Onto Innovation Inc. ($ONTO)

Good day, and welcome to the Onto Innovation First Quarter Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sidney Ho. Please go ahead.

Thank you, Taren, and good afternoon, everyone. Onto Innovation issued its 2026, first quarter financial results this afternoon shortly after the market closed. If you did not receive a copy of the release, please refer to the company's website where a copy of the release is posted. Joining us on the call today are Michael Plisinski, Chief Executive Officer; and Brian Roberts, Chief Financial Officer. I'd like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of the federal securities laws. Those statements are subject to a range of changes, risks and uncertainties that can cause actual results to vary materially. For more information regarding risk factors that may impact Onto Innovation's results, I would encourage you to review our earnings release and our SEC filings. Onto Innovation does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of our financial results will be presented on a non-GAAP financial basis, unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release. Let me now turn the call over to our CEO, Mike Plisinski. Mike?

Thank you, Sidney. Good afternoon, everyone, and thank you for joining us on our call today. The Onto Innovation team is off to an outstanding start to the year as the momentum in our business continues to build in support of strong demand for AI compute. This surge in demand across both front end and advanced packaging resulted in first quarter revenue above our original guidance range and is expected to continue with the heightened outlook for the second quarter revenue which at the midpoint represents a 20% increase year-over-year. Momentum should continue into the second half of the year with rising customer expansions enhanced by accelerating new product adoption and a growing backlog, all indicating more than 15% sequential revenue growth in the second half of the year. In total, we expect revenue growth of more than 30% in 2026. This momentum is driven by the insatiable end market demand for high-performance compute and supporting process technologies, including silicon photonics. Customers benefit from our broad and synergistic portfolio of optical process control technologies, which through our software are capable of working together to provide more actionable intelligence to manufacturers. The announcement of our strategic collaboration with the leader in X-ray technology, Rigaku, expands this capability significantly. So while optical metrology is preferred for high-volume manufacturing, additional needs are emerging as manufacturers increase the application of exotic materials and 3D structures at transistor and chiplet scale, which is where the penetration power and precision of X-ray technology can provide additional information about material composition and underlayer data to potentially improve optical metrology robustness. The key to realizing this benefit is our AI to fact software, where our customers were the first to see the potential benefits of leveraging AI to frac technology to unleash the strength of Rigaku's X-ray system to solve process metrology challenges where other suppliers struggled. Now with 2 competitive wins in hand and several other evaluations planned across memory and logic manufacturers we are confident that the value of this combination to our customers will increase. In addition to revenue from licensing AI do frac to support Rigaku X-ray systems, another revenue stream involves the development of more complex hybrid metrology solutions to provide unique production capable metrology by combining the strengths of optical and X-ray technologies. The breadth and depth of Rigaku's X-ray technology makes them an outstanding partner as they enjoy 1 of the broadest portfolios of X-ray technology spanning CD, materials analysis and films. Rigaku has over 75-year history in X-ray with over $600 million in 2025 revenue, of which approximately 40% is related to the semiconductor industry. We are proud to be working together, and our investment of 27% of the business, which provides us a seat on their Board of Directors will further strengthen our long-term alignment, provide deeper insight into X-ray technology road maps and position us to jointly advance next-generation hybrid metrology solutions. So while the Rigaku partnership expands our opportunities for growth tied to future process challenges, today's process challenges are driving increased demand for our solutions in both advanced packaging and advanced nodes. Starting with advanced packaging, we're, of course, thrilled to have announced our qualification adoption of Dragonfly G5 inspection system at a leading 2.5D logic customer. so closely following our wins in high-bandwidth memory for both 2D inspection and 3D metrology. Our team did a phenomenal job to accelerate the delivery of this completely new platform which delivers improved sensitivity, high throughput and the flexibility of multiple sensors to provide a compelling and differentiated value proposition to the customer. Shipments to customers are ahead of plan, and we are actively engaging with new customers and applications with a pipeline of over 15 distinct applications across over 10 customers, the outlook for Dragonfly G5 is very promising providing opportunities for both share gains in current markets and expansion into new markets. Just as 2D features within shrinking rapidly, so are the 3D interconnects between die. Two years ago, the most advanced bumps were approximately 15 to 25 microns high. Today, we're sampling bumps below 6 microns in height. This adoption of smaller, more dense bumps plays to the strength of our 3DI technology and has led to several more OSAT customers and over 10 additional orders in the quarter. Finally, the strong demand for AI and the industry constraints in packaging capacity are causing customers to look at additional processes such as panel-level packaging, where larger substrates can provide for greater economies of scale as the adoption of heterogeneous packaging drives larger package sizes. We're pleased to learn that JetStep was recently qualified at 2 packaging suppliers to AI device manufacturers with ramp-up expectations in 2027. Considering all of these growth drivers, we believe our advanced packaging revenue will grow more than 50% in 2026. Turning to our Advanced nodes business. It continues to strengthen across both logic and memory. Adoption of our Atlas G6 platform is expanding following successful competitive head-to-head evaluations at several key accounts for next-generation logic nodes, while in memory, we're seeing solid traction as DRAM customers ramp development of next-generation devices. Additionally, we secured a new application win for TSV metrology using our Atlas system, with initial shipments expected to commence in the second half of the year. With this broad-based strength in logic DRAM and early signs of recovery in NAND, we now expect our advanced nodes business to grow approximately 25% in 2026, ahead of the average WFE growth expectations in the low 20s. And with that, let me now turn the call to Brian to review our financial highlights and provide second quarter guidance. Brian?

Thanks, Mike. Good afternoon, everyone. As Mike noted, 2026 is off to a strong start for Onto Innovation as we exceeded the high end of our first quarter guidance range across all key financial metrics, including revenue, gross margin, operating margin and earnings per share. Revenue of $292 million increased nearly 10% sequentially on strength primarily across our advanced nodes business, highlighted by adoption of the Atlas G6 and our inspection products, including the initial commercial shipments of the Dragonfly G5. Specialty device and AP was approximately $160 million in the quarter, of which 2/3 was advanced packaging $25 million related to semi lab and the remainder specialty device, including power semi. Advanced nodes was approximately $80 million, of which 60% was memory, primarily DRAM and the remainder logic. Software and services comprised the remaining first quarter revenue. Despite increasing headwinds around certain material input costs, such as memory and higher fuel and shipping charges, we demonstrated solid margin performance as gross margin improved sequentially by 110 basis points to 55.7% and operating margin increased by 150 basis points to 26.7%. Our performance reflects benefits recognized primarily from our move to extended factories. Earnings per share were $1.42, reflecting a 13% improvement over Q4 2025. On April 20, we announced the deepening of our strategic partnership with Rigaku, including the purchase of a 27% stake in the company from Carlyle Group for approximately $710 million. The deal is expected to close in the second half of 2026 and be primarily funded with cash on hand. The strategic rationale, as Mike discussed, is clear, but let me take a minute to discuss the financial side of the transaction. We will account for the purchase using the fair value option method for investments, which simply means the deal would be recorded at cost. And then each reporting period, we will show an unrealized gain or loss based upon the movement in Rigaku stock price. This will be reflected in the other income section of our P&L. While Rigaku's financials will not be consolidated into our numbers, we see 3 primary benefits which will enhance our financial results. First, Rigaku's X-ray tool integrated with our AI to frac software will generate incremental licensing revenue to us at nearly 100% margin. Second, we expect we will sell additional metrology tools such as our Atlas G6 to customers who are using the integrated X-ray tool. And third, we expect Rigaku will continue to pay dividends to shareholders which equates to approximately $7 million or more per year based on our expected ownership stake. Within a year of the close of the transaction, we would expect that the income generated from these 3 sources will offset any foregone interest income on cash used in the deal. Now let me discuss our outlook for the second quarter with some thoughts on the remainder of 2026. We previously announced on April 16, our Q2 revenue expectation of $320 million to $330 million, representing at the midpoint, a 10% increase to previous analyst expectations and 28% year-over-year growth. As we look to the second half of this year, revenue is expected to accelerate to at least 15% growth over the first half of 2026. This translates to 2026 revenue greater than $1.3 billion. Alongside this outstanding revenue result is our expectations for continued second quarter gross and operating margin expansion. While we do note increasing headwinds around certain material costs, fuel charges and investments in our R&D and services teams to support the revenue ramp, we are confident in our ability to show continued margin expansion. We currently expect Q2 gross margin in the range of 56% to 56.5%, operating expenses of $90 million to $92 million, operating margin in the range of 28% to 28.6% and earnings of approximately $1.69 per share at the midpoint. This assumes a non-GAAP tax rate of approximately 15% and slightly more than 50 million shares outstanding. While closely monitoring macro and micro headwinds impacting our cost structure, we remain confident that we will improve gross margins in Q3 and Q4 at a rate of at least 50 basis points per quarter and exit Q4 with an operating margin greater than 30%. And with that, let me turn it back to Mike for some closing thoughts before we take your questions. Mike?

Thank you, Brian. In summary, this quarter underscores the strength of our execution and the accelerating momentum across our portfolio. We exceeded expectations in the first quarter, advanced our leadership in advanced packaging with the successful qualification of Dragonfly G5 at multiple key customers and took a major step forward in our metrology strategy through the partnership and investment in Rigaku. At the same time, our operational discipline continues to enhance scalability and drive strong margin expansion. Our visibility continues to strengthen, supported by record backlog, new product momentum, and deep collaboration with customers as we work together to solve their most critical process control challenges. With this visibility, market expansion and our relentless drive to improve operational efficiencies, we believe Onto Innovation is well positioned to not only outperform this year but also carry that momentum forward into 2027. And now, Taren, let's open the call for questions from our covering analysts.

[Operator Instructions] We'll take our first question from Craig Ellis with B. Riley Securities.

Congratulations on the real strong execution guys. Mike, I wanted to start with a question on Dragonfly G5. So clearly, you got a marquee win that starts to ship in 2Q, which is great to see. Can you just talk about the way the pipeline allows for visibility for growth through the back half of the year? And then what are you hearing from customers with Dragonfly G5 relative to 2027?

Great question, Craig. So from the G5 perspective, one of the, I think, comments I made is that we're actually getting requests to pull in and serving those requests to pull in G5 shipments. So in fact, we'll be shipping -- we've shipped several systems in Q1, will be shipping more into Q2 and even more in Q3 and Q4. So we see a steady growth in demand for the G5 throughout all 4 quarters. So that's an acceleration or pull-in of the G5. From a perspective of 2027, we certainly, from those existing customers, we certainly have visibility into stronger demands, as you would expect, as they get cut into production as that production expands in '27, we have -- listen, that's what we're expecting. But I also mentioned that we have a very strong pipeline of application studies. And I highlighted that these are both studies in existing technologies, so existing markets we serve as well as new markets and those applications are going quite well, which would imply, if successful and resulting in orders imply significant expansion in 2027.

Very good. And then the follow-up question is on advanced nodes. So we're significantly raising our view for advanced nodes growth this year to 25%. Can you just talk about some of the end-use drivers for that? And how we should think about linearity as we go through the back half of the year in '26?

So for us, the advanced nodes, the biggest driver is, of course, the Atlas OCD metrology and some of the latest capabilities we're providing customers is with smaller spot. So being able to measure in die -- in the actual die to provide more process information that the customers can use to improve yield. Historically, spot sizes were too large to do that, and you had to measure in some sort of test areas. Customers prefer to do it on die if possible. So we're seeing good drivers from that. We also are working on the integrated metrology, and we've had some good progress in integrated metrology from larger customers, building on the strength we have in the memory market. So that also contributes to some of the growth we're seeing as well as in the film. So the Iris films tools, we're seeing some level of growth there in the common films, but we continue to work with customers on the critical films as well and hopefully see that contributing to some exciting news more towards the end of this year and into 2027. So that's what we're seeing on the advanced node side. .

We'll take our next question from Blayne Curtis with Jefferies.

Ezra Weener for Blayne. Just the first one. Last quarter, you were talking about a big VPA potentially being 2/3 weighted into '27 and could get pulled in half-half theoretically into '26. Can you talk a little bit about what you're seeing in terms of demand from customers from a timing perspective, maybe you're seeing pull-ins?

Broadly speaking, we are seeing pull-ins, but not at the expense of the 2027 numbers. So it's really more of a broader rising of the tide. The pull-ins if you look at '26 and '27, a lot of these expansions are tied to new fabs coming online versus filling up excess capacity or excess -- yes, capacity in existing fabs. So the pull-ins are if the customers are able to ramp up a fab quickly enough and they want to take some more tools or we had some share gains and we see a share shift and they want to pull in some tools. But it's not at the expense, what we see so far of '27. In fact, '27 continues to look much stronger even than '26.

Got it. And then just a follow-up. Dragonfly G5 was looked at as a margin improvement story versus G3. Can you help kind of talk about how much you're seeing that actually impact margin?

Yes. So it's for sure going to be an improvement in margins is a completely new tool with a significant improvement in value proposition to the customers. So Overall, the cost of ownership is for the customer much more attractive. You're not going to see the margin improvement in the initial first half of the year because the relative volume is low as we continue to ramp it throughout the second half of throughout this year. So going into the second half, where I expect you to see a more significant impact is in 2027 when the -- when that transition to Dragonfly G5 is much more predominant, much stronger, and it's a higher percentage of the overall inspection revenue. We do continue to expect to improve the gross margins throughout each of the quarters throughout this year.

[Operator Instructions] We'll move to our next question from Edward Yang with Oppenheimer.

Congrats on the G5 foundry qualification. That's a big win for you guys. Maybe, Mike, -- can you give a little bit more detail on why the foundry customer like the new platform versus other options and are you expecting any share recapture, new layer wins or broader customer application expansion related to G5?

So I characterized it as a 2.5D logic customer. I didn't say boundary per se. So we'll just stick to 2.5D logic. But I do expect -- so in the head-to-head, you have to win and if you win, then you get more orders. So that, by definition, means that we're going to see some opportunities shift back to us that were either served by us before or new opportunities for us. Again, driven by the higher resolution and the compelling value that the flexibility of the Dragonfly delivered to the customer. I think you also asked what the -- why the win. Again, we've been in this market for a long time. Packaging is very different than the front end. Our tool is designed for packaging. What we needed to do is deliver on the high resolution piece. We've done that. We are seeing things now below 200 nanometers, where historically, 800 nanometers might have been about the limit. This is a combination of new optics, new camera, new staging, basically a ground-up system, but leveraging all of our experience and the challenges in packaging with Wafer Warp, with rough surfaces due to different types of CMP polishing, leaving rough surfaces for metal metal layers and things like this. So all of our algorithms and experience helped to create a very compelling system. And in addition, we added some new capabilities, die-to-die algorithms that allow us to eliminate die variation. I think that's a significant improvement, complementary to our golden die. Algorithms from the past. So yes, I think there's a variety of reasons. And at the end of the day, the customer just wants the best cost of ownership, most flexible system for the valuable fab space that they have. So this system is designed for several generations ahead. And yes, we're happy we won and look forward to continuing to win.

That's very helpful color. For my follow-up would just be on the 2027 outlook. It sounds like you have a rich menu of growth opportunities. Obviously, a very favorable industry backdrop, but a lot of internal drivers as well. So if you were to rank order the opportunities you're particularly excited about, whether it's Atlas G6, Dragonfly, 3DI, Iris, JetStep, X-ray, et cetera. Maybe give some color around how you feel about 2027 and your ability to outgrow WFE.

You're asking me which of the children I love best. I think the highest growth and the highest contributions to growth or potential share gain opportunities will definitely come from the Dragonfly G5. I think it's expanding into or has the potential to expand into nearly $1 billion in new markets. That's exciting, and the existing markets it's serving are also growing. So I think there's a lot of opportunities for the Dragonfly, the Atlas G6 is making good progress in gate all around customers. That's going to continue to ramp and the OCD continues to be a critical component for process control in the gate all around technologies even as we look at integrating X-ray systems in order to extend the opportunities for OCD and expand the opportunities for OCD. These are complementary, not replacements. I think they work well together. In addition, I think the surface charge metrology is another good growth area for us. We see more and more interest from -- especially from packaging as chiplet architectures become more of the more mainstream, the concerns around charge metrology or residual charge having an impact on yield, a direct impact on yield for a package is high. And so the products that we're coming out with and opportunities for the SDI, I think are continuing to grow. So that's another exciting opportunity. And of course, right up with that is the panel panel-level products we have with both [indiscernible] and the Firefly. We talked about some growth there as well recently and see a meaningful shift now with the panel market starting to gain traction and people recognizing some of the benefits there. So yes, I think that's -- and then there's some more...

You expect to outgrow WFE?

Yes.

Next year?

Yes, we do expect to next year as well. .

We'll take our next question from Matthew Prisco with Cantor.

I just wanted to start on the advanced packaging market and the kind of improved outlook there. Primary drivers within that who got incrementally strong over the last 90 days between maybe HBM CoCos like panel little packaging? And what's included now in that number from a G5 perspective?

And so for all the growth we talked about how much of it is G5, it's still relatively small. So call it, less than 10%, maybe even 5%. So it's ramping.

And then maybe how you think about all those other areas playing and being contributors to growth?

There are significant contributors to growth. So the G3 demand is still going up. The G5 is ramping every quarter. It's grown very dramatically. So it's starting from 0. Q1 is going to be a handful of tools Q2, Q3 has continued to nearly double each quarter throughout the year. So it's growing quite a bit. I think overall, yes, you're looking at over 50% growth in advanced packaging. And if I think about 2.5D Logic or HBM, they're very similar in growth outlook for us. Similar to what they were in '24 when everything is ramping. I think we talked about them split roughly equally. .

Got you. That's helpful. And then maybe -- can you talk a little bit more about the Rigaku collaboration and how you think about revenues there ramping in the second half, primarily it seems like starting with software? And then how we should think about that combo optical x-ray tool timing of that system and potential magnitude of that opportunity over time.

So the -- so on the software piece, we'll provide some more guidance as we continue to gain experience, putting in the -- working with Rigaku as they drive the sales. We're 2 separate companies now. So we're 2 separate companies. So we're dependent, our software attach rate to their CD X-ray tools is depending on CD X-ray tool pipeline. We've looked. We think it's quite healthy. We need more experience with how long it takes to close. And based on what we've seen, I would say we expect that software revenue to growth without '26 and then grow even further in '27 based on the pipeline we've seen. But we're now starting to leverage some of our contacts in the industry and with some of these customers looking for new opportunities now that we have a more solidified arrangement, and so that number could grow. So we'll provide more guidance as we continue to work together. The new -- the hybrid metrology solution, that's further out. That is more working with customers, understanding their challenges and then looking at ways to combine information to provide production-worthy systems, and plus 2 kind of several generations out. OCD right now is going to cover through 1-nanometer type processes. There'll be some incremental sales we talked about. But the hybrid metrology is going to be more on some of the new technologies coming out in a couple of years. So that means we're starting now in R&D, working with our partners in the R&D space and then look at timing for HVM. That's where the real money will come in.

Matt, in its simplest form, as I mentioned in my remarks, I mean, if you think about just from an interest income or the foregone interest income and think about what needs for us over the next 12 months, we very confident that we will more than pick that back up. Through the combination of the licensing revenue that we've talked about is the primary kind of revenue stream plus then the dividend income that we'll see from Rigaku. So those 2 numbers together from an income perspective should offset what we were foregoing in interest. .

We'll take our next question from Vedvati Shrotre with Evercore ISI.

My first 1 is on advanced packaging. You talked about 2 growth opportunities, additionally, like silicon photonics and panel-level packaging. Can you help kind of size the revenue opportunity that could be here? And like when do you expect to start seeing volumes on this?

We're already starting to see some volumes in silicon photonics. And from a size, I think you look at the end market demand, and it's quite high. If you think about all the AI servers going in and all this desire to reduce the power consumption of those servers provide additional speed between the memory and the logic as well. So 2 different areas, silicon photonics are being used or co-packaged optics. -- it can mean quite a bit of volume, but the question is how quickly it gets cut in. So we've talked about several different customers that we've already been selected and gaining traction, gaining orders. We'll -- we have a kind of a good visibility and pipeline into additional orders additional opportunities through the next, say, 12 months, I think from a sizing perspective, it's a little early to be too specific, but I would definitely see this as one of our high-growth areas from a relatively low base, but very high growth based on end market demand and need.

And how about panel-level packaging? And then I have a follow-up.

Panel level packaging, I don't think we've come off of the $200 million or so that we've said over the several years. That includes the JetStep and the Firefly. I would say there's more of a bias as the industry starts to shift to this where we see more manufacturers move to a panel packaging format, that number could go up quite meaningfully. But for now, that's sort of a range you can think about. .

Understood. And for my second question, so I kind of wanted to understand what your tool lead times are? You talked about some of the headwinds like the case. There's also some components like maybe specifically, are there any supply chain bottle necks that are starting to creep up on the tools?

I'm sure if you asked our COO, he'd say, "yes, plenty. But in general, we're managing through them. None of them are impacting our production and our commitments to customers. So we're doing a great job managing through the issues that pop up. This is one of the benefits of moving to the extended factories. We also through that process. did some pruning of our supply chain treat. So as we looked at shifting and who could support our overseas factories, we made some changes to certain suppliers that didn't have the scale and capability to grow with us. And so I think right now, we're in relatively good shape. Of course, lead times are extending out a little bit, but so far, no big issue and we're able to meet customer demand. .

We'll take our next question from Charles Shi with Needham.

Maybe the first question regarding the Rigaku to collaboration and the expected licensing revenue. I know you want to I mean spend a few quarters to understand how to better forecast and maybe guide, but -- and we also understand this is a highly complementary to what you have on the optical side, but -- can you kind of talk to us what's the expected licensing revenue? What is the economics that look like maybe on a per tool basis, each Rigaku to ship out how much licensing revenue can you get is at least give us some sense on the order of magnitude? Is it a few [indiscernible] a few millions. What is that licensing revenue expected would say economics?

Yes, we're not going to break that down for anybody. But Brian did a nice job highlighting the component. So if you look at potential interest income, of the investment that we made, and then you subtract out roughly $7 million for dividends, then the residual is what we'd expect to see from license revenue and from profits from potential hybrid metrology sales. So I think that gives you a rough idea. Overall, that is not game-changing for on to innovation, from a revenue perspective this year. The whole point is this is a strategic initiative that expands our opportunities significantly as we look out 3, 4, 5, 6 years ahead. .

Got it. maybe asking you a longer-term question regarding your positioning for hybrid bonding related inspection metrology opportunities. Definitely, I understood that you have a portfolio -- a strong portfolio across different platforms, Dragonfly, maybe EcoScan, et cetera, but Rigaku probably is also working on some x-ray-based solutions there. So how do you think about the positioning between your offering versus theirs and especially for some of the applications, there seems to be some overlap. For example, your EcoScan versus some of the tools extra based solutions they may be working on? How do you solve that overlap of maybe you maybe end up competing for some of the same opportunities? And any color, any thoughts would be great.

I think, Charles, you're very well informed. You picked about the only overlap that exists and we don't know a lot about what that is about. But there is a potential overlap in packaging for X-ray inspection. That, I think, between our Echo scan and that. At the end of the day, optical systems should always be much faster. The Echo scan, if it reaches its full potential, should be much faster and then it's going to be a benefit. The X-ray benefit is going to be precision and it's going to be penetration depth. So in that case, there could be opportunities where one is like -- if you understand inspection, which I know you do. One is the inspection tools. The other is the high-end review tool. So optical inspection and some review as an example. So they can work together. They can coexist. And that's part of the reasons we like this expanded opportunity to expand the portfolio and together offer customers the best-of-breed technologies. So right now -- and that's about the only area. Otherwise, the films, the CD, [indiscernible] versus optical CD, all of these are complementary. If -- as long as the OCD can measure it, which so far, we've demonstrated we can push OCD technology beyond where most people thought possible, they'll go with OCD. But there are definitely gaps that we're starting to see, especially as 3D becomes more dominant part of the customers' process road maps where penetration depth is critical. And it's going to provide some insight into the OCD modeling engines that will make OCD more valuable or, let's say, extend OCD further down the line. To get the speed of with the precision and penetration depth of X-ray.

[Operator Instructions] We'll take our next question from Brian Chin with Stifel.

I will just ask a few questions. Mike referencing the 2.5D Logic win, are you baking -- and just to clarify, are you baking in a relatively modest contribution from Gen 5 sales to this customer in the second half could that be conservative? And also, when you think about that qualification, improving and strengthening your competitiveness for the variety of applications that customer has, can you [indiscernible] guess where your market share at that customer might shake out moving forward?

So I don't want to say exactly what could happen. But for sure, we've got new opportunities within the account that with the previous resolution and previous system that we couldn't serve. So we definitely see that. Could our forecast be conservative? Sure, it could be. Could there be upside to the second half? Sure, it could be. But we gave the guidance now and next quarter, we'll provide additional guidance and see how things shake out. But I don't think it's all tied to this customer, where we mentioned 10 additional customers looking at the G5 for applications, about 15, I believe, I said, over 15 applications, many of which we wouldn't have been able to serve in the past. So the opportunity to expand our overall SAM is also creating excitement and growth and upside for maybe second half, but definitely into 2027.

Yes. I mean kind of a mini question before I ask my follow-up. Relative to last year or the year before, there does seem to be a lot more breadth of potential customers as opposed to the recent years where it was pretty concentrated.

Yes, for sure. Yes. And we see this advanced packaging being migrated as customers try and focus in on their high value-add process steps and they outsource to others, some of the other process steps. We're seeing opportunities to -- well, we're not seeing the opportunity. We are growing our position in the outsourced partners. So we're definitely seeing a proliferation naturally through our customer base as well.

And then for the follow-up, is the Atlas TSV application, when you referenced an example of the synergy between the 2 companies optical x-ray technologies. And also -- the Rigaku relationship sounds undoubtedly, like it's focused on the semiconductor engagement. But given that a large portion of Rigaku's business is also outside of semi, are there any opportunities or plans to engage in markets beyond semis?

Specific to Rigaku, focusing on semi and they also see semi as 1 of their key growth pillars. So I think that's a great synergy and a great reason why working together. We can provide the strength, not just of technologies, but also of our footprint and infrastructures. So I think that's going to be our focus, at least for the foreseeable future and where the biggest benefits will be realized. TSV. No, that was not part of -- that was homegrown. That was leveraging the capabilities of our Atlas to do some very specific metrology that was previously done by a different OCD supplier. .

[Operator Instructions] It appears there are no further questions at this time. I'd like to turn the conference back over for any additional or closing remarks.

Thanks, Taren. We will be participating in a number of investor conferences throughout this quarter. We look forward to seeing many of you there. A replay of the call today will be available on our website at approximately 7:30 Eastern Time this evening. We would like to thank you for your continued interest in Onto Innovation. Taren, please conclude the call.

This concludes today's call. Thank you again for your participation. You may now disconnect, and have a great day.