Semiconductor quality control company Nova (NASDAQ: NVMI) announced better-than-expected revenue in Q4 CY2025, with sales up 14.3% year on year to $222.6 million. Guidance for next quarter’s revenue was better than expected at $227 million at the midpoint, 1.3% above analysts’ estimates. Its non-GAAP profit of $2.14 per share was 0.7% above analysts’ consensus estimates.
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Nova (NVMI) Q4 CY2025 Highlights:
- Revenue: $222.6 million vs analyst estimates of $221.1 million (14.3% year-on-year growth, 0.7% beat)
- Adjusted EPS: $2.14 vs analyst estimates of $2.12 (0.7% beat)
- Revenue Guidance for Q1 CY2026 is $227 million at the midpoint, above analyst estimates of $224.1 million
- Adjusted EPS guidance for Q1 CY2026 is $2.19 at the midpoint, above analyst estimates of $2.15
- Operating Margin: 27.3%, down from 28.5% in the same quarter last year
- Free Cash Flow Margin: 21.7%, down from 31% in the same quarter last year
- Inventory Days Outstanding: 177, up from 171 in the previous quarter
- Market Capitalization: $14.11 billion
"2025 was an exceptional year for Nova, as we delivered record revenue and profitability while supporting our customers' manufacturing challenges across advanced and mature nodes." said Gaby Waisman, President and CEO.
Company Overview
Headquartered in Israel, Nova (NASDAQ: NVMI) is a provider of quality control systems used in semiconductor manufacturing.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Nova’s sales grew at an incredible 26.7% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Nova’s annualized revenue growth of 30.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Nova reported year-on-year revenue growth of 14.3%, and its $222.6 million of revenue exceeded Wall Street’s estimates by 0.7%. Despite the beat, this was its third consecutive quarter of decelerating growth, potentially indicating a coming cyclical downturn. Company management is currently guiding for a 6.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 11.6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Nova’s DIO came in at 177, which is 5 days below its five-year average. These numbers show that despite the recent increase, there’s no indication of an excessive inventory buildup.
Key Takeaways from Nova’s Q4 Results
It was good to see Nova provide revenue guidance for next quarter that slightly beat analysts’ expectations. On the other hand, its inventory levels increased. Zooming out, we think this was a mixed quarter. The market seemed to be hoping for more, and the stock traded down 4.3% to $455.56 immediately after reporting.
Is Nova an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
