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Call sheet · Q1'26

Onto Innovation (ONTO)

Q1'26 earnings call · held May 5, 2026 · compared with the Q4'25 call · management-credibility review
10/12
Disclosure score
3 medium, 4 low flags
Financial quality
Bottom line
The sleeper story is Rigaku - a $710M investment creating a hybrid metrology platform that could unlock billions in new SAM over 3-6 years, with AI Diffract already winning competitive evaluations. While everyone focuses on the obvious 50% advanced packaging growth upgrade, the real constraint is still G5 adoption at under 10% of inspection revenue despite the marquee wins. Most concerning: they stopped disclosing AI packaging segmentation and cash flow metrics when those numbers apparently became inconvenient. Management quote that reveals everything: 'getting very difficult to keep those separations' - classic tell when you want to hide unfavorable mix. My view changes if G5 revenue contribution exceeds 20% of inspection revenue in Q2 or if they restore the missing cash flow and segmentation disclosures.

The 30-second version

  • The Rigaku X-ray partnership is the real story everyone's missing
  • Advanced packaging revenue acceleration is real but G5 contribution is tiny
  • They stopped breaking out AI packaging revenue and quietly dropped China exposure metrics

What changed this quarter

MetricQ4'25Q1'26Change
Total Revenue$267M (Q4 2025, +22% QoQ)$292M (Q1 2026, +9.4% QoQ)Decelerated to single-digit sequential growth
Gross Margin54.6%55.7%+110 bps sequential expansion
Operating Margin25.2%26.7%+150 bps sequential expansion
EPS$1.26$1.42+13% sequential growth
Advanced Packaging Revenue$145M in Q4$107M (~2/3 of $160M SP&AP)Sequential decline despite 'strong momentum'
Advanced Nodes Revenue$72M in Q4$80M+11% sequential, 60% memory/40% logic split
Q2 Revenue GuidanceExceeding $300M$320M-$330M+28% YoY at midpoint, 10% above prior analyst expectations
2026 Revenue Growth12-14% first half vs second half 2025More than 30% for full year 2026Meaningful acceleration from prior guidance
Advanced Packaging GrowthOver 30% in 2026More than 50% in 2026+20 percentage point increase in growth expectation
Advanced Nodes GrowthMid-teens expectedApproximately 25% in 2026Upgraded to outperform WFE growth expectations

Accountability tracked

8 new promises made4 narrative shifts flagged7 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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