VECO Q2 earnings strong demand, but margins are still the issue
Veeco reported Q2 revenue of $193.5M, up about 16% from last year and above both analyst expectations and the company’s own guidance. Adjusted EPS came in at $0.33.
Guidance was also solid. Veeco expects Q3 revenue of $200M–$220M and raised its full-year revenue forecast to $780M–$810M.
For anyone unfamiliar with the company, Veeco makes the equipment used to manufacture semiconductors. It does not design chips itself.
Its systems are used for things like:
\- Manufacturing DRAM and HBM memory
\- Advanced chip packaging
\- Producing optical components used in AI data centers
\- Compound semiconductors, power electronics and microLEDs
\- EUV masks, photonics and other specialized semiconductor applications
Semiconductor equipment is by far the largest part of the business. Veeco also makes money after the initial equipment sale through replacement parts, upgrades, maintenance and service contracts.
The main negative this quarter was profitability. Gross margin dropped to 38.7% from 41.4%, while operating expenses increased. Even though Veeco raised its revenue guidance, it lowered full-year adjusted EPS guidance from $1.50–$1.85 to $1.36–$1.61.
So the quarter was good from a demand and revenue standpoint, especially with AI, HBM and advanced packaging spending staying strong. The question is whether Veeco can turn that growth into better margins and earnings instead of just higher sales.