Welcome to Evercore's first annual TMT conference. Thank you all for joining today. I'm Vedvati Shrotre, at Evercore, and it is my pleasure to welcome our guests, Gaby Waisman, President and CEO of Nova, and Guy Kizner, CFO. Nova is a leading supplier of metrology solutions for front-end semiconductor manufacturing, as well as advanced packaging. With that, thank you very much for making the trip here, and I really appreciate the time. Maybe to kick things off really quickly. You've raised your WFE outlook. We are seeing SK Hynix talk about doubling capacity. Just talk about the visibility you're seeing right now and what that does for your revenue growth in second half 2026 and 2027. First of all, please allow me to thank you for inviting us and all of you for joining and taking the time to listen to us. I think that what we are seeing is definitely a better visibility. The market is growing, and we'll talk about the WFE numbers that keep changing. We do see the momentum and think that the influx of announcements by SK Hynix and more is a testament to the fact that there is a growing interest in semiconductor availability. Customers realize that it has an impact also on their supply chain. The need that they have today is give manufacturers such as us, their suppliers, the visibility in order to get ready on all fronts to supply the equipment. I think this visibility in turn gives us better confidence about the outlook for both this year and next year. We see the growth in both areas. We have indicated the fact that we expect the second half to be stronger than first half, and we do see additional growth next year. Overall, I think that there is a very strong tailwind to the market, and it definitely gives us the opportunity to have a better planning horizon, both for our capacity, our manpower, our supply chain and so forth. There are constraints of course, there are challenges, but this visibility gives us the means to have a better planning for execution that is much needed in order to supply to our customers. Maybe on that. Given that order momentum and the demand backdrop you're seeing, how are you thinking about Nova's capacity in terms of revenue potential today, and what are the expansion plans? Our capacity is part of our strategic plan. As you know, we have our strategic plan ending at 2027, which was originally $1 billion with an organic growth. We updated it to organic growth by 2027 of $1 billion, and that was the baseline for our capacity planning. Obviously, we keep updating that capacity plan, and we have invested significantly in capacity in both 2024 and 2025, more than doubling our capacity across the board. Whereas we have four production centers today, two in Germany, one in Israel, and one in the U.S. We announced another production center in Asia that is going to become operational by the end of this year. That being said, we are about to release our next strategic plan, and we're already planning for capacity requirements for that plan as well. One of the reasons why we keep our capital investments high is in order to accommodate for additional capacity which we anticipate will be required. It's a constant outlook as part of a three to five years plan because it requires investments in either building new clean rooms or having shells being equipped with the right jigs and equipment for production. We are constantly looking at the growth rates in the market and adjusting our plans for capacity. We have the capacity to support our customers. The production center in Asia is definitely going to add much needed boost into overall capacity requirements, especially in that area. We are well positioned in order to support our customers with the growth that they anticipate. On the Asia facility, have you given any color on how big it is? What should we expect compared to your current facilities? We'll definitely give more colors towards the launch of that facility, but it is meaningful in terms of capacity, and it gives us more than just capacity. With our geopolitical world today, being close to the customers, having more diversified supply chains, being able to have the ecosystem and of course with taxation implications, I believe that that additional site is meaningful for us in terms of not only providing capacity, but mitigating the entire geopolitical landscape that we see today. Understood. Maybe shifting gears to the end- market. On foundry logic, a lot has changed in the past two years when you provided that $500 million cumulative gate-all-around revenue target. Is there a potential upside to that target now, and what do you see happening in 2027? Our plan was devised based on the fact that we wanted to have a foothold and a market share and position across all four players. If we look at TSMC, Intel, Samsung and Rapidus, they're all playing in the gate-all-around. They're all investing. Our predominant target was to be present at all, not knowing exactly who is going to invest when and how much? Of course, we know who is investing the most, but we didn't have a crystal ball into understanding whether one of them is going to be more successful than the other or invest more at a certain period of time. Generally speaking, once you have the position and you know the overall capacity requirements of gate-all-around, you can deduct the overall business that you're going to have on an accumulative basis, and I think we're well on track with that plan. That being said, and looking at 2027 momentum, which is going even further, I think that there is a potential for an upside, but we're well on track with the numbers that we've given the market for gate-all-around. Along with these 2 nm expansions, we're also seeing 3 nm capacity build-outs. What are the Nova implications here? One thing to remember is that Nova is selling first and foremost to the high volume manufacturing market or part of the business. Wherever there is a capacity increase, we tap into that in terms of our growth. Now, we're well positioned in that particular node, and every capacity expansion definitely favors us. This is good news. That being said, of course, gate-all-around is more intense in terms of metrology, and we spoke about it, moving from FinFET to gate-all-around. Since we have a very good position in this 3 nm space and we see this capacity investment as very favorable, we definitely tap into that growth, and we're very encouraged by the additional capacity added. Understood. Maybe shifting gears to advanced packaging. It's emerged as one of the fastest-growing areas in WFE as well as for you. You have your advanced packaging revenues almost growing 50% this year. Maybe going from here, what are the low-hanging share gain opportunities you have? Are there any markets that you want to tap into, and what's your product positioning there? First, it's very exciting. Five years ago, we had no position in advanced packaging, and the growth has been staggering. It's phenomenal. What we see is many trends. I'll try to be brief. First of all, we've invested inorganically in order to build a strong position, both on the chemical metrology side as well as in the dimensional metrology, targeting advanced packaging in certain applications such as the TSVs, such as in the RDL, such in topography, and warpage. All of those are applications that are going to be more and more important as we move in the high bandwidth memory structures and definitely moving into a hybrid bonding. On top of that, we have customized our front-end metrology tools into addressing high-end applications in the advanced packaging space, tapping into the unique differentiating capabilities technological-wise that we have. For example, with the spectral interferometry in the PRISM that offers very unique, high aspect ratio capabilities. We start, and I mentioned it before, we had the signs, and now we see actual adoption of our material metrology portfolio into advanced packaging. We are porting our front-end portfolio into advanced packaging. This is one. Second, we've added more advanced packaging portfolio as part of our acquisitions into that market that we have a broad portfolio addressing multiple applications across that space, and we're definitely seeing additional adoption and very encouraging signs of our position in the hybrid bonding. The more advanced packaging architectures will evolve, the higher the metrological needs are going to be, the better it is for Nova in introducing a portfolio into that market. Maybe on that, is there a certain gap you have between the gross margins for the back end versus the gross margins for the front end? Do you see that converging over time? Traditionally, of course, the margins in packaging were lower than the margins in the front end. When we're looking at porting portfolio from the front end, there is no difference to the ASPs, and there is no impact in terms of the gross margins. On the flip side, where we're seeing our advanced packaging traditional portfolio being sold, we see improvements on the margins there as well, as part of the overall, let's say, Nova strategy to provide more value to our customers and definitely having differentiation with our competition that helps drive this higher value and better margins for that portfolio. Overall, in future, I see improvements on the gross margin sides on the traditional advanced packaging portfolio and maintaining our margins as it is for the front end, for our front-end tools going there. Understood. The other, when we do our channel checks, one of the key thing that's coming up is the CPU, GPU ratios are changing Sure in a sense. It used to be 1:4, and now it's kind of going at parity, if not higher. What are the implications for Nova when it comes to that dynamic, where you're seeing strong demand for CPUs as well as the GPUs? Yeah, go ahead. I think that that's part of the AI-driven architectures that we see across the board, and particularly use of CPUs, GPUs, is definitely part of that. It trickles down to the positioning of the different customers that manufacture those particular devices. It goes back to the fact that having a strong position in each one give us the opportunity to tap into growth wherever it comes from. I think that specifically for the CPUs, it's also very encouraging for Nova as part of our position in that space. We definitely see this as an opportunity going forward. Maybe in terms of that trickle-down effect, when does it translate to revenues for you or the order momentum given? It has to do with the lead time. When we look at the lead time for our products, it's between 3 to 12 months, depending on the product. The longer lead times are the X-ray ones. Yeah. The shorter ones, roughly speaking, are the opticals, even though within that there's also some parity. I think that that's where we're going to see that coming forth. Understood. Now in the WFE environment today, we're seeing very strong growth on DRAM and HBM pieces. Historically, your revenues were more levered towards leading edge or foundry logic in that matter. As the DRAM pieces become a bigger part of the pie or memory becomes a bigger part of the pie, how do you drive that outperformance? We've seen the growth of memory share in the first quarter of the year at more than 30%, and I think that this is a testament to our position in DRAM, which is most of the investment today. We hope 3D NAND will recover towards the end of the year. We do see the position in DRAM as a growth area for us, especially on the material and chemical metrology. Long-term business model, generally speaking for Nova, is 60% logic foundry, 40% memory. That's a general statement simply because metrology intensity in logic and foundry is higher than in memory. That being said, obviously there's still a lot of room to grow in order to reach that long-term model, which will require all the, let's say, engines of the memory market to work. We are seeing that growth already, and the strong position we have is definitely going to give us the right tailwind in the next coming quarters, coming from both the DRAM and the high-bandwidth memory. We do see the evolution in the technological space. whether it's 4F- or 6 F- squared, and then moving to 3D DRAM. There's a lot of additional growth expected as a result of not only capacity increase, but the technological inflections that are expected in this market. Understood. You have characterized ELIPSON and Metrion tools as your very important growth engines, right? As you look at the adoption curve from here, what milestones should we track in the next 12 to 18 months for the ramp of these products? ELIPSON and Metrion are both positioned for the most advanced nodes. Right. ELIPSON is our in-line Raman tool, and Metrion is our in-line SIMS. The ELIPSON is targeting strain, stress, and crystallinity application space, and the in-line SIMS is looking at the in-depth profile of material characterization. I think that what we have moved through is a few steps of adoption of this new technology, which is part of our lab-to-fab strategy, and that emulates the historical move that we've made with the XPS, which is first we need to penetrate and introduce this technology to the most advanced node manufacturers. Definitely the five big ones. Yeah. We are looking at, let's say, a tool per fab. The next step, and we've seen the adoption and proliferation of that as we've also announced in the first quarter, having a record business for our Metrion tool. The next step to watch is having multiple tools per fab. This is the same evolution we had with the XPS. Obviously, it will happen faster than what happened with the XPS in the past. Having multiple tools per fab is the next step to watch for those two tools. Understood. Then on the long-term model, I think we all have kind of a good trajectory on the revenue growth you can deliver. One of the important pieces for your strategy was driving R&D growth to support that revenue growth. Maybe going from here with the volume growth you're seeing, does that operating margin target of 28%-33%, does that look conservative now? I think, originally we introduced our target model back in 2022, where we are going to continue to double our revenues every five years. Currently, we're well on track reaching this target. The operating margins targets that we set, currently we're operating on the high end of those operating margins given the fact that we're very close to reaching this target that we have set to ourselves. Once we reach the $1 billion plan, we're going to step back and really outline the next five years' growth plan for us and obviously update the financial target model, where our strategy will remain investing a lot in R&D. We believe that this is what's driving our growth and contributing to our gross margins that we're seeing and the value that we're bringing to our shareholders. Once we reach the $1 billion, we're going to look under our financial model going forward. Understood. M&A has been a very important part of your strategy. You've had successful acquisitions at ReVera, ancosys, Sentronics. How are you thinking about M&A today? What capabilities seem attractive to you, and maybe the size of the transactions that we can expect? As you know, we had the convert back in September last year. Yeah. We now have about $1.7 billion in cash, and most of it is dedicated or designated towards having M&A. We have acquisitions. We have the right firepower. It's one of the high focus areas, but we're adamant about making the right acquisition. Obviously, we are looking potentially at targets at scale rather than, or compared to the acquisitions, the three acquisitions that we made in the past. It doesn't mean that we're not looking at smaller targets as well, which could be one or more. We are looking predominantly at process control as long as it has a strong anchor in semiconductor but could have positions in other segments or other markets as well. There could be exceptions to the rule, but predominantly it's in process control, and it needs to meet certain financial criteria as well as having technological differentiation and a cultural fit. Great. That would have to be the last question. Gaby and Guy, thank you very much for coming to our conference. Thank you. Thank you so much. Really appreciate it.