Onto Innovation Inc.

You're holding for the onto innovation. We are still on many additional participants and the call should begin shortly. We do thank you for your patience and please continue to stand by. Please stand by. Good day and welcome to the onto innovation second quarter earnings release conference call. Today's conference is being recorded. At this time I'd like to turn the conference over to Sydney Ho. Please go ahead.

Thank you Justin and good afternoon everyone. Onto innovation issued is 2025 second quarter financial results this afternoon after the market closed. Our service provider BusinessWire has technical issues disseminating the release but you can find it on the SEC website at sec.gov or on our GovCompany's website in the investors in the section. Joining us on the call today are Michael Placinski chief executive officer and Brian Roberts chief financial officer. I'd like to remind you that the statements made by management on this call will contain forward looking statements within the meaning of the federal securities laws. Those statements are subject to a range of changes risks and uncertainties that can cause actual results to vary materially. For more information regarding the risk factors that may impact Onto innovation's results. I would encourage you to review our earnings release and our SEC filings. Onto innovation does not undertake the obligation to update these forward looking statements in light of new information or future events. Today's discussion of our financial results will be presented on a non-GAAP financial basis unless otherwise specified. As a reminder a detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release. Let me now turn the call over to our CEO Mike Placinski. Mike.

Thank you Sydney. Good afternoon everyone and thank you for joining us on our call today. Onto innovation delivered a strong second quarter with revenue and operating margin both exceeding the midpoint of our guidance range. More importantly we made excellent progress in new product adoption and announced a strategic agreement to acquire several synergistic product lines from SemiLab International. A deal we expect to close in the coming months pending standard US and Hungarian regulatory approvals. This transaction with SemiLab expands our portfolio of inspection and metrology systems by adding electrical surface metrology, surface charge metrology and materials analysis technology. These additions will allow us to address new challenges facing our advanced nodes and advanced packaging customers as they adopt more exotic materials for use in 3D architectures. For example, the growing demand and complexity for disaggregated devices is creating a need to measure unwanted residual charge on chiplet circuitry. These charges, if not detected, can impact yield when chiplets from different sources are placed on substrates and packaged. Likewise, for new GAAP designs in both logic and memory, electrical metrology may provide critical insights into GAAP performance far earlier in the process. The importance of these technologies are reflected in the portfolio's approximately 20% annual growth over the last five years. A growth far outperforming WFE during that period. The acquired product lines are projected to add over 130 million in annual revenue, be immediately accretive to both growth and operating margin and increase first year earnings per share by more than 10%. With an implied price to EBITDA ratio of 10X, it is clear that this transaction will enhance shareholder value. Now let's turn to our quarterly highlights and our thoughts about the back half of the year. As we discussed on our call in May, following 10% year over year growth for the first half of 2025, we're preparing for a third quarter revenue to represent a low watermark for the business. However, our discussions with customers continue to support a revenue rebound in the fourth quarter consistent with revenue levels we reported in the first two quarters of this year. So let's begin with specialty device and advanced packaging markets. AI packaging remains a key driver for us with innovations in architecture, substrates and interconnect shrinks, creating new opportunities for Dragonfly systems in both 3D and 2D applications. We'll start with the need for high resolution inspection where our next generation Dragonfly platform achieved a significant milestone in the quarter when we successfully validated the platform's optical performance and scan time against our key customers comprehensive new requirements for two and a half D logic packaging. Our Dragonfly platform performed exceptionally well passing all tests and customer pull remains strong. In fact, we are seeing pull from several additional customers exploring the need for more advanced inspection while maintaining the flexibility to serve other applications through the other sensors. As a result, we now expect to ship next gen Dragonfly systems to several customers in the second half of the year. Demand is also growing for our subsurface inspection for use in die stacking process control and die crack inspection and memory and logic applications as well as wafer bonding applications for void and delamination detection. We expect demand to nearly double in the second half over the first half of the year with most shipments expected in the fourth quarter. Likewise, demand for 3DI technology is increasing with tools shipped to more than 10 different customers across an expanding list of applications including memory, logic, OSATs and specialty devices. The precision and speed of the 3DI is showing advantages not only in traditional applications but also in solving new challenges. For example, in two and a half D logic packaging the control of chip height and flatness is critical to downstream processes. Our 3DI in conjunction with other Dragonfly sensors will provide critical data used to control this step in next generation AI packaging architectures. Also in the quarter, the performance of 3DI expanded our 2D position and co-packaged optics with a win over alternative technologies to measure multiple height parameters critical to production of these devices. Though nascent today, the benefit in power savings and performance, particularly for hyperscalers is expected to drive a 30% CAGR over the next five years. In summary, we expect a sharp acceleration in AI logic packaging revenue in the fourth quarter with revenue increasing at least 50% quarter over quarter. This improved expectation has reduced the anticipated decline in this area by half from what we'd initially projected in May. Together with an expected recovery in power revenue specialty device and advanced packaging revenue in the fourth quarter will likely approach peak levels seen in 2024. Now turning to the advanced node market, second quarter revenue from memory markets remain strong led by increased investments in NAND while DRAM remained near record levels. Gate all around revenue, which has grown by more than 50% year over year, did slow in the second quarter as expected. However, we're quite pleased to expand our position in this market by recently winning both Atlas OCD and Iris Films orders, totalling over 20 million from a new customer moving aggressively to release gate all around technology. We expect much of this revenue in the fourth quarter. The continued expansion of our common films business is creating a nice backdrop for the adoption of our new Iris G2 platform specifically designed to serve the estimated 500 million critical films market. As previously discussed, advanced node spending is expected to pause in the third quarter. However, customers continue to indicate a meaningful uptick in the fourth quarter across memory and logic. For the full year, we expect advanced nodes revenue will nearly double as compared to 2024. And as we think about fourth quarter revenue, we're confident that we will see a rebound to levels more consistent with what we have reported in the first and second quarters of this year. This is based upon constructive discussions with customers, meaningful acceleration and AI packaging spend, and an uptick in advanced nodes from what's expected in the third quarter. So before we move into the financials, I wanna take a moment to welcome our new CFO, Brian Roberts. Brian brings over two decades of experience as a public company CFO with a track record of driving financial performance and creating value for stakeholders. His operational rigor and depth of experience are important assets to the team as we build a far more resilient and flexible global operation while at the same time strengthening our overall financial foundation. With that, let me turn the call to Brian to review our financial highlights and provide third quarter guidance. Brian. Thanks, Mike.