Veeco Instruments Inc ((VECO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Veeco Instruments Inc. recently held its earnings call, revealing a mixed sentiment with strong performance in the semiconductor segment and continued leadership in key technologies, yet facing challenges such as an overall revenue decline, tariff impacts, and decreased revenue from China. Despite these hurdles, the company remains optimistic about future growth, though certain market segments face uncertainties.
Exceeded Guidance Expectations
Veeco delivered a robust financial performance, surpassing the high end of its guidance. The company reported revenue totaling $166 million, with a non-GAAP operating income of $23 million and a non-GAAP EPS of $0.36, highlighting its ability to outperform expectations.
Record Revenue in Semiconductor Business
The semiconductor business achieved record revenue for advanced packaging systems, driven by increased demand from AI applications. This segment experienced a 13% year-over-year growth, contributing to 75% of Veeco’s total revenue, underscoring the strength of its semiconductor operations.
Strong Position in Key Technologies
Veeco maintained its leadership in laser annealing and ion beam deposition for EUV mask blanks. The company reported strong customer engagement and positive progress in evaluations, reinforcing its position in these critical technologies.
Advanced Packaging Segment Growth
The advanced packaging segment continued its expansion, with wet processing systems becoming the production tool of choice for leading customers. This growth is expected to drive significant revenue increases by 2025, reflecting the segment’s strategic importance.
Financial Flexibility Enhancements
Veeco strengthened its financial position by retiring $25 million in convertible senior notes and increasing its revolving credit facility to $250 million. These actions provide the company with greater financial flexibility to navigate future challenges.
Revenue Decline in Certain Segments
Despite overall strong performance, Veeco experienced a 6% decline in revenue from the previous year, with notable decreases in the data storage and scientific markets, highlighting areas of concern.
Impact of Tariffs on Gross Margins
Tariffs on imported materials impacted gross margins by 100 basis points. Veeco is actively working to mitigate these effects, demonstrating its commitment to maintaining profitability.
China Revenue Decrease
Revenue from China decreased in Q2 compared to Q1, with further declines expected in the second half of the year, projected to constitute approximately 20% of total revenue, indicating challenges in this key market.
Uncertain Future in Data Storage Market
The data storage market faces uncertainty, with revenue declining year-over-year and unclear prospects for customer capacity additions in 2026, posing potential risks to future growth.
Forward-Looking Guidance
Looking ahead, Veeco provided guidance for the third fiscal quarter of 2025, projecting revenue between $150 million and $170 million. The gross margin is expected to be between 40% and 42%, with operating expenses ranging from $48 million to $49 million. Net income is forecasted between $12 million and $21 million, with diluted EPS projected to range from $0.20 to $0.35. The company emphasized its strategic focus on growth in laser annealing, ion beam deposition, and advanced packaging technologies, driven by AI and high-performance computing demand. Veeco also sees significant potential for growth in its served available market by 2029.
In summary, Veeco Instruments Inc.’s earnings call reflected a mixed sentiment with strong performance in key areas like the semiconductor segment and advanced technologies, while facing challenges such as revenue declines and tariff impacts. The company’s forward-looking guidance remains optimistic, with strategic focuses poised to drive future growth despite existing uncertainties.