0001193125-26-206707
SEC filingRevenue grew 9.5% YoY driven by Semilab USA acquisition, but gross margin fell to 50.1% on inventory amortization and restructuring.
Revenue for the March 2026 quarter reached $291.9 million, up 9.5% from $266.6 million in the prior-year period and 9.4% sequentially from $266.9 million in the January 2026 quarter. Growth was primarily driven by the acquisition of Semilab USA, contributing $16.8 million sequentially ($24.0 million YoY), and higher sales to logic and memory customers in advanced nodes. Gross profit increased to $146.4 million (50.1% of revenue) from $143.2 million (53.7%) a year ago, reflecting a 3.7 percentage point sequential margin improvement but a 3.6 point YoY decline. The YoY margin compression was due to $6.1 million of inventory step-up amortization from Semilab USA and higher restructuring costs. Net income totaled $33.8 million ($0.67 per diluted share), compared to $10.5 million ($0.21) in the prior quarter, driven by operating leverage and lower sequential expenses.
The company reports revenue by source, not by operating segment. Systems and software revenue of $247.2 million increased 6.9% YoY, incorporating a full quarter of Semilab USA sales. Parts revenue surged 46.1% to $26.6 million, reflecting increased customer spending on upgrades and repairs. Services revenue grew 5.6% to $18.2 million. The shift in mix toward higher-margin services was offset by the dilutive effect of Semilab's initial amortization and product mix. Operating expenses rose to $112.9 million from $80.0 million a year ago, driven by higher R&D ($35.1M vs $28.0M), G&A ($31.4M vs $22.8M), and amortization ($19.7M vs $8.4M) due to the acquisition. Restructuring costs more than quadrupled to $5.2 million.
Management did not provide explicit guidance for upcoming quarters. The company highlighted a pending $710 million investment in Rigaku Holdings (27% stake), expected to close in the second half of 2026, and secured a $500 million bridge term loan facility. Liquidity remains strong with $654.2 million in cash and marketable securities, and the company expects existing resources to cover near-term needs. Key strategic priorities include integrating Semilab USA, managing supply chain dependencies, and navigating tariff/trade uncertainties. The MD&A emphasizes continued R&D investment and cost discipline but cautions on geopolitical risks and the evolving impact of the One Big Beautiful Bill Act on taxes.
As of March 31, 2026, Onto Innovation held $252.2M in cash and equivalents plus $401.9M in marketable securities, totaling $654.2M in liquid assets. The company has no outstanding debt, having terminated its $100M secured line of credit during the quarter. Shareholders' equity stood at $2.13B, with inventory of $316.0M (net) and deferred revenue of $39.7M ($31.4M current, $8.3M non-current).
No material purchase commitments or long-term contractual obligations were disclosed. Warranty reserves of $9.6M are the primary liability, down from $10.3M at year-end. The company disclosed a subsequent event: a $710M minority investment in Rigaku Holdings (27% stake) with a committed $500M bridge loan facility from Goldman Sachs, expected to close in H2 2026.
During Q1 2026, Onto Innovation did not repurchase any shares, leaving $99.9M remaining under the $200M authorization approved in February 2024. Capital expenditures were $3.6M (1.2% of sales), down from $8.2M in Q1 2025. No dividends were paid. The company's primary capital allocation activity was the Semilab USA acquisition (closed November 2025), which contributed $27.1M revenue and $13.4M operating income in the quarter.
The company operates as a single reportable segment. Revenue by geography shows Taiwan as the largest market (29.1% of total), followed by South Korea (23.9%), United States (20.3%), and China (9.5%). U.S. revenue more than doubled year-over-year ($25.6M to $59.2M), while China also grew strongly ($12.2M to $27.8M). Revenue recognition is predominantly point-in-time (93.0%), with services and installation over time accounting for 7.0%.