ONTO - Earnings call transcript Q4 2024

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Operator

Good day, and welcome to the Onto Innovation Fourth Quarter Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sidney Ho, Investor Relations. Please go ahead.

Sidney Ho

Thank you, Rachel, and good afternoon, everyone. XXXX shortly and after this results year issued, afternoon this the Innovation fourth full quarter financial Onto market closed.

not the a did please is you receive of copy If the posted. refer to of company's copy where website the release a release,

on that Michael statements Chief Joining call are contain by can federal on Those the and statements the will Executive like I'd vary today Financial statements this Chief securities made changes, Slicer, of meaning within Officer. cause to call to Officer; that are us to Plisinski, Mark remind the you of subject risks forward-looking the results materially. uncertainties range a laws. and management actual

to regarding For and impact factors release Innovation's review our the SEC may filings. you that our risk more earnings results, information Onto encourage I would

Onto financial unless will the not light our new to information forward-looking discussion these presented future be undertake on financial of update basis of statements events. otherwise non-GAAP Today's specified. in or results Innovation does obligation a

a As today's reconciliation non-GAAP and release. earnings found GAAP can between be results in a reminder, detailed

to turn CEO, me over our call the Mike Plisinski. Let Mike?

Michael Plisinski

Financially, packaging gross in improvements continue end culminated We'll also margins to operating XXXX new Thank throughout the on our demand. of AI $XXX and in every and Good afternoon, off for year XXXX. gross consecutive focus the strong the packaging you . driving quarter. strong us sixth quarter million. our quarterly specialty quarter a revenue the Sidney. from call our fourth fourth record XX% We growth was Growth throughout capped the thank and on quarter margin today. by improved advanced markets you, joining everyone, with record nearly at of year and and in led

and let's packaging year. which review for markets, a advanced devices with business specialty the the healthy calendar starting XX% Now, grew highlights, our quarter fourth

the to in X.X AI overall packaging, shipments in quarter support by delogic strong market growth packaging. was largest Our led

declined a after HBM orders expected, record quarter. from As third

are pickup HBM the allocations demand a X.XD support seeing to are end clearer packaging. suppliers, from order of as markets becoming in logic between growth However, we X main the

tool X.XD full packaging doubled between HBM. revenue for revenue Logic equally and the year, than and split was For nearly inspection more inspection AI

advanced of growing front-end in metrology customers are in adopting HBM support control To packaging X.XD to improve the processes, Logic complexity our processes. more tools both and

Advanced For in Packaging more the exceeded into XXXX, million, year. triple we the that than year, metrology expect additional our $XX and of growth revenue new

and glass in interest AI for enterprise to growing server addition particularly panels packaging, panel AI In use market, the the applications. of is for

adopted leaders reducing in pleased the panel firefight variety Firefly application advanced integrated We're multi-sensor IC and for quarter, in selected manual substrates. was ultimately defect high-resolution or beyond challenges that manufacturers inspection, solve ability the These eliminating of of our for at applications technology processes. to technology X a leading glass

record another In new fan-out not panel from integrated they behind lithography as installed for set XXXX future opportunities and market of addition, the quarter like the customers customers. second are base solutions in is currently expand applications. StepFAST fourth potential This quarter, Also panel adoption packaging. the power cross-selling creating was the and in revenue our JetStep level in devices the used largest X.XD

demand For despite delaying grew the end XX% soft year, Power market customer revenue several expansions.

could effort. our yield applications portfolio experience we of contribute the that focused to driving solutions on and were improvements, customers During we and year, our believe pleased

was the the in doubling the nearly advanced XXXX. growth consecutive strengthen In our increase, saw nodes around to quarter, more significantly we memory largest quarter. of our momentum gate gears both grew, Switching all and as over logic expect We and prior will fourth expected, markets. quarter revenue

nearly $XXX in In iris for film with qualifications also revenue packaging, metrology the in our memory successful demand OCD tools, million increased reaching for addition for growth to logic our year. Atlas and

demand markets products New the and several highlights customers and Concluding Year in expect the we manufacturers. as for Irish our films expand and our advanced for top power both launched in opportunities we've strengthening and We packaging, served. new proven products leading recently further grow the to semiconductor at in are These our fourth nodes aimed advanced semiconductors. being out X manufacturers expanding process at several power quarter, of

new We this expect revenue later more these higher incremental revenues XXXX volumes. starting products ramp in when meaningful and from year into products these

call over guidance. highlights financial the provide Now our I'll review and first to to quarter turn Mark

Mark Slicer

good Thanks, and everyone. afternoon, Mike,

exiting midpoint high third up Mike quarter the QX. As revenue fourth of throughout wrapping another year. XX% EPS of quarter-over-quarter versus had quarter X% and be of the to exceeding Fourth and EPS sequential advanced the the the sequentially for team prior with increased growth the devices the Onto XX% year. for quarter driver $X.XX, increasing growth XX% revenue our QX up XXXX $XXX prior year. up XXXX, with end the nodes packaging versus highlighted, and to we continue versus well strengthening as exceeding as by million strong advanced performance . Specialty during guidance

achieved twice and Cash operating growth. earnings into I'd of growth revenue both EPS, by like QX, growth, team going financial quickly details first outlook XX% the operations income further on Before to our growth, from the XX% the highlight year for rate XXXX. the performance and our our QX XX% performance in XXXX. achieved full for We

looking QX Now shifting back at to quarterly markets. by the revenue and

million X% of QX over $XXX remains market advanced packaging, nodes, specialty had and of and which represents increased of QX of revenue XX% revenue. quarterly represents million devices a XX% Advanced from biggest record XX% revenue. and increased revenue with $XX Our which

XX% million compared by Services, of revenue. revenue decreased X% $XX to of and QX, Software with representing

the quarter achieving since of stated, achieved XX% point we beginning XXX the of high while our gross of for year. improvement margin end the fourth Mike basis XX% As at range the to XX%, guidance

to result as the within we accelerate charges exit we impairment our quarter the operating announced assets a at Fourth restructuring we in expenses were range high guidance quarter, October. the of reflected margin, and continue expenses end of in relating As to the the gross acquisition-related acquisitions and $XX million of certain quarter. merger investments our and R&D GAAP during incurred as

$XX operating XXXX the for approximately XX% year. compared of of operating throughout since was quarter-over-quarter fourth Our margin quarter revenue improvement of We XX% basis point QX. to the income XXX million totaling start for achieved the improvement

income performance rate net XX% Our revenue QX, to of tax income and from basis favorable the improved XXX investment quarter. points supported within for

as sheet. average under of fourth We moving share existing Now share buybacks million. our per executed $XX and investments the cash remained QX of million balance of $XXX Cash $XXX the quarter with to short-term ended relatively we million flat an price authorization. at $XXX to

In announced closed acquisitions. we the and addition, finalized X previously

record $XX We achieved levels flow revenue, operating of due of for cash or QX primarily the down QX, and shipments in timing from XX% previous to of the million quarter.

consecutive million, $XXX million quarters projected. Inventory versus achieving of XXXX ended $XX below quarter and the $XXX in million as down QX X decline exiting at

to levels X.X We in expect X.X to stay external turns line relatively to and benchmarks. with flat maintain for quarter inventory the at expect first

turning million We be outlook quarter. between Now the to quarter million. our $XXX for for the $XXX first revenue currently and first to expect

will We be XX% XX%. expect to margins gross

expect be between $XX to operating $XX we For million. to expenses, million

to we year, XX% full XX%. For tax between to expect our rate be the effective

first assumptions, count between $X.XX to upon earnings the our we for XX.X our and the to first diluted per $X.XX non-GAAP quarter shares. for We share anticipate approximately quarter be expect be these share. million Based

that, XXXX. with and additional will to I on back And turn QX for insights further Mike it into commentary Mike?

Michael Plisinski

and Thank for logic advanced memory. Specific the see nodes in from strong both you, to growth our Mark. outlook we first quarter,

the DRAM $XX expect significant last We in to quarter, the month. VPA support million we announced first see the in most of growth partially

We support also NAND stack expansion demand to fourth and XD expect increasing gate to as around a well strong even demand for all very and quarter, NAND. orders grow we see after high

mentioned and end the up see in we As in customers' X.XD they support Logic. to our becomes as orders market growth HBM earlier, ramp clear demand packaging, for picking

these additional to expect required We be mid-XXXX. tools

For expect the by first quarter we in Power, see the a subsequent each growth XXXX. of to similar we in quarters dip seasonal saw to pattern the followed

next exceed year years. the XXXX. Overall, record For the expect secular we in power the continue revenue end driving total see to over X year, we X business markets our to

TSMC expect for we efficient in very demand announced U.S. black to at AI well Recently, mid-XX% logic revenue the build next next more Stargate grow more could driver accelerators and grow a X First, for Sea a staggering AI continues for its will a models devices, growth and billion the new devices. use a growth specialty X and years. refresh, its pace. processes at catalyst the packaging, of proliferate from in to years demand -- demand for for like CAGR AI memory be government project be that forecasted AI the the U.S. which mobile Similarly, high as could the the over and a described NVIDIA Deep multiyear recently, AI Overall, edge new increasing advanced infrastructure us. to AI $XXX

designs all AI contribute applications, technologies powerful memory our the The to NAND. energy-efficient is more driver second of leads for these performance which DDRX electrification to and support third secular is high energy-starved us since stack server This driver, around and to increasing secular XD and and gate everything. system enterprise

data by the built smart need to reduce U.S. agencies is infrastructure is XX% and urgent AI studies all various centers XXXX. to In of by infrastructure, the consumption X% grids addition generation increase there to power vehicles, by be consumption expected an to power electric to firms, electricity and years. According that for today is to expected over from X% coming out to government consulting

because the products New silicon. our markets. when we their and innovations technologies believe support process are adopted in conclusion, such are enabling customers demand new positioned well today these of compared power as are benefits gallium density our semiconductors from being to In leading the power nitride-based efficiency, through to who size

Rachel, serve covering We And products new required they our in concludes our remarks. for to as our for call future. the our the the our ability innovations questions expect customers will please announced that open analysts. from prepared recently invest extend

Operator

take question will Cantor Fitzgerald. Prisco we from first Matthew our with And Instructions] [Operator

Matthew Prisco

guess do front? color you're off growth growth adds. 'XX And Onto then pickup think Any in just you I on that on How the given in in potential off about start there. more the can level the we'll robust that you maybe demand with for higher HBM industry given XXXX? seeing capacity based

Michael Plisinski

largely because of the the for out customers quarter. I are to last seeing start HBM expected. half and starting this place weren't -- as to We playing COOs essentially we surmised timing et amount of it's we NVIDIA as on on required to So front, growth, the and of the for was waiting the mid level HBM with clear, driver, capacity If our become that we and the customers in look capacity expansions described to at orders were we think support that's of from us shipments, expand big those cetera, the we're allocations second we year. the see work sort

of X to how here XXXX. was is think the the understand demand though, and try HBM added I important much in points capacity

starts the market. XXXX. of estimate wafer XX was We per about added by that Roughly thus half required in was month

right metrology what see we market. the see which rates of equipment little now more our actually over the tax So the as to path order is the in meet we're seeing is market level added, increasing this we at And that demand or implies in even of front-end doubling our same adoption being a COOs.

Matthew Prisco

follow-up, help advanced node think the through for then XXXX. And parts the for you can into moving us Helpful. maybe

-- early kind signs NAND that back saw realistic Given all and levels to life of strength, prior you date peak growth return it those to in around [indiscernible] DRAM of would the be

Michael Plisinski

We're approaching it.

I we're levels, but getting prior get -- the within definitely range. think we're to to going we're don't So peak quite shooting

Operator

from with Securities. comes Riley Ellis Craig question next B. Your

Craig Ellis

you to a execution to I congratulations and in with high-level on question. robust my And the start XXXX. team the wanted

then So in in strength, and all year starts businesses digestion the but the sequential growth. some with business X really specialty,

industry versus think As be at in will you How are you as up mentioned larger from and and growth. do products, that that benefit saying some stack might what year-on-year more ONTO look second X% you you the be companies factor weighted. may new half

Michael Plisinski

will year kind incremental and on much a have first, larger year. new the of Well, this next effect effect on products an

been -- taking growth the I our would side, we're certainly So outperform position above WFE think numbers We've we've the articulated of have secular on we in exciting expect growth based future. those to remarks the the and are the those about, X%. above prepared kind well drivers aligned continue drivers to in X%, with, to our that for talked

Craig Ellis

Well above.

you. follow Okay, Mark, I'll question I'll basis decoder And get see up or XXX that's welcome. there, or the out and any color if a XXX with from better. points

like up more really because implications last margin gross through part of of continuing about continued I to key were I that's basis we expansion what think XXX the and material about earlier a advanced So to revenue nodes rise year Mike becoming year, the points. said

specific for puts of you on efforts, calendar the you can and business, how guidance, look your us ongoing looking 'XX Not gross and And through and takes give is helpful. much as potential key margin but expansion color be any any reduction cost would possible? mix

Mark Slicer

help Yes. question the gross our I we nodes quarter-over-quarter Thanks, on that. for and margins. that certainly, is improvement. of propel accelerate is mean, Certainly, XXXX as mix Craig, in going to the goal advanced

that the Our and goal baseline is to take to forward throughout move XX% continue as the year.

and execute the team mix effort within the of continue the work plant suppliers with to our but think said, I network. the efficiencies to I helps, also as

as we we should, his I ranges. give But XX improvement, improvement. quarter-over-quarter said, Mike in see more won't . we is or the together, I that all should and said basis points as said goal. remarks specific So

Operator

comes line Needham. question Charles Shi next from with the of Your

Yu Shi

Can you hear me?

Michael Plisinski

Yes.

Yu Shi

So was the Mike, new at packaging, the from of time the color hear now about we're a if I year the the mean, this business let's of didn't AI visibility, look about which overall for I year, everything current order, Ned the or DRAM quarters. the your expectation much give a obviously, outer business rest as all few parts, overall moving the for mean, profile month possible us the talked ago heard which the about based visibility we through at something together around the all you say, you what HBM as NAND. I on year. on I what's of your What's for right pipeline, based -- and growth, beginning

Michael Plisinski

traditional to for Yes. the of going visible a us. business. Well, the are least there's other that's And moving as you semiconductor parts. quarters lot know, be And

would So those areas changed that nothing's I mentioned. there. investments what in we're seeing I directionally, say is continued

and healthy nodes advanced the board. certainly, the is So across fairly frankly, it

So And nicely especially, growing also prior all from bottom, NAND lead growth. from -- but DRAM XXXX. around healthy compared is gate for years that pretty except to think the through will XD then -- again, a pretty

directional. that's So

to gyrations, bit on there's let's markets. the going you and or, tariffs the around a that's On do packaging, chip AI concerns to of and say, there, tariffs see lots what questions going

subsurface general applications in that handicap market outperform general metrology expanding the so bets say, the inspection let's to willing we XXXX. we I to applications continue with And demand there, have to not overall to But new share the we to for ahead our sensors capability growing that's the have opportunities the look position and place think I'm defect on. trend, the like our, adds as our

Yu Shi

market. for and think you Mike, paid the how how quick think how the was internal be on you followup. based by numbers said you for what's I order about you're on believe capacity much XXX,XXX now? your 'XX you some a a needed right little current your , I in seeing of HBM added much XXXX much Maybe own something was 'XX, forward-looking market said will required expectation your or view but bit more airline maybe capacity half

Michael Plisinski

Yes.

you capacity So XXX XXX,XXX million the that were wasn't co-op leveraged about roughly. roughly you last if match half say to or implies and year's required XXX,XXX, used wafer take starts then

other. the then doubling If you're that, doubling you're

in essentially demand XXX,XXX-or-more XXXX, would profile seeing seeing you're being the we so which And expect. wafer that -- the essentially starts we're added matches

Operator

comes of Yang Oppenheimer line Company. with Your from next question Edward & the

Edward Yang

your along XXX%. had your over XXXX. of lines growth, revenue And presentation, AI something that packaging thought congrats above target? I the Was in on you January the XXX%

Michael Plisinski

Yes. -- It the might I don't recall have specifically. been

over XXX% have said XXX%. ended . might up then and at I we So

Edward Yang

the can revenue for incremental see you And the in it's you Okay. the like first in seem of size demand pickup magnitude guidance. the doesn't quarter

more mid- it's half mentioned You 'XX. second to

Michael Plisinski

us well. are of both And I some correct. looking to needs, some inspection think XD We're there's growing and The worked for meaning we're the at that's out, XD their metrology being needs. talking upside as Yes, customers still I potential to that's also think seeing. some what for about

maybe all -- the going So QX, be half. but to in a that's . bit little that's second mostly probably some in

Operator

Chin question Your Brian next with from comes Stifel.

Brian Chin

ask few Thanks questions. a for making to

X. die questions do a move It's HBM will been phases. to that pretty stack decline. control thinking, but get high early for lot whether we HBM we that understand or to these So challenging getting about process what think is intensity I however, I you XX yields are hear, when you more

are control of So of is the upward thinking process is expansion, driving sustaining part die HBM, of demand what the actually increasing into that is also some second even XX intensity the profile seeing that some or what really . you of high midyear, half? SAM HBM maybe maybe some

Michael Plisinski

the I just loss and significantly going is increasing, exactly complexity cost between to stacking Yes, think designed critical. be the control interconnects to you're interconnects, to process that our that to are final our because challenges to -- a of is for XDI And do and going new the yield but believe the control you're products and more address. interfaces the very interconnects is going with for Scan new shrinking some intensity I more, set dense some of process think means of I continue also it's Echo of more risk that's a layer the right. not of increase, new as

Brian Chin

that have of the then And January that Sam. of add incremental on retain $XXX I top some adding think XX% suggests incremental And you you for Sam, million of around guess million packaging, existing it mentioned. that what of eyeballing, I it of then also you'll And $XXX through deck, terms XD, new kind on maybe XXXX? your do investor those like you're Great. share I SAM? XX% targeting think of just that, are slide share when for share the existing new all Okay. SAM products maybe of you in kind as you AI

Michael Plisinski

Our is, share. intention grow of our course, to

maintain. So of course, And take. our not competitors just to intend

that's the that the So beast. nature of --

alternative. for an Sam, get to market new sooner think, anything, released the is the But really we team I competition In creating some question. Sam, our happening if opportunity incremental, us EchoScan,the the the and on some for really see and of don't anticipated, good also that's is products On and maps a incremental, accelerate the had now. road to which an we of than case exciting

measure or without below yield to voids, having micron of to X in want risk these only Immersion immersing the due this X the We atmosphere you is of additional technologies. loss If think samples.

So we would targeting that high of percentage be share a very SAM.

that's different competitor a the bump, embedded question. we'll there, incumbent, a then On XD very There's see. strong

So viewed smaller they that becomes positively. then and entitlement. greater bump as gain incremental the technology and strength goes, share share, should greater a denser think have where could there the our be we on depending XDI get of any technology we greater . And

Operator

comes next Shrotre from Evercore. Your question with Vedvati

Vedvati Shrotre

provided The ramps. first one HBM I color the of had, good a amount on you

things CapEx earnings by advanced capacity a driven TSMC One big spending packaging from the it's in and of increase mostly advanced the expansion. that was increase big of came packaging pieces the -- in towards the the

linearity growth So if the advanced I how then about doubling from integration CapEx should revenue XXXX, about spend the TSMC's view? packaging into I think of X.XD to point your think

Michael Plisinski

monitor double be will they're control speaking. coming bring generally in it's If front and to going as someone's the answer the equipment more control, I to I'll more process it well. -- in as just online going the to order loaded to Yes. process of capacity, generally don't then processes speaking, the have qualify use so

of to seeing control. the that's loss, general we're well. and that described for as our expect packaging same it, think what the would lodge co be So the X.XD forecast as I in you that's process just nature the I

The opportunities. reason I'm new is because seeing hesitated we're also

are as online, there's They're where we're we're we those that could on with come new. working So trajectory new right? applications that -- applications customers that qualified working on change as being

control Brian's So increase board to they and capital across our capital process intensity. which haven't been goes ramps, seeing it we're in process previous and intensity increasing the

Vedvati Shrotre

your it. How And CoWoS-L CoWoS-S the follow up intensity? just of versus that with drastically Does offering to your changed on impact Got X? like does kind that.

Michael Plisinski

Yes. Not too differences. much. significant We don't any see

Operator

with Steelhead question . next David from Your Securities. comes Duley

David Duley

a be wondering might was things. if able help I you us of to couple understand

void just the just product as I bumps, other of in First, be in as more elaborate help business, might details from give a was XD might we if you I couple calendar bit can you the far Maybe detection, what could ones. about some adoption. the . glass there on contribution XXXX, what new a contribution think, us the just the be XXXX. us wondering And understand expect, and could lithography talked you there. little panel more then

Michael Plisinski

Okay.

talked in we hope an the calendar So incremental X new year. add close incremental what about I We'd XXXX. million one. adoption, least EchoScan, being $XX revenue the scan mentioned earlier expect Previously, shipped product is We'd for that at to some revenue to if close maybe in additional PRIMA we revenues. hope that other I we'd

incremental about talking orders. tool You're

grand the most application and in established of things. successful next in be record huge But qualifications positions the of ramps, for tool expected and would which those mean XXXX. likely not So scheme

that's where from we products. think new I see the the really benefit So

application lab. a what studies coming significant our PACE increase in out seeing to -- we're Going the litho, is of fairly the

So qualified the down running lab. PACE new let's we're the work or, that's doing being with demos say, stepper in our

orders talking ramp for 'XX. from delivery several they're also ramping to early qualifications about year additional a been to and and this we'll tools and we're it customers into that later most in hybrid tool. likely some to in then a them, And really 'XX. and shipped early but hopefully, qualify believe I customers has starting We running have That's well, ago. we and customer see months start X

or market in but we're to and the seeing say, defining glass and engaged I'd infancy, road customers more more their still, in it's So its include growing, panel definitely processing. panel maps

Operator

Company. We . will take Benchmark our with next Miller Mark question from

Mark Miller

Congrats quarter. on great another

what you're I NAND. surprise? increase just wondering And You are very increase shipments. Research NAND? NAND seeing mentioned for had some what know the that in expectations I'm thinking that year. in were about this a a Was you

Michael Plisinski

very a but Yes. We've seen I'd surprise. were they bit it a of small. very, say was some increases,

a percentage high as XXXX. stack the applications, more NAND but and driving customers largely, that's So becoming in ramping it's part upside now NAND small. primary least the meaningful X the XD was a But lot base we we're so support of XD seeing market. basis, a of to the see at

Mark Miller

Okay.

You increase. was Will saw large Sequentially, continue into large expenses. a increase R&D a in that XXXX? it

Mark Slicer

I we're products the to Yes. do maps portfolio. have to expenses at with continuing new look mean areas portfolio to we'll road and And certain as dollars place Mike to other the customers. there's the where said, certainly but we drive continue continue launching, the

Michael Plisinski

pace Our are a much us. from innovation higher customers driving of requirement

I requiring pull maps -- are lithography the intensity in having as to mentioned, process for us the inspection, for for and As challenges applications, road metrology even control they're for well.

incremental don't So a there's increase. but increase of XXXX, to in that course, yes, I significant think be there's going

Operator

Sidney for now today's does to would session. additional question-and-answer remarks. or Ho back I to conclude turn That any like call the closing

Sidney Ho

Thank you.

Onto forward approximately like interest of conclude Innovation. X:XX in there. We'd participating the you to seeing of your this be be of call website look please Eastern a will We will evening. to at We investor many our number Rachel, the continued Time quarter. call. available throughout on you conferences today the A in for thank replay

Operator

today's you Thank call. concludes participation. for This your

You may now disconnect.

Onto Innovation (ONTO) 6 Feb 252024 Q4 Earnings call transcript