stockrowLatest quarter
MKS reported second-quarter revenue of $1.2 billion, up 28.3% from $973.0 million a year earlier and 3.06% above the consensus. Adjusted earnings per share were $3.30, above the consensus estimate of $2.94. The company’s revenue also came in above its own guidance range, while gross margin was within its range.
MKS said semiconductor revenue grew 28% year over year and electronics and packaging revenue rose 44%. Its filing attributed the sequential increase in semiconductor sales primarily to deposition and etch equipment, NAND upgrades and services; higher chemistry, chemistry equipment and flexible PCB drilling sales drove the sequential increase in electronics and packaging.
Gross margin rose to 47.7% from 46.6% a year earlier, and operating margin increased to 20.1% from 13.9%. MKS reported diluted earnings per share of $2.41, compared with $0.92 a year earlier, and free cash flow of $189.0 million, up from $136.0 million.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.2 billion | $973.0 million | 28.3% |
| Diluted EPS | $2.41 | $0.92 | 162.0% |
| Gross margin | 47.7% | 46.6% | 1.1 percentage points |
| Operating margin | 20.1% | 13.9% | 6.2 percentage points |
| Free cash flow | $189.0 million | $136.0 million | 39.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $3.30 | $2.94 | Beat by 12.2% |
| Revenue | $1.2 billion | $1.2 billion | Beat by 3.06% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
| Against its own guidance | For | Guided | Reported | Result |
|---|---|---|---|---|
| Gross margin | Q2 FY2026 | 47.0%, plus or minus 100 basis points | 47.7% | Within the guide |
| Revenue | Q2 FY2026 | $1.2 billion, plus or minus $40 million | $1.2 billion | Above the guide |
What management said on the call
CEO John Lee said AI-related investment was increasing demand across semiconductor and advanced packaging applications. He said semiconductor orders and backlog gave MKS visibility through the second half of the year, while demand for chemistry equipment extended into 2027. For the third quarter, Lee expects semiconductor revenue growth above 50% year over year and electronics and packaging growth above 30%, with seasonal flex-equipment demand partly offsetting AI investment.
Lee said MKS was doubling capacity at its Guangzhou chemistry equipment factory. Asked about near-term capacity, he said the company had also turned on its Germany factory to bridge the period before the second Guangzhou factory comes online. He said the Malaysia facility had begun shipping and was ramping for demand in 2027 and beyond.
Asked about chemistry sales, Lee said most current growth still came from previously installed equipment. He said it can take 24 to 30 months from the start of equipment construction before chemistry reaches volume production. On the relative growth of semiconductor and packaging equipment, Lee said it was hard to determine which would grow faster, although he viewed the markets as connected.
Ramakumar Mayampurath said second-quarter gross margin included about 100 basis points of discrete benefits, mostly tariff and duty refunds. He said factory ramp investments and the mix of vacuum products and chemistry equipment would temporarily weigh on margin. Lee said chemistry equipment carries lower gross margins, but that equipment placements can lead to higher-margin chemistry sales later.
On pricing, Lee said MKS reviews product lines while accounting for competition and customer relationships. He said the company was “not going to take advantage of any opportunistic short-term dislocations in supply and demand.”
Guidance
MKS now expects its FY2026 non-GAAP tax rate to be at the lower end of its 18% to 20% range; its previous outlook was for the rate to remain within that range.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Revenue, Chemistry Equipment | FY2026 | MKS expects FY2026 chemistry equipment revenue to be significantly higher than its previous peak. | — | — |
| Revenue, Semiconductor | FY2026 | MKS expects FY2026 semiconductor revenue to grow year over year. | — | — |
| Revenue, Semiconductor Deposition and Etch | Q3 FY2026 | MKS expects its deposition and etch revenue growth in Q3 FY2026 to be significantly higher than its semiconductor average. | — | — |
| EPS, non-GAAP | Q3 FY2026 | $3.58, plus or minus $0.31 | — | New |
| Tax rate, non-GAAP | FY2026 | 18.0%–20.0% | — | New |
| Tax rate, non-GAAP | Q3 FY2026 | 20.0% | — | New |
| Capex growth, Percent of Revenue | FY2026 | 4.00%–5.00% | — | New |
| EBITDA, non-GAAP | Q3 FY2026 | $395.0 million, plus or minus $28 million | Q2 FY2026: $328.0 million, plus or minus $26 million | Raised |
| Operating margin, non-GAAP | Q3 FY2026 | 26.3% | — | New |
| Operating income, non-GAAP | Q3 FY2026 | $355.0 million | — | New |
| Operating expenses, non-GAAP | Q3 FY2026 | $280.0 million, plus or minus $5 million | — | New |
| Gross margin | Q3 FY2026 | 47.0%, plus or minus 100 basis points | Q2 FY2026: 47.0%, plus or minus 100 basis points; reported 47.7% | Held |
| Revenue | Q3 FY2026 | $1.4 billion, plus or minus $40 million | Q2 FY2026: $1.2 billion, plus or minus $40 million; reported $1.2 billion | Raised |
| EPS, GAAP | Q3 FY2026 | $2.73, plus or minus $0.31 | Q2 FY2026: $2.90, plus or minus $0.30 | Cut |
| Net income, non-GAAP | Q3 FY2026 | $257.0 million, plus or minus $22 million | — | New |
| Net income, GAAP | Q3 FY2026 | $201.0 million, plus or minus $23 million | — | New |
| Operating expenses, GAAP | Q3 FY2026 | $346.0 million, plus or minus $5 million | Q2 FY2026: $275.0 million, plus or minus $5 million | Raised |
| Market size, Wafer Fabrication Equipment | FY2027 | $170.0 billion–$180.0 billion | — | New |
| Tax rate | FY2026 | 18.0%–20.0% | — | New |
| Capex growth | FY2026 | 4.00%–5.00% | — | New |