Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Nova Ltd (NASDAQ:NVMI) achieved record results in both revenue and profitability, with revenues growing 50% year over year. The company exceeded its EPS guidance, with non-GAAP EPS increasing by 56% year over year. Nova's market share increased significantly in the thin film and CD metrology segment, solidifying its position as the second-largest vendor. The company saw record sales in its stand-alone solutions, particularly from the PRM platform, and integrated metrology solutions. Nova's software business achieved record performance, driven by strong sales of its software suite targeting high-value applications.

Negative Points

Macroeconomic uncertainty and the international trade climate pose potential indirect implications for Nova Ltd (NASDAQ:NVMI). The impact of tariffs could reduce gross margins by approximately 30 to 50 basis points. Operating expenses increased in the first quarter as the company ramped up R&D and sales and marketing spending. The acquisition of Centronics contributed only partially to the first quarter results, with a relatively small impact. Nova Ltd (NASDAQ:NVMI) expressed cautiousness about the second half of the year due to uncertainties, including potential impacts from tariffs.

Q & A Highlights

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Q: Can you talk about where you are in the gate all around ramp in terms of that $500 million cumulatively and how we should expect that from a shape perspective over the course of the year? A: We see a ramp in the first half of the year with strong demand from gate all around. We expect to meet growth plans, although there could be changes in the second half due to market conditions. Overall, we are on course for the gate all around. (Gaby Weissman, President and CEO)

Q: Can you talk about the size of the opportunity between the R&D phase and the ramp of high volume manufacturing? A: The beginnings this year reflect pilot lines and initial investments. As it moves to high volume manufacturing, we expect business growth. We anticipate 2025 to be higher than 2024, with 2026 expected to be even higher. Additional players entering the market will contribute to this growth. (Gaby Weissman, President and CEO)

Q: Can you talk about the moving pieces for the gross margin, especially with the impact of tariffs? A: Our gross margin should be viewed annually rather than quarterly. The second quarter's lower margin reflects tariff impacts (30 to 50 basis points) and product mix effects. We remain committed to our gross margin model of 57% to 60% for the full year. (Guy Kisner, CFO)

Story Continues

Q: Interesting to see some cross-selling in advanced packaging with customers using your gate all around equipment. Can you talk about what's driving these dynamics? A: We are well-positioned in cross-sales between front-end players with logic or memory and advanced packaging processes. We see strong double-digit growth in advanced packaging revenue for 2025, with a higher share compared to 2024. Our chemical and dimensional metrology solutions are well-positioned to drive this business. (Gaby Weissman, President and CEO)

Q: On the tariffs, have you seen any revenue impact in China from reciprocal tariffs, and what is your full-year services growth expectation? A: The main impact of tariffs is on gross margin, not the top line. Our service model suggests 10% to 15% growth year over year, and we expect to meet this target for 2025. (Guy Kisner, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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