Third-quarter 2026 earnings call, November 4, 2026
Camtek reported record third-quarter revenue of $161.3 million, up 28% year over year and 21% sequentially, and gave its first formal view of 2027: revenue of more than $800 million, roughly 35% growth on the approximately $595 million now expected for 2026. The more important point for investors is the quality of that visibility. CEO Rafi Amit said that "for the first time in Camtek history, we have visibility extending approximately 1 year ahead," as customers book delivery slots through 2027 to secure capacity on the company's production floor. The offset is a gross margin that came in below management's own expectations, which is the main blemish on an otherwise strong print.
Order Books Are Being Used to Reserve Capacity, Not Just Fill Demand
Orders exceeded $800 million in the year through the company's SEMICON West investor event roughly three weeks earlier, and management said momentum has continued since. About 80% of those orders relate to advanced packaging, nearly all of it high-end and AI-driven, and OSATs accounted for slightly more than 50% of the total. COO Ramy Langer said the company is already booking second-half 2027 slots.
Langer was candid that some of this ordering is about securing space rather than immediate need. Lead times, typically 3 to 6 months, are lengthening, and some customers are placing orders a year ahead. In his words, "this is not that they necessarily need the machines today. They just want to secure capacity on our floor for the time that there are clean rooms or whatever they need." That supports visibility, but it also means some of the order book reflects customer precaution in a tight equipment market, a distinction investors should keep in mind when extrapolating bookings.
Management declined to say how much of the $800 million 2027 outlook is covered by backlog, describing the figure as an initial outlook and the backlog as "significant." On quarterly shape, Langer expects 2027 to be "stable," with capacity being filled progressively. Fourth-quarter revenue is guided to about $180 million, up 40% year over year.
Gross Margin Is the Weak Spot, With Recovery Dependent on Pricing
Gross margin was 51.1%, against 51.4% in the second quarter. CFO Moshe Eisenberg said the company was "a bit disappointed" by the level. Industry-wide supply tightness has raised the cost of parts, components and materials, and a stronger shekel against the dollar has added pressure on the Israeli cost base. Cost-reduction initiatives and a richer product mix were not enough to offset this. Operating margin still expanded to 29.5% from 27%, helped by operating leverage, with operating profit at a record $47.5 million. Net income was $50.3 million, or $0.99 per diluted share.
Management expects gradual gross margin improvement beginning in the first quarter of 2027, driven by four factors: higher average selling prices, mix shift toward the newest platforms, cost initiatives and a growing software and service contribution. Eisenberg said the company has "already started to increase our ASPs." Langer described two tracks: modest increases to pass through component inflation, which customers broadly understand, and larger increases tied to added capabilities in the machines, for which he said customers are "receptive to pay more." He could not say whether the pricing benefit is already embedded in the $800 million outlook and hoped for "some upside" as 2027 develops. The shekel remains outside management's control, and Eisenberg only hoped it "will balance out" next year.
Supply Chain Constraints Are Real but Presented as Manageable
Asked by Needham's Charles Shi what is short, Langer pointed to general industry components rather than anything specific to Camtek. Memory and CPUs are scarce and more expensive, and there are shortages of general-purpose parts, mainly in the handling section of the tools. Camtek generally has dual sources, so the task is to shift volume from the first source to the second. Langer expects this to resolve within 3 to 6 months, though he conceded it is "my feeling" and that "we're not sure about it." Elsewhere in the call he suggested it could be 1 or 2 quarters, "maybe longer." Management maintained that no customer delivery schedules will be missed. This is a single-supplier issue in part, as Amit acknowledged a challenge with a limited number of suppliers, and it is a risk to watch given how much of the 2027 plan depends on on-time delivery.
Software Moves From Zero to Double-Digit Millions in 2027
The call added useful detail on the software ambition outlined at the investor event. Eisenberg said service revenue is about $40 million this year and growing 35% to 40% annually, which implies roughly $100 million within three years from the existing business. A further $40 million is assumed from new software, with potential upside. Camtek currently has "pretty much 0" software revenue. Langer expects double-digit millions of dollars of software revenue in 2027, with initial sales hoped for in the first quarter, built on the platform acquired with Visual Layer and focused on AI-based capabilities such as defect classification. Service growth is attributed to a larger installed base of about 4,000 systems and rising tool complexity.
Long-Term Target of $1.2 Billion, With Hybrid Bonding Still Out of the Numbers
Management reiterated a target of $1.2 billion in revenue within about three years at a 34% to 36% operating margin, described as organic and excluding any substantial M&A. Amit acknowledged it is "an ambitious target." Hybrid bonding is not a 2027 driver. Langer said Camtek is seeing some business but "on a low magnitude," with material revenue expected from 2028. The most likely source of upside to 2027 is share gain in 2D inspection steps rather than any single end market, and Langer said new upside would likely become visible in the first and second halves of 2027.
The newest platforms, Eagle G5 and Hawk, accounted for about 57% of system revenue. Langer expects the share to exceed 55% next year but cautioned against assuming 80%, since customers with fast production ramps are reluctant to qualify a new tool. HBM represented more than 20% of orders when last quantified two quarters ago, and Langer expects HBM inspection and 3D metrology to be significant in 2027 without giving a figure.
Competition and Demand Risks Dismissed, Though Not Quantified
Management dismissed competitive threats. Langer said Camtek sees no threat from small Chinese suppliers and sees China as a place to gain share, while larger entrants face a long development path in areas such as metrology, flexible handling and fluorescence inspection. "They are bigger than us. But in the specific market that we play, we are significantly larger," he said. Eisenberg added that China in the 2027 backlog is at least as large as this year. On reports of thermal compression bonding delays for HBM, Langer said Camtek sees no change to its plans. Conventional advanced packaging, about 15% of revenue on average, has shown no softening. Asia accounted for 95% of third-quarter revenue, and cash and securities stood at $877.1 million, with $71.1 million of operating cash flow in the quarter.