Revenue: $167 million, above the midpoint of guidance, down 4% year-over-year and 8% sequentially. Non-GAAP Operating Income: $24 million. Non-GAAP EPS: $0.37, above the high end of guidance. Gross Margin: Approximately 42%, in line with guidance. Operating Expenses: Approximately $46 million, below guidance. Net Income: $22 million. Cash and Short-term Investments: $353 million, a sequential increase from $345 million. Cash Flow from Operations: $20 million. CapEx: $7 million during the quarter. Semiconductor Business Revenue: Grew 10% sequentially and 3% year-over-year, representing 74% of total revenue. Compound Semiconductor Market Revenue: $14 million, totaling 9% of revenue. Data Storage Revenue: $7 million. Scientific and Other Revenue: $22 million, totaling 13% of revenue. Revenue by Region: China 42%, Asia Pacific (excluding China) 36%, United States 15%, EMEA 7%. Q2 Revenue Outlook: Expected between $135 million and $165 million. Q2 Gross Margin Outlook: Expected between 40% to 42%. Q2 Operating Expenses Outlook: Expected between $47 million and $48 million. Q2 Net Income Outlook: Expected between $7 million and $20 million. Q2 Diluted EPS Outlook: Expected between $0.12 and $0.32 on approximately 60 million shares.

Warning! GuruFocus has detected 5 Warning Sign with VECO.

Release Date: May 07, 2025

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

Positive Points

Veeco Instruments Inc (NASDAQ:VECO) reported revenue of $167 million, exceeding the midpoint of their guidance. The semiconductor business showed strong performance, with sequential and year-over-year growth, driven by advanced packaging and lithography systems. Veeco received Intel's 2025 Epic Supplier award, recognizing their excellence in Aneal technology. The company secured significant orders for laser annealing systems from leading-edge logic customers, indicating strong demand. Veeco's advanced packaging business is expected to double in 2025, driven by AI and high-performance computing applications.

Negative Points

Recently enacted tariffs are causing some customers to delay shipments, impacting future market demand. Revenue declined 4% from the prior year and 8% sequentially, with specific declines in the compound semiconductor and data storage markets. The company faces increased costs due to tariffs on imported materials and domestic suppliers' imports. Revenue from China customers is subject to uncertainty due to tariffs, with potential shipment delays impacting Q2 guidance. The data storage market shows no signs of system revenue growth, with no expected system shipments in 2025.

Story Continues

Q & A Highlights

Q: Could you elaborate on the advanced packaging orders for your lithography tools and what is driving this business? A: William Miller, CEO: We recently announced $35 million in lithography orders from IDMs and OSATs, driven by AI and high-performance computing, particularly high-bandwidth memory and device stacking. Our advanced packaging business is expected to double in 2025, reaching about $150 million, due to these factors.

Q: How are the recently enacted tariffs impacting your business, and what mitigation strategies are you considering? A: John Kiernan, CFO: Some customers in China are delaying shipments due to tariffs, impacting our Q2 guidance by approximately $15 million. We are exploring exemptions and considering manufacturing expansion outside the U.S. to mitigate these impacts. The affected areas are evenly split between scientific and semiconductor markets.

Q: Can you provide a recap of which parts of your semiconductor business are expected to grow in 2025? A: John Kiernan, CFO: Despite headwinds in China, we see growth opportunities in advanced packaging and high-bandwidth memory, driven by AI and high-performance computing. These areas could potentially double year-over-year, offsetting declines in other segments.

Q: Are the recent wins in process of record new applications or expansions with existing customers? A: William Miller, CEO: These are incremental wins with existing customers in advanced logic gate-all-around, representing new applications. Each win could result in $40 million to $50 million in revenue per application, depending on customer ramp and business conditions.

Q: What is the outlook for the second half of 2025, considering the current uncertainties? A: John Kiernan, CFO: While we are not providing specific guidance due to macro uncertainties, we expect strength in gate-all-around and advanced packaging to potentially offset China-related headwinds, resulting in similar business activity levels in the second half compared to the first half.

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

This article first appeared on GuruFocus.

View Comments