Market Overview

PDF Solutions® Reports Fourth Quarter and Full Year 2019 Results

Share:

Business Highlights

  • Analytics revenue grew by 29% for full year 2019 year-over-year
  • Analytics accounted for 58% of total 2019 full year revenues
  • GAAP gross margins expanded to 61% from 50% year-over-year
  • Non-GAAP gross margins expanded to 65% from 55% year-over-year
  • Operating activities generated $24.6 million in cash during the full year 2019
  • Cash and cash equivalents of $97.6 million at the end of 2019

SANTA CLARA, Calif., Feb. 13, 2020 (GLOBE NEWSWIRE) -- 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.

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. 

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, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)  
(In thousands)

    December 31,  
    2019     2018  
 ASSETS                
Current assets:                
Cash and cash equivalents   $ 97,605     $ 96,089  
Accounts receivable, net     40,651       51,570  
Prepaid expenses and other current assets     9,320       9,562  
Total current assets     147,576       157,221  
Property and equipment, net     40,798       35,681  
Operating lease right-of-use assets, net     7,609        
Goodwill     2,293       1,923  
Intangible assets, net     6,221       5,064  
Deferred tax assets     25,327       19,044  
Other non-current assets     9,720       6,972  
Total assets   $ 239,544     $ 225,905  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 7,636     $ 2,454  
Accrued compensation and related benefits     5,072       4,727  
Accrued and other current liabilities     1,665       3,235  
Operating lease liabilities - current portion     1,867        
Deferred revenues - current portion     10,639       8,477  
Billings in excess of recognized revenues     1,117       635  
Total current liabilities     27,996       19,528  
Long-term income taxes payable     5,368       3,751  
Non-current operating lease liabilities     7,677        
Other non-current liabilities     2,346       2,831  
Total liabilities     43,387       26,110  
                 
Stockholders' equity:                
Common stock and additional paid-in-capital     325,202       310,665  
Treasury stock at cost     (91,695 )     (79,142 )
Accumulated deficit     (35,870 )     (30,452 )
Accumulated other comprehensive loss     (1,480 )     (1,276 )
Total stockholders' equity     196,157       199,795  
Total liabilities and stockholders' equity   $ 239,544     $ 225,905  
                 

PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (1) 
(In thousands, except per share amounts)

    Three months ended     Year ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2019     2019     2018     2019     2018  
                                         
Revenues:                                        
Analytics   $ 13,527     $ 12,691     $ 10,351     $ 49,627     $ 38,502  
Integrated yield ramp     9,035       9,223       9,374       35,958       47,292  
Total revenues     22,562       21,914       19,725       85,585       85,794  
                                         
Costs and Expenses:                                        
Costs of revenues     9,059       8,715       9,721       33,474       42,803  
Research and development     8,754       8,435       6,898       32,747       27,998  
Selling, general and administrative     6,359       5,990       6,133       26,299       23,934  
Amortization of other acquired intangible assets     173       174       109       609       435  
Restructuring charges                 576       92       576  
Interest and other expense (income), net     31       (202 )     (210 )     (276 )     (493 )
Loss before income taxes     (1,814 )     (1,198 )     (3,502 )     (7,360 )     (9,459 )
Income tax benefit     (484 )     (511 )     (388 )     (1,942 )     (1,743 )
Net loss   $ (1,330 )   $ (687 )   $ (3,114 )   $ (5,418 )   $ (7,716 )
                                         
Net loss per share:                                        
Basic   $ (0.04 )   $ (0.02 )   $ (0.10 )   $ (0.17 )   $ (0.24 )
Diluted   $ (0.04 )   $ (0.02 )   $ (0.10 )   $ (0.17 )   $ (0.24 )
                                         
Weighted average common shares:                                        
Basic     32,429       32,392       32,306       32,411       32,169  
Diluted     32,429       32,392       32,306       32,411       32,169  

_______________________

(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, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) (UNAUDITED)
(In thousands, except per share amounts)

    Three months ended     Year ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2019     2019     2018     2019     2018  
GAAP net loss   $ (1,330 )   $ (687 )   $ (3,114 )   $ (5,418 )   $ (7,716 )
Adjustments to reconcile GAAP net loss to non-GAAP net income (loss):                                        
Stock-based compensation expense     2,782       2,732       2,470       11,423       10,295  
Amortization of acquired technology     143       144       144       574       575  
Amortization of other acquired intangible assets     173       174       109       609       435  
Restructuring charges and severance payments                 576       92       907  
Adjustment to contingent consideration related to acquisition           30       90       30       90  
Write-down in value of property and equipment                 227             227  
Tax impact of adjustments     (700 )     (805 )     (868 )     (2,785 )     (1,992 )
Non-GAAP net income (loss)   $ 1,068     $ 1,588     $ (366 )   $ 4,525     $ 2,821  
                                         
GAAP net loss per diluted share   $ (0.04 )   $ (0.02 )   $ (0.10 )   $ (0.17 )   $ (0.24 )
Non-GAAP net income (loss) per diluted share   $ 0.03     $ 0.05     $ (0.01 )   $ 0.14     $ 0.09  
                                         
Shares used in diluted shares calculation     33,414       32,997       32,476       33,122       32,466  


Company Contacts:    
Christine Russell Sonia Segovia Joe Diaz, Robert Blum, Joe Dorame
Chief Financial Officer IR Coordinator Lytham Partners, LLC
Tel: (408) 938-6466 Tel: (408) 938-6491 Tel: (602) 889-9700
Email: christine.russell@pdf.com Email: sonia.segovia@pdf.com Email: pdfs@lythampartners.com

Primary Logo

View Comments and Join the Discussion!