Camtek Ltd. Q1 FY2026 earnings call

Financial Performance

• Q1 2026 non-GAAP revenue reached $121.7 million, slightly above guidance and marginally higher than Q1 2025 revenue
• Non-GAAP gross margin held steady at 51%, matching the prior quarter level
• Non-GAAP operating income was $31.1 million, with an operating margin of 25.5%; operating expenses increased to $30.9 million year-over-year driven by higher R&D and sales & marketing investment, plus negative FX impact from a weaker U.S. dollar against the Israeli shekel
• Net income totaled $35.3 million ($0.70 per diluted share), compared to $38.7 million ($0.79 per diluted share) in Q1 2025
• End-of-period cash and equivalents totaled $850 million; inventory was $116.7 million, accounts receivable increased to $131.7 million from $90.8 million in Q4 2025

Order & Demand Highlights

• Camtek saw an unprecedented start to 2026 with record order intake, driven by surging demand for AI and high bandwidth memory (HBM) related advanced packaging solutions
• The company has already received binding orders and revenue forecasts from 2 HBM manufacturers for 3D metrology and 2D inspection products, representing expected revenue exceeding $260 million across 2026 and 2027
• The OSAT segment is undergoing a major wave of AI-related capacity expansion, and Camtek, as a leading provider of 2D inspection and 3D metrology for this domain, expects to be a primary beneficiary of this trend

Product & Innovation

• Camtek has maintained market leadership in 3D metrology and continues to gain market share in the 2D inspection market, which is confirmed by recent large order wins
• The two new platforms, Eagle G5 and Hawk, launched in 2025, meet the industry's evolving requirements for sub-6 micro bump height metrology, 100-nanometer inspection capability, and higher throughput. Their combined revenue is expected to double in 2026 compared to 2025
• Through strategic collaboration and now acquisition of Visual Layer, Camtek has developed cutting-edge AI-based capabilities for defect detection, metrology, and classification that deliver higher throughput, improved sensitivity, lower false alarms, and better measurement accuracy, strengthening the company's competitive edge
• The new AI capabilities will expand Camtek's addressable market by enabling the company to win additional process steps including front-end manufacturing applications

Corporate Development

• The acquisition of Visual Layer completed in early Q1 2026, and integration of the company's technology, research team, and engineering capabilities is already underway
• The acquisition combines Visual Layer's unique AI annotation and classification technology with Camtek's existing in-house algorithm development capabilities, accelerating Camtek's AI product roadmap and enabling new AI-powered software offerings

For Q1 2026, Camtek's total revenue was $121.7 million. 50% of total revenue was contributed by AI-related products, 20% by other advanced packaging applications, and the remaining 30% was generated across other applications with the same mix as the prior quarter. 2D inspection makes up approximately 66% of Camtek's overall business, while 3D metrology accounts for the remaining 34%. In 2025, the newly launched Eagle G5 and Hawk products together contributed 30% of total company revenue.

• Q2 2026 revenue is guided between $129 million and $131 million
• Revenue for the second half of 2026 is expected to be more than 25% higher than first half 2026 revenue, with potential additional upside depending on the timing of orders and deliveries between Q4 2026 and early 2027
• Gross margin is expected to improve in the second half of 2026, supported by higher revenue volume and the growing contribution of higher-margin Eagle G5 and Hawk products
• Operating margin is expected to return to around 30% in the second half of 2026
• Camtek's total addressable market is expected to expand to over $2 billion by 2027, up from the current 2026 level of $1.5 billion to $1.7 billion

• Forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from projections, as detailed in Camtek's SEC filings and earnings press release
• The ongoing conflict in the Middle East, where most of Camtek's manufacturing and R&D operations are based in Israel, creates geopolitical uncertainty, though Camtek has not experienced any operational disruptions to date
• Local competitors in China are applying pricing and market pressure at the lower end of the application spectrum, creating competitive risk for Camtek's China business
• Supply chain component price increases create potential headwinds for gross margins, though Camtek is offsetting this with internal cost reduction initiatives
• Order delivery timing can impact projected revenue growth between 2026 and 2027, creating uncertainty around annual revenue outcomes

Q: Why did Camtek acquire Visual Layer now, what unique capabilities does it add, and what is the roadmap for AI software revenue?

A: Camtek had collaborated with Visual Layer for over a year, and found their unique AI annotation and classification technology was an excellent complement to Camtek's existing in-house AI algorithm development. The acquisition adds Visual Layer's experienced research and engineering team to accelerate Camtek's AI roadmap and gives Camtek full ownership of the technology. AI capabilities will launch for customers in the near term, contributing to revenue in the second half of 2026, first as upgrade packages for Camtek's large existing installed base, with a broader stand-alone semiconductor AI software product planned as a second phase after the initial rollout.

Q: What are your current lead times for Eagle and Hawk products, and is there enough supply chain flexibility to meet unexpected incremental demand, or will demand shift to 2027?

A: Lead times for the established Eagle product are around 3 months, while lead times for the newer Hawk product are 3 to 6 months. Camtek has already built up inventory to match the expected surge in demand and has no supply chain constraints that would prevent it from fulfilling unexpected additional orders. The company is confident in its ability to meet all customer demand in line with current projections.

Q: Where is the unexpected strength in second half 2026 growth coming from, and why is your 2026 growth lower than peer group estimates for advanced packaging?

A: The growth is broad-based, with AI as the core driver across HBM, chiplet, and OSAT applications, and we see strength across all regions. The advanced packaging segment typically lags front-end semiconductor cycles by 1 to 2 quarters, and we are now seeing a clear ramp in demand that was not visible a quarter ago. Our lower 2026 growth is because we are lapping a very strong record 2025, unlike many peers, and much of the stronger demand is expected to shift to the first half of 2027, putting our growth profile in line with industry levels when measured over the 2026 H2 to 2027 H1 period. Camtek is not losing market share, and continues to gain share in both 2D inspection and 3D metrology.

Q: What impact has the Middle East conflict had on Camtek's operations, given most manufacturing is based in Israel?

A: All Camtek facilities in Israel have continued to operate normally throughout the conflict. The company has not missed a single shipment, and both manufacturing and R&D operations are running at full capacity. Most staff continue to work in-person, with only very limited work-from-home arrangements. Camtek's planned capacity expansion in Germany remains on track, and the company has not experienced any material operational impact from the conflict to date.