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Onto Innovation Set to Report Q3 Earnings: What's in Store?
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Onto Innovation (ONTO - Free Report) is set to report earnings for the third quarter of 2024 on Oct. 31, after the closing bell.
Stay up-to-date with all quarterly releases: See ZacksEarnings Calendar.
The Zacks Consensus Estimate for third-quarter earnings per share (EPS) has been steady at $1.31 in the past 60 days, suggesting growth of 36.5% from the year-ago quarter’s figure. The company expects non-GAAP EPS in the $1.25-$1.35 range.
The consensus mark for revenues is pegged at $250.5 million, indicating a rise of 20.9% from the year-earlier quarter’s actuals. Management expects revenues in the range of $245-$255 million.
ONTO’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.5%. The company’s shares have gained 80.5% compared with sub-industry’s growth of 74.9% in the past year.
Image Source: Zacks Investment Research
Factors at Play
Increasing uptake of its Dragonfly inspection system is likely to have benefited ONTO’s top-line performance. Its Dragonfly G3 platform integrates 2D and 3D technologies to identify yield-killing defects and compute features, which are important for advanced front-end and packaging technologies.
Robust performance in Advanced nodes, Specialty devices and advanced packaging and Software and services revenues is likely to have aided the top line. Management anticipates these healthy demand trends as a key catalyst for the third quarter. Fueled by strength across both memory and logic segments, ONTO expects revenues from advanced node customers to increase more than 25% in the third quarter.
In the last reported quarter, revenues from specialty and advanced packaging customers reached a record level of $164 million, driven by rising demand from AI packaging customers. ONTO expects this momentum to drive revenues and cash flow in the third quarter as well. Moreover, ongoing investments by HBM manufacturers in advanced packaging capacity and new capabilities are likely to have propelled the top line in the third quarter.
ONTO continues to focus on inventory optimization, amid the strong revenue growth from Dragonfly and the anticipated expansion in its advanced nodes business in the latter half of the year. It exited the second quarter with $320 million in inventory compared with $330 million in the first quarter. The company forecasts an additional inventory reduction of $10-$15 million in the third quarter, highlighting its commitment to operational efficiency and strategic resource management.
Weak global macroeconomic backdrop, forex fluctuations and fierce competition remain concerns for the company. Increasing expenses are likely to have weighed on its margin’s performance. For the third quarter of 2024, it expects operating expenses in the range of $64-$66 million amid higher research and development expenses.
Key Recent Developments
In the third quarter, ONTO expanded its panel portfolio with the new Glass Suite, featuring the JetStep X500 and Firefly G3 systems. These systems provide a complete panel-level packaging solution for AI, high-performance computing and cloud computing. As the industry shifts to glass core panels, Onto’s JetStep lithography and Firefly G3 inspection systems offer a robust solution. The JetStep X500’s hybrid substrate handling demonstrates its commitment to advancing its panel-level products to meet technological demands.
It also opened the Packaging Applications Center of Excellence, a new facility in the United States for panel-level packaging innovations, in collaboration with ASMPT, Corning, Evatec, Lam Research and LPKF Laser & Electronics, among others. The center is focused on enabling advancements in 2.5D and 3D chiplet architectures, which are vital for AI package development.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Onto Innovation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Earnings ESP: ONTO has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
Microsoft Corporation (MSFT - Free Report) currently has an Earnings ESP of +0.35% and a Zacks Rank #3.
MSFT is scheduled to report quarterly earnings on Oct. 30. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings and revenues is pegged at $3.08 per share and $64.41 billion, respectively. Shares of MSFT have gained 26.5% in the past year.
Paylocity Holding Corporation (PCTY - Free Report) currently has an Earnings ESP of +1.08% and a Zacks Rank #2.
PCTY is scheduled to report quarterly earnings on Oct. 30. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings and revenues is pegged at $1.39 per share and $356.5 billion, respectively. Shares of PCTY have lost 0.7% in the past year.
Shopify (SHOP - Free Report) has an Earnings ESP of +4.13% and a Zacks Rank #1.
SHOP is set to report its third-quarter 2024 results on Nov. 12. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings and revenues is pegged at 27 cents per share and $2.1 billion, respectively. Shopify shares have gained 70.2% in the past year.
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Onto Innovation Set to Report Q3 Earnings: What's in Store?
Onto Innovation (ONTO - Free Report) is set to report earnings for the third quarter of 2024 on Oct. 31, after the closing bell.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The Zacks Consensus Estimate for third-quarter earnings per share (EPS) has been steady at $1.31 in the past 60 days, suggesting growth of 36.5% from the year-ago quarter’s figure. The company expects non-GAAP EPS in the $1.25-$1.35 range.
The consensus mark for revenues is pegged at $250.5 million, indicating a rise of 20.9% from the year-earlier quarter’s actuals. Management expects revenues in the range of $245-$255 million.
ONTO’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.5%. The company’s shares have gained 80.5% compared with sub-industry’s growth of 74.9% in the past year.
Image Source: Zacks Investment Research
Factors at Play
Increasing uptake of its Dragonfly inspection system is likely to have benefited ONTO’s top-line performance. Its Dragonfly G3 platform integrates 2D and 3D technologies to identify yield-killing defects and compute features, which are important for advanced front-end and packaging technologies.
Robust performance in Advanced nodes, Specialty devices and advanced packaging and Software and services revenues is likely to have aided the top line. Management anticipates these healthy demand trends as a key catalyst for the third quarter. Fueled by strength across both memory and logic segments, ONTO expects revenues from advanced node customers to increase more than 25% in the third quarter.
In the last reported quarter, revenues from specialty and advanced packaging customers reached a record level of $164 million, driven by rising demand from AI packaging customers. ONTO expects this momentum to drive revenues and cash flow in the third quarter as well. Moreover, ongoing investments by HBM manufacturers in advanced packaging capacity and new capabilities are likely to have propelled the top line in the third quarter.
ONTO continues to focus on inventory optimization, amid the strong revenue growth from Dragonfly and the anticipated expansion in its advanced nodes business in the latter half of the year. It exited the second quarter with $320 million in inventory compared with $330 million in the first quarter. The company forecasts an additional inventory reduction of $10-$15 million in the third quarter, highlighting its commitment to operational efficiency and strategic resource management.
Onto Innovation Inc. Price and EPS Surprise
Onto Innovation Inc. price-eps-surprise | Onto Innovation Inc. Quote
Weak global macroeconomic backdrop, forex fluctuations and fierce competition remain concerns for the company. Increasing expenses are likely to have weighed on its margin’s performance. For the third quarter of 2024, it expects operating expenses in the range of $64-$66 million amid higher research and development expenses.
Key Recent Developments
In the third quarter, ONTO expanded its panel portfolio with the new Glass Suite, featuring the JetStep X500 and Firefly G3 systems. These systems provide a complete panel-level packaging solution for AI, high-performance computing and cloud computing. As the industry shifts to glass core panels, Onto’s JetStep lithography and Firefly G3 inspection systems offer a robust solution. The JetStep X500’s hybrid substrate handling demonstrates its commitment to advancing its panel-level products to meet technological demands.
It also opened the Packaging Applications Center of Excellence, a new facility in the United States for panel-level packaging innovations, in collaboration with ASMPT, Corning, Evatec, Lam Research and LPKF Laser & Electronics, among others. The center is focused on enabling advancements in 2.5D and 3D chiplet architectures, which are vital for AI package development.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Onto Innovation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Earnings ESP: ONTO has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ONTO currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
Microsoft Corporation (MSFT - Free Report) currently has an Earnings ESP of +0.35% and a Zacks Rank #3.
MSFT is scheduled to report quarterly earnings on Oct. 30. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings and revenues is pegged at $3.08 per share and $64.41 billion, respectively. Shares of MSFT have gained 26.5% in the past year.
Paylocity Holding Corporation (PCTY - Free Report) currently has an Earnings ESP of +1.08% and a Zacks Rank #2.
PCTY is scheduled to report quarterly earnings on Oct. 30. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings and revenues is pegged at $1.39 per share and $356.5 billion, respectively. Shares of PCTY have lost 0.7% in the past year.
Shopify (SHOP - Free Report) has an Earnings ESP of +4.13% and a Zacks Rank #1.
SHOP is set to report its third-quarter 2024 results on Nov. 12. The Zacks Consensus Estimate for its to-be-reported quarter’s earnings and revenues is pegged at 27 cents per share and $2.1 billion, respectively. Shopify shares have gained 70.2% in the past year.