Back to top

Image: Bigstock

Onto Innovation (ONTO) Q2 Earnings Beat on Record Revenues

Read MoreHide Full Article

Onto Innovation Inc. (ONTO - Free Report) reported strong second-quarter 2021 results, with both the bottom line and the top line beating the respective Zacks Consensus Estimate. Backed by solid order trends, the company registered record quarterly revenues and remains well poised to continue this growth momentum in the second half of the year on multiple secular drivers.

Net Income

On a GAAP basis, net income in the June quarter was $35.1 million or 71 cents per share compared with $7.4 million or 15 cents per share in the prior-year quarter. The significant improvement in GAAP earnings was primarily attributable to healthy top-line growth.

Excluding non-recurring items, non-GAAP net income came in at $45.9 million or 92 cents per share compared with $36.3 million or 73 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents and exceeded the company’s guided range of 76-85 cents per share.

Onto Innovation Inc. Price, Consensus and EPS Surprise Onto Innovation Inc. Price, Consensus and EPS Surprise

Onto Innovation Inc. price-consensus-eps-surprise-chart | Onto Innovation Inc. Quote

Revenues   

Quarterly revenues were record high at $193.4 million compared with $134.9 million in the year-ago quarter as demand for both front-end and back-end products soared. In addition, increased adoption of optical metrology solutions and strength in high-performance computing and specialty devices, particularly in 5G smartphones, and baseband RF were tailwinds. The top line surpassed the consensus estimate of $179 million and was well ahead of the guidance of $173-$184 million.

Based on sources of revenues, 84% of revenues were derived from Systems and Software, 10% from Parts and 6% from Services.

Other Details

Total operating expenses increased to $69.5 million from $63.7 million in the prior-year quarter. Non-GAAP gross profit improved to $105.5 million from $71.9 million with respective margins of 55% and 53%. The year-over-year increase was driven by a favorable product mix on the back of higher revenues. Non-GAAP operating income was $49.7 million compared with $24.2 million in the year-ago quarter.

Cash Flow & Liquidity

During the first six months of 2021, Onto Innovation generated $76.4 million cash from operating activities compared with $46.9 million in the year-ago period. As of Jun 30, 2021, the company had $134.2 million in cash and cash equivalents with $83.8 million of non-current liabilities.

Q3 Guidance

Backed by strong second-quarter results and healthy demand curve, Onto Innovation has offered bullish guidance for the third quarter of 2021. The company expects revenues in the range of $190-$200 million. GAAP earnings per share are expected in the range of 62-76 cents. Non-GAAP earnings are estimated in the band of 85-99 cents per share.

Zacks Rank & Stocks to Consider

Onto Innovation currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry are Clearfield, Inc. (CLFD - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Juniper Networks, Inc. (JNPR - Free Report) and Qualcomm Incorporated (QCOM - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.

Juniper has a long-term earnings growth expectation of 11.8%. It delivered an earnings surprise of 7.5%, on average, in the trailing four quarters.

Qualcomm has a long-term earnings growth expectation of 21%. It delivered an earnings surprise of 13.5%, on average, in the trailing four quarters.