Onto Innovation (ONTO) Q2 FY26 earnings call: guidance and Q&A

Inquired about the mix and duration of the $1.1 billion backlog, and how it informs confidence for 2027 revenue and growth.

Mike Plisinski stated the backlog reflects strong customer confidence and commitment to securing supply. Approximately 60-70% is for 2026, and 30-40% covers 2027, indicating another strong year. The mix continues to be strong in packaging (HBM, 2.5D Logic, OSATs) and advanced nodes.

“Probably 60%, 70% of it is tied to this year, but 30%, 40% is covering 2027, and it's still early. So I think it bodes well for another year of strength in 2027, the discussions we're having with our customers is quite constructive for 2027 growth and growth dynamics.”

asked by Craig Ellis · answered by Michael Plisinski

Asked if gross margin expansion potential exists into 2027, given the strong progress in 2026, potentially reaching a 60% level.

Brian Roberts indicated confidence for 2027 gross margin expansion, driven by the increasing proportion of Dragonfly G5 revenue, which carries an average selling price lift. He also noted continued scaling of extended factories and supply chain localization benefits.

“the contribution from Dragonfly G5 is still a smaller portion, a smaller proportion of our overall revenue for 2026. And as we've talked about, as the G5 continues to ramp up and becomes a bigger percentage of our business, there's an average selling price lift that goes alongside that, that helps give us a lot more fuel for our gross margin.”

asked by Craig Ellis · answered by Brian Roberts

Sought to understand how much of the company's strong results and backlog are due to overall TAM/SAM growth versus market share gains or new product wins.

Mike Plisinski attributed growth to both, noting the industry's aggressive growth but also Onto's outperformance compared to peers. He highlighted new customer adoption and broader product use for Dragonfly, as well as share gains in metrology (e.g., new logic applications for integrated metrology).

“customers are adopting, finding new applications and adopting the Dragonfly in new areas at a much stronger pace than even we expected 3 months ago. We're adding new customers. Those customers are adopting the products in a broader way. So that's a mix of both their demand as well as share gain opportunities.”

asked by Melissa Weathers · answered by Michael Plisinski

Asked about the company's revenue capacity and steps being taken to expand it, particularly regarding supply side considerations for future growth.

Mike Plisinski stated the company is not capacity constrained, having expanded its capability with extended factories to essentially double its in-house capacity, now well above $2 billion. He emphasized strong supply chain management and leveraging the balance sheet to meet commitments.

“in the past, we've said that we had the capacity for $2 billion with our in-house factories. Since then, since that time, we've now added essentially the equal capability with our extended factories... So we're not capacity constrained.”

asked by Melissa Weathers · answered by Michael Plisinski

Asked for drivers behind the 80% inspection growth outlook, specifically if it's follow-on systems for HBM/2.5D Logic or Gen 5, and to estimate Gen 5 vs Gen 3 mix for Dragonfly in 2027.

Mike Plisinski confirmed the growth is from expansion in 2.5D (OSATs), new innovative packaging technologies, and HBM (2D inspection, 3D metrology, subsurface inspection). He declined to quantify the Gen 5 vs Gen 3 mix for 2027 but noted Gen 5's higher resolution opens new applications.

“it's essentially an expansion of the 2.5D, so that's the OSATs picking up more volume. It's new innovative packaging technologies... And for sure, it's HBM, where we've seen really phenomenal growth in both 2.5D -- sorry, both 2D inspection as well as 3D metrology.”

asked by Brian Chin · answered by Michael Plisinski

Noted the backlog doubled from $0.5B to $1B and asked if this implies accelerating revenue or a stable, elevated run rate.

Mike Plisinski explained that orders come in large chunks, making book-to-bill difficult to track for acceleration. He emphasized that the growing backlog reflects customer confidence in longer-term commitments to secure supply for ramp plans, with market growth indications coming from customer CapEx announcements.

“It's hard to answer that because we don't get steady streams of orders. We'll get a large chunk... I would say the general feeling is that backlogs are growing... what we're seeing really is a confidence from our customers to commit to longer -- to make longer-term commitments so that they can secure their slots in order to meet their ramp plans.”

asked by Edward Yang · answered by Michael Plisinski

Asked for an update on G5 traction in front-end applications and RSG2 progress, and how this positions the company for 2027 growth relative to the WFE market.

Mike Plisinski stated RSG2 and G5 for front-end are undergoing normal installation/qualification, with bigger contributions expected in 2027. He believes Onto can continue to outperform the market in 2027 due to new products, SAM expansion, and ongoing demand for Dragonfly, metrology, and the Rigaku partnership.

“we don't see any reason. We can't continue to outperform the market based on the opportunities we see with the new products that we're releasing and the early demonstrations we've talked about, those would be SAM expansion opportunities for us.”

asked by Matthew Prisco · answered by Michael Plisinski