Veeco Instruments (VECO) investor relations material

Executive summary

• Q3 2025 revenue was $165.9 million, exceeding guidance midpoint but down 10% year-over-year, with non-GAAP operating income of $23.1 million and diluted EPS of $0.36; strong demand in semiconductor technologies, especially AI and high-performance computing, offset a softer sales environment.

• Announced a definitive agreement to merge with Axcelis Technologies in an all-stock transaction, expected to close in H2 2026, creating a leading semiconductor equipment company with a combined served-available market over $5 billion; Veeco shareholders to receive 0.3575 Axcelis shares per Veeco share and own 41.6% of the combined company.

• The merger is expected to deliver growth synergies, expand product portfolios, increase R&D scale, and strengthen financial foundations with over $900 million in combined cash.

• Industry headwinds include tariffs, trade restrictions, and market uncertainty, but long-term semiconductor demand remains robust, driven by AI, high-performance computing, and automotive electrification.

• Multiple new orders won for advanced packaging, wet processing, lithography, and MOCVD systems, especially for 300mm Gallium Nitride and Arsenide Phosphide platforms.

Financial highlights

• Q3 2025 revenue was $165.9 million, with semiconductor business contributing $118.3 million (71% of total), compound semiconductor $10.9 million (7%), data storage $10 million (6%), and scientific/other $26.7 million (16%).

• Gross margin was 41.9% non-GAAP (40.8% GAAP), at the top end of guidance, driven by higher volume and improved product mix.

• Non-GAAP net income was $21.8 million; GAAP net income was $10.6 million; diluted EPS was $0.36 non-GAAP and $0.17 GAAP on 61 million shares.

• Cash and short-term investments ended at $369 million, up $14 million sequentially; cash and cash equivalents at quarter-end were $193.2 million.

• Cash flow from operations was $16 million in Q3; capital expenditures were $3 million.

Outlook and guidance

• Q4 2025 revenue expected between $155 million and $175 million; non-GAAP gross margin projected at 37%-39%, down from Q3 due to product mix and discounted evaluation tool acceptances.

• Q4 net income expected between $10 million and $19 million; non-GAAP diluted EPS between $0.16 and $0.32 on 62 million shares; GAAP diluted EPS guidance is ($0.07) to $0.05.

• 2025 semiconductor market growth anticipated, driven by gate-all-around, advanced packaging, and continued AI/high-performance computing investments; compound semiconductor and data storage markets expected to rebound in 2026.

• Long-term industry outlook remains positive, but near-term uncertainty persists due to tariffs and global trade dynamics.