Nova (NASDAQ:NVMI) Q3: Beats Revenue Expectation
Semiconductor quality control company Nova (NASDAQ: NVMI) reported results ahead of Q3 FY2023, with revenue down 10.5% year on year to $128.8 million. The company also expects next quarter's revenue to be around $127.5 million, in line with analysts' estimates. Turning to EPS, Nova made a non-GAAP profit of $1.23 per share, improving from its profit of $1.10 per share in the same quarter last year.
Revenue: $128.8 million vs analyst estimates of $123.1 million (4.6% beat)
EPS (non-GAAP): $1.23 vs analyst estimates of $1.09 (13% beat)
Revenue Guidance for Q4 2023 is $127.5 million at the midpoint, roughly in line with what analysts were expecting
Free Cash Flow of $43.13 million, up 106% from the previous quarter
Inventory Days Outstanding: 227, down from 256 in the previous quarter
Gross Margin (GAAP): 56.1%, down from 57.1% in the same quarter last year.
Semiconductor Manufacturing
The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
Sales Growth
Nova's revenue growth over the last three years has been very strong, averaging 30.4% annually. But as you can see below, its revenue declined from $143.9 million in the same quarter last year to $128.8 million.
Nova may be headed for an upturn. Although the company is guiding for a year-on-year revenue decline of 15.7% next quarter, we are expecting revenue to grow 4.5% over the next 12 months.
The business is much less risky now than it was in the years after going public. The company is a clear market leader in a huge, growing $200 billion market. Its $7 billion of revenue only scratches the surface. Its products are mission critical. Virtually no customers ever left the company.
Key Takeaways from Nova's Q3 Results
Sporting a market capitalization of $2.91 billion, Nova is among smaller companies, but its more than $116.5 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
We were impressed by Nova's strong improvement in inventory levels. We were also excited its revenue and EPS outperformed Wall Street's estimates, driven by outperformance in its products and services divisions. On top of that, its EPS guidance for next quarter came in above analysts' expectations. Overall, this was a strong quarter that should satisfy shareholders. The stock is up 2.1% after reporting and currently trades at $103.85 per share.
Revenue: $128.8 million vs analyst estimates of $123.1 million (4.6% beat)
EPS (non-GAAP): $1.23 vs analyst estimates of $1.09 (13% beat)
Revenue Guidance for Q4 2023 is $127.5 million at the midpoint, roughly in line with what analysts were expecting
Free Cash Flow of $43.13 million, up 106% from the previous quarter
Inventory Days Outstanding: 227, down from 256 in the previous quarter
Gross Margin (GAAP): 56.1%, down from 57.1% in the same quarter last year.
Semiconductor Manufacturing
The semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
Sales Growth
Nova's revenue growth over the last three years has been very strong, averaging 30.4% annually. But as you can see below, its revenue declined from $143.9 million in the same quarter last year to $128.8 million.
Nova may be headed for an upturn. Although the company is guiding for a year-on-year revenue decline of 15.7% next quarter, we are expecting revenue to grow 4.5% over the next 12 months.
The business is much less risky now than it was in the years after going public. The company is a clear market leader in a huge, growing $200 billion market. Its $7 billion of revenue only scratches the surface. Its products are mission critical. Virtually no customers ever left the company.
Key Takeaways from Nova's Q3 Results
Sporting a market capitalization of $2.91 billion, Nova is among smaller companies, but its more than $116.5 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
We were impressed by Nova's strong improvement in inventory levels. We were also excited its revenue and EPS outperformed Wall Street's estimates, driven by outperformance in its products and services divisions. On top of that, its EPS guidance for next quarter came in above analysts' expectations. Overall, this was a strong quarter that should satisfy shareholders. The stock is up 2.1% after reporting and currently trades at $103.85 per share.
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