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ONTO Q3 Earnings Call Highlights Strong Backlog and 2027 Growth
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Key Takeaways
ONTO's backlog surged 20% to over $1.3B, supporting revenue growth visibility into 2027 and beyond.
ONTO projects Q4 revenues of $430M-$450M, with full-year 2026 revenue growth expected to exceed 45%.
Onto expects advanced packaging sales to grow over 80% in 2026, due to strong Dragonfly platform adoption.
Onto Innovation Inc. (ONTO - Free Report) entered the final quarter of 2026 with a larger order backlog and expectations for further revenue growth into 2027. Management linked that visibility to customers securing equipment for multiyear semiconductor capacity expansions.
The third-quarter 2026 earnings call also highlighted broader adoption of advanced packaging inspection tools, higher metrology requirements at advanced nodes and manufacturing changes supporting margin expansion.
Third-quarter revenues rose 87.8% year over year to $409.7 million, above the Zacks Consensus Estimate of $390.7 million. Adjusted earnings of $2.44 per share exceeded the consensus estimate of $2.27, providing context for management’s stronger outlook.
Onto Innovation Inc. Price, Consensus and EPS Surprise
CEO Michael Plisinski said backlog increased 20% to more than $1.3 billion, with some orders reaching into 2028 and beyond. Customers are placing orders ahead of major production ramps rather than responding to longer equipment delivery times.
In response to an RBC Capital Markets analyst, Plisinski said the backlog expansion was not caused by delivery constraints. CFO Brian Roberts added that product lead times had not extended.
Management expects sequential revenue growth through at least the first half of 2027. Plisinski told a Stifel analyst that growth could continue into the second half, although its magnitude remains undetermined.
Onto Raises Q4 Expectations
Roberts, Onto’s chief financial officer, guided fourth-quarter revenues to $430-$450 million, with non-GAAP earnings of $2.59-$2.79 per share. The midpoint implies revenue growth of more than 7% sequentially.
The company expects full-year revenue growth exceeding 45%. Roberts projected 2026 revenues of $1.485 billion at the fourth-quarter guidance midpoint.
ONTO Expands Its Advanced Packaging Footprint
Plisinski said advanced packaging revenues remain on course to grow more than 80% in 2026. Dragonfly inspection platforms were the largest growth contributor across nearly all specialty and packaging markets.
The newer Dragonfly G5 has reached more than 10 customers. Purchase orders for 2027 already represent twice the platform’s 2026 revenues, while requests for new applications doubled during the quarter.
During questioning from Deutsche Bank, Plisinski clarified that G5 momentum primarily reflects new high-resolution applications rather than customers switching from the G3. He also highlighted rising 3Di metrology adoption and repeat customer orders.
Onto Benefits From More Complex Chipmaking
Advanced-node revenues reached approximately $135 million in the third quarter, with memory contributing about 60% and logic accounting for 40%, Roberts said. Management expects advanced-node revenue growth to exceed 35% in 2026 and accelerate in 2027.
Plisinski attributed demand to greater use of optical critical dimension metrology directly within chip structures. The Atlas G6 platform achieved the company's fastest adoption for an OCD platform launch.
Asked by Goldman Sachs about the outlook by memory category, Plisinski expressed greater confidence in logic and DRAM than NAND. Plisinski tied that confidence to visible factory expansions and supporting backlog.
ONTO Targets Further Margin Gains
Roberts reported a non-GAAP gross margin of 57.6% and operating margin of 32.6% in the third quarter, reflecting progress in manufacturing efficiency and operating leverage.
The company expects a fourth-quarter non-GAAP operating margin of 33.5-34.5%. Roberts told a B. Riley Securities analyst that gross margin could improve by roughly 50 basis points per quarter on average during 2027.
In Q&A, executives acknowledged component pricing pressure, particularly involving memory. Plisinski said engineering changes are reducing memory requirements, while Roberts emphasized regional sourcing and extended factories as ways to lower freight costs and tariff exposure.
Onto Maintains Focus on Execution
Plisinski said he had not seen customers alter ordering behavior in response to recent concerns about data center investment. Demand continued to exceed available chipmaking capacity, according to management.
The company also completed its 27% investment in Rigaku during the quarter. Roberts explained that changes in Rigaku’s share price will affect reported GAAP earnings through quarterly mark-to-market adjustments.
Management’s emphasis remained on meeting customers’ expansion schedules, increasing product adoption and maintaining supply-chain resilience as orders extend further into future periods.
Zacks Rank and Style Scores Put ONTO in Context
ONTO currently carries a Zacks Rank #2 (Buy), indicating a favorable earnings-estimate-revision profile under the Zacks ranking framework. The stock’s Momentum Score of B is its strongest individual style signal. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Value Score of D points to weaker value characteristics, while the Growth Score and the VGM Score of C indicate more moderate readings. The C-rated VGM profile falls below the A or B combination favored by the Zacks Style Scores framework. The Zacks Rank can change as analysts revise estimates following the reported quarter.
View the Zacks #1 Rank List
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ONTO Q3 Earnings Call Highlights Strong Backlog and 2027 Growth
Key Takeaways
Onto Innovation Inc. (ONTO - Free Report) entered the final quarter of 2026 with a larger order backlog and expectations for further revenue growth into 2027. Management linked that visibility to customers securing equipment for multiyear semiconductor capacity expansions.
The third-quarter 2026 earnings call also highlighted broader adoption of advanced packaging inspection tools, higher metrology requirements at advanced nodes and manufacturing changes supporting margin expansion.
Third-quarter revenues rose 87.8% year over year to $409.7 million, above the Zacks Consensus Estimate of $390.7 million. Adjusted earnings of $2.44 per share exceeded the consensus estimate of $2.27, providing context for management’s stronger outlook.
Onto Innovation Inc. Price, Consensus and EPS Surprise
Onto Innovation Inc. price-consensus-eps-surprise-chart | Onto Innovation Inc. Quote
ONTO Sees Growth Extending Into 2027
CEO Michael Plisinski said backlog increased 20% to more than $1.3 billion, with some orders reaching into 2028 and beyond. Customers are placing orders ahead of major production ramps rather than responding to longer equipment delivery times.
In response to an RBC Capital Markets analyst, Plisinski said the backlog expansion was not caused by delivery constraints. CFO Brian Roberts added that product lead times had not extended.
Management expects sequential revenue growth through at least the first half of 2027. Plisinski told a Stifel analyst that growth could continue into the second half, although its magnitude remains undetermined.
Onto Raises Q4 Expectations
Roberts, Onto’s chief financial officer, guided fourth-quarter revenues to $430-$450 million, with non-GAAP earnings of $2.59-$2.79 per share. The midpoint implies revenue growth of more than 7% sequentially.
The company expects full-year revenue growth exceeding 45%. Roberts projected 2026 revenues of $1.485 billion at the fourth-quarter guidance midpoint.
ONTO Expands Its Advanced Packaging Footprint
Plisinski said advanced packaging revenues remain on course to grow more than 80% in 2026. Dragonfly inspection platforms were the largest growth contributor across nearly all specialty and packaging markets.
The newer Dragonfly G5 has reached more than 10 customers. Purchase orders for 2027 already represent twice the platform’s 2026 revenues, while requests for new applications doubled during the quarter.
During questioning from Deutsche Bank, Plisinski clarified that G5 momentum primarily reflects new high-resolution applications rather than customers switching from the G3. He also highlighted rising 3Di metrology adoption and repeat customer orders.
Onto Benefits From More Complex Chipmaking
Advanced-node revenues reached approximately $135 million in the third quarter, with memory contributing about 60% and logic accounting for 40%, Roberts said. Management expects advanced-node revenue growth to exceed 35% in 2026 and accelerate in 2027.
Plisinski attributed demand to greater use of optical critical dimension metrology directly within chip structures. The Atlas G6 platform achieved the company's fastest adoption for an OCD platform launch.
Asked by Goldman Sachs about the outlook by memory category, Plisinski expressed greater confidence in logic and DRAM than NAND. Plisinski tied that confidence to visible factory expansions and supporting backlog.
ONTO Targets Further Margin Gains
Roberts reported a non-GAAP gross margin of 57.6% and operating margin of 32.6% in the third quarter, reflecting progress in manufacturing efficiency and operating leverage.
The company expects a fourth-quarter non-GAAP operating margin of 33.5-34.5%. Roberts told a B. Riley Securities analyst that gross margin could improve by roughly 50 basis points per quarter on average during 2027.
In Q&A, executives acknowledged component pricing pressure, particularly involving memory. Plisinski said engineering changes are reducing memory requirements, while Roberts emphasized regional sourcing and extended factories as ways to lower freight costs and tariff exposure.
Onto Maintains Focus on Execution
Plisinski said he had not seen customers alter ordering behavior in response to recent concerns about data center investment. Demand continued to exceed available chipmaking capacity, according to management.
The company also completed its 27% investment in Rigaku during the quarter. Roberts explained that changes in Rigaku’s share price will affect reported GAAP earnings through quarterly mark-to-market adjustments.
Management’s emphasis remained on meeting customers’ expansion schedules, increasing product adoption and maintaining supply-chain resilience as orders extend further into future periods.
Zacks Rank and Style Scores Put ONTO in Context
ONTO currently carries a Zacks Rank #2 (Buy), indicating a favorable earnings-estimate-revision profile under the Zacks ranking framework. The stock’s Momentum Score of B is its strongest individual style signal. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Value Score of D points to weaker value characteristics, while the Growth Score and the VGM Score of C indicate more moderate readings. The C-rated VGM profile falls below the A or B combination favored by the Zacks Style Scores framework. The Zacks Rank can change as analysts revise estimates following the reported quarter.