Onto Innovation Inc. ONTO reported third-quarter 2024 earnings of $1.34 per share, which beat the Zacks Consensus Estimate by 2.3%. The bottom line compared favorably with the prior-year quarter's 96 cents.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Revenues of $252 million beat the Zacks Consensus Estimate by 0.7%. The top line expanded 21.7% year over year, driven by advanced nodes recovery and steady growth in advanced packaging technologies, which are critical in supporting artificial intelligence (AI) and power semiconductor demands.
Specialty devices and advanced packaging revenues (64% of total revenues) of $161 million dipped 1.8% sequentially. Revenues from Software and services (19%) grew 5% sequentially to $49 million. Revenues from the Advanced nodes (17%) market jumped 32% quarter over quarter to $42 million.
Onto Innovation Inc. Price, Consensus and EPS Surprise
Onto Innovation Inc. price-consensus-eps-surprise-chart | Onto Innovation Inc. Quote
The Dragonfly platform remains a key growth driver for ONTO, setting a record for inspection revenues this quarter. Also, demand from power semiconductor customers reached an all-time high. It emphasized the significance of the newly launched PACE lab as a model for fostering innovation through collaboration with customers and partners to pioneer 2.5D and 3D packaging technologies.
Apart from these, management highlighted two major acquisitions anticipated to generate up to $100 million in additional annual revenues over the next three years and be accretive to earnings within a year. The acquisition of California-based Lumina Instruments brings ONTO a $250 million market expansion opportunity in wafer and panel manufacturing, as well as in power semiconductors. It also supports ONTO’s Firefly inspection systems for advanced panel packaging.
Furthermore, the company has acquired the lithography business from Kulicke and Soffa Industries, Inc., gaining valuable intellectual property, including 24 issued and eight pending patents, along with a skilled team holding more than 200 man-years of experience in lithography and wafer applications. This acquisition strengthens Onto’s JetStep panel lithography roadmap and enhances its metrology and lithography capabilities.
Margin Details
Non-GAAP operating expenses were $67.5 million, up 17.8% from $57.3 million in the prior-year quarter, owing to higher R&D spending to augment its 3D metrology capabilities for advanced packaging applications.
Non-GAAP gross profit increased to $137.5 million from $106.9 million in the year-earlier quarter. Non-GAAP gross profit margin expanded to 55% from 52% in the prior year quarter.
Non-GAAP operating income was $70 million compared with $49.6 million in the year-ago quarter. Non-GAAP operating margin was 28%, up from 24% in the previous year quarter.
Balance Sheet
As of Sept. 28, the company had $855.4 million in cash, cash equivalents and marketable securities with $144.7 million of total current liabilities compared with $786 million and $148.4 million, respectively, as of June 29, 2024. Accounts receivable were $253.7 million.
In addition, ONTO set a record for cash from operations, which totaled $67 million, equating to 27% of revenues.
Q4 Outlook
Management expects revenues in the range of $253-$267 million. The Zacks Consensus Estimate is pegged at $245.8 million.
Non-GAAP earnings per share are projected to be between $1.33 and $1.48. We project the metric to be $1.26.
GAAP earnings per share are expected to range from $1.04 to $1.19.
ONTO’s Zacks Rank
Onto Innovation currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Iridium Communications IRDM reported EPS of 21 cents for the third quarter of 2024, beating the Zacks Consensus Estimate by 5%. The company incurred a loss of 1 cent per share in the prior-year quarter.
Shares of IRDM have lost 20.4% in the past year.
Seagate Technology Holdings STX reported first-quarter fiscal 2025 non-GAAP earnings of $1.58 per share, beating the Zacks Consensus Estimate by 6.8% and coming toward the high end of management’s guidance of $1.40 per share (+/- 20 cents). The company reported a non-GAAP loss of 22 cents per share in the year-ago quarter.
Shares of STX have gained 46.1% in the past year.
Western Digital Corporation WDC reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.
Shares of WDC have gained 66.9% in the past year.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpWestern Digital Corporation (WDC) : Free Stock Analysis Report
Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report
Iridium Communications Inc (IRDM) : Free Stock Analysis Report
Onto Innovation Inc. (ONTO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
