Onto Innovation Posts Record Annual Revenue but Q4 Earnings Miss Expectations
ONTO INNOVATION INC (NYSE:ONTO), a leader in process control equipment for the semiconductor industry, reported financial results for the fourth quarter and full fiscal year 2025. The company achieved a significant milestone by surpassing $1 billion in annual revenue for the first time, though its quarterly performance fell short of Wall Street's forecasts, leading to a mixed market reaction.
Earnings and Revenue Versus Estimates
The company's fourth-quarter results presented a contrast between top-line growth and bottom-line performance relative to analyst expectations.
- Revenue: Onto Innovation reported Q4 revenue of $266.9 million. This represented a modest year-over-year increase of 1.1% but came in below the analyst consensus estimate of approximately $272.1 million.
- Earnings Per Share (Non-GAAP): The company reported non-GAAP diluted EPS of $1.26 for the quarter. This missed the consensus estimate of $1.30.
For the full fiscal year 2025, the company reported revenue of $1.005 billion, a 1.8% increase over the prior year. Non-GAAP net income for the year was $243.5 million, or $4.94 per diluted share.
Market Reaction and Price Action
Following the earnings release, Onto Innovation's stock experienced volatility. The immediate after-market trading showed a positive gain of over 1%. However, this reaction must be viewed in the context of recent performance. Over the past month, the stock has been relatively flat, and its movement over the past week has been minimal, suggesting investors were in a holding pattern ahead of the earnings news. The initial after-hours uptick indicates some investor relief or positive interpretation of the company's forward guidance, despite the earnings miss.
Key Highlights from the Quarterly Report
Beyond the financial figures, management highlighted several strategic accomplishments that signal future growth initiatives:
- Record Annual Revenue: Crossing the $1 billion annual revenue mark is a landmark achievement for the company.
- Strategic Acquisition: The quarter saw the completion of the acquisition of key product lines from Semilab International's materials analysis business, expanding Onto's portfolio in materials composition and electrical analysis.
- Major Customer Agreement: The company closed a volume purchase agreement valued at over $240 million with a leading manufacturer of high-bandwidth memory (HBM). This agreement is for Dragonfly® inspection and metrology systems to support the customer's expansion plans through 2027.
- Next-Generation Product Shipments: Multiple next-generation Dragonfly® systems for high-resolution 2D applications were shipped to customers, who have now begun evaluation periods.
Forward Outlook Versus Analyst Expectations
Onto Innovation provided guidance for the first quarter of fiscal 2026, which appears to be a primary driver behind the positive after-hours sentiment. The company's outlook is notably strong when stacked against current analyst projections.
- Q1 2026 Revenue Guidance: The company expects revenue between $275 million and $285 million. The midpoint of this range ($280 million) is above the current analyst sales estimate of approximately $273.3 million.
- Q1 2026 EPS Guidance: Onto forecasts non-GAAP diluted EPS in the range of $1.26 to $1.36. The midpoint of this guidance ($1.31) also surpasses the analyst EPS estimate of about $1.29 for the coming quarter.
CEO Mike Plisinski expressed confidence in the company's positioning, stating, "With global AI investment fueling a robust upcycle in semiconductor capital equipment spending, our deep and broad portfolio...positions us to capitalize on the high growth segments of the market." He added that the company is poised to "outgrow the semiconductor equipment market in 2026 and beyond."
Conclusion
Onto Innovation's fourth quarter presented a familiar narrative in the semiconductor equipment sector: solid execution and strategic positioning slightly offset by a quarterly earnings miss. The record annual revenue and the significant, multi-year HBM customer agreement underscore the company's competitive strength in advanced packaging and memory—key growth areas driven by artificial intelligence. While the Q4 earnings fell short, the market's initial positive reaction seems firmly tied to the company's robust guidance for the current quarter, which exceeds analyst expectations. This suggests investors are looking past a single quarter's miss and focusing on the strong demand pipeline highlighted by management.
For a detailed look at Onto Innovation's historical earnings and future estimates, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, nor does it recommend buying or selling any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
