Onto Innovation (ONTO) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $252.2 million, up 4% sequentially and 21.7% year-over-year, driven by strong demand in advanced packaging, power devices, and advanced nodes.

• Gross margin improved to 54%-55%, with GAAP net income at $53.1 million (26% of revenue) and non-GAAP net income at $66 million.

• Operating cash flow was $67 million, converting 100% of operating income to cash, with cash and equivalents at $855.4 million at quarter-end.

• Announced acquisitions of Lumina Instruments and Kulicke & Soffa's lithography business to expand inspection and lithography capabilities.

• Opened Packaging Applications Center of Excellence (PACE) to support 2.5D and 3D packaging architectures.

Financial highlights

• Q3 2024 revenue: $252.2 million (+4% QoQ, +21.7% YoY); GAAP EPS: $1.07, non-GAAP EPS: $1.34 (+40% YoY).

• Gross margin: 54%-55%, up from 51.6% a year ago and at the high end of guidance.

• Operating income: $53.1 million GAAP, $70 million non-GAAP; operating margin: 21% GAAP, 28% non-GAAP.

• Operating expenses: $67 million, reflecting increased R&D for product expansion.

• Inventory declined for the fifth consecutive quarter, ending at $308 million.

Outlook and guidance

• Q4 2024 revenue expected between $253 million and $267 million; gross margin 54%-55%.

• GAAP diluted EPS guidance for Q4: $1.04-$1.19; non-GAAP: $1.33-$1.48.

• Inventory expected to fall below $300 million by year-end.

• Anticipates another year of growth in 2025, outpacing WFE market growth.

• Cash and credit facilities expected to cover capital needs for at least 12 months.