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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 27, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-39110

ONTO INNOVATION INC.

(Exact name of registrant as specified in its charter)

     Delaware

     94-2276314

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer
Identification Number)

16 Jonspin Road, Wilmington, Massachusetts 01887

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (978) 253-6200

Securities registered pursuant to Section 12(b) of the Act


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share	ONTO	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the Registrant’s Common Stock on October 15, 2025 was 49,011,162.

Table of Contents

TABLE OF CONTENTS


Item No.		Page
	PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Statements of Operations for the three and nine-months ended September 27, 2025 and September 28, 2024	1
	Condensed Consolidated Statements of Comprehensive Income for the three and nine-months ended September 27, 2025 and September 28, 2024	2
	Condensed Consolidated Balance Sheets at September 27, 2025 and December 28, 2024	3
	Condensed Consolidated Statements of Cash Flows for the nine-months ended September 27, 2025 and September 28, 2024	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three and nine-months ended September 27, 2025 and September 28, 2024	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	29

	PART II OTHER INFORMATION

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	31
Item 6.	Exhibits	31

Signatures

Table of Contents

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 27,			September 28,			September 27,			September 28,
	2025			2024			2025			2024
Revenue	$	218,193		$	252,210		$	738,397		$	723,382
Cost of revenue		107,570			115,831			362,419			340,482
Gross profit		110,623			136,379			375,978			382,900
Operating expenses:
Research and development		32,493			28,277			95,815			81,876
Sales and marketing		17,103			19,451			51,729			56,635
General and administrative		24,820			20,298			72,608			57,363
Amortization		8,445			13,114			25,336			39,338
Restructuring and other		4,074			2,167			11,421			3,046
Total operating expenses		86,935			83,307			256,909			238,258
Operating income		23,688			53,072			119,069			144,642
Interest income, net		9,290			8,667			27,187			24,524
Other (expense) income, net		(999	)		(724	)		(2,879	)		10
Income before provision for income taxes		31,979			61,015			143,377			169,176
Provision for income taxes		3,755			7,964			17,147			16,323
Net income	$	28,224		$	53,051		$	126,230		$	152,853
Earnings per share:
Basic	$	0.58		$	1.07		$	2.57		$	3.10
Diluted	$	0.57		$	1.07		$	2.57		$	3.08
Weighted average number of shares outstanding:
Basic		49,023			49,426			49,044			49,333
Diluted		49,106			49,694			49,178			49,669

The accompanying notes are an integral part of these financial statements.

Table of Contents

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended					Nine Months Ended
	September 27,			September 28,		September 27,		September 28,
	2025			2024		2025		2024
Net income	$	28,224		$	53,051	$	126,230	$	152,853
Other comprehensive income (loss), net of tax:
Change in net unrealized gains on available-for-sale marketable securities		191			2,162		423		1,304
Change in currency translation adjustments		(1,864	)		4,859		7,017		270
Total other comprehensive income (loss), net of tax		(1,673	)		7,021		7,440		1,574
Total comprehensive income	$	26,551		$	60,072	$	133,670	$	154,427

The accompanying notes are an integral part of these financial statements.

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ONTO INNOVATION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	September 27, 2025			December 28, 2024
ASSETS
Current Assets:
Cash and cash equivalents	$	603,085		$	212,945
Marketable securities		380,843			639,383
Accounts receivable, less allowance of $2,295 at September 27, 2025 and $2,585 at December 28, 2024		260,197			308,142
Inventories, net		259,370			286,979
Prepaid expenses and other current assets		41,441			30,073
Total current assets		1,544,936			1,477,522
Property, plant and equipment, net		129,071			123,868
Goodwill		330,037			329,980
Identifiable intangible assets, net		102,121			127,457
Deferred income taxes		57,203			42,811
Other assets		23,242			15,453
Total assets	$	2,186,610		$	2,117,091
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	52,925		$	56,261
Accrued liabilities		48,913			49,974
Deferred revenue		30,764			33,828
Other current liabilities		30,268			30,026
Total current liabilities		162,870			170,089
Deferred and other tax liabilities		4			4
Other non-current liabilities		21,670			21,116
Total liabilities		184,544			191,209
Commitments and contingencies
Stockholders’ equity:
Common stock		49			49
Additional paid-in capital		1,275,184			1,275,146
Accumulated other comprehensive loss		(6,423	)		(13,863	)
Accumulated earnings		733,256			664,550
Total stockholders’ equity		2,002,066			1,925,882
Total liabilities and stockholders’ equity	$	2,186,610		$	2,117,091

The accompanying notes are an integral part of these financial statements.

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ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 27,			September 28,
	2025			2024
Cash flows from operating activities:
Net income	$	126,230		$	152,853
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Amortization of intangibles		25,336			39,338
Accretion of discount on marketable securities		(4,292	)		(5,353	)
Depreciation		15,174			10,818
Share-based compensation		20,378			21,826
Provision for inventory valuation		20,385			5,925
Deferred income taxes		(14,509	)		(15,951	)
Other, net		4,624			(97	)
Changes in operating assets and liabilities		39,993			(19,682	)
Net cash and cash equivalents provided by operating activities		233,319			189,677
Cash flows from investing activities:
Purchases of marketable securities		(421,154	)		(538,132	)
Proceeds from maturities and sales of marketable securities		684,526			342,958
Purchases of property, plant and equipment		(23,384	)		(27,277	)
Purchases of non-marketable equity securities		(8,000	)		—
Acquisitions, net of cash acquired		(57	)		—
Net cash and cash equivalents provided by (used in) investing activities		231,931			(222,451	)
Cash flows from financing activities:
Purchases and retirement of common stock		(75,015	)		—
Tax payments related to shares withheld for share-based compensation plans		(12,589	)		(18,441	)
Payment of contingent consideration for acquired business		—			(737	)
Issuance of shares through share-based compensation plans		9,740			9,178
Net cash and cash equivalents used in financing activities		(77,864	)		(10,000	)
Effect of exchange rate changes on cash and cash equivalents		2,754			(1,996	)
Net increase (decrease) in cash and cash equivalents		390,140			(44,770	)
Cash and cash equivalents at beginning of period		212,945			233,508
Cash and cash equivalents at end of period	$	603,085		$	188,738

Supplemental disclosure of cash flow information:
Income taxes paid (net of refunds)	$	35,468		$	30,232

The accompanying notes are an integral part of these financial statements.

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ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Accumulated
	Shares			Amount		Capital			Loss			Earnings			Total
Balance at December 28, 2024		49,238		$	49	$	1,275,146		$	(13,863	)	$	664,550		$	1,925,882
Net income		—			—		—			—			64,095			64,095
Share-based compensation		—			—		6,814			—			—			6,814
Issuance of shares through share-based compensation plans, net		140			—		4,179			—			—			4,179
Purchases of common stock		(492	)		—		(17,491	)		—			(57,524	)		(75,015	)
Share-based compensation plan withholdings		(49	)		—		(8,684	)		—			—			(8,684	)
Currency translation		—			—		—			2,013			—			2,013
Unrealized gain on investments		—			—		—			338			—			338
Balance at March 29, 2025		48,837		$	49	$	1,259,964		$	(11,512	)	$	671,121		$	1,919,622
Net income		—			—		—			—			33,911			33,911
Share-based compensation		—			—		6,678			—			—			6,678
Issuance of shares through share-based compensation plans, net		137			—		—			—			—			—
Share-based compensation plan withholdings		(37	)		—		(3,707	)		—			—			(3,707	)
Currency translation		—			—		—			6,868			—			6,868
Unrealized loss on investments		—			—		—			(106	)		—			(106	)
Balance at June 28, 2025		48,937		$	49	$	1,262,935		$	(4,750	)	$	705,032		$	1,963,266
Net income		—			—		—			—			28,224			28,224
Share-based compensation		—			—		6,886			—			—			6,886
Issuance of shares through share-based compensation plans, net		76			—		5,561			—			—			5,561
Share-based compensation plan withholdings		(4	)		—		(198	)		—			—			(198	)
Currency translation		—			—		—			(1,864	)		—			(1,864	)
Unrealized gain on investments		—			—		—			191			—			191
Balance at September 27, 2025		49,009		$	49	$	1,275,184		$	(6,423	)	$	733,256		$	2,002,066

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	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Accumulated
	Shares			Amount		Capital			Loss			Earnings		Total
Balance at December 30, 2023		49,086		$	49	$	1,262,029		$	(7,899	)	$	482,356	$	1,736,535
Net income		—			—		—			—			46,853		46,853
Share-based compensation		—			—		6,486			—			—		6,486
Issuance of shares through share-based compensation plans, net		169			—		4,015			—			—		4,015
Share-based compensation plan withholdings		(53	)		—		(9,088	)		—			—		(9,088	)
Currency translation		—			—		—			(2,593	)		—		(2,593	)
Unrealized loss on investments		—			—		—			(657	)		—		(657	)
Balance at March 30, 2024		49,202		$	49	$	1,263,442		$	(11,149	)	$	529,209	$	1,781,551
Net income		—			—		—			—			52,949		52,949
Share-based compensation		—			—		8,244			—			—		8,244
Issuance of shares through share-based compensation plans, net		181			—		—			—			—		—
Share-based compensation plan withholdings		(44	)		—		(8,871	)		—			—		(8,871	)
Currency translation		—			—		—			(1,996	)		—		(1,996	)
Unrealized loss on investments		—			—		—			(201	)		—		(201	)
Balance at June 29, 2024		49,339		$	49	$	1,262,815		$	(13,346	)	$	582,158	$	1,831,676
Net income		—			—		—			—			53,051		53,051
Share-based compensation		—			—		7,096			—			—		7,096
Issuance of shares through share-based compensation plans, net		53			—		5,163			—			—		5,163
Purchases and retirement of common stock		—			—		—			—			—		—
Share-based compensation plan withholdings		(2	)		—		(482	)		—			—		(482	)
Currency translation		—			—		—			4,859			—		4,859
Unrealized gain on investments		—			—		—			2,162			—		2,162
Balance at September 28, 2024	$	49,390		$	49	$	1,274,592		$	(6,325	)	$	635,209	$	1,903,525

The accompanying notes are an integral part of these financial statements.

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ONTO INNOVATION INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. Basis of Presentation

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by Onto Innovation Inc. (together with its consolidated subsidiaries, unless otherwise specified or suggested by the context, the “Company,” “Onto Innovation,” “we,” “our” or “us”) and in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain reclassifications have been made to prior-period amounts to conform to current-period presentation. Preparing financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual amounts could differ materially from reported amounts. The interim results for the three and nine-month periods ended September 27, 2025 are not necessarily indicative of results to be expected for the entire year or any future periods. This interim financial information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024 (the “2024 Form 10-K”) filed with the Securities and Exchange Commission on February 25, 2025. The accompanying Condensed Consolidated Balance Sheet at December 28, 2024 has been derived from the audited consolidated financial statements included in the 2024 Form 10-K.

The Company operates on a 52- or 53-week fiscal year ending on the Saturday closest to December 31. Our fiscal year ending January 3, 2026 (“fiscal year 2025”) is a 53-week fiscal year. The first quarter of the Company’s fiscal year 2025 ended on March 29, 2025, the second quarter ended on June 28, 2025 and the third quarter ended on September 27, 2025. Our fiscal year ended December 28, 2024 was a 52-week fiscal year. The third quarter of the fiscal year ended December 28, 2024 ended on September 28, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates made by management include excess and obsolete inventory, fair value of assets acquired and liabilities assumed in a business combination, recoverability and useful lives of property, plant and equipment and identifiable intangible assets, recoverability of goodwill, recoverability of deferred tax assets, allowance for credit losses, liabilities for product warranty, share-based payments and liabilities for tax uncertainties. Actual results could differ from those estimates.

These estimates and assumptions are based on historical experience and on various other factors which the Company believes to be reasonable under the circumstances. The Company may engage third-party valuation specialists to assist with estimates related to the valuation of financial instruments, assets and stock awards associated with various contractual arrangements. Such estimates often require the selection of appropriate valuation methodologies and significant judgment. Actual results could differ from these estimates under different assumptions or circumstances and such differences could be material.

Recent Accounting Pronouncements

Updates Not Yet Effective

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-06, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes all references to software development stages and clarifies the threshold entities apply to begin capitalizing costs. ASU No. 2025-06 is effective for annual periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. The ASU may be applied prospectively, retrospectively or through a modified transition approach with early adoption permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

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In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326), which simplifies the estimation of credit losses on current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification 606, Revenue from Contracts with Customers. The guidance allows all entities to use a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. The guidance is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years. Early adoption is permitted. Entities that elect the practical expedient are required to apply the amendments prospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Other than the standards listed above, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three and nine months ended September 27, 2025, as compared to the recent accounting pronouncements described in the 2024 Form 10-K, that are of significance, or potential significance, to the Company.

NOTE 2. Acquisitions

Proposed Acquisition

On June 27, 2025, we entered into an Equity Purchase Agreement (the “Purchase Agreement”) to acquire all the outstanding membership interests of Semilab USA LLC (“Semilab USA”) from Semilab International Zrt. (“Semilab”), for $475.0 million in cash (subject to certain customary purchase price adjustments) and 706,215 shares of the Company’s common stock (the “Transaction”). On September 25, 2025, each of the Company and Semilab received a request for additional information and documentary material (a “Second Request”) from the U.S. Department of Justice in connection with the Transaction. In response to the Second Request, and in order to increase the likelihood of a timely closing for the Transaction, on October 9, 2025, the parties entered into an amendment to the Purchase Agreement (the “Purchase Agreement Amendment”), pursuant to which the parties agreed that the Fourier-Transform infrared spectroscopy reflectometry systems business conducted by Semilab and its affiliates would not be included in the Transaction and would instead be retained by Semilab. The Purchase Agreement Amendment amends the purchase price that the Company will pay to Semilab in the transaction to $432.3 million in cash (subject to certain customary purchase price adjustments) and 641,771 shares of the Company’s common stock, par value $0.001 per share. This represents a reduction of approximately $50.0 million in total Transaction value to approximately $495.0 million based upon the closing value of the Company’s common stock on June 27, 2025. The Company continues to anticipate that the Transaction will be completed in 2025.

For the three and nine months ended September 27, 2025, the Company incurred $2.1 million and $4.6 million of Transaction-related costs, respectively, in each case recorded within the caption “General and administrative” in the Company’s Condensed Consolidated Statements of Operations.

NOTE 3. Fair Value Measurements

Fair Value of Financial Instruments

The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair value because of the short-term maturity of these instruments.

Fair Value Hierarchy

The Company applies a three-level valuation hierarchy for fair value measurements. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based on management’s assumptions used to measure assets and liabilities at fair value. A financial

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asset’s or liability’s fair value measurement classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at September 27, 2025 and December 28, 2024:


	Fair Value Measurements Using Significant Other Observable Inputs (Level 2)
	September 27, 2025		December 28, 2024
	(in thousands)
Assets:
Available-for-sale debt securities:
Government notes and bonds	$	197,257	$	284,863
Certificates of deposit		60,621		73,421
Commercial paper		50,922		136,557
Corporate bonds		72,043		144,542
Foreign currency forward contracts		67		61
Total assets	$	380,910	$	639,444

Available-for-sale debt securities classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. The foreign currency forward contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. Investment prices are obtained from third-party pricing providers, which model prices utilizing the above observable inputs, for each asset class.

See Note 4 for additional discussion regarding the fair value of the Company’s marketable securities.

Non-recurring Fair Value Measurements

During the nine-month period ended September 27, 2025, the Company invested $8.0 million in the equity of a privately-held company. There were no such investments at December 28, 2024. This non-marketable equity investment is recorded at fair value on a non-recurring basis and is classified as a Level 3 asset in “Other assets” on the Condensed Consolidated Balance Sheets. This non-marketable equity investment is generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and is periodically assessed for impairment when events or circumstances indicate that decline in value may have occurred. As of September 27, 2025, there have been no impairments recorded for the non-marketable equity investment.

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NOTE 4. Marketable Securities

At September 27, 2025 and December 28, 2024, marketable securities are categorized as follows:


	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
	(in thousands)
September 27, 2025
Government notes and bonds	$	196,607	$	669	$	19	$	197,257
Certificates of deposit		60,570		51		—		60,621
Commercial paper		50,910		15		3		50,922
Corporate bonds		71,818		225		—		72,043
Total marketable securities	$	379,905	$	960	$	22	$	380,843
December 28, 2024
Government notes and bonds	$	284,763	$	387	$	287	$	284,863
Certificates of deposit		73,390		49		18		73,421
Commercial paper		136,496		103		42		136,557
Corporate bonds		144,331		283		72		144,542
Total marketable securities	$	638,980	$	822	$	419	$	639,383

The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheets classification, are as follows at September 27, 2025 and December 28, 2024:


	September 27, 2025				December 28, 2024
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in thousands)
Due within one year	$	288,860	$	289,282	$	432,088	$	432,616
Due after one through five years		91,045		91,561		140,917		140,792
Due after five through ten years		—		—		235		235
Due after ten years		—		—		65,740		65,740
Total marketable securities	$	379,905	$	380,843	$	638,980	$	639,383

The Company has evaluated its investment policies and determined that all of its marketable securities, which are comprised of debt securities, are to be classified as available-for-sale. The Company’s available-for-sale debt securities are carried at fair value, with the unrealized gains and losses reported in Stockholders’ equity under the caption “Accumulated other comprehensive loss.” Gross realized gains and losses on available-for-sale securities are included in “Other (expense) income, net” on the Condensed Consolidated Statements of Operations and were not material during the three and nine-months ended September 27, 2025 and September 28, 2024. The Company records credit losses for its available-for-sale debt securities when it intends to sell the securities, it is more likely than not that it will be required to sell the securities before a recovery, or when it does not expect to recover the entire amortized cost basis of the securities. The cost of securities sold is based on the specific identification method.

The Company has determined that the gross unrealized losses on its marketable securities at September 27, 2025 and December 28, 2024 are temporary in nature. The Company regularly reviews its investment portfolio to identify and evaluate marketable securities that have indications of possible impairment from credit losses or other factors. Factors considered in determining whether an unrealized loss is considered to be a credit loss include the length of time and extent to which fair value has been less than the cost basis, credit quality and the Company’s ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

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The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at September 27, 2025 and December 28, 2024:


	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For Greater Than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in thousands)
September 27, 2025
Government notes and bonds	$	11,152	$	11	$	3,573	$	9
Certificates of deposit		—		—		2,000		—
Commercial paper		14,597		1		8,457		1
Corporate bonds		—		—		—		—
Total	$	25,749	$	12	$	14,030	$	10
December 28, 2024
Government notes and bonds	$	37,636	$	287	$	—	$	—
Certificates of deposit		8,260		18		—		—
Commercial paper		18,317		42		—		—
Corporate bonds		13,260		71		3,200		1
Total	$	77,473	$	418	$	3,200	$	1

See Note 3 for additional discussion regarding the fair value of the Company’s marketable securities.

NOTE 5. Derivative Instruments and Hedging Activities

The Company, when it considers it to be appropriate, enters into forward contracts to hedge the economic exposures arising from foreign currency denominated transactions. These contracts are typically denominated in euro, Chinese renminbi, Japanese yen, Korean won, Singapore dollars, and Taiwanese dollars. Foreign currency forward contracts are not designated as hedges for accounting purposes, and therefore, the change in fair value is recorded in “Other (expense) income, net,” in the Condensed Consolidated Statements of Operations. The Company records its forward contracts at fair value in either “Prepaid expenses and other current assets” or “Other current liabilities” in the Condensed Consolidated Balance Sheets.

The dollar equivalent of the U.S. dollar forward contracts and related fair values as of September 27, 2025 and December 28, 2024 were as follows:


	September 27, 2025		December 28, 2024
	(in thousands)
Notional amount	$	45,105	$	45,883
Fair value of asset	$	67	$	61

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NOTE 6. Goodwill and Purchased Intangible Assets

Goodwill

The changes in the carrying amount of goodwill are as follows:


	Nine Months Ended
	September 27,		September 28,
	2025		2024
	(in thousands)
Balance, beginning of the period	$	329,980	$	315,811
Adjustment for previously acquired business		57		—
Balance, end of the period	$	330,037	$	315,811

Purchased Intangible Assets

Purchased intangible assets as of September 27, 2025 and December 28, 2024 are as follows:


	Gross Carrying Amount		Accumulated Amortization		Net
	(in thousands)
September 27, 2025
Finite-lived intangibles:
Developed technology	$	277,416	$	208,718	$	68,698
Customer and distributor relationships		66,621		36,110		30,511
Trademarks and trade names		14,171		11,259		2,912
Total identifiable intangible assets	$	358,208	$	256,087	$	102,121
December 28, 2024
Finite-lived intangibles:
Developed technology	$	387,716	$	298,013	$	89,703
Customer and distributor relationships		73,321		39,370		33,951
Trademarks and trade names		14,171		10,368		3,803
Total identifiable intangible assets	$	475,208	$	347,751	$	127,457

During the nine months ended September 27, 2025, the Company disposed of fully amortized identifiable intangible assets whose gross carrying value totaled $117 million. There were no disposals of identifiable intangible assets during the three and nine months ended September 28, 2024.

Assuming no change in the gross carrying value of identifiable intangible assets and estimated lives, future estimated amortization expenses are:


	Expected Amortization
	Expense
Fiscal Year:	(in thousands)
2025 (remainder)	$	8,445
2026		32,588
2027		24,367
2028		13,482
2029		6,232
2030		6,109
Thereafter		10,898
Total	$	102,121

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NOTE 7. Balance Sheet Components

Inventories

Inventories, net are comprised of the following:


	September 27, 2025		December 28, 2024
	(in thousands)
Materials	$	185,709	$	176,814
Work-in-process		54,283		91,672
Finished goods		19,378		18,493
Total inventories, net	$	259,370	$	286,979

Property, Plant and Equipment

Property, plant and equipment, net is comprised of the following:


	September 27, 2025			December 28, 2024
	(in thousands)
Machinery and equipment	$	94,716		$	86,317
Land and building		47,611			46,583
Computer equipment and software		40,123			32,755
Leasehold improvements		22,639			20,405
Furniture and fixtures		3,922			4,081
Total property, plant and equipment, gross		209,011			190,141
Accumulated depreciation		(79,940	)		(66,273	)
Total property, plant and equipment, net	$	129,071		$	123,868

Other assets

Other assets are comprised of the following:


	September 27, 2025		December 28, 2024
	(in thousands)
Operating lease right-of-use assets	$	13,044	$	13,939
Non-marketable equity securities		8,000		—
Other		2,198		1,514
Total other assets	$	23,242	$	15,453

Accrued liabilities

Accrued liabilities are comprised of the following:


	September 27, 2025		December 28, 2024
	(in thousands)
Payroll and related expenses	$	37,667	$	39,850
Warranty		11,194		10,075
Other		52		49
Total accrued liabilities	$	48,913	$	49,974

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Other current liabilities

Other current liabilities are comprised of the following:


	September 27, 2025		December 28, 2024
	(in thousands)
Customer deposits	$	6,501	$	10,700
Current operating lease obligations		5,625		5,416
Income tax payable		4,002		8,492
Accrued professional fees		2,821		618
Other accrued taxes		7,017		839
Other		4,302		3,961
Total other current liabilities	$	30,268	$	30,026

Other non-current liabilities

Other non-current liabilities are comprised of the following:


	September 27, 2025		December 28, 2024
	(in thousands)
Non-current operating lease obligations	$	8,442	$	9,743
Unrecognized tax benefits (including interest)		6,320		5,489
Deferred revenue		5,853		4,009
Other		1,055		1,875
Total other non-current liabilities	$	21,670	$	21,116

NOTE 8. Commitments and Contingencies

Intellectual Property Indemnification Obligations

The Company has entered into agreements with customers that include limited intellectual property indemnification obligations that are customary in the industry. These agreements generally require the Company to compensate the other party for certain damages and costs incurred as a result of third-party intellectual property claims. The nature of the intellectual property indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers. Historically, the Company has not made any indemnification payments under such agreements and no amount has been accrued in the accompanying Condensed Consolidated Financial Statements with respect to these indemnification obligations.

Warranty Reserves

The Company generally provides a warranty on its products for a period of 12 to 14 months against defects in material and workmanship. The Company estimates the costs that may be incurred during the warranty period and records a liability in the amount of such costs at the time revenue is recognized. The Company’s estimate is based primarily on historical experience. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Warranty provisions are generally related to current period sales. Settlements of warranty reserves are generally associated with sales that occurred during the 12 to 14 months prior to the period-end.

Table of Contents

Changes in the Company’s warranty reserves are as follows:


	Nine Months Ended
	September 27,		September 28,
	2025		2024
	(in thousands)
Balance, beginning of the period	$	10,858	$	9,380
Accruals		9,858		8,756
Usage		(9,522

ONTO INNOVATION INC. 10-Q