PDFS 8-K
Pdf Solutions Inc (PDFS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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(
(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:
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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. ☐
Item 2.02. Results of Operations and Financial Condition.
On Dated: November 9, 2021 PDF Solutions (the “Company”) issued a press release regarding its financial results and certain other information related to the third quarter ended September 30, 2021. The Company also posted on the Investors section of its website (www.pdf.com) a management report with regard to the third quarter ended September 30, 2021. 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 | Management Report by PDF Solutions, Inc. as of November 9, 2021. | |
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 9, 2021
Exhibit 99.1
2858 De La Cruz Boulevard, Santa Clara CA 95050 USA
+1.408.280.7900 www.pdf.com
News Release
Company Contacts: |
| |
Adnan Raza | Sonia Segovia | Joe Diaz, Robert Blum, Joe Dorame |
Chief Financial Officer | Investor Relations | Lytham Partners, LLC |
Tel: (408) 516-0237 | Tel: (408) 938-6491 | Tel: (602) 889-9700 |
Email: [email protected] | Email: [email protected] | Email: [email protected] |
PDF Solutions® Reports Third Quarter 2021 Results
Business Highlights
| ● | Total revenues of $29.6 million for the third quarter of 2021, up 28% over the third quarter of 2020 |
| ● | Analytics revenue of $27.2 million for the third quarter, up 90% over the third quarter of 2020 |
| ● | Bookings for the year 2021 through Q3 are now ahead of full year 2020 bookings |
| ● | Backlog ending Q3 2021 up 60% to $180.9 million compared to backlog as of September 30, 2020 |
| ● | GAAP Gross Margin of 63% for the third quarter of 2021 |
| ● | Non-GAAP Gross Margin of 66% for the third quarter of 2021 |
| ● | Operating activities provided $4.0 million in cash during the third quarter of 2021 |
| ● | Ended the quarter with cash, cash equivalents, and short-term investments of $141.2 million |
| ● | Expect full year 2021 total revenues to grow, on a year over year basis, near the top end of previously communicated 20-25% range |
| ● | Expect full year 2021 Analytics revenue to grow, on a year over year basis, more than 50% |
SANTA CLARA, Calif. — Tuesday, November 9, 2021 — PDF Solutions, Inc. (Nasdaq: PDFS), a leading provider of comprehensive data solutions for the semiconductor ecosystem, today announced financial results for its third quarter ended September 30, 2021.
Highlights of Third Quarter 2021 Financial Results
Total revenues for the third quarter of 2021 were $29.6 million, compared to $27.4 million for the second quarter of 2021 and $23.1 million for the third quarter of 2020. Analytics revenue for the third quarter of 2021 was $27.2 million, compared to $19.6 million for the second quarter of 2021 and $14.3 million for the third quarter of 2020. Integrated Yield Ramp revenue for the third quarter of 2021 was $2.4 million, compared to $7.8 million for second quarter of 2021 and $8.8 million for the third quarter of 2020.
GAAP gross margin for the third quarter of 2021 was 63%, compared to 61% for the second quarter of 2021 and 59% for the third quarter of 2020.
Non-GAAP gross margin for the third quarter of 2021 was 66%, compared to 65% for the second quarter of 2021 and 63% for the third quarter of 2020.
PDF Solutions® Reports Third Quarter 2021 Results
On a GAAP basis, net loss for the third quarter of 2021 was $2.4 million, or ($0.06) per basic and diluted share, compared to a net loss of $4.5 million, or ($0.12) per basic and diluted share, for the second quarter of 2021, and net loss of $2.7 million, or ($0.08) per basic and diluted share, for the third quarter of 2020.
Non-GAAP net income for the third quarter of 2021 was $2.4 million, or $0.06 per diluted share, compared to a net loss of $0.3 million, or ($0.01) per diluted share, for the second quarter of 2021, and net income of $0.1 million, or $0.00 per diluted share, for the third quarter of 2020.
Cash, cash equivalents and short-term investments at September 30, 2021 were $141.2 million, compared to $145.3 million at December 31, 2020, a decrease of $4.1 million. Cash provided by operating activities was $4.0 million during the three months ended September 30, 2021.
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 2021 Financial Commentary Available Online
A Management Report reviewing the Company’s third quarter 2021 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 2021 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 (loss) excludes the effects of non-recurring items (including 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, tax impact of the CARES Act and valuation allowance for deferred tax assets. 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 and acquisition-related costs) 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 press release and the planned conference call include forward-looking statements regarding the Company’s future expected business performance and financial results, including expectations for analytics and total revenues, that 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: continued adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; cost and schedule of new product development; the provision of technology and services prior to the execution of a final contract; the continuing 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; our ability to successfully integrate the acquired businesses and technologies; whether we can successfully convert our backlog into revenue; customers’ production volumes under contracts that provide Gainshare royalties; 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, 2020, 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) provides comprehensive data solutions designed to empower organizations across the semiconductor ecosystem to improve the yield and quality of their products and operational efficiency for increased profitability. The Company’s products and services are used by Fortune 500 companies across the semiconductor ecosystem to achieve smart manufacturing goals by connecting and controlling equipment, collecting data generated during manufacturing and test operations, and performing advanced analytics and machine learning to enable profitable, high-volume manufacturing.
Founded in 1991, PDF Solutions is headquartered in Santa Clara, California, with operations across Europe and Asia. The Company (directly or through one or more subsidiaries) is an active member of SEMI, INEMI, TPCA, IPC, the OPC Foundation, and DMDII. For the latest news and information about PDF Solutions or to find office locations, visit http://www.pdf.com/.
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 2021 Results
PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
|
| September 30, |
| December 31, | ||
| | 2021 | | 2020 | ||
| | | | | | |
ASSETS | |
|
|
| |
|
Current assets: | |
|
|
| |
|
Cash and cash equivalents |
| $ | 71,238 | | $ | 30,315 |
Short-term investments | | | 69,992 | |
| 114,981 |
Accounts receivable, net | | | 33,681 | |
| 34,140 |
Prepaid expenses and other current assets | | | 10,298 | |
| 13,944 |
Total current assets | | | 185,209 | |
| 193,380 |
Property and equipment, net | | | 37,821 | |
| 39,242 |
Operating lease right-of-use assets, net | | | 5,614 | |
| 6,672 |
Goodwill | | | 15,305 | |
| 15,774 |
Intangible assets, net | | | 22,106 | |
| 24,573 |
Deferred tax assets, net | | | 174 | |
| 249 |
Other non-current assets | | | 8,995 | |
| 7,690 |
Total assets | | $ | 275,224 | | $ | 287,580 |
| | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
|
|
Current liabilities: | | | | |
| |
Accounts payable | | $ | 3,210 | | $ | 4,399 |
Accrued compensation and related benefits | | | 8,125 | |
| 8,339 |
Accrued and other current liabilities | | | 5,854 | |
| 6,309 |
Operating lease liabilities ‒ current portion | | | 1,740 | |
| 1,926 |
Deferred revenues ‒ current portion | | | 22,207 | |
| 19,895 |
Billings in excess of recognized revenues | | | 3 | |
| 1,337 |
Total current liabilities | | | 41,139 | |
| 42,205 |
Long-term income taxes payable | | | 2,508 | |
| 2,956 |
Non-current operating lease liabilities | | | 5,501 | |
| 6,516 |
Other non-current liabilities | | | 2,621 | |
| 1,397 |
Total liabilities | | | 51,769 | |
| 53,074 |
| | |
| | |
|
Stockholders’ equity: | | |
| |
|
|
Common stock and additional paid-in-capital | | | 418,939 | | | 407,179 |
Treasury stock at cost | | | (103,995) | |
| (96,215) |
Accumulated deficit | | | (90,721) | |
| (76,233) |
Accumulated other comprehensive loss | | | (768) | |
| (225) |
Total stockholders’ equity | | | 223,455 | |
| 234,506 |
Total liabilities and stockholders’ equity |
| $ | 275,224 | | $ | 287,580 |
4
PDF Solutions® Reports Third Quarter 2021 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, | |||||
|
| 2021 (1) |
| 2021 (1) |
| 2020 |
| 2021 (1) |
| 2020 | |||||
| | | | | September 30, | | | | | | | | | | |
Revenues: |
|
|
| | |
| | |
| |
|
| | |
|
Analytics (1) |
| $ | 27,194 | | $ | 19,578 | | $ | 14,346 | | $ | 66,165 | | $ | 42,766 |
Integrated yield ramp |
|
| 2,361 | |
| 7,841 | |
| 8,766 | |
| 15,009 | |
| 22,912 |
Total revenues |
|
| 29,555 | |
| 27,419 | |
| 23,112 | |
| 81,174 | |
| 65,678 |
| | | | | | | | | | | | | | | |
Costs and Expenses: |
|
| | |
|
| |
|
| |
|
| |
|
|
Costs of revenues |
|
| 11,070 | |
| 10,785 | |
| 9,493 | |
| 32,518 | |
| 26,926 |
Research and development |
|
| 10,657 | |
| 11,064 | |
| 8,328 | |
| 32,562 | |
| 24,672 |
Selling, general and administrative |
|
| 9,609 | |
| 9,410 | |
| 8,420 | |
| 28,482 | |
| 24,052 |
Amortization of other acquired intangible assets |
|
| 314 | |
| 313 | |
| 174 | |
| 942 | |
| 521 |
Interest and other expense (income), net |
|
| (194) | |
| 243 | |
| 361 | | | (391) | |
| 530 |
Loss before income taxes | | | (1,901) | |
| (4,396) | |
| (3,664) | | | (12,939) | |
| (11,023) |
Income tax expense (benefit) | | | 506 | |
| 88 | |
| (930) | |
| 1,549 | |
| (4,109) |
Net loss |
| $ | (2,407) | | $ | (4,484) | | $ | (2,734) | | $ | (14,488) | | $ | (6,914) |
| | | | | | | | | | | | | | | |
Net loss per share, basic and diluted |
| $ | (0.06) | | $ | (0.12) | | $ | (0.08) | | $ | (0.39) | | $ | (0.21) |
| | | | | | | | | | | | | | | |
Weighted average common shares used to calculate net loss per share, basic and diluted | |
| 37,221 | |
| 37,004 | |
| 35,479 | |
| 37,067 | |
| 33,696 |
| (1) | Analytics revenue includes revenue from Cimetrix Incorporated, a wholly owned subsidiary acquired by the Company in December 2020. |
5
PDF Solutions® Reports Third Quarter 2021 Results
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN (UNAUDITED)
(In thousands)
| | Three months ended | | Nine months ended |
| |||||||||||
| | September 30, | | June 30, | | September 30, | | September 30, | | September 30, |
| |||||
|
| 2021 |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| |||||
| | | | | September 30, | | | | | | | | | | | |
GAAP |
| |
|
| |
|
| |
|
| |
|
| |
| |
Total revenues | | $ | 29,555 | | $ | 27,419 | | $ | 23,112 | | $ | 81,174 | | $ | 65,678 | |
Costs of revenues | |
| 11,070 | |
| 10,785 | |
| 9,493 | |
| 32,518 | |
| 26,926 | |
GAAP gross profit | | $ | 18,485 | | $ | 16,634 | | $ | 13,619 | | $ | 48,656 | | $ | 38,752 | |
GAAP gross margin | |
| 63 | % |
| 61 | % |
| 59 | % |
| 60 | % |
| 59 | % |
| | | | | | | | | | | | | | | | |
Non-GAAP | |
|
| |
|
| |
|
| |
|
| |
|
| |
GAAP gross profit | | $ | 18,485 | | $ | 16,634 | | $ | 13,619 | | $ | 48,656 | | $ | 38,752 | |
Adjustments to reconcile GAAP to non-GAAP gross margin: | |
| | |
|
| |
|
| |
| | |
|
| |
Stock-based compensation expense | |
| 670 | |
| 538 | |
| 790 | |
| 1,860 | |
| 2,582 | |
Amortization of acquired technology | |
| 454 | |
| 536 | |
| 144 | |
| 1,525 | |
| 431 | |
Non-GAAP gross profit | | $ | 19,609 | | $ | 17,708 | | $ | 14,553 | | $ | 52,041 | | $ | 41,765 | |
Non-GAAP gross margin | |
| 66 | % |
| 65 | % |
| 63 | % |
| 64 | % |
| 64 | % |
6
PDF Solutions® Reports Third Quarter 2021 Results
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME (LOSS) (UNAUDITED)
(In thousands, except per share amounts)
| | Three months ended | | Nine months ended | |||||||||||
| | September 30, | | June 30, | | September 30, | | September 30, | | September 30, | |||||
| | 2021 | | 2021 | | 2020 | | 2021 | | 2020 | |||||
| | | | | September 30, | | | | | | | | | | |
GAAP net loss |
| $ | (2,407) |
| $ | (4,484) |
| $ | (2,734) |
| $ | (14,488) |
| $ | (6,914) |
Adjustments to reconcile GAAP net loss to non-GAAP net income (loss): | |
|
| |
|
| |
|
| |
|
| |
|
|
Stock-based compensation expense | |
| 3,363 | |
| 2,742 | |
| 3,130 | |
| 9,474 | |
| 9,476 |
Amortization of acquired technology | |
| 454 | |
| 536 | |
| 144 | |
| 1,525 | |
| 431 |
Amortization of other acquired intangible assets | |
| 314 | |
| 314 | |
| 174 | |
| 942 | |
| 521 |
Expenses of arbitration (1) | |
| 341 | |
| 558 | |
| 366 | |
| 1,194 | |
| 830 |
Write-down in value of property and equipment | |
| — | |
| — | |
| — | |
| — | |
| 311 |
Tax impact of reconciling items | |
| — | |
| — | |
| (955) | |
| — | |
| (1,931) |
Tax impact of the CARES Act (2) | |
| — | |
| — | |
| — | |
| — | |
| (2,261) |
Tax impact of valuation allowance for deferred tax assets (3) | |
| 334 | |
| 52 | |
| — | |
| 1,552 | |
| — |
Non-GAAP net income (loss) | | $ | 2,399 | | $ | (282) | | $ | 125 | | $ | 199 | | $ | 463 |
| | | | | | | | | | | | | | | |
GAAP net loss per diluted share | | $ | (0.06) | | $ | (0.12) | | $ | (0.08) | | $ | (0.39) | | $ | (0.21) |
Non-GAAP net income (loss) per diluted share | | $ | 0.06 | | $ | (0.01) | | $ | 0.00 | | $ | 0.01 | | $ | 0.01 |
| | | | | | | | | | | | | | | |
Shares used in net income (loss) per diluted share calculation | |
| 37,916 | |
| 37,004 | |
| 36,661 | |
| 37,723 | |
| 34,705 |
| (1) | Represents expenses related to an arbitration proceeding over a disputed customer contract, which expenses are expected to continue until the arbitration is resolved. |
| (2) | The Company recognized a 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 (loss). |
| (3) | The Company’s GAAP tax expense is higher year-to-date compared to the non-GAAP tax expense, primarily due to the GAAP full U.S. federal and state valuation allowances. The Company’s non-GAAP tax rate and resulting non-GAAP tax expense is not calculated with a full U.S. federal or state valuation allowance due to the Company’s forecasted Non-GAAP income and management’s conclusion that it will be able to more likely than not to utilize its net DTAs. Each reporting period, management evaluates the need for a valuation allowance and may place a valuation allowance against its U.S. net deferred tax assets (DTA) on a non-GAAP basis if it concludes it is more likely than not that it will not be able to utilize some or all of its US DTAs on a non-GAAP basis. |
7
a | | |
Exhibit 99.2
Q3 2021
Management Report
November 9, 2021
1
| | |
Contents
■ | Q3 2021 Results |
– Overview
– Key Financial & Operating Metrics
– Revenue by Geographic Area
■ | Q3 2021 Non-GAAP Results |
– Reconciliation of GAAP to Non-GAAP Net Income (Loss)
– Reconciliation of GAAP to Non-GAAP Spending by Function
■ | Related Information |
The following commentary is provided by management and should be referenced in conjunction with PDF Solutions’ third quarter of 2021 financial results press release available on its Investor Relations website at http://www.pdf.com/financial-news. These remarks represent management’s current views of the Company’s financial and operational performance and are provided to give investors and analysts further insight into its performance in advance of the earnings call webcast. The Company disclaims any duty to update this information for future events.
| 2 |
| | |
PDF Solutions Reports Third Quarter 2021 Results
Q3 2021 Key Metrics | financial results Summary |
Revenue: $29.6M | |
GAAP Gross Margin: 63% | ■ Q3 2021 Total revenues of $29.6M, up 8% over Q2 2021, and up 28% over Q3 2020. ■ Q3 2021 Analytics revenue of $27.2M, up 39% over Q2 2021, and up 90% over Q3 2020. ■ Q3 2021 Integrated yield ramp revenue of $2.4M, down 70% over Q2 2021 and down 73% over Q3 2020. |
Non-GAAP Gross Margin: 66% | |
GAAP EPS: ($0.06) | |
Non-GAAP EPS: $0.06 | |
Operating Cash Flow: $4.0M | |
Capital Expenditures: $1.6M | |
| 3 |
| | |
Key Financial & Operating Metrics – Quarterly
(in thousands, except share data, which is in millions, and percentages)
| | | Q3’21 |
|
| Q2’21 |
|
| Q1’21 |
|
| Q4’20 |
|
| Q3’20 | |
Revenues | | | $ 29,555 | | | $ 27,419 | | | $ 24,200 | | | $ 22,367 | | | $ 23,112 | |
GAAP Gross Margin | | | 63% | | | 61% | | | 56% | | | 56% | | | 59% | |
Non-GAAP Gross Margin | | | 66% | | | 65% | | | 61% | | | 61% | | | 63% | |
Outstanding Debt | |
| $ 0 | |
| $0 | | | $0 | | | $0 | | | $0 | |
Operating Cash Flow | |
| $ 4,022 | |
| $ 8,130 | |
| ($ 8,325) | | | $ 10,908 | | | $ 245 | |
Capital Expenditures (CAPEX) | |
| $ 1,592 | |
| $ 535 | |
| $ 586 | | | $ 1,603 | | | $ 1,425 | |
$ Shares Repurchased | |
| $ 0 | |
| $ 0 | |
| $ 4,523 | | | $ 0 | | | $ 0 | |
Weighted Average Common Shares Outstanding | |
| 37.2 | |
| 37.0 | |
| 37.0 | | | 36.7 | | | 35.5 | |
Effective Tax Rate Benefit (Expense) | |
| (27)% | |
| (2)% | |
| (14)% | | | (375)% | | | 25% | |
| 4 |
| | |
Key Financial & Operating Metrics – Year to Date
(in thousands, except share data, which is in millions, and percentages)
| | | Nine Months Ended September 30, | ||||||
| | | 2021 |
| | 2020 |
| | 2019 |
Revenues |
|
| $ 81,174 | |
| $ 65,679 | |
| $ 63,023 |
GAAP Gross Margin |
| | 60% | | | 59% | | | 61% |
Non-GAAP Gross Margin |
| | 64% | | | 64% | | | 66% |
Outstanding Debt |
|
| $ 0 | |
| $0 | | | $0 |
Operating Cash Flow |
|
| $ 3,827 | |
| $ 10,875 | |
| $ 23,011 |
Capital Expenditures (CAPEX) |
|
| $ 2,713 | |
| $ 5,365 | |
| $ 6,891 |
$ Shares Repurchased |
|
| $ 4,523 | |
| $ 0 | |
| $ 9,638 |
Weighted Average Common Shares Outstanding |
|
| 37.1 | |
| 33.7 | |
| 32.4 |
Effective Tax Rate Benefit (Expense) |
|
| (12)% | |
| 37% | |
| 26% |
| 5 |
| | |
Revenue by Geographic Area – Quarterly
(Dollars in thousands)
|
| Q3’21 |
| Q2’21 |
| Q1’21 |
| Q4’20 |
| Q3’20 |
North America |
| $ 14,037 | | $ 12,211 | | $ 8,608 | | $ 10,525 | | $ 7,754 |
% of Total |
| 47% | | 45% | | 35% | | 47% | | 34% |
Europe |
| $ 4,325 | | $ 3,958 | | $ 4,331 | | $ 3,602 | | $ 3,581 |
% of Total |
| 15% | | 14% | | 18% | | 16% | | 15% |
APAC |
| $ 11,193 | | $ 11,250 | | $ 11,261 | | $ 8,240 | | $ 11,777 |
% of Total |
| 38% | | 41% | | 47% | | 37% | | 51% |
Total revenues |
| $ 29,555 | | $ 27,419 | | $ 24,200 | | $ 22,367 | | $ 23,112 |
| 6 |
| | |
Revenue by Geographic Area – Year to Date
(Dollars in thousands)
| | Nine Months Ended September 30, | | ||||
|
| 2021 | | 2020 | | 2019 | |
North America |
| $ 34,856 | | $ 26,409 | | $ 25,401 | |
% of Total |
| 43% | | 40% | | 40% | |
Europe |
| $ 12,614 | | $ 11,125 | | $ 10,002 | |
% of Total |
| 16% | | 17% | | 16% | |
APAC |
| $ 33,704 | | $ 28,144 | | $ 27,619 | |
% of Total |
| 42% | | 43% | | 44% | |
Total revenues |
| $ 81,174 | | $ 65,678 | | $ 63,023 | |
| 7 |
| | |
GAAP / Non-GAAP Presentation
In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), the Company 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 (loss) exclude the effects of non-recurring items (including expenses related to an arbitration proceeding for a disputed customer contract), acquisition-related costs, write-down in value of property and equipment, stock-based compensation expenses, 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, tax impact of the CARES Act and valuation allowance for deferred tax assets. 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 and acquisition-related costs) 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. Management uses these non-GAAP financial measures internally to measure profitability and performance; these non-GAAP measures are presented here to give investors an opportunity to see the Company’s financial results as viewed by management. A detailed reconciliation of the adjustments made to comparable GAAP measures is included herein.
| 8 |
| | |
Reconciliation of GAAP to Non-GAAP Net (Loss) Income
Quarterly | (in thousands, except for shares and per share amounts) |
|
| | Q3’21 |
| Q2’21 |
| Q1’21 |
| Q4’20 |
| Q3’20 | |
| | | | | | | | | | | | |
GAAP net loss | |
| ($ 2,407) | | ($ 4,484) | | ($ 7,597) | | ($ 33,449) | | ($ 2,734) | |
Adjustments to reconcile GAAP net loss to non-GAAP net income (loss): | |
| | | | | | | | | | |
Stock-based compensation expense |
| | 3,363 | | 2,742 | | 3,369 | | 2,987 | | 3,130 | |
Amortization of acquired technology |
|
| 454 | | 536 | | 535 | | 274 | | 144 | |
Amortization of other acquired intangible assets |
|
| 314 | | 314 | | 314 | | 220 | | 174 | |
Expenses of arbitration (1) |
|
| 341 | | 558 | | 295 | | 268 | | 366 | |
Acquisition-related costs (2) | | | — | | — | | — | | 752 | | — | |
Write-down in value of property and equipment | |
| — | | — | | — | | 179 | | — | |
Tax impact of reconciling items (3) | | | — | | — | | — | | 1,931 | | (955) | |
Tax impact of the CARES Act (4) | |
| — | | — | | — | | 1,099 | | — | |
Tax impact of valuation allowance for deferred tax assets (5) | | | 334 | | 52 | | 1,166 | | 24,471 | | — | |
Non-GAAP net income (loss) | |
| $ 2,399 | | ($ 282) | | ($ 1,918) | | ($ 1,268) | | $ 125 | |
GAAP net loss per diluted share | | | ($ 0.06) | | ($ 0.12) | | ($ 0.21) | | ($ 0.91) | | ($ 0.08) | |
Non-GAAP net income (loss) per diluted share | |
| $ 0.06 | | ($ 0.01) | | ($ 0.05) | | ($ 0.03) | | $ 0.00 | |
Shares used in net income (loss) per diluted share calculation |
|
| 37,916 | | 37,004 | | 36,974 | | 36,727 | | 36,727 | |
| (1) | Represents expenses related to an arbitration proceeding over a disputed customer contract, which expenses are expected to continue until the arbitration is resolved. |
| (2) | Represents transaction expenses related to the acquisition of Cimetrix Incorporated in the fourth quarter of 2020. |
| (3) | Tax impact of reconciling items for the fourth quarter of 2020 pertains to the reversal of prior quarters’ tax impact due to a full valuation allowance recognized against the U.S. deferred tax assets (DTA) on a GAAP basis. The above reconciling items do not have any tax expense or benefit on a GAAP basis for the year ended December 31, 2020 due to the full valuation allowance offsetting any tax impact from reconciling items. |
| (4) | The Company recognized a 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. Due to the full valuation allowance against U.S. DTA recognized in the fourth quarter of 2020, there is no tax benefit from the released tax attributes. 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 (loss). |
| (5) | The Company's GAAP tax expense is higher year-to-date compared to the non-GAAP tax expense, primarily due to the GAAP full U.S. federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense is not calculated with a full US federal or state valuation allowance due to recent cumulative profit on a non-GAAP basis. Each reporting period, management evaluates the need for a valuation allowance and may place a valuation allowance against its US net deferred tax assets (DTA) on a non-GAAP basis if it concludes it is more likely than not that it will not be able to utilize some or all of its US DTAs on a non-GAAP basis. |
| 9 |
| | |
Reconciliation of GAAP Net Loss to Non-GAAP Net Income
Year to Date | (in thousands, except for shares and per share amounts) |
| | | Nine Months Ended September 30, | | ||||
|
| | 2021 |
| 2020 |
| 2019 | |
GAAP net loss |
|
| ($ 14,488) | | ($ 6,914) | | ($ 4,088) | |
Adjustments to reconcile GAAP net loss to non-GAAP net income: |
| | | | | | | |
Stock-based compensation expense |
| | 9,474 | | 9,476 | | 8,642 | |
Amortization of acquired technology |
|
| 1,525 | | 431 | | 431 | |
Amortization of other acquired intangible assets |
|
| 942 | | 521 | | 436 | |
Expenses of arbitration (1) |
|
| 1,194 | | 830 | | — | |
Write-down in value of property and equipment | | | — | | 311 | | — | |
Restructuring charges and severance payment | | | — | | — | | 122 | |
Tax impact of reconciling items | | | — | | (1,931) | | (2,085) | |
Tax impact of the CARES Act (2) | | | — | | (2,261) | | — | |
Tax impact of valuation allowance for deferred tax assets (3) | | | 1,552 | | — | | — | |
Non-GAAP net income | | | $ 199 | | $ 463 | | $ 3,458 | |
GAAP net loss per diluted share | | | ($ 0.39) | | ($ 0.21) | | ($ 0.13) | |
Non-GAAP net income per diluted share | | | $ 0.01 | | $ 0.01 | | $ 0.10 | |
Shares used in net income per diluted share calculation |
|
| 37,723 | | 34,705 | | 33,025 | |
| (1) | Represents expenses related to an arbitration proceeding over a disputed customer contract, which expenses are expected to continue until the arbitration is resolved. |
| (2) | The Company recognized a 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. Due to the full valuation allowance against U.S. DTA recognized in the fourth quarter of 2020, there is no tax benefit from the released tax attributes. 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 (loss). |
| (3) | The Company's GAAP tax expense is higher year-to-date compared to the non-GAAP tax expense, primarily due to the GAAP full U.S. federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense is not calculated with a full US federal or state valuation allowance due to recent cumulative profit on a non-GAAP basis. Each reporting period, management evaluates the need for a valuation allowance and may place a valuation allowance against its US net deferred tax assets (DTA) on a non-GAAP basis if it concludes it is more likely than not that it will not be able to utilize some or all of its US DTAs on a non-GAAP basis. |
| 10 |
| | |
Reconciliation of GAAP to Non-GAAP Spending by Function
Quarterly
| | (in thousands) | |||||||||||
| | Q3’21 |
|
| Q2’21 |
|
| Q1’21 |
|
| Q4’20 |
| Q3’20 |
Cost of Revenue - GAAP |
| $ 11,070 | | | $ 10,785 | | | $ 10,663 | | | $ 9,839 | | $ 9,493 |
Adjustments to reconcile GAAP Cost of Revenue to non-GAAP Cost of Revenue: |
| | | | | | | | | | | | |
Stock-based compensation expense |
| (670) | | | (538) | | | (652) | | | (872) | | (790) |
Amortization of acquired technology |
| (454) | | | (536) | | | (535) | | | (274) | | (144) |
Cost of Revenue - Non-GAAP |
| $ 9,946 | | | $ 9,711 | | | $ 9,476 | | | $ 8,693 | | $ 8,559 |
| | | | | | | | | | | | | |
Research & Development - GAAP |
| $ 10,657 | | | $ 11,064 | | | $ 10,841 | | | $ 9,981 | | $ 8,328 |
Adjustments to reconcile GAAP R&D to non-GAAP R&D: | | | | | | | | | | | | | |
Stock-based compensation expense | | (1,299) | | | (1,126) | | | (1,588) | | | (1,187) | | (1,148) |
Write-down in value of property and equipment | | — | | | — | | | — | | | (179) | | — |
Research & Development - Non-GAAP | | $ 9,358 | | | $ 9,938 | | | $ 9,253 | | | $ 8,615 | | $ 7,180 |
| | | | | | | | | | | | | |
Selling, General, & Administrative - GAAP | | $ 9,609 | | | $ 9,410 | | | $ 9,464 | | | $ 8,625 | | $ 8,420 |
Adjustment to reconcile GAAP SG&A to non-GAAP SG&A: | | | | | | | | | | | | | |
Stock-based compensation expense | | (1,394) | | | (1,078) | | | (1,129) | | | (928) | | (1,192) |
Expenses of arbitration (1) | | (341) | | | (558) | | | (295) | | | (268) | | (366) |
Acquisition-related costs (2) | | — | | | — | | | — | | | (752) | | — |
Selling, General, & Administrative - Non-GAAP |
| $ 7,874 | | | $ 7,774 | | | $ 8,040 | | | $ 6,677 | | $ 6,862 |
| (1) | Represents expenses related to an arbitration proceeding over a disputed contract with a customer, which expenses are expected to continue until the arbitration is resolved. |
| (2) | Represents transaction expenses related to the acquisition of Cimetrix Incorporated in the fourth quarter of 2020. |
| 11 |
| | |
Reconciliation of GAAP to Non-GAAP Spending by Function
Year to Date
| | (in thousands) | ||||
| | Nine Months Ended September 30, | ||||
| | 2021 |
| 2020 |
| 2019 |
| | | | | | |
Cost of Revenue - GAAP |
| $ 32,518 | | $ 26,926 | | $ 24,414 |
Adjustments to reconcile GAAP Cost of Revenue to non-GAAP Cost of Revenue: |
| | | | | |
Stock-based compensation expense |
| (1,860) | | (2,582) | | (2,404) |
Amortization of acquired technology |
| (1,525) | | (431) | | (431) |
Cost of Revenue - Non-GAAP |
| $ 29,133 | | $ 23,913 | | $ 21,579 |
| | | | | | |
Research & Development - GAAP |
| $ 32,562 | | $ 24,672 | | $ 23,993 |
Adjustments to reconcile GAAP R&D to non-GAAP R&D: | | | | | | |
Stock-based compensation expense | | (4,013) | | (3,613) | | (3,681) |
Write-down in value of property and equipment | | — | | (149) | | — |
Adjustment to contingent consideration related to acquisition | | — | | — | | (30) |
Research & Development - Non-GAAP | | $ 28,549 | | $ 20,910 | | $ 20,282 |
| | | | | | |
Selling, General, & Administrative - GAAP | | $ 28,482 | | $ 24,052 | | $ 19,941 |
Adjustment to reconcile GAAP SG&A to non-GAAP SG&A: | | | | | | |
Stock-based compensation expense | | (3,601) | | (3,281) | | (2,557) |
Expenses of arbitration (1) | | (1,194) | | (830) | | — |
Write-down in value of property and equipment | | — | | (162) | | — |
Selling, General, & Administrative - Non-GAAP |
| $ 23,687 | | $ 19,779 | | $ 17,384 |
| (1) | Represents expenses related to an arbitration proceeding over a disputed contract with a customer, which expenses are expected to continue until the arbitration is resolved. |
| 12 |