Intevac (IVAC) 5 Aug 24 2024 Q2 Earnings call transcript

Intevac, a leading provider of advanced coating systems, reported a significant boost in its second quarter financial results, with a total revenue of nearly $15 million, surpassing initial expectations. This achievement can be attributed to the increased demand for HDD technology upgrades and solid execution by the team in Singapore. The company's strong financial performance is a testament to its strategic focus on upgrades, which has resulted in a gross margin of over 38% and a net loss per share of $0.12, a favorable outcome compared to previous guidance.

HDD Technology: A Growth Driver

Intevac's success in the HDD technology sector is a key factor contributing to its financial growth. With HDD revenue forecasts approaching $45 million for the full year, the company's focus on HDD upgrades is expected to sustain a solid base of business for the next few years. This growth is particularly noteworthy given the critical role Intevac plays in the HDD industry, with its flagship 200 Lean system remaining the industry-leading platform for advanced media production, even after two decades in operation.

The HDD market is experiencing a surge in demand due to the increasing reliance on cloud storage and the emergence of artificial intelligence (AI) applications. The demand for cloud storage has grown significantly in 2024, and is projected to continue expanding through the next year, driven primarily by the growing need for data center deployments related to AI. This trend bodes well for the long-term strength of Intevac's primary served market, as HAMR technology upgrades are expected to provide strong visibility for a solid base of business.

TRIO System: A Game-Changer in Coating Technology

Intevac's TRIO system, a pioneering platform in advanced coating technology, has shown promising progress. The company has successfully delivered its first HAMR upgrade for a leading data storage company, marking a significant milestone in the qualification process. This achievement underscores Intevac's commitment to innovation and its ability to meet the evolving needs of its customers. The TRIO system, which brings a more compact footprint and enhanced coating capabilities, is expected to bring meaningful incremental growth for the company in the near future.

Strategic Partnerships and Expansion

Intevac's strategic partnership with Intralink, a firm specializing in identifying opportunities in fast-growing sectors, is a testament to the company's forward-looking approach. This collaboration is aimed at building a broader market for the TRIO platform while maintaining a focus on securing initial orders in the consumer device space. Intralink's expertise in assessing opportunities in emerging sectors, such as automotive and advanced packaging, will be crucial in expanding Intevac's market reach and driving future growth.

Conclusion

Intevac's strong Q2 financial results and future outlook highlight its strategic focus on HDD technology upgrades and the promising potential of its TRIO system. The company's ability to respond quickly to customer demand, coupled with its innovative technology and strategic partnerships, positions it well for continued growth and success in the rapidly evolving coating technology market. Intevac's commitment to delivering value to its customers and investors, combined with its strategic vision, makes it an exciting player to watch in the technology sector.