Q4 2023 Aehr Test Systems Earnings Call
Good day and welcome to the Aircastle Systems' fiscal 2023 fourths quarter and full year financial results Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by APRA.
Star then zero.
Today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on had touched on phone to withdraw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Jim Byers N P. R. In the simulation.
Please go ahead.
Thank you operator, good afternoon, and welcome to Air Test systems fiscal 2023 fourth quarter and full year financial results Conference call.
With me on today's call are test systems, President and Chief Executive Officer gain Ericsson and Chief Financial Officer, Chris Suite.
Before I turn the call over to gain and Chris I'd like to cover a few items. This afternoon right after market close.
Air Test issued a press release announcing its fiscal 2023 fourth quarter and full year results.
That release is available on the company's website at <unk> Dot com.
This call is being broadcast live over the Internet for all interested parties and the webcast will be archived.
In the Investor Relations page of the Air website.
I'd like to remind everyone that on today's call management will be making forward looking statements. Today that are based on current information and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements.
These factors that may cause results to differ materially from those in the forward looking statements are discussed in the company's most recent periodic and current reports filed with the SEC.
These forward looking statements, including guidance provided during today's call.
Are only valid as of the state and are test systems undertakes no obligation to update the forward looking statements.
And now with that said I'd like to turn the call over to gain Erickson President and CEO .
Thanks, Tim Good afternoon, everyone and welcome to our fiscal 2023 fourth quarter and full year earnings conference call. Thanks for joining US today, let's start with a quick summary of the highlights of the quarter and fiscal year. We just completed in May and the continued momentum we're experiencing in the semiconductor wafer level test and burn in markets.
Our new CFO , Chris Terry Let me make sure I get that right, Chris too sorry, that's awful who is sitting here with myself and Ken Spink, who is retiring soon will go over the financials in more detail after that we'll open up the lines to take your questions. We're pleased to report record financial performance for both the quarter as well as the entire fiscal 2023 year.
And it may 31st for fiscal 'twenty three our total revenue grew 28% to a record $65 million bookings reached a record $78 $3 million and our GAAP profit of $14 6 million and non-GAAP profit of $17 $3 million were also records growing 54%.
62% year over year, respectively.
This record performance was significantly driven by bookings and revenue shipments of our wafer level test and burn in systems and contractors for Silicon carbide semiconductor Houston electric vehicles, and electric vehicle charging infrastructure and silicon photonics devices used in data cleaning data and telecommunications infrastructure as well as an up and coming new application.
For chip to chip optical I O that will provide more detail on later in this call.
We saw fiscal 2023 as a breakout year for our weight unique wafer level test and burn in products. These products provide complete solutions for semiconductor manufacturers for high volume test Vernon and stabilization of semiconductors, such as those used in electric vehicles electric vehicle charging infrastructure photovoltaic.
Our solar power conversion and data and telecommunications infrastructure. We also see on the horizon, a significant new market opportunity for test and burn in of semiconductors, such as Silicon photonics devices used in optical input output, our optical I O and co package optics for data farms computing and artificial intelligence.
Markets.
So let me start with the increasing momentum were seeing for wafer level test and burn in for Silicon carbide devices.
During the fiscal fourth quarter, we received the first purchase order from another new Silicon carbide semiconductor company for our production Fox XP multi wafer solution that will be used for volume production of wafer level test and burn in of Silicon carbide devices for electric vehicles trucks and trained traction invertor modules.
The train traction in Burger application represents an exciting new market driver for our Fox production test solutions due to the extreme reliability and length of service requirements of this application leading to prolonged tough times.
This new customer is a multinational industrial conglomerate manufacturer semiconductors, including power semiconductors.
Therefore casting to grow their silicon carbide business significantly to meet the market demand, which we forecast will in turn drive incremental capacity of our Fox systems, and our proprietary wafer pack full wafer contactor.
William Blair forecast total demand for Silicon carbide wafer is just for electric vehicles, which include EV Inverters onboard and off board Chargers to grow from 220000 wafers in 2022 to over four and a half million six inch equivalent wafers in 2030, a greater than 45 person.
<unk> compound annual growth rate and over 20 times larger in 'twenty 30, then in 2020 two.
In addition, William Blair expects demand for industrial applications trains energy conversion and RF amplifiers of Silicon carbide to drive another $2 8 million wafers in 2030. This expands our silicon carbide test and burn in market even more.
With the addition of this latest new customer we've significantly expanded our customer base by adding a total of four new silicon carbide customers. This year. Each of these new customers is already ramping or plans to ramp our products into high volume production using our multi wafer test and burn in systems.
We continue to be excited about the incredible growth and production ramp of our lead silicon carbide customer that's using our wafer level test and burn in systems and wafer packs to meet capacity increases from their current customers. In addition to many new design wins.
In early June we announced another $13 $7 million and follow on orders for wafer packs from them.
That includes both current design capacity increases and several new designs that are expected to ramp to volume production. After their customer qualification has completed.
During the quarter, we also announced an order for production quantities of wafer pack full wafer contactor is from our second major silicon carbide customer that'll be used with previously ordered Fox XP systems for test and burn in of <unk>.
Wafers in their production facilities. We believe this customer who serves several significant markets that include the electric vehicle industry as well as other industrial applications will purchase a large number of our Fox XP systems to meet their publicly announced significant increase in plant capacity and revenue growth over the next several years and through the end of the decade in la.
Longer.
Now, let me move to our benchmarks and engagements with prospective new customers, which continue to make great progress.
We continue to work closely with one of the largest silicon carbide players in the world on a large wafer level benchmark in qualification for automotive and other markets well candidly. This has taken much longer than we thought it would we're excited that this qualification continues to make good progress and we remain confident that it will result in them moving to our Fox wafer level.
Systems and wafer packs for their volume production.
They have told us that their plan is to move all new production capacity to wafer level burn in and away from packaged part burn in.
This is because theyre not only mostly moving to multi chip modules and known good dye sales, but also for the lower cost of test associated with wafer level burn in over packaged Vernon as well as the significant improvements in yield they achieve with wafer level burn in.
For those listening in that are new to our story, we provide our customers with a unique low cost way to do extended burn in stress testing that removes the early extrinsic failures of devices like silicon carbide semiconductors before they're put into packages.
This saves and cost of overall manufacturing is youre, not only avoiding throwing away the cost of the package, but in scenarios, where multiple of these devices are put into a single package, which is referred to as multi chip modules. This also saves significant cost as the other devices in the same module are not thrown away when one of the devices.
As failed during burn it.
The savings and yield as much more than the actual cost of wafer level burn in.
Multiple companies have announced silicon carbide half-breed modules used for EV traction and burgers that have up to 48 die in a single module.
I imagine the implication of the greater than 1% failure rate experienced in burn in on a module with 48 die.
The extrinsic failure rate of high power Silicon carbide, MOSFET could cause 25% to 50% yield loss of these modules.
For all intents and purposes. This is unmanageable without wafer level burn in so wafer level burn in actually enables these kinds of high density multi chip modules.
In addition to our momentum in Silicon carbide, we also have multiple potential new customers enquiring about our systems with the new 2000 volt high voltage option that we introduced last year to test and burn in devices, such as silicon carbide and gallium nitride semiconductors for power conversion applications.
Nitride is another wide bandgap semi can compound semiconductor being applied for efficient high speed power conversion and amplifier applications.
These new potential customer inquiries include several gallium nitride semiconductor devices, ranging from RF radio frequency to power conversion.
We're currently working with a large multinational semiconductor supplier to move forward with a full wafer level burn in evaluation of gallium nitride devices. This evaluation includes our new high voltage option for doing the critical high temperature reversed by our stress tests needed for gallium nitride MOSFET and amplifiers.
Aleem nitride market appears to be a potentially significant growth driver for our systems and wafer pack full wafer contactor is particularly for Automotives and photo photovoltaic applications, where burn and appears to be critical for meeting the initial quality and reliability needs of those markets.
Now moving to Silicon photonic semiconductors, Vernon and stabilization and the new significant market opportunity, we see on the horizon.
As a reminder for those not familiar with Silicon Photonics. This is what the industry calls the devices, where both electrical semiconductor integrated circuits are combined with photonics or light based transmitters and receivers.
We continue to be very enthusiastic about this market, especially as it looks to expand beyond just being used for fiber optic transceivers to becoming an embedded market that integrates the optical data transmission technology into other devices like chipsets and processors themselves.
We see the potential to integrate the photonic integrated circuit devices into multi chip modules as another major market opportunity for error. There are several names for this application ranging from co package outbid optics heterogeneous integration and optical I O that use silicon photonic integrated circuits for use.
<unk> optical chip to chip communication.
This market is in addition to the current photonics transceiver market used in data in telecommunications, where we currently have six customers that have adopted our Fox XP and N. P systems for production use other silicon photonics wafer and dies flash module level burn in.
Multiple companies such as Intel Nvidia AMD, TSMC and Globalfoundries have made public announcements regarding their product Roadmaps for co package photonic integrated circuits with microprocessors graphics processors chipsets for computing and also artificial intelligence applications.
Our Fox wafer level test and burn in solution with our proprietary wafer pack full wafer contactor is a great fit for their silicon photonics semiconductor market as we can test and burn in the devices, while still in die or wafer form before they are integrated into the multi chip modules for the same reason as discussed before due to module yield.
The improvement.
Also because the burning conditions of the photonic integrated circuits are very different than the other chips in the multi chip module that they're integrated with burning in the photonic integrated circuit and the module would also pose real thermal and power challenges to silicon photonics part.
And also the devices that are integrated into the same module.
During the fourth quarter, we received our first order from a current major silicon photonics customer for our new volume production Fox XP system configuration that enables cost effective production test of full wafers of next generation photonic integrated circuits up to 3500 watts of power per wafer.
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This system can test new high power density devices that can be used in new optical Io are heterogeneous integrated packages. This customer is one of the world's largest semiconductor manufacturers and we expect to receive orders for additional production systems as they have increased production of these devices.
These next generation Silicon Photonics based integrated circuits can require up to two to four times as much power for full wafer test burn in and stabilization of the silicon Photonics devices.
Our new Fox production system configuration, which can be used to test and burn in these new optical Io devices up to 3500 watts per wafer expands the market opportunities of the Fox XP system either been further.
Its ability to test Vernon and stabilize up to nine 300 millimeter wafers in parallel with up to three and a half kilowatts of power per wafer is beyond the wafer parallelism and power capacity of any system on the market.
This test ability is unprecedented in the industry is there no other competitors that can even test one wafer at a time at these power levels and our Fox XP with our proprietary wafer pack contractors enables the test of up to nine of these wafers at a time in a single system.
The applications that have been announced by these major semiconductor players for optical chip to chip communication include high performance microprocessors graphics processors and processors processor to peripheral device chipsets.
He's known devices had been predicted to dramatically improve the communication bandwidth between semiconductor devices beyond the bottleneck of traditional electrical interfaces used today. This.
This is an exciting opportunity and we believe these devices will ramp to high volume production over the next several years, we believe silicon photonics can become a significant market for wafer level test and burn in and could become as large or larger than the silicon carbide market for our products later in this decade.
Now, let me spend a minute or two on our R&D initiatives.
This past year, we introduced several significant test system enhancements that extend the market leadership of our Fox products for full wafer test and burn in and open new markets for our products. These include added voltage ranges increased parallelism per wafer, new Vernon and stress conditions and a new fully automated Fox.
Wafer pack aligner configured to fully integrate with our Fox XP multi wafer systems to enable hands free operation.
Our new bipolar voltage channel module or bcm for the Fox P platform of products, which includes our Fox XP NP and CP extends our test and burning capability to provide a wide range of positive and negative voltage programmability applied to the gate for positive high temperature gave bias or negative http testing.
The BBC M can supply gave bias voltage to more than 3000 die per wafer, while being able to monitor individual die performance and detect individual die failures, enabling these tests as particularly essential and threshold voltage gate oxide stabilization and screening.
Our new very high voltage channel module or V H B C M.
Which is an option released this fiscal year enables high temperature reverse biased testing of silicon carbide and gallium nitride devices on wafers of up to 2000 volts, using our proprietary wafer pack contractors.
Our wafer packs and the Fox XP N N. P systems include patented anti arcing capabilities that are necessary to avoid the high voltage electrical arcing between devices right even at these voltages.
Or between the devices in the streets on the wafer that of distances as small as less than 200 microns apart from each other.
The amazing part of this is we can manage anti arcane across the entire wafer, whereas semiconductor functional automated test equipment R. A T E. Testers today are only able to keep devices from arcane in very small areas such as only one or a few devices at a time.
This allows an unprecedented low cost of test and burn in for high voltage wafer such as silicon carbide devices used for electric vehicles trucks and trains with voltage specifications up to 1700 volts and above.
We're excited that we received customer final acceptance of this new high voltage solution and wafer packs in our fiscal fourth quarter.
During the fiscal year, we completed a multi year development of our new fully automated Fox wafer pack aligner, our new wafer pack aligner allows hands free operation of wafer pack handling and alignment and it's available either as a standalone configuration with movement between the aligner and portable carts or in a full <unk>.
Gration configuration integrated with the Fox XP system.
The wafer pack auto aligner automatically takes wafers from cassettes are fuchs, ranging from 100 to 300 millimeter wafers and automatically aligns unloads wafers into our proprietary wafer pack cartridges, which provide contact with 100% of the die on the wafer.
Wafer packs can be brought to and from the Ottawa liner and wafer pack carts and what we referred to as the Standalone configuration. This allows one auto aligner to work with multiple Fox XP systems, which each can have up to 18 wafer packs with 18 wafers in them tested at the same time.
This is great for the very long test and burn in times, such as 24 to 48 hours or more.
Alternatively be auto aligner can be configured to Doc directly to the front of our Fox XP system, such that all material handling and wafer pack movement is done 100% hands freeze hands free up to and including fully lights out operation.
As capacity and volume forecast grow eliminating all manual interfaces for automated handling can become critical to our customers. The added automation capability of our new aligner gives our wafer level test and burn in offering even greater value and opened several significant incremental markets to air such as high volume.
Processors, and chipsets with integrated Photonics, Transceivers flash and ultimately DRAM memories and higher mix devices require an extremely high reliability and 100% bernann such as automotive Microcontrollers and sensors.
We have received positive feedback on our new aligner from multiple current and prospective customers across several markets and believe it will be an important addition to our product portfolio going forward.
We have now installed both the Standalone and integrated configurations of our new wafer pack aligner at multiple customers with our stand alone Aligner accepted and released into production just this week and the Fox XP with the integrated Aligner as expected received production acceptance yet this current fiscal quarter.
We see a mix of customers that will purchase our wafer pack auto liners in Standalone and integrated configurations, most customers feel very passionate that one way is absolutely better than the other way and basically we just agree with them.
We offer both to our customers.
Each of these new product enhancements broadens, our total available market and extends our cost competitiveness and application space for our Fox products, we continue to invest in R&D to enhance our existing market, leading products and to introduce new products to maintain our competitive advantages and to expand our applications and addressable market.
Our customers use our products to test Vernon and stabilized semiconductors used for applications, where safety security quality and reliability are absolutely critical including electric vehicles electric vehicle Chargers photovoltaic solar power conversion and industrial and data and telecommunications applications.
Our Fox multi wafer test and burn in systems proprietary wafer pack full wafer contactor and newly introduced fully automated wafer pack aligner puts us in an excellent position to continue to gain significant market share of these new market opportunities our customers require semiconductors to be tested and burned in and stabilized priority.
Integration and the customer systems and in particular, multi chip modules heterogeneous integrated packages or co package optics and we believe this is a.
This is the very beginning of a wave of applications using our Fox products the.
The market forecast for wafer level burn in products is significant William.
William Blair estimates the total global market for wafer level burn in products for silicon carbide alone to be over $400 million by 2027.
We believe air has the potential to capture a significant portion of that market based on the level of silicon carbide engagements, we have with the customers across the globe.
To meet this demand we have begun to significantly ramp up the production capacity of our systems and wafer pack full wafer contactor is increasing our production capacity to three acts or by over 200%. During this past fiscal year and we plan to double this production capacity by the end of this new fiscal year we.
Excuse me to increase capacity significantly as the market demand warrants.
To conclude we're very encouraged by the continued positive momentum and expanding growth opportunities, we see with our current and prospective customers. We start fiscal 2024 with an effective backlog of almost $40 million and a strong forecast from our current and prospective customers our engagements with numerous potential new customers.
<unk> gives us confidence in our growth expectations over the next several years, including projections for record revenue and profit again for this fiscal year that ends next may.
Particularly as the positive momentum in demand for Silicon carbide in an electric vehicle continues to accelerate.
We're very pleased to report a significant forecasted growth in our fiscal 2020 for financials.
For the fiscal year, ending May 31, 2024 air expects total revenue to be at least $100 million.
Representing a growth of over 50% year over year.
And a GAAP net income of at least $28 million.
Then in earnings growth greater than 90% year over year.
Before I turn the call over to Chris I'd like to take a moment to welcome him to air Chris as a semiconductor industry veteran who has served in senior financial positions with several much larger public companies in the semiconductor and semiconductor equipment space, including most recently at ultra clean technologies. We're excited to have him join the company.
And look forward to working together.
Also want to thank again, Ken Spain for his leadership and many contributions during his 15 years at Air. This includes helping us identify and select Chris as our new CFO and also staying on to help complete our fiscal year and annual 10-K filing and worked with Chris and I to ensure a smooth transition.
Behalf of the board and the entire team.
Wish Ken and his family the best in his retirement with that let me turn the call over to Chris before we open up the lines for questions.
Thank you Jay.
Good afternoon, everyone.
I'd like to begin by saying that I'm thrilled to have joined air test and we are very excited about the opportunities ahead of us.
On today's call I'll summarize our results for the fiscal year, 2023, and Q4 as well as provide our guidance for fiscal 2024.
It's getting noted we reported record financial performance for both the fourth quarter and fiscal year 2023.
On a year over year basis revenue increased by 28% to a record $65 million.
GAAP gross margin increased by 390 basis points to 54%.
Full year non-GAAP net income increased by 62% to a record $17 3 million.
We generated a record $10 million in operating cash flows and physical 2023 up more than 500% from the prior year.
In the fiscal year demand for all products was very strong with record annual bookings of $78 3 million.
Up 30% from our total bookings of $60 2 million for the prior fiscal year.
Bookings in the fourth quarter was $15 2 million.
Backlog as of year end was $24 5 million up 121% from a year ago.
With more than 15 million bookings received in the first six weeks of the first quarter of physical 2024.
We now have an effective backlog of nearly $40 million.
Moving to our Q4 results, we delivered record quarterly revenue of $22 3 million up 10% from $20 3 million year over year.
Demand for our Fox P systems drove the record revenue in the fourth quarter.
We are encouraged to see that installed base of our systems continues to grow as our product solutions are validated and recognized by our existing and new customers.
Wafer pack and die pack consumables revenue accounted for 38% of our total revenue in the fourth quarter compared to 45% of revenue in the prior year quarter.
As we have noted before our customers typically purchase our Fox systems and wafer packs as separate times and also to stagger the delivery.
GAAP gross margin for the fourth quarter came in at 51, 5% compared to 51, 6% last year.
Margins can be influenced by fluctuations in product mix as well as material and transportation costs.
Operating expenses in the fourth quarter were $5 8 million.
Up 26% from $4 6 million year over year.
Primarily driven by increased head count related expenses to support sales initiatives and R&D programs as.
As we noted on our Q3 call.
The company increased its worldwide sales and marketing efforts with the addition of three senior sales executives, who have already begun making a positive impact.
We continue to invest in R&D to enhance our existing market, leading products and to introduce new products to maintain our competitive advantages and expand our applications and addressable market.
The increase in R&D is primarily due to costs associated with development programs for our new automated wafer pack aligner.
And a very high voltage channel module and bipolar voltage channel module.
Which enable new events tests and burning capabilities for silicon carbide, and gallium nitride power semiconductors on air Fox wafer level test and burn in systems.
The first order for our automated aligner was shipped during Q4 fiscal 2023 and was just ups. After this week.
non-GAAP net income, which excludes the impact of stock based compensation was $6 8 million.
Or <unk> 23 per diluted share for the fourth quarter.
This compares to non-GAAP net income of $6 5 million or <unk> 23 per diluted share in the fourth quarter of fiscal 2022.
Turning to the balance sheet.
We finished the year with a strong cash position.
Our cash cash equivalents and short term investments were $47 9 million at year end.
Up 52% from $31 $5 million year over year.
We generated $5 8 million in operating cash flows during the quarter up more than 800% year over year.
We have zero debt and continue to invest our excess cash and short term investments to take advantage of higher interest rates.
Interest income earned in the fourth quarter with nearly half a million dollars compared to just 22000 in the fourth quarter of last year.
During the third quarter, we announced an ATM offering of up to $25 million in shares of the company's common stock on the open market as we reported on our last call. During the third quarter. We received gross proceeds of $7 3 million on the sale of 209000 shares at an average price of <unk>.
$34 78 per share.
We did not sell any shares under the ATM in our fourth quarter, but.
But we expect to sell shares in fiscal 2024 to receive the remaining $17 7 million.
Under the ATM.
Now turning to our outlook for the current fiscal 2020 or that ends on May 31 2024.
We expect full year total revenue to be at least $100 million representing growth of over 50% year over year, 50% year over year.
And GAAP net income of at least $28 million.
Representing earnings growth of greater than 90% year over year.
Lastly, <unk>.
Looking at the Investor Relations calendar Air test will be meeting with investors virtually at the Needham virtual semiconductor and semi cap one on one conference on Tuesday August 22nd.
And then the following week, we'll be meeting with investors in person on Tuesday August 29 at the Jefferies semiconductor.
Hardware communications software and infrastructure summit, taking place in Chicago.
We hope to see some of you at this conferences.
This concludes our prepared remarks, and we're now ready to take your questions.
Operator, Please go ahead.
Thank you.
We'll now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you're using a speakerphone please pick up your handset before pressing the keys.
If at any time Youre question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Christian Schwab with Craig Hallum. Please go ahead.
Hey, guys. Thanks for taking my questions I just have a few so what.
When would you expect to file your 10.
Okay.
We're filing our 10-K at the end of August August 28th as our propel.
Proposed filing date right now.
Okay could you.
We really this year.
More than 110% customer at exactly yet.
One.
Exactly how much revenue came from just the one customer.
Absolutely we did actually have two customers over 10% one at 79% of revenues in the other at 10% of revenues.
Excellent.
Ken when you guys were talking about your greater than 100 billion.
Expectations for revenue.
Next fiscal year, how many 10% customers.
Are you assuming in that guidance.
Let me try and field that one.
Maybe almost better I don't have it in front of me because I don't want to get too specific on it but I think we expect several maybe three or four so there will be.
We're obviously very heavily focused on our <unk> silicon carbide customer this last year and we expect while they will continue to be a great customer and certainly a 10% customer for years to come that there'll be less of a focus in terms of.
Concentration with them.
Excellent.
And then three to four I assume that will be you know we've talked about before obviously our lead customer.
We've gotten orders from our second major silicon customers.
So should we assume that the third large customers you know and we expect business from that customer.
And the next step.
Fiscal year as well.
Yeah.
Yes.
Excellent excellent.
It is as we think about mix for the quarter Ken.
We have 40 million.
Backlog is weak.
As you stated you know do we expect mix.
Thinking about the shape.
Corridors for next year should we assume roughly 40% in the first half and 60%.
In the second half again.
Or was it makes me something different.
You you should see his eyebrows raised right now but.
Let me field that one maybe for Chris and I cause Ken is going to be writing off in a sense that here and we won't have to live with it like this.
I actually do think that's probably fair, where we think that the second half is going to be stronger than the first half.
Maybe a little less dramatic as it has been in the last couple of years, but that may be a fair way of thinking about it now for everybody on the call. We don't give quarterly guidance, so I need to be careful because I'm guessing. Your next question is gonna be about next quarters. So please don't.
[laughter], Alright, I will say that I don't think that.
Yes.
Shipments in Q4.
There was one but.
Dollar Bob and shipments in.
Q4 awards.
Awards recognized in revenue that we.
We did and we had teed that up pretty hard right before at the last call because we were anticipating shipping the liners.
As well as an aligner tied to our Fox XP system and so we did get the revenue for the couple of NPS that we had with the high voltage option, but the integrated Fox XP aligner pushed into this quarter as we expected.
And in fact, I think we shifted right literally right. After the I think it was at June 2nd or something like that.
So it didnt ship, yet, but it was right there we had customer acceptance during the quarter, but we would expect to see revenue for this quarter why apartments acceptance.
The first the liners.
We're actually shipped during last quarter for those standalone of liners and they say, we just got acceptance.
On the first one of those this week, so we're pretty happy about that.
Great and then just if I could slip one last question Dan.
Yes, it does.
Difference between you said at least 100 million.
What should we be looking for a bond here throughout the course of the year to say that.
Revenue goes.
100, 105 billion what would it take you know for revenue to be 120 or Huntington.
There is one or two things you could point us to.
That you're thinking about or.
Or is it just too early to.
Yes, I mean, it's too early a lot of this is just still uncertainty in timing of customer ramps themselves.
That's the that's one of the challenges with this thing I mean, a N. A S. P. A a system with a set of wafer packs at $4 million plus or minus a couple of days is a big number on a quarter and on a year, but you know for us to be able to look out there and try and understand what it was I think we're confident that's way way use the at least $100 million, but.
You know as things firm up and we get a little bit more visibility and we believe that we will.
It gets a lot stronger, we'll let you guys know.
But.
We're starting off with a great backlog.
We have great forecasts of current and perspective, which we believe are likely to be.
Customer wins, this year and as those things firm up I mean, it's boding well and we think that it's we're just right at the start we are a lot of these companies are starting to kick in their silicon carbide plants.
This last year was kind of a big big number for us.
In terms of just sort of the initial progress got us to test our wheels to be able to ramp up our production and things like that but.
We're just going to be continuing to ramp as we go into the end of it into this year and certainly into the next year.
Fantastic no other questions. Thanks.
Thanks Christian.
The next question.
<unk> comes from jet Dashi Margaret William Blair. Please go ahead.
Hi, Thanks for taking my question and congratulations on the quarter.
And J I hope you have some good travel plans and Chris.
Welcome it's been a while since the 88 days at a meeting with you tried so welcome to air.
And then I'd be remiss gain thanks for the time.
Technology primer.
So.
I appreciate that.
I guess.
Just wanted to dig into.
Basically what Christian was kind.
Kind of coming to and maybe just take a different slightly different angle, which is you know around the sausage making for this.
For your your full year guide.
And specifically if we look at this past year, and your largest customer being $52 million.
Based on the 79%.
And there are targets of.
Growing 300% over the next few years.
I would assume that that creates a solid base for your for your business. So as you look at.
Already having eight to 10 million booked on that number too.
You're really talking about.
$30 million incremental number.
To hit that minimum thresholds.
And you've already got.
Three customers. So could you just walk us through sort of how you know wind Vernon brings the spreadsheet of customers, how you're thinking about.
The puts and takes for that level of confidence in terms of that guide and then I have a few follow ups.
Sure Jed I'd say here you talked to that I felt like you were going to end it with why we're such sandbaggers, but anyhow I would never say that.
Uh huh.
So.
We if you were to look at Vernon burdened by the way as our VP of sales and his team. If you were to look at their funnel. It's a it's pretty impressive. There are there are a very large number of companies that are expressing interest and leaning forward with us for our wafer level test and burn in products across several.
Markets.
It's going to be a very busy year for us.
<unk> does include a <unk>.
A good number I'm not sure we want to start putting numbers on it of new customers.
For bookings as well as terms book customers that are expected booking.
And shipped within the year, we still have a wide range of forecasts from people.
Kristin even with current customers candidly their ability to forecast is all over the map.
And so I think we've taken a conservative stance here, but.
It provides us with confidence to be able to hit that number and we don't.
I don't want to get into talking about how much upside there is to it I will say that we have.
<unk> upside in terms of our capacity.
And the ability to serve the market the old outage, what if you invite everybody and they all show up and so we're looking at it that way we want to make sure that if the customers select us that we will be able to ship them and short lead times and high volumes with the level of confidence that they would want and so.
Hopefully that gives you a little bit more color again, it's not all about one one or even two companies as we go forward.
We're going to see a lot of breath. Many of those will just be starting the classic they take their first system and Theres a little digestion.
I think will bode well for us as we head into the following fiscal year as well.
That's helpful.
I guess, just as a follow up on sort of number two through number four.
Or number five I guess of the.
The.
Incremental customers.
In terms of the discussions so you ship out these two systems.
Whereas you've shipped the two systems you recognize the revenues.
Are the conversations.
They such that if this tool hits.
The vacation.
We expect to come back with.
Five tools or 10 tools or 20, or three or what level of visibility I know as you mentioned.
There's a bit of movement amongst your customers, but what level of visibility are they providing you so that you're meeting your dad I mean.
Don't mean to be vague or elusive, but it really depends on the customer, but I would say even within one day in common with all of them is there still some pretty broad range as you know.
It just they are trying to figure out the timing of.
Their customer wins or their customer.
Yes.
Capacity needs. There, there's there's certainly an element of AV test times, and what quality requirements will be needed for different customer levels.
The the higher the quality requirements the larger the test times.
Have a direct linear impact on us.
You've heard customers talk about well you know different markets can get away with lower quality than others. That's very odd are interesting to me, but those are clearly things, we keep to ourselves about about Hussein those type of things but.
No.
We hope to make it get easier I mean, one of the challenges that we face is you know we're very theirs.
Customers can be very lumpy and there's these variability. The nice thing is is we do expect to wake up here.
Not in the not too far distant future with a lot more customers and so while it may seem like we're better at planning, we're probably just averaging a bunch of random uncertainties. If you will random is way overstated, we are pretty darn good visibility of what people are doing the one of the things we look at the most candidly.
What their actual plans are you go look at their buildings you watch them being built you look at their public statements about the capacity that we're putting in place we have a pretty good idea of what the average test times are amongst the Oems around the world and we do our back of the envelope numbers, sometimes those numbers are bigger than what the customers are saying and candidly that has happened.
And in the past, where we've built with our customers said, we're going to buy X. We were building <unk> and they came back and said I need three X. So and we were able to actually quickly ramp to them. So I know youre looking for better color I hope that gives you some but it's not that clear to you I realize.
No that's helpful.
You know I know I'm gonna be asked these questions. So I just wanted to.
Get it from the horses mouth.
Yes.
Just before I jump back in queue.
Youre high voltage product congratulations.
That takes you into opens.
Opens up a few doors for you guys.
I was wondering if you might just elaborate on that I know you mentioned it for the Silicon you mentioned silicon photonics, but does that also change the calculus for Ah <unk>.
Trench in Silicon Carbide, and then how does that play for memory too.
Yeah, Okay, well for memory it doesn't apply.
For for trench or gallium nitride, there are different burn and processes that can be used to accelerate different failures in the opinion of what the customer failures may be seen this gives them all the tools for them to be able to apply it and so candidly we're just.
There for them.
A lot of people are trying to get away from high voltage.
It's more expensive than the gate bias, even from us even though we're a fraction of the other guys.
But it's still cheaper to do that gate bias only and so people are playing around with recipes and mixes of.
How much high voltage they need how much gateways do they need and different things in there I'll try and optimize and.
Of course, we can't share or anyone else's secret. So, we're just giving them the tools and being supportive. The nice thing is you can buy a system from us that can do all of the above in fact, you can buy a blade that can do all of the above in one blade you can optimize it depend on test times, let's say your test time for high voltage is X, but your test time for.
Gate as Tenex, you can optimize the systems and you can reconfigure them in the field.
It gives us a lot of customers a lot of flexibility and we kind of arm them with those tools and are supportive and we don't have to say no to anything.
That's key and then things like gallium nitride, where the primary if not maybe only that the only real failure mode has to do with the high temp reverse bias, which is a high voltage gate breakdown and so in that case, they need the high voltage for it and so that's a critical piece to it.
The fact that we can do it at much higher voltages than anyone else without archaean across a whole wafer Gan devices also tend to be smaller so they have a much higher quantity per wafer.
Even the competitors of ours that talk about having the ability to test our wafer do.
With lower quantity than we do so we have an advantage there as well and it seems to be coming out from from our customer.
Customer inquiries. So it's nice to have these options you mentioned memory memory, yes.
If you mentioned to a memory guide 2000 volts it by.
Get it <unk> south out of ourselves.
You don't get that near my mind device. So high voltage is really more to do with these compound semiconductor devices for power management that is for memory memory tends to be lower voltage.
But I'll tell you what let me just cover that rather than <unk>. So we have been having discussions with respect to some memory folks related to both the new auto aligner as well as our long term roadmap and I always allude to that some time on these calls again.
Investors and their test are can be confident that we have oars in the water and are working towards long term growth have been in memory memory makes sense for wafer level burn in NAND is easier and closer.
DRAM there is a path to wafer level burn in.
We should have and can share our opinions with people about how to get there using some.
Our design for test methodologies that we can provide our opinions on to help the DRAM guys get there as well that's going to take longer in time.
But personally at seven point out whether it's the end of the decade or what I can see companies getting there and we want to be their partner.
Thanks, that's helpful I'll jump back in the queue. Thanks, guys.
Okay.
As a reminder, if you have a question. Please press star then one to be joined into the queue. The next question comes from Larry <unk>.
<unk> capital. Please go ahead.
Larry is clearly Larry either no I'm there.
You started to answer my question. My primary question when you might have a evaluation tool to since you have a fully automated machine though.
It seems like.
One of these memory guys might be interested in evaluating it.
Future films.
I agree if I remembered I would want to evaluate our tool as well so.
That is something that is as important to us.
I often tell people be careful don't assume we're going to be having revenue anytime immediately.
But it is absolutely something that we are.
That we're working towards and for sure our new wafer.
Wafer pack automated aligner is a key piece of that and we did get feedback from multiple memory companies on that configuration and its capability I will share that with you. So I'm Barry for people that know me, where I've seen the picture of me smiling next to it before we shipped the first one.
It's a passionate.
Project for me and.
This team is very very proud of that so I'll leave it at that Larry.
Alright, good well I'll leave it at that also but.
Okay, Great Great Guide I appreciate how you are thinking.
Makes sense.
And.
I haven't seen the full.
Automation.
Completely agree with you I think it's fantastic.
Offering soon hey, great job, particularly good. Thank you. Thank you Larry.
Okay.
As a reminder, if you have a question. Please press star then one to be drawn into the queue.
Last call folks.
Alright, operator, then.
There are no other calls.
Yeah, we have one more.
The next question comes from Tom Diffley with D. A Davidson. Please go ahead.
Yes, good afternoon I appreciate the chance to ask a question.
Curious about the leverage in the model itself and maybe this is a question for Ken but I think in the past you talked about roughly a $30 million breakeven and then at 45, 50% drop through thereafter.
A lot has gone on over the last year. So I'm curious if you could give us an update on that.
Yes, I'd be happy to chat with you about it yes, I think the number that you were talking about when I spoke previously $36 million number incentive.
Waller for every incremental dollar.
I'll start with the bottom line and if you actually followed and compared to our revenue number that we came in at $65 million. It was within like $100000 of that model. So I was pretty excited and thank you very much for asking.
We're going to incur some significantly higher expenses in this upcoming year and just from a model standpoint gross margin standpoint.
You could see us ranging from anywhere from a 49% to 52% margin.
Very similar to what we've recognized in the past, however, because and I think Chris can probably touch more on this as we're moving more and more.
Company, a significant amount of cost associated with the G&A. We also have R&D initiatives that we are.
Implementing also continuing during the year and we've added sales and marketing. So there is a significant amount of overhead.
Opex manufacturing spending so.
That $36 million number is really going to go up several millions of dollars.
And the.
The same roughly 50% dropping yep yep.
So let me add on that what Ken just said Tom is.
As you know our market cap exceeds the bill and so the SEC requires anything over 700 million public float too big to report the financial statements.
Large accelerated filer that includes Sox attestation, so that means there'll be more work from internal control perspective from our auditors and what it means is we need to beef up our resources.
With that compliance requirement. So as a result, our opex would increase.
Accordingly, there are downsides to mark a large market cap one of them.
Unless you are an auditor and it's fantastic COVID-19. It makes so much more money, but okay.
Yeah.
Well it seems like a pretty fair trade off I appreciate your time.
Thanks, Thank you Tom.
Again, if you have a question. Please press star then one to be done joined into the queue.
Alright folks.
Let me go ahead and take that thank you everybody for joining the call.
And we really appreciate you joining us for we're very proud of how the year went and I can tell you. We're on the edge of our seat excited about heading into this new fiscal year.
With the great backlog, great bunch of customers, a great bunch of potential customers and a great team and so we really appreciate you folks joining us as always we do try and make ourselves available if you happen to be in the Silicon Valley Bay area.
To set up unemployment come by and take a look.
Our manufacturing floor is a button and it is exciting to look at something we're very proud of and so we appreciate everybody's.
I guess an involvement in cheerleading us on as we as we head into this next fiscal year and we will talk to you next quarter Bye bye.
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