UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 13, 2020
PDF SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
000-31311
(Commission File Number)
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Delaware |
25-1701361 |
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(State or Other Jurisdiction of Incorporation) |
(I.R.S. Employer Identification No.) |
2858 De La Cruz Boulevard
Santa Clara, CA 95050
(Address of principal executive offices, with zip code)
(408) 280-7900
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, $0.00015 par value |
PDFS |
The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition.
On February 13, 2020 PDF Solutions (the “Company”) issued a press release regarding its financial results and certain other information related to the fourth quarter and year ended December 31, 2019. The Company also posted on the Investor Relations section of its website (www.pdf.com) a management report with regard to the quarter and year ended December 31, 2019. Copies of the press release and management report are attached to this report as Exhibit 99.1 and 99.2, respectively. Information on the website is not, and will not be deemed, a part of this report or incorporated into any other filings the Company makes with the Securities and Exchange Commission.
The information in this Item 2.02, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
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Description |
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99.1 |
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99.2 |
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Management Report by PDF Solutions, Inc. as of February 13, 2020. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PDF SOLUTIONS, INC. (Registrant) |
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By: |
/s/ Christine Russell |
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Christine Russell EVP, Finance, and Chief Financial Officer (principal financial and accounting officer) |
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Dated: February 13, 2020
Exhibit 99.1
News Release
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Company Contacts: |
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Christine Russell |
Sonia Segovia |
Joe Diaz, Robert Blum, Joe Dorame |
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Chief Financial Officer |
IR Coordinator |
Lytham Partners, LLC |
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Tel: (408) 938-6466 |
Tel: (408) 938-6491 |
Tel: (602) 889-9700 |
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Email: christine.russell@pdf.com |
Email: sonia.segovia@pdf.com |
Email: pdfs@lythampartners.com |
PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results
New Reporting Line Items Commence With These Results
Business Highlights
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● |
Analytics revenue grew by 29% for full year 2019 year-over-year |
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● |
Analytics accounted for 58% of total 2019 full year revenues |
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● |
GAAP gross margins expanded to 61% from 50% year-over-year |
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● |
Non-GAAP gross margins expanded to 65% from 55% year-over-year |
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● |
Operating activities generated $24.6 million in cash during the full year 2019 |
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● |
Cash and cash equivalents of $97.6 million at the end of 2019 |
SANTA CLARA, Calif. — Thursday, February 13, 2020 — PDF Solutions, Inc. (“PDF Solutions” or the “Company”) (NASDAQ: PDFS), a leading provider of differentiated data and analytics solutions to the semiconductor and electronics industries, today announced financial results for its fourth quarter and full year ended December 31, 2019. The Company also announced that it is commencing reporting revenue in two components: Analytics and Integrated Yield Ramp. Integrated Yield Ramp revenue comprises revenue from the Company’s engagements that include performance incentives based on customers’ yield achievement, such as Gainshare royalty. Analytics revenue comprises all other revenue, including from the Company’s Exensio® software platform, Design-for-Inspection™ solution (DFI™), and Characterization Vehicle® solutions. Prior periods have been reclassified to conform to the new revenue presentation.
Highlights of Fourth Quarter and Full Year 2019 Financial Results
Total revenues for the fourth quarter of 2019 were $22.6 million, compared to $21.9 million for the third quarter of 2019 and $19.7 million for the fourth quarter of 2018. Analytics revenue for the fourth quarter of 2019 was $13.5 million, compared to $12.7 million for the third quarter of 2019 and $10.3 million for the fourth quarter of 2018. Integrated Yield Ramp revenue for the fourth quarter of 2019 was $9.1 million, compared to $9.2 million for the third quarter of 2019 and $9.4 million for the fourth quarter of 2018.
Total revenues for the full year 2019 year were essentially flat versus 2018. Analytics revenue for the full year 2019 grew by 29% compared to 2018, while Integrated Yield Ramp revenue for the full year declined by 24% compared to 2018. For the fourth quarter and the full year 2019, Analytics revenue comprised 60% and 58% of total revenues, respectively.
PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results
Fourth quarter 2019 GAAP gross margin of 60% showed an improvement from 51% in the fourth quarter of 2018. GAAP gross margin for the full year 2019 and 2018 was 61% and 50%, respectively. Non-GAAP gross margin for the fourth quarter of 2019 and 2018 was 64% and 55%, respectively. Non-GAAP gross margin for the full year 2019 and 2018 was 65% and 55%, respectively.
On a GAAP basis, net loss for the fourth quarter of 2019 was $1.3 million, or ($0.04) per basic and diluted share, compared to net loss of $0.7 million, or ($0.02) per basic and diluted share, for the third quarter of 2019, and compared to net loss of $3.1 million, or ($0.10) per basic and diluted share, for the fourth quarter of 2018. On a GAAP basis, net loss for the full year 2019 was $5.4 million, or ($0.17) per basic and diluted share, compared to net loss of $7.7 million, or ($0.24) per basic and diluted share, for the full year 2018.
Non-GAAP net income for the fourth quarter of 2019 was $1.1 million, or $0.03 per diluted share, compared to net income of $1.6 million, or $0.05 per diluted share, for the third quarter of 2019, and compared to net loss of $0.4 million, or ($0.01) per diluted share, for the fourth quarter of 2018. Non-GAAP net income for the full year 2019, was $4.5 million, or $0.14 per diluted share, compared to non-GAAP net income of $2.8 million, or $0.09 per diluted share, for the full year 2018.
Cash and cash equivalents at December 31, 2019 were $97.6 million, compared to $96.1 million at December 31, 2018, an increase of $1.5 million. Operating activities generated $24.6 million in cash during the year ended December 31, 2019, in part due to the collection of a significant amount of long-outstanding accounts receivables during the third quarter of 2019.
Conference Call
As previously announced, PDF Solutions will discuss these results on a live conference call beginning at 2:00 p.m. Pacific Time/5:00 p.m. Eastern Time today. The call will be simultaneously web cast on PDF Solutions’ website at http://ir.pdf.com/webcasts. A replay of the web cast will be available at the same website address beginning approximately two hours after completion of the live call. A copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measures, which non-GAAP measures may be used periodically by PDF Solutions’ management when discussing financial results with investors and analysts, will also be available on PDF Solutions’ website at http://www.pdf.com/press-releases following the date of this release.
Fourth Quarter and Full Year 2019 Financial Commentary Available Online
A Management Report reviewing the Company’s fourth quarter and full year 2019 financial results will be furnished to the SEC on Form 8-K and published on the Company’s website at http://ir.pdf.com/financial-reports. Analysts and investors are encouraged to review this commentary prior to participating in the conference call webcast.
PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results
Information Regarding Use of Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), PDF Solutions also provides certain non-GAAP financial measures. Non-GAAP net income (loss) excludes the effects of non-recurring items (including adjustment to contingent consideration related to acquisition, write-down in value of property and equipment, restructuring charges and severance payments), stock-based compensation expense, amortization of acquired technology and other acquired intangible assets, and their related income tax effects, as applicable, as well as adjustments for the non-cash portion of income taxes. These non-GAAP financial measures are used by management internally to measure the Company’s profitability and performance. PDF Solutions’ management believes that these non-GAAP measures provide useful supplemental information to investors regarding the Company’s ongoing operations in light of the fact that none of these categories of expense has a current effect on the future uses of cash (with the exception of certain non-recurring items) nor do they impact the generation of current or future revenues. These non-GAAP results should not be considered an alternative to, or a substitute for, GAAP financial information, and may differ from similarly titled non-GAAP measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for GAAP measures of income or loss as a measure of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity. Since management uses these non-GAAP financial measures internally to measure profitability and performance, PDF Solutions has included these non-GAAP measures to give investors an opportunity to see the Company’s financial results as viewed by management. A reconciliation of the comparable GAAP financial measures to the non-GAAP financial measures is provided at the end of the Company’s financial statements presented below.
Forward-Looking Statements
The statements planned to be made on the planned conference call regarding the Company’s future expected business performance and financial results are forward looking and are subject to future events and circumstances. Actual results could differ materially from those expressed in these forward-looking statements. Risks and uncertainties that could cause results to differ materially include risks associated with: customers’ production volumes under contracts that provide Gainshare royalties, cost and schedule of new product development; continued adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; the provision of technology and services prior to the execution of a final contract, the potential impact of the coronavirus on our operations in China or demand for our products by customers in China; and other risks set forth in PDF Solutions’ periodic public filings with the Securities and Exchange Commission, including, without limitation, its Annual Reports on Form 10-K, most recently filed for the year ended December 31, 2018, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and amendments to such reports. The forward-looking statements made in the conference call are made as of the date hereof, and PDF Solutions does not assume any obligation to update such statements nor the reasons why actual results could differ materially from those projected in such statements. The Company has not filed its Form 10-K for the year ended December 31, 2019. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect the completion of our audit and any necessary adjustments or changes in accounting estimates that are identified prior to the time the Company files the Form 10-K.
About PDF Solutions
PDF Solutions (NASDAQ: PDFS) offers an end-to-end analytics platform that empowers engineers and data scientists across the semiconductor ecosystem to rapidly improve the yield, quality, and profitability of their products. By combining industry-leading data analytics and professional services with exclusive, differentiated product data generated during the manufacturing process, PDF Solutions is delivering on the promise of Industry 4.0 today by transforming how the ecosystem collects, analyzes, and shares data. Key Fortune 500 organizations around the world rely on PDF Solutions to remove the data barriers that encumber and constrain new product introductions and to deliver the machine learning insights that drive efficient and profitable high-volume manufacturing.
Headquartered in Santa Clara, California, PDF Solutions also operates worldwide in Canada, China, France, Germany, Italy, Japan, Korea, and Taiwan. For the Company’s latest news and information, visit http://www.pdf.com/.
Characterization Vehicle, Design-for-Inspection, DFI, Exensio, PDF Solutions, and the PDF Solutions logo are trademarks or registered trademarks of PDF Solutions, Inc. or its subsidiaries.
PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results
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PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
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(In thousands) |
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December 31, |
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2019 |
2018 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 97,605 | $ | 96,089 | ||||
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Accounts receivable, net |
40,651 | 51,570 | ||||||
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Prepaid expenses and other current assets |
9,320 | 9,562 | ||||||
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Total current assets |
147,576 | 157,221 | ||||||
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Property and equipment, net |
40,798 | 35,681 | ||||||
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Operating lease right-of-use assets, net |
7,609 | — | ||||||
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Goodwill |
2,293 | 1,923 | ||||||
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Intangible assets, net |
6,221 | 5,064 | ||||||
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Deferred tax assets |
25,327 | 19,044 | ||||||
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Other non-current assets |
9,720 | 6,972 | ||||||
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Total assets |
$ | 239,544 | $ | 225,905 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 7,636 | $ | 2,454 | ||||
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Accrued compensation and related benefits |
5,072 | 4,727 | ||||||
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Accrued and other current liabilities |
1,665 | 3,235 | ||||||
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Operating lease liabilities - current portion |
1,867 | — | ||||||
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Deferred revenues - current portion |
10,639 | 8,477 | ||||||
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Billings in excess of recognized revenues |
1,117 | 635 | ||||||
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Total current liabilities |
27,996 | 19,528 | ||||||
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Long-term income taxes payable |
5,368 | 3,751 | ||||||
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Non-current operating lease liabilities |
7,677 | — | ||||||
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Other non-current liabilities |
2,346 | 2,831 | ||||||
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Total liabilities |
43,387 | 26,110 | ||||||
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Stockholders’ equity: |
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Common stock and additional paid-in-capital |
325,202 | 310,665 | ||||||
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Treasury stock at cost |
(91,695 |
) |
(79,142 |
) |
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Accumulated deficit |
(35,870 |
) |
(30,452 |
) |
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Accumulated other comprehensive loss |
(1,480 |
) |
(1,276 |
) |
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Total stockholders’ equity |
196,157 | 199,795 | ||||||
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Total liabilities and stockholders’ equity |
$ | 239,544 | $ | 225,905 | ||||
PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results
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PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (1) |
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(In thousands, except per share amounts) |
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Three months ended |
Year ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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2019 |
2019 |
2018 |
2019 |
2018 |
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Revenues: |
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Analytics |
$ | 13,527 | $ | 12,691 | $ | 10,351 | $ | 49,627 | $ | 38,502 | ||||||||||
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Integrated yield ramp |
9,035 | 9,223 | 9,374 | 35,958 | 47,292 | |||||||||||||||
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Total revenues |
22,562 | 21,914 | 19,725 | 85,585 | 85,794 | |||||||||||||||
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Costs and Expenses: |
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Costs of revenues |
9,059 | 8,715 | 9,721 | 33,474 | 42,803 | |||||||||||||||
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Research and development |
8,754 | 8,435 | 6,898 | 32,747 | 27,998 | |||||||||||||||
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Selling, general and administrative |
6,359 | 5,990 | 6,133 | 26,299 | 23,934 | |||||||||||||||
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Amortization of other acquired intangible assets |
173 | 174 | 109 | 609 | 435 | |||||||||||||||
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Restructuring charges |
— | — | 576 | 92 | 576 | |||||||||||||||
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Interest and other expense (income), net |
31 | (202 |
) |
(210 |
) |
(276 |
) |
(493 |
) |
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Loss before income taxes |
(1,814 |
) |
(1,198 |
) |
(3,502 |
) |
(7,360 |
) |
(9,459 |
) |
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Income tax benefit |
(484 |
) |
(511 |
) |
(388 |
) |
(1,942 |
) |
(1,743 |
) |
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Net loss |
$ | (1,330 |
) |
$ | (687 |
) |
$ | (3,114 |
) |
$ | (5,418 |
) |
$ | (7,716 |
) |
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Net loss per share: |
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Basic |
$ | (0.04 |
) |
$ | (0.02 |
) |
$ | (0.10 |
) |
$ | (0.17 |
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$ | (0.24 |
) |
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Diluted |
$ | (0.04 |
) |
$ | (0.02 |
) |
$ | (0.10 |
) |
$ | (0.17 |
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$ | (0.24 |
) |
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Weighted average common shares: |
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Basic |
32,429 | 32,392 | 32,306 | 32,411 | 32,169 | |||||||||||||||
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Diluted |
32,429 | 32,392 | 32,306 | 32,411 | 32,169 | |||||||||||||||
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(1) |
In the fourth quarter of fiscal 2019, in order to improve the transparency of our revenue reporting, the Company updated its Condensed Consolidated Statements of Operations to change its historical presentation of revenue categories. The Company now presents revenues in the following categories: Analytics and Integrated yield ramp. Integrated yield ramp comprises revenue from the Company’s engagements that include performance incentives based on customers’ yield achievement, such as Gainshare royalty. Analytics comprises all other revenue, including from the Company’s Exensio® software platform, Design-for-Inspection™ solution (DFI™), and Characterization Vehicle® solutions. Prior periods Condensed Consolidated Statements of Operations have been reclassified to conform to the new revenue presentation. The change in presentation of revenue does not change the Company’s total revenues, or total cost of revenues. |
PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results
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PDF SOLUTIONS, INC. |
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RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) (UNAUDITED) |
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(In thousands, except per share amounts) |
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Three months ended |
Year ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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2019 |
2019 |
2018 |
2019 |
2018 |
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GAAP net loss |
$ | (1,330 |
) |
$ | (687 |
) |
$ | (3,114 |
) |
$ | (5,418 |
) |
$ | (7,716 |
) |
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Adjustments to reconcile GAAP net loss to non-GAAP net income (loss): |
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Stock-based compensation expense |
2,782 | 2,732 | 2,470 | 11,423 | 10,295 | |||||||||||||||
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Amortization of acquired technology |
143 | 144 | 144 | 574 | 575 | |||||||||||||||
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Amortization of other acquired intangible assets |
173 | 174 | 109 | 609 | 435 | |||||||||||||||
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Restructuring charges and severance payments |
— | — | 576 | 92 | 907 | |||||||||||||||
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Adjustment to contingent consideration related to acquisition |
— | 30 | 90 | 30 | 90 | |||||||||||||||
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Write-down in value of property and equipment |
— | — | 227 | — | 227 | |||||||||||||||
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Tax impact of adjustments |
(700 |
) |
(805 |
) |
(868 |
) |
(2,785 |
) |
(1,992 |
) |
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Non-GAAP net income (loss) |
$ | 1,068 | $ | 1,588 | $ | (366 |
) |
$ | 4,525 | $ | 2,821 | |||||||||
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GAAP net loss per diluted share |
$ | (0.04 |
) |
$ | (0.02 |
) |
$ | (0.10 |
) |
$ | (0.17 |
) |
$ | (0.24 |
) |
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Non-GAAP net income (loss) per diluted share |
$ | 0.03 | $ | 0.05 | $ | (0.01 |
) |
$ | 0.14 | $ | 0.09 | |||||||||
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Shares used in diluted shares calculation |
33,414 | 32,997 | 32,476 | 33,122 | 32,466 | |||||||||||||||
6
