PDFS

Backlog and Bookings

• Accelerated backlog growth was achieved in the reported quarter, driven by both new large customer contracts and expanded commitments from existing customers
• A significant new direct scan systems contract with a mature node customer kicked off in the second quarter, and an eight-figure multi-year SecureWise contract was signed with an existing equipment vendor customer
• One DFI machine was shipped for customer evaluation this quarter, establishing an initial beachhead in the memory market
• E-Probe is on track to hit the 2026 shipment target of 6 units, and supply chain capacity is sufficient to support higher production volumes if needed

Product and Market Expansion

• Direct scan systems' target customer base has expanded beyond the original 5 to 10 customer estimate, including new customers developing mature nodes
• SecureWise market penetration is expanding: it is now standardized at Intel, which makes it available to all equipment vendors operating at its facilities, and has been extended to 3-millimeter fabs and back-end test and assembly operations
• SecureWise revenue is primarily derived from data transmission across its network, which supports AI-driven solutions, and management expects it to grow at least at the company's overall growth rate over the next few years

Capital Expenditure and Cash Strategy

• Capital expenditure will be incrementally higher in Q3 and Q4 compared to Q2, with full year average quarterly capex similar to Q2 levels
• The year-over-year capex increase is partially driven by higher component costs for direct scan systems, to meet strong customer demand
• Despite higher capex spending, the company expects to grow its cash balance over the course of the year and end 2026 with a higher cash balance than Q2, while also reducing outstanding debt per scheduled payment plans

• Management reaffirms its prior full-year 2026 guidance of 20% revenue growth compared to full-year 2025
• Gross margins are expected to revert to historical levels in the next quarter; the Q2 gross margin contraction was driven by the absence of high-margin perpetual software licenses that boosted Q1 margins
• Management reaffirms the target of reaching a 77% gross margin, and expects to hit this target faster than the previous margin target (which took two years to achieve), and confirms line of sight to the 77% target
• No 2027 shipment or revenue targets will be disclosed until later in 2026; supply chain capacity can support higher E-Probe production than the 2026 target if needed

No segment-level financial performance data (absolute revenue or revenue contribution percentages) for individual product segments was disclosed in the provided transcript.

• Longer lead times are required for components, requiring advance capex spending to secure inventory for future shipments
• Costs for computing components in the company's solutions continue to rise; the company is working on cost optimization initiatives to offset this increase
• DFI customer evaluation and contract conversion typically take close to a year, and there is no certainty that the current evaluation will result in a signed contract

Q: A year ago, management stated the target audience for direct scan systems was 5-10 customers. Has this target group expanded based on current prospect conversations?

A: Management confirms the target customer group for direct scan systems is larger than originally estimated. The new large contract signed this quarter is with a mature node customer that the company has worked with for a long time, and additional similar mature node customers and other new customer groups are now in the pipeline, expanding the total market aperture.

Q: What is driving the recent acceleration in backlog growth, and is this growth concentrated among large existing customers or spreading across a broader customer base?

A: Backlog growth comes from both new and existing customers. The new direct scan contract contributed new backlog from a new customer, while the large eight-figure SecureWise contract is an expanded multi-year commitment from an existing equipment vendor customer.

Q: What caused Q2 gross margin contraction, and will margins stay at current Q2 levels or revert to Q1 levels for the rest of the year?

A: Q1 margins were lifted by high-margin perpetual software license sales that did not recur in Q2, which caused the Q2 contraction. Margins are expected to revert to historical normal levels next quarter. Management reaffirms the 77% gross margin target and still expects to hit this target faster than the prior two-year timeline for the previous margin goal, with clear line of sight to the target.

Q: What is the total market opportunity for SecureWise one year after its acquisition?

A: Originally, SecureWise only monetized equipment vendors, but it has now expanded to end-user fabs (starting with Intel's internal standardization) and into back-end test and assembly operations. SecureWise's revenue is mostly tied to data transmission that supports AI pipelines, and management expects it to grow at least at the company's overall growth rate over the next few years.

Q: What is the visibility for E-Probe shipments in 2027, and could shipment volume increase from the 2026 target of 6 units?

A: Management is not ready to disclose 2027 targets yet, but supply chain capacity has been expanded and can support higher production volumes if needed. Cost optimization work is ongoing to offset rising computing component costs, and 2027 targets will be shared later this year.