Nova Ltd. Q2 FY2025 earnings call

• Nova delivered a record quarter with revenue at the top end of guidance and profitability exceeding guidance.
• Driven by multiple revenue streams, including record results in chemical metrology division and service business, with logic/foundry and advanced packaging segments also achieving record results.
• First half 2025 revenue grew 45% year-over-year, fueled by logic, DRAM, and advanced packaging growth.
• Invested in expanding business and market share, leveraging product portfolio to support technological transitions.
• AI driving demand for advanced metrology and packaging, with Nova well-positioned in gate-all-around architecture with 4 leading customers.
• Service business had 10 consecutive quarters of revenue growth, with service revenue up 7% QoQ and 31% YoY.
• Introduced active charge compensation on the VeraFlex platform for 3D NAND applications, with shipments to 2 leading memory manufacturers.

Nova Limited's second quarter 2025 revenue reached a record $220 million, up 3% sequentially and 40% year-over-year. Product revenue was approximately 75% from logic/foundry and 25% from memory. The chemical metrology division and service business had record revenues. Service revenue grew 7% sequentially and 31% year-over-year. In the first half of 2025, revenue grew 45% year-over-year, driven by logic capacity build-out, DRAM and advanced packaging capacity increases.

• Q3 2025 revenue expected between $215 million and $227 million. GAAP earnings per diluted share range from $1.77 to $1.97; non-GAAP earnings per diluted share range from $2.02 to $2.22.
• Midpoint GAAP gross margin approximately 57%, non-GAAP approximately 59%. Operating expenses GAAP ~$63 million, non-GAAP ~$57.5 million. Effective tax rate ~16%.
• First half 2025 revenue up over 45% YoY, outperforming WFE growth forecast. Tariff impact on gross margins revised to ~20 basis points, better than initial estimate.

Q: Atif Malik asked about gate-all-around sales performance in Q2 and trajectory for the second half.

A: Gaby stated Nova is well-positioned across 4 gate-all-around customers and is on track to reach $500 million in gate-all-around revenue by the end of 2026, with strong momentum seen.

Q: Atif Malik followed up on gross margins, asking about product mix impact and tariff effect.

A: Guy Kizner said tariffs had marginal impact, and strong gross margins were driven by product mix rather than specific contributions from chemical metrology.

Q: Michael Mani asked about Sentronics momentum.

A: Gaby mentioned encouragement from Sentronics integration, with positive signs of adoption by multiple customers across territories.

Q: Michael Mani inquired about a gate-all-around customer's CapEx cut and impact on the $500 million goal.

A: Gaby expressed confidence in achieving the gate-all-around revenue goal due to strong positioning across 4 customers and optimism for next year being stronger.

Q: Michael Mani asked about the lab-to-fab strategy for materials metrology.

A: Gaby discussed efforts on XPS to expand adoption, active charge compensation on VeraFlex for 3D NAND, and progress with METRION and ELIPSON evaluations.

Q: Ezra Weener asked about geographic mix and HBM strength.

A: Gaby said HBM is growing, making up about 1/3 of advanced packaging business; for China, nominal value expected to be moderately higher year-over-year but percentage-wise down due to higher investments in advanced nodes.

Q: Matthew Prisco asked about competitive landscape in dimensional metrology.

A: Gaby said Nova leads in integrated metrology and is gaining market share in stand-alone OCD.

Q: Matthew Prisco asked about ELIPSON and METRION revenue contribution.

A: Gaby stated they are on track, targeting advanced nodes, and focusing on becoming process tools of record for customers.

Q: Charles Shi asked about gate-all-around progress towards $500 million and China demand.

A: Gaby said Nova is on track with gate-all-around revenue, and China's dynamics differ due to the company's diversified product portfolio.