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VI

VEECO INSTRUMENTS INC (VECO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $182.1M, up 5% year over year and down ~1% sequentially; GAAP diluted EPS was $0.26 and non-GAAP diluted EPS was $0.41. Non-GAAP gross margin was 41.5% (GAAP 40.6%), below guidance due to mix and evaluation program spend .
  • Semiconductor revenue comprised 62% of Q4 revenue with record Laser Annealing shipments, including NSA and LSA systems to leading-edge GAA nodes; advanced packaging (wet processing, lithography) is expected to double in 2025 on AI-related capacity builds .
  • China remains a near-term headwind: management expects China to be ~25–30% of revenue in 1H25 (vs. ~36% in FY24) as mature-node spending slows while leading-edge GAA/HBM and advanced packaging offset outside China .
  • Q1 2025 guidance: revenue $155–$175M, GAAP EPS $0.11–$0.22, non-GAAP EPS $0.26–$0.36; management also indicated Q2 revenue likely similar to Q1 .
  • S&P Global Wall Street consensus estimates for Q4 2024 were unavailable at the time of this analysis; beat/miss vs. consensus cannot be assessed (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Record Laser Annealing revenue with shipments to two leading-edge GAA customers; “Our semiconductor business delivered another solid quarter of revenue, highlighted by record laser annealing revenue, including shipments to two leading edge customers gate all around nodes.” .
  • NSA milestone: shipped NSA500 to a leading-edge logic customer for high-volume 2nm GAA production in Q4; evals at two other customers progressing with multiple applications .
  • Advanced packaging momentum: “We see this as an opportunity doubling in ’25 over ’24… benefiting from capacity expansions at a leading foundry and HBM manufacturer as well as multiple OSATs” (implying ~$75M → ~$150M) .

What Went Wrong

  • Gross margin below guidance in Q4 (41.5% non-GAAP vs ~42% guide): “Gross margin totaled approximately 41.5% below our guidance, driven by a shift in product mix and additional spending for our evaluation programs.” .
  • Asset impairment of $28.1M (SiC epitaxy) offset by contingent consideration reduction and tax benefits; non-GAAP adjustments impacted reported GAAP net income .
  • China mix decline ahead: management expects China to fall to ~25–30% of 1H25 revenue, pressuring margins as higher-margin China/data storage mix recedes; 2025 gross margins expected closer to ~42% vs 43% in 2024 .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($M)$173.9 $175.9 $184.8 $182.1
GAAP Diluted EPS ($)$0.37 $0.25 $0.36 $0.26
Non-GAAP Diluted EPS ($)$0.51 $0.42 $0.46 $0.41
GAAP Gross Margin (%)45.2% 42.9% 42.9% 40.6%
Non-GAAP Gross Margin (%)45.4% 43.7% 43.8% 41.5%
Non-GAAP Operating Income ($M)$32.1 $28.3 $31.0 $27.4

Revenue by End-Market

End-MarketQ4 2023 ($M)Q3 2024 ($M)Q4 2024 ($M)
Semiconductor$115 $124 $112
Compound Semiconductor$16 $16 $23
Data Storage$19 $33 $14
Scientific & Other$23 $12 $33
Total$174 $185 $182

Selected KPIs and Balance Sheet

KPI ($M unless noted)Q4 2023Q3 2024Q4 2024
Cash & Short-Term Investments$306 $321 $345
Accounts Receivable$103 $132 $97
Inventories$238 $242 $247
Accounts Payable$42 $50 $44
Cash Flow from Operations$29 $18 $28
Capital Expenditures$11 $4 $5
DSO (days)53 64 48
DIO (days)231 207 203
DPO (days)41 43 37

Notes:

  • Q4 revenue up 5% YoY and down ~1% QoQ per management .
  • Q4 non-GAAP tax expense ~$4M; effective tax rate ~14% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/Updated GuidanceChange
RevenueQ4 2024$165–$185M $175–$185M Raised (higher low-end)
GAAP Diluted EPSQ4 2024$0.18–$0.27 $0.09–$0.28 Lowered (wider, lower low-end)
Non-GAAP Diluted EPSQ4 2024$0.35–$0.45 $0.36–$0.44 Maintained/Tightened
RevenueFY 2024—$710–$720M New FY update
RevenueQ1 2025—$155–$175M New
GAAP Diluted EPSQ1 2025—$0.11–$0.22 New
Non-GAAP Diluted EPSQ1 2025—$0.26–$0.36 New

Context: The Jan 14 update reflected a net GAAP impact from SiC epitaxy acquisition (non-cash impairment offset by contingent consideration reduction and tax benefits) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2, Aug 2024)Previous Mentions (Q-1, Nov 2024)Current Period (Q4 2024)Trend
Laser Annealing (LSA)Record LSA demand; follow-on GAA and DRAM orders Record Semiconductor revenue; increased shipments to leading-edge customers Record LSA revenue; shipments to two leading-edge GAA customers Accelerating
Nanosecond Annealing (NSA)——Shipped NSA500 to leading-edge 2nm GAA; two NSA evals progressing Emerging growth
Advanced Packaging (Wet Processing, Litho)——Expected to double in 2025 (~$75M → ~$150M); driven by AI/HBM capacity Strong acceleration
China Exposure——1H25 China expected ~25–30% of revenue vs 36% FY24; mature-node slowdown Decelerating (mix headwind)
Gross Margin——Q4 non-GAAP GM 41.5% below guide; 2025 GM ~42% given mix (lower China/data storage, more backend) Slightly lower run-rate
HBM——LSA is production tool of record at one DRAM; second DRAM eval mid-2025; 2025 HBM revenue ~flat YoY Stable
IBD300——Evaluations at DRAM makers continuing through 2025; $30–$40M per application per node per 100k WSPM potential Progressing evals

Management Commentary

  • CEO: “Our semiconductor business delivered another solid quarter of revenue, highlighted by record laser annealing revenue, including shipments to two leading edge customers gate all around nodes.” .
  • CEO: “We see [advanced packaging] as an opportunity doubling in ’25 over ’24… benefiting from capacity expansions at a leading foundry and HBM manufacturer as well as multiple OSATs.” .
  • CEO on NSA: “Shipment came as part of a multi-tool laser annealing system order… new customer… straight sale… we’re now qualified at all four advanced logic customers for gate-all-around nodes for LSA.” .
  • CFO: “Gross margin totaled approximately 41.5% below our guidance, driven by a shift in product mix and additional spending for our evaluation programs.” .
  • CFO outlook: “We expect Q2 revenue to be in a similar range to Q1 levels.” .
  • CFO on China: “We expect our China revenue in the first half of 2025 to be about 25% to 30% of total revenue, down from last year’s ~36%.” .

Q&A Highlights

  • China mix/visibility: 1H25 China ~25–30% of revenue; slower new fab funding, digestion of prior equipment; regulations not impacting near-term backlog .
  • Advanced packaging trajectory: Doubling in 2025, ramping through Q1→Q2→Q3; backlog composition shifting to 2nm GAA and advanced packaging .
  • HBM: LSA is production tool of record at one DRAM; second DRAM eval mid-2025; HBM revenue expected roughly flat in 2025 given timing .
  • NSA incremental: ~80%+ applications incremental (not cannibalistic), enabling shallow material modification; potential additional GAA step .
  • Gross margin: 2025 targeted ~42% due to mix headwinds (lower China/data storage, more backend); efficiency initiatives underway .

Estimates Context

  • S&P Global Wall Street consensus for Q4 2024 EPS and revenue could not be retrieved at the time of analysis; therefore, beat/miss vs. consensus is unavailable (S&P Global data unavailable).
  • Q4 guidance update (Jan 14) and final results indicate revenue at high end of updated range and non-GAAP EPS within updated range .

Key Takeaways for Investors

  • Mix shift from China/mature-node and data storage toward leading-edge GAA/HBM and advanced packaging will likely temper gross margins to ~42% in 2025 but sustains top-line growth drivers tied to AI and HPC .
  • NSA and IBD300 represent multi-year, incremental SAM expansion opportunities; NSA is in production at a leading-edge logic node and multiple evals; IBD300 could drive $30–$40M per application per node per customer .
  • Advanced packaging is a 2025 growth pillar (doubling), supported by wet processing tool-of-record positions at a leading foundry, HBM manufacturer, and OSATs; watch order cadence and customer capacity announcements .
  • Near-term China headwinds (1H25 25–30% mix) and data storage system revenue downdraft ($60–$70M YoY decline in 2025) require monitoring; offsetting GAA/AP progress is key to trajectory .
  • Sequential Q1/Q2 revenue ranges (~$155–$175M) suggest steady near-term setup; margin recovery depends on mix and execution of efficiency initiatives .
  • Asset impairment (SiC epitaxy) is largely non-cash and offset by contingent consideration/tax benefits; non-GAAP profiles remain solid (FY24 non-GAAP EPS $1.74, operating income $116M) .
  • Without consensus estimates, traders should anchor on guidance adherence and leading-edge evaluation/qualification milestones (NSA, IBD300) as stock catalysts .