Camtek Q3 Earnings Call Highlights

Key Points

• Record Q3 results: Revenue rose 28% year over year to $161.3 million, with advanced packaging—mostly AI-related—accounting for about 80% of sales. Operating margin reached a record 29.5%, and non-GAAP net income hit $50.3 million.
• Strong demand and visibility: Camtek received more than $800 million in orders through its investor event, largely for AI-driven advanced packaging, and customers are booking delivery slots through 2027. The company expects 2027 revenue to exceed $800 million.
• Growth outlook tempered by near-term cost pressures: Supply-chain constraints and higher component costs weighed slightly on gross margin, though Camtek expects gradual improvement from 2027 as pricing, product mix, cost reductions, software and services contribute. It forecasts about $180 million in Q4 revenue and targets $1.2 billion in annual revenue within roughly three years.

Camtek NASDAQ: CAMT reported record third-quarter results as demand for advanced packaging equipment, particularly AI-related applications, drove revenue and profitability above the company’s guidance.

Chief Executive Officer Rafi Amit said third-quarter revenue reached $161.3 million, up 28% from a year earlier and 21% sequentially. Revenue was supported primarily by advanced packaging, which accounted for about 80% of quarterly sales. Amit said the majority of that advanced-packaging demand was related to AI applications.

Operating income reached a record $47.5 million, producing an operating margin of 29.5%, compared with 27% in the prior quarter. Amit said the margin expansion demonstrated the operating leverage in Camtek’s business model as revenue growth translated into faster growth in profitability.

New Platforms and Order Visibility

Camtek’s Eagle G5 and Hawk platforms represented approximately 57% of systems revenue during the quarter. Amit said the contribution from those newer-generation products is expected to rise as adoption broadens among customers.

The company said it had received more than $800 million in orders from the beginning of the year through its investor and analyst event held less than a month before the earnings call, with order momentum continuing afterward. About 80% of those orders were tied to advanced packaging, nearly all for high-end AI-driven applications, according to Amit.

Outsourced semiconductor assembly and test providers, or OSATs, accounted for slightly more than half of total orders. Amit said customers across all territories, including China, have increasingly been securing delivery slots through 2027, giving Camtek visibility approximately one year ahead for the first time in its history.

Chief Operating Officer Ramy Langer said the company was already booking business for the second half of 2027. He described conditions across regions as strong, including in China, and said the company expects its 2027 business to remain stable as it fills production capacity and continues to secure future delivery slots.

Margins Face Supply-Chain Pressure

On a non-GAAP basis, Chief Financial Officer Moshe Eisenberg said gross profit was $82.3 million and gross margin was 51.1%, compared with 51.4% in the preceding quarter. The result was slightly below management’s expectations because of higher costs for parts, components and materials.

Eisenberg said industry-wide supply-chain constraints have created operational challenges and pricing pressure for components used in Camtek’s systems. He said the company has begun increasing average selling prices and expects those actions to begin helping gross margin in 2027. A higher mix of advanced systems and planned software offerings are also expected to support margin improvement.

Langer said the shortages involve general industry components, including memory and CPUs, as well as certain general-purpose components used in machine handling. He said Camtek is working with vendors and, in many cases, can use dual sources to manage supply. The company expects to meet customer delivery schedules, and Langer said he expects the issues to be resolved within roughly three to six months, while acknowledging that timing remains uncertain.

Camtek expects gross margin to improve gradually beginning in the first quarter of 2027, Eisenberg said. The expected improvement reflects cost-reduction actions, favorable product mix, pricing actions and contributions from software and service revenue. Eisenberg also cited the stronger Israeli shekel against the U.S. dollar as a recent headwind to the company’s cost structure.

Profit, Cash and Outlook

Non-GAAP operating expenses were $34.8 million, up from $32.5 million in the second quarter, primarily because of higher selling and marketing spending associated with the increased revenue level. Non-GAAP net income was a record $50.3 million, or $0.99 per diluted share, compared with $39.4 million, or $0.78 per diluted share, in the prior quarter.

Cash and cash equivalents, including short- and long-term deposits and marketable securities, totaled $877.1 million as of Sept. 30, 2026. The company generated $71.1 million of operating cash flow during the quarter. Accounts receivable rose to $166.2 million from $153.9 million, while days sales outstanding remained around 90 days.

• Fourth-quarter 2026 revenue is expected to be approximately $180 million, representing 40% year-over-year growth.
• Full-year 2026 revenue is expected to be about $595 million, up roughly 20% from 2025.
• Camtek’s initial outlook calls for 2027 revenue of more than $800 million, supported by backlog, pipeline activity and order momentum.
• The company continues to target $1.2 billion in annual revenue within about three years, with operating margins of 34% to 36%.

Management said the longer-term target is based substantially on organic growth and does not include potential contributions from significant acquisitions. Amit said the company and its manufacturing partner are expanding production capacity and operational infrastructure to support higher revenue levels.

Software, Services and Competition

Camtek expects service revenue, which management said is about $40 million in 2026, to grow at an annual rate of roughly 35% to 40%. Eisenberg said the company expects service revenue to approach $100 million within three years as its installed base grows.

The company also plans to begin selling AI-based software products in 2027, with Langer saying initial revenue could begin in the first quarter. Management expects double-digit software revenue in 2027 and has included approximately $40 million of new software revenue in its longer-term software-and-services target.

On competition, Langer said Camtek does not currently view smaller Chinese competitors as a significant threat and expects China to remain a meaningful part of its 2027 backlog. He said the company’s installed base of about 4,000 systems, specialized advanced-packaging portfolio, flexible handling, fluorescence inspection and metrology capabilities support its competitive position, particularly with OSAT customers.

Langer added that hybrid-bonding activity remains at a low level and is not expected to be a substantial contributor in 2027, though Camtek views the market as a longer-term opportunity beginning more meaningfully in 2028 and beyond.

About Camtek (NASDAQ:CAMT)

Camtek Ltd. NASDAQ: CAMT is an Israel-based provider of inspection and metrology equipment for the semiconductor industry. The company develops and manufactures systems that help chipmakers detect defects, measure manufacturing processes, and improve production yields during the fabrication and packaging of semiconductor devices.

Its product portfolio includes automated optical inspection and metrology systems for wafers, substrates, and packaged devices, along with inspection solutions for advanced packaging, memory, image sensors, and other specialty semiconductor applications.

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