PDF Solutions® Reports Fourth Quarter and Full Year 2022 Results
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PDF Solutions® Reports Fourth Quarter and Full Year 2022 Results

SANTA CLARA, Calif., Feb. 16, 2023 (GLOBE NEWSWIRE) -- PDF Solutions, Inc. (Nasdaq: PDFS), a leading provider of unified data and cloud analytics for the semiconductor ecosystem, today announced financial results for its fourth quarter and year ended December 31, 2022.

Highlights of Fourth Quarter 2022 Financial Results

Highlights of Full Year 2022 Financial Results

Total revenues for the fourth quarter of 2022 were $40.5 million, compared to $39.9 million for the third quarter of 2022 and $29.9 million for the fourth quarter of 2021. Analytics revenue for the fourth quarter of 2022 was $36.0 million, compared to $32.9 million for the third quarter of 2022 and $27.3 million for the fourth quarter of 2021. Integrated Yield Ramp revenue for the fourth quarter of 2022 was $4.5 million, compared to $7.0 million for the third quarter of 2022 and $2.6 million for the fourth quarter of 2021. Total revenues for the full year 2022 and 2021 were $148.5 million and $111.0 million, respectively.

GAAP gross margin for the fourth quarter of 2022 was 71%, compared to 69% for the third quarter of 2022 and 61% for the fourth quarter of 2021. GAAP gross margin for the full year 2022 and 2021 was 68% and 60%, respectively.

Non-GAAP gross margin for the fourth quarter of 2022 was 74%, compared to 72% for the third quarter of 2022 and 65% for the fourth quarter of 2021. Non-GAAP gross margin for the full year 2022 and 2021 was 71% and 64%, respectively.

On a GAAP basis, net income for the fourth quarter of 2022 was $0.5 million, or $0.01 per diluted share, compared to a net income of $1.4 million, or $0.04 per diluted share, for the third quarter of 2022, and net loss of $7.0 million, or ($0.19) per diluted share, for the fourth quarter of 2021. On a GAAP basis, net loss for the full year 2022 was $3.4 million, or ($0.09) per diluted share, compared to net loss of $21.5 million, or ($0.58) per diluted share, for the full year 2021.

Non-GAAP net income for the fourth quarter of 2022 was $7.4 million, or $0.19 per diluted share, compared to a non-GAAP net income of $7.6 million, or $0.20 per diluted share, for the third quarter of 2022, and non-GAAP net income of $2.8 million, or $0.07 per diluted share, for the fourth quarter of 2021. Non-GAAP net income for the full year 2022 was $22.9 million, or $0.60 per diluted share, compared to non-GAAP net income of $3.0 million, or $0.08 per diluted share, for the full year 2021.

Cash, cash equivalents and short-term investments at December 31, 2022 were $139.2 million, compared to $140.2 million at December 31, 2021, a decrease of $1.0 million. Net cash provided by operating activities was $24.3 million for the fourth quarter of 2022. Net cash provided by operating activities was $32.3 million for the full year 2022.

Financial Outlook and Recent Accomplishments

In spite of macroenvironment headwinds and a high revenue base from the strong performance in 2022, we expect 2023 revenue growth rate to approach mid-teens percent on a year-over-year basis, benefiting from our strong backlog.

“Thanks to all our employees, contractors, and customers for the strong 2022 performance. We are pleased with how we are positioned for 2023 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/BI4d22ed99a5804ec6a79bce8b073e8200. Registrants will receive dial-in information and a unique passcode to access the call. We encourage participants to dial-in into the call ten minutes ahead of 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 www.pdf.com/press-releases following the date of this release.

Fourth Quarter and Full Year 2022 Financial Commentary Available Online

A Management Report reviewing the Company’s fourth quarter and full year 2022 financial results will be furnished to the Securities and Exchange Commission on Form 8-K and published on the Company’s website at 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 the effects of certain non-recurring items, expenses related to an arbitration proceeding for a disputed contract with a customer, write-downs 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 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 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 and expected revenue from new bookings, 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 impact of rising inflation and interest rates; 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 supply and 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; the Company’s ability to successfully integrate acquired businesses and technologies; whether the Company can successfully convert backlog into revenue; customers’ production volumes under contracts that provide Gainshare royalties; the potential for export controls that could impact the Company’s sales in China; 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, 2021, 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. PDF Solutions has not filed its Form 10-K for the year ended December 31, 2022. 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 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 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, 
 2022 2021
      
ASSETS     
Current assets:     
Cash and cash equivalents$119,624  $27,684 
Short-term investments 19,557   112,542 
Accounts receivable, net 42,164   40,087 
Prepaid expenses and other current assets 12,063   8,194 
Total current assets 193,408   188,507 
Property and equipment, net 40,174   35,295 
Operating lease right-of-use assets, net 6,002   5,408 
Goodwill 14,123   14,123 
Intangible assets, net 18,055   21,239 
Deferred tax assets, net 64   75 
Other non-current assets 6,845   9,121 
Total assets$278,671  $273,768 
      
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Current liabilities:     
Accounts payable$6,388  $5,554 
Accrued compensation and related benefits 16,948   9,495 
Accrued and other current liabilities 5,581   3,328 
Operating lease liabilities ‒ current portion 1,412   1,758 
Deferred revenues ‒ current portion 26,019   23,691 
Billings in excess of recognized revenues 1,852    
Total current liabilities 58,200   43,826 
Long-term income taxes payable 2,622   2,656 
Non-current operating lease liabilities 5,932   5,258 
Non-current portion of deferred revenues 1,905   2,443 
Total liabilities 68,659   54,183 
      
Stockholders’ equity:     
Common stock and additional paid-in-capital 447,421   423,075 
Treasury stock at cost (133,709)  (104,705)
Accumulated deficit (101,150)  (97,721)
Accumulated other comprehensive loss (2,550)  (1,064)
Total stockholders’ equity 210,012   219,585 
Total liabilities and stockholders’ equity$278,671  $273,768 
        

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, 
 2022 2022 2021    2022 2021
               
Revenues:               
Analytics$36,058  $32,879  $27,250  $130,480  $93,415 
Integrated yield ramp 4,465   6,981   2,636   18,069   17,645 
Total revenues 40,523   39,860   29,886   148,549   111,060 
                
Costs and Expenses:               
Costs of revenues 11,791   12,545   11,675   47,907   44,193 
Research and development 14,360   14,303   11,218   56,126   43,780 
Selling, general and administrative 12,724   12,005   9,167   45,338   37,649 
Amortization of acquired intangible assets 324   318   313   1,270   1,255 
Write-down in value of property and equipment       3,183      3,183 
Interest and other expense (income), net 250   (1,511)  (292)  (2,562)  (683)
Income (loss) before income taxes 1,074   2,200   (5,378)  470   (18,317)
Income tax expense 591   815   1,622   3,899   3,171 
Net income (loss)$483  $1,385  $(7,000) $(3,429) $(21,488)
                
Net income (loss) per share:               
Basic$0.01  $0.04  $(0.19) $(0.09) $(0.58)
Diluted$0.01  $0.04  $(0.19) $(0.09) $(0.58)
                
Weighted average common shares used to calculate net income (loss) per share:               
Basic 37,379   37,226   37,348   37,309   37,138 
Diluted 38,276   38,054   37,348   37,309   37,138 
                    

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, 
 2022 2022 2021 2022 2021
                  
GAAP                   
Total revenues$40,523  $39,860  $29,886  $148,549  $111,060 
Costs of revenues 11,791   12,545   11,675   47,907   44,193 
GAAP gross profit$28,732  $27,315  $18,211  $100,642  $66,867 
GAAP gross margin 71%  69%  61%  68%  60%
                    
Non-GAAP                   
GAAP gross profit$28,732  $27,315  $18,211  $100,642  $66,867 
Adjustments to reconcile GAAP to non-GAAP gross margin:                   
Stock-based compensation expense 737   854   703   2,974   2,563 
Amortization of acquired technology 553   553   554   2,213   2,079 
Non-GAAP gross profit$30,022  $28,722  $19,468  $105,829  $71,509 
Non-GAAP gross margin 74%  72%  65%  71%  64%
                    

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, 
 2022 2022 2021 2022 2021
               
GAAP net income (loss)$483  $1,385  $(7,000) $(3,429) $(21,488)
Adjustments to reconcile GAAP net income (loss) to non-GAAP net income:               
Stock-based compensation expense 5,088   5,136   3,457   19,649   12,931 
Amortization of acquired technology under costs of revenues 553   553   554   2,213   2,079 
Amortization of other acquired intangible assets 325   318   313   1,270   1,255 
Expenses of arbitration (1) 852   556   757   1,895   1,951 
Write-down in value of property and equipment (2)       3,183      3,183 
Tax impact of valuation allowance for deferred tax assets and reconciling items (3) 98   (373)  1,539   1,326   3,091 
Non-GAAP net income$7,399  $7,575  $2,803  $22,924  $3,002 
                
GAAP net income (loss) per diluted share$0.01  $0.04  $(0.19) $(0.09) $(0.58)
Non-GAAP net income per diluted share$0.19  $0.20  $0.07  $0.60  $0.08 
                
Weighted average common shares used in GAAP net income (loss) per diluted share calculation 38,276   38,054   37,348   37,309   37,138 
Weighted average common shares used in Non-GAAP net income per diluted share calculation 38,276   38,054   38,430   38,130   37,901 
                    

_______________
(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) Pertains to write-down in value of our first-generation of e-beam tools for Design-for-Inspection systems wherein carrying values may not be fully recoverable due to lack of market demand and future needs of our customers for these tools.
(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 R&D credits after 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 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.

Company Contacts:
Adnan Raza
Chief Financial Officer
Tel: (408) 516-0237
Email: adnan.raza@pdf.com
                                         Sonia Segovia
Investor Relations
Tel: (408) 938-6491
Email: sonia.segovia@pdf.com
   

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