NASDAQ:NVMI Nova Q2 2023 Earnings Report $200.72 +6.84 (+3.53%) Closing price 04:00 PM EasternExtended Trading$182.23 -18.49 (-9.21%) As of 07:26 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Nova EPS ResultsActual EPS$0.97Consensus EPS $0.83Beat/MissBeat by +$0.14One Year Ago EPSN/ANova Revenue ResultsActual Revenue$122.70 millionExpected Revenue$121.00 millionBeat/MissBeat by +$1.70 millionYoY Revenue GrowthN/ANova Announcement DetailsQuarterQ2 2023Date8/3/2023TimeN/AConference Call DateThursday, August 3, 2023Conference Call Time8:30AM ETUpcoming EarningsNova's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Nova Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 3, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day, and welcome to Nova's Second Quarter 2023 Results Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Miri Segal of MSIR. Please go ahead. Speaker 100:00:23Thank you, operator, and good day to everybody. I would like to welcome all of you to Nova's 2nd quarter 2023 financial results conference Call. With us on the line today are Mr. Gabbi Weissmann, President and CEO and Mr. Dror David, CFO. Speaker 100:00:41Before we begin, may I remind our listeners that certain information provided on this call may contain forward looking statements and the Safe Harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, Please view it in the Investor Relations section of the company's website. Gabby will begin the call with a business update, followed by Dror with an overview of the financials. We will then open the call for the question and answer session. I'll now turn the call over to Mr. Speaker 100:01:18Gabby Wiseman, Nova's President and CEO. Gabby, please go ahead. Speaker 200:01:25Thank you all for joining our 2nd quarter financial results conference call. I will start the call by speaking about our quarterly results and performance highlights. Following my commentary, Dror will review the quarter's financial results in detail and then conclude with the guidance for the Q1 of 2023. Nova's results for the quarter Met our expectations, highlighting the resilience of our portfolio, our wide exposure to new advanced applications and a well maintained operational model, which effectively combines customers' focus and our roadmap for continuous investment in every division. The value of our broad materials and dimensional portfolio helps us drive increased traction with several notable achievements this quarter, including new penetrations and additional orders following successful evaluations of our new products. Speaker 200:02:24These opportunities will allow us to broaden our position and capitalize on larger opportunities once the industry fully recovers. We are taking necessary steps to ensure Nova's near term healthy business performance and profitability for the remainder of 2023. Just as we performed in the first half, we are also confident about our long term strategy and ability to deliver going forward. We are committed to executing our strategic plan towards $1,000,000,000 in revenue and we aim to resume our accelerated growth path. We are building our business, our infrastructure and technology offerings to be ready for the industry when it resumes growth. Speaker 200:03:11This quarter, we diversified revenue streams in each of our product divisions with a continued proliferation of advanced materials 1st, our newest integrated metrology platform Just completed a successful evaluation with the world's leading foundry in the most advanced node, presenting significant performance enhancements and addressing the customers' need for cutting edge productivity and accuracy towards a faster time to market and high yields. 2nd, our Nova Prism standalone OCD platform is transferring to high volume manufacturing in a leading foundry and recently penetrated a new memory manufacturer. The value of Prism for advanced nodes front end processes In both logic and memory is becoming increasingly clear buoyed further by significant interest in the platform's unique technology In advanced packaging and more specifically in what we can do in hybrid bonding process steps. 3rd, we just delivered another Alexon tool to a leading IBM and we have additional evaluations in progress As our ability to bring Raman technology to the fab, garnered a lot of interest and not just in the leading edge. In addition, the Veriflex platform secured several new customers and continued proliferation within our existing customer base. Speaker 200:04:49Finally, our Chemical Metrology division is already inherently embedded in packaging and advanced packaging processes and benefits from a recent increase in demand for high bandwidth memory. Additionally, the division is breaking ground Several new customers this quarter, a strategic new evaluation at the leading IDM and our front end AncoSys solution gaining traction across nodes. We are successfully leveraging Nova's exposure to front end processes to open the door for our chemical metrology portfolio, while also leveraging our strong customer relationships to ramp up sales and explore opportunities in the back end of line. Our revenues are derived from multiple territories with China generating approximately a third of our sales, driven by greenfield customers and significant capacity expansions in mature and trailing nodes. Other regions where we see great potential are the European and U. Speaker 200:05:56S. Territories propelled by government incentives and global players building capacity outside their homelands. Beyond regionalization, Nova benefits from its broad exposure to the foundrylogic sector and to the majority of semiconductor CapEx. Nearly 80% of our revenue this quarter was generated by foundrylogic customers and approximately half of that stemmed from mature and trailing notes. This is the result of our ability to leverage the shift from a market Driven by our unique technology enabling value, we achieved significant traction with a leading memory customer this quarter, making Korea our 2nd largest territory. Speaker 200:06:54The increasing interest in Nova's unique technology offerings For front end, back end and advanced packaging applications, at the potential new addressable markets are more building blocks for our future growth. Nova's rich and differentiated portfolio is built to meet the challenges of next generation device fabrication, Our complementary offering for 3 d architecture devices allow customers to gain a better insight into the most complicated semiconductor structures through a wider view of geometrical dimensions, Physical Material Properties and Chemical Analytics. One example of that is our Veriflex platform that has become a technology enabler and it therefore exerts higher resilience to demand fluctuations. If you want to successfully run high k metal gate processes, Veraflex is a requirement in the fab from first silicon to correctly characterize composition and measure ultra film film thickness. It is true for FinFET processes and even more so for gate all around and 3 d memory. Speaker 200:08:09Another example is the Nova ELIXON with a field proven crucial ability to successfully characterize Nanosheets. And of course Prism, which I mentioned earlier, brings unique abilities to the table, adding new information inaccessible by current optical CV methods. I want to take a minute to also highlight the opportunity we see 3 d stacking and heterogeneous integration in advanced packaging, it is essentially a way to maintain Moore's Law And to achieve higher bandwidth, lower latency and power along with higher yield. Integration cases abound from CMOS Sensors to 3 d NAND and 3 d DRAM. Furthermore, advanced packaging allows mid range and mature mode manufacturers An alternative scaling route to EUV expanding the opportunity beyond gate all around. Speaker 200:09:06These new advanced packaging schemes necessitate process steps such as fruit silicon via, backside pile delivery, Hybrid Bonding and WaferEdge CMP. They demand tighter process control on smaller, denser interconnects as well as tall highly complex multilayered structures requiring more measurements to ensure package integrity. The Nova Prism has a proven advantage over our competitors in some of the applications I mentioned and our market leading portfolio allows manufacturers to utilize optical CV technology for advanced packaging in completely new ways. So you can see why we are encouraged by the interest from existing and new customers in previously untapped processes and market segments across multiple territories. To conclude my prepared comments, We are working on multiple fronts to ensure that Nova is ready for the turn of the tide. Speaker 200:10:08We're expanding the range of applications our solutions address, Broadening our customer base, increasing our market share and enhancing our relationships with the world's leading manufacturers. We're investing in infrastructure, technology and in building long term capacity. We are confident in our ability to deliver constant performance in the coming quarters and to leverage new opportunities when the market rebounds. Now let me hand over the call to Dror to review our financial results in detail. Dror? Speaker 300:10:45Thanks, Gabby. Good day, everyone, and thank you for joining our 2023 second quarter conference call. Total revenues in the Q2 of 2023 were $122,700,000 Above the midpoint of our guidance and down 13% year over year reflecting the current lower investment levels in memory and in Leading Logic and Foundry. Product revenue distribution was approximately 80% from Logic and Foundry and Approximately 20% from Memory. Product revenues included 3 customers and 4 main territories contributing each more than 10% to product revenues. Speaker 300:11:33The wider territory distribution reflects And improved territorial diversification relative to previous periods driven by the increasing investments in the Western Territories of the U. S. And Europe. Blended gross margin in the 2nd quarter was 57% on a GAAP basis and 59% on a non GAAP basis at the high end of the company non GAAP target model of 57% to 59%. Operating expenses remained stable in the 2nd quarter and came in at $41,000,000 on a GAAP basis and $38,000,000 on a non GAAP basis, reflecting management focus on restraining costs in the current business environment. Speaker 300:12:25Operating margins in the 2nd quarter were 23% on a GAAP basis and 28% on a non GAAP basis within the company non GAAP target model of 27% to 31%. This excellent result was driven by the healthy gross margins and the prudent cost control initiatives implemented by the management. Financial income for the quarter increased to approximately 5 2nd quarter was approximately 13%, slightly lower than our target model of 14% to 15%. Earnings per share in the 2nd quarter on a GAAP basis were $0.94 per diluted share And earnings per share on an aggregate basis were $1.06 per diluted share at the high end of our 2nd quarter guidance. This result coincides with management commitment to generate quarterly earnings per share of $1 or more or the equivalent $4 or more in annual earnings per share on annual revenues of approximately $500,000,000 a year. Speaker 300:13:50Finally, I would like to share the details of our guidance for the Q3 of 2023. Currently, we expect revenues to be between $119,000,000 $126,000,000 GAAP earnings per diluted share are expected to range from $0.83 to $0.94 Non GAAP earnings per diluted share are expected to range from $1.02 to 1 $0.13 At the midpoint of the Q3 2023 estimate, we anticipate the following: Gross margins to be approximately 56% on a GAAP basis and approximately 58% on a non GAAP basis within the company non GAAP target model. Operating expenses on a GAAP basis are expected to decrease to approximately 40,000,000 Operating expenses on a non GAAP basis are expected to decrease to approximately 36,000,000 This reduction reflects management determination to restrain expenses in the current environment. However, looking forward, we do expect operating expenses to gradually increase towards the end of the year and into 2024. Financial income and tax rate are expected to be similar to the 2nd quarter. Speaker 300:15:23To conclude my remarks, I want to mention the company's cash and working capital management. In the first half of twenty twenty three, The company generated operating cash flow of approximately $50,000,000 or 19 percent of revenues. In parallel, we continue to aggressively invest in manufacturing capacity expansions, in IT infrastructure and in additional offices to support sales and services at new sites. As a result, We expect elevated capital investments throughout the remainder of 2023 and throughout 2024. In addition, as Gabby mentioned, we continue to expand our investment in product evaluations at customer sites to meet the heightened customer interest and the growing application space of our most advanced product portfolio. Speaker 300:16:21Finally, I would like to highlight the cash reserves of the company, which increased to approximately 570,000,000 and provide the required flexibility to pursue organic and non organic business development activities towards executing the $1,000,000,000 strategic plan. With that, I will turn the call back over to Gabby. Gabby? Speaker 200:16:50Yes. I would like to open the session for Q and A. Operator00:17:01Thank you very much. We will now begin the question and answer session. Our first question comes from Vivek Arya from Bank of America. Vivek, please go ahead. Speaker 400:17:59This is Doug San on behalf of Vivek. I just want to touch on the trailing edge Portion that you talked about, so it's about 50% of foundry and logic. A lot of your peers are seeing strengths here and they see this to continue into next year. So I'm curious if you're seeing similar things. And if so, what kind of visibility do you have to support that view. Speaker 400:18:23Thank you. Speaker 200:18:26So we share this notion and we do expect it To continue towards 2024, but I do expect some of the advanced nodes to Kick in at some point of time, elevating the share of Advanced relative to the trailing and mid range during 2024. Speaker 400:18:52Got it. Got it. And then in terms of just trailing edge specifically, Is it the new products that you're ramping where you see the strengths from? Or is it any other kind of views that you have? Speaker 200:19:09It's a combination of investing in areas such as in automotive, analog power, IoT And of course some expansions into advanced packaging and other areas. So it's actually the mix Between different customers, geographies and focused areas of investment that drive those specific nodes. Speaker 400:19:38Got it. And then just one on memory. I think you said you had a significant traction at your memory customers and Korea was the 2nd largest geography. How much is this related to the HBM kind of ramp that we're seeing in the industry versus non HPM? Thank you. Speaker 200:19:59So it's still not related to it. But as I mentioned during the call, We do expect high bandwidth memory to increase even further towards the second half of the year. Speaker 400:20:14Thank you. Speaker 200:20:14It currently relates to other capabilities that we have presented in offering us the unique Speaker 400:20:31Understood. Thanks. Operator00:20:37And our next question comes from Quinn Bolton from Needham and Company. Quinn, please go ahead. Speaker 400:20:49Hey, Gabby and Gerrard. This is Darren Lynn on for Quinn Bolton. Thanks for letting me ask the question today. So I have a couple of questions. The first being, in the press release you mentioned an increasing number of tool valuations for advanced packaging applications. Speaker 400:21:03Can you sort of discuss where Nova plays in advanced packaging markets, specifically what tools are under evaluation? And also could you discuss Nova's opportunity in hybrid bonding and how large the TAM could be in hybrid bonding for Nova? Thank you. Speaker 200:21:20So we are currently focusing on our dimensional metrology portfolio in positioning in both advanced Packaging as well as the hybrid bonding. This is related to capabilities on the wafer edge as well as the FruSilicon Via, Where we are seeing our technology capable of delivering better cost of ownership and of course better performance. In terms of the TAM, we expect this the TAM for these particular products to reach about $200,000,000 in 2027. Speaker 400:22:02Great. Thank you for the color. And if I can just squeeze one more in. You mentioned the additional placements for the Veriflex tool. How do you see the TAM for VERIPLEX? Speaker 400:22:12And do you see it continuing to expand going forward? Speaker 200:22:17So the Veriflex platform is gaining traction in both existing And new customers, we see that accelerating with the new generation of our tools that are offering And even better cost of ownership and definitely addressing the most challenging requirements from these customers. And we expect the TAM of these tools to reach about $400,000,000 in 2027. Speaker 400:22:53Great. Understood. Thank you very much. Operator00:23:09And now we follow with a question from Firdre Shwadri from Jefferies. Madrati, please go ahead. Speaker 500:23:20Yes. Thanks for taking my question. The first one I had is, could you talk about the timelines you're seeing for K Dollar Round ramps? Have they shifted or come In the recent quarters? Speaker 200:23:38They have not Shifted in a significant way. I think that our customers are definitely driving forward with the plans for gate all around. We expect the time line to remain as anticipated previously Throughout the coming 2 years. Speaker 500:24:02Got it. And then if you're like If I think about the penetration with your materials portfolio, right, the Viroflex, the Ellipton and your positioning with Kate All Around. Do you think there's kind of more room for adoption That you're still in that evaluation process. And how like How do you gauge like what percentage adoption is there and what would go in as you start ramping these technologies? Speaker 200:24:40So we, as I mentioned already, delivered the 2nd Elixson tool to a leading IBM in the Q2 of the year. And we have delivered additional tools for evaluations. We definitely see the great potential that this tool has sorry for both strain, stress and crystallinity, Not only in advanced notes by the way, which is becoming very interesting, but definitely the take up rate It's going to be determined after the evaluation or after some of those evaluations considering the specific layers and applications that this tool is going to A product tool of record for and we definitely believe in the potential of this tool to cover A myriad of such layers and applications. We've started with a few. We see that growing and I believe it will continue to grow As customers become more acquainted with the capabilities of this tool. Speaker 500:25:44Got it. And then I guess a last one. So have you characterized recently your contribution from the chemical metrology products? And you mentioned that that's driving that's benefiting from the growth in HBM. Can you give us a sense of what percentage of Your revenue that lines up to? Speaker 300:26:07You mean the chemical how much is the chemical metrology from our business? Speaker 500:26:13Yes. Speaker 300:26:15So when we acquired this new technology, we said that it's More or less around 5% and we hope to grow the annual contribution from this product line in the coming quarters to around 10%. So this product line is actually growing its portion of the revenues And we want to reach around 10% in the coming quarters. Speaker 500:26:44And is that mostly HBM driven? Speaker 200:26:48It's not only HBM driven, but HBM definitely propels the business, specifically in the second half of this year. And we see a lot of potential And the adoption of those tools in HBM, which is becoming a crucial component in driving some of the AI New business that is coming. Speaker 500:27:16All right. That's helpful. Thank you. Operator00:27:24And this concludes our question and answer session. I would like to turn the conference back over to Kavy Weisman, Nova's President and CEO for some closing remarks. Speaker 200:27:38Thank you all for taking the time to join our call today. We look forward to meeting many of you in person in the upcoming investor conferences. Thank you very much. Operator00:27:55And this concludes the conference. Thank you for attending today's presentation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallNova Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Nova Earnings HeadlinesNova Measuring Instruments Q1 2025 Earnings PreviewMay 7 at 4:48 PM | msn.comNova Ltd. (NVMI): Among Billionaire Jim Simons’ RenTech’s Small-Cap Stock Picks with Huge Upside PotentialMay 3, 2025 | insidermonkey.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.May 7, 2025 | Paradigm Press (Ad)Nova Ltd. (NVMI): Among Billionaire Jim Simons’ RenTech’s Small-Cap Stock Picks with Huge Upside PotentialMay 3, 2025 | finance.yahoo.comShould You Think About Buying Nova Ltd. (NASDAQ:NVMI) Now?May 2, 2025 | finance.yahoo.comHow Nova Turned Metrology Into A Profit MachineMay 2, 2025 | seekingalpha.comSee More Nova Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Nova? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Nova and other key companies, straight to your email. Email Address About NovaNova (NASDAQ:NVMI) designs, develops, produces, and sells process control systems used in the manufacture of semiconductors in Israel, Taiwan, the United States, China, Korea, and internationally. Its product portfolio includes a set of metrology platforms for dimensional, films, and materials and chemical metrology measurements for process control for various semiconductor manufacturing process steps, including lithography, etch, chemical mechanical planarization, deposition, electrochemical plating, and advanced packaging. The company serves various sectors of the integrated circuit manufacturing industry, including logic, foundries, and memory manufacturers, as well as process equipment manufacturers. Nova Ltd. was formerly known as Nova Measuring Instruments Ltd. and changed its name to Nova Ltd. in July 2021. Nova Ltd. was incorporated in 1993 and is headquartered in Rehovot, Israel.View Nova ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Disney Stock Jumps on Earnings—Is the Magic Sustainable?Archer Stock Eyes Q1 Earnings After UAE UpdatesFord Motor Stock Rises After Earnings, But Momentum May Not Last Broadcom Stock Gets a Lift on Hyperscaler Earnings & CapEx BoostPalantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release? Upcoming Earnings Monster Beverage (5/8/2025)Brookfield (5/8/2025)Anheuser-Busch InBev SA/NV (5/8/2025)ConocoPhillips (5/8/2025)Cheniere Energy (5/8/2025)McKesson (5/8/2025)Shopify (5/8/2025)Enbridge (5/9/2025)Petróleo Brasileiro S.A. - Petrobras (5/12/2025)Simon Property Group (5/12/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 6 speakers on the call. Operator00:00:00Good day, and welcome to Nova's Second Quarter 2023 Results Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Miri Segal of MSIR. Please go ahead. Speaker 100:00:23Thank you, operator, and good day to everybody. I would like to welcome all of you to Nova's 2nd quarter 2023 financial results conference Call. With us on the line today are Mr. Gabbi Weissmann, President and CEO and Mr. Dror David, CFO. Speaker 100:00:41Before we begin, may I remind our listeners that certain information provided on this call may contain forward looking statements and the Safe Harbor statement outlined in today's earnings release also pertains to this call. If you have not received a copy of the release, Please view it in the Investor Relations section of the company's website. Gabby will begin the call with a business update, followed by Dror with an overview of the financials. We will then open the call for the question and answer session. I'll now turn the call over to Mr. Speaker 100:01:18Gabby Wiseman, Nova's President and CEO. Gabby, please go ahead. Speaker 200:01:25Thank you all for joining our 2nd quarter financial results conference call. I will start the call by speaking about our quarterly results and performance highlights. Following my commentary, Dror will review the quarter's financial results in detail and then conclude with the guidance for the Q1 of 2023. Nova's results for the quarter Met our expectations, highlighting the resilience of our portfolio, our wide exposure to new advanced applications and a well maintained operational model, which effectively combines customers' focus and our roadmap for continuous investment in every division. The value of our broad materials and dimensional portfolio helps us drive increased traction with several notable achievements this quarter, including new penetrations and additional orders following successful evaluations of our new products. Speaker 200:02:24These opportunities will allow us to broaden our position and capitalize on larger opportunities once the industry fully recovers. We are taking necessary steps to ensure Nova's near term healthy business performance and profitability for the remainder of 2023. Just as we performed in the first half, we are also confident about our long term strategy and ability to deliver going forward. We are committed to executing our strategic plan towards $1,000,000,000 in revenue and we aim to resume our accelerated growth path. We are building our business, our infrastructure and technology offerings to be ready for the industry when it resumes growth. Speaker 200:03:11This quarter, we diversified revenue streams in each of our product divisions with a continued proliferation of advanced materials 1st, our newest integrated metrology platform Just completed a successful evaluation with the world's leading foundry in the most advanced node, presenting significant performance enhancements and addressing the customers' need for cutting edge productivity and accuracy towards a faster time to market and high yields. 2nd, our Nova Prism standalone OCD platform is transferring to high volume manufacturing in a leading foundry and recently penetrated a new memory manufacturer. The value of Prism for advanced nodes front end processes In both logic and memory is becoming increasingly clear buoyed further by significant interest in the platform's unique technology In advanced packaging and more specifically in what we can do in hybrid bonding process steps. 3rd, we just delivered another Alexon tool to a leading IBM and we have additional evaluations in progress As our ability to bring Raman technology to the fab, garnered a lot of interest and not just in the leading edge. In addition, the Veriflex platform secured several new customers and continued proliferation within our existing customer base. Speaker 200:04:49Finally, our Chemical Metrology division is already inherently embedded in packaging and advanced packaging processes and benefits from a recent increase in demand for high bandwidth memory. Additionally, the division is breaking ground Several new customers this quarter, a strategic new evaluation at the leading IDM and our front end AncoSys solution gaining traction across nodes. We are successfully leveraging Nova's exposure to front end processes to open the door for our chemical metrology portfolio, while also leveraging our strong customer relationships to ramp up sales and explore opportunities in the back end of line. Our revenues are derived from multiple territories with China generating approximately a third of our sales, driven by greenfield customers and significant capacity expansions in mature and trailing nodes. Other regions where we see great potential are the European and U. Speaker 200:05:56S. Territories propelled by government incentives and global players building capacity outside their homelands. Beyond regionalization, Nova benefits from its broad exposure to the foundrylogic sector and to the majority of semiconductor CapEx. Nearly 80% of our revenue this quarter was generated by foundrylogic customers and approximately half of that stemmed from mature and trailing notes. This is the result of our ability to leverage the shift from a market Driven by our unique technology enabling value, we achieved significant traction with a leading memory customer this quarter, making Korea our 2nd largest territory. Speaker 200:06:54The increasing interest in Nova's unique technology offerings For front end, back end and advanced packaging applications, at the potential new addressable markets are more building blocks for our future growth. Nova's rich and differentiated portfolio is built to meet the challenges of next generation device fabrication, Our complementary offering for 3 d architecture devices allow customers to gain a better insight into the most complicated semiconductor structures through a wider view of geometrical dimensions, Physical Material Properties and Chemical Analytics. One example of that is our Veriflex platform that has become a technology enabler and it therefore exerts higher resilience to demand fluctuations. If you want to successfully run high k metal gate processes, Veraflex is a requirement in the fab from first silicon to correctly characterize composition and measure ultra film film thickness. It is true for FinFET processes and even more so for gate all around and 3 d memory. Speaker 200:08:09Another example is the Nova ELIXON with a field proven crucial ability to successfully characterize Nanosheets. And of course Prism, which I mentioned earlier, brings unique abilities to the table, adding new information inaccessible by current optical CV methods. I want to take a minute to also highlight the opportunity we see 3 d stacking and heterogeneous integration in advanced packaging, it is essentially a way to maintain Moore's Law And to achieve higher bandwidth, lower latency and power along with higher yield. Integration cases abound from CMOS Sensors to 3 d NAND and 3 d DRAM. Furthermore, advanced packaging allows mid range and mature mode manufacturers An alternative scaling route to EUV expanding the opportunity beyond gate all around. Speaker 200:09:06These new advanced packaging schemes necessitate process steps such as fruit silicon via, backside pile delivery, Hybrid Bonding and WaferEdge CMP. They demand tighter process control on smaller, denser interconnects as well as tall highly complex multilayered structures requiring more measurements to ensure package integrity. The Nova Prism has a proven advantage over our competitors in some of the applications I mentioned and our market leading portfolio allows manufacturers to utilize optical CV technology for advanced packaging in completely new ways. So you can see why we are encouraged by the interest from existing and new customers in previously untapped processes and market segments across multiple territories. To conclude my prepared comments, We are working on multiple fronts to ensure that Nova is ready for the turn of the tide. Speaker 200:10:08We're expanding the range of applications our solutions address, Broadening our customer base, increasing our market share and enhancing our relationships with the world's leading manufacturers. We're investing in infrastructure, technology and in building long term capacity. We are confident in our ability to deliver constant performance in the coming quarters and to leverage new opportunities when the market rebounds. Now let me hand over the call to Dror to review our financial results in detail. Dror? Speaker 300:10:45Thanks, Gabby. Good day, everyone, and thank you for joining our 2023 second quarter conference call. Total revenues in the Q2 of 2023 were $122,700,000 Above the midpoint of our guidance and down 13% year over year reflecting the current lower investment levels in memory and in Leading Logic and Foundry. Product revenue distribution was approximately 80% from Logic and Foundry and Approximately 20% from Memory. Product revenues included 3 customers and 4 main territories contributing each more than 10% to product revenues. Speaker 300:11:33The wider territory distribution reflects And improved territorial diversification relative to previous periods driven by the increasing investments in the Western Territories of the U. S. And Europe. Blended gross margin in the 2nd quarter was 57% on a GAAP basis and 59% on a non GAAP basis at the high end of the company non GAAP target model of 57% to 59%. Operating expenses remained stable in the 2nd quarter and came in at $41,000,000 on a GAAP basis and $38,000,000 on a non GAAP basis, reflecting management focus on restraining costs in the current business environment. Speaker 300:12:25Operating margins in the 2nd quarter were 23% on a GAAP basis and 28% on a non GAAP basis within the company non GAAP target model of 27% to 31%. This excellent result was driven by the healthy gross margins and the prudent cost control initiatives implemented by the management. Financial income for the quarter increased to approximately 5 2nd quarter was approximately 13%, slightly lower than our target model of 14% to 15%. Earnings per share in the 2nd quarter on a GAAP basis were $0.94 per diluted share And earnings per share on an aggregate basis were $1.06 per diluted share at the high end of our 2nd quarter guidance. This result coincides with management commitment to generate quarterly earnings per share of $1 or more or the equivalent $4 or more in annual earnings per share on annual revenues of approximately $500,000,000 a year. Speaker 300:13:50Finally, I would like to share the details of our guidance for the Q3 of 2023. Currently, we expect revenues to be between $119,000,000 $126,000,000 GAAP earnings per diluted share are expected to range from $0.83 to $0.94 Non GAAP earnings per diluted share are expected to range from $1.02 to 1 $0.13 At the midpoint of the Q3 2023 estimate, we anticipate the following: Gross margins to be approximately 56% on a GAAP basis and approximately 58% on a non GAAP basis within the company non GAAP target model. Operating expenses on a GAAP basis are expected to decrease to approximately 40,000,000 Operating expenses on a non GAAP basis are expected to decrease to approximately 36,000,000 This reduction reflects management determination to restrain expenses in the current environment. However, looking forward, we do expect operating expenses to gradually increase towards the end of the year and into 2024. Financial income and tax rate are expected to be similar to the 2nd quarter. Speaker 300:15:23To conclude my remarks, I want to mention the company's cash and working capital management. In the first half of twenty twenty three, The company generated operating cash flow of approximately $50,000,000 or 19 percent of revenues. In parallel, we continue to aggressively invest in manufacturing capacity expansions, in IT infrastructure and in additional offices to support sales and services at new sites. As a result, We expect elevated capital investments throughout the remainder of 2023 and throughout 2024. In addition, as Gabby mentioned, we continue to expand our investment in product evaluations at customer sites to meet the heightened customer interest and the growing application space of our most advanced product portfolio. Speaker 300:16:21Finally, I would like to highlight the cash reserves of the company, which increased to approximately 570,000,000 and provide the required flexibility to pursue organic and non organic business development activities towards executing the $1,000,000,000 strategic plan. With that, I will turn the call back over to Gabby. Gabby? Speaker 200:16:50Yes. I would like to open the session for Q and A. Operator00:17:01Thank you very much. We will now begin the question and answer session. Our first question comes from Vivek Arya from Bank of America. Vivek, please go ahead. Speaker 400:17:59This is Doug San on behalf of Vivek. I just want to touch on the trailing edge Portion that you talked about, so it's about 50% of foundry and logic. A lot of your peers are seeing strengths here and they see this to continue into next year. So I'm curious if you're seeing similar things. And if so, what kind of visibility do you have to support that view. Speaker 400:18:23Thank you. Speaker 200:18:26So we share this notion and we do expect it To continue towards 2024, but I do expect some of the advanced nodes to Kick in at some point of time, elevating the share of Advanced relative to the trailing and mid range during 2024. Speaker 400:18:52Got it. Got it. And then in terms of just trailing edge specifically, Is it the new products that you're ramping where you see the strengths from? Or is it any other kind of views that you have? Speaker 200:19:09It's a combination of investing in areas such as in automotive, analog power, IoT And of course some expansions into advanced packaging and other areas. So it's actually the mix Between different customers, geographies and focused areas of investment that drive those specific nodes. Speaker 400:19:38Got it. And then just one on memory. I think you said you had a significant traction at your memory customers and Korea was the 2nd largest geography. How much is this related to the HBM kind of ramp that we're seeing in the industry versus non HPM? Thank you. Speaker 200:19:59So it's still not related to it. But as I mentioned during the call, We do expect high bandwidth memory to increase even further towards the second half of the year. Speaker 400:20:14Thank you. Speaker 200:20:14It currently relates to other capabilities that we have presented in offering us the unique Speaker 400:20:31Understood. Thanks. Operator00:20:37And our next question comes from Quinn Bolton from Needham and Company. Quinn, please go ahead. Speaker 400:20:49Hey, Gabby and Gerrard. This is Darren Lynn on for Quinn Bolton. Thanks for letting me ask the question today. So I have a couple of questions. The first being, in the press release you mentioned an increasing number of tool valuations for advanced packaging applications. Speaker 400:21:03Can you sort of discuss where Nova plays in advanced packaging markets, specifically what tools are under evaluation? And also could you discuss Nova's opportunity in hybrid bonding and how large the TAM could be in hybrid bonding for Nova? Thank you. Speaker 200:21:20So we are currently focusing on our dimensional metrology portfolio in positioning in both advanced Packaging as well as the hybrid bonding. This is related to capabilities on the wafer edge as well as the FruSilicon Via, Where we are seeing our technology capable of delivering better cost of ownership and of course better performance. In terms of the TAM, we expect this the TAM for these particular products to reach about $200,000,000 in 2027. Speaker 400:22:02Great. Thank you for the color. And if I can just squeeze one more in. You mentioned the additional placements for the Veriflex tool. How do you see the TAM for VERIPLEX? Speaker 400:22:12And do you see it continuing to expand going forward? Speaker 200:22:17So the Veriflex platform is gaining traction in both existing And new customers, we see that accelerating with the new generation of our tools that are offering And even better cost of ownership and definitely addressing the most challenging requirements from these customers. And we expect the TAM of these tools to reach about $400,000,000 in 2027. Speaker 400:22:53Great. Understood. Thank you very much. Operator00:23:09And now we follow with a question from Firdre Shwadri from Jefferies. Madrati, please go ahead. Speaker 500:23:20Yes. Thanks for taking my question. The first one I had is, could you talk about the timelines you're seeing for K Dollar Round ramps? Have they shifted or come In the recent quarters? Speaker 200:23:38They have not Shifted in a significant way. I think that our customers are definitely driving forward with the plans for gate all around. We expect the time line to remain as anticipated previously Throughout the coming 2 years. Speaker 500:24:02Got it. And then if you're like If I think about the penetration with your materials portfolio, right, the Viroflex, the Ellipton and your positioning with Kate All Around. Do you think there's kind of more room for adoption That you're still in that evaluation process. And how like How do you gauge like what percentage adoption is there and what would go in as you start ramping these technologies? Speaker 200:24:40So we, as I mentioned already, delivered the 2nd Elixson tool to a leading IBM in the Q2 of the year. And we have delivered additional tools for evaluations. We definitely see the great potential that this tool has sorry for both strain, stress and crystallinity, Not only in advanced notes by the way, which is becoming very interesting, but definitely the take up rate It's going to be determined after the evaluation or after some of those evaluations considering the specific layers and applications that this tool is going to A product tool of record for and we definitely believe in the potential of this tool to cover A myriad of such layers and applications. We've started with a few. We see that growing and I believe it will continue to grow As customers become more acquainted with the capabilities of this tool. Speaker 500:25:44Got it. And then I guess a last one. So have you characterized recently your contribution from the chemical metrology products? And you mentioned that that's driving that's benefiting from the growth in HBM. Can you give us a sense of what percentage of Your revenue that lines up to? Speaker 300:26:07You mean the chemical how much is the chemical metrology from our business? Speaker 500:26:13Yes. Speaker 300:26:15So when we acquired this new technology, we said that it's More or less around 5% and we hope to grow the annual contribution from this product line in the coming quarters to around 10%. So this product line is actually growing its portion of the revenues And we want to reach around 10% in the coming quarters. Speaker 500:26:44And is that mostly HBM driven? Speaker 200:26:48It's not only HBM driven, but HBM definitely propels the business, specifically in the second half of this year. And we see a lot of potential And the adoption of those tools in HBM, which is becoming a crucial component in driving some of the AI New business that is coming. Speaker 500:27:16All right. That's helpful. Thank you. Operator00:27:24And this concludes our question and answer session. I would like to turn the conference back over to Kavy Weisman, Nova's President and CEO for some closing remarks. Speaker 200:27:38Thank you all for taking the time to join our call today. We look forward to meeting many of you in person in the upcoming investor conferences. Thank you very much. Operator00:27:55And this concludes the conference. Thank you for attending today's presentation. You may now disconnect.Read morePowered by