• Full Year Revenue: $717 million, an 8% increase from the prior year.
• Semiconductor Business Revenue: $467 million, up 13% year-over-year, comprising 65% of total revenue.
• Non-GAAP Operating Income: $116 million, a 6% increase from the prior year.
• Non-GAAP EPS: $1.74, an increase from the prior year.
• Q4 Revenue: $182 million, a 5% year-over-year increase.
• Q4 Non-GAAP Operating Income: $27 million.
• Q4 Non-GAAP EPS: $0.41.
• Gross Margin (Full Year): 43.3%, consistent with the prior year.
• Operating Expenses (Full Year): $194 million, an 8% increase driven by R&D investment.
• Net Income (Full Year): $104 million with a tax expense of $15 million.
• Order Backlog: Approximately $410 million, down $80 million from the prior year.
• Cash and Short-term Investments: $345 million at the end of the quarter.
• Cash Flow from Operations (Full Year): $64 million.
• Q1 2025 Revenue Outlook: Expected between $155 million and $175 million.
• Q1 2025 Gross Margin Outlook: Approximately 42%.
• Q1 2025 Net Income Outlook: Between $16 million and $22 million.
• Q1 2025 Diluted EPS Outlook: Between $0.26 and $0.36.

• Warning! GuruFocus has detected 7 Warning Signs with FSLY.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Veeco Instruments Inc (NASDAQ:VECO) achieved record revenue in its semiconductor business, growing 13% year-over-year.
• The company successfully shipped an LSA system for high-volume production of 2-nanometer gate all around logic chips.
• Veeco's advanced packaging business is expected to double in 2025, driven by wet processing and lithography.
• The company is a market leader in laser annealing and ion beam deposition technologies, critical for leading-edge semiconductor manufacturing.
• Veeco's non-GAAP operating income grew 6% to $116 million, with diluted non-GAAP EPS increasing to $1.74.

Negative Points

• Revenue from the compound semiconductor segment declined, representing only 11% of total revenue.
• The order backlog decreased by approximately $80 million, primarily due to a decline in the data storage business.
• Gross margin for the fourth quarter was below guidance at 41.5%, impacted by product mix and evaluation program spending.
• China's revenue is expected to decline in 2025, with a significant drop anticipated in the second half of the year.
• The company faces headwinds in the data storage market, with expectations of a $60 million to $70 million decline in revenue for 2025.

Q & A Highlights

Q: Can you provide more details on the expected decline in China revenue for Q1 2025? A: John Kiernan, CFO, stated that Veeco expects China revenue in the first half of 2025 to be about 25% to 30% of total revenue, down from 36% in 2024. This decline is slightly more weighted to Q1 than Q2.

Q: What is driving the growth in advanced packaging, and how do you see it progressing in 2025? A: CEO William Miller explained that advanced packaging is expected to double in 2025 over 2024, driven by wet processing. This growth is supported by capacity expansions at a leading foundry, HBM manufacturer, and multiple OSATs, with expectations for continued growth throughout the year.

Q: Can you elaborate on the new NSA customer and their decision to purchase ahead of others still in evaluation? A: William Miller noted that the new customer is entering the market at the 2-nanometer gate all around and purchased the system as part of a multitool laser system order in 2024. This was a straight sale without an evaluation tool, marking them as a new customer for Veeco.

Q: How are the recent export restrictions affecting your business in China? A: John Kiernan stated that recent regulatory changes have not impacted Veeco's near-term view on China. There were no backlog impacts from customers added to the entity list, nor changes in licensing requirements for Veeco's products.

Q: What is the status of your high-bandwidth memory (HBM) business, and what are your expectations for 2025? A: William Miller mentioned that Veeco is a production tool of record for one DRAM customer and expects HBM revenue to remain robust in 2025. An evaluation agreement with a second customer is in place, with a tool shipment expected mid-2025, but it will not impact 2025 revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.