This article first appeared on GuruFocus .
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Record quarterly revenue of $255 million, surpassing the $250 million milestone, with 16% year-over-year growth.
-
Record non-GAAP EPS of $2.51, exceeding the high end of guidance, demonstrating strong earning power.
-
Broad-based demand across product lines, with record sales in advanced logic, advanced packaging, and services.
-
Strong growth in advanced packaging, contributing nearly 25% of product revenue, driven by AI-related demand and HBM capacity.
-
Enhanced visibility into 2027 with customers providing longer-term planning, supporting confidence in future growth.
-
Strong financial position with over $1.7 billion in cash and investments, providing flexibility for R&D and M&A.
-
Continued innovation with new product launches (Prism, VeriFlex, Nova WMC, NovaHub) expanding the serviceable market.
-
Gross margins remain healthy at 58% non-GAAP, within the target model, with Q3 guidance of 59%.
-
Operating margins reached 33% non-GAAP, at the upper end of the target model, reflecting operational leverage.
-
Positive Q3 guidance with revenues expected between $277 million and $287 million, indicating continued momentum.
Negative Points
-
Memory revenue declined 14% quarter-over-quarter, with muted NAND demand due to upgrades rather than capacity expansion.
-
Supply chain is stretched, requiring significant effort to maintain lead times, which vary from 4 to 12 months.
-
Gross margin in Q2 was slightly below guidance by about 90 basis points due to product mix, though within the target range.
-
Operating expenses increased to $62.9 million non-GAAP, reflecting higher reinvestment in R&D and roadmap expansion.
-
Process control intensity is lower this year, particularly in memory, which could limit near-term growth relative to WFE.
-
Visibility into 2027 is still early, and it is too soon to confirm whether WFE growth of 40% is achievable.
-
NAND market remains muted, and recovery is uncertain, with potential benefits only expected when capacity returns, possibly next year.
-
The company faces potential BOM cost impacts from memory price increases, though currently not significant to margins.
Q & A Highlights
Q: Can you compare the visibility you have into 2027 versus prior cycles, particularly on the memory side, and how customer behavior is changing? A: Gabby Weisman, President and CEO, stated that this cycle is unprecedented in terms of visibility and customer intimacy. Customers are working much more closely with Nova, providing longer-term visibility into next year to ensure supply chain readiness. This is a significant departure from previous cycles, allowing for better planning for both the second half of this year and into 2027. He noted that in some cases, they are already receiving orders and planning 2027 deliveries.
Q: What is Nova's view on process control intensity recovering into 2027, and do you have levers to outgrow process control growth next year? A: Gabby Weisman, President and CEO, explained that process control intensity varies by end market, with logic being higher than memory, while advanced packaging is rapidly growing. He emphasized that structural drivers like increasing complexity in architectures and materials remain in place. The most important indicators are customer adoption, market share gains, and technology wins, where Nova continues to see strength, keeping the long-term growth drivers firmly intact.
Q: How is hybrid bonding impacting your SAM, and what is the update on advanced packaging growth for this year? A: Gabby Weisman, President and CEO, confirmed that advanced packaging is nearing 25% of product revenue in Q2, evolving from essentially zero several years ago into a meaningful growth contributor. He views advanced packaging as a multi-year structural growth opportunity spanning optical, chemical, and materials metrology. Technologies like chiplets, hybrid bonding, and panel-level packaging are increasing the number and criticality of measurements, and hybrid bonding is seen as an additional layer that will accelerate this growth.
Q: Can you provide more detail on the DRAM versus NAND outlook for the second half, and any changes in memory demand entering the first half of 2027? A: Gabby Weisman, President and CEO, stated that the majority of Nova's memory exposure is DRAM, while NAND is currently muted due to growth driven by upgrades rather than capacity expansion. He noted that technology transitions like 4x square, 6x square advanced DRAM architectures, and eventually 3D DRAM will increase process complexity and metrology requirements. Nova sells to all top NAND players and expects to benefit once capacity investments return, potentially sometime next year.
Q: What drove the gross margin being slightly below guidance, and what is the outlook? A: Guy Kiesner, CFO, explained that the main reason was product mix, with estimates fluctuating plus or minus 1% each quarter. The Q2 gross margin of 58% is healthy and within the target model. He noted that the first half of 2026 gross margin was approximately 59%, the Q3 outlook is 59%, and the full year is expected to be approximately 59%, reflecting normal business dynamics.
Q: How does a greenfield project like TerraFab compare to more typical brownfield expansion in terms of metrology intensity? A: Gabby Weisman, President and CEO, declined to comment on specific customers but provided a general answer on greenfield operations. He stated that Nova sees higher metrology intensity during the initial stages of greenfield fabs due to the need to improve time-to-market and achieve yield thresholds required for new operations. This is a general trend observed in past greenfield projects, such as Rapidus.
Q: Can you provide an update on where Metreon and Ellipson sit on the adoption curve exiting Q2? A: Gabby Weisman, President and CEO, confirmed continued demand for Metreon across both logic and memory customers, with increasing utilization and qualifications. Both Metreon and Ellipson have moved into high-volume manufacturing proliferation. The current effort is focused on increasing tool utilization, introducing new applications, and gaining adoption by more customers to replicate the successful model seen with the XPS platform, which is also seeing increased adoption in advanced logic nodes.
Q: What is the split between Logic/Foundry and Memory, and what are the puts and takes behind the sequential changes? A: Gabby Weisman, President and CEO, explained that the Q2 split was 73% logic/foundry and 27% memory. He projected memory to be about 30% for the full year. While intensity and growth on advanced logic nodes are higher, Nova sees strong demand from DRAM but somewhat muted demand from NAND this year. The long-term model calls for a 60/40 split in favor of logic, but both segments are expected to grow.
Q: Can you discuss the impact of higher component costs, particularly memory, on gross margins and your pricing strategy? A: Guy Kiesner, CFO, acknowledged some impact on BOM costs related to memory, but noted that the memory portion of the BOM is not significant, so there is no major change to the gross margin profile. Gabby Weisman, President and CEO, added that Nova balances pricing to support both BOM/COGS and customer expectations, maintaining the gross margin model of 57% to 60% through this year and beyond.
Q: How do current lead times compare to the past three months, and have they changed? A: Gabby Weisman, President and CEO, stated that despite a stretched supply chain, Nova is managing production to maintain lead times, which he considers best-in-class. Lead times vary by product line, ranging from four to 12 months at the latest. The company is making tremendous efforts to maintain lead times for customers despite incremental demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
