Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 03, 2024 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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, $0.00015 par value | |
Trading Symbol | PDFS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 38,403,665 | |
Entity Central Index Key | 0001120914 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 85,256 | $ 98,978 |
Short-term investments | 37,628 | 36,544 |
Accounts receivable, net of allowance for credit losses of $890 as of March 31, 2024 and December 31, 2023 | 47,267 | 44,904 |
Prepaid expenses and other current assets | 17,165 | 17,422 |
Total current assets | 187,316 | 197,848 |
Property and equipment, net | 36,088 | 37,338 |
Operating lease right-of-use assets, net | 4,742 | 4,926 |
Goodwill | 15,003 | 15,029 |
Intangible assets, net | 14,747 | 15,620 |
Deferred tax assets, net | 145 | 157 |
Other non-current assets | 28,782 | 19,218 |
Total assets | 286,823 | 290,136 |
Current liabilities: | ||
Accounts payable | 5,729 | 2,561 |
Accrued compensation and related benefits | 9,491 | 14,800 |
Accrued and other current liabilities | 4,963 | 4,633 |
Operating lease liabilities - current portion | 1,625 | 1,529 |
Deferred revenues - current portion | 27,643 | 25,750 |
Billings in excess of recognized revenues | 2,345 | 1,570 |
Total current liabilities | 51,796 | 50,843 |
Long-term income taxes payable | 2,980 | 2,972 |
Non-current portion of operating lease liabilities | 4,363 | 4,657 |
Other non-current liabilities | 2,271 | 2,718 |
Total liabilities | 61,410 | 61,190 |
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 50,173 and 49,749, respectively; shares outstanding 38,393 and 38,289, respectively | 6 | 6 |
Additional paid-in-capital | 481,390 | 473,295 |
Treasury stock at cost, 11,780 and 11,460 shares, respectively | (154,616) | (143,923) |
Accumulated deficit | (98,438) | (98,045) |
Accumulated other comprehensive loss | (2,929) | (2,387) |
Total stockholders' equity | 225,413 | 228,946 |
Total liabilities and stockholders' equity | $ 286,823 | $ 290,136 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for credit losses | $ 890 | $ 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) | 50,173 | 49,749 |
Common stock, shares outstanding (in shares) | 38,393 | 38,289 |
Treasury stock, shares (in shares) | 11,780 | 11,460 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues: | ||
Total revenues | $ 41,310 | $ 40,759 |
Costs and Expenses: | ||
Costs of revenues | 13,529 | 11,904 |
Research and development | 12,984 | 13,051 |
Selling, general, and administrative | 16,498 | 15,645 |
Amortization of acquired intangible assets | 259 | 325 |
Interest and other expense (income), net | (1,692) | (911) |
Income (loss) before income tax expense | (268) | 745 |
Income tax expense | (125) | (390) |
Net income (loss) | (393) | 355 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments, net of tax | (522) | 260 |
Change in unrealized gain (loss) related to available-for-sale debt securities, net of tax | (20) | 7 |
Total other comprehensive income (loss) | (542) | 267 |
Comprehensive income (loss) | $ (935) | $ 622 |
Net income (loss) per share: | ||
Basic | $ (0.01) | $ 0.01 |
Diluted | $ (0.01) | $ 0.01 |
Weighted average common shares used to calculate net income (loss) per share: | ||
Basic | 38,500 | 37,737 |
Diluted | 38,500 | 38,859 |
Analytics | ||
Revenues: | ||
Total revenues | $ 38,463 | $ 36,326 |
Integrated Yield Ramp | ||
Revenues: | ||
Total revenues | $ 2,847 | $ 4,433 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning Balances at Dec. 31, 2022 | $ 6 | $ 447,415 | $ (133,709) | $ (101,150) | $ (2,550) | $ 210,012 |
Beginning Balances (shares) at Dec. 31, 2022 | 37,431 | 11,182 | ||||
Issuance of common stock in connection with employee stock purchase plan | 1,663 | 1,663 | ||||
Issuance of common stock in connection with employee stock purchase plan (shares) | 98 | |||||
Issuance of common stock in connection with exercise of options | 345 | 345 | ||||
Issuance of common stock in connection with exercise of options (shares) | 21 | |||||
Vesting of restricted stock units (shares) | 286 | |||||
Purchases of treasury stock in connection with tax withholdings on vesting of restricted stock | $ (4,101) | (4,101) | ||||
Purchases of treasury stock in connection with tax withholdings on vesting of restricted stock (shares) | 133 | |||||
Stock-based compensation expense | 4,884 | 4,884 | ||||
Comprehensive income (loss) | 355 | 267 | 622 | |||
Ending Balances at Mar. 31, 2023 | $ 6 | 454,307 | $ (137,810) | (100,795) | (2,283) | 213,425 |
Ending Balances (shares) at Mar. 31, 2023 | 37,836 | 11,315 | ||||
Beginning Balances at Dec. 31, 2023 | $ 6 | 473,295 | $ (143,923) | (98,045) | (2,387) | 228,946 |
Beginning Balances (shares) at Dec. 31, 2023 | 38,289 | 11,460 | ||||
Repurchase of common stock | $ (6,899) | (6,899) | ||||
Repurchase of common stock (shares) | (202) | 202 | ||||
Issuance of common stock in connection with employee stock purchase plan | 1,916 | 1,916 | ||||
Issuance of common stock in connection with employee stock purchase plan (shares) | 74 | |||||
Issuance of common stock in connection with exercise of options | 25 | 25 | ||||
Issuance of common stock in connection with exercise of options (shares) | 1 | |||||
Vesting of restricted stock units (shares) | 231 | |||||
Purchases of treasury stock in connection with tax withholdings on vesting of restricted stock | $ (3,794) | (3,794) | ||||
Purchases of treasury stock in connection with tax withholdings on vesting of restricted stock (shares) | 118 | |||||
Stock-based compensation expense | 6,154 | 6,154 | ||||
Comprehensive income (loss) | (393) | (542) | (935) | |||
Ending Balances at Mar. 31, 2024 | $ 6 | $ 481,390 | $ (154,616) | $ (98,438) | $ (2,929) | $ 225,413 |
Ending Balances (shares) at Mar. 31, 2024 | 38,393 | 11,780 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (393) | $ 355 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,064 | 1,304 |
Stock-based compensation expense | 6,110 | 4,884 |
Amortization of acquired intangible assets | 843 | 878 |
Amortization of costs capitalized to obtain revenue contracts | 634 | 456 |
Net accretion of discounts on short-term investments | (485) | (231) |
Deferred taxes | 9 | (23) |
Other | (74) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,389) | (4,872) |
Prepaid expenses and other current assets | (408) | (973) |
Operating lease right-of-use assets | 306 | 302 |
Other non-current assets | (5,864) | (476) |
Accounts payable | 1,801 | 1,261 |
Accrued compensation and related benefits | (5,214) | (3,132) |
Accrued and other liabilities | 213 | 260 |
Deferred revenues | 1,529 | 723 |
Billings in excess of recognized revenues | 775 | (1,510) |
Operating lease liabilities | (319) | (188) |
Net cash used in operating activities | (1,862) | (982) |
Cash flows from investing activities: | ||
Proceeds from maturities and sales of short-term investments | 19,000 | 7,000 |
Purchases of short-term investments | (19,619) | (6,351) |
Purchases of property and equipment | (2,023) | (2,902) |
Net cash used in investing activities | (2,642) | (2,253) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 25 | 345 |
Proceeds from employee stock purchase plan | 1,916 | 1,663 |
Payments for taxes related to net share settlement of equity awards | (3,794) | (4,101) |
Repurchases of common stock | (6,899) | |
Net cash used in financing activities | (8,752) | (2,093) |
Effect of exchange rate changes on cash and cash equivalents | (466) | 86 |
Net change in cash and cash equivalents | (13,722) | (5,242) |
Cash and cash equivalents at beginning of period | 98,978 | 119,624 |
Cash and cash equivalents at end of period | 85,256 | 114,382 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for taxes | 668 | 1,985 |
Cash paid for amounts included in the measurement of operating lease liabilities | 405 | 276 |
Supplemental disclosure of noncash information: | ||
Property and equipment received and accrued in accounts payable and accrued and other liabilities | 745 | 1,714 |
Advances for purchase of fixed assets transferred from prepaid assets to property and equipment | $ 21 | |
Operating lease liabilities arising from obtaining right-of-use assets | 142 | |
Property and equipment transferred to sales-type lease | $ 3,652 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
BASIS OF PRESENTATION 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 consolidated 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 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024. 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, 2023 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, realization of 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 In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of the new standard on the consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard for “annual financial statements that have not yet been issued or made available for issuance.” Adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures. 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 CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Mar. 31, 2024 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS: | |
REVENUE FROM CONTRACTS 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 , and its related amendments (collectively known as “ASC 606”). ASC 606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. Revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services. 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 ® and Cimetrix ® products), software-as-a-service (“SaaS”) (which is primarily Exensio ® products), and Design-for-Inspection™ (“DFI™”) systems and Characterization Vehicle ® (“CV ® ”) systems that do not include performance incentives based on customers’ yield achievement. 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 the 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. The Company also leases some of its DFI system and CV system assets to some customers. The Company determines the existence of a lease when the customer controls the use of these identified assets for a period of time defined in the lease agreement and classifies such leases as operating leases or sales-type leases. A lease is classified as a sales-type lease if it meets certain criteria under ASC Topic 842, Leases; otherwise, it is classified as an operating lease. Operating lease revenue is recognized on a straight-line basis over the lease term. Sales-type lease revenue and corresponding lease receivables are recognized at lease commencement based on the present value of the future lease payments, and related interest income on lease receivable is recognized over the lease term and are recorded under Analytics revenue in the accompanying condensed consolidated statements of comprehensive income (loss). Payments under sales-type leases are discounted using the interest rate implicit in the lease. When the Company’s leases are embedded in contracts with customers that include non-lease performance obligations, the Company allocates consideration in the contract between lease and non-lease components based on their relative SSPs. Assets subject to operating leases remain in property and equipment and continue to be depreciated. Assets subject to sales-type leases are derecognized from property and equipment, net at lease commencement and a net investment in the lease asset is recognized in prepaid expenses and other current assets and other non-current assets in the accompanying condensed consolidated balance sheets. 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 March 31, 2024 2023 Over time 65 % 80 % Point-in-time 35 % 20 % Total 100 % 100 % International revenues accounted for approximately 57% and 43% of the Company’s total revenues during the three months ended March 31, 2024 and 2023, 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 recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level. As of March 31, 2024 and December 31, 2023, the total contract assets included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets were $4.1 million and $6.8 million, respectively. As of March 31, 2024 and December 31, 2023, contract assets of $0.7 million and $0.9 million, respectively, are included in other non-current assets in the accompanying condensed consolidated balance sheets. 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 March 31, 2024, and December 31, 2023, the non-current portion of deferred revenues included in non-current liabilities was $1.4 million and $1.8 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 $11.4 million and $11.4 million during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, 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 $262.2 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 $2.5 million during the three months ended March 31, 2024 and 2023, 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 March 31, 2024, and December 31, 2023, were $2.3 million and $2.0 million, respectively. Total capitalized direct sales commission costs included in other non-current assets in the accompanying condensed consolidated balance sheets as of March 31, 2024, and December 31, 2023, were $3.6 million and $2.6 million, respectively. Amortization of these assets was $0.6 million and $0.5 million during the three months ended March 31, 2024 and 2023, respectively. There was no impairment loss 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 months ended March 31, 2024 and 2023. |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 3 Months Ended |
Mar. 31, 2024 | |
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 $17.4 million and $16.4 million as of March 31, 2024, and December 31, 2023, 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 $2.2 million and $1.1 million as of March 31, 2024, and December 31, 2023, 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 collectibility 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): March 31, December 31, 2024 2023 Computer equipment $ 12,124 $ 12,515 Software 5,599 5,596 Furniture, fixtures, and equipment 2,519 2,501 Leasehold improvements 6,463 6,475 Laboratory and other equipment 5,102 4,891 Test equipment 22,324 25,044 Property and equipment in progress: DFI™ system assets 22,086 22,864 CV® system and other assets 7,192 6,977 83,409 86,863 Less: Accumulated depreciation and amortization (47,321) (49,525) Total $ 36,088 $ 37,338 Test equipment mainly includes DFI™ system and CV ® system assets at customer sites that are contributing to revenue. Property and equipment in progress represent the development or construction of property and equipment that have not yet been placed in service for the Company’s intended use and are not depreciated. Depreciation and amortization expense was $1.1 million and $1.3 million during the three months ended March 31, 2024 and 2023, respectively. Goodwill and Intangible Assets, Net As of March 31, 2024, and December 31, 2023, the carrying amount of goodwill was $15.0 million and $15.0 million, respectively. Intangible assets, net, consisted of the following (in thousands): March 31, 2024 December 31, 2023 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 $ (7,500) $ 2,005 $ 9,508 $ (7,335) $ 2,173 Developed technology 4-9 34,623 (22,723) 11,900 34,650 (22,094) 12,556 Tradename and trademarks 2-10 1,598 (1,052) 546 1,598 (1,025) 573 Patent 6-10 2,100 (1,804) 296 2,100 (1,782) 318 Noncompetition agreements 3 848 (848) — 848 (848) — Total $ 48,674 $ (33,927) $ 14,747 $ 48,704 $ (33,084) $ 15,620 The weighted average amortization period for acquired identifiable intangible assets was 5.0 years as of March 31, 2024. The following table summarizes intangible assets amortization expense in the accompanying condensed consolidated statements of comprehensive income (loss) (in thousands): Three Months Ended March 31, 2024 2023 Amortization of acquired technology included under costs of revenues $ 584 $ 553 Amortization of acquired intangible assets presented separately under costs and expenses 259 325 Total amortization of acquired intangible assets $ 843 $ 878 The Company expects annual amortization of acquired identifiable intangible assets to be as follows (in thousands): Year Ending December 31, Amount 2024 (remaining nine months) $ 2,388 2025 3,068 2026 2,899 2027 2,746 2028 2,441 2029 and thereafter 1,205 Total future amortization expense $ 14,747 There were no impairment charges for goodwill and intangible assets during the three months ended March 31, 2024 and 2023. Other Non-current Assets Other non-current assets consisted of the following (in thousands): March 31, December 31, 2024 2023 Costs capitalized to obtain revenue contracts – non-current (1) $ 3,645 $ 2,587 Unbilled accounts receivable – non-current (2) 2,248 1,069 Contract assets – non-current (1) 687 933 Net investments in sales-type leases – non-current (3) 20,035 12,196 Deposits and other non-current prepaid expenses 2,167 2,433 Total other non-current assets $ 28,782 $ 19,218 (1) See Note 2, Revenue from Contracts with Customers . (2) See Note 3, Balance Sheet Components – Accounts Receivable . (3) The Company had net investments in sales-type leases for its DFI™ system and CV® system assets. The following table summarizes the components of the Company’s net investments in sales-type leases in the condensed consolidated balance sheets (in thousands): March 31, December 31, 2024 2023 Lease receivables $ 16,493 $ 9,460 Unguaranteed residual assets 6,786 4,717 Net investments in sales-type leases 23,279 14,177 Less: Current portion of lease receivables under prepaid expenses and other current assets (3,244) (1,981) Net investments in sales-type leases – non-current $ 20,035 $ 12,196 Maturities of leases payments under sales-type leases as of March 31, 2024, were as follows (in thousands): Year Ending December 31, Amount 2024 (remaining nine months) $ 3,211 2025 7,883 2026 7,519 2027 2,674 2028 68 Total future sales-type lease payments 21,355 Less: Present value adjustment (a) (4,862) Present value of lease receivables $ 16,493 (a) Calculated using the rate implicit in the lease determined for each lease. There was no allowance for credit losses |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2024 | |
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 Lease expense was comprised of the following (in thousands): Three Months Ended March 31, 2024 2023 Operating lease expense $ 381 $ 387 Short-term lease and variable lease expense (1) 214 228 Total lease expense $ 595 $ 615 (1) 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: March 31, December 31, 2024 2023 Weighted average remaining lease term under operating leases (in years) 4.1 4.4 Weighted average discount rate for operating lease liabilities 5.02 % 4.96 % Maturities of operating lease liabilities as of March 31, 2024, were as follows (in thousands): Year Ending December 31, Amount (1) 2024 (remaining nine months) $ 1,315 2025 1,679 2026 1,373 2027 1,294 2028 929 2029 63 Total future minimum lease payments 6,653 Less: Interest (2) (665) Present value of future minimum lease payments under operating lease liabilities (3) $ 5,988 (1) As of March 31, 2024, the total operating lease liability includes approximately $1.0 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 $1.6 million as of March 31, 2024. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2024 | |
STOCKHOLDERS EQUITY: | |
STOCKHOLDERS' EQUITY | 5. STOCKHOLDERS’ EQUITY Stock Repurchase Program On April 11, 2022, the Board of Directors adopted a stock repurchase 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, including through Rule 10b5-1 plans, from time to time, over the next two years. During the three months ended March 31, 2024, 201,561 shares were repurchased by the Company under the 2022 Program at an average price of $34.23 per share for an aggregate total price of $6.9 million. In total, the Company repurchased 937,501 shares under the 2022 Program at an average price of $25.96 per share for an aggregate total price of $24.3 million. The 2022 Program expired on April 11, 2024, and on April 15, 2024, the Board of Directors adopted a new program (the “2024 Program”) to repurchase up to $40.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2024 | |
EMPLOYEE BENEFIT PLANS: | |
EMPLOYEE BENEFIT PLANS | 6. EMPLOYEE BENEFIT PLANS On March 31, 2024, the Company had the following stock-based compensation plans: Employee Stock Purchase Plan On June 15, 2021, the Company’s stockholders approved the 2021 Employee Stock Purchase Plan, which has a ten-year term (the “2021 Purchase Plan”). Under the 2021 Purchase Plan, eligible employees can contribute up to 10% of their compensation, as defined in the 2021 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 2021 Purchase Plan commenced on August 1, 2021, and provided for twenty-four-month offering periods with four six-month purchase periods in each offering period. On April 15, 2024, the Company’s Board of Directors approved another amendment and restatement of the 2021 Purchase Plan, which is subject to stockholder approval at the 2024 annual meeting of stockholders, to, among other things, increase the number of shares reserved for issuance under it to a total of 1.2 million shares, which is an increase of an additional 0.2 million shares, and to eliminate the term of the 2021 Purchase Plan. 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: Three Months Ended March 31, 2024 2023 Expected life (in years) 1.25 1.25 Volatility 41.40 % 46.70 % Risk-free interest rate 4.62 % 4.48 % Expected dividend — — Weighted average fair value of purchase rights granted during the period $ 10.89 $ 11.90 During the three months ended March 31, 2024, a total of 73,854 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $25.94 per share. During the three months ended March 31, 2023, a total of 98,216 shares were issued under the 2021 Purchase Plan, at a weighted-average purchase price of $16.93 per share. As of March 31, 2024, unrecognized compensation cost related to the 2021 Purchase Plan was $4.0 million. This estimated unrecognized cost is expected to be recognized over a weighted average period of 1.8 years. As of March 31, 2024, 520,455 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. On April 15, 2024, the Company’s Board of Directors approved another amendment and restatement of the 2011 Plan, which is subject to stockholder approval at the 2024 annual meeting of stockholders, to, among other things, increase the number of shares reserved for awards under it to a total of 14.6 million shares, which is an increase of an additional 0.8 million shares, and to eliminate the term of the 2011 Plan. As of March 31, 2024, 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 March 31, 2024. As of March 31, 2024, 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 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 March 31, 2024 2023 Costs of revenues $ 1,200 $ 964 Research and development 2,202 1,794 Selling, general, and administrative 2,708 2,126 Stock-based compensation expense $ 6,110 $ 4,884 Stock-based compensation capitalized in the capitalized software development costs included in property and equipment, net, was immaterial for the three months ended March 31, 2024. Additional information with respect to options under the Stock Plans during the three months ended March 31, 2024, 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, January 1, 2024 38 $ 15.92 Granted — — Exercised (1) 20.06 Canceled — — Expired — — Outstanding, March 31, 2024 37 $ 15.78 3.94 $ 628 Vested and expected to vest, March 31, 2024 37 $ 15.78 3.94 $ 628 Exercisable, March 31, 2024 36 $ 15.73 3.90 $ 621 The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $33.67 per share as of March 31, 2024. The total intrinsic value of options exercised during the three months ended March 31, 2024 and 2023 was as follows (in thousands): Three Months Ended March 31, 2024 2023 Intrinsic value of options exercised $ 16 $ 439 Total remaining unrecognized compensation cost related to unvested stock options as of March 31, 2024, which is expected to be fully recognized in 2024, and total fair value of shares vested during the three months ended March 31, 2024, were immaterial. Nonvested restricted stock unit activity during the three months ended March 31, 2024, was as follows: Weighted Average Grant Shares Date Fair Value (in thousands) Per Share Nonvested, January 1, 2024 1,995 $ 30.03 Granted 40 33.17 Vested (349) 26.27 Forfeited (21) 27.91 Nonvested, March 31, 2024 1,665 $ 30.92 The weighted average grant date fair values of restricted stock units granted during the three months ended March 31, 2024 and 2023 were $33.17 and $33.46 , respectively. The total fair value of restricted stock units vested during the three months ended March 31, 2024 and 2023 was as follows (in thousands): Three Months Ended March 31, 2024 2023 Fair value of restricted stock units vested $ 11,225 $ 12,909 As of March 31, 2024, there was $41.3 million of total unrecognized compensation cost related to restricted stock units. That cost is expected to be recognized over a weighted average period of 2.4 years. Restricted stock units do not have rights to dividends prior to vesting. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2024 | |
INCOME TAXES: | |
INCOME TAXES | 7 . INCOME TAXES Income tax expense decreased by $0.3 million for the three months ended March 31, 2024, to a $0.1 million income tax expense as compared to a $0.4 million income tax expense for the three months ended March 31, 2023. The Company’s effective tax rate was (47%) and 52% for the three months ended March 31, 2024 and 2023, respectively. The Company’s effective tax rate decreased in the three months ended March 31, 2024, as compared to the same period in 2023, 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 three months ended March 31, 2024, was primarily attributable to foreign and state taxes. The Company’s total amount of unrecognized tax benefits, excluding interest, as of March 31, 2024, was $16.8 million, of which $2.7 million, if recognized, would affect the Company’s effective tax rate. The Company’s total amount of unrecognized tax benefits, excluding interest, as of December 31, 2023, was $15.9 million, of which $2.0 million, if recognized, would affect the Company’s effective tax rate. As of March 31, 2024, the Company has recorded unrecognized tax benefits of $2.6 million, including interest of $0.7 million, as long-term taxes payable in the accompanying condensed consolidated balance sheet. The remaining $14.2 million has been recorded within the Company’s DTAs, which is subject to a full valuation allowance. The valuation allowance was approximately $64.2 million as of March 31, 2024, and December 31, 2023, which was related to U.S. net federal and state DTAs. The worldwide net DTAs balance as of March 31, 2024, and December 31, 2023, 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 2020 to present and 2019 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 currently under income tax examinations in any other of its major foreign subsidiaries’ jurisdictions. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2024 | |
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 the 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 March 31, 2024 2023 Numerator: Net income (loss) $ (393) $ 355 Denominator: Basic weighted average shares outstanding 38,500 37,737 Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan — 1,122 Diluted weighted average shares outstanding 38,500 38,859 Net income (loss) per share: Basic $ (0.01) $ 0.01 Diluted $ (0.01) $ 0.01 For the three months ended March 31, 2024, 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 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 March 31, 2024 2023 Outstanding options 37 — Non-vested restricted stock units 1,665 9 Employee Stock Purchase Plan 24 — Total 1,726 9 |
CUSTOMER AND GEOGRAPHIC INFORMA
CUSTOMER AND GEOGRAPHIC INFORMATION | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, Customer 2024 2023 A 22 % 38 % B 19 % * % * represents less than 10% 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: March 31, December 31, Customer 2024 2023 A 35 % 39 % C 13 % * % D * % 11 % * 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 March 31, 2024 2023 Percentage Percentage Revenues of Revenues $ Revenues of Revenues United States $ 17,733 43 % $ 23,274 57 % Japan 11,288 27 2,277 6 China 4,853 12 6,956 17 Rest of the world 7,436 18 8,252 20 Total revenue $ 41,310 100 % $ 40,759 100 % Long-lived assets, net by geographic area are as follows (in thousands): March 31, December 31, 2024 2023 United States (1) $ 46,113 $ 45,619 Rest of the world 1,503 1,362 Total long-lived assets, net $ 47,616 $ 46,981 (1) Includes assets deployed at customer sites which could be outside the U.S. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024, and December 31, 2023, and the basis for those measurements (in thousands): Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Significant March 31, Assets Inputs Unobservable Assets 2024 (Level 1) (Level 2) Inputs (Level 3) Cash equivalents Money market mutual funds $ 71,326 $ 71,326 $ — $ — Short-term investments (available-for-sale debt securities) U.S. Government securities (1) 37,628 37,628 — — Total $ 108,954 $ 108,954 $ — $ — Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable December 31, Assets Inputs Inputs Assets 2023 (Level 1) (Level 2) (Level 3) Cash equivalents Money market mutual funds $ 83,810 $ 83,810 $ — $ — Short-term investments (available-for-sale debt securities) U.S. Government securities (1) 36,544 36,544 — — Total $ 120,354 $ 120,354 $ — $ — (1) As of March 31, 2024, and December 31, 2023, 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 months ended March 31, 2024, there were no material realized or unrealized gains or losses, either individually or in the aggregate. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
COMMITMENTS AND CONTINGENCIES: | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Strategic Partnership with Advantest — See Note 12, Strategic Partnership Agreement with Advantest and Related Party Transactions , for the discussion about the Company’s commitments under the strategic partnership with Advantest. Operating Leases — Refer to Note 4, Leases , for the discussion about the Company’s lease commitments. Indemnifications initial delivery of its products. The Company also indemnifies certain customers from third-party claims of intellectual property infringement relating to the use of its products. Historically, costs related to these guarantees have not been significant. The Company is unable to estimate the maximum potential impact of these guarantees on its future results of operations. Purchase Obligations Indemnification of Officers and Directors — As permitted by the Delaware general corporation law, the Company has included a provision in its certificate of incorporation to eliminate the personal liability of its directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, other than in cases of fraud or other willful misconduct. 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 — From time to time, the Company is subject to various claims and legal proceedings that arise in the ordinary course of business. The Company accrues for losses related to litigation when a potential loss is probable, and the loss can be reasonably estimated in accordance with FASB requirements. As of March 31, 2024, the Company was not party to any material legal proceedings for which a loss was probable or an amount was accrued. From time to time, the Company may enter into contingent fee arrangements with external legal firms that may represent the Company in legal proceedings related to disputes. Contingent legal fees are accrued by the Company when they are probable and reasonably estimable. 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 2023. A decision is expected this year. |
STRATEGIC PARTNERSHIP AGREEMENT
STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2024 | |
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”), which includes: (i) a Securities Purchase Agreement wherein the Company issued and sold to Advantest America, Inc., an aggregate of 3,306,924 shares of its common stock, for aggregate gross proceeds of $65.2 million; (ii) a significant agreement for its assistance in development of cloud-based applications for Advantest tools that leverages our Exensio analytics software; (iii) a commercial agreement providing for the license to third parties of solutions that result from the development work that combine Advantest’s testing applications and our Exensio platform; and (iv) a 5-year cloud-based subscription for Exensio analytics software and related services. Analytics revenue recognized from Advantest was $2.9 million and $1.8 million during the three months ended March 31, 2024 and 2023, respectively. Accounts receivable from Advantest were $0.1 million as of March 31, 2024. Accounts receivable from Advantest were not material as of December 31, 2023. Deferred revenue amounted to $6.6 million and $9.4 million as of March 31, 2024, and December 31, 2023, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 13 . SUBSEQUENT EVENTS Refer to Note 5, Stockholder’s Equity , for the discussion about the adoption of the 2024 Stock Repurchase Program. Refer to Note 6, Employee Benefit Plans , for the discussion about the amendments to the 2011 Stock Incentive Plan and the 2021 Purchase Plan. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
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 consolidated 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 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024. 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, 2023 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, realization of 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 , and its related amendments (collectively known as “ASC 606”). ASC 606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. Revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services. 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 ® and Cimetrix ® products), software-as-a-service (“SaaS”) (which is primarily Exensio ® products), and Design-for-Inspection™ (“DFI™”) systems and Characterization Vehicle ® (“CV ® ”) systems that do not include performance incentives based on customers’ yield achievement. 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 the 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. The Company also leases some of its DFI system and CV system assets to some customers. The Company determines the existence of a lease when the customer controls the use of these identified assets for a period of time defined in the lease agreement and classifies such leases as operating leases or sales-type leases. A lease is classified as a sales-type lease if it meets certain criteria under ASC Topic 842, Leases; otherwise, it is classified as an operating lease. Operating lease revenue is recognized on a straight-line basis over the lease term. Sales-type lease revenue and corresponding lease receivables are recognized at lease commencement based on the present value of the future lease payments, and related interest income on lease receivable is recognized over the lease term and are recorded under Analytics revenue in the accompanying condensed consolidated statements of comprehensive income (loss). Payments under sales-type leases are discounted using the interest rate implicit in the lease. When the Company’s leases are embedded in contracts with customers that include non-lease performance obligations, the Company allocates consideration in the contract between lease and non-lease components based on their relative SSPs. Assets subject to operating leases remain in property and equipment and continue to be depreciated. Assets subject to sales-type leases are derecognized from property and equipment, net at lease commencement and a net investment in the lease asset is recognized in prepaid expenses and other current assets and other non-current assets in the accompanying condensed consolidated balance sheets. 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, Policy | 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 March 31, 2024 2023 Over time 65 % 80 % Point-in-time 35 % 20 % Total 100 % 100 % International revenues accounted for approximately 57% and 43% of the Company’s total revenues during the three months ended March 31, 2024 and 2023, respectively. See Note 9, Customer and Geographic Information . |
Contract Balances, Policy | 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 recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level. As of March 31, 2024 and December 31, 2023, the total contract assets included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets were $4.1 million and $6.8 million, respectively. As of March 31, 2024 and December 31, 2023, contract assets of $0.7 million and $0.9 million, respectively, are included in other non-current assets in the accompanying condensed consolidated balance sheets. 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 March 31, 2024, and December 31, 2023, the non-current portion of deferred revenues included in non-current liabilities was $1.4 million and $1.8 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 $11.4 million and $11.4 million during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, 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 $262.2 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 $2.5 million during the three months ended March 31, 2024 and 2023, respectively. These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare. |
Revenue-related 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 months ended March 31, 2024 and 2023. |
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 $17.4 million and $16.4 million as of March 31, 2024, and December 31, 2023, 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 $2.2 million and $1.1 million as of March 31, 2024, and December 31, 2023, respectively. |
Costs to Obtain or Fulfill a Contract, Policy | 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 March 31, 2024, and December 31, 2023, were $2.3 million and $2.0 million, respectively. Total capitalized direct sales commission costs included in other non-current assets in the accompanying condensed consolidated balance sheets as of March 31, 2024, and December 31, 2023, were $3.6 million and $2.6 million, respectively. Amortization of these assets was $0.6 million and $0.5 million during the three months ended March 31, 2024 and 2023, respectively. There was no impairment loss |
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 March 31, 2024 2023 Costs of revenues $ 1,200 $ 964 Research and development 2,202 1,794 Selling, general, and administrative 2,708 2,126 Stock-based compensation expense $ 6,110 $ 4,884 |
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 |
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: Three Months Ended March 31, 2024 2023 Expected life (in years) 1.25 1.25 Volatility 41.40 % 46.70 % Risk-free interest rate 4.62 % 4.48 % Expected dividend — — Weighted average fair value of purchase rights granted during the period $ 10.89 $ 11.90 |
Net Income (Loss) Per Share, Policy | Basic net income (loss) per share is computed by dividing net income (loss) by the 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. |
Accounting Standards Adopted, Policy | Recent Accounting Standards In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of the new standard on the consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard for “annual financial statements that have not yet been issued or made available for issuance.” Adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures. 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 CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
REVENUE FROM CONTRACTS WITH CUSTOMERS: | |
Schedule of Disaggregated Revenues | Three Months Ended March 31, 2024 2023 Over time 65 % 80 % Point-in-time 35 % 20 % Total 100 % 100 % |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
BALANCE SHEET COMPONENTS | |
Schedule of Property, Plant and Equipment | March 31, December 31, 2024 2023 Computer equipment $ 12,124 $ 12,515 Software 5,599 5,596 Furniture, fixtures, and equipment 2,519 2,501 Leasehold improvements 6,463 6,475 Laboratory and other equipment 5,102 4,891 Test equipment 22,324 25,044 Property and equipment in progress: DFI™ system assets 22,086 22,864 CV® system and other assets 7,192 6,977 83,409 86,863 Less: Accumulated depreciation and amortization (47,321) (49,525) Total $ 36,088 $ 37,338 |
Schedule of Other Non-Current Assets | March 31, December 31, 2024 2023 Costs capitalized to obtain revenue contracts – non-current (1) $ 3,645 $ 2,587 Unbilled accounts receivable – non-current (2) 2,248 1,069 Contract assets – non-current (1) 687 933 Net investments in sales-type leases – non-current (3) 20,035 12,196 Deposits and other non-current prepaid expenses 2,167 2,433 Total other non-current assets $ 28,782 $ 19,218 (1) See Note 2, Revenue from Contracts with Customers . (2) See Note 3, Balance Sheet Components – Accounts Receivable . (3) The Company had net investments in sales-type leases for its DFI™ system and CV® system assets. The following table summarizes the components of the Company’s net investments in sales-type leases in the condensed consolidated balance sheets (in thousands): March 31, December 31, 2024 2023 Lease receivables $ 16,493 $ 9,460 Unguaranteed residual assets 6,786 4,717 Net investments in sales-type leases 23,279 14,177 Less: Current portion of lease receivables under prepaid expenses and other current assets (3,244) (1,981) Net investments in sales-type leases – non-current $ 20,035 $ 12,196 |
Schedule of Maturities of Payments to be Received Under Sales-type Leases | Year Ending December 31, Amount 2024 (remaining nine months) $ 3,211 2025 7,883 2026 7,519 2027 2,674 2028 68 Total future sales-type lease payments 21,355 Less: Present value adjustment (a) (4,862) Present value of lease receivables $ 16,493 (a) Calculated using the rate implicit in the lease determined for each lease. |
Schedule of Finite-Lived Intangible Assets, Net | March 31, 2024 December 31, 2023 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 $ (7,500) $ 2,005 $ 9,508 $ (7,335) $ 2,173 Developed technology 4-9 34,623 (22,723) 11,900 34,650 (22,094) 12,556 Tradename and trademarks 2-10 1,598 (1,052) 546 1,598 (1,025) 573 Patent 6-10 2,100 (1,804) 296 2,100 (1,782) 318 Noncompetition agreements 3 848 (848) — 848 (848) — Total $ 48,674 $ (33,927) $ 14,747 $ 48,704 $ (33,084) $ 15,620 |
Schedule of Finite-lived Intangible Assets Amortization Expense | Three Months Ended March 31, 2024 2023 Amortization of acquired technology included under costs of revenues $ 584 $ 553 Amortization of acquired intangible assets presented separately under costs and expenses 259 325 Total amortization of acquired intangible assets $ 843 $ 878 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Year Ending December 31, Amount 2024 (remaining nine months) $ 2,388 2025 3,068 2026 2,899 2027 2,746 2028 2,441 2029 and thereafter 1,205 Total future amortization expense $ 14,747 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
LEASES: | |
Schedule of Lease Expenses | Three Months Ended March 31, 2024 2023 Operating lease expense $ 381 $ 387 Short-term lease and variable lease expense (1) 214 228 Total lease expense $ 595 $ 615 (1) 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 | March 31, December 31, 2024 2023 Weighted average remaining lease term under operating leases (in years) 4.1 4.4 Weighted average discount rate for operating lease liabilities 5.02 % 4.96 % |
Schedule of Operating Lease Liabilities and Maturities | Year Ending December 31, Amount (1) 2024 (remaining nine months) $ 1,315 2025 1,679 2026 1,373 2027 1,294 2028 929 2029 63 Total future minimum lease payments 6,653 Less: Interest (2) (665) Present value of future minimum lease payments under operating lease liabilities (3) $ 5,988 (1) As of March 31, 2024, the total operating lease liability includes approximately $1.0 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 $1.6 million as of March 31, 2024. |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
EMPLOYEE BENEFIT PLANS: | |
Schedule of Employee Stock Purchase Plan, Black-Scholes-Merton Valuation Assumptions | Three Months Ended March 31, 2024 2023 Expected life (in years) 1.25 1.25 Volatility 41.40 % 46.70 % Risk-free interest rate 4.62 % 4.48 % Expected dividend — — Weighted average fair value of purchase rights granted during the period $ 10.89 $ 11.90 |
Schedule of Stock-Based Compensation Expenses | Three Months Ended March 31, 2024 2023 Costs of revenues $ 1,200 $ 964 Research and development 2,202 1,794 Selling, general, and administrative 2,708 2,126 Stock-based compensation expense $ 6,110 $ 4,884 |
Schedule of Stock Option Activity | 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, January 1, 2024 38 $ 15.92 Granted — — Exercised (1) 20.06 Canceled — — Expired — — Outstanding, March 31, 2024 37 $ 15.78 3.94 $ 628 Vested and expected to vest, March 31, 2024 37 $ 15.78 3.94 $ 628 Exercisable, March 31, 2024 36 $ 15.73 3.90 $ 621 |
Schedule of Options Exercised Intrinsic Value | Three Months Ended March 31, 2024 2023 Intrinsic value of options exercised $ 16 $ 439 |
Schedule of Restricted Stock Unit Activity | Weighted Average Grant Shares Date Fair Value (in thousands) Per Share Nonvested, January 1, 2024 1,995 $ 30.03 Granted 40 33.17 Vested (349) 26.27 Forfeited (21) 27.91 Nonvested, March 31, 2024 1,665 $ 30.92 |
Schedule of Vested Restricted Stock Unit Fair Value | Three Months Ended March 31, 2024 2023 Fair value of restricted stock units vested $ 11,225 $ 12,909 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
NET INCOME (LOSS) PER SHARE: | |
Schedule of Earnings Per Share, Basic and Diluted | Three Months Ended March 31, 2024 2023 Numerator: Net income (loss) $ (393) $ 355 Denominator: Basic weighted average shares outstanding 38,500 37,737 Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan — 1,122 Diluted weighted average shares outstanding 38,500 38,859 Net income (loss) per share: Basic $ (0.01) $ 0.01 Diluted $ (0.01) $ 0.01 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Three Months Ended March 31, 2024 2023 Outstanding options 37 — Non-vested restricted stock units 1,665 9 Employee Stock Purchase Plan 24 — Total 1,726 9 |
CUSTOMER AND GEOGRAPHIC INFOR_2
CUSTOMER AND GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
CUSTOMER AND GEOGRAPHIC INFORMATION: | |
Schedule of Revenue by Major Customers by Reporting Segments | Three Months Ended March 31, Customer 2024 2023 A 22 % 38 % B 19 % * % * represents less than 10% 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: March 31, December 31, Customer 2024 2023 A 35 % 39 % C 13 % * % D * % 11 % * represents less than 10% |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | Three Months Ended March 31, 2024 2023 Percentage Percentage Revenues of Revenues $ Revenues of Revenues United States $ 17,733 43 % $ 23,274 57 % Japan 11,288 27 2,277 6 China 4,853 12 6,956 17 Rest of the world 7,436 18 8,252 20 Total revenue $ 41,310 100 % $ 40,759 100 % |
Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | March 31, December 31, 2024 2023 United States (1) $ 46,113 $ 45,619 Rest of the world 1,503 1,362 Total long-lived assets, net $ 47,616 $ 46,981 (1) Includes assets deployed at customer sites which could be outside the U.S. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
FAIR VALUE MEASUREMENTS: | |
Schedule of Fair Value, Assets Measured on Recurring Basis | Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Identical Observable Significant March 31, Assets Inputs Unobservable Assets 2024 (Level 1) (Level 2) Inputs (Level 3) Cash equivalents Money market mutual funds $ 71,326 $ 71,326 $ — $ — Short-term investments (available-for-sale debt securities) U.S. Government securities (1) 37,628 37,628 — — Total $ 108,954 $ 108,954 $ — $ — Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable December 31, Assets Inputs Inputs Assets 2023 (Level 1) (Level 2) (Level 3) Cash equivalents Money market mutual funds $ 83,810 $ 83,810 $ — $ — Short-term investments (available-for-sale debt securities) U.S. Government securities (1) 36,544 36,544 — — Total $ 120,354 $ 120,354 $ — $ — (1) As of March 31, 2024, and December 31, 2023, 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 months ended March 31, 2024, there were no material realized or unrealized gains or losses, either individually or in the aggregate. |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) | 3 Months Ended | ||
Mar. 31, 2024 USD ($) item | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Number of revenue sources | item | 2 | ||
Revenue, net contract assets non-current | $ 687,000 | $ 933,000 | |
Revenue, remaining performance obligation | 262,200,000 | ||
Revenue performance obligations satisfied in previous period | (600,000) | $ 2,500,000 | |
Capitalized direct sales commission costs - non-current | 3,645,000 | 2,587,000 | |
Amortization of capitalized direct sales commission costs | 634,000 | 456,000 | |
Capitalized contract cost, impairment loss | 0 | 0 | |
Prepaid Expenses and Other Current Assets | |||
Revenue, net contract assets | 4,100,000 | 6,800,000 | |
Capitalized direct sales commission costs - current | 2,300,000 | 2,000,000 | |
Other Non-current Assets | |||
Revenue, net contract assets non-current | 700,000 | 900,000 | |
Capitalized direct sales commission costs - non-current | 3,600,000 | 2,600,000 | |
Non-current Liabilities | |||
Noncurrent deferred revenue | 1,400,000 | $ 1,800,000 | |
Deferred Revenue and Billings in Excess of Recognized Revenue | |||
Recognized revenue from the beginning balance | $ 11,400,000 | $ 11,400,000 | |
Geographic Concentration Risk | Revenue Benchmark | |||
Significant customer concentration (percentage) | 100% | 100% | |
Geographic Concentration Risk | Revenue Benchmark | Non-US | |||
Significant customer concentration (percentage) | 57% | 43% |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Performance obligations, percentage of revenues | 100% | 100% |
Over Time | ||
Performance obligations, percentage of revenues | 65% | 80% |
Point-in-time | ||
Performance obligations, percentage of revenues | 35% | 20% |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Additional Information (Details) | Mar. 31, 2024 |
Software License and Related Services Agreement | Advantest America, Inc. | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
More than half of the remaining performance obligations | 2 years |
BALANCE SHEET COMPONENTS (Detai
BALANCE SHEET COMPONENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Unbilled accounts receivable - non-current | $ 2,248 | $ 1,069 | |
Depreciation and amortization | 1,100 | $ 1,300 | |
Goodwill | 15,003 | 15,029 | |
Impairment of goodwill | $ 0 | $ 0 | |
Intangible assets, amortization period | 5 years | ||
Receivables Benchmark | |||
Unbilled receivables | $ 17,400 | 16,400 | |
Other Non-current Assets | |||
Unbilled accounts receivable - non-current | $ 2,200 | $ 1,100 |
BALANCE SHEET COMPONENTS - Prop
BALANCE SHEET COMPONENTS - Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property and equipment, gross | $ 83,409 | $ 86,863 |
Less: accumulated depreciation and amortization | (47,321) | (49,525) |
Total property and equipment | 36,088 | 37,338 |
Computer Equipment | ||
Property and equipment, gross | 12,124 | 12,515 |
Software | ||
Property and equipment, gross | 5,599 | 5,596 |
Furniture, Fixtures, and Equipment | ||
Property and equipment, gross | 2,519 | 2,501 |
Leasehold Improvements | ||
Property and equipment, gross | 6,463 | 6,475 |
Laboratory and Other Equipment | ||
Property and equipment, gross | 5,102 | 4,891 |
Test Equipment | ||
Property and equipment, gross | 22,324 | 25,044 |
DFI System Assets | ||
Property and equipment, gross | 22,086 | 22,864 |
CV System and Other Assets | ||
Property and equipment, gross | $ 7,192 | $ 6,977 |
BALANCE SHEET COMPONENTS - Inta
BALANCE SHEET COMPONENTS - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Intangible assets, amortization period | 5 years | ||
Intangible assets, gross carrying amount, total | $ 48,674 | $ 48,704 | |
Intangible assets, accumulated amortization, total | (33,927) | (33,084) | |
Intangible assets, net carrying amount, total | 14,747 | 15,620 | |
Total amortization of acquired intangible assets | 843 | $ 878 | |
Customer Relationships | |||
Intangible assets, gross carrying amount, total | 9,505 | 9,508 | |
Intangible assets, accumulated amortization, total | (7,500) | (7,335) | |
Intangible assets, net carrying amount, total | $ 2,005 | 2,173 | |
Customer Relationships | Minimum | |||
Amortization Period (Year) | 1 year | ||
Customer Relationships | Maximum | |||
Amortization Period (Year) | 10 years | ||
Developed Technology | |||
Intangible assets, gross carrying amount, total | $ 34,623 | 34,650 | |
Intangible assets, accumulated amortization, total | (22,723) | (22,094) | |
Intangible assets, net carrying amount, total | $ 11,900 | 12,556 | |
Developed Technology | Minimum | |||
Amortization Period (Year) | 4 years | ||
Developed Technology | Maximum | |||
Amortization Period (Year) | 9 years | ||
Tradename and Trademarks | |||
Intangible assets, gross carrying amount, total | $ 1,598 | 1,598 | |
Intangible assets, accumulated amortization, total | (1,052) | (1,025) | |
Intangible assets, net carrying amount, total | $ 546 | 573 | |
Tradename and Trademarks | Minimum | |||
Amortization Period (Year) | 2 years | ||
Tradename and Trademarks | Maximum | |||
Amortization Period (Year) | 10 years | ||
Patent | |||
Intangible assets, gross carrying amount, total | $ 2,100 | 2,100 | |
Intangible assets, accumulated amortization, total | (1,804) | (1,782) | |
Intangible assets, net carrying amount, total | $ 296 | 318 | |
Patent | Minimum | |||
Amortization Period (Year) | 6 years | ||
Patent | Maximum | |||
Amortization Period (Year) | 10 years | ||
Noncompetition Agreements | |||
Amortization Period (Year) | 3 years | ||
Intangible assets, gross carrying amount, total | $ 848 | 848 | |
Intangible assets, accumulated amortization, total | (848) | $ (848) | |
Costs of Revenues | |||
Amortization of acquired technology included under Costs of revenues | 584 | 553 | |
Costs and Expenses | |||
Amortization of acquired intangible assets presented separately under costs and expenses | $ 259 | $ 325 |
BALANCE SHEET COMPONENTS - Annu
BALANCE SHEET COMPONENTS - Annual Amortization of Identifiable Intangible Assets (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
BALANCE SHEET COMPONENTS | |
2024 (remaining nine months) | $ 2,388 |
2025 | 3,068 |
2026 | 2,899 |
2027 | 2,746 |
2028 | 2,441 |
2029 and thereafter | 1,205 |
Total future amortization expense | $ 14,747 |
BALANCE SHEET COMPONENTS - Othe
BALANCE SHEET COMPONENTS - Other Non-current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
BALANCE SHEET COMPONENTS | ||
Costs capitalized to obtain revenue contracts - non-current (1) | $ 3,645 | $ 2,587 |
Unbilled accounts receivable - non-current (1) | 2,248 | 1,069 |
Contract assets - non-current (1) | 687 | 933 |
Net investment in sales-type leases - non-current (2) | 20,035 | 12,196 |
Deposits and other non-current prepaid expenses | 2,167 | 2,433 |
Other non-current assets | $ 28,782 | $ 19,218 |
BALANCE SHEET COMPONENTS - Net
BALANCE SHEET COMPONENTS - Net Investment in Sales-type Leases (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
BALANCE SHEET COMPONENTS | ||
Lease receivables | $ 16,493,000 | $ 9,460,000 |
Unguaranteed residual assets | 6,786,000 | 4,717,000 |
Net investment in sales-type leases | 23,279,000 | 14,177,000 |
Less: Current portion of lease receivables under prepaid expenses and other current assets | (3,244,000) | (1,981,000) |
Net investment in sales-type leases, non-current | 20,035,000 | 12,196,000 |
Allowance for credit loss on sales-type lease receivables | $ 0 | $ 0 |
BALANCE SHEET COMPONENTS - Matu
BALANCE SHEET COMPONENTS - Maturities of Lease Payments Under Sales-type Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
BALANCE SHEET COMPONENTS | ||
2024 (remaining nine months) | $ 3,211 | |
2025 | 7,883 | |
2026 | 7,519 | |
2027 | 2,674 | |
2028 | 68 | |
Total future sales-type lease payments | 21,355 | |
Less: Present value adjustment (1) | (4,862) | |
Present value of lease receivables | $ 16,493 | $ 9,460 |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 | |
Operating lease expense | $ 381 | $ 387 | |
Short-term lease and variable lease expense | 214 | 228 | |
Total lease expense | $ 595 | $ 615 | |
Number of finance leases | 0 | 0 | |
Weighted average remaining lease term under operating leases (in years) | 4 years 1 month 6 days | 4 years 4 months 24 days | |
Weighted average discount rate for operating lease liabilities | 5.02% | 4.96% | |
Minimum | |||
Initial lease term, threshold to be recorded in accompanying condensed consolidated balance sheets | 12 months |
LEASES - Maturity of Operating
LEASES - Maturity of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
LEASES: | ||
2024 (remaining nine months) | $ 1,315 | |
2025 | 1,679 | |
2026 | 1,373 | |
2027 | 1,294 | |
2028 | 929 | |
2029 | 63 | |
Total future minimum lease payments | 6,653 | |
Less: Interest (2) | (665) | |
Present value of future minimum lease payments under operating lease liabilities (3) | 5,988 | |
Operating lease liability, amount related to extension of lease term | 1,000 | |
Operating lease liability - current portion | $ 1,625 | $ 1,529 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 24 Months Ended | ||
Apr. 15, 2024 | Apr. 11, 2022 | Mar. 31, 2024 | Mar. 31, 2024 | |
2022 Stock Repurchase Program | ||||
Stock Repurchase Program, Authorized Amount | $ 35 | |||
Stock Repurchase Program, Period in Force (Year) | 2 years | |||
Repurchase of common stock (shares) | 201,561 | 937,501 | ||
Repurchase of common stock, weighted-average price per share | $ 34.23 | $ 25.96 | ||
Repurchases of common stock, cost | $ 6.9 | $ 24.3 | ||
2024 Stock Repurchase Program | Subsequent Event | ||||
Stock Repurchase Program, Authorized Amount | $ 40 | |||
Stock Repurchase Program, Period in Force (Year) | 2 years |
EMPLOYEE BENEFIT PLANS - Narrat
EMPLOYEE BENEFIT PLANS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 32 Months Ended | 41 Months Ended | |||
Nov. 16, 2011 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Dec. 31, 2024 | Apr. 15, 2024 | |
Stock option vesting period | 4 years | |||||
Common Stock, Closing Share Price | $ 33.67 | $ 33.67 | ||||
Restricted Stock Units (RSUs) | ||||||
Unrecognized Compensation | $ 41,300 | $ 41,300 | ||||
Unrecognized Compensation Recognition Period | 2 years 4 months 24 days | |||||
Fair value of restricted stock units vested | $ 11,225 | $ 12,909 | ||||
Expired Stock Incentive Plans | Maximum | ||||||
Stock Incentive Plans, Common Shares Reserved for Future Issuance | 3,500,000 | |||||
2011 Stock Incentive Plan | ||||||
Stock Incentive Plans, Common Shares Reserved for Future Issuance | 13,800,000 | 13,800,000 | ||||
Stock Incentive Plans, Common Shares Reserved for Future Issuance from Expired Incentive Plans | 500,000 | 500,000 | ||||
Aggregate Common Shares Reserved to Cover Stock-based Awards Under the 2011 Plan | 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 | Employee Stock Option | ||||||
Stock Incentive Plans, Rate Decrease in Reserved Plan-Shares Pursuant to Awards Other Than Options or SARs | 1.33 | |||||
Stock Option Expiration Period | 10 years | |||||
Stock option vesting period | 4 years | |||||
2021 Employee Stock Purchase Plan | ||||||
Eligible Employee Contribution Rate, Percentage of Compensation | 10% | |||||
Eligible Employee 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 | |||||
Shares Issued During Period | 73,854 | 98,216 | ||||
Weighted Average Purchase Price | $ 25.94 | $ 16.93 | ||||
Unrecognized Compensation | $ 4,000 | $ 4,000 | ||||
Unrecognized Compensation Recognition Period | 1 year 9 months 18 days | |||||
Capital Shares Reserved for Future Issuance | 520,455 | 520,455 | ||||
Amended 2021 Stock Purchase Plan | Subsequent Event | ||||||
Capital Shares Reserved for Future Issuance | 1,200,000 | |||||
New Shares Reserved for Future Issuance Under Stock Plan Amendment | 200,000 | |||||
Amended 2011 Stock Incentive Plan | Subsequent Event | ||||||
New Shares Reserved for Future Issuance Under Stock Plan Amendment | 800,000 | |||||
Stock Incentive Plans, Common Shares Reserved for Future Issuance | 14,600,000 |
EMPLOYEE BENEFIT PLANS - Valuat
EMPLOYEE BENEFIT PLANS - Valuation Assumptions for ESPP (Details) - 2021 Employee Stock Purchase Plan - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Expected life (in years) | 1 year 3 months | 1 year 3 months |
Volatility | 41.40% | 46.70% |
Risk-free interest rate | 4.62% | 4.48% |
Expected dividend | 0% | 0% |
Weighted average fair value of purchase rights granted during the period | $ 10.89 | $ 11.90 |
EMPLOYEE BENEFIT PLANS - Alloca
EMPLOYEE BENEFIT PLANS - Allocation of Recognized Period Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Stock-based compensation expenses | $ 6,110 | $ 4,884 |
Costs of Revenues | ||
Stock-based compensation expenses | 1,200 | 964 |
Research and Development | ||
Stock-based compensation expenses | 2,202 | 1,794 |
Selling, General, and Administrative | ||
Stock-based compensation expenses | $ 2,708 | $ 2,126 |
EMPLOYEE BENEFIT PLANS - Stock
EMPLOYEE BENEFIT PLANS - Stock Options Activity (Details) - Employee Benefit Plans - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Options Outstanding, Beginning Balance | 38 | |
Options Exercised | (1) | |
Options Outstanding, Ending Balance | 37 | |
Options Vested and Expected to Vest | 37 | |
Options Exercisable | 36 | |
Options Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 15.92 | |
Options Exercised, Weighted Average Exercise Price | 20.06 | |
Options Outstanding, Weighted Average Exercise Price, Ending Balance | 15.78 | |
Options Vested and Expected to Vest, Weighted Average Exercise Price | 15.78 | |
Options Exercisable, Weighted Average Exercise Price | $ 15.73 | |
Options Outstanding, Weighted Average Remaining Contractual Term | 3 years 11 months 8 days | |
Options Vested and Expected to Vest, Weighted Average Remaining Contractual Term | 3 years 11 months 8 days | |
Options Exercisable, Weighted Average Remaining Contractual Term | 3 years 10 months 24 days | |
Options Outstanding, Aggregate Intrinsic Value | $ 628 | |
Options Vested and Expected to Vest, Aggregate Intrinsic Value | 628 | |
Options Exercisable, Aggregate Intrinsic Value | 621 | |
Intrinsic value of options exercised | $ 16 | $ 439 |
EMPLOYEE BENEFIT PLANS - Nonves
EMPLOYEE BENEFIT PLANS - Nonvested Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Non-vested RSUs, Opening Balance | 1,995 | |
RSUs Granted | 40 | |
RSUs Vested | (349) | |
RSUs Forfeited | (21) | |
Non-vested RSUs, Ending Balance | 1,665 | |
Non-vested RSUs Opening, Weighted Average Grant Date Fair Value | $ 30.03 | |
RSUs Granted, Weighted Average Grant Date Fair Value | 33.17 | $ 33.46 |
RSUs Vested, Weighted Average Grant Date Fair Value | 26.27 | |
RSUs Forfeited, Weighted Average Grant Date Fair Value | 27.91 | |
Non-vested RSUs Ending, Weighted Average Grant Date Fair Value | $ 30.92 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
INCOME TAXES: | |||
Increase (Decrease) in Income Taxes | $ (300) | ||
Income Tax Expense (Benefit) | $ 125 | $ 390 | |
Effective Income Tax Rate Reconciliation, Percent | (47.00%) | 52% | |
Unrecognized tax benefits, excluding interest and penalties | $ 16,800 | $ 15,900 | |
Unrecognized tax benefits that would impact effective tax rate | 2,700 | 2,000 | |
Unrecognized tax benefits including income tax penalties and interest accrued in long term liabilities | 2,600 | ||
Unrecognized tax benefits, interest accrued | 700 | ||
Unrecognized Tax Benefits In Deferred Tax Assets | 14,200 | ||
Deferred Tax Assets, Valuation Allowance | $ 64,200 | $ 64,200 |
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 | |
Mar. 31, 2024 | Mar. 31, 2023 | |
NET INCOME (LOSS) PER SHARE: | ||
Net income (loss) | $ (393) | $ 355 |
Basic weighted average shares outstanding | 38,500 | 37,737 |
Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under Employee Purchase Plan | 1,122 | |
Diluted weighted average shares outstanding | 38,500 | 38,859 |
Basic | $ (0.01) | $ 0.01 |
Diluted | $ (0.01) | $ 0.01 |
NET INCOME (LOSS) PER SHARE - A
NET INCOME (LOSS) PER SHARE - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Antidilutive securities excluded from EPS | 1,726 | 9 |
Outstanding Options | ||
Antidilutive securities excluded from EPS | 37 | |
Non-vested Restricted Stock Units | ||
Antidilutive securities excluded from EPS | 1,665 | 9 |
Employee Stock Purchase Plan | ||
Antidilutive securities excluded from EPS | 24 |
CUSTOMER AND GEOGRAPHIC INFOR_3
CUSTOMER AND GEOGRAPHIC INFORMATION - Other (Details) | 3 Months Ended |
Mar. 31, 2024 | |
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 | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue Benchmark | Customer A | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Significant customer concentration (percentage) | 22% | 38% |
Revenue Benchmark | Customer B | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Significant customer concentration (percentage) | 19% | |
Receivables Benchmark | Customer A | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Significant customer concentration (percentage) | 35% | 39% |
Receivables Benchmark | Customer C | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Significant customer concentration (percentage) | 13% | |
Receivables Benchmark | Customer D | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Significant customer concentration (percentage) | 11% |
CUSTOMER AND GEOGRAPHIC INFOR_5
CUSTOMER AND GEOGRAPHIC INFORMATION - Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 41,310 | $ 40,759 |
Geographic Concentration Risk | Revenue Benchmark | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 41,310 | $ 40,759 |
Percentage of Revenues | 100% | 100% |
Geographic Concentration Risk | Revenue Benchmark | United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 17,733 | $ 23,274 |
Percentage of Revenues | 43% | 57% |
Geographic Concentration Risk | Revenue Benchmark | China | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 4,853 | $ 6,956 |
Percentage of Revenues | 12% | 17% |
Geographic Concentration Risk | Revenue Benchmark | JAPAN | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 11,288 | $ 2,277 |
Percentage of Revenues | 27% | 6% |
Geographic Concentration Risk | Revenue Benchmark | Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 7,436 | $ 8,252 |
Percentage of Revenues | 18% | 20% |
CUSTOMER AND GEOGRAPHIC INFOR_6
CUSTOMER AND GEOGRAPHIC INFORMATION - Long-lived Assets by Geographic Area (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets, net | $ 47,616 | $ 46,981 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets, net | 46,113 | 45,619 |
Rest of the World | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets, net | $ 1,503 | $ 1,362 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets measured at fair value, total | $ 108,954 | $ 120,354 |
Quoted Prices in Active Markets for Identical Assets (level 1) | ||
Assets measured at fair value, total | 108,954 | 120,354 |
Money Market Mutual Funds | ||
Cash equivalents | 71,326 | 83,810 |
Money Market Mutual Funds | Quoted Prices in Active Markets for Identical Assets (level 1) | ||
Cash equivalents | 71,326 | 83,810 |
U.S. Government Securities | ||
Short-term investments (available-for-sale debt securities) | 37,628 | 36,544 |
U.S. Government Securities | Quoted Prices in Active Markets for Identical Assets (level 1) | ||
Short-term investments (available-for-sale debt securities) | $ 37,628 | $ 36,544 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Future Lease payments | $ 6,653 |
Indemnifications | |
Term of Product Warranty | 90 days |
Purchase Obligations | |
Purchase Obligation, Total | $ 25,500 |
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) - Advantest America, Inc. - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2020 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Related party receivables | $ 0.1 | |||
Analytics | ||||
Related party revenue | 2.9 | $ 1.8 | ||
Related party deferred revenue | $ 6.6 | $ 9.4 | ||
Securities Purchase Agreement | ||||
Common stock shares issued | 3,306,924 | |||
Proceeds from Issuance of Common Stock | $ 65.2 | |||
Term of cloud-based subscription for Extension analytics software | 5 years |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (393) | $ 355 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |