PDF Solutions, Inc. (“PDF Solutions” or the “Company”)
(NASDAQ:PDFS), the leading provider of process-design integration
technologies to enhance integrated circuit (IC) manufacturability,
today announced financial results for its second fiscal quarter
ended June 30, 2017.
Total revenues for the second fiscal quarter of
2017 totaled $24.3 million, which were flat compared to the total
revenue for the first fiscal quarter of 2017 and down 9% from $26.7
million for the second fiscal quarter of 2016.
Design-to-silicon-yield solutions revenue for the second fiscal
quarter of 2017 totaled $16.5 million, down 16% from $19.7 million
for the first fiscal quarter of 2017 and down 20% from $20.6
million for the second fiscal quarter of 2016. Gainshare
performance incentives revenue for the second fiscal quarter of
2017 totaled $7.8 million, up 70% from $4.6 million for the first
fiscal quarter of 2017 and up 27% from $6.1 million for the second
fiscal quarter of 2016.
On a GAAP basis, net income for the second
fiscal quarter of 2017 was $0.2 million, or $0.01 per basic and
diluted share, compared to net income of $0.5 million, or $0.02 per
basic and diluted share, for the first fiscal quarter of 2017, and
compared to net income of $2.1 million, or $0.07 per basic and
diluted share, for the second fiscal quarter of 2016.
Cash and cash equivalents were $109.0 million at
June 30, 2017, compared to $116.8 million at December 31, 2016.
Non-GAAP net income for the second fiscal
quarter of 2017 was $2.7 million, or $0.08 per diluted share,
compared to $2.6 million, or $0.08 per diluted share, for the first
fiscal quarter of 2017, and compared to $5.3 million, or $0.16 per
diluted share, for the second fiscal quarter of 2016. EBITDAR for
the second quarter of 2017 was $3.7 million, compared to $3.5
million for the first fiscal quarter of 2017 and compared to $7.1
million for the second fiscal quarter of 2016.
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.
Second Quarter 2017 Financial Commentary Available
Online
A Management Report reviewing the Company’s
second quarter 2017 financial results, as well as providing updated
2017 financial outlook, 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, stock-based
compensation expenses, 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. EBITDAR is calculated by taking GAAP net income,
adding back the effects of non-recurring items, stock-based
compensation expenses, amortization of acquired technology and
other acquired intangibles, depreciation expense and income tax
provision (benefit). 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 measures 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 be different 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 on the planned conference
call regarding the Company's future expected business performance
and financial results are forward looking and are subject to events
and circumstances of the future. 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 at Gainshare-covered facilities; 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,
2016, 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 enables customers to reduce the
time to market of integrated circuits (“ICs”), lower the cost of IC
design and manufacturing and improve profitability. The Company has
developed proprietary products and provides services that target
the entire Process Life Cycle, which is a term used to mean the
time from technology development and the design of an IC to volume
manufacturing of that IC to product assembly and test.
PDF Solutions’ products and services consist of
proprietary test structures and electrical test systems, physical
intellectual property, enterprise platform software and
professional services. The Company’s Characterization
Vehicle® (CV®) electrical test chip infrastructure provides
core modeling capabilities, and is used by more leading
manufacturers than any other test chips in the industry. The
Design-for-Inspection™ solution extends the Company’s electrical
characterization technologies into the e-beam measurement of
extremely dense test structures, or DFI™ cells, across an entire
fabrication process. Proprietary Template™ layout patterns for
standard cell libraries optimize area, performance, and
manufacturability for designing IC products. The Exensio® platform
for big data unlocks relevant, actionable information buried in
wafer fabrication, process control and test data through four, key
components: Exensio® -Yield, Exensio® -Control, Exensio® -Test,
Exensio® -ALPS, and Exensio® -Char. The Exensio® platform is
available either on-premise or via software as a service
(SaaS).
Headquartered in San Jose, Calif., PDF Solutions
operates worldwide with additional offices in Canada, China,
France, Germany, Italy, Japan, Korea, and Taiwan. PDF Solutions is
listed on The NASDAQ National Market under the ticker symbol PDFS.
For the Company’s latest news and information, visit
http://www.pdf.com/.
Characterization Vehicle, CV, Exensio, PDF
Solutions, and the PDF Solutions logo are registered trademarks of
PDF Solutions, Inc. or its subsidiaries. ALPS,
Design-for-Inspection, DFI, and Template are trademarks of PDF
Solutions, Inc. or its subsidiaries.
PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) |
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(In thousands) |
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June 30, |
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December 31, |
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2017 |
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|
2016 |
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ASSETS |
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Current assets: |
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Cash and
cash equivalents |
|
$ |
109,007 |
|
|
|
$ |
116,787 |
|
Accounts
receivable, net |
|
|
54,029 |
|
|
|
|
48,157 |
|
Prepaid
expenses and other current assets |
|
|
8,813 |
|
|
|
|
5,335 |
|
Total
current assets |
|
|
171,849 |
|
|
|
|
170,279 |
|
Property and equipment,
net |
|
|
23,068 |
|
|
|
|
19,341 |
|
Goodwill |
|
|
215 |
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|
|
|
215 |
|
Intangible assets,
net |
|
|
3,847 |
|
|
|
|
4,223 |
|
Deferred tax
assets |
|
|
15,815 |
|
|
|
|
15,640 |
|
Other non-current
assets |
|
|
12,263 |
|
|
|
|
12,631 |
|
Total
assets |
|
$ |
227,057 |
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|
|
$ |
222,329 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current
liabilities: |
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|
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|
Accounts
payable |
|
$ |
2,270 |
|
|
|
$ |
2,206 |
|
Accrued
compensation and related benefits |
|
|
5,863 |
|
|
|
|
5,959 |
|
Accrued
and other current liabilities |
|
|
2,075 |
|
|
|
|
2,080 |
|
Deferred
revenues - current portion |
|
|
8,933 |
|
|
|
|
8,189 |
|
Billings
in excess of recognized revenue |
|
|
389 |
|
|
|
|
88 |
|
Total
current liabilities |
|
|
19,530 |
|
|
|
|
18,522 |
|
Long-term income taxes
payable |
|
|
3,174 |
|
|
|
|
3,354 |
|
Other non-current
liabilities |
|
|
2,253 |
|
|
|
|
1,650 |
|
Total
liabilities |
|
|
24,957 |
|
|
|
|
23,526 |
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
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|
|
|
|
|
|
Common
stock and additional paid-in-capital |
|
|
289,961 |
|
|
|
|
281,428 |
|
Treasury
stock at cost |
|
|
(61,532 |
) |
|
|
|
(54,882 |
) |
Accumulated deficit |
|
|
(25,046 |
) |
|
|
|
(25,752 |
) |
Accumulated other comprehensive loss |
|
|
(1,283 |
) |
|
|
|
(1,991 |
) |
Total
stockholders’ equity |
|
|
202,100 |
|
|
|
|
198,803 |
|
Total
liabilities and stockholders’ equity |
|
$ |
227,057 |
|
|
|
$ |
222,329 |
|
|
|
|
|
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PDF SOLUTIONS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
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(In thousands, except per share amounts) |
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Three months ended |
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Six months ended |
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June 30, |
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March 31, |
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June 30, |
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|
June 30, |
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June 30, |
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|
|
2017 |
|
2017 |
|
2016 (1) |
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|
2017 |
|
2016 (1) |
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Revenues: |
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|
Design-to-silicon-yield solutions |
|
|
$ |
16,500 |
|
|
$ |
19,698 |
|
|
$ |
20,574 |
|
|
$ |
36,198 |
|
|
$ |
39,152 |
|
Gainshare
performance incentives |
|
|
|
7,789 |
|
|
|
4,591 |
|
|
|
6,114 |
|
|
|
12,380 |
|
|
|
12,617 |
|
Total
revenues |
|
|
|
24,289 |
|
|
|
24,289 |
|
|
|
26,688 |
|
|
|
48,578 |
|
|
|
51,769 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of
Design-to-silicon-yield solutions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
costs of Design-to-silicon-yield solutions |
|
|
|
11,283 |
|
|
|
11,335 |
|
|
|
10,558 |
|
|
|
22,618 |
|
|
|
20,668 |
|
Amortization of acquired technology |
|
|
|
96 |
|
|
|
96 |
|
|
|
96 |
|
|
|
192 |
|
|
|
192 |
|
Total
costs of Design-to-silicon-yield solutions |
|
|
|
11,379 |
|
|
|
11,431 |
|
|
|
10,654 |
|
|
|
22,810 |
|
|
|
20,860 |
|
Gross profit |
|
|
|
12,910 |
|
|
|
12,858 |
|
|
|
16,034 |
|
|
|
25,768 |
|
|
|
30,909 |
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|
|
|
|
|
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Operating
expenses: |
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|
|
|
|
|
|
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|
|
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|
|
Research
and development |
|
|
|
7,276 |
|
|
|
7,282 |
|
|
|
7,060 |
|
|
|
14,557 |
|
|
|
13,371 |
|
Selling,
general and administrative |
|
|
|
6,195 |
|
|
|
5,899 |
|
|
|
5,094 |
|
|
|
12,095 |
|
|
|
10,218 |
|
Amortization of other acquired intangible assets |
|
|
|
92 |
|
|
|
92 |
|
|
|
117 |
|
|
|
184 |
|
|
|
234 |
|
Total
operating expenses |
|
|
|
13,563 |
|
|
|
13,273 |
|
|
|
12,271 |
|
|
|
26,836 |
|
|
|
23,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
|
(653 |
) |
|
|
(415 |
) |
|
|
3,763 |
|
|
|
(1,068 |
) |
|
|
7,086 |
|
Interest and other
income (expense), net |
|
|
|
27 |
|
|
|
(230 |
) |
|
|
(51 |
) |
|
|
(202 |
) |
|
|
(287 |
) |
Income (loss) before
income taxes |
|
|
|
(626 |
) |
|
|
(645 |
) |
|
|
3,712 |
|
|
|
(1,270 |
) |
|
|
6,799 |
|
Income tax provision
(benefit) |
|
|
|
(815 |
) |
|
|
(1,162 |
) |
|
|
1,579 |
|
|
|
(1,976 |
) |
|
|
2,605 |
|
Net income |
|
|
$ |
189 |
|
|
$ |
517 |
|
|
$ |
2,133 |
|
|
|
706 |
|
|
|
4,194 |
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|
|
|
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|
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|
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Net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.07 |
|
|
|
0.02 |
|
|
|
0.13 |
|
Diluted |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.07 |
|
|
|
0.02 |
|
|
|
0.13 |
|
|
|
|
|
|
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|
|
|
|
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|
Weighted average common
shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
32,191 |
|
|
|
31,991 |
|
|
|
31,276 |
|
|
|
32,091 |
|
|
|
31,222 |
|
Diluted |
|
|
|
33,461 |
|
|
|
33,594 |
|
|
|
32,099 |
|
|
|
33,528 |
|
|
|
31,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(1) The results for the three and six months ended June
30, 2016 have been updated to reflect the Company’s adoption of the
Accounting Standards Update (ASU) 2016-09, Compensation - Stock
Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting. The Company elected to early adopt this new
standard in the fourth quarter of 2016, which required that any
adjustments be reflected as of January 1, 2016, the beginning of
the fiscal year that includes the interim period of adoption. |
PDF SOLUTIONS, INC. |
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RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(UNAUDITED) |
|
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|
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|
|
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|
|
|
|
|
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|
(In thousands, except per share amounts) |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
Six months ended |
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
June 30, |
|
|
|
June 30, |
|
2017 |
|
2017 |
|
2016 (2) |
|
|
2017 |
2016 (2) |
|
GAAP net income |
|
|
$ |
189 |
|
|
$ |
517 |
|
|
$ |
2,133 |
|
|
$ |
706 |
|
|
|
|
$ |
4,194 |
|
Adjustments to
reconcile GAAP net income to non-GAAP net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense |
|
|
|
2,904 |
|
|
|
2,884 |
|
|
|
2,291 |
|
|
|
5,788 |
|
|
|
|
|
4,957 |
|
Amortization of
acquired technology |
|
|
|
96 |
|
|
|
96 |
|
|
|
96 |
|
|
|
192 |
|
|
|
|
|
192 |
|
Amortization of other
acquired intangible assets |
|
|
|
92 |
|
|
|
92 |
|
|
|
117 |
|
|
|
184 |
|
|
|
|
|
234 |
|
Acquisition related
deferred revenue adjustment (1) |
|
|
|
- |
|
|
|
- |
|
|
|
50 |
|
|
|
- |
|
|
|
|
|
165 |
|
Non-cash portion of
income tax expense |
|
|
|
(629 |
) |
|
|
(995 |
) |
|
|
609 |
|
|
|
(1,624 |
) |
|
|
|
|
908 |
|
Non-GAAP
net income |
|
|
$ |
2,652 |
|
|
$ |
2,594 |
|
|
$ |
5,296 |
|
|
$ |
5,246 |
|
|
|
|
$ |
10,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per
diluted share |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.07 |
|
|
$ |
0.02 |
|
|
|
|
$ |
0.13 |
|
Non-GAAP net income per
diluted share |
|
|
$ |
0.08 |
|
|
$ |
0.08 |
|
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
|
|
$ |
0.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in diluted
shares calculation |
|
|
|
33,461 |
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33,594 |
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32,099 |
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33,528 |
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31,927 |
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PDF SOLUTIONS, INC. |
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RECONCILIATION OF GAAP NET INCOME TO EBITDAR
(UNAUDITED) |
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(In thousands, except per share amounts) |
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Three months ended |
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Six months ended |
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June 30, |
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March 31, |
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June 30, |
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June 30, |
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June 30, |
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2017 |
2017 |
2016 (2) |
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2017 |
2016 (2) |
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GAAP net income |
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$ |
189 |
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$ |
517 |
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$ |
2,133 |
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$ |
706 |
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$ |
4,194 |
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Adjustments to
reconcile GAAP net income to EBITDAR: |
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Stock-based
compensation expense |
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2,904 |
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2,884 |
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2,291 |
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5,788 |
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4,957 |
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Amortization of
acquired technology |
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96 |
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96 |
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96 |
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192 |
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192 |
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Amortization of other
acquired intangible assets |
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92 |
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92 |
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117 |
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184 |
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234 |
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Acquisition related
deferred revenue adjustment (1) |
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- |
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- |
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50 |
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- |
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165 |
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Depreciation
expense |
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1,196 |
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1,091 |
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859 |
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2,286 |
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1,624 |
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Income tax provision
(benefit) |
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(815 |
) |
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(1,162 |
) |
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1,579 |
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(1,976 |
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2,605 |
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EBITDAR |
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$ |
3,662 |
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$ |
3,518 |
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$ |
7,125 |
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$ |
7,180 |
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$ |
13,971 |
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(1) As announced on July 20, 2015, the Company completed the
acquisition of Syntricity, Inc., the industry leading hosted
solution for characterization and yield management. In relation to
this acquisition, the Company recorded an adjustment to reduce
revenue recognized from deferred revenue arising from the
acquisition. Accordingly, for non-GAAP purposes, the Company
is excluding these reductions to revenue in order to provide better
comparability between periods. |
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(2) The results for the period ended June 30, 2016 have
been updated to reflect the Company’s adoption of the Accounting
Standards Update (ASU) 2016-09, Compensation - Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment
Accounting. The Company elected to early adopt this new standard in
the fourth quarter of 2016, which required that any adjustments be
reflected as of January 1, 2016, the beginning of the fiscal year
that includes the interim period of adoption. |
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Company Contacts:
Gregory Walker,
VP, Finance and CFO
Tel: (408) 938-6457
Email:gregory.walker@pdf.com
Sonia Segovia,
IR Coordinator
Tel: (408) 938-6491
Email: sonia.segovia@pdf.com
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