Nova Ltd. (NVMI) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call and Q&A session present a positive outlook with strong growth expectations in advanced packaging and memory, sustained gross margins, and strategic expansions in Asia. Despite some uncertainties in guidance, the company's proactive strategies in supply chain management and technological advancements, along with improved customer visibility, indicate potential stock price increase. The positive market trends and strategic priorities further support this sentiment.
Key Financial Performance
Revenue $235.3 million in Q1 2026, a 10% year-over-year increase. This growth was driven by strong customer demand and momentum in the product portfolio, with 66% revenue from Logic and Foundry customers and 34% from Memory customers.
Gross Margins 57.7% on a GAAP basis and 59.4% on a non-GAAP basis in Q1 2026. This performance was at the upper end of the target model range (57%-60%) due to favorable product mix and growth in the services business.
Operating Expenses $64.9 million on a GAAP basis and $59.4 million on a non-GAAP basis in Q1 2026. The company strategically invested in R&D and go-to-market capabilities to support product roadmaps and future growth.
Operating Margins 30% on a GAAP basis and 34% on a non-GAAP basis in Q1 2026, exceeding the target model range of 28%-33%. This reflects the strength of the operating model and focus on profitable growth.
Effective Tax Rate Approximately 17% in Q1 2026, slightly above guidance due to geographic and entity mix of income. This is expected to normalize over the year.
Earnings Per Share (EPS) $2.04 per diluted share on a GAAP basis and $2.33 per diluted share on a non-GAAP basis in Q1 2026. This exceeded guidance and was driven by record quarterly performance.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Metrion platform: Achieved record sales, including repeat purchases by a leading memory customer for advanced 3D NAND and DRAM devices.
Nova AncoScene: Achieved record sales and gained additional market share at a leading memory customer in Asia.
Nova WMC and Semdex stand-alone platform: Robust HBM-related bookings observed.
Integrated metrology product line: Record revenue driven by gate-all-around and new customer penetrations in mature nodes and advanced packaging.
Nova WMC: Addresses critical issues in advanced packaging, such as increased warpage and non-uniform surfaces.
Market share in film and critical dimension metrology: Gained an additional 400 basis points, becoming the second largest vendor in this market.
Global manufacturing footprint: Expanding with a new facility in Asia to increase production capacity, optimize cost structure, and improve regional load balancing.
Service revenue: Achieved record service revenue for the 13th consecutive quarter, reflecting expanding scale and utilization of the installed base.
Gross margins: Achieved 57.7% on a GAAP basis and 59.4% on a non-GAAP basis, driven by favorable product mix and growth in services.
AI investments: Driving industry growth with a shift towards agentic AI models, increasing computing and memory requirements.
Hybrid bonding processes: Adoption progressing faster than expected, requiring tight metrology control, positioning Nova's portfolio strongly.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Manufacturing Complexity and Yield Challenges: The shift towards agentic AI models is increasing computing and memory requirements, which introduces greater manufacturing complexity and yield challenges. This necessitates higher process control and metrology intensity, potentially impacting operational efficiency and costs.
Supply Chain and Capacity Expansion Risks: The construction of a new facility in Asia to expand global manufacturing footprint and optimize cost structure carries risks related to project delays, cost overruns, and potential disruptions during the transition period.
Advanced Packaging Challenges: New advanced packaging schemes introduce material and structural challenges, such as increased warpage and non-uniform surfaces, which require precise metrology solutions to address.
Hybrid Bonding Process Risks: The adoption of hybrid bonding processes, which depend on direct copper-to-copper interfaces and ultrafine pitch interconnects, is highly metrology-intensive. This poses risks related to tight control of surface planarity, alignment accuracy, and interface integrity, which are critical for successful implementation.
Geographic and Entity Mix of Income: The effective tax rate was modestly above guidance due to the geographic and entity mix of income, which could lead to financial unpredictability if not normalized as expected.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Guidance for Q2 2026: Expected revenue for the second quarter of 2026 is projected to be between $245 million and $255 million.
Earnings Per Share (EPS) Guidance for Q2 2026: GAAP EPS is expected to range from $2.10 to $2.24, while non-GAAP EPS is projected to range from $2.34 to $2.48.
Gross Margin Projections for Q2 2026: Gross margins are anticipated to be approximately 57% on a GAAP basis and approximately 59% on a non-GAAP basis.
Operating Expenses for Q2 2026: GAAP operating expenses are expected to increase to approximately $72 million, while non-GAAP operating expenses are projected to increase to approximately $66 million.
Effective Tax Rate for Q2 2026: The effective tax rate is expected to be approximately 15%.
Strategic Investments and Facility Expansion: A new manufacturing facility in Asia is under construction, expected to become operational towards the end of 2026, aimed at increasing production capacity, optimizing cost structure, and improving regional load balancing.
Market Trends and AI Impact: AI investments and the shift towards agentic AI models are driving increased computing and memory requirements, accelerating capacity expansion across Logic, Memory, and advanced packaging segments.
Customer Engagement and Capacity Planning: The company is working closely with customers to align capacity and inventory levels to meet demand, with expectations of higher performance in the second half of 2026.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you elaborate on the multiple customer wins in several product lines? Are these wins more on Memory or Foundry, Logic customers?
A:The wins are across Logic and Memory and several product lines, particularly chemical metrology solutions. There is broader adoption of the in-line SIMS, the Metrion solution, and wins across the product portfolio and segments.
Q:Are you expecting similar outperformance in share gain this year compared to the last two years? Where do you see the most share gain opportunities?
A:Based on the Gartner report, the company grew 400 basis points in 2025 compared to 2024, marking the second consecutive year of growth. Advanced packaging is a key growth area, with traction in hybrid bonding and higher metrology intensity providing opportunities to grow market share.
Q:What is Nova's growth outlook for the full year relative to WFE and the mix between Foundry, Logic, and Memory?
A:Nova expects WFE to grow mid-teens, higher than earlier projections, and aims to outperform this growth. Growth is driven by Logic, Memory (primarily DRAM), and advanced packaging. Memory is expected to become more dominant this year due to investments in advanced DRAM.
Q:What are the drivers for sustaining gross margins at the 59% level, and is this sustainable through the second half?
A:The target model is 57%-60%. Based on business dynamics and first-half results, gross margins are expected to remain sustainable within this range for the year.
Q:How does Nova plan to outperform WFE in a challenging year for process control?
A:Nova capitalizes on growth vectors in both process and process control. Integrated products in dimensional and chemical metrology, stand-alone products in dimensional metrology, and material metrology portfolio contribute to growth. Emerging critical applications for advanced nodes also provide opportunities.
Q:What are the dynamics in leading-edge Logic investments, particularly in 3-nanometer and gate-all-around technologies?
A:Nova is well-positioned across all gate-all-around players and continues to invest in R&D to maintain differentiation. There is growing investment in 3-nanometer and advanced FinFET technologies, with higher metrology intensity in gate-all-around.
Q:What is the update on lead times and visibility into customer orders?
A:Visibility has improved, with customers planning further ahead. Some pull-ins have driven higher first-half performance, and orders for 2027 deliveries are already being received. Lead times are shorter than peers, and visibility and confidence in annual performance have increased.
Q:How is Nova addressing supply chain constraints and capacity to support robust demand?
A:Nova is launching a new production center in Asia by year-end to meet growing demand. Supply chain pressures are mitigated by working with multiple suppliers and active cost management. Long-term relationships help manage supplier constraints and meet demand.
Q:What is Nova's positioning and strategy in X-ray technology?
A:Nova sees significant opportunities in X-ray applications for front-end and advanced packaging challenges. The strategy includes hybrid metrology, leveraging a broad portfolio of optical and X-ray technologies, and collaborations with customers. Investments in the roadmap aim to maintain competitive advantage.
Q:What are Nova's expectations for China growth this year?
A:China's share of revenue is expected to decrease due to advanced nodes growth but stabilize at 25%-30% long-term. There is increased demand for advanced packaging and high-bandwidth memory, with positive momentum in China compared to last quarter.
Q:What is the outlook for gate-all-around revenue and advanced packaging growth?
A:Nova is on track for the $500 million cumulative gate-all-around revenue target and expects growth in gate-all-around investments in 2027. Advanced packaging is edging towards mid-20s of product revenue this quarter, with healthy high-bandwidth memory bookings and similar growth levels as peers.
Q:Why is gross margin guidance slightly lower sequentially?
A:The gross margin guidance for the second quarter is 59%, within the usual plus/minus 1% range, indicating no significant deviation.
Q:What is the timeline and opportunity for hybrid bonding?
A:Nova sees strong traction in hybrid bonding with top-tier customers. Higher metrology intensity and challenges like flatness and interconnect yield provide opportunities. Some pull-ins for hybrid bonding, especially in Memory, indicate growth potential.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on how process control will perform relative to process this year, stating it is too early to call. Additionally, while they mentioned being on track for the $1 billion revenue target by 2027, they did not provide guidance beyond that.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI investment
AI scaling
Adoption device
AncoScene record
Asia tool
Award honor
Capacity expansion
Customer schedule
EPIC Supplier
Financial Results
HBM booking
Intel EPIC
Intel Nova
Intel packaging
Intel supply
Logic
Nova Financial
Nova WMC
alignment
capacity expansion
control
copper
demand DRAM
driver
engagement
facility
interface
investment technology
memory customer
planning
product line
production
ramp
recognition
record sale
requirement
scale
supply chain
surface
NVMI Transcript
Nova Ltd. (NVMI) Presents at Bank of America 2026 Global Technology Conference Transcript
Neutral6-3
Nova Ltd. (NVMI) Q1 2026 Earnings Call Transcript
Positive5-14
The earnings call and Q&A session present a positive outlook with strong growth expectations in advanced packaging and memory, sustained gross margins, and strategic expansions in Asia. Despite some uncertainties in guidance, the company's proactive strategies in supply chain management and technological advancements, along with improved customer visibility, indicate potential stock price increase. The positive market trends and strategic priorities further support this sentiment.
Nova Ltd. (NVMI) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call highlights record high revenue expectations and strong gross margins, coupled with optimistic guidance for AI-driven demand and advanced packaging growth. The Q&A section reveals strategic investments and market share gains. Despite some uncertainties in production bottlenecks and China sales, the overall sentiment remains positive with strong operational execution and encouraging customer conversations, leading to a likely stock price increase of 2% to 8% over the next two weeks.
Nova Ltd. (NVMI) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call indicates strong financial performance with high EPS and free cash flow. The company has a robust cash position and strategic positioning in AI and semiconductor markets. Despite some uncertainties in China and NAND growth, Nova's guidance and strategic initiatives suggest potential outperformance in WFE growth. The Q&A reveals management's confidence in their growth engines and market positioning, with positive expectations for 2026. Overall, the sentiment is positive, likely resulting in a stock price increase of 2% to 8% over the next two weeks.
NVMI Slides
NVMI Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
