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ONTO Q1 Earnings Beat, Revenues Up Y/Y on Strong Semiconductor Demand
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Key Takeaways
ONTO Q1 EPS of $1.42 beat estimates, while revenue rose 9.5% on strong semiconductor demand.
Onto Innovation growth driven by AI chips, advanced packaging and adoption of Dragonfly G5 and Atlas G6.
ONTO expands capabilities with 27% Rigaku stake and projects strong Q2 revenue and margin growth.
Onto Innovation Inc. (ONTO - Free Report) reported first-quarter 2026 earnings per share of $1.42, which beat the Zacks Consensus Estimate by 2.9%. The bottom line compared unfavorably with the prior-year quarter's $1.51. Management expected non-GAAP earnings per share to be between $1.26 and $1.36.
Onto Innovation reported quarterly revenue of $291.9 million, reflecting a 9.5% increase year over year and nearly 10% sequential growth led by rising customer investments in advanced semiconductor manufacturing. The growth was primarily driven by the increased adoption of ONTO’s inspection and metrology platforms among top logic and memory manufacturers. Demand for AI chips, advanced packaging solutions and high-bandwidth memory continues to boost semiconductor capital expenditures, especially in Asia, where Onto Innovation has expanded its manufacturing footprint.
Customer adoption of the company’s latest systems, including the Dragonfly G5 and Atlas G6 platforms, has been especially promising. These technologies aim to help semiconductor manufacturers improve yields and process control for increasingly complex chip designs. A key highlight from the quarter was the qualification of the Dragonfly G5 inspection system at both a leading 2.5D logic customer and a high-bandwidth memory customer. Onto also announced that its newly launched Atlas G6 system was selected by a second logic customer for gate-all-around metrology applications.
Another major development was Onto Innovation’s collaboration with Rigaku Holdings Corporation, acquiring a 27% stake for about $710 million, with the deal expected to close in the second half of 2026. The partnership expands Onto’s access to advanced X-ray technologies, enhancing its semiconductor inspection and metrology capabilities, and includes the right to appoint a board member. Along with its earlier acquisition of Semilab USA, the move underscores Onto’s strategy to broaden its process control ecosystem and support long-term growth.
Onto Innovation Inc. Price, Consensus and EPS Surprise
Specialty devices and advanced packaging revenues (55% of total revenues) were about $160 million for the quarter. Roughly two-thirds came from advanced packaging, including about $25 million from Semilab, with the remainder driven by specialty devices such as power semiconductors.
Revenues from the Advanced nodes (27.4%) were about $80 million, with roughly 60% coming from memory, primarily DRAM, and the rest from logic.
Revenues from Software and services accounted for the remaining 17.6% of net sales.
Margin Details
Non-GAAP gross margin improved slightly to 55.7% from 55.1% in the previous-year quarter.
Non-GAAP operating income rose to $77.9 million from $76.5 million in the prior-year quarter. Non-GAAP operating margin was 26.7%, down from 28.7% in the previous-year quarter.
Despite rising input costs, including memory, fuel and shipping, margin performance remained strong, driven largely by benefits from the shift to extended factories.
Total operating expenses for the quarter were $112.9 million compared with $80 million in the previous year quarter.
Liquidity
As of March 31, 2026, the company had $654.2 million in cash, cash equivalents and marketable securities with $214.5 million of total current liabilities compared with $639.6 million and $218.9 million, respectively, as of Jan. 3, 2026.
Accounts receivable were $306.6 million.
The company also generated roughly $26 million in operating cash flow during the quarter.
Q2 Guidance Signals Continued Momentum
Onto Innovation expects second-quarter revenues of $320–$330 million, implying about 10% upside to prior estimates at the midpoint and 28% year-over-year growth. Momentum is set to build in the second half, with at least 15% growth over the first half, putting full-year 2026 revenue above $1.3 billion.
Despite headwinds from higher material and fuel costs, along with increased R&D and service investments, Onto Innovation expects continued margin expansion.
The company expects gross margin between 56% and 56.5%, non-GAAP operating margin between 28% and 28.6% and non-GAAP EPS between $1.65 and $1.73.
While monitoring macro and company-specific cost pressures, Onto Innovation remains confident it can expand gross margins by at least 50 basis points in the third and fourth quarters each and exit the year with an operating margin above 30%.
Badger Meter, Inc. (BMI - Free Report) reported EPS of 93 cents for first-quarter 2026, which missed the Zacks Consensus Estimate by 22.5%. The bottom line compared unfavorably with the year-ago quarter’s EPS of $1.30. Quarterly net sales were $202.3 million, down 9% from $222.2 million in the year-ago quarter due to delayed project deployments and weaker-than-expected short-cycle order activity. The Zacks Consensus Estimate was pegged at $230.1 million.
Sensata Technologies Holding plc (ST - Free Report) reported first-quarter 2026 adjusted EPS of 86 cents, up from 78 cents a year ago. The bottom line beat the Zacks Consensus Estimate by 2.4%. Revenues for the quarter reached $934.8 million, up 2.6% from a year ago. The figure came near to the upper end of management’s expectations ($917-$937 million) and beat the consensus estimate by 0.7%. Strength Aerospace, Defense and Commercial Equipment segments drove the top-line performance.
Fortive Corporation (FTV - Free Report) reported first-quarter 2026 adjusted EPS of 70 cents from continuing operations, which surpassed the Zacks Consensus Estimate of 64 cents. The bottom line increased 25.4% year over year. Revenues increased 7.7% year over year to $1069.4 million. The top line beat the Zacks Consensus Estimate by 3.8%. Core revenues jumped 5.3%.
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ONTO Q1 Earnings Beat, Revenues Up Y/Y on Strong Semiconductor Demand
Key Takeaways
Onto Innovation Inc. (ONTO - Free Report) reported first-quarter 2026 earnings per share of $1.42, which beat the Zacks Consensus Estimate by 2.9%. The bottom line compared unfavorably with the prior-year quarter's $1.51. Management expected non-GAAP earnings per share to be between $1.26 and $1.36.
Onto Innovation reported quarterly revenue of $291.9 million, reflecting a 9.5% increase year over year and nearly 10% sequential growth led by rising customer investments in advanced semiconductor manufacturing. The growth was primarily driven by the increased adoption of ONTO’s inspection and metrology platforms among top logic and memory manufacturers. Demand for AI chips, advanced packaging solutions and high-bandwidth memory continues to boost semiconductor capital expenditures, especially in Asia, where Onto Innovation has expanded its manufacturing footprint.
Customer adoption of the company’s latest systems, including the Dragonfly G5 and Atlas G6 platforms, has been especially promising. These technologies aim to help semiconductor manufacturers improve yields and process control for increasingly complex chip designs. A key highlight from the quarter was the qualification of the Dragonfly G5 inspection system at both a leading 2.5D logic customer and a high-bandwidth memory customer. Onto also announced that its newly launched Atlas G6 system was selected by a second logic customer for gate-all-around metrology applications.
Another major development was Onto Innovation’s collaboration with Rigaku Holdings Corporation, acquiring a 27% stake for about $710 million, with the deal expected to close in the second half of 2026. The partnership expands Onto’s access to advanced X-ray technologies, enhancing its semiconductor inspection and metrology capabilities, and includes the right to appoint a board member. Along with its earlier acquisition of Semilab USA, the move underscores Onto’s strategy to broaden its process control ecosystem and support long-term growth.
Onto Innovation Inc. Price, Consensus and EPS Surprise
Onto Innovation Inc. price-consensus-eps-surprise-chart | Onto Innovation Inc. Quote
Specialty devices and advanced packaging revenues (55% of total revenues) were about $160 million for the quarter. Roughly two-thirds came from advanced packaging, including about $25 million from Semilab, with the remainder driven by specialty devices such as power semiconductors.
Revenues from the Advanced nodes (27.4%) were about $80 million, with roughly 60% coming from memory, primarily DRAM, and the rest from logic.
Revenues from Software and services accounted for the remaining 17.6% of net sales.
Margin Details
Non-GAAP gross margin improved slightly to 55.7% from 55.1% in the previous-year quarter.
Non-GAAP operating income rose to $77.9 million from $76.5 million in the prior-year quarter. Non-GAAP operating margin was 26.7%, down from 28.7% in the previous-year quarter.
Despite rising input costs, including memory, fuel and shipping, margin performance remained strong, driven largely by benefits from the shift to extended factories.
Total operating expenses for the quarter were $112.9 million compared with $80 million in the previous year quarter.
Liquidity
As of March 31, 2026, the company had $654.2 million in cash, cash equivalents and marketable securities with $214.5 million of total current liabilities compared with $639.6 million and $218.9 million, respectively, as of Jan. 3, 2026.
Accounts receivable were $306.6 million.
The company also generated roughly $26 million in operating cash flow during the quarter.
Q2 Guidance Signals Continued Momentum
Onto Innovation expects second-quarter revenues of $320–$330 million, implying about 10% upside to prior estimates at the midpoint and 28% year-over-year growth. Momentum is set to build in the second half, with at least 15% growth over the first half, putting full-year 2026 revenue above $1.3 billion.
Despite headwinds from higher material and fuel costs, along with increased R&D and service investments, Onto Innovation expects continued margin expansion.
The company expects gross margin between 56% and 56.5%, non-GAAP operating margin between 28% and 28.6% and non-GAAP EPS between $1.65 and $1.73.
While monitoring macro and company-specific cost pressures, Onto Innovation remains confident it can expand gross margins by at least 50 basis points in the third and fourth quarters each and exit the year with an operating margin above 30%.
ONTO’s Zacks Rank
Onto Innovation currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Performance of Other Firms
Badger Meter, Inc. (BMI - Free Report) reported EPS of 93 cents for first-quarter 2026, which missed the Zacks Consensus Estimate by 22.5%. The bottom line compared unfavorably with the year-ago quarter’s EPS of $1.30. Quarterly net sales were $202.3 million, down 9% from $222.2 million in the year-ago quarter due to delayed project deployments and weaker-than-expected short-cycle order activity. The Zacks Consensus Estimate was pegged at $230.1 million.
Sensata Technologies Holding plc (ST - Free Report) reported first-quarter 2026 adjusted EPS of 86 cents, up from 78 cents a year ago. The bottom line beat the Zacks Consensus Estimate by 2.4%. Revenues for the quarter reached $934.8 million, up 2.6% from a year ago. The figure came near to the upper end of management’s expectations ($917-$937 million) and beat the consensus estimate by 0.7%. Strength Aerospace, Defense and Commercial Equipment segments drove the top-line performance.
Fortive Corporation (FTV - Free Report) reported first-quarter 2026 adjusted EPS of 70 cents from continuing operations, which surpassed the Zacks Consensus Estimate of 64 cents. The bottom line increased 25.4% year over year. Revenues increased 7.7% year over year to $1069.4 million. The top line beat the Zacks Consensus Estimate by 3.8%. Core revenues jumped 5.3%.