Novanta 2025 Q2 Earnings Weak Earnings Amid Revenue Growth

Novanta reported revenue growth for Q2 2025 but was offset by a sharp decline in earnings. The company met expectations with revenue just above guidance, though no guidance adjustments were made in the earnings release.

Revenue
Novanta’s Q2 2025 revenue rose 2.2% year-over-year to $241.05 million, driven by strong performance in both its core segments. The Automation Enabling Technologies division contributed $121.67 million, showcasing steady demand in industrial automation and robotics. Meanwhile, the Medical Solutions segment added $119.38 million, reflecting continued traction in advanced surgical and medical device applications. Together, the two segments accounted for the full $241.05 million in total revenue, demonstrating Novanta’s balanced growth across its business lines.

Earnings/Net Income
The company’s earnings performance was significantly weaker, with EPS declining 68.4% to $0.12 in 2025 Q2, compared to $0.38 in the same period a year ago. Net income also fell sharply to $4.50 million, representing a 67.3% drop from $13.76 million in 2024 Q2. These results highlight ongoing cost or margin pressures that offset top-line gains.

Price Action
Following the earnings report, Novanta’s stock has experienced a downward trend, slipping 0.98% in a single day, 6.56% over the past week, and 13.22% month-to-date.

Post-Earnings Price Action Review
Historically, a strategy of purchasing Novanta shares following a quarter with revenue growth has yielded no return over the past three years. The 30-day holding period following positive revenue reports returned 0.00% on average, with a CAGR of 0.00%. This lack of excess return and absence of a Sharpe ratio suggests that the strategy has not been effective in generating meaningful or risk-adjusted returns.

CEO Commentary
Matthijs Glastra, CEO & Chairman, praised the company’s Q2 performance, noting that revenue exceeded guidance at $241 million, with 2% reported growth and over 50% new product revenue. He highlighted strength in Advanced Surgery and Robotics, as well as Automation, driven by design wins, new product ramps, and long-term partnerships. While challenges persist in industrial capital equipment and life sciences, Glastra expressed optimism about a sequential recovery fueled by design wins, regional manufacturing shifts, and the recent Kion acquisition.

Guidance
For full-year 2025, Novanta expects revenue in the range of $970–$985 million, representing 2–4% growth. The company is targeting adjusted gross margins of approximately 46%, with R&D and SG&A expenses expected to remain around 28% of sales. Adjusted EBITDA is forecasted at $225–$230 million, reflecting a margin of 23%. For Q3, the company projects revenue of $244–$247 million, with adjusted EBITDA of $57–$60 million and EPS of $0.78–$0.85. Novanta also anticipates mitigating the impact of tariffs, sequential revenue growth in H2, and strong cash flow, while remaining cautious about macroeconomic risks.

Additional News
On August 6, 2025, one day after its Q2 earnings release, Novanta announced a new product revenue target of $50 million for 2025. This strategic goal underscores the company’s focus on innovation and long-term growth. Although access to the full details of the report was restricted, the target aligns with the CEO’s emphasis on new product ramps and expansion into high-growth markets such as medical and AI-driven robotics. The company remains committed to its strategic priorities, including recurring consumables and intelligent subsystems.