NOVA (TATT) Q3 2025: Advanced Packaging Revenue Doubles, Fueling Outperformance Over WFE
NOVA capped another record quarter as advanced packaging revenue more than doubled, now 15% of product sales, and Centronics integration expands its addressable market. Outperformance against industry wafer fab equipment (WFE) growth continues, driven by leadership in metrology for advanced logic and high-bandwidth memory. Guidance signals continued momentum, with management targeting double-digit growth in key segments and reiterating commitment to $500 million cumulative gate-all-around revenue by 2026.
Summary
- Advanced Packaging Surges: Revenue more than doubled, now a major growth engine and strategic focus.
- Centronics Acquisition Expands TAM: Modular metrology platform broadens reach into new wafer types and packaging applications.
- Guidance Targets Outperformance: Management expects to outgrow WFE again, citing strong end-market demand and product adoption.
Performance Analysis
NOVA delivered a record quarter and full year, with revenue up 30% year-over-year to $672.4 million and non-GAAP net income up 38%. The fourth quarter marked the sixth consecutive period of growth, with total revenue reaching $194.8 million—up 45% YoY and 9% sequentially—driven by robust sales in Veriflex, Ellipson, and Metreon platforms. Product revenue mix was 72% logic and foundry, 28% memory, reflecting the pivot toward advanced logic nodes and high-bandwidth memory (HBM).
Gross margins held strong at 58% (non-GAAP), at the high end of the target range despite cost pressures and supply chain dynamics. Operating margin reached 33% (non-GAAP), exceeding model targets, as disciplined execution and R&D investment supported both innovation and profitability. Free cash flow was a standout at $218 million, with $820 million in cash and equivalents on the balance sheet, underscoring financial strength and capacity for further M&A or buybacks.
- Advanced Packaging Revenue Doubled: Now 15% of product revenue, reflecting broad adoption and strategic wins across top manufacturers.
- Service Growth Robust: Service revenue up 19% YoY, driven by higher tool utilization and demand for yield improvements; guidance calls for 10-15% growth in 2025.
- Geographic Mix Shifts: China represented 39% of 2024 sales, but management expects this to decline as growth shifts to advanced nodes outside China.
Overall, NOVA outperformed a moderately growing semiconductor equipment industry, leveraging its diversified metrology suite and gaining share in both front-end and advanced packaging markets. The addition of Centronics is expected to be accretive and further strengthens the growth outlook.
Executive Commentary
"Our advanced packaging revenue more than doubled this year, reaching 15% of product revenue and signifying its growing importance to NOVA. Our integrated metrology solutions have been adopted by four of the top five advanced packaging manufacturers, while our standalone OCD market share in the segment grew significantly. With the recent addition of Centronics, we expect our revenues of advanced packaging to grow further."
Gabby Weissman, President and CEO
"In a year where the industry experienced moderate growth, our ability to scale at this pace, demonstrate the strength of our business model. The value we bring to customers and the effectiveness of our long-term strategy. Despite cost pressures and the industry-wide supply chain dynamics, we maintain robust profitability through operational efficiencies, pricing discipline, and continued focus on higher value solutions."
Guy Kisner, CFO
Strategic Positioning
1. Advanced Packaging and HBM Leadership
NOVA’s integrated and standalone metrology platforms are now deeply embedded with top-tier advanced packaging and high-bandwidth memory manufacturers. The company’s unique offerings for 2.5D and 3D structures, including the Prism and Velocity platforms, address the rising complexity and demand for precision in both logic and memory nodes. This segment’s rapid growth—more than doubling YoY—positions NOVA as a key enabler of next-generation semiconductor architectures.
2. Centronics Acquisition as Growth Catalyst
The Centronics acquisition brings modular, multi-sensor metrology technology that expands NOVA’s portfolio into wafer-level packaging and specialty devices, including new wafer sizes and types. Management expects the deal to be accretive within 12 months, with Centronics aligning to NOVA’s margin model and opening new customer channels. Integration is underway, with a focus on accelerating cross-selling and market penetration.
3. Diversified Revenue Streams and Geographic Reach
Revenue is balanced across logic, memory, and service, with geographic exposure spanning China, Taiwan, Korea, and the US. While China comprised 39% of 2024 revenue, management anticipates a shift toward advanced node growth in other regions, reducing reliance on China and aligning with global industry trends.
4. R&D and Product Innovation
Significant R&D investment fueled launches like Nova Velocity, a dual-chamber platform offering industry-leading productivity. Metreon and Veriflex platforms saw landmark customer wins and repeat orders, particularly in advanced DRAM and NAND lines, supporting long-term design-win monetization and tool proliferation across fabs.
5. Service and Recurring Revenue Expansion
Service revenue posted another record year, up 19%, as customers sought capacity and yield improvements. Management guides to 10-15% service growth in 2025, reflecting sustained demand for tool utilization and process optimization, and providing a recurring revenue base to buffer cyclicality.
Key Considerations
This quarter’s results underscore NOVA’s execution on its strategy to lead in metrology for advanced logic and packaging, while broadening its addressable market through targeted M&A and innovation.
Key Considerations:
- Advanced Packaging Traction: Integration across top manufacturers signals sustained demand and deepening customer relationships.
- Centronics Synergy Potential: Modular platform adds new applications, with accretive financial impact expected in 2025.
- Product Mix and Margin Leverage: High-value solutions and operational discipline support margin resilience at the upper end of target model.
- Geographic Exposure Management: Shift away from China reliance as advanced node growth accelerates in other regions.
- Recurring Service Revenue: Growing base provides stability and visibility amid industry cycles.
Risks
Risks include potential volatility in semiconductor capital spending, particularly if AI and mobile demand falters or advanced node investments slow. High China revenue exposure could face regulatory or geopolitical headwinds, though management expects this to moderate as mix shifts. Integration risk with Centronics remains, though management’s diligence and financial alignment mitigate near-term concerns. Product mix and adoption timing could impact margin consistency and growth pacing.
Forward Outlook
For Q1 2025, NOVA guided to:
- Revenue of $205 million to $215 million (includes Centronics contribution)
- Non-GAAP EPS of $2.00 to $2.16
- Gross margin of approximately 59% (non-GAAP)
For full-year 2025, management reiterated:
- Outperformance relative to WFE market growth (mid-single digit WFE)
- Commitment to $500 million cumulative gate-all-around revenue by 2026
Management highlighted:
- Advanced logic and packaging as primary growth drivers
- Centronics integration and new product launches as incremental tailwinds
Takeaways
NOVA’s strong execution and product leadership are driving outperformance, with advanced packaging and HBM metrology commanding a larger share of revenue and mindshare with leading customers.
- Growth Engine: Advanced packaging and logic segments are set to sustain double-digit growth, underpinned by technology leadership and customer adoption.
- Strategic Expansion: Centronics acquisition and new R&D investments expand total addressable market and reinforce competitive positioning.
- Watch for Adoption Pace: The speed of tool proliferation in major fabs and post-merger integration success will be key to sustaining momentum and margin profile.
Conclusion
NOVA’s Q3 2025 performance confirms its position as a technology leader in metrology for the most advanced semiconductor manufacturing nodes. With advanced packaging and logic driving growth, Centronics integration broadening reach, and robust financial discipline, the company is well-placed to continue outgrowing the industry through 2025.
Industry Read-Through
NOVA’s results underscore the accelerating shift toward advanced packaging and high-bandwidth memory in the semiconductor capital equipment sector. The company’s ability to double advanced packaging revenue and gain share in both logic and memory metrology highlights the rising importance of process control and precision measurement as device complexity increases. Peers with exposure to legacy nodes or slower-growing geographies may face headwinds, while those positioned for advanced node transitions and recurring service models are likely to benefit. Successful integration of modular, multi-sensor platforms like Centronics could set a template for future industry M&A, as tool providers seek to broaden application scope and customer base amid intensifying competition.