922417AD2 Filings — Veeco Instruments Inc. - FilingSpy
922417AD2
Veeco Instruments Inc.
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A maker of advanced machines that help manufacture semiconductors, Veeco builds systems for deposition, etching, annealing, and lithography used in markets from data storage to power electronics. Its tools include laser annealing systems for advanced computer chips, NEXUS ion beam systems for EUV mask blanks and data storage, and MOCVD systems for gallium-nitride power and radio-frequency devices. In late 2025 it signed a merger agreement with Axcelis Technologies.
Revenue rebounded 22% sequentially to $193.5M as Data Storage and Compound Semiconductor rose, but gross margin fell to 38.7%.
snapped a four-quarter decline, rising 22% from Q1 to $193.5M. The 16% increase was driven by an 80% increase in Data Storage and a 45% rise in Compound Semiconductor, though contracted 2.7 points to 38.7% on unfavorable mix and higher logistics costs. The top-line recovery is underway, but profitability remains under pressure as the company awaits the Axcelis merger close.
Key takeaways
rose 16% to $193.5M, the first year-over-year increase in five quarters, as Data Storage revenue climbed 80% and Compound Semiconductor revenue climbed 45%, more than offsetting a modest 5% increase in the core Semiconductor .
contracted 2.7 points to 38.7% from 41.4% a year earlier, which management attributed to unfavorable product mix and higher logistics costs, partially offsetting the benefit of higher sales volume.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue rose 16% to $193.5M driven by Data Storage and Compound Semiconductor, while gross margin contracted on unfavorable mix and higher logistics costs.
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Total grew 16% to $193.5M, with Data Storage up 80%, Compound Semiconductor up 45%, and Semiconductor up 5%.
declined to 39% from 41% due to unfavorable product mix and higher spending, including logistics costs, partially offsetting volume gains.
fell 4% to $11.9M as a 7% increase in R&D and a 9% increase in SG&A, including $1.5M in merger-related costs for the Axcelis transaction, outpaced the growth in .
rose to $51.4M from $9.0M a year earlier, and rose to $47.7M from $5.4M, aided by improvements.
Cash and short-term investments totaled $429.4M at quarter-end, and management stated the pending merger with Axcelis is expected to close in the second half of 2026, pending final regulatory approval from China.
What changed
The 72% China semiconductor sales decline that drove the Q1 operating loss did not repeat at the same magnitude; Semiconductor returned to growth, rising 5% to $130.0M, up from the $109.3M Q1 low.
Compound Semiconductor growth accelerated to 45% from 31% in Q1, consistent with the $250M InP order book management highlighted last quarter, suggesting the 's recovery is gaining traction rather than proving a single-quarter event.
Data Storage rose 80% , a sharp reversal from the 64% and 70% declines in Q2 and Q3 of FY2025, indicating the may be stabilizing after the capacity-expansion cycle ended.
of 38.7% improved 3.4 points sequentially from the 35.3% Q1 trough but remained below the 41.4% of the prior-year quarter, as the unfavorable product mix and logistics costs flagged in Q1 persisted.
What to watch
Q3 FY2026 Semiconductor against $130.0M to confirm whether the 's return to growth is sustainable, particularly if China demand continues to normalize.
Q3 FY2026 against 38.7% as the product mix continues to shift and logistics costs persist, with management having flagged further tariff-related pressure.
Progress toward the Axcelis merger closing in the second half of 2026, including the final regulatory approval from China that management cited as the remaining condition.
Compound Semiconductor in Q3 FY2026 to see if the 45% growth rate can be sustained as deliveries from the $250M InP order book begin to accelerate.
fell 4% to $11.9M as R&D and SG&A increases, plus $1.5M in merger costs, outpaced growth.
Cash and short-term investments totaled $429.4M at quarter-end, and for the first half of 2026 was $59.4M, up from $29.0M a year ago.
The pending merger with Axcelis is expected to close in the second half of 2026, pending final regulatory approval from China.
Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk is concentrated in a $214.9M fixed-income portfolio, while currency risk is limited by predominantly USD-denominated sales.
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A 100 rise in interest rates would reduce the fair value of the $214.9M fixed-income portfolio by $1.7 million.
Losses on fixed-income securities are not realized in earnings unless sold prior to recovery or deemed .
Non-U.S. sales were 69% and 74% of total for the three and six months ended June 30, 2026, but only 2% were denominated in non-USD currencies.
A 10% adverse move in foreign exchange rates would have an immaterial impact on consolidated results because most international sales are in U.S. dollars.
The company may use monthly to mitigate currency risk on monetary assets, liabilities, and forecasted cash flows, but does not designate them as accounting hedges.
The Company is involved in various legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash…
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The Company is involved in various legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.
Information regarding risk factors appears in the Safe Harbor Statement at the beginning of this quarterly report on Form 10-Q, in Part I — Item 1A of our 2025 Form 10-K. There have been no material changes from the risk factors previously disclosed.
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Information regarding risk factors appears in the Safe Harbor Statement at the beginning of this quarterly report on Form 10-Q, in Part I — Item 1A of our 2025 Form 10-K. There have been no material changes from the risk factors previously disclosed.