Onto Innovation — Q3 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue reached $409.7 million, an 87.8% year-over-year increase from $218.2 million in Q3 2025, and a 19% sequential increase.
• Nine-month 2026 revenue totaled $1.045 billion, a 41.5% year-over-year increase from $738.4 million in the first nine months of 2025.
• Q3 2026 GAAP gross margin was 54.8% compared to 50.7% in Q3 2025; Non-GAAP gross margin was 57.6% compared to 54.0% in Q3 2025.
• Nine-month 2026 GAAP gross margin was 53.0% compared to 50.9% in the same period of 2025; Non-GAAP gross margin was 56.9% compared to 54.6%.
• Q3 2026 GAAP operating income was $95.4 million (23.3% of revenue) versus $23.7 million (10.9%) in Q3 2025.
• Q3 2026 Non-GAAP operating income was $133.5 million (32.6% of revenue) versus $46.1 million (21.1%) in Q3 2025.
• Nine-month 2026 GAAP operating income was $192.5 million (18.4% of revenue) versus $119.1 million (16.1%) in 2025.
• Nine-month 2026 Non-GAAP operating income was $314.1 million (30.1% of revenue) versus $188.2 million (25.5%) in 2025.
• Q3 2026 GAAP net income was $46.8 million ($0.95 diluted EPS) versus $28.2 million ($0.57 diluted EPS) in Q3 2025.
• Q3 2026 Non-GAAP net income was $120.3 million ($2.44 diluted EPS) versus $45.1 million ($0.92 diluted EPS) in Q3 2025.
• Nine-month 2026 GAAP net income was $140.7 million ($2.83 diluted EPS) versus $126.2 million ($2.57 diluted EPS) in 2025.
• Nine-month 2026 Non-GAAP net income was $287.1 million ($5.78 diluted EPS) versus $181.2 million ($3.69 diluted EPS) in 2025.
• Cash flow from operations for Q3 2026 was approximately $79 million.
• Cash, cash equivalents, and marketable securities ended Q3 2026 at $1.25 billion, up from $639.6 million at the start of the fiscal year.
• The Company holds $1.47 billion in 2031 Notes, net, as of September 30, 2026.
• An unrealized loss of $40.8 million on the investment in Rigaku was recorded in Q3 2026.

Guidance and Future Outlook:

• Full-year 2026 revenue growth is expected to exceed 45% year-over-year.
• Q4 2026 revenue guidance is $430 million to $450 million.
• Q4 2026 GAAP operating margin guidance is 24.4% to 24.8%.
• Q4 2026 Non-GAAP operating margin guidance is 33.5% to 34.5%.
• Q4 2026 GAAP diluted EPS guidance is $1.95 to $2.07.
• Q4 2026 Non-GAAP diluted EPS guidance is $2.59 to $2.79.
• Management expects to finish 2026 with revenue growth exceeding 45% year-over-year and believes the company is well-positioned for strong 2027 performance.
• Management cites a backlog exceeding $1.3 billion and visibility into customer investment plans extending multiple years.

Business Segments and Product Lines:

• Advanced Nodes achieved a quarterly revenue record, driven by strong adoption of the Atlas® G6 OCD system.
• Advanced Packaging and Specialty Devices achieved record revenue, primarily driven by the Dragonfly® G5 and Firefly® inspection systems.
• Non-GAAP gross margin improved by 60 basis points in the quarter and has increased by 300 basis points year-to-date through September 30, 2026.

Market and Competitive Landscape:

• Demand remains robust driven by increasingly complex device architectures for next-generation AI and high-performance computing.
• The company serves the semiconductor value chain with technologies including unpatterned wafer quality, 3D metrology, macro defect inspection, metal interconnect composition, factory analytics, and lithography for advanced semiconductor packaging.

Risks and Challenges:

• Risks include fluctuations in customer capital spending, supply chain management, and geopolitical conflicts (including Israel, U.S., Iran).
• Potential impacts from U.S. tariff and trade policy changes, export regulations, and exchange rate fluctuations (Japanese yen to U.S. dollar) affecting the Rigaku investment.
• Risks related to the ability to realize anticipated benefits from the Rigaku investment and the integration of acquired businesses like Semilab USA.
• Potential impacts from natural disasters, public health emergencies, and intellectual property protection issues.

Management Commentary and Tone:

• CEO Mike Plisinski stated, "Our outstanding results this quarter reflect excellent execution by our team and continued strength in the markets we serve."
• Management expressed increased confidence in the durability of demand trends due to business momentum, a strong backlog, and long-term customer visibility.
• The tone is confident, highlighting record revenue, earnings, and margins exceeding the high end of previously announced non-GAAP guidance ranges.

Other Key Points:

• In August 2026, the Company closed on the purchase of a 27% ownership interest in Rigaku.
• The press release includes detailed reconciliations of GAAP to Non-GAAP financial measures, excluding amortization of intangibles, merger and acquisition-related expenses, litigation expenses, and restructuring costs.
• The Company reported a significant increase in total assets to $3.8 billion from $2.37 billion at the start of the fiscal year, driven by cash accumulation and the acquisition of Rigaku.