Onto Innovation Inc. (NYSE:ONTO) Q3 2023 Earnings Call Transcript

Brian Chin: Got it. Obviously that’s part of meeting some of your outlook for the first half revenue for next year to be above the second half of this year I think. I guess also in terms of — you have the visibility — you kind of anticipate the order rates will sort of level off in second half on packaging and maybe advanced node starts to pick up the pace at some point next year?

Michael Plisinski: I think advanced nodes will at some point to pick up the pace. That’s — that we’re hoping for. The leveling off, it’s unclear. I’m surprised how rapidly we are seeing the expansions, and how broad. So originally, we were seeing a lot of demand for the dragonfly for inspection and some of the metrology capabilities in dragonfly, but as customers are ramping so aggressively, we’re finding new challenges that some of our other metrology systems are solving, and we’re seeing orders for them. I mentioned the Echo [ph] on the call, there’s some others as well. So I think there is — so that — as the ramp happens, and customers start driving yields and productivity up, I think we’re going to find that there is more opportunities for process control, maybe even through the second half that keeps that pace of revenue for us up.

Brian Chin: Okay. Maybe one last quick one. I think you’ve shipped some Atlas, OCD tools for deal [ph] around applications in recent quarters but what do you — what’s your latest thinking in terms of the timeframe? When you’ll start to receive volume based orders and then start to ship against that backlog?

Michael Plisinski: Yes, that’s the million dollar question. I think customers — our customers are getting pretty ready and it’s really the visibility they have into customer — their customers adopting those lines. So, of course, we have some construction delays here in the United States but there is other pilot lines and low volume production lines around the globe that I think are more ready for volume as soon as customers decide to take that plunge. From a timing standpoint, what we hear sort of end of 2024; we should see orders preparing for more aggressive ramp in 2025.

Brian Chin: Okay, great. Thank you.

Operator: We will take our next question from the line of Charles Shi with Needham. Please go ahead.

Charles Shi: Hey, good afternoon. Hey Mike, Mark. I want to kind of a follow-up on the question related to high bandwidth memory plus 2.5D. If what I hear correctly, looks like you’re — you’ve got enough orders as much as $210 million plus to deliver between second half 2023 and the first half of 2024; is that correct? Because you kind of mentioned about $100 million plus, that’s your prior announcement but you’ve got another $110 million. And that’s — all of that is going to deliver through the first half of 2024. So I want to make sure I heard that correct.

Mark Slicer: Yes, that’s correct.

Charles Shi: Thanks. So looks like there’s a good amount of growth for the second half ’23 into first half ’24 because I think that what you’ve guided for, I mean, this quarter is Q-on-Q growth of that product; AI packaging related revenue. And the next quarter’s growth kind of suggests us something about $70 million to 80 million, but the next that means next year is going to get to something like a first half next year, $130 million to $140 million [ph]. So that looks like a very good incremental revenue out there but I just kind of curious, what about other part of your business? Advanced? No, it doesn’t sound like you’re expecting a recovery but the third piece, I think you don’t really break it down. But especially devices has been strong second half, but what about first half next year? Is it flat or up or down from the second half 2023 levels? Thanks.