Semiconductor production equipment company Kulicke & Soffa (NASDAQ: KLIC) reported Q2 CY2025 results topping the market’s revenue expectations, but sales fell by 18.3% year on year to $148.4 million. On top of that, next quarter’s revenue guidance ($170 million at the midpoint) was surprisingly good and 7.4% above what analysts were expecting. Its non-GAAP profit of $0.07 per share was 27.3% above analysts’ consensus estimates.
Is now the time to buy Kulicke and Soffa? Find out by accessing our full research report, it’s free.
Kulicke and Soffa (KLIC) Q2 CY2025 Highlights:
- Revenue: $148.4 million vs analyst estimates of $145.8 million (18.3% year-on-year decline, 1.8% beat)
- Adjusted EPS: $0.07 vs analyst estimates of $0.06 (27.3% beat)
- Adjusted Operating Income: $1.59 million vs analyst estimates of -$931,670 (1.1% margin, significant beat)
- Revenue Guidance for Q3 CY2025 is $170 million at the midpoint, above analyst estimates of $158.3 million
- Adjusted EPS guidance for Q3 CY2025 is $0.22 at the midpoint, above analyst estimates of $0.19
- Operating Margin: -4.1%, down from 4.6% in the same quarter last year
- Free Cash Flow Margin: 3.7%, down from 13.3% in the same quarter last year
- Inventory Days Outstanding: 182, up from 171 in the previous quarter
- Market Capitalization: $1.71 billion
Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "We continue to execute on multiple technology transitions supported by parallel customer engagements. As we expand our portfolio, we are unlocking new opportunities across general semiconductor, memory, automotive, and industrial markets. Additionally, we are encouraged by positive market feedback of our latest solutions and also by recent order momentum within our highest-volume regions."
Company Overview
Headquartered in Singapore, Kulicke & Soffa (NASDAQ: KLIC) is a provider of production equipment and tools used to assemble semiconductor devices
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Kulicke and Soffa’s sales grew at a sluggish 2.4% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a poor baseline 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.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Kulicke and Soffa’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 10.8% annually. 
This quarter, Kulicke and Soffa’s revenue fell by 18.3% year on year to $148.4 million but beat Wall Street’s estimates by 1.8%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 6.2% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
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, Kulicke and Soffa’s DIO came in at 182, which is 23 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.
Key Takeaways from Kulicke and Soffa’s Q2 Results
It was good to see Kulicke and Soffa beat analysts’ revenue, EPS, and adjusted operating income expectations this quarter. We were also excited its guidance for next quarter outperformed Wall Street’s estimates by a wide margin. A slight blemish is that its inventory levels materially increased. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 4.2% to $33.43 immediately after reporting.
Indeed, Kulicke and Soffa had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.