Revenue growth has re-accelerated to 10.3% year-over-year in 2026Q2, driving operating margin expansion to 11.5% from 6.2% a year prior, though gross margin remains volatile at 43.1% below its 2025 peak.
Novanta Inc. Tangible Equity Units (NOVTU) annual income statement — 1-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 |
|---|
| Sales/Revenue | 1.03B | 980.6M |
| Revenue Growth % | - | - |
| Cost of Goods Sold | 591.34M | 572.79M |
| COGS % of Revenue | - | 58.41% |
| Gross Profit | 438.36M | 407.81M |
| Gross Margin % | 42.57% | 41.59% |
| Gross Profit Growth % | - | - |
| Operating Expenses | 325.12M | 291.14M |
| OpEx % of Revenue | - | 29.69% |
| Selling, General & Admin | 217.34M | 195.66M |
| SG&A % of Revenue | - | 19.95% |
| Research & Development | 94.18M | 95.48M |
| R&D % of Revenue | - | 9.74% |
| Other Operating Expenses | 1000K | 0 |
| Operating Income | 113.24M | 116.66M |
| Operating Margin % | 11% | 11.9% |
| Operating Income Growth % | - | - |
| EBITDA | 174.84M | 178.6M |
| EBITDA Margin % | 16.98% | 18.21% |
| EBITDA Growth % | - | - |
| D&A (Non-Cash Add-back) | 61.6M | 61.93M |
| EBIT | 106.2M | 91.11M |
| Net Interest Income | -12.96M | -21.47M |
| Interest Income | 0 | 0 |
| Interest Expense | 12.96M | 21.47M |
| Other Income/Expense | -33.55M | -47.02M |
| Pretax Income | 79.69M | 69.64M |
| Pretax Margin % | 7.74% | 7.1% |
| Income Tax | 17.92M | 15.81M |
| Effective Tax Rate % | 22.49% | 22.71% |
| Net Income | 61.76M | 53.83M |
| Net Margin % | 6% | 5.49% |
| Net Income Growth % | - | - |
| Net Income (Continuing) | 61.76M | 53.83M |
| Discontinued Operations | 0 | 0 |
| Minority Interest | 0 | 0 |
| EPS (Diluted) | 1.50 | 1.47 |
| EPS Growth % | - | - |
| EPS (Basic) | - | 1.47 |
| Diluted Shares Outstanding | 41.16M | 36.7M |
| Basic Shares Outstanding | 41.01M | 36.59M |
| Dividend Payout Ratio | - | - |
Quick answers to the most common questions about buying NOVTU stock.
For fiscal year 2025, Novanta Inc. Tangible Equity Units (NOVTU) reported total revenue of $980.6M. This represents a 0.0% increase compared to $980.6M in 2025.
Novanta Inc. Tangible Equity Units (NOVTU) is profitable, generating $53.8M in net income for the fiscal year ending 2025 with a net profit margin of 5.5%.
Novanta Inc. Tangible Equity Units (NOVTU) reported an operating income of $116.7M, resulting in an operating profit margin of 11.9%. This margin reflects the operational efficiency of the business before interest and taxes.
Novanta Inc. Tangible Equity Units (NOVTU) generated $407.8M in gross profit for the year, representing a gross profit margin of 41.6%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Margin compression from cost inflation
Revenue Growth Re-Acceleration
Novanta's revenue growth has re-accelerated to a 10.3% year-over-year rate in 2026Q2, following a period of slower top-line expansion, suggesting a strengthening demand environment for its precision components and subsystems.
The sequential acceleration in revenue growth, from approximately 10.4% in Q1 to 10.3% in Q2, represents a solid two-quarter run of double-digit growth after no growth was reported in the prior year periods. This indicates the company is successfully capturing share in its end markets, which likely include medical and industrial applications, following a period of inventory digestion or macro uncertainty.
Gross Margin Volatility Amid Reinvestment
Gross margin contracted sharply to 40.7% in 2025Q4 but has since recovered to 43.1% in 2026Q2, indicating a potential mix shift toward higher-value products or improved pricing, though it remains below the 44-45% peak seen in mid-2025.
The fluctuation suggests Novanta's margins are sensitive to product mix and possibly input cost dynamics. The recovery in the most recent two quarters, as reported in its financials, appears to be driven by operational improvements or favorable sales mix, but the volatility warrants monitoring to assess if it reflects cyclical pressures or a structural shift in the business portfolio.
SG&A Discipline Drives Operating Leverage
Operating margin expanded significantly to 11.5% in 2026Q2, up from 6.2% a year prior, driven by operating leverage as SG&A growth was substantially contained relative to revenue expansion.
While gross profit grew 7.3% year-over-year in Q2, SG&A expenses grew a more modest 27.4% over two years (from $47.1M to $60.0M), but as a percentage of revenue, SG&A has declined from 19.5% to 22.6%—a slight increase. The key driver appears to be the sharp decline in R&D spending as a percentage of sales, from 10.5% in 2025Q2 to 9.0% in 2026Q2, which has flowed through to the operating line and suggests management is prioritizing profitability over investment in the current cycle.
Stock-Based Compensation Erodes Net Income
Reported diluted EPS of $0.30 in 2026Q2 includes $9.8 million in stock-based compensation, a significant non-cash charge that appears to have fully offset the operating profit growth and suppressed net income relative to operating performance.
The substantial stock-based compensation expense, as noted in the financial data, creates a wedge between operating income and net income. In Q2, operating income was $30.6M while net income was only $12.5M, a gap widened by SBC and likely taxes. This indicates the quality of reported earnings is diluted by equity-based pay, which investors should monitor as it directly reduces the cash flow available to shareholders and may indicate management's compensation philosophy is aggressive.
Margin Sustainability Under Scrutiny
The recent improvement in operating margin to 11.5% may be partially unsustainable, as it coincides with a sharp year-over-year decline in R&D spending as a percentage of revenue, potentially borrowing from future innovation capacity to boost near-term profitability.
A contrarian view would focus on the fact that operating margin expansion has been aided by a reduction in R&D intensity (from 10.5% to 9.0% of sales). While this may reflect efficiency, it could also indicate a temporary pullback in investment that may hamper long-term product development and competitive positioning. Furthermore, the volatile gross margin history suggests the current profitability level is not yet firmly established.