Financial Data and Key Metrics Changes - The company reported revenue of $195 million and non-GAAP earnings per diluted share of $1.13, both exceeding expectations [7][22] - Bookings in the second quarter were $96 million, reflecting a book-to-bill ratio of 0.8 times, slightly down sequentially [7][25] - GAAP gross margins were 44.9%, exceeding the outlook of 41.7%, while non-GAAP gross margins were 45.2% compared to an expected 42% [25] - The company generated approximately $38 million in free cash flow in the second quarter [27] Business Line Data and Key Metrics Changes - System revenue was $134 million, and CS&I revenue was $61 million, both slightly above expectations [22] - Shipments in the power business for silicon carbide applications were relatively flat quarter-over-quarter, with continued firm demand in China for 150mm and 200mm applications [10][12] - Revenue from other power applications grew sequentially, primarily due to growth in China [15] Market Data and Key Metrics Changes - China accounted for 65% of total shipped system sales, up from 37% in the prior quarter [22] - The U.S. contributed 19% to system sales, while Korea declined to 8% [22] - The company anticipates second-half revenue in China to be similar to the first half due to customers digesting previous investments [22] Company Strategy and Development Direction - The company is focusing on innovation and deep engagement with customers on their technology roadmaps [19] - The strategy includes a shift towards advanced logic and memory applications, with a focus on next-generation implant applications [17][18] - The company is managing costs prudently while ensuring resources for growth, reflected in a first-half adjusted EBITDA margin of approximately 20% [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainty and cyclical digestion in 2025 but expressed confidence in the company's ability to navigate the downturn [31] - The company expects modest revenue improvement in 2025, driven by pockets of demand in the power market [14] - Management remains optimistic about long-term growth opportunities, particularly in silicon carbide and advanced logic markets [12][14] Other Important Information - The company repurchased approximately $45 million in shares during the second quarter, with $168 million remaining in share repurchase authorization [28][66] - The company is monitoring the tariff environment and believes it is well-positioned to respond to changes [29] Q&A Session Summary Question: Initial indications of wafer start growth in memory market for 2026 - Management indicated that while they are not forecasting for 2026 yet, they expect new capacity to come online in 2025 and early 2026, which could lead to increased demand for implanters [34][35] Question: Outlook for the general mature marketplace - Management believes revenue for 2025 will be slightly up, but not due to general mature markets, which are currently in a digestion period [36] Question: Silicon carbide customers using current period for R&D - Management confirmed that customers are indeed acquiring tools for R&D, which may lead to increased demand for volume production in the future [39][40] Question: Drivers behind strong performance in CS&I - The strong performance in CS&I was attributed to upgrades and related activities rather than tariff pull-ins [62] Question: State of competition in China - Management noted that competition in China is still immature, with new companies struggling to meet the high standards required for advanced tools [72][74] Question: Backlog composition and timing - The backlog reported consists solely of systems-related orders, with projected shipments extending into 2026 [75]

Financial Data and Key Metrics Changes - The company reported revenue of $195 million and non-GAAP earnings per diluted share of $1.13, both exceeding expectations [6][22] - Bookings in the second quarter were $96 million, reflecting a book-to-bill ratio of 0.8 times, slightly down sequentially [6][25] - GAAP gross margins were 44.9%, exceeding the outlook of 41.7%, while non-GAAP gross margins were 45.2% compared to an expected 42% [25][26] - The company generated approximately $38 million in free cash flow in the second quarter [28] Business Line Data and Key Metrics Changes - System revenue was $134 million, and CS and I revenue was $61 million, both slightly above expectations [22] - Shipments in the power business remained flat quarter-over-quarter, with a focus on silicon carbide applications [8][14] - Revenue from other power applications grew sequentially, primarily due to growth in China [14] - Advanced logic remains an underpenetrated market, with a forward order received in the second quarter [15] Market Data and Key Metrics Changes - China accounted for 65% of total shipped system sales, up from 37% in the prior quarter [22] - The U.S. contributed 19% to system sales, while Korea declined to 8% [22] - The company anticipates that second-half revenue in China will be similar to the first half due to customers digesting previous investments [22] Company Strategy and Development Direction - The company is focused on innovation and deep engagement with customers on their technology roadmaps [19] - CS and I revenue made up approximately 30% of total revenue, reflecting the strength of the installed base [20] - The company is managing its cost structure prudently while ensuring resources for growth [21] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty and cyclical digestion in 2025 but expressed confidence in the company's ability to navigate these challenges [19][32] - The company expects modest improvement in revenue in 2025, driven by pockets of demand [13] - The outlook for the third quarter includes expected revenue of approximately $200 million and non-GAAP diluted earnings per share of about $1 [30] Other Important Information - The company repurchased approximately $45 million in shares during the second quarter, with $168 million remaining in share repurchase authorization [29][68] - The company continues to monitor the tariff environment and believes it is well-positioned to respond to changes [30] Q&A Session Summary Question: Initial indications of wafer start growth in memory market for 2026 - Management indicated that while they are not forecasting for 2026 yet, they expect to see new capacity come online in 2025 and early 2026 [36][37] Question: Outlook for the general mature marketplace - Management believes revenue for 2025 will be slightly up, but not due to general mature, which is currently in a digestion period [38] Question: Silicon carbide customers using current period for R&D - Management confirmed that customers are indeed acquiring tools for R&D, which may lead to increased demand for volume production in the future [41][42] Question: Drivers behind strong performance in CS and I - Management attributed the strong performance to upgrades and related activities rather than tariff pull-ins [64][66] Question: Competition in China - Management noted that competition in China is still immature and closely monitored, with no significant threats outside of China [72][75] Question: Backlog composition and timing - The backlog consists solely of systems-related orders and is expected to carry into 2026 [77] Question: Reconciliation of strong China EV sales with flat sales projection - Management explained that while EV sales are strong, the capacity built in 2024 is leading to a focus on productivity and efficiency rather than new capacity additions [82][84]