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(State or Other Jurisdiction of Incorporation)
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(I.R.S. Employer Identification No.)
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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))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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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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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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PDF SOLUTIONS, INC.
(Registrant)
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By:
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/s/ Adnan Raza
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Adnan Raza
EVP, Finance, and Chief Financial Officer
(principal financial and accounting officer)
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Exhibit 99.1
News Release
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Company Contacts: |
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Adnan Raza |
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) 516-0237 |
Tel: (408) 938-6491 |
Tel: (602) 889-9700 |
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Email: adnan.raza@pdf.com |
Email: sonia.segovia@pdf.com |
Email: pdfs@lythampartners.com |
PDF Solutions® Reports Third Quarter 2020 Results
Business Highlights
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Total revenues of $23.1 million, up 5% over last year’s comparable quarter |
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Analytics revenue of $14.3 million, up 13% over last year’s comparable quarter |
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Analytics accounted for 62% of third quarter revenues |
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GAAP Gross Margin of 59% for the third quarter of 2020 |
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Non-GAAP Gross Margin of 63% for the third quarter of 2020 |
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Cash, cash equivalents and short-term investments of $168.4 million at the end of third quarter of 2020 |
SANTA CLARA, Calif. — Thursday, November 5, 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 third quarter ended September 30, 2020.
Highlights of Third Quarter 2020 Financial Results
Total revenues for the third quarter of 2020 were $23.1 million, compared to $21.4 million for the second quarter of 2020 and $21.9 million for the third quarter of 2019. Analytics revenue for the third quarter of 2020 was $14.3 million, compared to $15.2 million for the second quarter of 2020 and $12.7 million for the third quarter of 2019. Integrated Yield Ramp revenue for the third quarter of 2020 was $8.8 million, compared to $6.2 million for the second quarter of 2020 and $9.2 million for the third quarter of 2019.
GAAP gross margin for the third quarter of 2020 was 59%, compared to 58% for the second quarter of 2020 and 60% for the third quarter of 2019.
Non-GAAP gross margin for the third quarter of 2020 was 63%, compared to 63% for the second quarter of 2020 and 64% for the third quarter of 2019.
On a GAAP basis, net loss for the third quarter of 2020 was $2.7 million, or ($0.08) per basic and diluted share, compared to a net loss of $3.7 million, or ($0.11) per basic and diluted share, for the second quarter of 2020, and compared to a net loss of $0.7 million, or ($0.02) per basic and diluted share, for the third quarter of 2019.
Non-GAAP net income for the third quarter of 2020 was $0.1 million, or $0.00 per diluted share, compared to a net income of $0.5 million, or $0.01 per diluted share, for the second quarter of 2020, and compared to net income of $1.6 million, or $0.05 per diluted share, for the third quarter of 2019.
Cash, cash equivalents and short-term investments at September 30, 2020, were $168.4 million, compared to cash and cash equivalents of $97.6 million at December 31, 2019. The increase was due mainly to the gross proceeds from issuance of common stock pursuant to strategic partnership with Advantest Corporation of $65.2 million during the third quarter of 2020. Operating activities generated $0.2 million in cash during the third quarter of 2020.
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 webcast on PDF Solutions’ website at http://ir.pdf.com/webcasts. A replay of the webcast 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.
Third Quarter 2020 Financial Commentary Available Online
A Management Report reviewing the Company’s third quarter of 2020 financial results will be furnished to the Securities and Exchange Commission 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.
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 gross margin excludes stock-based compensation expense and the amortization of acquired technology. Non-GAAP net income excludes the effects of non-recurring items (including restructuring charges, severance payments, adjustments to contingent consideration related to acquisition, and expenses related to an arbitration proceeding for a disputed contract with a customer), write-down in value of property and equipment, 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 and tax impact of the CARES Act. 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 and the Company’s recent strategic agreement with Advantest 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 (COVID-19) on the semiconductor industry and on the Company’s operations or demand for the Company’s products; the time required of the Company’s executive management for, and the expenses related to, as well as the success of the Company’s strategic growth opportunities and partnerships, including its partnership with Advantest Corporation; 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, 2019, 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.
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.
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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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September 30, 2020 |
December 31, 2019 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 118,386 | $ | 97,605 | ||||
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Short-term investments |
49,983 | — | ||||||
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Accounts receivable, net |
40,388 | 40,651 | ||||||
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Prepaid expenses and other current assets |
9,310 | 9,320 | ||||||
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Total current assets |
218,067 | 147,576 | ||||||
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Property and equipment, net |
39,487 | 40,798 | ||||||
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Operating lease right-of-use assets, net |
6,712 | 7,609 | ||||||
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Goodwill |
2,293 | 2,293 | ||||||
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Intangible assets, net |
5,269 | 6,221 | ||||||
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Deferred tax assets, net |
30,498 | 25,327 | ||||||
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Other non-current assets |
8,282 | 9,720 | ||||||
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Total assets |
$ | 310,608 | $ | 239,544 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 2,212 | $ | 7,636 | ||||
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Accrued compensation and related benefits |
5,396 | 5,072 | ||||||
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Accrued and other current liabilities |
3,001 | 1,665 | ||||||
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Operating lease liabilities ‒ current portion |
1,763 | 1,867 | ||||||
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Deferred revenues ‒ current portion |
19,074 | 10,639 | ||||||
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Billings in excess of recognized revenues |
1,430 | 1,117 | ||||||
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Total current liabilities |
32,876 | 27,996 | ||||||
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Long-term income taxes payable |
5,137 | 5,368 | ||||||
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Non-current operating lease liabilities |
6,764 | 7,677 | ||||||
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Other non-current liabilities |
1,054 | 2,346 | ||||||
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Total liabilities |
45,831 | 43,387 | ||||||
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Stockholders’ equity: |
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Common stock and additional paid-in-capital |
$ | 403,455 | $ | 325,202 | ||||
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Treasury stock at cost |
(94,992 |
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(91,695 |
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Accumulated deficit |
(42,784 |
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(35,870 |
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Accumulated other comprehensive loss |
(902 |
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(1,480 |
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Total stockholders’ equity |
264,777 | 196,157 | ||||||
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Total liabilities and stockholders’ equity |
$ | 310,608 | $ | 239,544 | ||||
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PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share amounts) |
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Three months ended |
Nine months ended |
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September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
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2020 |
2020 |
2019 (1) | 2020 | 2019 | (1) | |||||||||||||||
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Revenues: |
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Analytics |
$ | 14,346 | $ | 15,172 | $ | 12,691 | $ | 42,766 | $ | 36,099 | ||||||||||
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Integrated yield ramp |
8,766 | 6,237 | 9,223 | 22,912 | 26,924 | |||||||||||||||
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Total revenues |
23,112 | 21,409 | 21,914 | 65,678 | 63,023 | |||||||||||||||
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Costs and Expenses: |
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Costs of revenues |
9,493 | 8,946 | 8,715 | 26,926 | 24,415 | |||||||||||||||
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Research and development |
8,328 | 7,754 | 8,435 | 24,672 | 23,993 | |||||||||||||||
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Selling, general and administrative |
8,420 | 7,737 | 5,990 | 24,052 | 19,940 | |||||||||||||||
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Amortization of other acquired intangible assets |
174 | 174 | 174 | 521 | 436 | |||||||||||||||
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Restructuring charges |
— | — | — | — | 92 | |||||||||||||||
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Interest and other expense (income), net |
361 | 150 | (202 |
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530 | (307 |
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Loss before income taxes |
(3,664 |
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(3,352 |
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(1,198 |
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(11,023 |
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(5,546 |
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Income tax expense (benefit) |
(930 |
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300 | (511 |
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(4,109 |
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(1,458 |
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Net loss |
$ | (2,734 |
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$ | (3,652 |
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$ | (687 |
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$ | (6,914 |
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$ | (4,088 |
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Net loss per share: |
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Basic |
$ | (0.08 |
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$ | (0.11 |
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$ | (0.02 |
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$ | (0.21 |
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$ | (0.13 |
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Diluted |
$ | (0.08 |
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$ | (0.11 |
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$ | (0.02 |
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$ | (0.21 |
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$ | (0.13 |
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Weighted average common shares: |
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Basic |
35,479 | 32,886 | 32,392 | 33,696 | 32,405 | |||||||||||||||
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Diluted |
35,479 | 32,886 | 32,392 | 33,696 | 32,405 | |||||||||||||||
_______________________
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(1) |
In the fourth quarter of 2019, the Company updated its Condensed Consolidated Statements of Comprehensive Loss to change its historical presentation of revenue categories. Previously, the Company presented revenue on two lines: Solutions and Gainshare performance incentives. Included within Solutions, was revenue from software and related revenue, SaaS solutions, Design-for-Inspection (DFI™) licenses, and fixed-price project-based solution implementation services. The previous Gainshare performance incentive category included only revenue from performance incentive programs. The Company now presents revenue in the following categories: Analytics and Integrated Yield Ramp. Integrated Yield Ramp revenue is comprised of all revenue from the Company’s Integrated Yield Ramp services engagements that include performance incentives based on customers’ yield achievement (i.e. both fixed-fees and Gainshare royalty from such engagements). Analytics comprises all other revenue, including from the Company’s licenses and services for Exensio Software, Exensio SaaS, DFI™ and Characterization Vehicle systems that do not include performance incentives based on customers’ yield achievement. This prior period presentation had been reclassified to conform to the new revenue presentation. |
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PDF SOLUTIONS, INC. |
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RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN (UNAUDITED) (In thousands) |
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Three months ended |
Nine months ended |
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September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
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2020 |
2020 |
2019 |
2020 |
2019 |
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GAAP |
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Total revenues |
$ | 23,112 | $ | 21,409 | $ | 21,914 | $ | 65,678 | $ | 63,023 | ||||||||||
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Costs of revenues |
9,493 | 8,946 | 8,715 | 26,926 | 24,415 | |||||||||||||||
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GAAP gross profit |
$ | 13,619 | $ | 12,463 | $ | 13,199 | $ | 38,752 | $ | 38,608 | ||||||||||
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GAAP gross margin |
59 |
% |
58 |
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60 |
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59 |
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61 |
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Non-GAAP |
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GAAP gross profit |
$ | 13,619 | $ | 12,463 | $ | 13,199 | $ | 38,752 | $ | 38,608 | ||||||||||
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Adjustments to reconcile GAAP to non-GAAP gross margin: |
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Stock-based compensation expense |
790 | 883 | 745 | 2,582 | 2,404 | |||||||||||||||
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Amortization of acquired technology |
144 | 143 | 144 | 431 | 431 | |||||||||||||||
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Non-GAAP gross profit |
$ | 14,553 | $ | 13,489 | $ | 14,088 | $ | 41,765 | $ | 41,443 | ||||||||||
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Non-GAAP gross margin |
63 |
% |
63 |
% |
64 |
% |
64 |
% |
66 |
% |
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PDF SOLUTIONS, INC. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (UNAUDITED) (In thousands, except per share amounts) |
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Three months ended |
Nine months ended |
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September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
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2020 |
2020 |
2019 |
2020 |
2019 |
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GAAP net loss |
$ | (2,734 |
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$ | (3,652 |
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$ | (687 |
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$ | (6,914 |
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$ | (4,088 |
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Adjustments to reconcile GAAP net loss to non-GAAP net income: |
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Stock-based compensation expense |
3,130 | 2,978 | 2,732 | 9,476 | 8,642 | |||||||||||||||
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Amortization of acquired technology |
144 | 143 | 144 | 431 | 431 | |||||||||||||||
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Amortization of other acquired intangible assets |
174 | 174 | 174 | 521 | 436 | |||||||||||||||
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Expenses of arbitration (1) |
366 | 363 | — | 830 | — | |||||||||||||||
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Write-down in value of property and equipment |
— | 311 | — | 311 | — | |||||||||||||||
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Adjustments to contingent consideration related to acquisition |
— | — | 30 | — | 30 | |||||||||||||||
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Restructuring charges and severance payments |
— | — | — | — | 92 | |||||||||||||||
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Tax impact of adjustments |
(955 | ) | 167 | (805 |
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(1,931 |
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(2,085 |
) |
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Tax impact of the CARES Act (2) |
— | — | — | (2,261 |
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— | ||||||||||||||
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Non-GAAP net income |
$ | 125 | $ | 484 | $ | 1,588 | $ | 463 | $ | 3,458 | ||||||||||
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GAAP net loss per diluted share |
$ | (0.08 |
) |
$ | (0.11 |
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$ | (0.02 |
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$ | (0.21 |
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$ | (0.13 |
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Non-GAAP net income per diluted share |
$ | 0.00 | $ | 0.01 | $ | 0.05 | $ | 0.01 | $ | 0.10 | ||||||||||
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Shares used in diluted shares calculation |
36,661 | 33,874 | 32,997 | 34,705 | 33,025 | |||||||||||||||
______________________
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(1) |
Represents the expenses related to an arbitration proceeding over a disputed customer contract, which expenses are expected to continue until the arbitration is resolved. |
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(2) |
Represents the discrete tax benefit recognized from the carryback of net operating losses (NOLs) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted in March 2020. The Company does not have any NOLs on a non-GAAP basis and, therefore, it did not recognize this discrete tax benefit in calculating its non-GAAP tax expense and net income. |
Exhibit 99.2
