SANTA CLARA, Calif., Oct. 31, 2019 (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 third fiscal quarter ended September 30, 2019.
Highlights of Third Fiscal Quarter 2019 Financial Results
Total revenues for the third fiscal quarter of 2019 were $21.9 million, compared to $20.6 million for the second fiscal quarter of 2019 and $20.2 million for the third fiscal quarter of 2018. Solutions revenue for the third fiscal quarter of 2019 was $16.2 million, compared to $13.4 million for the second fiscal quarter of 2019 and $14.0 million for the third fiscal quarter of 2018. “With more than 50% of total Solutions revenue in the third quarter coming from analytics-based deals and another strong bookings quarter of primarily analytics-based deals, PDF Solutions continues its strategic evolution to be the provider of choice for end-to-end analytics and manufacturing controls to the semiconductor and electronics industry,” said John Kibarian, Chief Executive Officer and President of the company.
Gainshare performance incentives revenue for the third fiscal quarter of 2019 was $5.7 million, compared to $7.1 million for the second fiscal quarter of 2019 and $6.2 million for the third fiscal quarter of 2018.
Third fiscal quarter 2019 gross margin of 60%, an improvement from 47% in the third fiscal quarter of 2018, was due primarily to higher Solutions revenue and lower headcount, primarily related to reductions in our yield ramp engagements as we focus on our analytics opportunities.
On a GAAP basis, net loss for the third fiscal quarter of 2019 was $0.7 million, or ($0.02) per basic and diluted share, compared to net loss of $0.7 million, or ($0.02) per basic and diluted share, for the second fiscal quarter of 2019, and compared to net loss of $2.1 million, or ($0.06) per basic and diluted share, for the third fiscal quarter of 2018.
Non-GAAP net income for the third fiscal quarter of 2019 was $1.6 million, or $0.05 per diluted share, compared to net income of $1.0 million, or $0.03 per diluted share, for the second fiscal quarter of 2019, and compared to net income of $0.2 million, or $0.01 per diluted share, for the third fiscal quarter of 2018.
Cash and cash equivalents at September 30, 2019, were $100.3 million, compared to $96.1 million at December 31, 2018, an increase of $4.2 million. Operating activities generated $23.0 million in cash during the nine months ended September 30, 2019, in part due to the collection of a significant amount of long-outstanding accounts receivables during the third quarter of fiscal 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.
Third Fiscal Quarter 2019 Financial Commentary Available Online
A Management Report reviewing the Company’s third fiscal quarter 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 excludes the effects of non-recurring items (including adjustment to contingent consideration related to acquisition, 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 adjusts 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 made in this press release and 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; 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.
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/.
CV, Exensio, PDF Solutions, and the PDF Solutions logo are registered trademarks of PDF Solutions, Inc. or its subsidiaries. DFI is a trademark of PDF Solutions, Inc. or its subsidiaries.
PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
| September 30, |
December 31, |
|||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 100,259 | $ | 96,089 | ||||
| Accounts receivable, net | 34,556 | 51,570 | ||||||
| Prepaid expenses and other current assets | 8,026 | 9,562 | ||||||
| Total current assets | 142,841 | 157,221 | ||||||
| Property and equipment, net | 38,969 | 35,681 | ||||||
| Operating lease right-of-use assets, net | 7,581 | — | ||||||
| Goodwill | 2,293 | 1,923 | ||||||
| Intangible assets, net | 6,538 | 5,064 | ||||||
| Deferred tax assets | 23,100 | 19,044 | ||||||
| Other non-current assets | 8,025 | 6,972 | ||||||
| Total assets | $ | 229,347 | $ | 225,905 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,203 | $ | 2,454 | ||||
| Accrued compensation and related benefits | 4,313 | 4,727 | ||||||
| Accrued and other current liabilities | 2,452 | 3,235 | ||||||
| Operating lease liabilities – current portion | 1,826 | — | ||||||
| Deferred revenues – current portion | 8,612 | 8,477 | ||||||
| Billings in excess of recognized revenues | 1,219 | 635 | ||||||
| Total current liabilities | 20,625 | 19,528 | ||||||
| Long-term income taxes payable | 3,565 | 3,751 | ||||||
| Non-current operating lease liabilities | 7,726 | — | ||||||
| Other non-current liabilities | 2,444 | 2,831 | ||||||
| Total liabilities | 34,360 | 26,110 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock and additional paid-in-capital | 322,188 | 310,665 | ||||||
| Treasury stock at cost | (90,908 | ) | (79,142 | ) | ||||
| Accumulated deficit | (34,540 | ) | (30,452 | ) | ||||
| Accumulated other comprehensive loss | (1,753 | ) | (1,276 | ) | ||||
| Total stockholders’ equity | 194,987 | 199,795 | ||||||
| Total liabilities and stockholders’ equity | $ | 229,347 | $ | 225,905 | ||||
PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Solutions | $ | 16,208 | $ | 13,429 | $ | 13,976 | $ | 46,298 | $ | 47,431 | ||||||||||
| Gainshare performance incentives | 5,706 | 7,139 | 6,237 | 16,725 | 18,638 | |||||||||||||||
| Total revenues | 21,914 | 20,568 | 20,213 | 63,023 | 66,069 | |||||||||||||||
| Cost of Solutions: | ||||||||||||||||||||
| Direct costs of solutions | 8,571 | 7,689 | 10,539 | 23,984 | 32,651 | |||||||||||||||
| Amortization of acquired technology | 144 | 143 | 144 | 431 | 431 | |||||||||||||||
| Total cost of solutions | 8,715 | 7,832 | 10,683 | 24,415 | 33,082 | |||||||||||||||
| Gross profit | 13,199 | 12,736 | 9,530 | 38,608 | 32,987 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | 8,435 | 7,312 | 6,755 | 23,993 | 21,100 | |||||||||||||||
| Selling, general and administrative | 5,990 | 6,940 | 5,507 | 19,940 | 17,801 | |||||||||||||||
| Amortization of other acquired intangible assets | 174 | 154 | 108 | 436 | 326 | |||||||||||||||
| Restructuring charges | — | — | — | 92 | — | |||||||||||||||
| Total operating expenses | 14,599 | 14,406 | 12,370 | 44,461 | 39,227 | |||||||||||||||
| Loss from operations | (1,400 | ) | (1,670 | ) | (2,840 | ) | (5,853 | ) | (6,240 | ) | ||||||||||
| Interest and other income (expense), net | 202 | 111 | 223 | 307 | 283 | |||||||||||||||
| Loss before income taxes | (1,198 | ) | (1,559 | ) | (2,617 | ) | (5,546 | ) | (5,957 | ) | ||||||||||
| Income tax benefit | (511 | ) | (849 | ) | (535 | ) | (1,458 | ) | (1,355 | ) | ||||||||||
| Net loss | $ | (687 | ) | $ | (710 | ) | $ | (2,082 | ) | $ | (4,088 | ) | $ | (4,602 | ) | |||||
| Net loss per share: | ||||||||||||||||||||
| Basic | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.13 | ) | $ | (0.14 | ) | |||||
| Diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.13 | ) | $ | (0.14 | ) | |||||
| Weighted average common shares: | ||||||||||||||||||||
| Basic | 32,392 | 32,339 | 32,184 | 32,405 | 32,105 | |||||||||||||||
| Diluted | 32,392 | 32,339 | 32,184 | 32,405 | 32,105 | |||||||||||||||
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (UNAUDITED)
(In thousands, except per share amounts)
| Three months ended | Nine months ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
| GAAP net loss | $ | (687 | ) | $ | (710 | ) | $ | (2,082 | ) | $ | (4,088 | ) | $ | (4,602 | ) | |||||
| Adjustments to reconcile GAAP net loss to non-GAAP net income: | ||||||||||||||||||||
| Stock-based compensation expense | 2,732 | 2,434 | 2,268 | 8,642 | 7,825 | |||||||||||||||
| Amortization of acquired technology | 144 | 143 | 144 | 431 | 431 | |||||||||||||||
| Amortization of other acquired intangible assets | 174 | 154 | 108 | 436 | 326 | |||||||||||||||
| Adjustment to contingent consideration related to acquisition | 30 | — | — | 30 | — | |||||||||||||||
| Restructuring charges and severance payments | — | — | 48 | 92 | 331 | |||||||||||||||
| Tax impact of adjustments | (805 | ) | (993 | ) | (281 | ) | (2,085 | ) | (1,124 | ) | ||||||||||
| Non-GAAP net income | $ | 1,588 | $ | 1,028 | $ | 205 | $ | 3,458 | $ | 3,187 | ||||||||||
| GAAP net loss per diluted share | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.13 | ) | $ | (0.14 | ) | |||||
| Non-GAAP net income per diluted share | $ | 0.05 | $ | 0.03 | $ | 0.01 | $ | 0.10 | $ | 0.10 | ||||||||||
| Shares used in diluted shares calculation | 32,997 | 33,055 | 32,385 | 33,025 | 32,444 | |||||||||||||||
