Nova Ltd.

Good day and welcome to NOVA's third quarter 2021 results. Today's conference is being recorded. At this time, I would like to turn the conference over to Mary Segal, CEO of MSIR. Please go ahead.

Thank you, Operator, and good day to everybody. I would like to welcome all of you to NOVA's third quarter 2021 financial results conference call. With us on the line today are Mr. Ethan Oppenheim, President and CEO, and Mr. Dror David, CFO. Before 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. Eitan will begin the call with a business update, followed by a drawer with an overview of the financials. We will then open the call for the question and answer session. I'll now hand over the call to Mr. Eitan Oppenheim, Novus President and CEO. Eitan, please go ahead.

Thank you, Mary, and welcome everyone to our quarterly conference call. I will start the call today by speaking about our quarterly results and performance highlights. Following my commentary, DRAW will review the financial results in detail, including the guidance for the fourth quarter of 2021. NOVA's track record of consistent outperformance and strong execution was evident in the third quarter results, with both revenue and profit exceeding our guidance and reaching another record high. Although we are not immune to the various challenges in the supply chain, these outstanding results demonstrate the strong momentum in our core markets and our ability to navigate efficiently in this environment to satisfy our customers' demands. Our record performance over the last five quarters also signifies the strength and the agility of our financial model which allows us to keep expanding production output and investing in new technologies while still meeting our long-term strategy of profitable growth. The impact of multiple technology transitions in chip design continues to drive growth across a broad range of applications. The impact of COVID on consumer behavior, along with industry secular drivers like data storage, mobile infrastructure, AI and digital transformation are now augmented by strategic decisions to redistribute capacity over different geographies in order to ensure supply independence. These elements are creating pressure simultaneously on multiple semiconductor technology nodes across different chip manufacturing lines. While we continue to deliver a solution to the most high-end technology nodes we also continue to deliver systems to the trailing edge nodes that support the growth of traditional applications. In the exigent environment, we are well positioned to keep fortifying our market advantages as we continue rolling out new metrology solutions. Delivery of a combination of new and traditional platforms to a wide range of fabrication nodes drove records booking this quarter, which increased our backlog significantly for the following quarters. With our current guidance in place for the fourth quarter and following my comments during the previous earning call about the potential upside for the year end, we now forecast the company revenue for the year to surpass $412 million in revenues. This forecast indicates growth of more than 50% year over year. Turning now to our business highlights for the quarter, revenue contributions was weighted towards logic across different technologies. While we continue delivering our solution to the most advanced nodes below seven nanometers, we also increased our delivery to the more trailing nodes across various traditional applications. The strong demand for our logic solutions is reflected in our geographical distribution with growing activity in Taiwan, China, Korea, and U.S. We expect this demand, along with new site construction, to continue in 2022 as well. On the memory side, we continue to experience solid DRAM demand with expectations for additional NAND spending as we enter The growing demand for our portfolio drove several notable achievements this quarter. The first one to mention is the record contribution of our materials metrology portfolio. Against the backdrop of broad demand for advanced semiconductors, the growing complexity of materials engineering has struck a high note in our offering. The next generation devices require a better approach to control different materials properties along with the ambitious architectural design. As complexity increases, inline materials process control in etch, lithography, and deposition become crucial to yield improvement and drive growing metrology attach rates. Nova's strategy to lead this market resonates well in our results as both our XPS Veriflex and Raman Ellipson products were adopted by multiple customers. Beyond the immediate effect on our business growth, the initiative to move more laboratories' capabilities to inline manufacturing capabilities resonates well with our strategy as we continue to develop new technologies to allow production hubs to better control of each step of their process. Following this encouraging progress, we announced this quarter two major wins for the Veriflex and Ellipson platforms with leading memory and logic customers. These wins represent a solid business potential for 2022 as well. The second achievement to notice is the record income from our software products. Our software stand-alone portfolio is now implemented by our leading customers and allow them to utilize more effectively the hardware platforms. Combining our physical modeling and advanced mathematical training engines over a connected fleet of tools in various stages allows Nova to achieve better results using a smaller data set with much greater accuracy and repeatability. We continue increasing investments in these areas, which we view as our most encouraging competitive advantage. The third milestone to highlight is our new service revenue record. In the current environment, customers are investing simultaneously in both extending their existing nodes and expanding into new ones. Revenue this year from services is expected to hit a record high with a wide range of drivers including upgrades, improved productivity, software enhancement, and advanced service contracts. The growing demand for Nova's innovative portfolio in both memory and logic for materials and dimensions metrology pushes our development cadence forward with new products and offerings. Our focus this year continues to be the Prism standalone rollout, the expansion of the materials offering, and the investment in advanced software prediction capabilities. During the third quarter, we made exceptional progress in all of these directions. This direction putting us in a very strong proliferation position towards 2022. A notable achievement in this regard was the continued adoption by several customers of our standalone OCD Prism platform for advanced memory. In response to the surge demand during 2021, we are working intensively to expand our production capacity, which grew more than 60% this year. With growth in all our product lines, we continue to optimize our output around the globe and plan to open two new clean room facilities next year in Fremont, US and Israel. As other companies Companies mentioned we are not immune to the supply chain disruptions in this dynamic market. As materials and chip keep being short, transportation and increasing prices are constantly changing. Yet, as reflected in our outstanding results, we continue to navigate well these challenges in order to extend our growth into 2022. Before I hand over the call to draw, let me recap my notes for this quarter. It has been yet another outstanding quarter and a milestone for Nova, where for the first time we crossed the $100 million quarterly revenue mark as a direct result of our well-executed plans towards the Nova 500 strategy. Against the backdrop of global chip shortage, the growing demand for our innovative portfolio continues to pave the way to another outperformance year in 2021, and builds a positive and encouraging momentum towards 2022. With that, let me hand over the call to draw to review our financial results in details.