Onto Innovation Inc (ONTO) Q4 2025 Earnings Call Highlights: Record Revenue and Strategic …

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Fri, February 20, 2026 at 2:03 PM GMT+9 4 min read

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**Revenue:** Record revenue of $267 million for Q4, a 22% increase from Q3. Full-year revenue reached $1.5 billion.

**Gross Margin:** Improved by 50 basis points to 54.6% in Q4.

**Operating Margin:** Increased to 25.2% in Q4, up 410 basis points from Q3.

**Cash Generation:** Record cash generation of $95 million in Q4.

**Adjusted Diluted EPS:** $1.26 for Q4.

**Advanced Packaging Revenue:** Grew over 25% sequentially in Q4.

**Advanced Nodes Revenue:** More than doubled in 2025 to $308 million.

**Q1 2026 Revenue Guidance:** Expected to be between $275 million to $285 million.

**Q2 2026 Revenue Guidance:** Expected to exceed $300 million.

**Operating Expenses:** Approximately $80 million expected in Q1 2026.

**Q1 2026 EPS Guidance:** Expected to be in the range of $1.26 to $1.36 per share.

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Release Date: February 19, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Onto Innovation Inc (NYSE:ONTO) reported record revenue of $267 million for the fourth quarter, marking a 22% increase from the previous quarter.

The company achieved a record cash generation of $95 million in the quarter.

Advanced packaging business grew over 25% sequentially, driven by demand for Dragonfly inspection and Iris films metrology.

Onto Innovation Inc (NYSE:ONTO) secured a volume purchase agreement valued at over $240 million, covering Dragonfly 2D and 3D bump metrology demand through 2027.

The company expects advanced packaging revenue to grow over 30% in 2026, setting a new revenue record for this market.

Negative Points

Power semiconductor revenue is expected to decline around 10% in 2026 due to weakening demand for EVs and slowing infrastructure spending.

Semi lab, acquired in mid-November, may experience a decrease in revenue from original planning due to market challenges.

The company faces challenges with supply chain constraints, particularly in precision optics, affecting lead times.

There is uncertainty in the timing of advanced nodes growth, with several factories expected to open but timing remains unclear.

The company anticipates a seasonal decline in power semiconductor revenue in the first quarter of 2026.

Q & A Highlights

Q: Can you talk about what you see for the market outlook for the year, particularly in advanced packaging and WFE growth? A: We expect our advanced packaging to grow over 30% this year. WFE is harder to track due to varying factors, but we see broad-based demand and expansions across large device manufacturers and other players providing innovative solutions.

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Q: Can you discuss the backlog and capacity for growth given the expanding lead times and increasing visibility? A: Our capacity is set up to serve a $2 billion run rate, which has improved with our extended factories. We are managing supply chain challenges, especially in precision optics, to meet the rapid increase in orders.

Q: What are your expectations for advanced packaging growth throughout the year, and are there any notable programmatic wins? A: We expect advanced packaging revenue to be stable throughout the year. The adoption of G5 could add upside in the second half. We are taking a conservative approach, expecting over 30% growth without heavily relying on G5 adoption.

Q: Can you provide more details on the $240 million VPA for HBM and its impact on your AI packaging revenue? A: The VPA is a two-year agreement, initially more weighted towards 2027, but we see some acceleration. We expect additional VPAs from other customers, and this agreement reflects strong demand in AI packaging.

Q: How do you see the growth rates for your co-op inspection and HBM inspection businesses in 2026? A: The growth rates for both segments are relatively similar. The complexities of co-op are higher, but the large VPA in memory indicates strong expansion, and we have a good position in memory.

Q: What are your expectations for the semi lab contributions in 2026, and do you expect to outperform WFE growth? A: Semi lab contributed $9 million in Q4, and we initially expected $100 to $110 million for 2026. We anticipate outperforming WFE growth, with advanced packaging expected to grow over 30% and advanced nodes in the mid-teens.

Q: Can you discuss the options within the VPA for Dragonfly inspection and the potential for Gen 5 shipments? A: The VPA includes options for Dragonfly inspection, primarily for G3s now, with potential upgrade options. The current products are qualified for the customer’s aggressive ramp.

Q: How do you see the contribution of new products like 3DI and critical films to growth rates this year? A: New products are in early penetration stages, contributing about 10% to the business. They are expanding our SAM and growth opportunities into 2027, with initial ramps expected this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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