pdfs20201105_8k.htm
false 0001120914 0001120914 2020-11-05 2020-11-05
 
Table of Contents
 


 
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): November 5, 2020
 
PDF SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
 
000-31311
(Commission File Number)
 
Delaware
25-1701361
(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:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
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:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
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 November 5, 2020 PDF Solutions (the “Company”) issued a press release regarding its financial results and certain other information related to the third quarter of 2020. The Company also posted on the Investors section of its website (www.pdf.com) a management report with regard to the third quarter of 2020. 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
 
 
 
Exhibit No.
 
Description
99.1
 
 
 
 
99.2
 
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
  
 
 
 
 
SIGNATURES
 
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.
 
 
PDF SOLUTIONS, INC.
(Registrant)
 
 
 
 
 
 
By:
/s/ Adnan Raza
 
 
 
Adnan Raza
EVP, Finance, and Chief Financial Officer
(principal financial and accounting officer)
 
 
Dated: November 5, 2020
  
 
ex_212050.htm
 

Exhibit 99.1

 

News Release

 

Company Contacts:

 

 

Adnan Raza

Sonia Segovia

Joe Diaz, Robert Blum, Joe Dorame

Chief Financial Officer

IR Coordinator

Lytham Partners, LLC

Tel: (408) 516-0237

Tel: (408) 938-6491

Tel: (602) 889-9700

Email: adnan.raza@pdf.com

Email: sonia.segovia@pdf.com

Email: pdfs@lythampartners.com

 

 

PDF Solutions® Reports Third Quarter 2020 Results

 

 

Business Highlights

 

 

Total revenues of $23.1 million, up 5% over last year’s comparable quarter

 

Analytics revenue of $14.3 million, up 13% over last year’s comparable quarter

 

Analytics accounted for 62% of third quarter revenues

 

GAAP Gross Margin of 59% for the third quarter of 2020

 

Non-GAAP Gross Margin of 63% for the third quarter of 2020

 

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.

 

 

1

PDF Solutions® Reports Third Quarter 2020 Results

 

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. 

 

2

PDF Solutions® Reports Third Quarter 2020 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 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.

 

3

PDF Solutions® Reports Third Quarter 2020 Results

 

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands)

 

   

September 30,

2020

   

December 31,

2019

 

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 118,386     $ 97,605  

Short-term investments

    49,983        

Accounts receivable, net

    40,388       40,651  

Prepaid expenses and other current assets

    9,310       9,320  

Total current assets

    218,067       147,576  

Property and equipment, net

    39,487       40,798  

Operating lease right-of-use assets, net

    6,712       7,609  

Goodwill

    2,293       2,293  

Intangible assets, net

    5,269       6,221  

Deferred tax assets, net

    30,498       25,327  

Other non-current assets

    8,282       9,720  

Total assets

  $ 310,608     $ 239,544  

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 2,212     $ 7,636  

Accrued compensation and related benefits

    5,396       5,072  

Accrued and other current liabilities

    3,001       1,665  

Operating lease liabilities ‒ current portion

    1,763       1,867  

Deferred revenues ‒ current portion

    19,074       10,639  

Billings in excess of recognized revenues

    1,430       1,117  

Total current liabilities

    32,876       27,996  

Long-term income taxes payable

    5,137       5,368  

Non-current operating lease liabilities

    6,764       7,677  

Other non-current liabilities

    1,054       2,346  

Total liabilities

    45,831       43,387  
                 

Stockholders’ equity:

               

Common stock and additional paid-in-capital

  $ 403,455     $ 325,202  

Treasury stock at cost

    (94,992

)

    (91,695

)

Accumulated deficit

    (42,784

)

    (35,870

)

Accumulated other comprehensive loss

    (902

)

    (1,480

)

Total stockholders’ equity

    264,777       196,157  

Total liabilities and stockholders’ equity

  $ 310,608     $ 239,544  

    

4

PDF Solutions® Reports Third Quarter 2020 Results

 

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,

 
   

2020

   

2020

     2019 (1)       2020       2019 (1)
                                         

Revenues:

                                       

Analytics

  $ 14,346     $ 15,172     $ 12,691     $ 42,766     $ 36,099  

Integrated yield ramp

    8,766       6,237       9,223       22,912       26,924  

Total revenues

    23,112       21,409       21,914       65,678       63,023  
                                         

Costs and Expenses:

                                       

Costs of revenues

    9,493       8,946       8,715       26,926       24,415  

Research and development

    8,328       7,754       8,435       24,672       23,993  

Selling, general and administrative

    8,420       7,737       5,990       24,052       19,940  

Amortization of other acquired intangible assets

    174       174       174       521       436  

Restructuring charges

                            92  

Interest and other expense (income), net

    361       150       (202

)

    530       (307

)

Loss before income taxes

    (3,664

)

    (3,352

)

    (1,198

)

    (11,023

)

    (5,546

)

Income tax expense (benefit)

    (930

)

    300       (511

)

    (4,109

)

    (1,458

)

Net loss

  $ (2,734

)

  $ (3,652

)

  $ (687

)

  $ (6,914

)

  $ (4,088

)

                                         

Net loss per share:

                                       

Basic

  $ (0.08

)

  $ (0.11

)

  $ (0.02

)

  $ (0.21

)

  $ (0.13

)

Diluted

  $ (0.08

)

  $ (0.11

)

  $ (0.02

)

  $ (0.21

)

  $ (0.13

)

                                         

Weighted average common shares:

                                       

Basic

    35,479       32,886       32,392       33,696       32,405  

Diluted

    35,479       32,886       32,392       33,696       32,405  

 

_______________________

 

(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.

 

5

PDF Solutions® Reports Third Quarter 2020 Results

 

PDF SOLUTIONS, INC.

RECONCILIATION OF GAAP TO NON-GAAP GROSS MARGIN (UNAUDITED)

(In thousands)

 

   

Three months ended

   

Nine months ended

 
   

September 30,

   

June 30,

   

September 30,

   

September 30,

   

September 30,

 
   

2020

   

2020

   

2019

   

2020

   

2019

 

GAAP

                                       

Total revenues

  $ 23,112     $ 21,409     $ 21,914     $ 65,678     $ 63,023  

Costs of revenues

    9,493       8,946       8,715       26,926       24,415  

GAAP gross profit

  $ 13,619     $ 12,463     $ 13,199     $ 38,752     $ 38,608  

GAAP gross margin

    59

%

    58

%

    60

%

    59

%

    61

%

                                         
                                         

Non-GAAP

                                       

GAAP gross profit

  $ 13,619     $ 12,463     $ 13,199     $ 38,752     $ 38,608  

Adjustments to reconcile GAAP to non-GAAP gross margin:

                                       

Stock-based compensation expense

    790       883       745       2,582       2,404  

Amortization of acquired technology

    144       143       144       431       431  

Non-GAAP gross profit

  $ 14,553     $ 13,489     $ 14,088     $ 41,765     $ 41,443  

Non-GAAP gross margin

    63

%

    63

%

    64

%

    64

%

    66

%

 

 

6

PDF Solutions® Reports Third Quarter 2020 Results

 

 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,

 
   

2020

   

2020

   

2019

   

2020

   

2019

 

GAAP net loss

  $ (2,734

)

  $ (3,652

)

  $ (687

)

  $ (6,914

)

  $ (4,088

)

Adjustments to reconcile GAAP net loss to non-GAAP net income:

                                       

Stock-based compensation expense

    3,130       2,978       2,732       9,476       8,642  

Amortization of acquired technology

    144       143       144       431       431  

Amortization of other acquired intangible assets

    174       174       174       521       436  

Expenses of arbitration (1)

    366       363             830        

Write-down in value of property and equipment

          311             311        

Adjustments to contingent consideration related to acquisition

                30             30  

Restructuring charges and severance payments

                            92  

Tax impact of adjustments

    (955 )     167       (805

)

    (1,931

)

    (2,085

)

Tax impact of the CARES Act (2)

                      (2,261

)

     

Non-GAAP net income

  $ 125     $ 484     $ 1,588     $ 463     $ 3,458  
                                         

GAAP net loss per diluted share

  $ (0.08

)

  $ (0.11

)

  $ (0.02

)

  $ (0.21

)

  $ (0.13

)

Non-GAAP net income per diluted share

  $ 0.00     $ 0.01     $ 0.05     $ 0.01     $ 0.10  
                                         

Shares used in diluted shares calculation

    36,661       33,874       32,997       34,705       33,025  

 

______________________

 

(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.

 

(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.

 

 

7
Image Exhibit

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
v3.20.2
Document And Entity Information
Nov. 05, 2020
Document Information [Line Items]  
Entity, Registrant Name PDF SOLUTIONS, INC.
Document, Type 8-K
Document, Period End Date Nov. 05, 2020
Entity, File Number 000-31311
Entity, Incorporation, State or Country Code DE
Entity, Tax Identification Number 25-1701361
Entity, Address, Address Line One 2858 De La Cruz Boulevard
Entity, Address, City or Town Santa Clara
Entity, Address, State or Province CA
Entity, Address, Postal Zip Code 95050
City Area Code 408
Local Phone Number 280-7900
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol PDFS
Security Exchange Name NASDAQ
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001120914