PDFS
$15.90
Pdf Solutions
$.02
.13%
Earnings Details
2nd Quarter June 2017
Thursday, July 27, 2017 4:01:22 PM
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Summary

Pdf Solutions (PDFS) Recent Earnings

Pdf Solutions (PDFS) reported 2nd Quarter June 2017 earnings of $0.01 per share on revenue of $24.3 million. The consensus earnings estimate was $0.02 per share on revenue of $26.7 million. Revenue fell 9.0% compared to the same quarter a year ago.

PDF Solutions Inc provides process-design integration technologies. The Company also serves to improve yield and optimize performance of integrated circuits.

Results
Reported Earnings
$0.01
Earnings Whisper
-
Consensus Estimate
$0.02
Reported Revenue
$24.3 Mil
Revenue Estimate
$26.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

PDF Solutions(R) Reports Second Fiscal Quarter Results

PDF Solutions, Inc. ("PDF Solutions" or the "Company") (PDFS), the leading provider of process-design integration technologies to enhance integrated circuit (IC) manufacturability, today announced financial results for its second fiscal quarter ended June 30, 2017.

Total revenues for the second fiscal quarter of 2017 totaled $24.3 million, which were flat compared to the total revenue for the first fiscal quarter of 2017 and down 9% from $26.7 million for the second fiscal quarter of 2016. Design-to-silicon-yield solutions revenue for the second fiscal quarter of 2017 totaled $16.5 million, down 16% from $19.7 million for the first fiscal quarter of 2017 and down 20% from $20.6 million for the second fiscal quarter of 2016. Gainshare performance incentives revenue for the second fiscal quarter of 2017 totaled $7.8 million, up 70% from $4.6 million for the first fiscal quarter of 2017 and up 27% from $6.1 million for the second fiscal quarter of 2016.

On a GAAP basis, net income for the second fiscal quarter of 2017 was $0.2 million, or $0.01 per basic and diluted share, compared to net income of $0.5 million, or $0.02 per basic and diluted share, for the first fiscal quarter of 2017, and compared to net income of $2.1 million, or $0.07 per basic and diluted share, for the second fiscal quarter of 2016.

Cash and cash equivalents were $109.0 million at June 30, 2017, compared to $116.8 million at December 31, 2016.

Non-GAAP net income for the second fiscal quarter of 2017 was $2.7 million, or $0.08 per diluted share, compared to $2.6 million, or $0.08 per diluted share, for the first fiscal quarter of 2017, and compared to $5.3 million, or $0.16 per diluted share, for the second fiscal quarter of 2016. EBITDAR for the second quarter of 2017 was $3.7 million, compared to $3.5 million for the first fiscal quarter of 2017 and compared to $7.1 million for the second fiscal quarter of 2016.

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 web cast on PDF Solutions’ website at http://ir.pdf.com/webcasts. A replay of the web cast 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">http://www.pdf.com/press-releases following the date of this release.

Second Quarter 2017 Financial Commentary Available Online

A Management Report reviewing the Company’s second quarter 2017 financial results, as well as providing updated 2017 financial outlook, will be furnished to the SEC 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 webcast.

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 net income excludes the effects of non-recurring items, stock-based compensation expenses, amortization of acquired technology and other acquired intangible assets, and their related income tax effects, as applicable, as well as adjusts for the non-cash portion of income taxes. EBITDAR is calculated by taking GAAP net income, adding back the effects of non-recurring items, stock-based compensation expenses, amortization of acquired technology and other acquired intangibles, depreciation expense and income tax provision (benefit). 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) 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. Since management uses these non-GAAP financial measures internally to measure profitability and performance, PDF Solutions has included these non-GAAP measures to give investors an opportunity to see the Company’s financial results as viewed by management. A reconciliation of the comparable GAAP financial measures to the non-GAAP financial measures is provided at the end of the Company’s financial statements presented below.

Forward-Looking Statements

The statements made on the planned conference call regarding the Company’s future expected business performance and financial results are forward looking and are subject to events and circumstances of the future. Actual results could differ materially from those expressed in these forward-looking statements. Risks and uncertainties that could cause results to differ materially include risks associated with: customers’ production volumes at Gainshare-covered facilities; continued adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; the provision of technology and services prior to the execution of a final contract; 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, 2016, 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 enables customers to reduce the time to market of integrated circuits ("ICs"), lower the cost of IC design and manufacturing and improve profitability. The Company has developed proprietary products and provides services that target the entire Process Life Cycle, which is a term used to mean the time from technology development and the design of an IC to volume manufacturing of that IC to product assembly and test.

PDF Solutions’ products and services consist of proprietary test structures and electrical test systems, physical intellectual property, enterprise platform software and professional services. The Company’s Characterization Vehicle (CV) electrical test chip infrastructure provides core modeling capabilities, and is used by more leading manufacturers than any other test chips in the industry. The Design-for-Inspection(TM) solution extends the Company’s electrical characterization technologies into the e-beam measurement of extremely dense test structures, or DFI(TM) cells, across an entire fabrication process. Proprietary Template layout patterns for standard cell libraries optimize area, performance, and manufacturability for designing IC products. The Exensio platform for big data unlocks relevant, actionable information buried in wafer fabrication, process control and test data through four, key components: Exensio-Yield, Exensio-Control, Exensio-Test, Exensio-ALPS, and Exensio-Char. The Exensio platform is available either on-premise or via software as a service (SaaS).

Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Canada, China, France, Germany, Italy, Japan, Korea, and Taiwan. PDF Solutions is listed on The NASDAQ National Market under the ticker symbol PDFS. For the Company’s latest news and information, visit http://www.pdf.com/.

Characterization Vehicle, CV, Exensio, PDF Solutions, and the PDF Solutions logo are registered trademarks of PDF Solutions, Inc. or its subsidiaries. ALPS, Design-for-Inspection, DFI, and Template are trademarks of PDF Solutions, Inc. or its subsidiaries.

PDF SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
June 30,
December 31,
2017
2016
ASSETS
Current assets:
Cash and cash equivalents
$
109,007
$
116,787
Accounts receivable, net
54,029
48,157
Prepaid expenses and other current assets
8,813
5,335
Total current assets
171,849
170,279
Property and equipment, net
23,068
19,341
Goodwill
215
215
Intangible assets, net
3,847
4,223
Deferred tax assets
15,815
15,640
Other non-current assets
12,263
12,631
Total assets
$
227,057
$
222,329
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
2,270
$
2,206
Accrued compensation and related benefits
5,863
5,959
Accrued and other current liabilities
2,075
2,080
Deferred revenues - current portion
8,933
8,189
Billings in excess of recognized revenue
389
88
Total current liabilities
19,530
18,522
Long-term income taxes payable
3,174
3,354
Other non-current liabilities
2,253
1,650
Total liabilities
24,957
23,526
Stockholders’ equity:
Common stock and additional paid-in-capital
289,961
281,428
Treasury stock at cost
(61,532 )
(54,882 )
Accumulated deficit
(25,046 )
(25,752 )
Accumulated other comprehensive loss
(1,283
)
(1,991
)
Total stockholders’ equity
202,100
198,803
Total liabilities and stockholders’ equity
$
227,057
$
222,329
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,
2017
2017
2016 (1)
2017
2016 (1)
Revenues:
Design-to-silicon-yield solutions
$
16,500
$
19,698
$
20,574
$ 36,198
$ 39,152
Gainshare performance incentives
7,789
4,591
6,114
12,380
12,617
Total revenues
24,289
24,289
26,688
48,578
51,769
Costs of Design-to-silicon-yield solutions:
Direct costs of Design-to-silicon-yield solutions
11,283
11,335
10,558
22,618
20,668
Amortization of acquired technology
96
96
96
192
192
Total costs of Design-to-silicon-yield solutions
11,379
11,431
10,654
22,810
20,860
Gross profit
12,910
12,858
16,034
25,768
30,909
Operating expenses:
Research and development
7,276
7,282
7,060
14,557
13,371
Selling, general and administrative
6,195
5,899
5,094
12,095
10,218
Amortization of other acquired intangible assets
92
92
117
184
234
Total operating expenses
13,563
13,273
12,271
26,836
23,823
Income (loss) from operations
(653
)
(415
)
3,763
(1,068
)
7,086
Interest and other income (expense), net
27
(230
)
(51
)
(202
)
(287
)
Income (loss) before income taxes
(626
)
(645
)
3,712
(1,270
)
6,799
Income tax provision (benefit)
(815
)
(1,162
)
1,579
(1,976
)
2,605
Net income
$
189
$
517
$
2,133
706
4,194
Net income per share:
Basic
$
0.01
$
0.02
$
0.07
0.02
0.13
Diluted
$
0.01
$
0.02
$
0.07
0.02
0.13
Weighted average common shares:
Basic
32,191
31,991
31,276
32,091
31,222
Diluted
33,461
33,594
32,099
33,528
31,927
(1) The results for the three and six months ended June 30, 2016 have been updated to reflect the Company’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The Company elected to early adopt this new standard in the fourth quarter of 2016, which required that any adjustments be reflected as of January 1, 2016, the beginning of the fiscal year that includes the interim period of adoption.
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP 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,
2017
2017
2016 (2)
2017
2016 (2)
GAAP net income
$
189
$
517
$
2,133
$
706
$
4,194
Adjustments to reconcile GAAP net income to non-GAAP net income:
Stock-based compensation expense
2,904
2,884
2,291
5,788
4,957
Amortization of acquired technology
96
96
96
192
192
Amortization of other acquired intangible assets
92
92
117
184
234
Acquisition related deferred revenue adjustment (1)
-
-
50
-
165
Non-cash portion of income tax expense
(629
)
(995
)
609
(1,624
)
908
Non-GAAP net income
$
2,652
$
2,594
$
5,296
$
5,246
$
10,650
GAAP net income per diluted share
$
0.01
$
0.02
$
0.07
$
0.02
$
0.13
Non-GAAP net income per diluted share
$
0.08
$
0.08
$
0.16
$
0.16
$
0.33
Shares used in diluted shares calculation
33,461
33,594
32,099
33,528
31,927
PDF SOLUTIONS, INC.
RECONCILIATION OF GAAP NET INCOME TO EBITDAR (UNAUDITED)
(In thousands, except per share amounts)
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
June 30,
2017
2017
2016 (2)
2017
2016 (2)
GAAP net income
$
189
$
517
$
2,133
$
706
$
4,194
Adjustments to reconcile GAAP net income to EBITDAR:
Stock-based compensation expense
2,904
2,884
2,291
5,788
4,957
Amortization of acquired technology
96
96
96
192
192
Amortization of other acquired intangible assets
92
92
117
184
234
Acquisition related deferred revenue adjustment
(1)
-
-
50
-
165
Depreciation expense
1,196
1,091
859
2,286
1,624
Income tax provision (benefit)
(815
)
(1,162
)
1,579
(1,976
)
2,605
EBITDAR
$
3,662
$
3,518
$
7,125
$
7,180
$
13,971
(1) As announced on July 20, 2015, the Company completed the acquisition of Syntricity, Inc., the industry leading hosted solution for characterization and yield management. In relation to this acquisition, the Company recorded an adjustment to reduce revenue recognized from deferred revenue arising from the acquisition.
Accordingly, for non-GAAP purposes, the Company is excluding these reductions to revenue in order to provide better comparability between periods.
(2) The results for the period ended June 30, 2016 have been updated to reflect the Company’s adoption of the Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The Company elected to early adopt this new standard in the fourth quarter of 2016, which required that any adjustments be reflected as of January 1, 2016, the beginning of the fiscal year that includes the interim period of adoption.
Company Contacts:
Gregory Walker,
VP, Finance and CFO
Tel: (408) 938-6457
Email:gregory.walker@pdf.com
Sonia Segovia,
IR Coordinator
Tel: (408) 938-6491
Email: sonia.segovia@pdf.com

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