] - Advanced nodes revenues are expected to decline moderately in Q2, with slight decreases in specialty devices and advanced packaging markets, but growth is anticipated to resume in Q4 [8]

Company Performance - Onto Innovation (ONTO) reported quarterly earnings of $1.51 per share, exceeding the Zacks Consensus Estimate of $1.47 per share, and up from $1.18 per share a year ago, representing an earnings surprise of 2.72% [1] - The company posted revenues of $266.61 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.62%, and an increase from $228.85 million year-over-year [2] - Onto Innovation has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Stock Outlook - The stock has underperformed, losing about 24.9% since the beginning of the year, compared to the S&P 500's decline of 4.3% [3] - The current consensus EPS estimate for the upcoming quarter is $1.48 on revenues of $264.6 million, and for the current fiscal year, it is $6.09 on revenues of $1.07 billion [7] Industry Context - The Nanotechnology industry, to which Onto Innovation belongs, is currently ranked in the bottom 6% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Onto Innovation's stock may be influenced by the overall outlook for the industry, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Onto Innovation achieved a record revenue of $267 million for the first quarter, representing a 17% increase year-over-year and a 28% increase in EPS compared to the prior year [4][11] - The company reported an operating cash flow of $92 million, which is 35% of revenue, and free cash flow of $84 million, or 31% of revenue, converting 100% of operating income into cash [11][13] - Gross margin for the first quarter was 55%, slightly above the guidance range of 54% to 56% [12] Business Line Data and Key Metrics Changes - Revenue from Advanced Nodes was $93 million, a 96% increase over Q4, representing 35% of total revenue [11] - Specialty Devices and Advanced Packaging revenue decreased by 24% from Q4 to $129 million, accounting for 48% of revenue [12] - Software and Services revenue was $44 million, down 5% compared to Q4, representing 17% of revenue [12] Market Data and Key Metrics Changes - The Advanced Nodes market showed significant growth, driven by increased investments in AI compute engines and cloud servers [4] - Specialty device and advanced packaging markets experienced a decline, but long-term outlooks for AI packaging are improving [7][16] Company Strategy and Development Direction - The company is accelerating strategic programs to improve business continuity by establishing manufacturing capabilities in Asia, with shipments expected to begin in the second half of 2025 [5] - Onto Innovation is focusing on new product innovations in 2D inspection, 3D metrology, and optical metrology to support advancements in AI and cloud applications [18] Management's Comments on Operating Environment and Future Outlook - Management anticipates a moderate decline in revenue from advanced node customers in Q2 due to timing of investments, but expects growth to resume in Q4 [15][17] - The company is preparing for potential impacts from tariffs but currently does not foresee significant effects on shipments [30] Other Important Information - The company ended Q1 with cash and short-term investments of $851 million, with inventory levels expected to remain flat in Q2 [12][13] - The effective tax rate for the full year is expected to be between 14% to 16% [14] Q&A Session Summary Question: Impact of high bandwidth memory digestion - Management noted no significant changes in the HBM market, with continued investments and product adoptions ongoing [21][23] Question: Guidance for advanced packaging and specialty devices - Management indicated that advanced packaging is facing tough comparisons and tool allocation issues, leading to short-term degradation [25][26] Question: Impact of reciprocal tariffs - Management stated that there has been no current impact from reciprocal tariffs, with exceptions made for semiconductor equipment by China [29][30] Question: Performance of the new 2.5D tool - Management expressed confidence in the new tool's performance, which has been developed to meet evolving customer requirements [35][37] Question: Clarification on Q3 revenue expectations - Management clarified that Q3 is expected to be a low point for total revenue, with advanced nodes also anticipated to decline [42][43] Question: Update on lithography and packaging trends - Management reported strong interest in wide field high-resolution optics and panel packaging, with developments still in R&D stages [47][48] Question: 2.5D packaging platform performance - Management confirmed that while existing equipment met specifications, evolving customer requirements necessitated a new platform for better performance [51][52]

Financial Data and Key Metrics Changes - Onto Innovation achieved a record revenue of $267 million for the first quarter, representing a 17% increase year-over-year and a 28% increase in EPS compared to the prior year [4][12] - The company reported an operating cash flow of $92 million, converting 100% of operating income into cash, with a gross margin of 55% for the first quarter [12][14] - Cash and short-term investments at the end of the first quarter were $851 million, remaining relatively flat compared to Q4 [14] Business Line Data and Key Metrics Changes - Revenue from Advanced Nodes was $93 million, a 96% increase over Q4, accounting for 35% of total revenue [12] - Specialty Devices and Advanced Packaging revenue decreased by 24% from Q4 to $129 million, representing 48% of total revenue [12] - Software and Services revenue was $44 million, down 5% compared to Q4, making up 17% of total revenue [12] Market Data and Key Metrics Changes - The Advanced Nodes market showed significant growth, while Specialty Devices and Advanced Packaging faced a decline due to tough comparisons from the previous year [17][26] - The company anticipates a moderate decline in revenue from Advanced Node customers in Q2, with expectations for NAND and DRAM spending to remain steady [16][18] Company Strategy and Development Direction - The company is accelerating strategic programs to improve business continuity by establishing manufacturing capabilities in Asia, with shipments expected to begin in the second half of 2025 [5] - New product innovations in 2D inspection, 3D metrology, and optical metrology are seen as critical for enabling advancements in AI and cloud applications [19] Management's Comments on Operating Environment and Future Outlook - Management noted that tariffs are impacting incoming costs, but they are actively working to mitigate these through supply chain optimization [15] - The company expects revenue growth to resume in Q4 after a low point in Q3, with confidence in broad-based expansions in Advanced Nodes [18] Other Important Information - The company plans to maintain inventory levels at 1.6 to 1.8 turns for 2025, with expectations for inventory to stay relatively flat in Q2 [14] - The effective tax rate for the full year is expected to be between 14% to 16% [16] Q&A Session Summary Question: Follow-up on high bandwidth memory (HBM) market - Management indicated no significant changes in the HBM market since the last calls, with continued investments and product adoptions [21][23] Question: Expectations for advanced packaging and specialty devices in the second half of the year - Management noted that advanced packaging faced tough comparisons and allocations of tool slots negatively impacted short-term performance [25][26] Question: Impact of reciprocal tariffs on shipments - Management stated that there has been no significant impact from reciprocal tariffs at this time, with exceptions made for semiconductor equipment [29][30] Question: Clarification on Q2 guidance and business segments - Management confirmed that Advanced Nodes revenue is expected to decline slightly, while Specialty Devices and Advanced Packaging are impacted by lithography shipments [47][48] Question: Update on lithography and market interest - Management reported strong interest in wide field high-resolution optics and panel packaging, with developments expected to take two years to hit volume [50] Question: Performance of the new 2.5D tool - Management expressed confidence in the new tool's performance and its ability to meet evolving customer requirements [36][38] Question: Clarification on Q3 being a low watermark - Management clarified that Q3 is expected to be a low point for total revenue, not just Advanced Nodes [44] Question: Overall outlook compared to previous expectations - Management acknowledged some choppiness in the middle part of the year but indicated that most segments are performing in line with expectations [66][67]

Financial Performance - Record revenue of $266.6 million for Q1 2025, marking the seventh consecutive quarter of growth[6] - Net income for Q1 2025 was $64.1 million, up from $48.8 million in Q4 2024[5] - Revenue for the three months ended March 29, 2025, was $266,607,000, an increase of 16.5% from $228,846,000 for the same period in 2024[26] - Operating income rose to $76,495,000, with an operating margin of 29%, compared to 25% in the same quarter last year[28] - Net income for the period was $74,809,000, reflecting a significant increase from $58,452,000 year-over-year[30] Profitability Metrics - GAAP gross profit margin increased to 54%, up from 50% in Q4 2024[5] - Gross profit increased to $146,868,000, resulting in a gross margin of 55%, up from 52% in the prior year[28] - GAAP operating income reached $63.1 million, compared to $42.5 million in Q4 2024[5] - Diluted earnings per share increased to $1.51, up from $1.18 in the previous year[30] Future Guidance - Guidance for Q2 2025 revenue is projected to be between $240 million and $260 million[11] - GAAP diluted earnings per share expected to be in the range of $0.99 to $1.13 for Q2 2025[11] - Non-GAAP diluted earnings per share expected to be in the range of $1.21 to $1.35 for Q2 2025[11] - The company provided guidance for estimated U.S. GAAP net income per diluted share between $0.99 and $1.13 for the upcoming quarter[32] - Non-GAAP diluted earnings per share are estimated to be between $1.21 and $1.35 for the next quarter[32] Operational Highlights - Advanced nodes revenue doubled quarter-over-quarter, with significant growth in DRAM, NAND, and gate-all-around devices[6] - Iris™ film metrology revenue increased over 25% quarter-over-quarter, with full-year revenue expected to reach record levels[6] - Record cash from operations of $92 million, representing 35% of revenue[6] - Total operating expenses were $70,373,000, compared to $61,808,000 in the same quarter last year[28] - Research and development expenses were $28,030,000, an increase from $26,554,000 in the prior year[26] - Interest income increased to $9,266,000, compared to $7,361,000 in the same quarter last year[26]

Core Viewpoint - Onto Innovation (ONTO) is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended March 2025, with earnings expected to be $1.47 per share, reflecting a 24.6% increase, and revenues projected at $264.96 million, up 15.8% from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is scheduled for May 8, and the stock may rise if the reported figures exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised down by 1.07% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model compares the Most Accurate Estimate to the Zacks Consensus Estimate, suggesting that recent estimate revisions may provide more accurate insights into the company's earnings potential [5][6]. - A negative Earnings ESP of -1.09% indicates that analysts have become bearish on Onto Innovation's earnings prospects, compounded by a Zacks Rank of 4, making it challenging to predict an earnings beat [10][11]. Historical Performance - Onto Innovation has a history of beating consensus EPS estimates, having done so in the last four quarters, including a surprise of +8.63% in the last reported quarter [12][13]. Conclusion - Despite the historical performance of beating estimates, Onto Innovation does not currently appear to be a strong candidate for an earnings beat, and investors should consider other factors before making investment decisions [14][16].

Company Performance - Onto Innovation (ONTO) closed at $122.28, reflecting a -1.96% change from the previous day, underperforming the S&P 500's gain of 0.58% [1] - Over the past month, Onto Innovation's shares have increased by 2.79%, outperforming the Computer and Technology sector's gain of 0.6% and the S&P 500's loss of 0.84% [1] Upcoming Earnings - The company's earnings report is scheduled for May 8, 2025, with an expected EPS of $1.47, indicating a 24.58% increase from the same quarter last year [2] - The Zacks Consensus Estimate for revenue is projected at $264.96 million, up 15.78% from the previous year [2] Fiscal Year Estimates - For the entire fiscal year, the Zacks Consensus Estimates predict earnings of $6.09 per share and revenue of $1.07 billion, reflecting increases of +14.04% and +8.62% respectively from the prior year [3] Analyst Estimates - Recent changes in analyst estimates for Onto Innovation are crucial as they reflect short-term business trends, with positive revisions indicating analyst optimism about the company's profitability [4] - The Zacks Consensus EPS estimate has decreased by 3.21% in the past month, and Onto Innovation currently holds a Zacks Rank of 4 (Sell) [6] Valuation Metrics - Onto Innovation is trading at a Forward P/E ratio of 20.5, which is in line with the industry's average [7] - The company has a PEG ratio of 0.68, indicating a favorable valuation relative to its expected earnings growth [7] Industry Context - The Nanotechnology industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 240, placing it in the bottom 4% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Company Performance - Onto Innovation (ONTO) closed at $114.21, reflecting a +1.84% change from the previous session, which is lower than the S&P 500's gain of 2.51% [1] - Over the past month, shares have depreciated by 20.42%, underperforming the Computer and Technology sector's loss of 12.18% and the S&P 500's loss of 8.86% [1] Earnings Estimates - The company is expected to report earnings on May 8, 2025, with projected earnings of $1.47 per share, indicating a year-over-year growth of 24.58% [2] - Revenue is projected at $265.94 million, up 16.21% from the prior-year quarter [2] Full Year Projections - For the full year, earnings are projected at $6.09 per share and revenue at $1.07 billion, reflecting changes of +14.04% and +8.62% respectively from the previous year [3] Analyst Sentiment - Recent changes to analyst estimates indicate evolving short-term business trends, with positive revisions suggesting optimism regarding the company's business and profitability [3] Valuation Metrics - Onto Innovation is currently trading at a Forward P/E ratio of 18.43, which aligns with the industry's average [6] - The company has a PEG ratio of 0.61, comparable to the average PEG ratio of nanotechnology stocks [6] Industry Ranking - The Nanotechnology industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 89, placing it in the top 36% of over 250 industries [7] - The top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]