Nova Posts $287.8 Million Q3 Revenue, Eyes $1 Billion

By Amara Osei

Nova Ltd. (NASDAQ: NVMI) reported third-quarter 2026 revenue of $287.8 million, up 28% from a year earlier and 13% from the second quarter, above guidance and marking its third consecutive quarterly sales record. CFO Guy Kizner said on the earnings call that diluted earnings per share reached $2.64 on a GAAP basis and $2.86 on a non-GAAP basis.

President and CEO Gaby Waisman said demand for semiconductor measurement tools rose in memory and advanced packaging, while Nova expects to surpass $1 billion in annual revenue a year ahead of its strategic plan.

Waisman expects second-half 2026 revenue to grow more than 33% from the same period in 2025, supported by what he called a healthy customer pipeline and an investment mix likely to turn more favorable in 2027.

What powered record third-quarter sales?

Memory generated record revenue and bookings in the third quarter, driven mainly by demand for dynamic random-access memory, or DRAM. Advanced DRAM capacity expansion benefited Nova's integrated metrology products, while customers raised sampling rates and broadened applications for its X-ray photoelectron spectroscopy, or XPS, platform.

Waisman said a significant order from a major memory customer strengthened Nova's demand profile for 2027. “We expect continued strong double-digit growth in DRAM investments next year,” he said, alongside a move toward more advanced manufacturing nodes.

Advanced packaging also produced record results. More than 10 customers have placed orders for or completed acceptance of Nova's WMC platform, used in logic and high-bandwidth memory applications; additional evaluations are under way, and sales to outsourced semiconductor assembly and test customers increased significantly.

Logic and foundry supplied approximately 61% of third-quarter product revenue, while memory and other applications supplied 39%, Kizner said. Four customers and four geographic territories each contributed at least 10% of product revenue.

Value-added services revenue rose approximately 50% year over year, largely because customers sought upgrades supporting production at advanced nodes.

Demand was broad.

Takeaway: Memory and packaging led, while logic, foundry and service revenue also strengthened the quarter.

What does the fourth-quarter outlook show?

Nova forecasts fourth-quarter revenue of $305 million to $315 million. It expects GAAP diluted earnings per share of $2.78 to $2.94 and non-GAAP diluted earnings per share of $3.03 to $3.18.

Third-quarter gross margin reached 57.7% on a GAAP basis and 59.1% on a non-GAAP basis. Operating margin reached 32% under GAAP and 35.5% on a non-GAAP basis, with the latter above the company's 28% to 33% target range, Kizner said.

Margins held firm.

At the midpoint of fourth-quarter guidance, Nova expects gross margin of approximately 57% on a GAAP basis and 59% on a non-GAAP basis. Kizner said Nova “does not currently see gross-margin headwinds,” though quarterly gross margin could fluctuate by one percentage point in either direction.

Nova ended the quarter with $1.8 billion in cash equivalents, bank deposits and marketable securities. Free cash flow reached $132 million for the quarter and approximately $206 million for the first nine months of 2026.

The company repurchased approximately $38.5 million of shares during the quarter after announcing a $200 million authorization in September.

Takeaway: Nova enters the fourth quarter with higher revenue guidance, strong margins and substantial financial flexibility.

What could drive growth in 2027?

A shift toward gate-all-around transistors could benefit Nova because metrology intensity runs about 30% higher than for FinFET devices, and Nova holds a higher share among gate-all-around customers. The company remains on track to produce $500 million in cumulative gate-all-around revenue from 2024 through 2026, although Waisman declined to quantify 2027 revenue.

Nova's AncoScene chemical metrology platform completed acceptance and was released for high-volume manufacturing at a leading foundry during the third quarter. Waisman said Nova is pursuing additional customers and gaining share across several regions.

Potential new competition in XPS metrology may emerge in the second half of 2027, though Waisman said it was unclear whether the first entrants would be meaningful. Nova is investing in new products and lower cost of ownership to maintain its position.

Supply is straining.

The rapid industry ramp has stretched Nova's supply chain. The company is working with suppliers on capacity, broadening its supply base and expanding manufacturing infrastructure, including a new clean room in Asia expected to become operational by year-end.

Management will discuss future strategy at an investor day on March 9, 2027, in New York City.

Takeaway: Memory spending, gate-all-around devices and new chemical tools support the growth case, while supply and XPS competition remain the main uncertainties.

What does Nova do?

Nova develops and supplies metrology and process-control solutions for semiconductor manufacturers. Its systems measure and control critical dimensions, film thickness, material properties and other integrated-circuit characteristics; its portfolio spans optical and X-ray metrology, chemical metrology, software and analytics.

The tools operate in front-end wafer processing and advanced packaging, supporting process development, yield improvement and manufacturing control. Founded in 1993, Nova is headquartered in Rehovot, Israel, with operations and customer support across North America, Europe and Asia.

Takeaway: Nova's tools support process development, yield improvement and manufacturing control across chip fabrication.