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Onto Innovation reported Q2 FY2026 revenue of $343.1 million, above the $325.6 million consensus. Adjusted earnings per share were $1.93, exceeding the $1.68 consensus. Revenue rose 35.3% from $253.6 million a year earlier, while diluted earnings per share increased to $1.21 from $0.69.
The filing attributed the year-over-year increase in systems and software revenue to demand for inspection and metrology equipment. Parts and services revenue also rose, primarily because of higher customer support activity and service contract revenue. Onto said newer product lines with higher standard margins helped lift gross margin to 53.4% from 48.2%; lower restructuring expenses also benefited the quarter.
Onto’s operating margin rose to 18.5% from 12.7%, and free cash flow increased to $57.9 million from $44.2 million. The filing said cash, cash equivalents and marketable securities reached $1.9 billion at June 30, primarily reflecting financing proceeds and cash generated from operations.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $343.1 million | $253.6 million | 35.3% |
| Diluted EPS | $1.21 | $0.69 | 75.4% |
| Gross margin | 53.4% | 48.2% | 5.3 percentage points |
| Operating margin | 18.5% | 12.7% | 5.8 percentage points |
| Free cash flow | $57.9 million | $44.2 million | 31.0% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.93 | $1.68 | Beat by 14.9% |
| Revenue | $343.1 million | $325.6 million | Beat by 5.38% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Michael Plisinski said customers were placing orders further ahead of their delivery needs, taking backlog past $1.1 billion. He said much of the backlog was tied to 2026, with the remainder extending into 2027. In his view, customers were issuing “purchase orders well in advance of the historical norms” to secure capacity for their expansion plans.
Plisinski said Onto had won more than $200 million in Dragonfly technology orders from one packaging partner, with most scheduled for delivery in 2027. He also said the company had received more than $50.0 million in silicon photonics orders, roughly two-thirds of which were due for delivery in 2027.
CFO Brian Roberts said advanced nodes revenue rose 50% from the first quarter to approximately $120.0 million, with memory and logic both growing. He said the inspection business grew 30% quarter over quarter, driven by 2.5D and HBM applications. Other packaging and specialty-device revenue fell sequentially, but Roberts expected it to return to its first-quarter level in the next quarter.
On pricing and margins, Roberts said Dragonfly G5 accounted for a smaller portion of 2026 revenue but could help gross margin as it becomes a larger share of the business because it carries a higher average selling price. Plisinski said the G5 opens new applications, although “we’re not going to quantify that just yet” described his response on its future mix.
Plisinski said customers were adopting Onto products across more applications and that growth reflected both customer demand and opportunities to gain share. He also said extended factories had added capacity and reduced cycle times, while supply-chain constraints remained a concern. Roberts said Onto was increasing inventory to support revenue growth and supply continuity, while watching material costs, fuel surcharges and freight expense.
Guidance
Plisinski raised Onto’s second-half 2026 revenue growth outlook to 25% or more over the first half, from a previous expectation of 15%. He also raised the full-year advanced packaging growth outlook to approximately 80%, from the 50% projected in the prior quarter, citing demand following the Dragonfly G5 launch.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| EPS, non-GAAP | Q3 FY2026 | $2.18–$2.38 | — | New |
| EPS, GAAP | Q3 FY2026 | $1.54–$1.70 | — | New |
| Operating margin, non-GAAP | Q3 FY2026 | 31.5%–32.5% | — | New |
| Operating margin, GAAP | Q3 FY2026 | 21.4%–22.4% | — | New |
| Gross margin | Q3 FY2026 | 57.3%–57.8% | — | New |
| Revenue | Q3 FY2026 | $380.0 million–$400.0 million | — | New |
| Market size, Silicon Photonics | FY2030 | $500.0 million | — | New |
| Tax rate, non-GAAP | Q3 FY2026 | 15.0% | — | New |
| Operating margin, non-GAAP | FY2026 | 7.50% | — | New |
| Operating margin, non-GAAP | Q4 FY2026 | 33.0% | Q3 FY2026: 31.5%–32.5% | Raised |
| Gross margin, non-GAAP | FY2027 | Onto Innovation expects continued non-GAAP gross margin improvement in FY2027. | — | — |
| Gross margin, non-GAAP | FY2026 | 3.50% | — | New |
| Gross margin, non-GAAP | Q4 FY2026 | 0.50% | Q3 FY2026: 0.50% | Held |
| Gross margin, non-GAAP | Q3 FY2026 | 0.50% | — | New |
| Revenue, Specialty | FY2026 | Onto Innovation expects specialty revenue to be roughly flat in FY2026. | — | — |
| Revenue, Other Packaging and Specialty Device | Q3 FY2026 | Onto Innovation expects other packaging and specialty device revenue to rebound to its Q1 level in Q3 FY2026. | — | — |
| Revenue, Iris Films | FY2026 | Onto Innovation expects record Iris Films revenue in FY2026. | — | — |
| Revenue growth, Advanced Nodes | FY2026 | 35.0% | — | New |
| Revenue, Panel Level Packaging | FY2027 | Onto Innovation expects further panel-level packaging revenue growth in FY2027. | — | — |
| Revenue, Advanced Packaging | FY2027 | Onto Innovation expects advanced packaging revenue to grow in FY2027. | — | — |
| Revenue growth, Advanced Packaging | FY2026 | 80.0% | — | New |
| Revenue | Q4 FY2026 | Onto Innovation expects Q4 FY2026 revenue to rise from Q3. | — | — |
| Revenue growth | FY2026 | 25.0% | — | New |