VECO — Veeco Instruments Inc.

Summary of Veeco's Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Q4 Revenue: $165 million, flat from the prior quarter and at the midpoint of guidance.
• Full Year Revenue: $664 million, a 7% decline year-over-year.
• Earnings Per Share (EPS): Q4 EPS was $0.24; full year EPS was $1.33.
• Gross Margin: Q4 gross margin at 38%; full year gross margin at 41%.
• Order Backlog: Ended the year at $555 million, a 35% increase from the previous year.

2. Strategic Updates and Business Highlights:

• Veeco's semiconductor business reached a record revenue of $477 million, primarily driven by laser annealing and advanced packaging.
• Significant growth in the advanced packaging segment, doubling year-over-year to $150 million.
• New product traction in compound semiconductors, particularly the Propel 300-millimeter GaN-on-silicon system.
• Continued investment in next-generation technologies and successful evaluations of new systems with Tier 1 customers.
• Progress on the merger with Axcelis Technologies, with shareholder approvals and ongoing regulatory discussions.

3. Forward Guidance and Outlook:

• Q1 2026 Revenue Forecast: Between $150 million and $170 million.
• Full Year 2026 Revenue Forecast: Between $740 million and $800 million, representing a potential 16% growth from 2025.
• Anticipated growth in semiconductor revenue driven by AI and high-performance computing, with expectations of 15% growth in the semiconductor segment.
• Compound semiconductor revenue expected to increase by one-third, while data storage revenue is projected to double.

4. Bad News, Challenges, or Points of Concern:

• Overall revenue decline of 7% in 2025 compared to the previous year.
• Compound semiconductor revenue decreased to $60 million, representing 9% of total revenue.
• Anticipated decline in scientific and other revenue due to the absence of large quantum computing orders, projecting a decrease of about 33%.
• Gross margin pressures due to a shift in product mix towards lower-margin advanced packaging and impacts from tariffs, which have been quantified as a 100 basis point headwind.

5. Notable Q&A Insights:

• Management indicated strong demand for semiconductor products, particularly in advanced nodes and AI applications, while acknowledging challenges in the scientific segment.
• The company is fully booked for system orders in 2026, with positive signals from customers regarding increased CapEx and HAMR adoption in data storage.
• Gross margins are expected to improve in the second half of 2026, driven by higher volumes and new product contributions.
• Tariff impacts are factored into the guidance, with expectations of continued headwinds affecting gross margins.

Overall, Veeco demonstrated resilience in its semiconductor business despite facing some revenue declines and challenges in specific segments, while maintaining a positive outlook for growth driven by AI and advanced technologies.