Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-31311 | |
Entity Registrant Name | PDF SOLUTIONS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 25-1701361 | |
Entity Address, Address Line One | 2858 De La Cruz Blvd. | |
Entity Address, City or Town | Santa Clara | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95050 | |
City Area Code | 408 | |
Local Phone Number | 280-7900 | |
Title of 12(b) Security | Common Stock, $0.00015 par value | |
Trading Symbol | PDFS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 38,261,403 | |
Entity Central Index Key | 0001120914 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 111,620 | $ 119,624 |
Short-term investments | 23,744 | 19,557 |
Accounts receivable, net of allowance for credit losses of $890 as of September 30, 2023 and December 31, 2022 | 40,959 | 42,164 |
Prepaid expenses and other current assets | 18,001 | 12,063 |
Total current assets | 194,324 | 193,408 |
Property and equipment, net | 37,833 | 40,174 |
Operating lease right-of-use assets, net | 5,069 | 6,002 |
Goodwill | 15,008 | 14,123 |
Intangible assets, net | 16,486 | 18,055 |
Deferred tax assets, net | 32 | 64 |
Other non-current assets | 13,701 | 6,845 |
Total assets | 282,453 | 278,671 |
Current liabilities: | ||
Accounts payable | 2,633 | 6,388 |
Accrued compensation and related benefits | 11,502 | 16,948 |
Accrued and other current liabilities | 4,772 | 5,581 |
Operating lease liabilities - current portion | 1,504 | 1,412 |
Deferred revenues - current portion | 29,267 | 26,019 |
Billings in excess of recognized revenues | 240 | 1,852 |
Total current liabilities | 49,918 | 58,200 |
Long-term income taxes payable | 2,820 | 2,622 |
Non-current portion of operating lease liabilities | 4,922 | 5,932 |
Other non-current liabilities | 3,229 | 1,905 |
Total liabilities | 60,889 | 68,659 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $0.00015 par value, 5,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.00015 par value, 70,000 shares authorized; shares issued 49,694 and 48,613, respectively; shares outstanding 38,245 and 37,431, respectively | 6 | 6 |
Additional paid-in-capital | 467,304 | 447,415 |
Treasury stock at cost, 11,449 and 11,182 shares, respectively | (143,587) | (133,709) |
Accumulated deficit | (98,932) | (101,150) |
Accumulated other comprehensive loss | (3,227) | (2,550) |
Total stockholders' equity | 221,564 | 210,012 |
Total liabilities and stockholders' equity | $ 282,453 | $ 278,671 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, net of allowance for credit losses | $ 890 | |
Preferred stock, par value (in dollars per share) | $ 0.00015 | $ 0.00015 |
Preferred stock, shares authorized (in shares) | 5,000 | 5,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00015 | $ 0.00015 |
Common stock, shares authorized (in shares) | 70,000 | 70,000 |
Common stock, shares issued (in shares) | 49,694 | 48,613 |
Common stock, shares outstanding (in shares) | 38,245 | 37,431 |
Treasury stock, shares (in shares) | 11,449 | 11,182 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Revenues | $ 42,350 | $ 39,860 | $ 124,710 | $ 108,026 |
Costs and Expenses: | ||||
Costs of revenues | 14,282 | 12,545 | 38,555 | 36,116 |
Research and development | 13,113 | 14,303 | 38,428 | 41,766 |
Selling, general and administrative | 15,611 | 12,005 | 46,022 | 32,614 |
Amortization of acquired intangible assets | 328 | 318 | 979 | 946 |
Interest and other expense (income), net | (2,018) | (1,511) | (4,000) | (2,812) |
Income (loss) before income tax expense (benefit) | 1,034 | 2,200 | 4,726 | (604) |
Income tax expense | (6,006) | (815) | (2,508) | (3,308) |
Net income (loss) | (4,972) | 1,385 | 2,218 | (3,912) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, net of tax | (552) | (1,394) | (679) | (2,828) |
Change in unrealized gain (loss) related to available-for-sale debt securities, net of tax | (5) | 17 | 2 | (17) |
Total other comprehensive (loss) | (557) | (1,377) | (677) | (2,845) |
Comprehensive income (loss) | $ (5,529) | $ 8 | $ 1,541 | $ (6,757) |
Net income (loss) per share: | ||||
Basic | $ (0.13) | $ 0.04 | $ 0.06 | $ (0.10) |
Diluted | $ (0.13) | $ 0.04 | $ 0.06 | $ (0.10) |
Weighted average common shares used to calculate net income (loss) per share: | ||||
Basic | 38,187 | 37,226 | 37,930 | 37,285 |
Diluted | 38,187 | 38,054 | 38,977 | 37,285 |
Analytics | ||||
Revenues: | ||||
Revenues | $ 39,497 | $ 32,879 | $ 112,957 | $ 94,422 |
Integrated Yield Ramp | ||||
Revenues: | ||||
Revenues | $ 2,853 | $ 6,981 | $ 11,753 | $ 13,604 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock Outstanding | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balances (in shares) at Dec. 31, 2021 | 37,411 | 10,003 | ||||
Balances at Dec. 31, 2021 | $ 6 | $ 423,069 | $ (104,705) | $ (97,721) | $ (1,064) | $ 219,585 |
Issuance of common stock in connection with employee stock purchase plan (in shares) | 95 | |||||
Issuance of common stock in connection with employee stock purchase plan | 1,502 | 1,502 | ||||
Issuance of common stock in connection with exercise of options (in shares) | 75 | |||||
Issuance of common stock in connection with exercise of options | 675 | 675 | ||||
Vesting of restricted stock units (in shares) | 232 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares) | 113 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ (3,389) | (3,389) | ||||
Repurchase of common stock | $ (5,778) | (5,778) | ||||
Repurchase of common stock (in shares) | (219) | 219 | ||||
Stock-based compensation expense | 5,553 | 5,553 | ||||
Comprehensive income (loss) | (4,150) | (431) | (4,581) | |||
Balances (in shares) at Mar. 31, 2022 | 37,594 | 10,335 | ||||
Balances at Mar. 31, 2022 | $ 6 | 430,799 | $ (113,872) | (101,871) | (1,495) | 213,567 |
Balances (in shares) at Dec. 31, 2021 | 37,411 | 10,003 | ||||
Balances at Dec. 31, 2021 | $ 6 | 423,069 | $ (104,705) | (97,721) | (1,064) | 219,585 |
Comprehensive income (loss) | (6,757) | |||||
Balances (in shares) at Sep. 30, 2022 | 37,295 | 11,153 | ||||
Balances at Sep. 30, 2022 | $ 6 | 441,705 | $ (132,966) | (101,633) | (3,909) | 203,203 |
Balances (in shares) at Mar. 31, 2022 | 37,594 | 10,335 | ||||
Balances at Mar. 31, 2022 | $ 6 | 430,799 | $ (113,872) | (101,871) | (1,495) | 213,567 |
Issuance of common stock in connection with exercise of options (in shares) | 12 | |||||
Issuance of common stock in connection with exercise of options | 113 | 113 | ||||
Vesting of restricted stock units (in shares) | 84 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares) | 33 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ (800) | (800) | ||||
Repurchase of common stock | $ (715) | $ (16,693) | (16,693) | |||
Repurchase of common stock (in shares) | 715 | |||||
Stock-based compensation expense | 3,872 | 3,872 | ||||
Comprehensive income (loss) | (1,147) | (1,037) | (2,184) | |||
Balances (in shares) at Jun. 30, 2022 | 36,975 | 11,083 | ||||
Balances at Jun. 30, 2022 | $ 6 | 434,784 | $ (131,365) | (103,018) | (2,532) | 197,875 |
Issuance of common stock in connection with employee stock purchase plan (in shares) | 92 | |||||
Issuance of common stock in connection with employee stock purchase plan | 1,509 | 1,509 | ||||
Issuance of common stock in connection with exercise of options (in shares) | 22 | |||||
Issuance of common stock in connection with exercise of options | 276 | 276 | ||||
Vesting of restricted stock units (in shares) | 206 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares) | 70 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ (1,601) | (1,601) | ||||
Stock-based compensation expense | 5,136 | 5,136 | ||||
Comprehensive income (loss) | 1,385 | (1,377) | 8 | |||
Balances (in shares) at Sep. 30, 2022 | 37,295 | 11,153 | ||||
Balances at Sep. 30, 2022 | $ 6 | 441,705 | $ (132,966) | (101,633) | (3,909) | 203,203 |
Balances (in shares) at Dec. 31, 2022 | 37,431 | 11,182 | ||||
Balances at Dec. 31, 2022 | $ 6 | 447,415 | $ (133,709) | (101,150) | (2,550) | 210,012 |
Issuance of common stock in connection with employee stock purchase plan (in shares) | 98 | |||||
Issuance of common stock in connection with employee stock purchase plan | 1,663 | 1,663 | ||||
Issuance of common stock in connection with exercise of options (in shares) | 21 | |||||
Issuance of common stock in connection with exercise of options | 345 | 345 | ||||
Vesting of restricted stock units (in shares) | 286 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares) | 133 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ (4,101) | (4,101) | ||||
Stock-based compensation expense | 4,884 | 4,884 | ||||
Comprehensive income (loss) | 355 | 267 | 622 | |||
Balances (in shares) at Mar. 31, 2023 | 37,836 | 11,315 | ||||
Balances at Mar. 31, 2023 | $ 6 | 454,307 | $ (137,810) | (100,795) | (2,283) | 213,425 |
Balances (in shares) at Dec. 31, 2022 | 37,431 | 11,182 | ||||
Balances at Dec. 31, 2022 | $ 6 | 447,415 | $ (133,709) | (101,150) | (2,550) | 210,012 |
Comprehensive income (loss) | 1,541 | |||||
Balances (in shares) at Sep. 30, 2023 | 38,245 | 11,449 | ||||
Balances at Sep. 30, 2023 | $ 6 | 467,304 | $ (143,587) | (98,932) | (3,227) | 221,564 |
Balances (in shares) at Mar. 31, 2023 | 37,836 | 11,315 | ||||
Balances at Mar. 31, 2023 | $ 6 | 454,307 | $ (137,810) | (100,795) | (2,283) | 213,425 |
Issuance of common stock in connection with exercise of options (in shares) | 6 | |||||
Issuance of common stock in connection with exercise of options | 87 | 87 | ||||
Vesting of restricted stock units (in shares) | 37 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares) | 11 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ (468) | (468) | ||||
Stock-based compensation expense | 4,678 | 4,678 | ||||
Comprehensive income (loss) | 6,835 | (387) | 6,448 | |||
Balances (in shares) at Jun. 30, 2023 | 37,879 | 11,326 | ||||
Balances at Jun. 30, 2023 | $ 6 | 459,072 | $ (138,278) | (93,960) | (2,670) | 224,170 |
Issuance of common stock in connection with employee stock purchase plan (in shares) | 125 | |||||
Issuance of common stock in connection with employee stock purchase plan | 2,169 | 2,169 | ||||
Issuance of common stock in connection with exercise of options (in shares) | 2 | |||||
Issuance of common stock in connection with exercise of options | 37 | 37 | ||||
Vesting of restricted stock units (in shares) | 260 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares) | 102 | |||||
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ (4,566) | (4,566) | ||||
Repurchase of common stock | $ (21) | $ (743) | (743) | |||
Repurchase of common stock (in shares) | 21 | |||||
Stock-based compensation expense | 6,026 | 6,026 | ||||
Comprehensive income (loss) | (4,972) | (557) | (5,529) | |||
Balances (in shares) at Sep. 30, 2023 | 38,245 | 11,449 | ||||
Balances at Sep. 30, 2023 | $ 6 | $ 467,304 | $ (143,587) | $ (98,932) | $ (3,227) | $ 221,564 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 2,218 | $ (3,912) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 3,778 | 4,173 |
Stock-based compensation expense | 15,561 | 14,561 |
Amortization of acquired intangible assets | 2,659 | 2,605 |
Amortization of costs capitalized to obtain revenue contracts | 1,494 | 1,127 |
Net (accretion of discounts) and amortization of premiums on short-term investments | (734) | (41) |
Deferred taxes | 43 | 46 |
Other | (106) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,185 | (14,999) |
Prepaid expenses and other current assets | (7,038) | (2,750) |
Operating lease right-of-use assets | 904 | 1,510 |
Other non-current assets | (928) | 1,479 |
Accounts payable | (2,697) | (2,852) |
Accrued compensation and related benefits | (5,342) | 3,624 |
Accrued and other liabilities | 393 | 2,560 |
Deferred revenues | 3,681 | 2,322 |
Billings in excess of recognized revenues | (1,612) | 183 |
Operating lease liabilities | (888) | (1,613) |
Net cash provided by (used in) operating activities | 12,571 | 8,023 |
Cash flows from investing activities: | ||
Proceeds from maturities and sales of short-term investments | 28,800 | 136,000 |
Purchases of property and equipment | (8,574) | (6,651) |
Prepayment for the purchase of property and equipment | (343) | (54) |
Purchase of intangible assets | (150) | (150) |
Payment for business acquisition, net of cash acquired | (1,823) | |
Net cash provided by (used in) investing activities | (14,235) | 83,354 |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 469 | 1,064 |
Proceeds from employee stock purchase plan | 3,832 | 3,011 |
Payments for taxes related to net share settlement of equity awards | (9,135) | (5,790) |
Repurchases of common stock | (743) | (22,471) |
Net cash used in financing activities | (5,577) | (24,186) |
Effect of exchange rate changes on cash and cash equivalents | (763) | (1,147) |
Net change in cash and cash equivalents | (8,004) | 66,044 |
Cash and cash equivalents at beginning of period | 119,624 | 27,684 |
Cash and cash equivalents at end of period | 111,620 | 93,728 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for taxes | 3,568 | 2,001 |
Cash paid for amounts included in the measurement of operating lease liabilities | 1,160 | 1,219 |
Supplemental disclosure of noncash information: | ||
Property and equipment received and accrued in accounts payable and accrued and other liabilities | 697 | 2,200 |
Property and equipment transferred to sales-type lease | 6,002 | |
Advances for purchase of fixed assets transferred from prepaid assets to property and equipment | $ 66 | 336 |
Operating lease liabilities arising from obtaining right-of-use assets | $ 2,268 |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited condensed consolidated financial statements included herein have been prepared by PDF Solutions, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments) to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023. The interim unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The accompanying interim unaudited condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these condensed consolidated financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for credit losses, impairment of goodwill and long-lived assets, valuation for deferred tax assets (“DTAs”), and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies. Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position. Recent Accounting Standards Accounting Standards Adopted In June 2016, the Financial Accounting Standards Board (“FASB’) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU No. 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses. Subsequent to the issuance of ASU No. 2016-13, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instrument, ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326) Targeted Transition Relief, ASU No. 2016-13, ASU No. 2019-10 Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU No. 2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses. The subsequent ASUs do not change the core principle of the guidance in ASU No. 2016-13. Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU No. 2016-13. The Company adopted this standard on January 1, 2023, using a modified retrospective approach, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption with prior periods not restated. The adoption of ASU No. 2016-13 did not have a material impact on the Company’s condensed consolidated financial statements. Accounting Standards Not Yet Adopted Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB, and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements. |
REVENUE FROM CONTRACT WITH CUST
REVENUE FROM CONTRACT WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2023 | |
REVENUE FROM CONTRACT WITH CUSTOMERS | |
REVENUE FROM CONTRACT WITH CUSTOMERS | 2. REVENUE FROM CONTRACTS WITH CUSTOMERS The Company derives revenue from two sources: Analytics revenue and Integrated Yield Ramp revenue. The Company recognizes revenue in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The Company determines revenue recognition through the following five steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectibility of consideration is probable. Contracts with multiple performance obligations The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price (“SSP”). Analytics Revenue Analytics revenue is derived from the following primary offerings: licenses and services for standalone software (which is primarily Exensio ® ® ® ® ® Revenue from standalone software is recognized depending on whether the license is perpetual or time-based. Perpetual (one-time charge) license software is recognized at the time of the inception of the arrangement when control transfers to the customers if the software license is considered as a separate performance obligation from the services offered by the Company. Revenue from post-contract support is recognized over the contract term on a straight-line basis, because the Company is providing (i) support and (ii) unspecified software updates on a when-and-if available basis over the contract term. Revenue from time-based-licensed software is allocated to each performance obligation and is recognized either at a point in time or over time as follows. The license component is recognized at the time when control transfers to customers, with the post-contract support component recognized ratably over the committed term of the contract. For contracts with any combination of licenses, support, and other services, distinct performance obligations are accounted for separately. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Revenue from SaaS arrangements, which allow for the use of a cloud-based software product or service over a contractually determined period of time without the customer having to take possession of software, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers. For contracts with any combination of SaaS and related services, distinct performance obligations are accounted for separately. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Revenue from DFI systems and CV systems (including Characterization services) that do not include performance incentives based on customers’ yield achievement is recognized primarily as services are performed. Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs. For those contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Where there are not discrete performance obligations, historically, revenue is primarily recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract. The estimation of percentage of completion method is complex and subject to many variables that require significant judgment. Please refer to the “Significant Judgments” section of this Note for further discussion. Integrated Yield Ramp Revenue Integrated Yield Ramp revenue is derived from the Company’s fixed-fee engagements that include performance incentives based on customers’ yield achievement (which consists primarily of Gainshare royalties) typically based on customer’s wafer shipments, pertaining to these fixed-price contracts, which royalties are variable. Revenue under these project-based contracts, which are delivered over a specific period of time, typically for a fixed fee component paid on a set schedule, is recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract. Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs and allocates the transaction price of the contract to each performance obligation on a relative basis using SSP. Similar to the services provided in connection with DFI systems and CV systems that are contributing to Analytics revenue, due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex and subject to many variables that require significant judgment. Please refer to the “Significant Judgments” section of this Note for further discussion. The Gainshare contained in Integrated Yield Ramp contracts is a variable fee related to continued usage of the Company’s intellectual property after the fixed-fee service period ends, based on a customer’s yield achievement. Revenue derived from Gainshare is contingent upon the Company’s customers reaching certain defined production yield levels. Gainshare periods are generally subsequent to the delivery of all contractual services and performance obligations. The Company records Gainshare as a usage-based royalty derived from customers’ usage of intellectual property and records it in the same period in which the usage occurs. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into the timing of the transfer of goods and services and the geographical regions. The Company determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company’s performance obligations are satisfied either over time or at a point-in-time. The following table represents a disaggregation of revenue percentage by timing of revenue: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Over time 68 % 68 % 74 % 70 % Point-in-time 32 % 32 % 26 % 30 % Total 100 % 100 % 100 % 100 % International revenues accounted for approximately 42% and 54% of the Company’s total revenues during the three months ended September 30, 2023 and 2022, respectively. International revenues accounted for approximately 44% and 51% of the Company’s total revenues during the nine months ended September 30, 2023 and 2022, respectively. See Note 9, Customer and Geographic Information Significant Judgments Judgments and estimates are required under ASC 606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under ASC 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances. For revenue under project-based contracts for fixed-price implementation services, revenue is recognized as services are performed using a percentage-of-completion method based on costs or labor-hours input method, whichever is the most appropriate measure of the progress towards completion of the contract. Due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex, subject to many variables and requires significant judgment. Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known. The Company’s contracts with customers often include promises to transfer products, software licenses and provide services, including professional services, technical support services, and rights to unspecified updates to a customer. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. The Company rarely licenses software on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where SSP is not directly observable because the Company does not license the software or sell the service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company is required to record Gainshare revenue in the same period in which the usage occurs. Because the Company generally does not receive the acknowledgment reports from its customers during a given quarter within the time frame necessary to adequately review the reports and include the actual amounts in quarterly results for such quarter, the Company accrues the related revenue based on estimates of customers underlying sales achievement. The Company’s estimation process can be based on historical data, trends, seasonality, changes in the contract rate, knowledge of the changes in the industry and changes in the customer’s manufacturing environment learned through discussions with customers and sales personnel. As a result of accruing revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true-up revenue to the actual amounts reported. Contract Balances The Company performs its obligations under a contract with a customer by licensing software or providing services in exchange for consideration from the customer. The timing of the Company’s performance often differs from the timing of the customer’s payment, which results in the recognition of a receivable, a contract asset or a contract liability. The Company classifies the right to consideration in exchange for software or services transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional, as compared to a contract asset, which is a right to consideration that is conditional upon factors other than the passage of time. The majority of the Company’s contract assets represent unbilled amounts related to fixed-price service contracts when the revenue recognized exceeds the amount billed to the customer. The contract assets are generally classified as current and are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level. As of September 30, 2023 and December 31, 2022, the total contract assets included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets were $8.1 million and $3.3 million, respectively. The Company did not record any asset impairment charges related to contract assets for the periods presented. Deferred revenues and billings in excess of recognized revenues consist substantially of amounts invoiced in advance of revenue recognition and are recognized as the revenue recognition criteria are met. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues and the remaining portion is recorded in other non-current liabilities in the accompanying condensed consolidated balance sheets. As of September 30, 2023, and December 31, 2022, the non-current portion of deferred revenues included in non-current liabilities was $2.3 million and $1.9 million, respectively. Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $13.1 million and $10.6 million during the three months ended September 30, 2023 and 2022, respectively, and $23.8 million and $16.3 million during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $218.3 million. Given the applicable contract terms with customers, more than half of this amount is expected to be recognized as revenue over the next two years with the remainder to be recognized thereafter. This amount does not include insignificant contracts to which the customer is not committed, nor significant contracts for which the Company recognizes revenue equal to the amount the Company has the right to invoice for services performed, or future sales-based or usage-based royalty payments in exchange for a license of intellectual property. This amount is subject to change due to future revaluations of variable consideration, terminations, other contract modifications, or currency adjustments. The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications. The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was a decrease of $0.6 million and an increase of $1.9 million during the three months ended September 30, 2023 and 2022, respectively, and an increase of $4.3 million and an increase of $0.4 million during the nine months ended September 30, 2023 and 2022, respectively. These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare. Costs to obtain or fulfill a contract The Company capitalizes the incremental costs to obtain or fulfill a contract with a customer, including direct sales commissions and related fees, when it expects to recover those costs. Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred. Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $2.0 million and $1.7 million, respectively. Total capitalized direct sales commission costs included in other non-current assets in the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $2.5 million and $2.1 million, respectively. Amortization of these assets was $0.5 million and $0.4 million during the three months ended September 30, 2023 and 2022, respectively, and $1.5 million and $1.1 million during the nine months ended September 30, 2023 and 2022. There was no impairment loss in relation to the costs capitalized for the periods presented. Practical expedient The Company does not adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less. The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component during the three and nine months ended September 30, 2023 and 2022. |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 9 Months Ended |
Sep. 30, 2023 | |
BALANCE SHEET COMPONENTS | |
BALANCE SHEET COMPONENTS | 3. BALANCE SHEET COMPONENTS Accounts receivable Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12-month period. Unbilled accounts receivable, included in accounts receivable, totaled $14.3 million and $13.5 million as of September 30, 2023, and December 31, 2022, respectively. Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period are recorded in other non-current assets and totaled $0.8 million and $0.8 million as of September 30, 2023, and December 31, 2022, respectively. The Company performs ongoing credit evaluations of its customers’ financial condition. An allowance for credit losses is maintained for probable credit losses based upon the Company’s assessment of the expected collectability of the accounts receivable. The allowance for credit losses is reviewed on a quarterly basis to assess the adequacy of the allowance. Property and equipment Property and equipment, net consist of the following (in thousands): September 30, December 31, 2023 2022 Computer equipment $ 12,076 $ 11,853 Software 5,575 5,395 Furniture, fixtures, and equipment 2,491 2,484 Leasehold improvements 6,456 6,467 Laboratory and other equipment 4,770 4,431 Test equipment 27,866 28,403 Property and equipment in progress: DFI™ system assets 21,123 22,231 CV® system and other assets 6,963 5,105 87,320 86,369 Less: Accumulated depreciation and amortization (49,487) (46,195) Total $ 37,833 $ 40,174 Test equipment mainly includes DFI™ system and CV ® Depreciation and amortization expense was $1.2 million and $1.4 million during the three months ended September 30, 2023 and 2022, respectively, and $3.8 million and $4.2 million during the nine months ended September 30, 2023 and 2022, respectively. Goodwill and Intangible Assets, Net As of September 30, 2023, and December 31, 2022, the carrying amount of goodwill was $15.0 million and $14.1 million, respectively. Refer to Note 13, Business Combination Intangible assets, net, consisted of the following (in thousands): September 30, 2023 December 31, 2022 Amortization Gross Net Gross Net Period Carrying Accumulated Carrying Carrying Accumulated Carrying (Years) Amount Amortization Amount Amount Amortization Amount Acquired identifiable intangibles: Customer relationships 1 - 10 $ 9,505 $ (7,170) $ 2,335 $ 9,407 $ (6,684) $ 2,723 Developed technology 4 - 9 34,627 (21,463) 13,164 33,635 (19,647) 13,988 Tradename and trademarks 2 - 10 1,598 (999) 599 1,598 (918) 680 Patent 6 - 10 2,100 (1,760) 340 2,100 (1,696) 404 Noncompetition agreements 3 848 (800) 48 848 (588) 260 Total $ 48,678 $ (32,192) $ 16,486 $ 47,588 $ (29,533) $ 18,055 The weighted average amortization period for acquired identifiable intangible assets was 5.5 years as of September 30, 2023. The following table summarizes intangible assets amortization expense in the accompanying condensed consolidated statements of comprehensive income (loss) (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization of acquired technology included under costs of revenues $ 574 $ 553 $ 1,680 $ 1,659 Amortization of acquired intangible assets presented separately under costs and expenses 328 318 979 946 Total amortization of acquired intangible assets $ 902 $ 871 $ 2,659 $ 2,605 The Company expects annual amortization of acquired identifiable intangible assets to be as follows (in thousands): Year Ending December 31, Amount 2023 (remaining three months) $ 890 2024 3,233 2025 3,069 2026 2,899 2027 2,747 2028 and thereafter 3,648 Total future amortization expense $ 16,486 There were no impairment charges for goodwill and intangible assets during the three and nine months ended September 30, 2023 and 2022. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
LEASES | |
LEASES | 4. LEASES The Company leases administrative and sales offices and certain equipment under non-cancellable operating leases, which contain various renewal options and, in some cases, require payment of common area costs, taxes and utilities. These operating leases expire at various dates through 2028. The Company had no leases that were classified as a financing lease as of September 30, 2023, and December 31, 2022. In the first quarter of 2022, the Company early terminated an office lease contract. The termination of this lease reduced the Company’s operating lease right-of-use assets and lease liabilities by approximately $0.5 million and $0.6 million, respectively. The gain from the lease termination of approximately $0.1 million was recorded under selling, general, and administrative expense in the accompanying condensed consolidated statement of comprehensive income (loss) for the nine months ended September 30, 2022. Lease expense was comprised of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating lease expense (1) $ 382 $ 375 $ 1,153 $ 1,073 Short-term lease and variable lease expense (2) 239 244 673 801 Total lease expense $ 621 $ 619 $ 1,826 $ 1,874 (1) Net of gain recognized upon lease termination of $0.1 million in the nine months ended September 30, 2022. (2) Leases with an initial term of 12 months or less are not recorded on the accompanying condensed consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease expense for the periods presented primarily included common area maintenance charges. Supplemental condensed consolidated balance sheets information related to operating leases was as follows: September 30, December 31, 2023 2022 Weighted average remaining lease term under operating leases (in years) 4.7 5.3 Weighted average discount rate for operating lease liabilities 4.89 % 4.87 % Maturities of operating lease liabilities as of September 30, 2023, were as follows (in thousands): Year Ending December 31, Amount (1) 2023 (remaining three months) $ 422 2024 1,619 2025 1,539 2026 1,354 2027 1,294 2028 and thereafter 992 Total future minimum lease payments 7,220 Less: Interest (2) (794) Present value of future minimum lease payments under operating lease liabilities (3) $ 6,426 (1) As of September 30, 2023, the total operating lease liability includes approximately $0.9 million related to an option to extend a lease term that is reasonably certain to be exercised. (2) Calculated using incremental borrowing interest rate for each lease. (3) Includes the current portion of operating lease liabilities of $1.5 million as of September 30, 2023. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
STOCKHOLDERS EQUITY | |
STOCKHOLDERS' EQUITY | 5. Stock Repurchase Program On June 4, 2020, the Company’s Board of Directors adopted a stock repurchase program (the “2020 Program”) to repurchase up to $25.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, over the next two years. During the nine months ended September 30, 2022, 218,858 shares were repurchased by the Company under the 2020 Program at an average price of $26.40 per share for an aggregate total price of $5.8 million. In total, 470,070 shares were repurchased under the 2020 Program at an average price of $21.91 per share, for an aggregate total price of $10.3 million. On April 11, 2022, the Board of Directors terminated the 2020 Program, and adopted a new program (the “2022 Program”) to repurchase up to $35.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, from time to time, over the next two years. During the nine months ended September 30, 2022, 714,600 shares were repurchased by the Company under the 2022 Program at an average price of $23.36 per share for an aggregate total price of $16.7 million. During the nine months ended September 30, 2023, 21,340 shares were repurchased by the Company under the 2022 Program at an average price of $34.81 per share for an aggregate total price of $0.7 million. In total, the Company has repurchased 735,940 shares under the 2022 Program at an average price of $23.69 per share for an aggregate total price of $17.4 million. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2023 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 6. EMPLOYEE BENEFIT PLANS On September 30, 2023, the Company had the following stock-based compensation plans: Employee Stock Purchase Plan In July 2001, the Company’s stockholders initially approved the 2001 Employee Stock Purchase Plan, which was subsequently amended and restated in 2010 (as amended, the “2010 Purchase Plan”) to extend the term of the plan through May 17, 2020. Under the 2010 Purchase Plan, eligible employees could contribute up to 10% of their compensation, as defined in the 2010 Purchase Plan, towards the purchase of shares of PDF common stock at a price of 85% of the lower of the fair market value at the beginning of the offering period or the end of the purchase period. The 2010 Purchase Plan provided for twenty-four-month offering periods with four six similar those the The Company estimated the fair value of purchase rights granted under the 2021 Purchase Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values: Nine Months Ended September 30, 2023 2022 Expected life (in years) 1.25 1.25 Volatility 43.66 % 48.73 % Risk-free interest rate 5.15 % 2.75 % Expected dividend — — Weighted average fair value of purchase rights granted during the period $ 15.71 $ 10.00 During the three months ended September 30, 2023, a total of 125,392 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $17.30 per share. During the three months ended September 30, 2022, a total of 92,043 shares were issued under the 2021 Purchase Plan, at a weighted-average purchase price of $16.40 per share. During the nine months ended September 30, 2023, a total of 223,608 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $17.14 per share. During the nine months ended September 30, 2022, a total of 182,083 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $16.15 per share. During the nine months ended September 30, 2022, a total of 5,203 shares were issued under the 2010 Purchase Plan, at a weighted average purchase price of $13.40 per share. As of September 30, 2023, unrecognized compensation cost related to the 2021 Purchase Plan was $3.9 million. This estimated unrecognized cost is expected to be recognized over a weighted average period of 1.7 years. As of September 30, 2023, 594,309 shares were available for future issuance under the 2021 Purchase Plan. Stock Incentive Plans On November 16, 2011, the Company’s stockholders initially approved the 2011 Stock Incentive Plan, which has been amended and restated and approved by the Company’s stockholders a number of times since then (as approved by the stockholders through the date of this report, the “2011 Plan”) and currently expires in 2033. Under the 2011 Plan, the Company may award stock options, stock appreciation rights (“SARs”), stock grants or stock units covering shares of the Company’s common stock to employees, directors, non-employee directors and contractors. The aggregate number of shares reserved for awards under the 2011 Plan is 13.8 million shares, plus up to 3.5 million shares previously issued under the 2001 Stock Plan adopted by the Company in 2001, which expired in 2011 (the “2001 Plan”) that are either (i) forfeited or (ii) repurchased by the Company or are shares subject to awards previously issued under the 2001 Plan that expire or that terminate without having been exercised or settled in full on or after November 16, 2011. In case of awards other than options or SARs, the aggregate number of shares reserved under the 2011 Plan will be decreased at a rate of 1.33 shares issued pursuant to such awards. The exercise price for stock options must generally be at prices no less than the fair market value at the date of grant. Stock options generally expire ten years from the date of grant and become vested and exercisable over a four-year period. As of September 30, 2023, 14.3 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.7 million shares were available for future grant. The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired or repurchased by the Company after the adoption of the 2011 Plan through September 30, 2023. As of September 30, 2023, there were no outstanding awards that had been granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”). The Company estimated the fair value of share-based awards granted under the 2011 Stock Plan during the period using the Black-Scholes-Merton option-pricing model. There were no stock options granted during the three and nine months ended September 30, 2023 and 2022. Stock-Based Compensation Stock-based compensation is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generally four years . Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Costs of revenues $ 1,120 $ 854 $ 3,022 $ 2,237 Research and development 2,196 2,180 5,609 7,158 Selling, general, and administrative 2,683 2,102 6,930 5,166 Stock-based compensation expense $ 5,999 $ 5,136 $ 15,561 $ 14,561 Stock-based compensation capitalized in the capitalized software development costs included in property and equipment, net, was immaterial for the three and nine months ended September 30, 2023. Additional information with respect to options under the Stock Plans during the nine months ended September 30, 2023, is as follows: Outstanding Options Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value (in thousands) per Share (Years) (in thousands) Outstanding, December 31, 2022 68 $ 16.11 Granted — — Exercised (29) 16.39 Canceled — — Expired — — Outstanding, September 30, 2023 39 $ 15.91 4.40 $ 654 Vested and expected to vest, September 30, 2023 39 $ 15.91 4.40 $ 653 Exercisable, September 30, 2023 36 $ 15.80 4.21 $ 604 The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $32.40 per share as of September 30, 2023. The total intrinsic value of options exercised was $0.6 million during the nine months ended September 30, 2023. Total remaining unrecognized compensation cost related to unvested stock options as of September 30, 2023, which is expected to be fully recognized in 2023, and total fair value of shares vested during the nine months ended September 30, 2023, were immaterial. Nonvested restricted stock unit activity during the nine months ended September 30, 2023, was as follows: Weighted Average Grant Shares Date Fair Value (in thousands) Per Share Nonvested, December 31, 2022 2,124 $ 21.29 Granted 753 $ 43.92 Vested (829) $ 20.46 Forfeited (18) $ 25.87 Nonvested, September 30, 2023 2,030 $ 29.98 As of September 30, 2023, there was $48.6 million of total unrecognized compensation cost related to restricted stock units. That cost is expected to be recognized over a weighted average period of 2.7 years. Restricted stock units do not have rights to dividends prior to vesting. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 7. INCOME TAXES Income tax expense decreased by $0.8 million for the nine months ended September 30, 2023, to a $2.5 million income tax expense as compared to a $3.3 million income tax expense for the nine months ended September 30, 2022. The Company’s effective tax rate was 53.1% and (547.7%) for the nine months ended September 30, 2023 and 2022, respectively. The Company’s effective tax rate increased in the nine months ended September 30, 2023, as compared to the same period in 2022, primarily due to changes in the foreign and state taxes and year-to-date recognition of worldwide pre-tax income (loss) in relation to their forecasted amounts for full years. Our provision for income taxes for the nine months ended September 30, 2023, was primarily attributable to foreign and state taxes. The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of September 30, 2023, was $15.9 million, of which $2.0 million, if recognized, would affect the Company’s effective tax rate. The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of December 31, 2022, was $15.1 million, of which $2.0 million, if recognized, would affect the Company’s effective tax rate. As of September 30, 2023, the Company has recorded unrecognized tax benefits of $2.5 million, including interest and penalties of $0.6 million, as long-term taxes payable in the accompanying condensed consolidated balance sheet. The remaining $14.0 million has been recorded within the Company’s DTAs, which is subject to a full valuation allowance. The valuation allowance was approximately $59.2 million as of September 30, 2023, and December 31, 2022, which was related to U.S. net federal and state DTAs. The worldwide net DTAs balance as of September 30, 2023, and December 31, 2022, were not significant. The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S. federal and various state and foreign jurisdictions. For U.S. federal and California income tax purposes, the statute of limitations currently remains open for the tax years ended 2019 to present and 2018 to present, respectively. In addition, due to net operating loss carryback claims, the tax years 2013 through 2015 may be subject to federal examination and all of the net operating loss and research and development credit carryforwards that may be utilized in future years may be subject to federal and state examination. The Company is not subject to income tax examinations in any other of its major foreign subsidiaries’ jurisdictions. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
NET INCOME (LOSS) PER SHARE | |
NET INCOME (LOSS) PER SHARE | 8. NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) by weighted average number of common shares outstanding for the period (excluding outstanding stock options and shares subject to repurchase). Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive. The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share (in thousands except per share amount): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ (4,972) $ 1,385 $ 2,218 $ (3,912) Denominator: Basic weighted average shares outstanding 38,187 37,226 37,930 37,285 Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan(s) — 828 1,047 — Diluted weighted average shares outstanding 38,187 38,054 38,977 37,285 Net income (loss) per share: Basic $ (0.13) $ 0.04 $ 0.06 $ (0.10) Diluted $ (0.13) $ 0.04 $ 0.06 $ (0.10) For the three months ended September 30, 2023 and for the nine months ended September 30, 2022, because the Company was in a loss position, diluted net loss per share is the same as basic net loss per share as the inclusion of the potential common shares would have been anti-dilutive. The following table sets forth the weighted average potential shares of common stock that were not included in the diluted net income (loss) per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Outstanding options 23 — — 63 Non-vested restricted stock units 1,391 62 223 784 Employee Stock Purchase Plan 38 — — 75 Total 1,452 62 223 922 |
CUSTOMER AND GEOGRAPHIC INFORMA
CUSTOMER AND GEOGRAPHIC INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
CUSTOMER AND GEOGRAPHIC INFORMATION | |
CUSTOMER AND GEOGRAPHIC INFORMATION | 9. CUSTOMER AND GEOGRAPHIC INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions, allocation of resources, and assessing financial performance. Accordingly, the Company considers itself to be in one operating and reporting Revenues from an individual customer that are approximately 10% or more of the Company’s consolidated total revenues are as follows: Three Months Ended September 30, Nine Months Ended September 30, Customer 2023 2022 2023 2022 A 38 % 28 % 36 % 30 % B * % 16 % 10 % 11 % Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance are as follows: September 30, December 31, Customer 2023 2022 A 44 % 29 % B * % 12 % C * % 12 % * represents less than 10% Revenues from customers by geographic area based on the location of the customers’ work sites are as follows (amounts in thousands): Three Months Ended September 30, 2023 2022 Percentage Percentage Revenues of Revenues Revenues of Revenues United States $ 24,477 58 % $ 18,292 46 % China 7,549 18 9,555 24 Rest of the world 10,324 24 12,013 30 Total revenue $ 42,350 100 % $ 39,860 100 % Nine Months Ended September 30, 2023 2022 Percentage Percentage Revenues of Revenues Revenues of Revenues United States $ 70,090 56 % $ 52,869 49 % China 21,927 18 18,214 17 Rest of the world 32,693 26 36,943 34 Total revenue $ 124,710 100 % $ 108,026 100 % Long-lived assets, net by geographic area are as follows (in thousands): September 30, December 31, 2023 2022 United States (1) $ 45,419 $ 44,730 Rest of the world 1,207 1,446 Total long-lived assets, net $ 46,626 $ 46,176 (1) Includes assets deployed at customer sites which could be outside the U.S. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 10. FAIR VALUE MEASUREMENTS Fair value is the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The multiple assumptions used to value financial instruments are referred to as inputs, and a hierarchy for inputs used in measuring fair value is established, that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. These inputs are ranked according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 - Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The following table represents the Company’s assets measured at fair value on a recurring basis as of September 30, 2023, and December 31, 2022, and the basis for those measurements (in thousands): Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Significant September 30, Assets Inputs Unobservable Assets 2023 (Level 1) (Level 2) Inputs (Level 3) Cash equivalents Money market mutual funds $ 92,113 $ 92,113 $ — $ — Short-term investments (available-for-sale debt securities) U.S. Government securities (1) 23,744 23,744 — — Total $ 115,857 $ 115,857 $ — $ — Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable December 31, Assets Inputs Inputs Assets 2022 (Level 1) (Level 2) (Level 3) Cash equivalents Money market mutual funds $ 75,738 $ 75,738 $ — $ — U.S. Government securities (1) 1,990 1,990 — — Short-term investments (available-for-sale debt securities) U.S. Government securities (1) 19,557 19,557 — — Total $ 97,285 $ 97,285 $ — $ — (1) As of September 30, 2023, and December 31, 2022, the amortized cost of the Company’s investments in U.S Government securities approximated their fair value due to their short-term maturities, and there have been no events or changes in circumstances that would have had a significant effect on the fair value of these securities in the periods presented. For the three and nine months ended September 30, 2023, there were no material realized or unrealized gains or losses, either individually or in the aggregate. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Strategic Partnership with Advantest Strategic Partnership Agreement with Advantest and Related Party Transactions Operating Leases Leases Indemnifications Purchase Obligations Indemnification of Officers and Directors In addition, the Bylaws of the Company provide that the Company is required to indemnify its officers and directors even when indemnification would otherwise be discretionary, and the Company is required to advance expenses to its officers and directors as incurred in connection with proceedings against them for which they may be indemnified. The Company has entered into indemnification agreements with its officers and directors containing provisions that are in some respects broader than the specific indemnification provisions contained in the Delaware general corporation law. The indemnification agreements require the Company to indemnify its officers and directors against liabilities that may arise by reason of their status or service as officers and directors other than for liabilities arising from willful misconduct of a culpable nature, to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors’ and officers’ insurance if available on reasonable terms. The Company has obtained directors’ and officers’ liability insurance in amounts comparable to other companies of the Company’s size and in the Company’s industry. Since a maximum obligation of the Company is not explicitly stated in the Company’s Bylaws or in its indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated. Legal Proceedings On May 6, 2020, the Company initiated an arbitration proceeding with the Hong Kong International Arbitration Center against SMIC New Technology Research & Development (Shanghai) Corporation (“SMIC”) due to SMIC’s failure to pay fees due to the Company under a series of contracts. The Company seeks to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future (or a lump sum payment to end the contract), and costs associated with bringing the arbitration proceeding. SMIC denies liability and an arbitration hearing was held in February 2023. Final written submissions were submitted by the parties at the end of August. A decision is expected potentially within this calendar year. |
STRATEGIC PARTNERSHIP AGREEMENT
STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS | |
STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS | 12. STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS In July 2020, the Company entered into a long-term strategic partnership with Advantest Corporation through its wholly-owned subsidiary, Advantest America, Inc. (collectively referred to herein as “Advantest”). Analytics revenue recognized from Advantest was $2.6 million and $2.8 million during the three months ended September 30, 2023 and 2022, respectively, and $6.2 million and $8.1 million during the nine months ended September 30, 2023 and 2022, respectively. Accounts receivable from Advantest was not material as of September 30, 2023 and amounted to $0.3 million as of December 31, 2022. Deferred revenue amounted to $12.1 million and $7.1 million as of September 30, 2023, and December 31, 2022, respectively. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 9 Months Ended |
Sep. 30, 2023 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | 13. BUSINESS COMBINATION On July 5, 2023 (the “Acquisition Date”), the Company, through its wholly-owned subsidiary in Canada, PDF Solutions Canada, Ltd., acquired 100% of the equity interest in Lantern Machinery Analytics, Inc. headquartered in Canada, a privately-held provider of automated image analysis and feature extraction artificial intelligence/machine learning software for critical inspection and metrology steps at battery cell development and manufacturing processes for the electric vehicle industry. This software will enhance the Company’s Exensio analytics platform and product offerings to new and existing battery manufacturer customers. The total cash consideration for this acquisition was $1.8 million, net of cash acquired, for all of the outstanding equity of Lantern Machinery Analytics, Inc. The Company accounted for this acquisition as a business combination in accordance with FASB ASC Topic 805, Business Combinations The allocation of the purchase price for this acquisition, as of the date of the acquisition, is as follows (in thousands, except amortization period): Amortization Amount Period (Years) Allocation of Purchase Price: Assets Fair value of tangible assets (including cash of $265) $ 450 Fair value of intangible assets: Developed technology 1,010 8 Customer relationships 100 6 Goodwill 895 N/A Total assets acquired $ 2,455 Liabilities Deferred tax liabilities $ 294 Accounts payable and accrued expenses 73 Total liabilities assumed 367 Total purchase price allocation $ 2,088 Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company’s financial results. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation, Policy | Basis of Presentation The interim unaudited condensed consolidated financial statements included herein have been prepared by PDF Solutions, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments) to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023. The interim unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The accompanying interim unaudited condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. |
Use of Estimates, Policy | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these condensed consolidated financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for credit losses, impairment of goodwill and long-lived assets, valuation for deferred tax assets (“DTAs”), and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies. Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position. |
Revenue from Contracts with Customers, Policy | The Company derives revenue from two sources: Analytics revenue and Integrated Yield Ramp revenue. The Company recognizes revenue in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers The Company determines revenue recognition through the following five steps: ● Identification of the contract, or contracts, with a customer ● Identification of the performance obligations in the contract ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectibility of consideration is probable. Contracts with multiple performance obligations The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price (“SSP”). Analytics Revenue Analytics revenue is derived from the following primary offerings: licenses and services for standalone software (which is primarily Exensio ® ® ® ® ® Revenue from standalone software is recognized depending on whether the license is perpetual or time-based. Perpetual (one-time charge) license software is recognized at the time of the inception of the arrangement when control transfers to the customers if the software license is considered as a separate performance obligation from the services offered by the Company. Revenue from post-contract support is recognized over the contract term on a straight-line basis, because the Company is providing (i) support and (ii) unspecified software updates on a when-and-if available basis over the contract term. Revenue from time-based-licensed software is allocated to each performance obligation and is recognized either at a point in time or over time as follows. The license component is recognized at the time when control transfers to customers, with the post-contract support component recognized ratably over the committed term of the contract. For contracts with any combination of licenses, support, and other services, distinct performance obligations are accounted for separately. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Revenue from SaaS arrangements, which allow for the use of a cloud-based software product or service over a contractually determined period of time without the customer having to take possession of software, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers. For contracts with any combination of SaaS and related services, distinct performance obligations are accounted for separately. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Revenue from DFI systems and CV systems (including Characterization services) that do not include performance incentives based on customers’ yield achievement is recognized primarily as services are performed. Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs. For those contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Where there are not discrete performance obligations, historically, revenue is primarily recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract. The estimation of percentage of completion method is complex and subject to many variables that require significant judgment. Please refer to the “Significant Judgments” section of this Note for further discussion. Integrated Yield Ramp Revenue Integrated Yield Ramp revenue is derived from the Company’s fixed-fee engagements that include performance incentives based on customers’ yield achievement (which consists primarily of Gainshare royalties) typically based on customer’s wafer shipments, pertaining to these fixed-price contracts, which royalties are variable. Revenue under these project-based contracts, which are delivered over a specific period of time, typically for a fixed fee component paid on a set schedule, is recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract. Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs and allocates the transaction price of the contract to each performance obligation on a relative basis using SSP. Similar to the services provided in connection with DFI systems and CV systems that are contributing to Analytics revenue, due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex and subject to many variables that require significant judgment. Please refer to the “Significant Judgments” section of this Note for further discussion. The Gainshare contained in Integrated Yield Ramp contracts is a variable fee related to continued usage of the Company’s intellectual property after the fixed-fee service period ends, based on a customer’s yield achievement. Revenue derived from Gainshare is contingent upon the Company’s customers reaching certain defined production yield levels. Gainshare periods are generally subsequent to the delivery of all contractual services and performance obligations. The Company records Gainshare as a usage-based royalty derived from customers’ usage of intellectual property and records it in the same period in which the usage occurs. |
Contract Balances | Contract Balances The Company performs its obligations under a contract with a customer by licensing software or providing services in exchange for consideration from the customer. The timing of the Company’s performance often differs from the timing of the customer’s payment, which results in the recognition of a receivable, a contract asset or a contract liability. The Company classifies the right to consideration in exchange for software or services transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional, as compared to a contract asset, which is a right to consideration that is conditional upon factors other than the passage of time. The majority of the Company’s contract assets represent unbilled amounts related to fixed-price service contracts when the revenue recognized exceeds the amount billed to the customer. The contract assets are generally classified as current and are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level. As of September 30, 2023 and December 31, 2022, the total contract assets included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets were $8.1 million and $3.3 million, respectively. The Company did not record any asset impairment charges related to contract assets for the periods presented. Deferred revenues and billings in excess of recognized revenues consist substantially of amounts invoiced in advance of revenue recognition and are recognized as the revenue recognition criteria are met. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues and the remaining portion is recorded in other non-current liabilities in the accompanying condensed consolidated balance sheets. As of September 30, 2023, and December 31, 2022, the non-current portion of deferred revenues included in non-current liabilities was $2.3 million and $1.9 million, respectively. Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $13.1 million and $10.6 million during the three months ended September 30, 2023 and 2022, respectively, and $23.8 million and $16.3 million during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $218.3 million. Given the applicable contract terms with customers, more than half of this amount is expected to be recognized as revenue over the next two years with the remainder to be recognized thereafter. This amount does not include insignificant contracts to which the customer is not committed, nor significant contracts for which the Company recognizes revenue equal to the amount the Company has the right to invoice for services performed, or future sales-based or usage-based royalty payments in exchange for a license of intellectual property. This amount is subject to change due to future revaluations of variable consideration, terminations, other contract modifications, or currency adjustments. The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications. The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was a decrease of $0.6 million and an increase of $1.9 million during the three months ended September 30, 2023 and 2022, respectively, and an increase of $4.3 million and an increase of $0.4 million during the nine months ended September 30, 2023 and 2022, respectively. These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare. |
Significant Judgements, Policy | Significant Judgments Judgments and estimates are required under ASC 606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under ASC 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances. For revenue under project-based contracts for fixed-price implementation services, revenue is recognized as services are performed using a percentage-of-completion method based on costs or labor-hours input method, whichever is the most appropriate measure of the progress towards completion of the contract. Due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex, subject to many variables and requires significant judgment. Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known. The Company’s contracts with customers often include promises to transfer products, software licenses and provide services, including professional services, technical support services, and rights to unspecified updates to a customer. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. The Company rarely licenses software on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where SSP is not directly observable because the Company does not license the software or sell the service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company is required to record Gainshare revenue in the same period in which the usage occurs. Because the Company generally does not receive the acknowledgment reports from its customers during a given quarter within the time frame necessary to adequately review the reports and include the actual amounts in quarterly results for such quarter, the Company accrues the related revenue based on estimates of customers underlying sales achievement. The Company’s estimation process can be based on historical data, trends, seasonality, changes in the contract rate, knowledge of the changes in the industry and changes in the customer’s manufacturing environment learned through discussions with customers and sales personnel. As a result of accruing revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true-up revenue to the actual amounts reported. |
Practical Expedient, Policy | Practical expedient The Company does not adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less. The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component during the three and nine months ended September 30, 2023 and 2022. |
Accounts Receivable, Policy | Accounts receivable Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12-month period. Unbilled accounts receivable, included in accounts receivable, totaled $14.3 million and $13.5 million as of September 30, 2023, and December 31, 2022, respectively. Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period are recorded in other non-current assets and totaled $0.8 million and $0.8 million as of September 30, 2023, and December 31, 2022, respectively. |
Costs to obtain or fulfill a contract | Costs to obtain or fulfill a contract The Company capitalizes the incremental costs to obtain or fulfill a contract with a customer, including direct sales commissions and related fees, when it expects to recover those costs. Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred. Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $2.0 million and $1.7 million, respectively. Total capitalized direct sales commission costs included in other non-current assets in the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $2.5 million and $2.1 million, respectively. Amortization of these assets was $0.5 million and $0.4 million during the three months ended September 30, 2023 and 2022, respectively, and $1.5 million and $1.1 million during the nine months ended September 30, 2023 and 2022. There was no impairment loss in relation to the costs capitalized for the periods presented. |
Stock-Based Compensation, Policy | Stock-based compensation is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generally four years . Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Costs of revenues $ 1,120 $ 854 $ 3,022 $ 2,237 Research and development 2,196 2,180 5,609 7,158 Selling, general, and administrative 2,683 2,102 6,930 5,166 Stock-based compensation expense $ 5,999 $ 5,136 $ 15,561 $ 14,561 |
Stock Incentive Plan, Policy | The Company estimated the fair value of share-based awards granted under the 2011 Stock Plan during the period using the Black-Scholes-Merton option-pricing model. There were no stock options granted during the three and nine months ended September 30, 2023 and 2022. |
Employee Stock Purchase Plan, Policy | The Company estimated the fair value of purchase rights granted under the 2021 Purchase Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values: Nine Months Ended September 30, 2023 2022 Expected life (in years) 1.25 1.25 Volatility 43.66 % 48.73 % Risk-free interest rate 5.15 % 2.75 % Expected dividend — — Weighted average fair value of purchase rights granted during the period $ 15.71 $ 10.00 |
Net Income (Loss) Per Share, Policy | Basic net income (loss) per share is computed by dividing net income (loss) by weighted average number of common shares outstanding for the period (excluding outstanding stock options and shares subject to repurchase). Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive. |
Fair Value Measurement, Policy | Fair value is the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The multiple assumptions used to value financial instruments are referred to as inputs, and a hierarchy for inputs used in measuring fair value is established, that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. These inputs are ranked according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 - Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 - Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. |
Business Combinations, Policy | The Company accounted for this acquisition as a business combination in accordance with FASB ASC Topic 805, Business Combinations |
Accounting Standards, Policy | Recent Accounting Standards Accounting Standards Adopted In June 2016, the Financial Accounting Standards Board (“FASB’) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU No. 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses. Subsequent to the issuance of ASU No. 2016-13, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instrument, ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326) Targeted Transition Relief, ASU No. 2016-13, ASU No. 2019-10 Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU No. 2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses. The subsequent ASUs do not change the core principle of the guidance in ASU No. 2016-13. Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU No. 2016-13. The Company adopted this standard on January 1, 2023, using a modified retrospective approach, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption with prior periods not restated. The adoption of ASU No. 2016-13 did not have a material impact on the Company’s condensed consolidated financial statements. Accounting Standards Not Yet Adopted Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB, and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements. |
REVENUE FROM CONTRACT WITH CU_2
REVENUE FROM CONTRACT WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
REVENUE FROM CONTRACT WITH CUSTOMERS | |
Schedule of Disaggregation of Revenue | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Over time 68 % 68 % 74 % 70 % Point-in-time 32 % 32 % 26 % 30 % Total 100 % 100 % 100 % 100 % |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
BALANCE SHEET COMPONENTS | |
Schedule of Property, Plant and Equipment | September 30, December 31, 2023 2022 Computer equipment $ 12,076 $ 11,853 Software 5,575 5,395 Furniture, fixtures, and equipment 2,491 2,484 Leasehold improvements 6,456 6,467 Laboratory and other equipment 4,770 4,431 Test equipment 27,866 28,403 Property and equipment in progress: DFI™ system assets 21,123 22,231 CV® system and other assets 6,963 5,105 87,320 86,369 Less: Accumulated depreciation and amortization (49,487) (46,195) Total $ 37,833 $ 40,174 |
Schedule of Finite-Lived Intangible Assets, Net | September 30, 2023 December 31, 2022 Amortization Gross Net Gross Net Period Carrying Accumulated Carrying Carrying Accumulated Carrying (Years) Amount Amortization Amount Amount Amortization Amount Acquired identifiable intangibles: Customer relationships 1 - 10 $ 9,505 $ (7,170) $ 2,335 $ 9,407 $ (6,684) $ 2,723 Developed technology 4 - 9 34,627 (21,463) 13,164 33,635 (19,647) 13,988 Tradename and trademarks 2 - 10 1,598 (999) 599 1,598 (918) 680 Patent 6 - 10 2,100 (1,760) 340 2,100 (1,696) 404 Noncompetition agreements 3 848 (800) 48 848 (588) 260 Total $ 48,678 $ (32,192) $ 16,486 $ 47,588 $ (29,533) $ 18,055 |
Schedule of Finite-lived Intangible Assets Amortization Expense | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amortization of acquired technology included under costs of revenues $ 574 $ 553 $ 1,680 $ 1,659 Amortization of acquired intangible assets presented separately under costs and expenses 328 318 979 946 Total amortization of acquired intangible assets $ 902 $ 871 $ 2,659 $ 2,605 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Year Ending December 31, Amount 2023 (remaining three months) $ 890 2024 3,233 2025 3,069 2026 2,899 2027 2,747 2028 and thereafter 3,648 Total future amortization expense $ 16,486 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
LEASES | |
Schedule of Lease Expenses | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating lease expense (1) $ 382 $ 375 $ 1,153 $ 1,073 Short-term lease and variable lease expense (2) 239 244 673 801 Total lease expense $ 621 $ 619 $ 1,826 $ 1,874 (1) Net of gain recognized upon lease termination of $0.1 million in the nine months ended September 30, 2022. (2) Leases with an initial term of 12 months or less are not recorded on the accompanying condensed consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease expense for the periods presented primarily included common area maintenance charges. |
Schedule of Supplemental Operating Lease Information | September 30, December 31, 2023 2022 Weighted average remaining lease term under operating leases (in years) 4.7 5.3 Weighted average discount rate for operating lease liabilities 4.89 % 4.87 % |
Schedule of Operating Lease Liabilities and Maturities | Year Ending December 31, Amount (1) 2023 (remaining three months) $ 422 2024 1,619 2025 1,539 2026 1,354 2027 1,294 2028 and thereafter 992 Total future minimum lease payments 7,220 Less: Interest (2) (794) Present value of future minimum lease payments under operating lease liabilities (3) $ 6,426 (1) As of September 30, 2023, the total operating lease liability includes approximately $0.9 million related to an option to extend a lease term that is reasonably certain to be exercised. (2) Calculated using incremental borrowing interest rate for each lease. (3) Includes the current portion of operating lease liabilities of $1.5 million as of September 30, 2023. |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
EMPLOYEE BENEFIT PLANS | |
Schedule of Share-based Payment Awards, Stock Options, Valuation Assumptions | Nine Months Ended September 30, 2023 2022 Expected life (in years) 1.25 1.25 Volatility 43.66 % 48.73 % Risk-free interest rate 5.15 % 2.75 % Expected dividend — — Weighted average fair value of purchase rights granted during the period $ 15.71 $ 10.00 |
Schedule of Share-based Payment Arrangement, Expensed and Capitalized Amounts | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Costs of revenues $ 1,120 $ 854 $ 3,022 $ 2,237 Research and development 2,196 2,180 5,609 7,158 Selling, general, and administrative 2,683 2,102 6,930 5,166 Stock-based compensation expense $ 5,999 $ 5,136 $ 15,561 $ 14,561 |
Schedule of Share-based Payment Arrangement, Options Activity - Additional Information | Outstanding Options Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value (in thousands) per Share (Years) (in thousands) Outstanding, December 31, 2022 68 $ 16.11 Granted — — Exercised (29) 16.39 Canceled — — Expired — — Outstanding, September 30, 2023 39 $ 15.91 4.40 $ 654 Vested and expected to vest, September 30, 2023 39 $ 15.91 4.40 $ 653 Exercisable, September 30, 2023 36 $ 15.80 4.21 $ 604 The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $32.40 per share as of September 30, 2023. The total intrinsic value of options exercised was $0.6 million during the nine months ended September 30, 2023. |
Schedule of Share-based Payment Arrangement, Restricted Stock Unit Activity | Weighted Average Grant Shares Date Fair Value (in thousands) Per Share Nonvested, December 31, 2022 2,124 $ 21.29 Granted 753 $ 43.92 Vested (829) $ 20.46 Forfeited (18) $ 25.87 Nonvested, September 30, 2023 2,030 $ 29.98 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
NET INCOME (LOSS) PER SHARE | |
Schedule of Earnings Per Share, Basic and Diluted | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (loss) $ (4,972) $ 1,385 $ 2,218 $ (3,912) Denominator: Basic weighted average shares outstanding 38,187 37,226 37,930 37,285 Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan(s) — 828 1,047 — Diluted weighted average shares outstanding 38,187 38,054 38,977 37,285 Net income (loss) per share: Basic $ (0.13) $ 0.04 $ 0.06 $ (0.10) Diluted $ (0.13) $ 0.04 $ 0.06 $ (0.10) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Outstanding options 23 — — 63 Non-vested restricted stock units 1,391 62 223 784 Employee Stock Purchase Plan 38 — — 75 Total 1,452 62 223 922 |
CUSTOMER AND GEOGRAPHIC INFOR_2
CUSTOMER AND GEOGRAPHIC INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
CUSTOMER AND GEOGRAPHIC INFORMATION | |
Schedule of Revenue by Major Customers by Reporting Segments | Three Months Ended September 30, Nine Months Ended September 30, Customer 2023 2022 2023 2022 A 38 % 28 % 36 % 30 % B * % 16 % 10 % 11 % Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance are as follows: September 30, December 31, Customer 2023 2022 A 44 % 29 % B * % 12 % C * % 12 % * represents less than 10% |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | Three Months Ended September 30, 2023 2022 Percentage Percentage Revenues of Revenues Revenues of Revenues United States $ 24,477 58 % $ 18,292 46 % China 7,549 18 9,555 24 Rest of the world 10,324 24 12,013 30 Total revenue $ 42,350 100 % $ 39,860 100 % Nine Months Ended September 30, 2023 2022 Percentage Percentage Revenues of Revenues Revenues of Revenues United States $ 70,090 56 % $ 52,869 49 % China 21,927 18 18,214 17 Rest of the world 32,693 26 36,943 34 Total revenue $ 124,710 100 % $ 108,026 100 % |
Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | September 30, December 31, 2023 2022 United States (1) $ 45,419 $ 44,730 Rest of the world 1,207 1,446 Total long-lived assets, net $ 46,626 $ 46,176 (1) Includes assets deployed at customer sites which could be outside the U.S. |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Schedule of allocated purchase price for business acquisition | Amortization Amount Period (Years) Allocation of Purchase Price: Assets Fair value of tangible assets (including cash of $265) $ 450 Fair value of intangible assets: Developed technology 1,010 8 Customer relationships 100 6 Goodwill 895 N/A Total assets acquired $ 2,455 Liabilities Deferred tax liabilities $ 294 Accounts payable and accrued expenses 73 Total liabilities assumed 367 Total purchase price allocation $ 2,088 |
REVENUE FROM CONTRACT WITH CU_3
REVENUE FROM CONTRACT WITH CUSTOMERS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) item | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Number of revenue sources | item | 2 | ||||
Contract with Customer, Asset, after Allowance for Credit Loss, Current, Total | $ 8,100 | $ 8,100 | $ 3,300 | ||
Capitalized Contract Cost, Impairment Loss | $ 0 | $ 0 | |||
Short-term deferred revenue | 12 months | ||||
Revenue, Remaining Performance Obligation, Amount | 218,300 | $ 218,300 | |||
Contract with Customer, Performance Obligation Satisfied in Previous Period | 600 | $ 1,900 | 4,300 | 400 | |
Amortization of Capitalized Contract Costs | 500 | 400 | 1,500 | 1,100 | |
Prepaid Expenses and Other Current Assets | |||||
Capitalized Contract Cost, Net, Total | 2,000 | 2,000 | 1,700 | ||
Other Non-current Assets | |||||
Capitalized Contract Cost, Net, Total | 2,500 | 2,500 | 2,100 | ||
Non-current Liabilities | |||||
Contract with Customer, Liability, Noncurrent Revenue Deferred | 2,300 | 2,300 | $ 1,900 | ||
Deferred Revenue and Billings in Excess of Recognized Revenue | |||||
Contract with Customer, Liability, Revenue Recognized | $ 13,100 | $ 10,600 | $ 23,800 | $ 16,300 | |
Geographic Concentration Risk | Revenue Benchmark | |||||
Percentage of Revenues | 100% | 100% | 100% | 100% | |
Geographic Concentration Risk | Revenue Benchmark | Non-US [Member] | |||||
Percentage of Revenues | 42% | 54% | 44% | 51% |
REVENUE FROM CONTRACT WITH CU_4
REVENUE FROM CONTRACT WITH CUSTOMERS - Disaggregation of Revenue (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Percent of revenues | 100% | 100% | 100% | 100% |
Transferred over Time [Member] | ||||
Percent of revenues | 68% | 68% | 74% | 70% |
Transferred at Point in Time [Member] | ||||
Percent of revenues | 32% | 32% | 26% | 30% |
REVENUE FROM CONTRACT WITH CU_5
REVENUE FROM CONTRACT WITH CUSTOMERS - Additional information (Details) | Sep. 30, 2023 |
Software License and Related Services Agreement [Member] | Advantest America, Inc. [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue recognition, expected period to recognize more than half of remaining performance obligations | 2 years |
BALANCE SHEET COMPONENTS (Detai
BALANCE SHEET COMPONENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Period over which current unbilled receivables are billed and collected | 12 months | ||||
Depreciation, Depletion and Amortization, Nonproduction, Total | $ 1,200,000 | $ 1,400,000 | $ 3,800,000 | $ 4,200,000 | |
Impairment of Intangible Assets, Finite-lived | 0 | 0 | |||
Goodwill | 15,008,000 | 15,008,000 | $ 14,123,000 | ||
Impairment of goodwill | 0 | 0 | |||
Amortization of acquired intangible assets presented separately under Costs and Expenses | 328,000 | 318,000 | 979,000 | 946,000 | |
Total amortization of acquired intangible assets | 902,000 | 871,000 | $ 2,659,000 | 2,605,000 | |
Weighted-average amortization period intangible assets | 5 years 6 months | ||||
Accounts Receivable | |||||
Unbilled Receivables, Current | 14,300,000 | $ 14,300,000 | 13,500,000 | ||
Other Non-current Assets | |||||
Unbilled Receivables, Not Expected to be Billed and Collected in Next Twelve Months | 800,000 | 800,000 | $ 800,000 | ||
Costs of Revenues | |||||
Amortization of acquired technology included under Costs of revenues | 574,000 | 553,000 | 1,680,000 | 1,659,000 | |
Costs and Expenses | |||||
Amortization of acquired intangible assets presented separately under Costs and Expenses | $ 328,000 | $ 318,000 | $ 979,000 | $ 946,000 |
BALANCE SHEET COMPONENTS - Prop
BALANCE SHEET COMPONENTS - Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property and equipment, gross | $ 87,320 | $ 86,369 |
Less: accumulated depreciation and amortization | (49,487) | (46,195) |
Total | 37,833 | 40,174 |
Computer Equipment | ||
Property and equipment, gross | 12,076 | 11,853 |
Software | ||
Property and equipment, gross | 5,575 | 5,395 |
Furniture, Fixtures and Equipment | ||
Property and equipment, gross | 2,491 | 2,484 |
Leasehold Improvements | ||
Property and equipment, gross | 6,456 | 6,467 |
Laboratory and Other Equipment | ||
Property and equipment, gross | 4,770 | 4,431 |
Test Equipment | ||
Property and equipment, gross | 27,866 | 28,403 |
In-Progress DFI System Assets | ||
Property and equipment, gross | 21,123 | 22,231 |
In-Progress CV System and Other Assets | ||
Property and equipment, gross | $ 6,963 | $ 5,105 |
BALANCE SHEET COMPONENTS - Inta
BALANCE SHEET COMPONENTS - Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Weighted-average amortization period intangible assets | 5 years 6 months | |
Gross Carrying Amount | $ 48,678 | $ 47,588 |
Accumulated Amortization | (32,192) | (29,533) |
Total future amortization expense | 16,486 | |
Net Carrying Amount, Total | 16,486 | 18,055 |
Customer Relationships | ||
Gross Carrying Amount | 9,505 | 9,407 |
Accumulated Amortization | (7,170) | (6,684) |
Total future amortization expense | $ 2,335 | 2,723 |
Customer Relationships | Minimum | ||
Amortization Period (Year) | 1 year | |
Customer Relationships | Maximum | ||
Amortization Period (Year) | 10 years | |
Developed Technology Rights | ||
Gross Carrying Amount | $ 34,627 | 33,635 |
Accumulated Amortization | (21,463) | (19,647) |
Total future amortization expense | $ 13,164 | 13,988 |
Developed Technology Rights | Minimum | ||
Amortization Period (Year) | 4 years | |
Developed Technology Rights | Maximum | ||
Amortization Period (Year) | 9 years | |
Tradename and Trademarks | ||
Gross Carrying Amount | $ 1,598 | 1,598 |
Accumulated Amortization | (999) | (918) |
Total future amortization expense | $ 599 | 680 |
Tradename and Trademarks | Minimum | ||
Amortization Period (Year) | 2 years | |
Tradename and Trademarks | Maximum | ||
Amortization Period (Year) | 10 years | |
Patents | ||
Gross Carrying Amount | $ 2,100 | 2,100 |
Accumulated Amortization | (1,760) | (1,696) |
Total future amortization expense | $ 340 | 404 |
Patents | Minimum | ||
Amortization Period (Year) | 6 years | |
Patents | Maximum | ||
Amortization Period (Year) | 10 years | |
Noncompete Agreements | ||
Amortization Period (Year) | 3 years | |
Gross Carrying Amount | $ 848 | 848 |
Accumulated Amortization | (800) | (588) |
Total future amortization expense | $ 48 | $ 260 |
BALANCE SHEET COMPONENTS - Annu
BALANCE SHEET COMPONENTS - Annual Amortization of Identifiable Intangible Assets (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
BALANCE SHEET COMPONENTS | |
2023 (remaining six months) | $ 890 |
2024 | 3,233 |
2025 | 3,069 |
2026 | 2,899 |
2027 | 2,747 |
2028 and thereafter | 3,648 |
Total future amortization expense | $ 16,486 |
LEASES - Other (Details)
LEASES - Other (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) lease | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) lease | |
Number of finance leases | lease | 0 | 0 | ||
Operating Lease, Liability, Amount Related to Extension of Lease Term | $ 900 | |||
Operating Lease, Liability, Current | 1,504 | $ 1,412 | ||
Operating lease right of use assets decrease from early lease termination | $ 500 | |||
Operating lease liability decrease from early lease termination | $ 600 | |||
Selling, General, and Administrative | ||||
Lease termination gain | $ 100 | $ 100 |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
LEASES | |||||
Operating lease expense | $ 382 | $ 375 | $ 1,153 | $ 1,073 | |
Short-term lease and variable lease expense | 239 | 244 | 673 | 801 | |
Total lease expense | $ 621 | $ 619 | $ 1,826 | 1,874 | |
Weighted average remaining lease term under operating ROU leases (in years) (Year) | 4 years 8 months 12 days | 4 years 8 months 12 days | 5 years 3 months 18 days | ||
Weighted average discount rate for operating lease liabilities | 4.89% | 4.89% | 4.87% | ||
Operating lease ROU assets obtained (in thousands) | $ 2,268 |
LEASES - Maturity of Operating
LEASES - Maturity of Operating Lease Liabilities (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
LEASES | |
2023 (remaining six months) | $ 422 |
2024 | 1,619 |
2025 | 1,539 |
2026 | 1,354 |
2027 | 1,294 |
2028 and thereafter | 992 |
Total future minimum lease payments | 7,220 |
Less: Interest (2) | (794) |
Present value of future minimum lease payments under operating lease liabilities (3) | $ 6,426 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 18 Months Ended | 40 Months Ended | ||||||||
Apr. 11, 2022 | Jun. 04, 2020 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2023 | |
Purchases of treasury stock in connection with tax withholdings on restricted stock grants | $ 4,566 | $ 468 | $ 4,101 | $ 1,601 | $ 800 | $ 3,389 | ||||||
2020 Stock Repurchase Program | ||||||||||||
Stock Repurchase Program, Authorized Amount | $ 25,000 | |||||||||||
Stock Repurchase Program, Period in Force (Year) | 2 years | |||||||||||
Common stock repurchased | 218,858 | 470,070 | ||||||||||
Repurchase of common stock, weighted-average price per share | $ 26.40 | $ 21.91 | ||||||||||
Repurchases of common stock, cost | $ 5,800 | $ 10,300 | ||||||||||
2022 Stock Repurchase Program | ||||||||||||
Stock Repurchase Program, Authorized Amount | $ 35,000 | |||||||||||
Stock Repurchase Program, Period in Force (Year) | 2 years | |||||||||||
Common stock repurchased | 21,340 | 714,600 | 735,940 | |||||||||
Repurchase of common stock, weighted-average price per share | $ 34.81 | $ 23.36 | $ 23.69 | |||||||||
Repurchases of common stock, cost | $ 700 | $ 16,700 | $ 17,400 |
EMPLOYEE BENEFIT PLANS - Other
EMPLOYEE BENEFIT PLANS - Other (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 140 Months Ended | 227 Months Ended | ||||||
Aug. 01, 2021 | Jun. 15, 2021 | Nov. 16, 2011 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | May 17, 2020 | Dec. 31, 2022 | |
Stock Option Vesting Period | 4 years | |||||||||
Common Stock, Closing Share Price | $ 32.40 | $ 32.40 | ||||||||
Options Exercised in Period, Intrinsic Value | $ 0.6 | |||||||||
Restricted Stock Units (RSUs) | ||||||||||
Unrecognized Compensation | $ 48.6 | $ 48.6 | ||||||||
Unrecognized Compensation Recognition Period | 2 years 8 months 12 days | |||||||||
Employee Stock Plans | ||||||||||
Stock Incentive Plans, Stock Option Awards Outstanding | 39,000 | 39,000 | 68,000 | |||||||
Shares Previously Issued Under the 2001 Stock Plan | ||||||||||
Stock Incentive Plans, Cumulative Share Forfeitures, Expirations and Repurchases | 500,000 | |||||||||
Shares Previously Issued Under the 2001 Stock Plan | Maximum | ||||||||||
Stock Incentive Plans, Common Shares Reserved for Future Issuance | 3,500,000 | |||||||||
Shares Outside of the 2001, 2011 or IDS Plans | ||||||||||
Stock Incentive Plans, Stock Option Awards Outstanding | 0 | 0 | ||||||||
2010 Stock Purchase Plan | ||||||||||
ESPP, Employee Contribution Rate (Percentage of Compensation) | 10% | |||||||||
ESPP, Share Purchase Price (Percentage of Fair Market Value) | 85% | |||||||||
ESPP, Share Offering Period Duration | 24 months | |||||||||
ESPP, Share Purchase Periods Within Each Offering Period | 4 | |||||||||
ESPP, Share Purchase Period Duration | 6 months | |||||||||
ESPP, Shares Issued During Period | 5,203 | |||||||||
ESPP, Weighted Average Purchase Price | $ 13.40 | |||||||||
2011 Stock Incentive Plan | ||||||||||
Stock Incentive Plans, Common Shares Reserved for Future Issuance | 13,800,000 | 14,300,000 | 14,300,000 | |||||||
Stock Incentive Plans, Shares Available for Future Grant | 3,700,000 | 3,700,000 | ||||||||
Stock Incentive Plans, Stock Options and Awards Granted | 0 | 0 | ||||||||
2011 Stock Incentive Plan | Stock Options | ||||||||||
Stock Incentive Plans, Decrease in Share Reservation Rate | 1.33 | |||||||||
Stock Option Expiration Period | 10 years | |||||||||
Stock Option Vesting Period | 4 years | |||||||||
2021 Stock Purchase Plan | ||||||||||
ESPP, Employee Contribution Rate (Percentage of Compensation) | 10% | |||||||||
ESPP, Share Purchase Price (Percentage of Fair Market Value) | 85% | |||||||||
ESPP, Share Offering Period Duration | 24 months | |||||||||
ESPP, Share Purchase Periods Within Each Offering Period | 4 | |||||||||
ESPP, Share Purchase Period Duration | 6 months | |||||||||
ESPP, Purchase Plan Term | 10 years | |||||||||
ESPP, Shares Issued During Period | 125,392 | 92,043 | 223,608 | 182,083 | ||||||
ESPP, Weighted Average Purchase Price | $ 17.30 | $ 16.40 | $ 17.14 | $ 16.15 | ||||||
ESPP, Common Shares Reserved for Future Issuance | 594,309 | 594,309 | ||||||||
Unrecognized Compensation | $ 3.9 | $ 3.9 | ||||||||
Unrecognized Compensation Recognition Period | 1 year 8 months 12 days |
EMPLOYEE BENEFIT PLANS - Valuat
EMPLOYEE BENEFIT PLANS - Valuation Assumptions for ESPP (Details) - 2021 Stock Purchase Plan - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Expected life (in years) | 1 year 3 months | 1 year 3 months |
Volatility | 43.66% | 48.73% |
Risk-free interest rate | 5.15% | 2.75% |
Expected dividend | 0% | |
Weighted average fair value of purchase rights granted during the period | $ 15.71 | $ 10 |
EMPLOYEE BENEFIT PLANS - Alloca
EMPLOYEE BENEFIT PLANS - Allocation of Recognized Period Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-based compensation expenses | $ 5,999 | $ 5,136 | $ 15,561 | $ 14,561 |
Costs of Revenues | ||||
Stock-based compensation expenses | 1,120 | 854 | 3,022 | 2,237 |
Research and Development | ||||
Stock-based compensation expenses | 2,196 | 2,180 | 5,609 | 7,158 |
Selling, General, and Administrative | ||||
Stock-based compensation expenses | $ 2,683 | $ 2,102 | $ 6,930 | $ 5,166 |
EMPLOYEE BENEFIT PLANS - Stock
EMPLOYEE BENEFIT PLANS - Stock Options Activity (Details) - Employee Stock Plans - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2023 | |
Options Outstanding, Beginning Balance | 68 |
Options Exercised | (29) |
Options Expired | (1) |
Options Outstanding, Ending Balance | 39 |
Options Vested and Expected to Vest | 39 |
Options Exercisable | 36 |
Options Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 16.11 |
Options Exercised, Weighted Average Exercise Price | 16.39 |
Options Outstanding, Weighted Average Exercise Price, Ending Balance | 15.91 |
Options Vested and Expected to Vest, Weighted Average Exercise Price | 15.91 |
Options Exercisable, Weighted Average Exercise Price | $ 15.80 |
Options Outstanding, Weighted Average Remaining Contractual Term | 4 years 4 months 24 days |
Options Vested and Expected to Vest, Weighted Average Remaining Contractual Term | 4 years 4 months 24 days |
Options Exercisable, Weighted Average Remaining Contractual Term | 4 years 2 months 15 days |
Options Outstanding, Aggregate Intrinsic Value | $ 654 |
Options Vested and Expected to Vest, Aggregate Intrinsic Value | 653 |
Options Exercisable, Aggregate Intrinsic Value | $ 604 |
EMPLOYEE BENEFIT PLANS - Nonves
EMPLOYEE BENEFIT PLANS - Nonvested Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Non-vested RSUs, Opening Balance | shares | 2,124 |
RSUs Granted | shares | 753 |
RSUs Vested | shares | (829) |
RSUs Forfeited | shares | (18) |
Non-vested RSUs, Ending Balance | shares | 2,030 |
Non-vested RSUs, Weighted Average Grant Date Fair Value | $ / shares | $ 21.29 |
RSUs Granted, Weighted Average Grant Date Fair Value | $ / shares | 43.92 |
RSUs Vested, Weighted Average Grant Date Fair Value | $ / shares | 20.46 |
RSUs Forfeited, Weighted Average Grant Date Fair Value | $ / shares | 25.87 |
Non-vested RSUs, Weighted Average Grant Date Fair Value | $ / shares | $ 29.98 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
INCOME TAXES | |||||
Increase (Decrease) in Income Taxes | $ (800) | ||||
Income Tax Expense (Benefit), Total | $ 6,006 | $ 815 | $ 2,508 | $ 3,308 | |
Effective Income Tax Rate Reconciliation, Percent, Total | 53.10% | (547.70%) | |||
Unrecognized Tax Benefits, Ending Balance | 15,900 | $ 15,900 | $ 15,100 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 2,000 | 2,000 | 2,000 | ||
Unrecognized tax benefits including income tax penalties and interest accrued in long term liabilities | 2,500 | 2,500 | |||
Unrecognized tax benefits related to income tax penalties and interest accrued in long-term liabilities | 600 | 600 | |||
Unrecognized Tax Benefits In Deferred Tax Assets | 14,000 | 14,000 | |||
Deferred Tax Assets, Valuation Allowance, Total | $ 59,200 | $ 59,200 | $ 59,200 |
NET INCOME (LOSS) PER SHARE - C
NET INCOME (LOSS) PER SHARE - Calculation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
NET INCOME (LOSS) PER SHARE | ||||
Net loss | $ (4,972) | $ 1,385 | $ 2,218 | $ (3,912) |
Basic weighted-average shares outstanding (in shares) | 38,187 | 37,226 | 37,930 | 37,285 |
Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under Employee Purchase Plan | 828 | 1,047 | ||
Diluted weighted-average shares outstanding (in shares) | 38,187 | 38,054 | 38,977 | 37,285 |
Basic (in dollars per share) | $ (0.13) | $ 0.04 | $ 0.06 | $ (0.10) |
Diluted (in dollars per share) | $ (0.13) | $ 0.04 | $ 0.06 | $ (0.10) |
NET INCOME (LOSS) PER SHARE - A
NET INCOME (LOSS) PER SHARE - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Anti-dilutive securities (in shares) | 1,452 | 62 | 223 | 922 |
Stock Options | ||||
Anti-dilutive securities (in shares) | 23 | 63 | ||
Restricted Stock Units (RSUs) | ||||
Anti-dilutive securities (in shares) | 1,391 | 62 | 223 | 784 |
Employee Stock Purchase Plans | ||||
Anti-dilutive securities (in shares) | 38 | 75 |
CUSTOMER AND GEOGRAPHIC INFOR_3
CUSTOMER AND GEOGRAPHIC INFORMATION - Other (Details) | 9 Months Ended |
Sep. 30, 2023 | |
CUSTOMER AND GEOGRAPHIC INFORMATION | |
Number of Operating Segments | 1 |
Number of Reportable Segments | 1 |
CUSTOMER AND GEOGRAPHIC INFOR_4
CUSTOMER AND GEOGRAPHIC INFORMATION - Revenue Percentage by Major Customers (Details) - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | 12 Months Ended | 21 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Sep. 30, 2023 | |
Revenue Benchmark | Benchmark Percentage of Gross Revenues and Receivables | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 10% | |||||
Revenue Benchmark | Customer A | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 38% | 28% | 36% | 30% | ||
Revenue Benchmark | Customer B | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 16% | 10% | 11% | |||
Accounts Receivable | Benchmark Percentage of Gross Revenues and Receivables | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 10% | |||||
Accounts Receivable | Customer A | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 44% | 29% | ||||
Accounts Receivable | Customer B | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 12% | |||||
Accounts Receivable | Customer C | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk | 12% |
CUSTOMER AND GEOGRAPHIC INFOR_5
CUSTOMER AND GEOGRAPHIC INFORMATION - Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 42,350 | $ 39,860 | $ 124,710 | $ 108,026 |
Geographic Concentration Risk | Revenue Benchmark | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 42,350 | $ 39,860 | $ 124,710 | $ 108,026 |
Percentage of Revenues | 100% | 100% | 100% | 100% |
Geographic Concentration Risk | Revenue Benchmark | UNITED STATES | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 24,477 | $ 18,292 | $ 70,090 | $ 52,869 |
Percentage of Revenues | 58% | 46% | 56% | 49% |
Geographic Concentration Risk | Revenue Benchmark | CHINA | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 7,549 | $ 9,555 | $ 21,927 | $ 18,214 |
Percentage of Revenues | 18% | 24% | 18% | 17% |
Geographic Concentration Risk | Revenue Benchmark | Rest of the World | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenues | $ 10,324 | $ 12,013 | $ 32,693 | $ 36,943 |
Percentage of Revenues | 24% | 30% | 26% | 34% |
CUSTOMER AND GEOGRAPHIC INFOR_6
CUSTOMER AND GEOGRAPHIC INFORMATION - Long-lived Assets by Geographic Area (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets, net | $ 46,626 | $ 46,176 |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets, net | 45,419 | 44,730 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets, net | $ 1,207 | $ 1,446 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value, Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Total | $ 115,857 | $ 97,285 |
Quoted Prices in Active Markets for Identical Assets (level 1) | ||
Total | 115,857 | 97,285 |
Money Market Mutual Funds | ||
Cash equivalents | 92,113 | 75,738 |
Money Market Mutual Funds | Quoted Prices in Active Markets for Identical Assets (level 1) | ||
Cash equivalents | 92,113 | 75,738 |
US Government Securities | ||
Cash equivalents | 1,990 | |
Short-term investments (available-for-sale debt securities) | 23,744 | 19,557 |
US Government Securities | Quoted Prices in Active Markets for Identical Assets (level 1) | ||
Cash equivalents | 1,990 | |
Short-term investments (available-for-sale debt securities) | $ 23,744 | $ 19,557 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Future Lease payments | $ 7,220 |
Indemnifications | |
Term of Product Warranty | 90 days |
Purchase Obligations | |
Purchase Obligation, Total | $ 24,600 |
Period over which the majority of purchase obligations become due | 15 months |
STRATEGIC PARTNERSHIP AGREEME_2
STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS (Details) - Commercial Agreement With Advantest - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related party receivables | $ 0.3 | ||||
Analytics | |||||
Advantest analytics revenue | $ 2.6 | $ 2.8 | $ 6.2 | $ 8.1 | |
Deferred revenue | $ 12.1 | $ 12.1 | $ 7.1 |
BUSINESS COMBINATION - Other (D
BUSINESS COMBINATION - Other (Details) - Lantern Machinery Analytics, Inc. $ in Millions | Jul. 05, 2023 USD ($) |
Business Acquisition [Line Items] | |
Equity interest acquired in business combination | 100% |
Consideration to acquire business, net of cash acquired | $ 1.8 |
BUSINESS COMBINATION - Fair Val
BUSINESS COMBINATION - Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jul. 05, 2023 | Dec. 31, 2022 |
Assets | |||
Goodwill | $ 15,008 | $ 14,123 | |
Lantern Machinery Analytics, Inc. | |||
Assets | |||
Cash assumed | $ 265 | ||
Fair value of tangible assets (including cash of $265) | 450 | ||
Goodwill | 895 | ||
Total assets acquired | 2,455 | ||
Liabilities | |||
Deferred tax liabilities | 294 | ||
Accounts payable and accrued expenses | 73 | ||
Total liabilities assumed | 367 | ||
Total purchase price allocation | 2,088 | ||
Lantern Machinery Analytics, Inc. | Developed Technology Rights | |||
Assets | |||
Fair value of intangible assets | $ 1,010 | ||
Intangible asset amortization period | 8 years | ||
Lantern Machinery Analytics, Inc. | Customer Relationships | |||
Assets | |||
Fair value of intangible assets | $ 100 | ||
Intangible asset amortization period | 6 years |