PDF Solutions® Reports Fourth Quarter and Full Year 2023 Results
- Analytics revenues for Q4 2023 were $39.1 million, up 9% from the previous year.
- Total revenues for full year 2023 reached $165.8 million, a 12% increase from the previous year.
- GAAP gross margin for Q4 2023 was 68%, with non-GAAP gross margin at 72%.
- Net income for Q4 2023 was $0.9 million on a GAAP basis and $5.7 million on a non-GAAP basis.
- Cash, cash equivalents, and short-term investments stood at $135.5 million as of December 31, 2023.
- PDFS expects flat revenue for the first half of 2024 and a 20% growth in the second half.
- CEO John Kibarian expressed optimism for 2024 despite macroenvironment challenges.
- A live conference call to discuss results was scheduled for analysts and investors.
- Non-GAAP financial measures were provided to supplement GAAP results.
- None.
Insights
The financial results announced by PDF Solutions, Inc. reflect a company in a state of modest growth, with total revenues and analytics revenues both showing an uptick compared to the previous year. The reported increase in GAAP and non-GAAP gross margins suggests an improvement in cost management and operational efficiency. The growth in non-GAAP diluted earnings per share (EPS) from $0.60 to $0.73 year-over-year indicates a stronger profitability on an adjusted basis, which excludes certain one-time expenses and non-cash charges like stock-based compensation.
From a financial perspective, the liquidity position of the company seems robust with $135.5 million in cash and short-term investments. This strong cash position provides the company with strategic flexibility to invest in growth initiatives or weather potential downturns in the semiconductor industry. However, the outlook for flat revenue in the first half of 2024, followed by an expected 20% growth in the second half, suggests a cautious optimism that hinges on the strength of their pipeline and macro trends such as distributed manufacturing and energy electrification.
PDF Solutions operates within the semiconductor ecosystem, a sector that is highly cyclical and sensitive to macroeconomic factors. The company's performance and future outlook need to be contextualized within the broader industry dynamics. The semiconductor industry has been facing a period of short-term weakness, which is reflected in the company's expectation of flat revenues in the first half of 2024. However, the anticipated 20% growth in the latter half of the year aligns with industry forecasts predicting a rebound in semiconductor demand fueled by long-term trends like AI and energy electrification.
The company's focus on analytics revenue, which has seen a 17% increase over the last year, suggests a strategic emphasis on data solutions in semiconductor manufacturing—a segment that is expected to grow as the industry continues to evolve towards more sophisticated production techniques and supply chain management.
The financial results of PDF Solutions offer insights into the broader economic landscape, particularly within the technology and manufacturing sectors. The semiconductor industry is a leading indicator of economic activity, as it supplies critical components for a wide range of products. The company's improved performance, despite the current macroeconomic headwinds, indicates resilience in this segment. The projected revenue growth in the second half of 2024 may signal an anticipated recovery in the semiconductor market and, by extension, a potential uplift in the broader tech sector.
Moreover, the company's emphasis on trends such as AI and energy electrification points to the growing importance of these areas in driving economic growth. As these sectors expand, they could contribute to increased demand for semiconductors, which would benefit companies like PDF Solutions that are positioned to capitalize on these trends.
SANTA CLARA, Calif., Feb. 15, 2024 (GLOBE NEWSWIRE) -- PDF Solutions, Inc. (Nasdaq: PDFS), a leading provider of comprehensive data solutions for the semiconductor ecosystem, today announced financial results for its fourth quarter and year ended December 31, 2023.
Financial Highlights of Fourth Quarter 2023
- Analytics revenues of
$39.1 million , up9% over last year’s comparable quarter - Quarterly revenues of
$41.1 million , up slightly over last year’s comparable quarter - GAAP gross margin of
68% and Non-GAAP gross margin of72% - GAAP diluted earnings per share of
$0.02 and non-GAAP diluted earnings per share of$0.15
Financial Highlights of Full Year 2023
- Analytics revenues of
$152.1 million , up17% over last year - Record total full year revenues of
$165.8 million , up12% over last year - GAAP gross margin of
69% and Non-GAAP gross margin of73% - GAAP diluted earnings per share of
$0.08 and non-GAAP diluted earnings per share of$0.73 - Cash, cash equivalents and short-term investments of
$135.5 million
Total revenues for the fourth quarter of 2023 were
GAAP gross margin for the fourth quarter of 2023 was
Non-GAAP gross margin for the fourth quarter of 2023 was
On a GAAP basis, net income for the fourth quarter of 2023 was
Non-GAAP net income for the fourth quarter of 2023 was
Cash, cash equivalents and short-term investments as of December 31, 2023 were
Financial Outlook
The Company’s outlook for the year reflects both the short-term weakness in the semiconductor industry and the strength of our pipeline, bolstered by the macro trends of distributed manufacturing, energy electrification, and AI, which can drive significant growth. As a result, management expects revenue for the first half of 2024 to be flat over the comparable period of the prior year and for revenue for the second half of the year to grow by
“Thanks to all our employees, contractors, and customers for the strong 2023 performance. Despite the macroenvironment, we are pleased with how we are positioned for 2024 and look forward to serving our customers,” said John Kibarian, CEO and President.
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. To participate on the live call, analysts and investors should pre-register at: https://register.vevent.com/register/BI866d4f79f40f459e872fa6cec8a6dc7a. Registrants will receive dial-in information and a unique passcode to access the call. We encourage participants to dial into the call ten minutes ahead of the scheduled time. The teleconference will also be webcast simultaneously on the Company’s website at https://ir.pdf.com/webcasts. A replay of the conference call webcast will be available after the call on the Company’s investor relations website. A copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measures, which non-GAAP measures may be used periodically by PDF Solutions’ management when discussing financial results with investors and analysts, will also be available on PDF Solutions’ website at http://www.pdf.com/press-releases following the date of this release.
Fourth Quarter and Full Year 2023 Financial Commentary Available Online
A Management Report reviewing the Company’s fourth quarter and full year 2023 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.
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 profit and margin exclude stock-based compensation expense and the amortization of acquired technology. Non-GAAP net income excludes stock-based compensation expense, amortization of acquired technology and other acquired intangible assets, and the effects of certain non-recurring items, such as expenses related to an arbitration proceeding for a disputed contract with a customer, acquisition-related costs, proceeds from the sale of previously written-off property and equipment, and their related income tax effects, as applicable, as well as adjustments for the 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 expenses related to an arbitration proceeding for a disputed contract with a customer 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 condensed consolidated 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 about total revenue growth for 2024, 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, but are not limited to, risks associated with: expectations about the effectiveness of our business and technology strategies; expectations and integration concerns regarding recent and future acquisitions; current semiconductor industry trends; expectations of 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 impact of global economic trends and rising inflation and interest rates; supply chain disruptions; the success of the Company’s strategic growth opportunities and partnerships; customers’ production volumes under contracts that provide Gainshare royalties; possible impacts from the evolving trade regulatory environment and geopolitical tensions; and other risks set forth in PDF Solutions’ periodic public filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended December 31, 2022, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and amendments to such reports. The forward-looking statements made in the conference call are made as of the date hereof, and PDF Solutions does not assume any obligation to update such statements nor the reasons why actual results could differ materially from those projected in such statements. The Company has not filed its Form 10-K for the year ended December 31, 2023. As a result, all financial results described in this earnings release should be considered preliminary, and are subject to change to reflect any necessary adjustments or changes in accounting estimates, that are identified prior to the time the Company files its Form 10-K.
About PDF Solutions
PDF Solutions (NASDAQ: PDFS) provides comprehensive data solutions designed to empower organizations across the semiconductor and electronics 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 and electronics 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 North America, 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 https://www.pdf.com.
PDF Solutions and the PDF Solutions logo are trademarks or registered trademarks of PDF Solutions, Inc. or its subsidiaries.
PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 98,978 | $ | 119,624 | ||||
| Short-term investments | 36,544 | 19,557 | ||||||
| Accounts receivable, net | 44,904 | 42,164 | ||||||
| Prepaid expenses and other current assets | 17,422 | 12,063 | ||||||
| Total current assets | 197,848 | 193,408 | ||||||
| Property and equipment, net | 37,338 | 40,174 | ||||||
| Operating lease right-of-use assets, net | 4,926 | 6,002 | ||||||
| Goodwill | 15,029 | 14,123 | ||||||
| Intangible assets, net | 15,620 | 18,055 | ||||||
| Deferred tax assets, net | 157 | 64 | ||||||
| Other non-current assets | 19,218 | 6,845 | ||||||
| Total assets | $ | 290,136 | $ | 278,671 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,561 | $ | 6,388 | ||||
| Accrued compensation and related benefits | 14,800 | 16,948 | ||||||
| Accrued and other current liabilities | 4,633 | 5,581 | ||||||
| Operating lease liabilities ‒ current portion | 1,529 | 1,412 | ||||||
| Deferred revenues ‒ current portion | 25,750 | 26,019 | ||||||
| Billings in excess of recognized revenues | 1,570 | 1,852 | ||||||
| Total current liabilities | 50,843 | 58,200 | ||||||
| Long-term income taxes | 2,972 | 2,622 | ||||||
| Non-current operating lease liabilities | 4,657 | 5,932 | ||||||
| Other non-current liabilities | 2,718 | 1,905 | ||||||
| Total liabilities | 61,190 | 68,659 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock and additional paid-in capital | 473,301 | 447,421 | ||||||
| Treasury stock at cost | (143,923 | ) | (133,709 | ) | ||||
| Accumulated deficit | (98,045 | ) | (101,150 | ) | ||||
| Accumulated other comprehensive loss | (2,387 | ) | (2,550 | ) | ||||
| Total stockholders’ equity | 228,946 | 210,012 | ||||||
| Total liabilities and stockholders’ equity | $ | 290,136 | $ | 278,671 | ||||
PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
| Three months ended | Year ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Analytics | $ | 39,128 | $ | 39,497 | $ | 36,058 | $ | 152,085 | $ | 130,480 | ||||||||||
| Integrated yield ramp | 1,997 | 2,853 | 4,465 | 13,750 | 18,069 | |||||||||||||||
| Total revenues | 41,125 | 42,350 | 40,523 | 165,835 | 148,549 | |||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Costs of revenues | 13,194 | 14,282 | 11,791 | 51,749 | 47,907 | |||||||||||||||
| Research and development | 12,308 | 13,113 | 14,360 | 50,736 | 56,126 | |||||||||||||||
| Selling, general, and administrative | 16,194 | 15,611 | 12,724 | 62,216 | 45,338 | |||||||||||||||
| Amortization of acquired intangible assets | 306 | 328 | 324 | 1,285 | 1,270 | |||||||||||||||
| Interest and other expense (income), net | (1,020 | ) | (2,018 | ) | 250 | (5,020 | ) | (2,562 | ) | |||||||||||
| Income before income taxes | 143 | 1,034 | 1,074 | 4,869 | 470 | |||||||||||||||
| Income tax benefit (expense) | 744 | (6,006 | ) | (591 | ) | (1,764 | ) | (3,899 | ) | |||||||||||
| Net income (loss) | $ | 887 | $ | (4,972 | ) | $ | 483 | $ | 3,105 | $ | (3,429 | ) | ||||||||
| Net income (loss) per share: | ||||||||||||||||||||
| Basic | $ | 0.02 | $ | (0.13 | ) | $ | 0.01 | $ | 0.08 | $ | (0.09 | ) | ||||||||
| Diluted | $ | 0.02 | $ | (0.13 | ) | $ | 0.01 | $ | 0.08 | $ | (0.09 | ) | ||||||||
| Weighted average common shares used to calculate net income (loss) per share: | ||||||||||||||||||||
| Basic | 38,269 | 38,187 | 37,379 | 38,015 | 37,309 | |||||||||||||||
| Diluted | 38,814 | 38,187 | 38,276 | 38,937 | 37,309 | |||||||||||||||
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN (UNAUDITED)
(In thousands)
| Three months ended | Year ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| GAAP | ||||||||||||||||||||
| Total revenues | $ | 41,125 | $ | 42,350 | $ | 40,523 | $ | 165,835 | $ | 148,549 | ||||||||||
| Costs of revenues | 13,194 | 14,282 | 11,791 | 51,749 | 47,907 | |||||||||||||||
| GAAP gross profit | $ | 27,931 | $ | 28,068 | $ | 28,732 | $ | 114,086 | $ | 100,642 | ||||||||||
| GAAP gross margin | 68 | % | 66 | % | 71 | % | 69 | % | 68 | % | ||||||||||
| Non-GAAP | ||||||||||||||||||||
| GAAP gross profit | $ | 27,931 | $ | 28,068 | $ | 28,732 | $ | 114,086 | $ | 100,642 | ||||||||||
| Adjustments to reconcile GAAP to non-GAAP gross margin: | ||||||||||||||||||||
| Stock-based compensation expense | 1,147 | 1,120 | 737 | 4,169 | 2,974 | |||||||||||||||
| Amortization of acquired technology | 586 | 574 | 553 | 2,266 | 2,213 | |||||||||||||||
| Non-GAAP gross profit | $ | 29,664 | $ | 29,762 | $ | 30,022 | $ | 120,521 | $ | 105,829 | ||||||||||
| Non-GAAP gross margin | 72 | % | 70 | % | 74 | % | 73 | % | 71 | % | ||||||||||
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (UNAUDITED)
(In thousands, except per share amounts)
| Three months ended | Year ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| GAAP net income (loss) | $ | 887 | $ | (4,972 | ) | $ | 483 | $ | 3,105 | $ | (3,429 | ) | |||||||
| Adjustments to reconcile GAAP net income (loss) to non-GAAP net income: | |||||||||||||||||||
| Stock-based compensation expense | 5,923 | 5,999 | 5,088 | 21,484 | 19,649 | ||||||||||||||
| Amortization of acquired technology under costs of revenues | 586 | 574 | 553 | 2,266 | 2,213 | ||||||||||||||
| Amortization of other acquired intangible assets | 306 | 328 | 325 | 1,285 | 1,270 | ||||||||||||||
| Expenses of arbitration (1) | 75 | 226 | 852 | 2,600 | 1,895 | ||||||||||||||
| Acquisition-related costs (2) | — | 33 | — | 209 | — | ||||||||||||||
| Proceeds from the sale of previously written-off property and equipment | — | (105 | ) | — | (105 | ) | — | ||||||||||||
| Tax impact of valuation allowance for deferred tax assets and reconciling items (3) | (2,060 | ) | 5,904 | 98 | (2,374 | ) | 1,326 | ||||||||||||
| Non-GAAP net income | $ | 5,717 | $ | 7,987 | $ | 7,399 | $ | 28,470 | $ | 22,924 | |||||||||
| GAAP net income (loss) per diluted share | $ | 0.02 | $ | (0.13 | ) | $ | 0.01 | $ | 0.08 | $ | (0.09 | ) | |||||||
| Non-GAAP net income per diluted share | $ | 0.15 | $ | 0.20 | $ | 0.19 | $ | 0.73 | $ | 0.60 | |||||||||
| Weighted average common shares used in GAAP net income (loss) per diluted share calculation | 38,814 | 38,187 | 38,276 | 38,937 | 37,309 | ||||||||||||||
| Weighted average common shares used in non-GAAP net income per diluted share calculation | 38,814 | 38,992 | 38,276 | 38,937 | 38,130 | ||||||||||||||
________________
(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) Acquisition-related costs are incremental expenses related to business or asset acquisition transaction(s). These expenses may include consulting, legal and other fees. For the year ended December 31, 2023, the charges were related to the acquisition of Lantern Machinery Analytics, Inc.
(3) The difference between the GAAP and non-GAAP income tax provisions is primarily due to the valuation allowance on a GAAP basis and non-GAAP adjustments. For example, on a GAAP basis, the Company does not receive a deferred tax benefit for foreign tax credits or research and development credits after the valuation allowance. 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 cumulative non-GAAP income and management’s conclusion that it is more likely than not to utilize its net deferred tax assets (DTAs). Each reporting period, management evaluates the need for a valuation allowance and may place a valuation allowance against its U.S. net DTAs 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 U.S. DTAs on a non-GAAP basis.
| Company Contacts: | |
| Adnan Raza | Sonia Segovia |
| Chief Financial Officer | Investor Relations |
| Tel: (408) 516-0237 | Tel: (408) 938-6491 |
| Email: adnan.raza@pdf.com | Email: sonia.segovia@pdf.com |
FAQ
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