Cohu, Inc.

Good day, and thank you for standing by. Welcome to CoHUE's third quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please advise that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeff Jones, Chief Financial Officer. Please go ahead.

Good afternoon and welcome to our conference call to discuss Cohue's third quarter 2024 results and fourth quarter outlook. I'm joined today by our President and CEO, Louise Mueller. If you need a copy of our earnings release, you may access it from our website at cohue.com or by contacting Cohue Investor Relations. There's also a slide presentation in conjunction with today's call that may be accessed on CoHUE's website in the investor relations section. Replays of this call will be available via the same page after the call concludes. Now to the safe harbor. During today's call, we will make forward-looking statements reflecting management's current expectations concerning CoHUE's future business. These statements are based on current information that we have assessed, but which by its nature is subject to rapid and even abrupt changes. We encourage you to review the forward-looking statement section of the slide presentation and the earnings release, as well as COHU's filings with the SEC, including the most recently filed Form 10-K and Form 10-Q. Our comments speak only as of today, October 31, 2024, and COHU assumes no obligation to update these statements for developments occurring after this call. Finally, during this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings release and slide presentation for reconciliations to the most comparable GAAP measures. Now I'd like to turn the call over to Luis Mueller, COEU's president and CEO. Luis?

Hello, and welcome to your quarterly earnings call. Third quarter non-GAAP gross margin was strong at approximately 47%. Gross margin benefited from initial revenue of some new products and lower manufacturing costs. Jeff will get into more details on these later. Revenue of $95.3 million was split 67% recurring in the balanced systems, continuing to demonstrate the resilience of our business model during a market downturn. Systems revenue increased sequentially in automotive and mobile segments. although offset by declines in computing, consumer, and industrial. The mobile segment was strongest in third quarter at 12% of consolidated revenue. Mobile also posted 13% year-over-year revenue growth, defining a turning point in a segment that was first into this market downturn. We had a significant test cell design win last quarter at a top five automotive semiconductor manufacturer. With this win, Cohue is delivering a combined tester, handler, and interface solution for testing power management devices. We're excited to see traction with our Diamond X in the mixed signal market and expect to have additional good news in the coming quarters as more customers are evaluating our platform. While market conditions remain soft across our primary segments in automotive and industrial, We're busy realigning our investments to outsize growth opportunities. We made good progress recently entering the memory and silicon carbide power semiconductor markets. Earlier today, we announced a customer order for our NEON inspection metrology platform configured for high bandwidth memory, also known as HBM. The HBM market is estimated to be approximately $23 billion today, and projected to grow about 22% a year through the end of this decade. We're pleased to have received an initial order from one of the world's leading semiconductor memory manufacturers, marking a big strategic win with substantial growth opportunities in the next couple of years. We believe the industry is purchasing approximately $100 million of inspection metrology equipment for this HBM manufacturing process step today, and expanding at a fast pace to keep up with AI data center demand. NEON offers a highly efficient vision system, enabling full six-sided optical inspection and measurement of micropillars, along with vision optimization powered by Cohuse AI inspection technology. We're expecting follow-on orders in early 2025 to support a production ramp in the second half of next year. We also announced today that a leading European customer has selected Kohu for high-speed handling and inspection of silicon carbide dyes. We have been providing inspection metrology systems to silicon carbide manufacturing now for over a year, but this solution extends our offering into burn-in tasks at the dye level. Kohu's product configuration will significantly improve yield and productivity, eliminating more than 40% losses through burning of tested good-only dies. We'll also be supplying a high-power test interface for 2.5 kilovolts test per die, satisfying stringent automotive zero defect requirements. The silicon carbide market is poised to grow at 25% CAGR through 2029, and we're pleased to be an enabler of the next generation of devices coming to market in 2025. Now turning to our DI Core software platform, several customers have expressed interest in our data analytics software that is demonstrating yield and productivity gains. While we have validations running at multiple customers, in Q3, a key Kohu customer placed orders to expand use of our AI inspection software. This subscription-based software solution optimizes inspection yield through a convolutional neural network machine. In other words, it uses deep learning models to process vision data. We're excited to expand Cohu's recurring business with machine learning analytics. Although this is still a small part of our total revenue, the level of customer engagement and interest in our solutions is exceeding our expectations. Putting this a bit in context, We estimate that the semiconductor back-end manufacturing industry is spending about $600 million in data analytics for process control, data visualization, connectivity, and predictive applications. These investments are focused on positioning our products to growth applications, but also enabling our customers to expand use of factory automation and support on and near shoring semiconductor manufacturing. We're committing resources to making this a growth vector in our strategy, expanding our recurring revenue with subscription software aligned with our customers' push for what is known as Industry 4.0. I'm expecting to see some very exciting years ahead of CodeHue as we enter the memory market, expanding silicon carbide applications, including burn-in and stress desk, and very importantly, build on our analytics platform. Let me now turn it over to Jeff to provide further details on last quarter results and next quarter guidance. Jeff?