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Nova (NVMI) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· May 14, 2026

Source: earnings call transcript

Executive summary

Nova Q1 FY26 — Record Revenue and Profitability Driven by Memory and Advanced Packaging

Nova delivered a record Q1 FY26, driven by strong demand in memory, particularly advanced DRAM, and advanced packaging, alongside significant market share gains. The company is strategically investing in capacity expansion and R&D to capitalize on AI-driven industry growth and increasing metrology intensity, while navigating supply chain pressures and a dynamic China market. Management expects continued momentum with higher performance in the second half of the year.

Highlights

5

  • Q1 FY26 revenue reached $235.3 million, exceeding guidance and growing 6% QoQ and 10% YoY.

  • Achieved record profitability with non-GAAP operating margin of 34%, exceeding the target model range.

  • Gained an additional 400 basis points market share in film and critical dimension metrology in 2025, becoming the second largest vendor.

  • Memory revenue reached a record high, driven by advanced DRAM (approx. 2/3 of memory business) and robust HBM-related bookings.

  • Advanced packaging revenue also hit a record, driven by 2.5D/3D production and faster-than-expected hybrid bonding adoption.

Concerns

3

  • Effective tax rate in Q1 FY26 was approximately 17%, modestly above guidance, due to geographic and entity mix of income.

  • Supply chain is experiencing some pressure, with cost pressure at the supplier level due to higher chip prices and other factors.

  • China's share of revenue is expected to decrease compared to last year due to advanced nodes growth, stabilizing at 25% to 30% long-term.

Guidance & targets

CategoryTargetConfidence
Revenue
$245 million to $255 million
high materiality
High
GAAP earnings per diluted share
$2.10 to $2.24
medium materiality
High
Non-GAAP earnings per diluted share
$2.34 to $2.48
high materiality
High
GAAP gross margins
approximately 57%
medium materiality
High
Non-GAAP gross margins
approximately 59%
medium materiality
High
GAAP operating expenses
approximately $72 million
medium materiality
High
Non-GAAP operating expenses
approximately $66 million
medium materiality
High
Non-GAAP financial income
approximately $16 million
low materiality
High
Effective tax rate
approximately 15%
low materiality
High
WFE growth
mid-teens growth
high materiality
High
Gross margins
within the same rate that you -- that we were giving the guidance for the first half of the year
medium materiality
High
Revenue
$1 billion
high materiality
High
Cumulative gate-all-around revenue
$500 million
medium materiality
High
Gate-all-around investments
growth
medium materiality
High
China revenue share
25% to 30%
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Logic and Foundry
Record revenue from integrated metrology product line, driven by gate-all-around and new customer penetrations in mature nodes and advanced packaging. Received Intel EPIC Supplier Award.
Revenue mix: 66% of total
————
Memory
Record revenue this quarter, driven by strong demand for advanced DRAM applications. Record sales of Metrion platform with repeat purchases for 3D NAND and DRAM. Record sales for Nova AncoScene chemical metrology solution. Robust HBM-related bookings for Nova WMC and Semdex stand-alone platform.
Revenue mix: 34% of totalAdvanced DRAM share of memory business: approximately 2/3
————
Advanced Packaging
Record quarterly revenue driven by strong demand in 2.5D and 3D packaging production. Nova WMC addresses warpage and non-uniform surfaces. Hybrid bonding adoption progressing faster than expected, requiring high metrology intensity. Strong positioning of optical and chemical metrology platforms with top-tier manufacturers.
Product revenue share: edging towards mid-20s (this quarter)
————
Services
Delivered record service revenue, reflecting expanding scale and increasing utilization of installed base and deep operational engagement with customers worldwide.
——13th consecutive quarter of sequential growth—

Deals & partnerships

Intel Nova received the Intel EPIC Supplier Award, the highest honor in Intel's global supply chain.

Nova was included in a select list of companies to receive this award in 2026 out of thousands of suppliers. This recognition underscores the scale and depth of engagement and collaboration with Intel.

Capital programs

New manufacturing facility in Asia underway

Benefit:increase production capacity, optimize cost structure, improve load balancing, position closer to key customers and supply chain partners

Investment designed to support growing demand and improve operational efficiency.

Risks & headwinds

Effective tax rate modestly above guidance Q1 FY26, expected to normalize as year progresses

approximately 17% (Q1 FY26), modestly above guidance

Mitigation:Expected to normalize due to geographic and entity mix of income.

Supply chain pressure and cost increases Current

some pressure, cost pressure, mainly tied to the higher chip prices and other factors

Mitigation:Mitigating by working with multiple suppliers for agility, applying active cost management, leveraging long-term relationships, and managing suppliers to meet demand.

China revenue share decrease FY26 vs FY25, long-term stabilization

expected to decrease, stabilize in the range of 25% to 30% of our business (long-term)

Mitigation:Focusing on ensuring best-of-breed products, value, and cost of ownership in a competitive market.

What to watch in Q2 FY26

Nova's growth vs WFE

FY26
Current WFE mid-teens growth expected for FY26
Target Outperform WFE growth

Why it matters

Indicates Nova's competitive strength and market share gains in a growing industry.

the way we read the market today, we expect WFE to reach mid-teens growth... We are expecting to outperform this number.

Find out whether NVMI delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked for elaboration on multiple customer wins (segment, product type) and where Nova expects to see the most share gain in 2026 (front end vs. packaging).

Gaby stated wins were across Logic and Memory, and several product lines including chemical metrology and Metrion. For share gains, he noted the 400 bps gain in 2025 and aims to continue, highlighting advanced packaging (2.5D/3D, hybrid bonding) as a particular growth area due to higher metrology intensity.

“Advanced packaging is definitely one of them. We have good traction with advanced packaging customers across the board, top-tier customers as well as growth in the Chinese advanced packaging realm.”

asked by Yiling Sun · answered by Gabriel Waisman

2 min read 6 chapters

Detailed narrative

Record Q1 Performance and Market Share Gains

Nova achieved record Q1 FY26 revenue of $235.3 million and record profitability, exceeding guidance. The company gained an additional 400 basis points market share in film and critical dimension metrology in 2025, marking the second consecutive year of significant growth and solidifying its position as the second largest vendor in this market. This performance is attributed to strong demand in memory and advanced packaging, alongside strategic investments.

AI as a Key Industry Driver

AI investments are a fundamental driver, increasing computing and memory requirements, accelerating capacity expansion across Logic, Memory, and advanced packaging. This introduces greater manufacturing complexity and yield challenges, driving higher process control and metrology intensity, which directly benefits Nova's portfolio. The company is well-positioned to support production ramps and yield improvements in this evolving landscape.

Strategic Capacity Expansion and Supply Chain Management

To meet growing demand, Nova is expanding its global manufacturing footprint with a new facility in Asia, expected to be operational by the end of 2026. This investment aims to increase production capacity, optimize costs, and improve load balancing. While facing supply chain pressures and cost increases from suppliers, Nova is mitigating these through active cost management and long-term relationships to ensure demand is met.

Hybrid Bonding and Advanced Packaging Momentum

Advanced packaging continues to be a strong growth area, with record quarterly revenue driven by 2.5D and 3D packaging production. Hybrid bonding adoption is progressing faster than expected, particularly in memory, due to its high metrology intensity requirements for surface planarity, alignment accuracy, and interface integrity. Nova's optical and chemical metrology platforms are well-positioned with top-tier manufacturers in this critical area.

China Market Dynamics

China remains a significant part of Nova's business, though its share of revenue is expected to decrease this year compared to last due to advanced nodes growth, stabilizing at 25% to 30% long-term. The company observes increased demand in China for advanced packaging and high-bandwidth memory, with new customer engagements. Nova focuses on providing best-of-breed products and value in this competitive market, noting some positive momentum compared to the prior quarter.

Customer Engagement and Visibility

Nova reports improved visibility into next year, with customers planning further ahead and engaging closely on capacity and inventory levels. This has led to some pull-ins, driving stronger first-half performance, and orders are already being received for 2027 deliveries. The company's lead times, while shorter than some peers, are supported by this enhanced customer collaboration.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.