Onto Innovation (ONTO) 8 Aug 24 2024 Q2 Earnings call transcript

Onto Innovation, a leading provider of semiconductor manufacturing equipment, recently released its financial results for the second quarter of 2024, showing strong performance and promising outlook. The company's CEO, Michael Plisinski, and CFO, Mark Slicer, provided insights into Onto Innovation's strategic initiatives, financial achievements, and future plans during a detailed earnings call.

Financial Highlights

Onto Innovation reported a significant increase in second-quarter revenue, surpassing the high end of its guidance range. The company generated a quarterly record of $242 million in revenue, up 6% compared to the first quarter and 27% year over year. The financial strength was driven by better-than-expected demand for advanced packaging for AI devices, gate-all-around investments in advanced nodes, and strong performance in power customers.

The company's gross margin improved to 53% in the second quarter, marking a 100 basis point increase from the first quarter. This improvement was attributed to the Dragonfly systems' success in advanced packaging for AI devices and the adoption of the company's Iris films' metrology in gate-all-around applications. Operating cash flow also reached a record high of $65 million, demonstrating Onto Innovation's financial health and operational efficiency.

Strategic Initiatives and Market Trends

Advanced packaging has proven to be a key growth area for Onto Innovation, with AI packaging accounting for over half of the revenue in specialty devices and advanced packaging markets. The company's Dragonfly platform achieved another revenue record, driven by the need for high-performance substrates and interconnect sizes and densities required for AI devices. Onto Innovation also saw increased interest in panel packaging technologies to support chiplet architectures and larger package sizes.

The company's strategic investments in R&D and product development are paying off, with new sensors like the one to detect yield-critical subsurface defects in ultra-thin wafers and a new 3D bump metrology sensor for high-bandwidth memory and hybrid bonding applications. These innovations demonstrate Onto Innovation's commitment to staying at the forefront of technology and meeting the evolving needs of its customers.

Outlook and Future Plans

Looking ahead, Onto Innovation expects its inspection business to grow by over 70% this year, driven by increasing demand for advanced packaging and gate-all-around applications. The company also plans to continue expanding its capabilities in advanced nodes, with a focus on gate-all-around technologies and increasing its market share in this area.

Onto Innovation's financial guidance for the third quarter reflects continued growth, with revenue projected to be between $245 million and $255 million. The company's strategic focus on advanced packaging and gate-all-around technologies, along with its commitment to R&D and innovation, positions it well for future growth and market leadership.

In conclusion, Onto Innovation's second-quarter earnings call highlighted the company's strong financial performance, strategic initiatives, and promising outlook. The company's focus on advanced packaging, gate-all-around technologies, and R&D investments positions it well for continued growth and market leadership in the semiconductor manufacturing equipment industry.