Onto Innovation 2025 Q2 Earnings Mixed Performance as Net Income Hits 20-Year High

Onto Innovation reported its fiscal 2025 Q2 earnings on August 7, 2025. The company delivered a revenue beat, exceeding the midpoint of guidance, though earnings declined year-over-year. The CEO emphasized strong performance in key markets and a strategic acquisition, positioning the company for a rebound in the latter half of the year.

Revenue
Onto Innovation’s total revenue rose 4.7% year-over-quarter to $253.60 million, driven by robust demand in core segments. Systems and software remained the primary growth engine, generating $214.51 million in revenue. The parts segment contributed $19.85 million, while the services division added $19.24 million to the top line. The increase reflects solid demand for the company’s advanced metrology and inspection solutions, particularly in next-generation semiconductor manufacturing.

Earnings/Net Income
Despite the revenue growth, Onto Innovation’s EPS dropped 35.5% to $0.69 in Q2 2025 compared to $1.07 in the prior-year period. Net income also declined by 36.0% to $33.91 million. However, the company reported that this marked a record-high net income for a Q2 in over 20 years, highlighting its strong operational performance in a challenging macroeconomic environment.

Price Action
The stock has faced downward pressure in recent trading periods, falling 0.69% on the latest day, 2.18% for the week, and 10.32% month-to-date. The recent decline reflects investor caution ahead of the broader market uncertainty.

Post-Earnings Price Action Review
The buy-and-hold strategy following Onto Innovation’s earnings report delivered mixed results. Despite a revenue increase, the strategy underperformed the benchmark with a CAGR of 8.70%, lagging by 23.70%. The Sharpe ratio of 0.17 and a maximum drawdown of 0.00% indicated low volatility but limited upside, reinforcing the stock’s current risk-averse profile.

CEO Commentary
CEO Michael Plisinski expressed cautious optimism about the company’s outlook. He attributed the strong Q2 results to expanded adoption of the Dragonfly 3Di metrology solution and innovation in product platforms. The pending Semilab acquisition is expected to contribute over $130 million in annual revenue and boost earnings per share. While Q3 revenue is anticipated to be a low watermark, the CEO highlighted growing momentum in AI packaging spend, projecting a return to Q1 and Q2 2025 levels in Q4 and beyond.

Guidance
For the third quarter ending September 27, 2025, Onto Innovation expects revenue in the range of $210 million to $225 million, with a gross margin of 53% to 55% and a non-GAAP operating margin of 18% to 21%. GAAP diluted earnings per share are projected between $0.52 and $0.72, while non-GAAP diluted earnings per share are expected to be in the $0.75 to $0.95 range. The company also anticipates Q4 revenue to return to levels consistent with the first half of the year, with continued momentum into 2026.

Additional News
Notable developments in the three weeks following Onto Innovation’s earnings report include the pending acquisition of Semilab, a strategic move expected to significantly boost annual revenue. No major C-level changes or dividend announcements were reported. Political developments in Nigeria, including tensions over visa policies and gold tariffs, may indirectly impact the broader market but have not directly influenced Onto Innovation’s performance.