CAMT — Q2 2026 Financial Report Analysis

Camtek, an Israeli maker of machines that inspect and measure computer chips while they are being made, reported record quarterly revenue of $133.2 million for the second quarter of 2026 (April–June), up 8% from a year earlier and above the top of its own $129–131 million forecast. Profit went the other way: GAAP net income (profit under standard accounting rules) fell 31% to $23.3 million, and diluted earnings per share fell from $0.69 to $0.46. Three things drove that gap: spending on research and development grew far faster than sales, the company booked a $7.7 million one-time tax charge, and it closed the acquisition of an AI software company, Visual Layer. The bigger news in the release is forward-looking: Camtek says orders received so far in 2026 exceed $600 million, and it guided for a jump to $158–160 million of revenue in the third quarter.

At a glance

• $133.2M revenue (+8% YoY, +10% vs Q1): a record, and $2.2 million above the high end of the guidance Camtek gave in May.
• $0.46 diluted EPS (–33% YoY): about half of the drop is the one-time tax charge; the rest is operating costs rising faster than revenue.
• $158–160M Q3 revenue guidance: a 20% jump from Q2 and roughly 25–27% above Q3 2025's ~$126 million, backed by what the company calls record order backlog.

The numbers

Operating margin is the share of revenue left after paying for making the product and running the business, before interest income and tax. Gross margin is the share left after only the direct cost of building the machines. "Non-GAAP" figures are the company's own adjusted version, which strips out share-based pay, acquisition costs and this quarter's one-time tax item.

Why profit fell while revenue hit a record

Costs grew three times faster than sales. Revenue rose 8%, but total operating expenses rose 29%, from $30.6 million to $39.5 million. Most of that was R&D, up 45% to $16.7 million. Some of the increase is the newly acquired Visual Layer team (the release lists $0.2 million of acquisition-related compensation under R&D, so the deal itself is only a small part of the jump); the rest reflects a deliberate expansion of engineering, which management describes as heavy investment in "advanced AI-based algorithms and software capabilities." SG&A (selling, general and administrative costs) rose 19%, including $2.6 million of one-time deal expenses for the Visual Layer acquisition.

Gross margin was roughly flat. At 50.1% versus 50.8%, the factory side of the business held steady; part of the slip is $1.1 million of acquisition accounting charges (inventory revalued to fair value and amortization of acquired intangibles) booked in cost of revenues. On the adjusted basis, gross margin was 51.4% versus 51.9%.

Tax took a much bigger bite. Income tax expense was $10.9 million on $34.2 million of pre-tax income, a 32% effective rate, versus $3.2 million (about 9%) a year earlier. The reconciliation table attributes $7.7 million to "one-time tax expenses"; the release does not explain what the charge relates to. Without it, net income would have been about $31.0 million, down about 8% instead of 31%.

Interest income is propping up the bottom line. "Financial income, net," mostly interest on Camtek's cash and securities, rose to $7.0 million from $4.9 million. That is about a fifth of pre-tax income this quarter. It reflects a much larger cash pile ($815.8 million at June 30, 2026, against $522.6 million at March 31, 2025), much of it matched by convertible notes now carried as a $488.5 million liability, rather than anything the inspection business did.

Where the growth is coming from

Camtek sells to two main types of customer: memory makers building HBM (high-bandwidth memory, the stacked memory chips used alongside AI processors) and OSATs (outsourced assembly and test companies, which package chips for other chipmakers). Both are tied to "advanced packaging," the step where several chips are stacked or placed side by side into one unit, which needs a lot of inspection because each stack has thousands of tiny connections.

The release does not break revenue down by customer type or region, but management's comments point clearly at AI demand:

• Orders received year-to-date exceed $600 million, more than the company's entire 2025 revenue of $496.1 million, with deliveries scheduled through the rest of 2026 and into 2027.
• Camtek expects its advanced packaging revenue to grow about 70% between Q1 and Q4 2026.
• Separate filings during the quarter announced specific orders: over $105 million in June from a tier-1 OSAT ($55 million) and a leading HBM maker (over $50 million, all for its newest Hawk systems), both for 2027 delivery.

Put simply, revenue reported this quarter reflects orders placed months ago; the order surge of early 2026 has mostly not shown up in revenue yet.

What the headline numbers hide

• Cash is not keeping up with profit. Operating cash flow was $12.2 million in Q2 and $3.1 million in Q1, so $15.3 million for the half year against $55.0 million of net income, under 30% conversion. In 2025 the company generated $142.6 million of operating cash flow for the full year, so this is a sharp change.
• The reason is unpaid customer bills. Trade receivables (money customers owe for machines already delivered) rose from $90.8 million at December 31, 2025 to $131.7 million at March 31 and $153.9 million at June 30, a 69% increase in six months while first-half revenue grew 5%. At the current pace, Camtek is waiting roughly 105 days on average to be paid, against about 65 days at the end of 2025. The release gives no explanation. It may reflect timing of shipments late in the quarter or longer payment terms with large customers, but until receivables flatten this is the first number to check next quarter.
• Inventory went the right way. Short-term inventory fell from $112.2 million in December to $99.8 million, consistent with the company shipping systems out of stock rather than building up unsold machines.
• The adjusted figures exclude a lot this quarter. Non-GAAP net income of $39.4 million is $16.1 million above GAAP: $7.7 million one-time tax, $4.9 million share-based pay and $3.6 million of acquisition-related items. Share-based pay is a real, recurring cost to shareholders, so the adjusted EPS of $0.78 flatters the picture. The $0.46 GAAP figure is the more conservative read; the truth for recurring earnings power sits between the two, closer to about $0.60 if only the one-time tax charge is set aside.
• More shares. The diluted share count used for EPS rose 4.4% to 51.5 million (basic shares rose 2.1%, the rest is potentially dilutive securities such as the convertible notes). That alone takes about 3 cents off EPS compared with last year's share count.
• Cash fell $33.9 million in the quarter (from $849.7 million to $815.8 million) even with positive operating cash flow. Over the same period goodwill on the balance sheet rose $38.4 million to $112.7 million, which is consistent with cash spent on Visual Layer. Camtek did not disclose the purchase price.

Guidance: raised, and the near-term bar is high

Takeaway: This quarter's profit drop comes mostly from spending decisions and a one-time tax charge, not from weak demand. Orders tell the opposite story: more than $600 million booked so far this year. Whether the second-half ramp shows up in revenue and in cash is what matters now, and the 69% rise in unpaid customer bills is the warning sign to watch.

• Q3 2026: revenue of $158–160 million, a 20% jump from Q2.
• Second half 2026: more than 30% revenue growth over the first half. In May the company had guided for "over 25%," so this is an upgrade. On first-half revenue of $254.9 million, it implies at least $331 million in H2, and therefore a fourth quarter of roughly $171 million or more.
• 2027: "continued growth," with some of the announced orders already scheduled for 2027 delivery.

Our view: The revenue outlook rests on orders the company has already received rather than hoped-for demand, which makes it more credible than a typical forecast. Margins should benefit as revenue rises faster than the now-larger cost base: R&D and SG&A are largely fixed in the short run, so an extra $25 million of quarterly revenue at a roughly 50% gross margin should flow mostly to operating income. The open questions are (1) whether receivables start turning into cash as the backlog ships; (2) how dependent the order book is on a small number of AI-related customers, which the release doesn't quantify; and (3) the risk factors Camtek itself flags, including Middle East hostilities affecting its Israeli operations and shipping routes, and changing US export rules. Camtek's Q3 results should be out in roughly mid-November 2026; a print within the $158–160 million range with operating margin back above 25% would confirm the operating leverage case.

This is Camtek's first report on this site, so there is no earlier analysis to check against. On the company's own record: in May it guided Q2 revenue to $129–131 million and delivered $133.2 million, and it raised its second-half growth outlook from "over 25%" to "more than 30%."

Source: Camtek Form 6-K furnished August 10, 2026, containing the Q2 2026 results press release with unaudited financial statements. As a foreign private issuer, Camtek files quarterly results as press releases rather than a full 10-Q, so there is no segment breakdown or detailed management discussion beyond what is quoted here.