As a reminder, this conference is being recorded. If you have not yet received a copy of the corresponding press release, it has been posted to PDF's website at www.pdf.com. Some of the statements that will be made in the course of this conference are forward-looking, including statements regarding PDF's future financial results and performance, growth rates, and demand for its solutions. PDF's actual results could differ materially. You should refer to the section entitled Risk Factors on pages 16 through 36 of PDF's annual report on Form 10-K for the fiscal year ended December 31st, 2023, and similar disclosures and subsequent SEC filings. The forward-looking statements and risks stated in this conference call are based on information available to PDF today. PDF assumes no obligation to update them.
Now, I'd like to introduce John Kibarian, PDF's President and Chief Executive Officer, and Adnan Raza, PDF's Chief Financial Officer. Dr. Kibarian, please go ahead.
Thank you for joining us on today's call. If you've not already seen our press release announcing a definitive agreement for us to acquire SecureWISE LLC, please go to the news section of our website where it has been posted. Today, we entered into a definitive agreement to acquire SecureWISE LLC for $130 million financed by a combination of cash on hand and new bank debt. SecureWISE is the most widely used secure remote connectivity platform for the semiconductor industry. It is deployed at approximately 200mm, 300mm fabs and used by most major equipment manufacturers. The number of equipment connected via the network is in the tens of thousands, and the amount of data transmitted is in the PB. Equipment companies use SecureWISE to improve uptime, performance, and effective operations of equipment around the world by leveraging the ability to remotely access equipment and to transfer software and data.
Similar to how our DEX network enables our fabless customers to connect to the testers at their suppliers to achieve desired yield and quality targets, SecureWISE enables equipment companies to connect to their equipment and their customer sites to maintain desired yields and operational metrics. We at PDF have been a customer of SecureWISE for years, using their technology to communicate with our systems and our customers' fabs. Our motivation for this acquisition is very straightforward. The future of the industry requires tight collaboration between equipment suppliers, factory operators, and fabless chip companies. This is especially true in the era of advanced packaging, where processes are complex, dependent on equipment achieving amazing results, and specific to the chips used in the flow. By acquiring the SecureWISE business, we plan to extend PDF's leadership in data, analytics, and connectivity.
Upon completion of the closing of the acquisition, our global manufacturing connectivity network will grow approximately 10 x, including most 300 mm fabs in the world. We plan to move SecureWISE solution to the OSATs as well, the part of the supply chain where we already have a footprint. The customer base for SecureWISE and the factories is ideal, with many of them already customers of our Exensio and Cimetrix products and services. The business model for SecureWISE is a cloud-based SaaS model that is similar to Exensio, where customers pay for the number of systems connected and the amount of data transferred on ratable subscriptions. We expect the transaction to close within this quarter. With the partial year of SecureWISE and purchase according to the adjustments, we anticipate our total revenue growth for 2025 to be in the range of 21%-23% on a year-over-year basis.
We expect the acquisition to be EPS accretive and in line with our corporate growth margins. With this acquisition, we also expect to meet our target model of 20% operating margin in 2025 ahead of our plan. In summary, we are very excited about acquiring SecureWISE as we believe it improves our strategic value to the equipment customers by enabling them to deliver value-added services to their customers. When combined with our DEX network at OSATs, it has the potential to enable collaboration for both fabless customers and equipment suppliers to the packaging and test community. With a business model in line with our SaaS deployments of Exensio and combined with the Cimetrix customer base of approximately 200 equipment suppliers, acquisition of SecureWISE is designed to expand our scale and enable us to better serve the entire semiconductor ecosystem.
Upon completion and closing of this acquisition, we believe we'll be positioned as the preeminent manufacturing analytics and execution platform for the semiconductor industry, the trusted supplier of choice for data analytics, secure connectivity, and collaboration that enable AI and ML at all levels of semiconductor manufacturing. We look forward to being able to welcome the SecureWISE employees and customers to PDF upon closing of the transaction. Now, I'll turn the call over to the operator for questions. Operator.
Thank you, Dr. Kibarian. Ladies and gentlemen, if you have a question at this time, please press star one one on your telephone. If you're using a speakerphone, please lift the handset before asking a question. Please wait one moment for our first question. Our first question comes from the line of William Jellison from D.A. Davidson and Company.
Good afternoon, and thanks for taking the question. John, as I understand the nature of SecureWISE's business, it really sits at the heart of the sensitive and potentially adversarial relationship between the fab and its vendors with respect to data and IP, which, as you said, is quite similar to the way that PDF has long been at the intersection of design and manufacturing. So I'm wondering, with that as the backdrop, why now is the right time for PDF to bring SecureWISE into the fold?
Yeah, it's a great question, Will. I mean, a couple of answers to that question. First of all, we've admired SecureWISE for over a decade. We've used it for quite a while. It was not available, so that was always a factor. But when we went and did our talks with the customers and talks with the fabs, the customers of SecureWISE, which includes some fabs, but I think over 100 equipment vendors, are now starting to get more involved in advanced packaging. And so for them, bringing the SecureWISE platform out to the OSATs is of value to a lot of its core customers today, as I said in my prepared remarks. Secondly, when we looked at it, we keep on scaling up our DEX investment.
That means making sure we've got compute and folks to support that compute throughout Asia to support fabless companies, mostly in North America and Europe. When you look at the SecureWISE infrastructure, it's very similar. A lot of the equipment companies are located in Europe and the U.S.. They need to talk with their equipment mostly in Asia, a little also in Europe and the U.S.. And so there's a lot of scale that we get. As I said in my prepared remarks, it grows our compute network 10x. And lastly, as we look at our fabless customers, they're more and more relying on test at their foundry vendors. As they move to more advanced packaging, they want that tighter linkage. And so we see the DEX nodes starting to be more and more introduced into the fabs where SecureWISE already is.
So from a market perspective, it fits very well. Also, when we reviewed how SecureWISE addressed that, you'd refer to it as an adversarial role, but I mean, I think it's a collaborative role between the equipment vendor and the fab. It gives the fab a lot of control about what data and what engineers are allowed to go onto the system and get into the equipment, as well as the equipment vendor able to protect its data coming in and out. So there's a bidirectional encryption. There's a lot of specific systems in place. And we think that as you get more and more sophisticated in AI and ML in the test world, that level of sophistication needs to come to the test market. And to be candid with you, that has not existed in the way that you look at DEX and other like systems work.
SecureWISE is really a notch above when it comes to that aspect of trust but verify in the way both parties operate. And we think that is very valuable for our OSAT partners, equipment customers, and fabless companies in the advanced packaging world.
Great. And then as a follow-up, for a long time, investors have grown accustomed to PDF keeping a pretty clean balance sheet with lots of net cash, excuse me, and no debt. Even though it's not a great deal, can you provide any details on the nature of the debt you plan to borrow and how aggressively you might pay it down in the future?
Yeah, sure. Hi, Will. It's Adnan here. I'll take that question on. So look, naturally, with a deal like this, we are doubly cognizant about the ability to pay off and the amount of quantum of debt we take on. Of course, everybody also understands, John and Kimon's, as founder's, personal preference for not having debt. So you can take that to mean that we were very careful when we were looking at the acquisition, building our own models, and looking at the potential math to say, what is the quantum of debt and how fast might we be able to pay off? As for the debt itself, we have negotiated pretty good terms with a commercial bank and expect that given the growth in our EBITDA, coupled with the positive EBITDA that we're getting from this transaction, we'll be in a position to generate a meaningful amount of cash.
That gives us the flexibility to pay it off in a fast time. However, we'll continue to keep balancing that with share buyback opportunities, CapEx investments, and other potential M&A. But rest assured, our desire is not to keep the debt around for a very long term.
Great. Thanks, Adnan.
Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question comes from the line of Blair Abernethy from Rosenblatt Securities.
Thanks, and congrats, gentlemen.
Thank you.
Thank you.
John, just a couple of questions for me. Can you just talk a little bit more on the product side to start with in terms of what the integration, I mean, you've obviously been using, what needs to be done to sort of pull the products together and how does this fit or feed into Exensio?
Sure. You dropped off for a little bit there, Blair, but I think I got the gist of your question, which is, what does it mean from an integration perspective? So there's many points of integration. If you look at the SecureWISE solution, there is a piece of software that runs on the equipment. There is software running on servers that SecureWISE puts at the factories, mostly owned by SecureWISE. Sometimes the factories procure them. There's then servers located in each region, located typically at cloud sites where they collect the data up from that region to make it available in other regions. And then at each of the equipment vendors, there's also a SecureWISE system, hardware system that brings the data in. This allows for maximum security. And there's software that's run on both the equipment vendor systems as well as the factory systems.
When you look at that configuration, it's very much like DEX, so there is a plan that we will start developing around how we integrate this with DEX to bring a lot of that capability to a lot of our customers in the test world. Their agents look a lot like our software development kits for our Cimetrix products, so we can use that channel as a way of distributing it out, and it provides a series of analytics that will benefit from the Exensio analytics platform that we will integrate both for the equipment vendor as well as the factory owner as they manage statistics around who had access to the data, what data is transferred, et cetera, so there's basically three touch points of integration in terms of making the system work as one. These are all things that we will take over time.
They don't really limit us from the way we get benefit from SecureWISE. I think they just create more and more benefit. And then lastly, there's applications. If you attended our AI users conference, we demonstrated AI applications for equipment vendors, for example, the Deep application. Deep is a way of providing a platform for equipment vendors using the data they're getting from their equipment to provide value-add services to their customers, like predicting preventative maintenance or making sure you have the right spare parts for potential downtime on equipment, etc. That will be things that we will be able to go back and offer to the SecureWISE customers as additional value-add that they could potentially benefit. And then lastly, by adding scale on our communications network, it allows us to double down on investment in security. For sure, the most important thing for all of our customers is security.
We're very proud of the fact that we've operated with customers' data in a secure fashion for over 30 years, and we plan to have the extra scale of both DEX plus SecureWISE to double down on what we do in security.
Great. Thank you. And another question was just around on the go-to-market side, will this be integrated with your current go-to-market efforts? What do you sort of envision on that side?
Yeah. There's, again, tremendous synergy there. Their customer base very much on the equipment side very much overlaps with Cimetrix. The fabs that they both sell to and sometimes just deploy hardware and systems at overlap with the Exensio customer base very nicely. So there's a lot of synergy on the field side that we believe will let us cross-sell and upsell what we're doing for customers through driving more value. We like to think when customers make a choice with PDF, one of the benefits they get is that we're going to really seriously invest in the platform. It's going to keep getting better.
Things like SecureWISE means we can go to the Cimetrix customers and say, "Have you thought about ways of adding remote support for your equipment?" And add additional value to them and vice versa for the SecureWISE customers, show them what additional analytics they can take advantage of. So the synergy in the salesforce is quite important, actually.
Great. Thanks very much.
Thank you. One moment for our next question. Our next question comes from the line of Christian Schwab from Craig-Hallum Capital.
Hey, guys. This is a relatively small company who seems to be around for a long time. Let's call it approximately $20 million. What is your expected growth rate for this business on a go-forward basis? Is this going to be in line with your corporate average of 20% top-line growth, or do you think that given the cross-selling opportunities, the movement to advanced packaging, et cetera, that that growth rate could accelerate much higher than that?
That's a great question, Christian. Yeah. We've known about this company for a long time. As you know, it came out of, I mean, it came out of IBM. And for a long time, the amount of data people transmitted, the amount of equipment connected, was a relatively small number. Starting around 2018, 2019, as equipment, particularly in the FinFET fabs, as you got to s and below, became very, very complex. The data rates started going up, and it has grown quite meaningfully at or around our growth rates. We anticipated growing comparably to the 20% that the company grows to, about that number or greater.
Before we start thinking, that's before we start looking at the synergies between the products, we do believe, as you alluded to in your question, there is a way to grow this faster as we bring this particularly into the advanced packaging world and some of the value-added analytics software that we can provide to the equipment vendors and it's kind of traditional SecureWISE or conventional SecureWISE customer base, so we're modeling it to be similar to the company. We think it will help accelerate the company.
Great. And then my second question is just on the transaction itself. You're paying, call it roughly six and a half times price-to-sales to keep the math easy, in line with your historical five-year average for yourself, premium to what you currently trade at, though. Can you explain the sale process? Is this a deal that you went to them and said, "We'd like to acquire you"? Was this deal shopped? And did many people look at it? Was it a competitive process? Just trying to get an explanation for what seems to be a decent price for the company, SecureWISE.
Yeah. All right, Christian. I'm happy to take that, Adnan, here. So look, this opportunity, like John said, is a company we've known about for a long, long time.
He also alluded earlier in his prepared remarks at, or I think it was in the Q&A, that we've wanted to do something in terms of acquisition or partnership with this company, but it hasn't been available. If you go and look at the history of this company, it was acquired by a private equity firm as part of Telit, as noted in our press release as well. So I think as part of that process, when this asset became available, it was a formal sale process. We participated in it. So obviously, we've been in it for some time. And as a result of that process, came out as the right strategic partner for this asset. We hope, given our strategic nature as a buyer, this is a win-win for the customers, which is really what all this is about.
We're particularly pleased with the synergy that it offers, like John said, also with our existing customers within Cimetrix.
If I can just jump in there on the one other point to make, Christian. As we've been building out the DEX network, we've learned quite firsthand how costly and time-consuming it is to get an at-scale network. This network is 10x where our DEX network is. When we looked at the scale of the network and the reach that it has, and this is why we've always coveted this business. It's very hard to build one of those. It's very hard to sustain building one of those and sustain it once it's up and going. It's actually quite reasonable once you've got that thing going. But it's difficult to get going. So we definitely valued this. When we saw it was for sale, yes, it was something that we definitely thought fit well with us.
When we looked at it on an earnings basis, it's quite a reasonable price to pay for the business. It is a very profitable business in and of itself.
And then my last question, given, I don't know how far you can go back, but can you give us an idea of that scale of investment that has been made in the company to drive it to the revenue levels it's at currently?
Yeah. I probably don't have a number for you, but what I can tell you is there's thousands of servers located across hundreds of fabs around the world with software running on tens of thousands of equipment and an infrastructure proven to securely transmit PB of data. It's an at-scale system. There's nothing out there like it in the semiconductor world. Full stop.
Perfect. Thank you. Thanks, guys. No other questions.
Thank you.