NVMI — Nova Ltd.

Summary of NVMI Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: $235.3 million, exceeding guidance and representing a 6% quarter-over-quarter and 10% year-over-year growth.
• Gross Margins: 57.7% (GAAP) and 59.4% (non-GAAP), within the target range of 57% to 60%.
• Operating Margins: 30% (GAAP) and 34% (non-GAAP), surpassing the target range of 28% to 33%.
• Earnings Per Share: $2.04 (GAAP) and $2.33 (non-GAAP), exceeding the high end of guidance.
• Operating Expenses: $64.9 million (GAAP) and $59.4 million (non-GAAP), reflecting strategic investments in R&D and go-to-market capabilities.

2. Strategic Updates and Business Highlights:

• Nova achieved record revenue driven by strong demand in memory devices, particularly advanced DRAM, and growth in advanced packaging and gate-all-around applications.
• The company gained market share, now positioned as the second largest vendor in critical dimension metrology, with a 400 basis point increase in market share.
• Nova is expanding its global manufacturing footprint with a new facility in Asia expected to be operational by late 2026, aimed at increasing production capacity and optimizing costs.
• Record service revenue for the quarter marks the 13th consecutive quarter of growth, indicating strong customer engagement and utilization of the installed base.

3. Forward Guidance and Outlook:

• For Q2 2026, revenue is expected to be between $245 million and $255 million, with GAAP EPS guidance of $2.10 to $2.24 and non-GAAP EPS of $2.34 to $2.48.
• Gross margins are anticipated to remain stable at approximately 57% (GAAP) and 59% (non-GAAP) for the second quarter.
• The company is on track to achieve its strategic goal of $1 billion in revenue by 2027.

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

• There are indications of supply chain pressures and cost increases at the supplier level, primarily due to rising chip prices.
• While the company has improved visibility into customer orders, there are concerns about sustaining gross margins in the second half of the year, as operating expenses are expected to rise.
• Competitive pressures in the X-ray technology space and the need to maintain differentiation amidst emerging competition were noted.

5. Notable Q&A Insights:

• Management highlighted multiple customer wins across Logic and Memory segments, with a focus on chemical metrology solutions.
• There is optimism about continued share gains, particularly in advanced packaging and hybrid bonding, which are expected to drive future growth.
• The company is experiencing improved visibility into customer planning, with some orders extending into 2027.
• Concerns were raised regarding the potential for underperformance relative to broader WFE growth expectations, with management indicating they expect to outperform the mid-teens growth forecast for WFE.

Overall, Nova's Q1 2026 performance reflects strong demand and operational excellence, but challenges related to supply chain dynamics and competitive pressures remain areas to monitor.