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VI

VEECO INSTRUMENTS INC (VECO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $167.3M and non-GAAP diluted EPS was $0.37; both were above guidance midpoints, with EPS above the high end. The Semiconductor segment grew sequentially and year-over-year on Advanced Packaging strength .
  • Versus consensus, revenue beat by ~$1.3M and EPS beat by ~$0.05, driven by wet processing and lithography shipments and continued laser annealing strength at leading-edge customers; margins were stable with non-GAAP gross margin at ~41.7% .
  • Management set Q2 2025 guidance to $135–$165M revenue and $0.12–$0.32 non-GAAP EPS, with a wider range due to China tariff-related shipment delays (~$15M assumption) and ~100 bps gross margin impact from tariffs and lower volumes .
  • Strategic catalysts: Intel’s 2025 EPIC Supplier Award, over $35M AP300 lithography orders, and wet processing qualifications at a global IDM strengthen the Advanced Packaging and annealing narratives tied to AI/HPC demand .

What Went Well and What Went Wrong

What Went Well

  • Advanced Packaging momentum: “Revenue above mid-point of guidance, EPS above guidance… Growth driven by wet processing and lithography system shipments in Advanced Packaging” .
  • Strategic wins in annealing: “Two leading logic customers designated Veeco’s laser spike annealing platform as production tool of record for new applications at their most advanced gate-all-around nodes” .
  • Commercial traction: Over $35M of AP300 lithography orders from IDM/OSAT customers; deliveries in 2025 supporting AI/HPC capacity expansions .

What Went Wrong

  • Tariff headwinds: Management expects ~$15M of Q2 shipments to China to be delayed due to tariffs; gross margin guidance incorporates ~100 bps impact from tariffs and lower volumes .
  • End-market softness: Data Storage systems revenue was zero in Q1; revenue only from service/aftermarket; no system shipments expected in 2025 .
  • Scientific & Other normalization: Scientific revenue fell to $22M from $33M in Q4 2024 as activity normalized; moderating sequential momentum outside Semi .

Financial Results

Consolidated Performance vs Prior Periods and Estimates

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus*vs Consensus
Revenue ($M)$184.8 $182.1 $167.3 $166.0*+$1.3M*
GAAP Diluted EPS ($)$0.36 $0.26 $0.20 $0.320*-$0.12*
Non-GAAP Diluted EPS ($)$0.46 $0.41 $0.37 $0.320*+$0.05*
GAAP Gross Margin (%)42.9% 40.6% 40.9% N/AN/A
Non-GAAP Gross Margin (%)43.8% 41.5% 41.7% N/AN/A
GAAP Operating Income ($M)$24.3 $3.9 $14.1 N/AN/A
Non-GAAP Operating Income ($M)$31.0 $27.4 $24.3 N/AN/A
GAAP Net Income ($M)$22.0 $15.0 $11.9 N/AN/A
Non-GAAP Net Income ($M)$28.3 $24.2 $22.2 N/AN/A

Values retrieved from S&P Global for consensus (marked with *).
Note: Non-GAAP EPS beat vs consensus; GAAP EPS lags due to non-GAAP adjustments .

Segment/End-Market Revenue Mix

Market ($M)Q1 2024Q4 2024Q1 2025
Semiconductor$120 $112 $124
Compound Semi$21 $23 $14
Data Storage$18 $14 $7
Scientific & Other$15 $33 $22
Total$174 $182 $167

Geographic Revenue Mix

Region ($M)Q1 2024Q4 2024Q1 2025
China$64 $71 $71
APAC ex-China$73 $56 $60
United States$28 $35 $24
EMEA & ROW$8 $20 $12
Total$174 $182 $167

KPIs and Balance Sheet Highlights

KPI ($M unless noted)Q4 2024Q1 2025
Cash & Short-Term Investments$345 $353
Accounts Receivable$97 $114
Inventories$247 $254
Accounts Payable$44 $58
Cash Flow from Operations$28 $20
CapEx$5 $7
DSO (days)48 62
DIO (days)203 228
DPO (days)37 53

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q1 2025$155–$175 Actual: $167.3 Achieved above midpoint
GAAP Diluted EPS ($)Q1 2025$0.11–$0.22 Actual: $0.20 In-range
Non-GAAP Diluted EPS ($)Q1 2025$0.26–$0.36 Actual: $0.37 Above high end
Revenue ($M)Q2 2025Prior commentary: similar to Q1 (~$165) $135–$165 Widened/lowered midpoint due to tariffs
Gross Margin (%)Q2 2025N/AGAAP: 39–41; Non-GAAP: 40–42 ~100 bps headwind from tariffs/lower volume
OpEx ($M)Q2 2025N/AGAAP: $57–$58; Non-GAAP: $47–$48 Maintained disciplined spend
GAAP Diluted EPS ($)Q2 2025N/A($0.05)–$0.17 Wider risk range
Non-GAAP Diluted EPS ($)Q2 2025N/A$0.12–$0.32 Wider risk range

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024; Q-1: Q4 2024)Current Period (Q1 2025)Trend
AI/HPC-driven demandRecord Semi revenue; shipments to leading-edge customers Strong Semi performance; AP and annealing wins; AP lithography orders supporting AI/HPC Strengthening
Advanced Packaging (wet + litho)Wet processing orders momentum (Nov ‘24) [46: not read; see Q3 PR]AP300 orders >$35M; wet processing qualified at IDM; AP revenue expected to double in 2025 Accelerating
Laser Annealing (LSA/NSA)Continued leadership; leading-edge adoption Production tool-of-record at leading logic; multiple GAA/HBM shipments; added evaluations Expanding
Tariffs/MacroNot highlighted in Q3/Q4 PRsChina tariffs delaying ~$15M Q2 shipments; ~100 bps GM impact; cost increases Deteriorating risk
Data StorageSoftness; cautious outlook Only service revenue; no system shipments expected in 2025 Weak
Geographic mixChina large share; APAC/US/EMEA varied China 42% of Q1; APAC ex-China 36%; US 15%; EMEA 7% Stable China exposure

Management Commentary

  • “Veeco was awarded Intel's 2025 EPIC Supplier Award… validates us as a top supplier in the semiconductor industry.” — Bill Miller, CEO .
  • “Two leading logic customers [designated] Veeco’s laser spike annealing platform as production tool of record for new applications at their most advanced gate-all-around nodes.” — Bill Miller, CEO .
  • “Q2 revenue is expected between $135M and $165M… midpoint assumes ~$15M [China] shipments will be delayed… GM includes ~100 bps impact primarily from lower volumes due to tariffs and tariff-related costs.” — John Kiernan, CFO .
  • “Our Advanced Packaging business is going to probably double this year to about $150M in ’25… driven by AI, particularly HBM and 3D device stacking.” — Bill Miller, CEO .

Q&A Highlights

  • Advanced Packaging lithography recovery: Management cited capacity additions at IDM/OSATs tied to AI/HPC; AP lithography and wet processing expected to drive ~2x AP revenue in 2025 .
  • China tariff mitigation: Customers seeking exemptions; near-term shipments manufactured in U.S. face import tariffs; ~$15M delay embedded in Q2 guide; split across scientific and semiconductor customers .
  • Semi outlook components: Gate-all-around and Advanced Packaging expected to double year-over-year and offset China moderation; lithography included within AP numbers .
  • GaN Power timeline: Meeting performance requirements; customer pilot in 2026, potential ramp through 2027; no PO yet .
  • 2H setup: With tariff uncertainty, management sees second-half business activity similar to first-half levels; Data Storage systems remain off-cycle .

Estimates Context

PeriodMetricActualS&P Global Consensus*Surprise
Q1 2025Revenue ($M)$167.292 $166.002*+$1.290M*
Q1 2025Non-GAAP Diluted EPS ($)$0.37 $0.320*+$0.050*
Q2 2025 (Guide vs Street)Revenue ($M)Guide: $135–$165 $151.309*Midpoint ~$150 vs Street $151.309*
Q2 2025 (Guide vs Street)Non-GAAP Diluted EPS ($)Guide: $0.12–$0.32 $0.225*Midpoint ~$0.22 vs Street $0.225*

Values retrieved from S&P Global (consensus values marked with *).
Note: Management widened ranges due to tariff risk (~$15M shipments delayed; ~100 bps GM headwind) .

Key Takeaways for Investors

  • Q1 delivered a clean beat on revenue and non-GAAP EPS versus consensus; strength was concentrated in Advanced Packaging and leading-edge annealing; margins held steady .
  • Expect near-term volatility as China tariffs delay shipments (~$15M) and compress margins by ~100 bps in Q2; ranges are wider to reflect risk .
  • Strategic positioning in AI/HPC packaging and GAA/HBM annealing is improving: AP lithography orders (> $35M) and wet processing qualifications support AP doubling in 2025 .
  • Data Storage remains a drag with no system shipments expected in 2025; model service-only revenue in that segment while focusing on Semi growth drivers .
  • Watch evaluation-to-HVM conversion cadence (NSA/LSA/IBD300); incremental wins can be $40–$50M per application at 100k WSPM, but timing leans 2026+ .
  • Balance sheet is solid with $353M cash/ST investments; working capital up (A/R, inventories) reflecting shipment mix and timing; DSO/DIO increased QoQ .
  • Trading setup: Near-term risk skew from tariff visibility; upside tied to continued AI/HPC capacity buys and execution on AP/annealing evaluations; monitor Q2 order intake and tariff exemption progress .