PDF Solutions® Reports Second Quarter 2024 Results

Rhea-AI Summary

PDF Solutions (Nasdaq: PDFS) reported its Q2 2024 financial results. Key highlights include:

• Analytics revenues of $38.1 million, up 3% year-over-year
• Total quarterly revenues of $41.7 million, flat compared to Q2 2023
• GAAP gross margin of 71% and Non-GAAP gross margin of 75%
• GAAP diluted EPS of $0.04 and non-GAAP diluted EPS of $0.18
• Backlog of $243.2 million as of June 30, 2024

The company expects revenue for the second half of the year to grow by 20% over the comparable period of the prior year. Cash, cash equivalents, and short-term investments stood at $117.9 million as of June 30, 2024.

Positive

• Analytics revenues increased by 3% year-over-year to $38.1 million
• GAAP gross margin improved to 71% from 70% in Q2 2023
• Non-GAAP gross margin increased to 75% from 74% in Q2 2023
• Backlog of $243.2 million as of June 30, 2024
• Management expects 20% revenue growth in the second half of 2024 compared to the same period last year

Negative

• Total quarterly revenues remained flat at $41.7 million compared to Q2 2023
• GAAP net income decreased to $1.7 million from $6.8 million in Q2 2023
• GAAP diluted EPS decreased to $0.04 from $0.17 in Q2 2023
• Non-GAAP diluted EPS slightly decreased to $0.18 from $0.19 in Q2 2023

Financial Analyst

PDF Solutions' Q2 2024 results show a mixed performance. Analytics revenue grew 3% year-over-year to $38.1 million, indicating steady demand for their data solutions. However, total revenue remained flat at $41.7 million, suggesting challenges in other segments.

The company's GAAP gross margin improved to 71% from 70% last year, while non-GAAP gross margin rose to 75% from 74%. This margin expansion is positive, reflecting improved operational efficiency.

Notably, GAAP EPS decreased to $0.04 from $0.17 in Q2 2023, while non-GAAP EPS slightly declined to $0.18 from $0.19. The significant drop in GAAP EPS warrants further investigation into one-time expenses or accounting adjustments.

The backlog of $243.2 million and management's projection of 20% revenue growth in H2 2024 suggest a positive outlook, but investors should monitor execution closely given the flat current performance.

Market Research Analyst

PDF Solutions' Q2 results reflect the current semiconductor industry dynamics. The 3% growth in Analytics revenue aligns with the increasing demand for data-driven solutions in chip design and manufacturing. However, the flat overall revenue suggests ongoing challenges in the broader semiconductor market.

The company's strong gross margins (GAAP: 71%, non-GAAP: 75%) indicate a competitive advantage in their niche. This is important in a market where efficiency and value-added services are key differentiators.

The backlog of $243.2 million is a positive indicator of future revenue stability. However, the projected 20% revenue growth for H2 2024 seems ambitious given the current flat performance. This forecast might be based on anticipated market recovery or new contract wins, which investors should monitor closely.

Overall, PDF Solutions appears to be navigating the challenging semiconductor landscape relatively well, but sustained growth execution will be critical in the coming quarters.

SANTA CLARA, Calif., Aug. 08, 2024 (GLOBE NEWSWIRE) -- PDF Solutions, Inc. (Nasdaq: PDFS), a leading provider of comprehensive data solutions for the semiconductor and electronics ecosystem, today announced financial results for its second quarter ended June 30, 2024.

Financial Highlights of Second Quarter 2024

• Analytics revenues of $38.1 million, up 3% over last year’s comparable quarter
• Quarterly revenues of $41.7 million, flat compared to last year’s comparable quarter
• GAAP gross margin of 71% and Non-GAAP gross margin of 75%
• GAAP diluted earnings per share (EPS) of $0.04 and non-GAAP diluted EPS of $0.18
• Backlog of $243.2 million as of June 30, 2024
  

Total revenues for the second quarter of 2024 were $41.7 million, compared to $41.3 million for the first quarter of 2024 and $41.6 million for the second quarter of 2023. Analytics revenue for the second quarter of 2024 was $38.1 million, compared to $38.5 million for the first quarter of 2024 and $37.1 million for the second quarter of 2023. Integrated Yield Ramp revenue for the second quarter of 2024 was $3.5 million, compared to $2.8 million for the first quarter of 2024 and $4.5 million for the second quarter of 2023.

GAAP gross margin for the second quarter of 2024 was 71%, compared to 67% for the first quarter of 2024 and 70% for the second quarter of 2023.

Non-GAAP gross margin for the second quarter of 2024 was 75%, compared to 72% for the first quarter of 2024 and 74% for the second quarter of 2023.

On a GAAP basis, net income for the second quarter of 2024 was $1.7 million, or $0.04 per diluted share, compared to a net loss of $0.4 million, or ($0.01) per diluted share, for the first quarter of 2024, and a net income of $6.8 million, or $0.17 per diluted share, for the second quarter of 2023.

Non-GAAP net income for the second quarter of 2024 was $7.1 million, or $0.18 per diluted share, compared to a non-GAAP net income of $5.7 million, or $0.15 per diluted share, for the first quarter of 2024, and non-GAAP net income of $7.5 million, or $0.19 per diluted share, for the second quarter of 2023.

Cash, cash equivalents and short-term investments as of June 30, 2024, were $117.9 million.

Financial Outlook
“We are pleased with the ongoing progress we are making with our customers. We reiterate our expectation that revenue for the second half of the year will grow by 20% over the comparable period of the prior year.” 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/BI8d2f27b911674251b131f618f0692ce0. 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.

Second Quarter 2024 Financial Commentary Available Online
A Management Report reviewing the Company’s second quarter 2024 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 Accounting Principles Generally Accepted 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 amortization of acquired technology under costs of revenues. Non-GAAP net income excludes stock-based compensation expense, amortization of acquired technology under costs of revenues, amortization of 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, and their related income tax effects, as applicable, as well as adjustments for the valuation allowance for deferred tax assets and reconciling items. 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) 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 the second half of 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 continuing impact of global economic trends and rising global inflation and increased 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; our ability to obtain additional financing if needed; 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, 2023, 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. We have not filed our Form 10-Q for the quarter ended June 30, 2024. 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 we file our Form 10-Q.

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)

	June 30,				December 31,
	2024				2023
ASSETS
Current assets:
Cash and cash equivalents	$	91,987			$	98,978
Short-term investments		25,888				36,544
Accounts receivable, net		56,410				44,904
Prepaid expenses and other current assets		19,007				17,422
Total current assets		193,292				197,848
Property and equipment, net		40,707				37,338
Operating lease right-of-use assets, net		4,424				4,926
Goodwill		14,996				15,029
Intangible assets, net		13,897				15,620
Deferred tax assets, net		145				157
Other non-current assets		30,538				19,218
Total assets	$	297,999			$	290,136
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,219			$	2,561
Accrued compensation and related benefits		11,468				14,800
Accrued and other current liabilities		5,994				4,633
Operating lease liabilities ‒ current portion		1,609				1,529
Deferred revenues ‒ current portion		31,662				25,750
Billings in excess of recognized revenues		512				1,570
Total current liabilities		55,464				50,843
Long-term income taxes		2,668				2,972
Non-current operating lease liabilities		4,003				4,657
Other non-current liabilities		3,711				2,718
Total liabilities		65,846				61,190
Stockholders’ equity:
Common stock and additional paid-in capital		487,225				473,301
Treasury stock at cost		(155,084	)			(143,923	)
Accumulated deficit		(96,733	)			(98,045	)
Accumulated other comprehensive loss		(3,255	)			(2,387	)
Total stockholders’ equity		232,153				228,946
Total liabilities and stockholders’ equity	$	297,999			$	290,136

PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

	Three months ended												Six months ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2024				2024				2023				2024				2023
Revenues:
Analytics	$	38,114			$	38,463			$	37,134			$	76,577			$	73,460
Integrated yield ramp		3,547				2,847				4,467				6,394				8,900
Total revenues		41,661				41,310				41,601				82,971				82,360
Costs and Expenses:
Costs of revenues		12,230				13,529				12,369				25,759				24,273
Research and development		12,649				12,984				12,264				25,633				25,315
Selling, general, and administrative		16,259				16,498				14,766				32,757				30,411
Amortization of acquired intangible assets		259				259				326				518				651
Interest and other expense (income), net		(1,479	)			(1,692	)			(1,071	)			(3,171	)			(1,982	)
Income (loss) before income tax benefit (expense)		1,743				(268	)			2,947				1,475				3,692
Income tax benefit (expense)		(38	)			(125	)			3,888				(163	)			3,498
Net income (loss)	$	1,705			$	(393	)		$	6,835			$	1,312			$	7,190
Net income (loss) per share:
Basic	$	0.04			$	(0.01	)		$	0.18			$	0.03			$	0.19
Diluted	$	0.04			$	(0.01	)		$	0.17			$	0.03			$	0.18
Weighted average common shares used to calculate net income (loss) per share:
Basic		38,619				38,500				37,859				38,456				37,799
Diluted		39,132				38,500				39,076				38,989				38,968

PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP GROSS MARGIN TO NON-GAAP GROSS MARGIN (UNAUDITED)
(In thousands)

	Three months ended									Six months ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2024			2024			2023			2024			2023
GAAP
Total revenues	$	41,661		$	41,310		$	41,601		$	82,971		$	82,360
Costs of revenues		12,230			13,529			12,369			25,759			24,273
GAAP gross profit	$	29,431		$	27,781		$	29,232		$	57,212		$	58,087
GAAP gross margin		71	%		67	%		70	%		69	%		71	%
Non-GAAP
GAAP gross profit	$	29,431		$	27,781		$	29,232		$	57,212		$	58,087
Adjustments to reconcile GAAP to non-GAAP gross margin:
Stock-based compensation expense		1,185			1,200			938			2,385			1,902
Amortization of acquired technology		584			584			553			1,168			1,106
Non-GAAP gross profit	$	31,200		$	29,565		$	30,723		$	60,765		$	61,095
Non-GAAP gross margin		75	%		72	%		74	%		73	%		74	%

PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (UNAUDITED)
(In thousands, except per share amounts)

	Three months ended												Six months ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2024				2024				2023				2024				2023
GAAP net income (loss)	$	1,705			$	(393	)		$	6,835			$	1,312			$	7,190
Adjustments to reconcile GAAP net income (loss) to non-GAAP net income:
Stock-based compensation expense		5,700				6,110				4,678				11,810				9,562
Amortization of acquired technology under costs of revenues		584				584				553				1,168				1,106
Amortization of other acquired intangible assets		259				259				326				518				651
Expenses of arbitration (1)		—				—				166				—				2,299
Acquisition-related costs (2)		—				—				176				—				176
Tax impact of valuation allowance for deferred tax assets and reconciling items (3)		(1,159	)			(813	)			(5,238	)			(1,972	)			(6,218	)
Non-GAAP net income	$	7,089			$	5,747			$	7,496			$	12,836			$	14,766
GAAP net income (loss) per diluted share	$	0.04			$	(0.01	)		$	0.17			$	0.03			$	0.18
Non-GAAP net income per diluted share	$	0.18			$	0.15			$	0.19			$	0.33			$	0.38
Weighted average common shares used in GAAP net income (loss) per diluted share calculation		39,132				38,500				39,076				38,989				38,968
Weighted average common shares used in non-GAAP net income per diluted share calculation		39,132				39,053				39,076				38,989				38,968

 

______________________

(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 the business or asset acquisition transaction(s). These expenses may include consulting, legal and other fees. For the three and six months ended June 30, 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

What were PDF Solutions' (PDFS) Q2 2024 revenue and earnings?

PDF Solutions reported Q2 2024 total revenues of $41.7 million, with GAAP diluted earnings per share (EPS) of $0.04 and non-GAAP diluted EPS of $0.18.

How did PDF Solutions' (PDFS) Analytics revenue perform in Q2 2024?

PDF Solutions' Analytics revenue for Q2 2024 was $38.1 million, representing a 3% increase compared to $37.1 million in Q2 2023.

What is PDF Solutions' (PDFS) financial outlook for the second half of 2024?

PDF Solutions expects revenue for the second half of 2024 to grow by 20% compared to the same period in the previous year.

What was PDF Solutions' (PDFS) backlog as of June 30, 2024?

PDF Solutions reported a backlog of $243.2 million as of June 30, 2024.