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- **Revenue Growth Accelerating**: Q3 revenue of $218M exceeded expectations, with Q4 guidance of 15-21% sequential growth driven by AI packaging. 
- **Breakthrough Product Adoption**: 
  - Dragonfly systems set to ship to multiple customers in Q4, with 2026 volume ramp. 
  - 3Di technology qualified by 2 HBM customers, enabling next-gen device inspection. 
- **Profitability Improving**: 
  - Q3 gross margin 54%, with 2026 improvements from offshore manufacturing ramp. 
  - Q4 operating margin expected at 24-26%. 
- **Strategic Momentum**: 
  - Semilab acquisition on track to close, adding $300M+ in annual revenue. 
  - Packaging customers signaling 20%+ tool demand increase for advanced technologies. 


**【CEO Summary Section】**
- **Revenue Growth**: Q3 revenue of $218.2 million exceeded expectations, driven by 2.5D packaging and AI-related demand. Sequential growth in Q4 is expected to accelerate, with advanced packaging revenue nearly doubling from Q3. 
- **New Product Adoption**: 
  - Dragonfly systems: First shipment to a leading AI packaging customer in weeks, with additional shipments to memory customers in December. 
  - 3Di technology: Qualified by 2 HBM customers, demonstrating superior performance for smaller, denser interconnects. 
- **Strategic Initiatives**: 
  - Offshore manufacturing ramp: 30% of Q3 tools shipped from extended factories, reducing tariff impact. 
  - Semilab acquisition: Expected to close in coming weeks, with $432M cash and 641k shares to be issued. 
- **2026 Outlook**: 
  - Sequential growth expected in first half, with stronger growth in second half tied to new product adoption. 
  - Packaging customers indicate potential need for 20% more tools for 2D/3Di technologies. 

**【CFO Financial Commentary】**
- **Q3 Results**: 
  - GAAP net income: $42.3M 
  - Non-GAAP EPS: $0.92 (high end of guidance) 
  - Gross margin: 54% (including 1ppt tariff impact) 
  - Operating margin: 21.1% 
- **Q4 Guidance**: 
  - Revenue: $210-230M (15-21% sequential growth) 
  - Gross margin: ~54% (with $2.5M tariff cost) 
  - Operating expenses: ~$77M 
  - EPS: $1.18-1.33 
- **Cash Flow**: Q3 cash from ops: $83M (vs $58M in Q2) 

**【Q&A Highlights】**
- **3Di Technology**: 
  - Qualified by 2 HBM customers for bump inspection, with discussions for volume orders. 
  - Unique capability to measure pre-reflow bumps, enabling yield improvements. 
- **Dragonfly Momentum**: 
  - Multiple customers evaluating for 2.5D logic and memory applications. 
  - First half 2026 shipments expected, with meaningful volume in second half. 
- **Tariff Mitigation**: 
  - Offshore factory ramp reducing tariff impact; gross margin improvements expected in 2026. 
- **Semilab Update**: 
  - Transaction amended to exclude small product line; integration to be discussed post-close. 


Onto Innovation Inc. (ONTO) Q3 2025 Earnings Call Transcript

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ONTO

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