Disco Corporation (USOTC:DSCSY) reported robust first-quarter results, with revenue climbing to ¥89.9 billion—an 8.6% year-over-year increase—and operating profit reaching ¥34.4 billion, up 3.3%. The figures follow a recent guidance revision announced on July 9.
The company’s operating profit came in roughly ¥10 billion higher than internal forecasts, excluding currency effects, with an additional ¥4 billion gain attributed to a weaker yen. Gross margin stood at 68.1%, reflecting a 1.7-point drop from the previous quarter. Selling, general, and administrative (SG&A) expenses were reduced by ¥5.7 billion, totaling ¥26.8 billion.
Shipments, viewed as a more accurate indicator of underlying performance, rose 9.8% year-over-year and 20% from the prior quarter to ¥111.1 billion—outpacing the company’s ¥102 billion projection. Equipment shipments surged 28% from Q4, led by a 29% jump in dicer shipments and a 31% rise in grinders. The growth was largely fueled by demand from the generative AI boom, especially in memory-related markets, while OSAT (outsourced semiconductor assembly and test) shipments also contributed.
Part of the strong quarterly showing was attributed to the rollover of delayed Q4 orders into Q1, as well as early deliveries of some Q2 shipments. Consumables rose 5%, in line with forecasts, while “other” shipments grew 8%, outperforming expectations of a 15% drop.
Looking ahead, Disco expects Q2 sales to reach ¥91.2 billion, down 5% year-over-year but up 1% sequentially. Operating profit is forecast at ¥33.2 billion, representing a 22% quarter-over-quarter decline. The company’s outlook is based on assumed exchange rates of ¥135/USD and ¥160/EUR, with potential currency stability offering a possible ¥4 billion boost to profit.
The gross margin is anticipated to fall by roughly two percentage points, largely due to expected yen appreciation. SG&A expenses are projected to increase slightly to around ¥27 billion.
Disco projects second-quarter shipments of ¥83.6 billion—a 25% decline from Q1—due primarily to accelerated deliveries in the previous quarter. Equipment shipments are expected to drop 35%, although generative AI demand is likely to remain a tailwind. Consumables shipments are forecast to rise 5%, while “other” shipments are expected to decline 15%.
Management signaled that shipments should rebound in Q3, with logic demand showing more resilience than memory. However, logic-related shipments are still expected to dip slightly in Q2. The company also cautioned that visibility on generative AI-related demand beyond fiscal 2027 remains limited.
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