Nova reported its second quarter on 6 August 2026, before the open. We are writing about it today.
Every figure here was verified against the Form 6-K filed with the SEC, accession number 0001178913-26-003892. Even so, errors, inaccuracies or omissions are possible, and the figures may change after publication. Spotted something that looks wrong? Write to me and I will correct it.
What Nova Actually Does
Before the numbers, it is worth understanding what the company sells, because that explains why it is relevant to everything we wrote this week about AI infrastructure.
Nova, based in Rehovot, sells metrology systems to chip fabs. Metrology means measurement. When a fab makes a chip, it lays down films a few atoms thick and then etches patterns into them. Nobody can inspect that by eye. Nova's systems are what measure it: whether the layer is the right thickness, whether the etch landed where it should, and whether the chemistry is right.
Why does this matter now? Because every expansion of chip capacity runs through equipment like this. When a fab builds a new line for AI processors, it buys measurement tools too. Nova does not make chips. It sells to the people who do.
The Quarter: A Record in Almost Every Line
| The quarter | A year ago | |
|---|---|---|
| Revenue | $254.96 million | $219.99 million |
| of which, products | $201.47 million | $177.83 million |
| of which, services | $53.49 million | $42.16 million |
| Gross profit | $144.16 million | $127.25 million |
| Operating income | $76.19 million | $65.64 million |
| Net income | $75.01 million | $68.29 million |
| Adjusted net income | $86.46 million | $70.40 million |
This is a good quarter. Record revenue, past the $250 million mark for the first time, and growth of 15.9%. Services grew 26.9%, faster than products.
And Now the Thing Worth Noticing
Nova's release carries a highlight line worded like this:
"Record GAAP net income of $75.0 million, or $2.20 per diluted share, 8% increase QoQ, and up 3% YoY"
Read it again. The sentence opens with "record GAAP net income of $75.0 million" and closes with "up 3% YoY". The reasonable reader will join the two and conclude that net income rose 3%.
It did not. Net income went from $68.29 million to $75.01 million, which is 9.8%.
The 3% is the growth rate of earnings per share - from $2.14 to $2.20, a rise of 2.8%.
Where did six percentage points go? Into the share count. Diluted shares grew from 32.05 million to 34.45 million, up 7.5%. Net income grew 9.8%, but it is divided among more shareholders. What is left per share grew only 2.8%.
The same thing repeats on the adjusted line. The release says "up 14%" next to adjusted net income of $86.5 million. Adjusted net income rose 22.8%. The 14% is, again, per share.
And here is what makes it a genuine trap: in the very same release, on the revenue line, the percentages do refer to revenue. Identical sentence structure, different basis.
To be fair: nothing here is improper and nothing is hidden. Every number appears in the filing, and the arithmetic is open to anyone willing to do it. But a reader who takes only the highlight lines comes away with the wrong picture, and that is what we are here for.
Three Other Things I Saw
Gross margin compressed. 56.5% for the quarter, against 57.8% a year ago and 57.7% in the prior quarter, roughly 130 basis points of erosion. Gross profit grew 13.3% while revenue grew 15.9% - the company is selling more and earning less on each dollar of sales.
Cash flow fell while profit rose. First-half operating cash flow was $81.0 million, against $114.2 million a year earlier. First-half net income actually rose, from $133.1 million to $144.3 million. When profit rises and cash falls, it is worth asking where the money went.
The answer is in receivables. In the cash flow statement, trade receivables were a use of $59.4 million of cash this half, against a source of $6.5 million in the comparable half. A swing of roughly $66 million. Nova sold more and has not yet collected. For an industrial equipment vendor that is not automatically a warning sign, but it explains the gap.
One more balance-sheet detail: the $733.6 million of convertible notes was reclassified from long-term to current liabilities. Total current liabilities jumped from $224.5 million to $936.6 million. Against that Nova holds about $1.72 billion of liquidity, so there is no solvency question here. But it is why the balance sheet suddenly looks completely different, and that is not because the business changed.
Guidance
For the third quarter Nova expects revenue of $277 million to $287 million, and adjusted EPS of $2.70 to $2.85.
The midpoint, about $282 million, is roughly 10.6% above the quarter just reported. Unlike Datadog, SolarEdge and Taboola this week, here the guide is bigger than the quarter, not smaller.
And the stock still fell 5.23%, closing at $381.32.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
What interests me in this report is not the quarter, but how it is told.
Nova delivered a genuine record quarter. Record revenue, record profit, and a guide above the quarter just reported - exactly what the three companies that crashed this week were missing. On its face this is a good story.
And yet the highlight line places "record net income" next to "up 3%", and those two numbers are not talking about the same thing. I do not think this is deliberate misdirection. I think it is an example of how easy it is to read an earnings release and come away with the opposite conclusion.
What I take from it is a working rule, not an insight about Nova: when a release puts a percentage next to an amount, it is always worth checking what the percentage refers to. Net income and earnings per share are two different things the moment the share count moves, and here it moved 7.5%.
The second thing I take is about margin. A company selling equipment into an industry in expansion should be enjoying operating leverage. Nova is selling more and earning less per dollar, and that is what I want to see in the next quarter.
