Greetings. Welcome to the Aehr Test Systems Fiscal 2026 Third Quarter Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Jim Byers of PondelWilkinson Investor Relations. You may begin.

Thank you, operator. Good afternoon, and welcome to Aehr Test Systems Third Quarter Fiscal 2026 Financial Results Conference Call. With me on today's call are Aehr Test Systems' President and Chief Executive Officer, Gayn Erickson; and Chief Financial Officer, Chris Siu. Before I turn the call over to Gayn and Chris, I'd like to cover a few quick items. This afternoon, right after market closed, Aehr Test issued a press release announcing its third quarter fiscal 2026 results. That release is available on the company's website at aehr.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company's website. And I'd like to remind everyone that on today's call, management will be making forward-looking statements 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 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 this date, and Aehr Test Systems undertakes no obligation to update the forward-looking statements. And now with that, I'd like to turn the conference call over to Gayn Erickson, President and CEO.

Thanks, Jim. Good afternoon, everyone, and welcome to our third quarter fiscal '26 earnings conference call. I'll start with an update on the key markets driving our business and strong demand we're seeing, particularly from AI and data center infrastructure. Chris will then review our financial results, and we'll open up the call for questions. We're very pleased with the strong momentum in our business across multiple market segments highlighted by more than $37 million in quarterly bookings and a book-to-bill ratio exceeding 3.5x. Our effective backlog, which includes the backlog of $38.7 million at the end of the fiscal third quarter plus additional bookings received since the end of the quarter, is now over $50 million, a new company record. After generating approximately $20 million in bookings in our first -- in our fiscal first half, we're already 2.5x that in second half bookings and now expect to come in on the high side of the $60 million to $80 million in second half bookings I mentioned last quarter. Demand continues to accelerate across both package level and wafer level burn-in driving -- driven by increasing semiconductor complexity, power requirements and deployment in mission-critical AI, networking, automotive and industrial applications. As devices become more advanced, the need for comprehensive test in burn-in is becoming essential to ensure reliability and performance. This is driving growing adoption of our solutions across multiple markets. So let me start with wafer-level burn-in. During the quarter, we continued to make progress in growing our installed base and expanding to new customers with our wafer level burn-in solutions. AI wafer-level burn-in is really hot right now, I guess, pun intended. We received a $14 million follow-on production order from our lead wafer-level AI accelerator processor customer for multiple new fully automated FOX-XP wafer-level burn-in systems…

Thank you, Gayn, and good afternoon, everyone. I'll begin with bookings and backlog and walk through our third quarter financial performance, cash position, outlook and investor activity. The company recognized bookings of $37.2 million in the third quarter of fiscal 2026, significantly higher than the $6.2 million in the second quarter as we have received multiple purchase orders for FOX systems, WaferPak and several auto aligners from different customers for AI, silicon photonics and silicon carbide applications. At the end of the quarter, our backlog was $38.7 million. During the first 5 weeks of the fourth quarter, we received an additional $12.2 million in bookings. This increase was driven primarily by major new silicon photonics customer for wafer-level burn-in with an initial order for multiple FOX systems for both engineering qualification and high-volume production, which we recently announced. With these recent bookings, our effective backlog, which includes our quarter-end backlog plus additional bookings received since the end of the third quarter has now grown to a record of $50.9 million, providing strong visibility for the remainder of fiscal 2026 and positioning us for significant growth for fiscal 2027. Our strong bookings include increased demand for both wafer-level and package-level burn-in solutions. We believe this reflects the proven value of these differentiated solutions which are increasingly integral to the production and reliability strategies of our customers in the AI, data center and other key markets we serve. Turning to our Q3 performance. While we did not provide quarterly guidance, our third quarter revenue of $10.3 million was in line with internal expectations due to delayed orders. Q3 revenue was slightly below consensus and down 44% from $18.3 million in the prior year period. The decline was primarily driven by lower shipments of FOX systems and WaferPaks for wafer-level burn-in business, partially…

[Operator Instructions] Our first question comes from Mark Shooter with William Blair.

You have Mark Shooter on here for Jed Dorsheimer. Congrats on all the progress, especially with the hyperscaler. I'm curious how you guys are looking at this internally? And what percentage of GPUs or ASICs or XPUs do you think are burnt in today? And how do you guys size the vector space?

That's really a good question, and I think we're still getting our arms around a little bit here. I would say that we've been a little bit surprised at how many devices are not yet doing production burn-in. One of the things that we mentioned strategically when we purchased Incal what 18 months ago or so, Incal does a type of burn-in and they were known for it called qualification reliability burn-in, which all processors go through, in fact, all semiconductors. It's what determines their lifetime reliability specs and that they will last long enough, et cetera. So sort of a onetime deal, you do with a large number of devices to do the statistics on it. Then certain devices go through a screening in production to weed out infant mortalities because the failure rate is higher than the market will bear, okay? So Incal was doing this with a large number of AI customers. But actually, prior to that, wasn't doing any production burn-in. When we acquired them, we've now -- because of the capacity we have in terms of people and infrastructure, we've been able to capture this large hyperscaler and are engaged with multiple others. But one of the things that I've been surprised at is that how many of the, I guess, particularly, the ASIC suppliers don't do production burn-in yet or are talking about doing it. And that goes for a lot of different devices that are out there from edge, robotics, ASIC, network processors and even -- I want to always be careful at GPU because everybody just associates GPU only with NVIDIA. But not all devices are burnt in still today. And so there are certain ones that are, there are certain ones that aren't. And even within a company, they may have…

I appreciate all the color, Gayn. That's very helpful. To zero in a bit on your hyperscaler customer, can you bring us a little into the room a bit here and what was the decision process to go with package-level, right, not packaged part anymore, it's package-level versus wafer-level? And do you see a transition potentially with this customer to move to wafer level? And if you get a new customer, is there -- do you think that they'll make the same decision? Or is there a track towards wafer level? Like try to help us out with that.

Okay. So to be fair, 2, 3 years ago, if you would have asked me, we said -- I've said this before, can you do wafer-level burn-in of AI processors, I think we would have said absolutely not. We didn't have the power and the system, and the belief was that there weren't the test modes that we now understand there are to be able to do it. And now as we've gone from customer to customer across a wide variety, there's commonalities about it that allow us to be able to confidently tell them we can do wafer-level burn-in. So prior to that, it was whether you did package-level burn-in or not or did it at, say, the rack level, okay? So people first step is, do I do burn-in, then they're going to default to thinking I'm going to do it at the package level. But then what we're seeing, and I mentioned this before, we have customers -- I don't want to get too carried away here, but the last 2 customers that were in, in the last 2 weeks, Alberto is our package-level burn-in VP and Vernon really runs kind of the wafer-level side of things. The customer will come in and say, I want to talk about package level, and about halfway through the tour, they're like what is that? We talk about wafer level. They're like, whoa, whoa, whoa, how do I do that? And so we kind of joke about it around here. It's like ah. But the reality is, we don't care which side you go to. We have both. Specifically, on the hyperscaler and I've said this out loud before, the first device they ran with us, it's not their first device, but it's the first one they went to production…

Next question comes from Christian Schwab with Craig-Hallum.

Thanks for a tremendous amount of detail regarding the different target markets and your success in each one of them. The most common question I receive is, is there a way to gauge over a multiyear time frame? Obviously, you gave guidance for this year in support of substantial growth the following year with bookings in hand and others to come. But as -- if you had enough time to give some thought to the range of potential outcomes over a multiyear time frame that you guys could do in combination of your target markets and potential entry into the market -- memory market down the road.

So the short answer is we have. The long answer is it's -- we're just really cautious about trying to get too carried away with our projections. But the numbers are very significant. If you just -- because particularly now that there's some hung down memory kind of angle on this thing, too. If you look at the dollar spend that people are going to do on whether you call it compute or AI or if you look at the compute capability, right, that are going into training and inference in data centers, inference and edge, automotive, robotics, the number of different applications and the way people are using it and deploying it, the amount of silicon wafers is staggering and why people talk about these enormous dollars. Those devices -- a processor has always been burnt in. I want to -- it feels like I'm contradicting what I said earlier. It's widely known that Intel and AMD, the primary processor suppliers of the world, burnt in every one of their processors and always have, right? When the first GPUs were coming out, those were using graphics, they were not burnt in. And the initial people that are all related to AI are our foundries and they're out looking for burn-in capability. There were no burn-in systems in the foundry OSAT models. And so people weren't spending on. They spent enormous amounts of money on test and it's growing. And they're going to be spending a significant portion of their test budget on burn-in going forward. I hear things -- I mean, I hear it constantly from the customers rotating through. So the TAMs are multi-hundreds of millions of dollars for package-level burn-in. Wafer-level burn-in, if you say it displaces package-level is even higher. The average actual price per unit…

The next question comes from Max Michaelis with Lake Street Capital Markets.

First, I want to start out here. When you look at the demand environment from the package-level and wafer-level, the demand seems strong on both sides of the business here. But I mean, to me, it looks like wafer-level has seen some -- is outpacing on the demand side and maybe the order side. Can you let me know if I'm wrong there, but is there anything else you can add as well.

The challenge with our business and for all of our shareholders is we know how to be lumpy. And by having more markets and more customers, it can make it less lumpy. But the ASP of a production order set in wafer-level burn-in can be $10 million to $20 million in an order, let's say, okay? Package-level can be that big or bigger, too, okay? So when they come in, it looks like, oh, right now, we see demand on both significant. Now the engagement and the work to get a wafer-level burn-in is definitely harder than package level. And the obvious reason is, in many cases, we're already testing the part for the quality on our tool. So now they have to just say, oh, I need to buy a whole bunch of them and add automation and go to production. Does that make sense? On wafer-level, what we found is that there's a learning process by both sides a little bit, but to understand how they can use our tool to be able to test their part. And in some cases, they're like, okay, I know if I just did this, it would make it a lot easier. But it's too late. I already taped out this part. That would be an example of this benchmark I'm in right now. It's like they're having to use some -- a little fancier WaferPak to do it. And if they just did some specific DFT, they could use a very simple WaferPak, the same WaferPak we're using for like silicon photonics or Silicon Carbide and some of these others. Their vocabulary with us is, oh, I'll be able to do that for the next gen, but can you just work around it with the current one? Well, it's kind of…

[Operator Instructions] The next question comes from Larry Chlebina with Chlebina Capital.

Gayn, your contract manufacturer that you're starting up, when does that start? And when will it be fully capable of doing your 20 Sonomas a month?

They're -- they've already built. They're in the process of building the first batch, I would say is the best way of looking at it. There's -- it's a little more complicated than the way I described, but there's sort of -- there's actually 2 contract manufacturers together and then one feeds into the other one. The first -- the one that feeds into the other one did their prototypes, they sent to us, we were going through a kind of an acceptance process to validate it to work out any kinks, then those go to the other contract manufacturer for final system integration and shipping. The other one is when we were out there, we visited them last September, I think, we did kind of an audit of facility power infrastructure and cleanliness and they did a kind of a remodel similar to ours if people have seen it. It's all white and fancy clean floors, more clean room space so that we can actually build these things in a clean room area. They had facilities, they were doing some stuff for solar as it turns out. And so we were able to leverage from that. And that is in place now. And we think our first products would be ready to ship to customers this quarter through May. And what we want to make sure is they're ready to go by late summer when we see the Sonoma ramp hitting.

That was the really my question. Are you keeping any capacity? Or are you planning on producing those systems in Fremont as well or is...

Yes, for sure. But this is in addition to. We've kind of talked about like about a 20 system per month capacity here from an infrastructure and footprint perspective. We would actually still need to hire some more people, maybe to take on a shift. But we'll use -- we use that facility for like large volume orders of the same SKU, if you will, make it simple. And then we'll use -- we'll continue to make Sonoma systems here and all of the XPs will be built out of here, all the FOX products.

Great. And then did I hear you say that your first expected XP sales to an HBM customer will be this calendar year or next fiscal year '27?

Yes, I didn't quite say anything. I was a little more elusive than that on purpose. What I will tell you is that we have identified some interesting opportunities with HBM, probably the new 4E that it has some interesting challenges that people would really like to do this wafer-level burn-in on. And between our FOX system as it stands and the road map that we've been working on, as people know, with a team of people here for a memory extension to the FOX system to add what we would call channel modules into the FOX that make it memory focused, we think that there's some real overlap there. That just as you know, Larry, you follow this a lot. That's an uptick, okay? I thought HBM had a pack flash and it is in parallel with flash now.

I would say that would be an uptick. Yes, I agree -- a little bit of an uptick.

An order would be a good uptick. I'll agree with you. But right now, I'm excited about the discussions.

Yes. So the flash engagement, is that -- do you think that will bear fruit on the enterprise side here shortly before HBF gets underway, the effort that you're going to have.

That's a good question. I think it really is up to the customer kind of the timing of what we would build would be something that would be a superset that could do both. So yes, if HBF were delayed a little bit, maybe we would intercept their standard products. They've asked us to build it. The definition discussion has been to do both. In some ways, HBF is easier, okay? Then -- because if you start saying it's all flash, a lot of times what happens is people say, well, I want to be able to test everything I've ever had before. And then as the interfaces evolve, they tend to converge in voltages and speed or whatever. And if you say, well, I want legacy, it's like, well, okay, I've got to support this old voltage or something on a device you don't make anymore. So part of the challenge for us is to try and kind of converge on what do you really need going forward, where are you going to spend the money. They probably never buy a system for legacy products from us in general. So I think that's one of the challenges we get to work through.

That's all I had. Boy, you got a lot of irons in the fire.

It is so much fun, you guys, I'm telling you. You -- yes, the -- Vernon and Alberto and the R&D teams and the poor Nick, our WaferPak team is very busy right now. And we're doing some things to offload that adding additional resources. We're hiring anybody looking for a great job with a company that's growing, let us know. We've got a lot of reqs out there, and we're looking for great people. So it's...

It sounds like it is a lot of fun and congratulations. I know you've been working at it for a good while to get to this point.

[Operator Instructions]

All right, operator, if there's no other questions, we'll end on a really happy note. And as always, if you guys have any questions, please feel free to reach out to us. If you happen to be in the Bay Area and want to try and stop by, we're always happy to give a short tour to key investors and things like that. And we look forward to a great quarter and talking to you next quarter. I guess with our new fiscal year, now our quarterly earnings will be the same time the next time, and then there'll be a I guess, a 1-month push or something like that, but it should work out. This will be a good thing for our customers, which, honestly, that's the key to all of this. All right. Thank you very much, folks. Bye-bye.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.