Key Highlights

  • Net sales were USD 209.38 million against a USD 213.33 million estimate, with EPS of USD 0.36 against USD 0.43.
  • GAAP Net Income was USD 13.6 million, or USD 0.21 per diluted share, against USD 10.6 million, or USD 0.17.
  • Compound semiconductor sales rose 268% to USD 40.2 million, and data storage sales rose 101% to USD 20.0 million.
  • Cash and short-term investments totaled USD 482.5 million, and the Axcelis Merger awaits final approval in China.

Veeco Instruments Inc. (NASDAQ:VECO) reported third quarter net sales of USD 209.4 million, up 26% from USD 165.9 million a year earlier. EPS was USD 0.36, while GAAP diluted EPS was USD 0.21. The company said it did not recognize about USD 8 million of Revenue from a laser annealing system shipped to a customer in China, which is held by U.S. Customs and Border Protection pending review.

Results and the Held Shipment

Title, risk of loss and control of the system had transferred to the customer, but the company has not sought payment while the product is held and may not seek collection if export is not cleared. Because of that uncertainty, it did not recognize the revenue, which it said adversely affected third quarter operating results.

Gross profit was USD 80.4 million, or 38% of sales, against USD 67.7 million, or 41%. Management tied the lower Margin to product mix and higher spending on logistics, capacity and Supply chain, and noted USD 2.8 million of Tariff refunds recorded as a reduction to cost of sales. Operating Income was USD 14.1 million against USD 10.6 million. Research and Development expense was USD 35.1 million and selling, general and administrative expense was USD 28.5 million. Merger costs were USD 2.3 million.

Markets and Regions

Semiconductor sales were USD 135.3 million, up 14% and 65% of the total, driven by laser spike annealing and advanced packaging wet processing systems. Compound semiconductor sales were USD 40.2 million against USD 10.9 million, which the company tied to AI Data Center Demand for optical connectivity and indium phosphide lasers. Data storage sales were USD 20.0 million against USD 10.0 million. Scientific and other sales were USD 13.9 million against USD 26.7 million, down 48%.

By region, United States sales were USD 65.0 million against USD 26.5 million, and EMEA sales were USD 24.7 million against USD 11.6 million. China sales were USD 24.6 million against USD 45.7 million, and the rest of Asia Pacific was USD 95.1 million against USD 82.1 million.

Cash, Debt and the Merger Timeline

Cash and cash equivalents were USD 205.3 million and short-term investments were USD 277.2 million, together USD 482.5 million against USD 390.2 million at December 31. Nine-month Operating Cash Flow was USD 117.3 million against USD 44.6 million, and capital expenditures were USD 13.1 million. The company carries USD 230.0 million of 2.875% convertible senior notes due June 1, 2029, which are convertible by holders until December 31, 2026.

The company did not provide numerical guidance. Its merger agreement with Axcelis Technologies, approved by stockholders of both companies on February 6, 2026, remains subject to closing conditions, including final approval from China's State Administration for Market Regulation, and the company stated that closing is targeted by the end of the first quarter of 2027.

What Management Pointed To

Net sales of USD 209.38 million sit alongside GAAP diluted EPS of USD 0.21, cash and short-term investments of USD 482.5 million and the approximately USD 8 million of unrecognized revenue on the held shipment.

Management named several items going forward: the China approval and a first quarter 2027 closing target for the merger, evaluation of its nanosecond annealing system at all three leading logic customers, with one revenue order placed, and two ion beam deposition systems under evaluation at memory customers. It also pointed to expanded Manufacturing capacity, including through contract manufacturers, for advanced packaging demand that it said provides visibility into 2027.