Nova Ltd. Q4 FY2024 earnings call

• Nova ended fiscal year with record revenue ($672.4M, +30% YOY) and non-GAAP net income (+38% YOY), outperforming industry indices.
• Materials metrology solutions drove record sales, with advanced packaging revenue doubling and underscoring importance of dimensional and chemical metrology.
• Strategic penetrations into leading manufacturers, evolving position in new segments, and growing market share.
• Agile operational model and strategic focus driving profitability and growth.
• Sentronics acquisition closed, with post-merger integration teams working to align activities, leveraging Sentronics' modular metrology technology for advanced packaging and other applications.
• Product divisions: Dimensional metrology's integrated metrology and standalone OCD solutions grew; materials metrology's Metrion, VeraFlex, and Elipson platforms performed well; chemical metrology had record growth; service division saw 19% revenue growth.

Dimensional Metrology: Integrated metrology gained new market share in advanced packaging and HBM, expanding TAM and market leadership. Standalone OCD solutions had a record year with increased market share. Nova PRISM platform sales grew at high-double digits. Materials Metrology: Metrion platform adopted by a leading memory customer for DRAM R&D and high-volume manufacturing, VeraFlex platform saw broad adoption, Elipson platform had repeat orders. Chemical Metrology: Record growth at high double-digit rate, AncoScene gained front-end market share, Ancolyzer proliferated with memory customers. Service: 2024 revenues grew 19% year-over-year. Advanced Packaging: Revenue more than doubled, reaching 15% of product revenue, driven by both dimensional and chemical metrology, with Sentronics acquisition expected to fuel further growth into advanced Wafer Level Packaging and other segments.

• Q1 2025 revenue expected between $205M and $215M.
• GAAP EPS diluted range $1.75-$1.91; non-GAAP EPS diluted range $2-$2.16.
• Midpoint estimates: GAAP gross margin ~57%, non-GAAP ~59%; GAAP operating expenses ~$60M, non-GAAP ~$54M; non-GAAP financial income similar to Q4; effective tax rate ~15%.
• Sentronics acquisition expected to be accretive on non-GAAP basis within 12 months.

• Market dynamics and product mix fluctuations could cause quarter-to-quarter gross margin variation.
• Integration challenges from the Sentronics acquisition if not managed effectively.
• Uncertainty around the success of new products and their impact on margins.

Q: Talk about aspirations for advanced packaging sales in current year.

A: Advanced packaging had contribution from both chemical and dimensional metrology divisions, with integrated metrology in top five advanced packaging manufacturers and significant adoption of PRISM standalone OCD platform; expect double-digit growth this year, fueled by Sentronics acquisition.

Q: Services growth outlook for 2025 and impact from restrictions.

A: Services grew 19% in 2024; model assumes 10%-15% growth in 2025; no significant impact from restrictions on services.

Q: Competitive market and capacity build in HBM.

A: Advanced packaging growing significantly, with dimensional metrology portfolio having infant stages in HBM, and process control intensity growing, leading to higher appeal of chemical and dimensional portfolios.

Q: China revenue exposure and long-term outlook.

A: China was 39% of 2024 sales; share expected to decline due to growth from advanced nodes.

Q: Contributions from Sentronics acquisition and margin profile.

A: First quarter forecast includes Sentronics revenue; Sentronics aligned with financial model, expected to be accretive; margin profile fit to existing model.

Q: Chemical metrology manufacturing facility revenue potential.

A: New facility in Germany hosts chemical metrology division, expected to drive business forward as business grows.

Q: Q1 guidance and outperformance of WFE.

A: Q1 guidance includes Sentronics revenue; outperformance due to unique technologies, advanced packaging adoption, and Sentronics acquisition.

Q: Gate-all-around revenue and tracking to $500M cumulative.

A: Committed to $500M gate-all-around revenue by 2026, with more color to be provided at Investor Day on March 17.