Onto Innovation (ONTO) Q4 2025 earnings summary

Executive summary

• Achieved record Q4 revenue of $267 million and full-year revenue of $1,005 million for 2025.

• Completed the acquisition of Semilab in mid-November, contributing $9 million in Q4 revenue.

• Advanced packaging orders for AI devices more than doubled in Q4, driving strong momentum into 2026.

• Backlog nearly doubled over the last three months, providing strong visibility and support for continued growth.

• Secured a $240+ million volume purchase agreement with a leading HBM manufacturer for DragonflyⓇ systems.

Financial highlights

• Q4 gross margin improved by 50 basis points to 54.6% from Q3; non-GAAP gross margin was 54.6% (up from 54.5%).

• Q4 operating margin rose to 25.2% non-GAAP; GAAP operating income was $13.9 million (5.2% margin), non-GAAP $67.2 million (25.2% margin).

• Adjusted diluted EPS for Q4 was $1.26; GAAP EPS $0.21.

• Generated record quarterly cash of $95 million, with cash conversion at 150% of non-GAAP net income.

• Adopted the One Big Beautiful Bill Tax Act, resulting in $19 million cash tax savings in 2025 and an estimated $14 million in 2026.

Outlook and guidance

• Q1 2026 revenue expected between $275 million and $285 million; Q2 revenue projected to exceed $300 million.

• Core business growth for H1 2026 forecasted at 12%-14% over H2 2025.

• Gross margin expected to improve by 50 basis points in Q1 2026; Q1 2026 gross margin projected at 54.6% to 55.6%.

• Q1 2026 non-GAAP operating margin guidance at 25.5%-26.5%; GAAP at 14.2%-15.6%.

• Q1 EPS expected in the range of $1.26-$1.36 non-GAAP, $0.74-$0.84 GAAP, with a 16% tax rate and 49.9 million shares outstanding.

• Advanced packaging revenue projected to grow over 30% in 2026; advanced nodes expected to grow in the mid-teens percentage.