Nova Ltd.

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.

Thank you, operator, and good day to everybody. I would like to welcome all of you to NOVA's second quarter 2023 financial results conference call. With us on the line today are Mr. Gabby Weissman, 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. Gabby will begin the call with the 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 turn the call over to Mr. Gabby Weissman, NOVA's president and CEO. Gabby, please go ahead.

Thank you all for joining our second quarter financial results conference call. I will start the call by speaking about our quarterly results and performance highlights. Following my commentary, Doro will review the quarter's financial results in detail and then conclude with the guidance for the first quarter 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. These 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 billion 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. This quarter, we diversified revenue streams in each of our product divisions with a continued proliferation of advanced materials and dimensional products adopted by existing and new customers. First, 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 customer's need for cutting edge productivity and accuracy towards a faster time to market and high yield. Second, 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. Third, we just delivered another Ellipson tool to a leading IBM and we have additional evaluations in progress as our ability to bring Raman technology to the fab garners 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. Finally, 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 with several new customers this quarter, a strategic new evaluation at the leading IDM, and our front-end ankylosis 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 US territories propelled by government incentives and global players building capacity outside their homelands. Beyond regionalization, Nova benefits from its broad exposure to the foundry logic sector and to the majority of semiconductor CapEx. Nearly 80% of our revenue this quarter was generated by Foundry Logic customers, and approximately half of that stemmed from mature and trailing nodes. This is the result of our ability to leverage the shift from a market predominantly ruled by the leading edge towards the growing investment in more mature nodes. At the same time, driven by our unique technology-enabling value, we achieved significant traction with the leading memory customer this quarter, making Korea our second largest territory. The 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 3D 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-key metal gate processes Veriflex is a requirement in the fab from first silicon to correctly characterize composition and measure ultra-film-film thickness. It is true for FinFET processors and even more so for gate-all-around and 3D memory. Another example is the Nova Ellipson, 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 CD methods. I want to take a minute to also highlight the opportunity we see in 3D 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 3D NAND and 3D DRAM. Furthermore, advanced packaging allows mid-range and mature mode node manufacturers an alternative scaling route to EUV, expanding the opportunity beyond gate all around. These new advanced packaging schemes necessitate process steps such as through silicon via backside power delivery, hybrid bonding, and wafer edge CMP. They demand tighter process control and 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 CD 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. We'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?