Nova Ltd.

Good day and welcome to the NOVA Limited second quarter 2024 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to Miri 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 second quarter 2024 financial results conference call. With us on the line today are Gabby Weissman, President and CEO, and Guy Kisner, 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 the 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 Guy 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 Gaby Weissman, NOVA's President and CEO. Gaby, please go ahead.

Thank you, Miri, and thank you all for joining us today. I will start the call by summarizing our second quarter performance highlights. Following my commentary, Guy Kisner, NOVA's Chief Financial Officer will review the quarterly financial results in detail. Nova delivered an exceptionally strong quarter, exceeding the high end of the guidance in revenue and profit, with record results across the board. Our performance was propelled by our exposure across geographies, customers, and technology nodes, and manifested throughout Nova's dimensional, materials, and chemical metrology portfolios. Our revenue grew 11% sequentially and 28% year over year, and profitability set another unprecedented record. Furthermore, our overall cash reserves reached record levels at approximately $760 million. The strong momentum and the outstanding performance result from our consistent execution. These results also attests to our ability to leverage market opportunities while relying on our flexible operational model to maximize the benefits. Looking at the broader picture, the first half of 2024 revenue came just under $300 million, 17% higher than the same period last year, a significantly higher rate than current forecasts for wafer fab equipment. Given our third quarter guidance, we remain confident in our ability to outperform the market. Going forward, we see a steady increase in demand for leading-edge nodes, including gate-all-around and advanced packaging-related processes, led by customers in Taiwan, Korea, and the US. The upside to our performance this quarter is free-fold. First, the Nova Prism 2 platform's strong performance resulted from a faster-than-expected adoption rate in advanced packaging and gate all-around processes. Second, our chemical metrology division delivered record results driven by increasing demand for our solutions in high bandwidth memory, packaging, and front-end-of-line logic processes. Finally, Our service business grew 19% year-over-year by leveraging the increasing utilization rates to secure contract-based and value-added services sales, rounding up the contribution for this stellar quarter. While these revenue streams stand out, our performance relies on the broad diversity of our portfolio and market presence. with multiple new customers in all product divisions. A company's inherent ability to succeed in our industry's dynamic nature stems from having a myriad of revenue streams that complement and compensate through ebb and flow. NOVA has built this solid foundation through deep partnerships with our customers, flexible operations, and the unwavering dedication of our teams. It makes us confident that we can leverage every opportunity and address any challenge to thrive on our journey and realize our long-term strategic plans. Artificial intelligence is reshaping our digital world and expediting the implementation of scaling agents in integrated circuits to boost performance and power efficiency, which are at the core of enabling large language models through training and inference stages. Scaling is manifested in more complex designs through three avenues, dimensions, materials, and advanced packaging. It is also manifested in the size of manufactured dies and in the number of dies required in solutions such as high bandwidth memory. These developments profoundly impact our industry. in the number of the wafers needed to supply demand and in the yield ratio you must obtain to secure profitability with a lower number of dyes per wafer. Couple that with a growing complexity of architecture and materials and you have the growth drivers of process control in the coming years. We can already see these trends echoed in NOVA's portfolio and performance. There are multiple indications that our differentiated portfolio is well-structured to meet our customer needs of our most advanced critical dimensions and materials solutions. I mentioned Prism 2 earlier as a great example of the rapid adoption of our solutions by the manufacturers already engaged in gate-all-around production. This quarter, we recognize revenue from multiple present two tools. Demand is also consistently high for our advanced integrated metrology and XPS material metrology platforms. We're engaged with all customers developing Gable around production lines, and we estimate the transition will add 20 to 30% to the number of metrology steps. By the end of 2026, we see an opportunity of $500 million in gate-all-around, including adoption of our new technologies. The demand for metrology is not limited to gate-all-around processes, and we also see equipment deliveries driven by the demand for process control in FinFET advanced nodes. Nova had a record booking of Veriflex XPS platforms this quarter, of which over 40% resulted from capacity growth in such nodes. Advanced packaging is a revenue accelerant with significant revenue and booking in chemical and dimensional metrology. Approximately half of PRISM II record bookings stem from advanced packaging processes such as through SiliconVIA, where PRISM has a unique advantage in filtering information from specific underlayers. The platform is also under evaluation in one of the world's leading foundries, alongside our integrated and chemical metrology platform. There is a clear use case of front-end tools at the back-end of advanced nodes, and we were early to respond by creating a dedicated portfolio to address this need. I want to summarize my prepared notes by saying that looking into the second half of 2024, we see robust and diversified booking and a potential upside across all three divisions. we see encouraging indicators that our industry is moving into a growth cycle with strength coming primarily from logic across nodes. We remain vigilant for changes in the market conditions and confident in our ability to deliver on our promise to outperform the market. Now, for more details on the financials, let me hand over the call to Guy.