Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 5, 2026 · Beat 5 of last 7 quarters
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Veeco's record annealing revenue, $200M advanced packaging order, and accelerating silicon photonics orders underscore the AI infrastructure buildout's pull on enabling process equipment. The company's capacity expansion and customer forecasts extending into 2027 signal sustained multiyear demand for advanced packaging, optical interconnects, and memory annealing as AI compute scales.
Veeco reported Q2 revenue of $193M, above the midpoint of guidance, with semiconductor revenue of $131M (+20% QoQ) driven by laser annealing and advanced packaging wet processing. Compound semiconductor revenue grew 9% QoQ to $21M, while data storage revenue surged 117% QoQ to $22M. The company secured $200M in advanced packaging orders and announced a follow-on order for its next-generation nanosecond annealing system from a Tier 1 logic customer. Gross margin was 39.5%, and operating cash flow was $51M.
Management updated full-year 2026 revenue guidance to $780M–$810M and EPS to $1.36–$1.61, reflecting deliberate investments ahead of revenue. They plan to more than double advanced packaging and silicon photonics capacity in 2027 through internal expansion and Southeast Asia outsourcing, with ~$10M incremental OpEx and ~75bps gross margin impact in 2026. Q3 guidance calls for revenue of $200M–$220M, gross margin of 41%–42%, and EPS of $0.35–$0.49. Management emphasized strong customer visibility extending into 2027 and beyond, with a significant portion of 2027 revenue already in backlog. The Axcelis merger remains on track for a second-half 2026 close, pending China antitrust approval.
“We believe the industry is at an important inflection point where AI-driven investments are accelerating demand for enabling semiconductor technologies at an unprecedented pace.”
on AI inflection
“During the second quarter, we secured $200 million in advanced packaging orders for wet processing and lithography systems, strengthening our visibility into 2027.”
on Advanced packaging orders
“We have very strong -- much stronger visibility, I would say, than historically we've had into 2027 at this point, midway through 2026. And customers are actually sharing forecasts out beyond '27, kind of some long-range forecasts that they wouldn't normally be sharing.”
on Customer visibility
So it looks like your 2026 annual revenue guidance was lifted by about $25 million, but the non-GAAP EPS outlook was lowered. And from what looks like gross margin mix and higher OpEx. Could we assume that the gross margin impact is from the $200 million order for the advanced packaging? And in terms of the OpEx increase, can you tell us more about what kind of investments you'll be making there?
John Kiernan clarified that the $200M order is for 2027 delivery, so it doesn't impact 2026 gross margins. The margin and OpEx impact stems from deliberate investments ahead of revenue, including expanding internal manufacturing capacity and bringing on contract manufacturers in Southeast Asia, plus hiring and training. He quantified ~$10M incremental OpEx and ~75bps gross margin impact for the full year.
With the industry in an up cycle, you have both these optical networking orders shipping, the data storage-related revenue coming in and now the advanced packaging systems as well. Could you maybe give us like a recap or an update on when these will begin shipping, like how the revenue ramp profile will look? And if there were any changes from prior expectations for some of these programs?
Bill Miller said the ramp begins late Q4 2026, with the majority hitting in Q1 and Q2 of 2027. John Kiernan confirmed this applies to both silicon photonics and advanced packaging.
I think you mentioned that customers are providing outputs well into the future. How far would you say on average, they're giving you visibility right now? And has this visibility increased over the last 3 months?
John Kiernan said visibility has increased and is much stronger than historically into 2027, with customers sharing long-range forecasts beyond 2027 that they wouldn't normally share.