Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to the PDF Solutions Inc. Conference Call to discuss its Financial Results for the [fourth quarter and year-end 2023 Conference Call Ending Saturday, December 31, 2023] (sic) [First Quarter 2023]. [Operator Instructions] As a reminder, this conference is being recorded.

If you have not yet received a copy of the corresponding press release, it has been posted to PDF's website at www.pdf.com.

Some of the statements that will be made in the course of this conference are forward-looking, including statements regarding PDF's future financial results and performance, growth rates and demand for its solutions. differ could results actual materially. PDF's

year to You stated available to subsequent on them. Form SEC PDF entitled XXXX, in fiscal Factors today. filings. information The and conference section XX should XX-K similar through risks update in the on this refer on pages report XX Risk annual call to obligation XX, based statements the PDF of disclosures December no ended forward-looking assumes for and PDF's are

your John Mr. PDF's Kibarian, introduce go and to Executive Officer; Raza, President like Adnan Chief Chief I'd Now host, ahead. Kibarian, PDF's and Officer. Financial please

John Kibarian

you on Thank today's us joining call. for

If quarter, where been posted. you've and first please release go press to each has section our not website, already the earnings our the management report for Investors seen of

was our to as our strategic analytics newer revenue first our from we of a partnerships customers. and The start adoption year, end-to-end benefited continued good strong, remained our by we experienced quarter

in and I some market of perceptions Before Adnan quarter the the detail, our year. have the the remainder discusses quarter comments second events of in and the first in the financials the about

last a quarter collaboration our enabling pattern were that organizations. our timely experienced data, We benefiting for This customers with in and In first QX. booking SAP. manufacturing started record to HANA SAP's and integrate products applications with strong. ERP a the for is quarter. also accurate which Bookings bookings finance bookings X-figure we our from data quarter, light QX more in a operations following level, activity analytics large with followed first the of strong year, the similar Despite remain very

This as our changing a of Cimetrix designed react customers near to product manufacturing collaboration as extensive of real-time engineering data, customer Hub connection provided that well well The more are Sapience the data. as our acquisition and quickly business financial, and to solutions leverages completed includes we ago. X operational years ERP, our SAP with enable about is between solution engineering as Manufacturing application to to that which result Our enables environments.

More collaboration with our many interest than for expressing in customers this proof point of application. this an first being our important SAP, are

partner quarter, collaborations business in In the to was total, strategic strategic our and largest XX% in via in of other important strategy. SAP-generated bookings partners. also QX speaks the our related booking collaboration our over This resulted of bookings the value were While leads.

end-to-end industry, independent As largest analytics a the are natural the to we partner. provider semiconductor SaaS

significant including edge Other memory contracts one development, customer. quarter a bookings infrastructure leading in the for for with advanced include

experiencing solutions. to Our similar year as a remained year, volumes. so memory investing customers are customers, we China, strong Gainshare with customer this shipped PDF QX from of encouraged unchanged correction in nearly this at last particularly see were

QX business licenses runtime and results deliver ratably our activity business revenue the of pleased the in shipments Cimetrix's strength earnings. connectivity partnership in and most equipment were revenue recognized, the customers' we our in backlog quarter QX is demonstrates Finally, model, the strong We strong with bookings and versus surprising to of given This it strategy. the equipment decreased. for as as continue model in our market. weakness meaningfully with where decreased our Overall, is business capital not

me product let Now turn to discuss development.

DFI includes capabilities our the eProbe Hub, next tool. the new and advancement products in Manufacturing year. coming other Beyond this up Sapience have we This

and ramping of often structures. last the in signed tools part contract for include large backside advanced X-nanometer and It is customers first shipped X- designed we year, power which technologies, As the gate-all-around of April. we these

about are excited very We this milestone.

such and key, markets quality and is system data more center. products, Customers end package where are targeting as automotive building

critical at more For test test advanced use more is points. it screening to insertion these customers,

our we Network need. next will scale emerging this their designed for exactly Exchange feed benefit model set to as applications test ACS data model customers monitoring. edge Voice of Exensio are These models Conference at back built demonstrate for box. and ML week required the applications from Advantest's have We forward and This as for DEX building and Exensio deploy well feed and and Data managing quality cloud the platform, at

set and future. expect a the to half from position fruitful, release results the in a this we Overall, product of year believe us second very strong standpoint, which results to have in we this first the strong be year will will -- --

impacted and customers. into generally been inventory quarter is environment that many semiconductor fabless foundries, has the correction XXXX, an This IDM companies unsettled. OSATs equipment has One There our and serve. the also affecting of we

is environment of economy, and our energy the devices drivers AI/ML, the the cloud, short-term including remain the long-term use smart of place. electrification in customers, for While unclear, increased

remain earlier These provided of amplified the are by government supply of being overall the drivers in around and the increased revenue mid-teens. diversification the for annual we various confident are outlook the that the in this We seeing approaching semiconductors investments we growth world many of customers are embracing. year our year chain

on users the to Santa Marriott. Clara October we meeting the will group also XX, XX have at announce that through would We like the PDF

hope and our with pre-COVID attend. see the We from learn in gives stockholders able capabilities that PDF a customers, This Analyst As Day also our to you'll we October partners, event, on an latest chance host will be other. XX. each and analysts to

to for thank the want I their quarter. employees PDS efforts all contractors this and

over to and I the results. our will will who on provide finances call Adnan review Adnan? the turn perspective his Now

Adnan Raza

John. afternoon, are and everyone. I with Thank and to of today, families you Good you, all well. Good you speak again your hope

quarter to first pleased XXXX. review of the results are of the We financial

are our As website. our section and in report earnings the of posted the management Investor release mentioned, Relations

today. note a on reconciliation in Our in also filed and was GAAP non-GAAP all financial of on results with financials SEC provided our a the the to Please XX-Q basis, today's Form that the discuss is call are we website. materials

last XXXX. and quarter quarter also on of up revenue a year-over-year Analytics Total $XX.X at the well. XX% revenues up basis. $XX.X for We slightly first are sequential first XX% good increase first of start slightly to basis the were and as a million, quarter on a in off an year's over sequential up came with million,

strong performance saw and from equipment result business, by of we Exensio of year-over-year Leading shipment offset trends is the the Edge Our some recently. a strength

Exensio products, the benefiting are our quarters, across For we over platform manufacturing utilizing Exensio the from deals few we last about recent operations. large the spoke

customers with business. For engage we this our multiple to expand leading edge to see opportunities continue solutions, strongly and

For we meaningful Manufacturing Sapience downturn our products, due products new to spend, our in capital while as investments equipment saw impact a from in we such benefited the Cimetrix Hub.

near continues long-term our strong, believe growth exhibiting we targets. to as business or Taken in-line to a be whole, analytics growth our

IYR up revenue last year's XX% $X.X first million came at in and quarter. was over

over this rebuild levels. We are have we to that meaningful the able years X.X been last pleased to business

backlog the a Our million $XXX quarter a quarter ended strong for million at ago. from down $XXX though level,

quarter-to-quarter, of basis, bookings in size from the by of over we a we the the year. will our On our XX%. mentioned, encouraged John our up QX vary backlog what at year-over-year As in end and see for are rest pipeline is

able accruals for year lower for for from XX% cloud higher last benefited the spend versus first some and XX% QX gross Our from came and in expense as incrementally to QX, we optimization. were XX% revenues quarter and at savings realize margin

the expansion sequential a Our ago year driven with versus margin quarter. XX% revenue operating operating quarter came cost our expenses. year-over-year stronger prior primarily basis, sales a growth first same of margin lower in of period On operating by for growth, the expense at XX% coupled was and and XX% from

apply reap as our income benefits have spend. QX ability QX, we last $X.X to meaningfully quarter to share, the both million compared year's margins more allowing year in scale and per compared $X.XX share. to improved last We totaled Net effective $X.XX resources for or business, engineering efficiently our net $X.X cloud income the us similar higher the or cloud of per essentially to however, million of

$X.XX EPS share. our For year-over-year, per by increased

to balance Turning the sheet.

carefully the managed $XXX.X due $XXX.X with quarter million, prior equivalents to to CapEx cash have bonuses and debt. cash employee the us. and support opportunities the spend ahead end timing balance change with ended of compared at We quarter, to payment position million of primarily of driven We and the of carry X our accrued of

next expect of customer to pilots the the costs moderately year. for to to and increase opportunities half a stronger for investment we rest As meet we the the and year, look bookings of the ramped quarter second

XXXX, a quarter rest us full on well year all, was revenue stated comfortable the For continue year-over-year basis. to mid-teens positions we solid with a previously for the in year. first our and rates the of approaching be it All growth

We and the and the partnerships. model from value with our resilience business our are potential pleased strategic of realized

save-the-date conference and press starting hosting We all you also Analyst User's look for later Please look a October during week. to PDF this Tuesday, XX. on Group Day our announcement forward planned

Q&A. With the turn call over the to for that, me let operator

Operator

And our the question line comes of first Securities. Blair from from Instructions] [Operator Rosenblatt Abernethy

Blair Abernethy

I just pipeline sort what guys. forward? if the sense long of some of cycle quarter, wonder how X-figure John, around could just more of deal, little systems selling in and the And with manufacturing going -- solution Great terms SAP. here execution color maybe what give looks you this a like

John Kibarian

Thank Sure. Blair. you,

years, how And -- relatively in showing Because with -- SAP different that quickly, of discussion definitely that out I working us a customers cases, work quite designing organization, software was for wouldn't early it's working, that them it organization. understand their a a to cycle, But now I one that been the of I for couple think, been think, of this companies, but building customer on this of the years. to the was with a to we've of of parts closed market. So on customers, it it, potential been them. of part have selling we've part bit participate the this which in our first the our cycle. helping selling with in say actually some out them, is application, companies number customers, with for obviously

time how points. different the The tool, for insertion applications each real-time each much has, information -- are way the for they yields advantage that Exensio going for how is much the are of through take consumables way what are used at

their ability a I on analysis. So the number operations also and per basis that with applications that are route to system, field costing what look the when truly understand organizations basis. model. the is have that returns other on data data manufacturing really enhance costs their economic understand then ERP the the And execution you a very at product a and of in accurate a per can combine

the got that of at costing other this this a In large customers, with, point, as sold deployed that a doing together, it's have on brought said, to that to number I was talked to before interested SAP in felt companies customer also we good talk the ones is contract, that to we base we are this handful same that platform embarked application. SAP deployment. other a pretty beyond brought there we the us. other And module we And a demand first see -- the and SAP data probably for us a connects have as we customers this,

be constant to real handle time supply more speeds, as them sophisticated, gets a a customer want from desire near -- of for the more all more They hear real-time important increasingly nimble. base. and do way automated these And be We companies. to the having becomes chain very

new Exensio have So and understand we're this us with and build worked data out super capability. SAP that help it is application way And a to to connection. Exensio really us this use happy the

Blair Abernethy

just marketing just feeling just you from your spending Could your the to That's there plans of of up with that to spending again? the some count sales and And the terms so partners, great. respect areas be in through rep your levels go to -- growth? clarify going you What perspective. drive going spend you are to how if And ask are you and Could Adnan, year. continue in are also, forth? for this your just said could of sort I XXXX,

Adnan Raza

Yes, sure.

Advantest may time the see realize us we on necessarily doing will you was in, the up of year the and look, #X where revenue and I bookings mean, XXX for was business. This the engagements. This before the leading to And focus we not year few engagement. growth that getting for years ago, So the come just when right, we from last function edge of that true because to some continue us ramp investment. and were true before the of is matching time, a goal as we were to grow ready

those events is seen this So we have that well. comment just as similar past to

us in You're the some feel feel also us hearing that good. of booking we about in rest pipeline from the how how the makes the and terms of year of

So some of of the bookings. some getting do increasing some that of those ready related regards to comments with to are spend to

we look, to another sales optimize. this and try area is As marketing to again the spend,

those increase, I customers. With R&D up the improve over the from of at will increased ramp look of for Most we we kind set on we the we scale as the serving that and our that quarter-to-quarter. be our of revenue that a have, we think increased But margins hope expect and take development would platform close solution the time. areas capabilities a

Operator

And our the Tom next Davidson. question line comes from D.A. from Diffely of

Thomas Diffely

John, a I historically, I'm a thought memory an driving little been I'd not just level huge customers. curious about mean, of what's there. portion the ask your increased you more bit has I memory business. activity

John Kibarian

moving look memory seen at from of of processing more through interfaces and with system. a Tom. memory to the of as more Yes, as we've integral some commodity part elements, kind When it subsystem to very the you, separate this being computing, as this customer more involves Sure. futures a compute you well Thank standard others.

wanting are characterization get characterize control customers logic manufacturing. them in of portion sophisticated able So elements, to to more be the and design better capabilities, to of interface memory the them statistical

the an really was of kind not historically, afterthought. design of of built kind of and memory logic relaxed the aggressive past, relatively with terms legacy the performance In very portion rules, in or typically

like wafer, of use at of X-stack Now we advanced lot on one more technologies, technologies wafer, because element how there. some do another -- see and this more the others, them do flash coming nodes, on logic ability moving logic, get are memory we bond really this you in if we integrate of the the certainly together, one you with looking at look element is to what sophisticated is memory more you with And how performance customers, then a logic. increasingly course, gives

water this early putting insignificant our like It an saw of my a kind alluded not we years what is of as contract. is from we started this ago in customers. So comments, in as demonstrates the we interest toe And of the couple customers kind we generally they we're the more with the if broader other to of And area, into our systems this demonstrate start characterization new and a to course, expands out value some PDK around when characterization have it with them. successful. of

per to this are that you or you're the the about, increasingly asking is performance is idea subsystems watt become memory systems. that And with an and to I more dollar think lot awful I subsystems. computing advanced memory logic trend Tom, as really get more for But use broader going going think hence, have future important per without PDF, world of

Thomas Diffely

lot that it's to Okay. than just the and sounds DDRX lot going like a together. And it put a being but DDRX packages more heterogeneous from complicated just increased are logic, on it's

John Kibarian

Correct. Yes.

You're right.

Thomas Diffely

And on the side, carbide side then strength silicon? automotive on you or seeing with silicon the are control the with just the the side power

John Kibarian

being applied, We most test technologies where use and edge. ADAS, sophisticated. to around go comments the are test are that the the which cars do controllers to chips relaxed lot cars customers operations relative cars, my a into terms the They're because to looking I in quite on would -- leading FinFET the be trying geometries very the very, of historically sophisticated kind sophisticated of referenced In think that below screening. for places most of see the you

X-nanometer the measured would in in decades. see when, your you that have car, phone on the time in between scale, let's would time your would X-nanometer you So say, historical see and been

years. Now it's measured in

happening screening first the . so sophistication we're there. And seeing

still sophistication carbide end-to-end bring-up and lot stages. getting is of think, analytics seeing I there. analytics silicon just of a really still in the use carbide. are We And Silicon is, primary the for an increased

say more are first I'd see behind first. they're use that far place So the edge, the that this leading tend capabilities trying companies, phone where we to advanced which them on technologies the to not use

the across will automotive majority Test market. automotive up So the the -- of spread kind it across and we of over time. market to go expect sophistication

Thomas Diffely

silicon of you next-generation sense. see as data the in And when see to well? Makes some you are Okay. the kind starting photonics then side, strength center

John Kibarian

We do number have on photonics some silicon Exensio. customers of small

one that that nascent. data logic flows, as calls. driving the still folks very, performed companies I silicon. at increased of look with didn't application-specific I we of that assembly that seeing by as previous to processor-vendors R&D using and is silicon. are And of that analytics designed your you're class a chips part center historically anticipate in Really more side, think stages broader really by own specialized to more The of of That of continuing very Exensio. in the design to still our system companies R&D alluded the well we complex is than being an conventional see it number set use workloads as moved driving trend being more more their a

Thomas Diffely

a describe Okay. just Very X-figure clarification SAP, How is PDF that? joint that for maybe quick with helpful. question. a Or And venture? then The is you alone? would that deal

John Kibarian

that's our that's so Yes, -- just product. for

available. are We

at If SAP product the is -- SAP Hub store. is you a the look website, on the it on Manufacturing

when sold the that. So a on they to store, commission get do

is from time, for So our drive revenue product. does to that but them it time primarily

Thomas Diffely

When question. upsell for final in that what then with the new you And base, is Great. products Cimetrix at base? installed opportunity installed look the Okay.

John Kibarian

of we did that's Yes, our had a the question, one we great -- direct merger. really Cimetrix ideas Tom. And X when

this ways spirit data really the of originally analytics types not really connectivity first of was into bringing was we but new in first, imagined, opportunity, and that had new data first types SAP new The piece. analytics. And of bringing to really one kind it's the

the analytics use the equipment, uptime equipment Most the by of available service generate our to equipment bringing was analytics companies of recurring improve equipment, functionality and equipment making revenue usually of The their for consumables, second to these are the piece contracts. large products of larger from it companies.

Cimetrix look X to Cimetrix's using base, customers that And are of you but When need based. top a recurring them, with are they the they -- we generate connectivity, a couple companies at equipment analytics a have want some XX. with #X services, the through too, of for the company, analytics installed do revenue lot or

Cimetrix, making actively that infrastructure leverage ability that new So their our analytics, companies' in development, incremental and new working products been create the combines the types bring. data to we've analytics service products, leveraging Exensio equipment platform

with next those traceability. that released would engage to leg of But first our there the others the desire and was generate through that we enable is year. hoping the kind into recurring customers. The the is that. already second We're But some are of that year are customers for to of this equipment We've on as get on working one relationship. which of companies revenue stream, we that most a EXXX

Operator

[Operator Instructions] And Craig-Hallum from of the question our Christian comes Capital. next from line Schwab

Christian Schwab

guys. quarter, Good

it's materially? question down quick should one over that say, where to -- visibility. backlog that expect calendar Or to have should of around just to Is this backlog. like 'XX, we years, the move that exiting do know visibility mean, gives you be expect be be time worked done something continue I which to the great as on, you I So is going vast think through of of over John? majority layered couple type I we next

John Kibarian

could number grow, to a versus you always On we've a that's kind How this the specific course, of given can't of year-over-year expect Yes. specific -- Christian. quarter it I exactly I like a quarter, quarter. does it on know generally basis, on basis, give it mean, quarter, there end do But got are we I previous any the that Is is us. QX, deals We bit. it little generally out a to at lot significant a on of of see QX, year-over-year down it's where year. affect expect a Timing we a QX, increase. the you that for difficult. always right,

Adnan Raza

add, like to mentioned saw a And in if could last what his pattern John prepared I remarks, we year. similar

at QX. to of down backlog XXXX, looked you was compared our QX it If at

look So it's We'll always we timing how annual the that to more performance exceed function of year-over-year. can bookings. of and

Christian Schwab

next is Advantest quick it follow-up. them? new come and I -- Great. or have where of is an give how pull-through And to from Can you guess to -- then, us would customer or type do ramp much is or expect business one you update year What ramping X? the have opportunities I level on that

John Kibarian

Yes.

it's So great.

we bookings would of We've grow. That or that DPT. to product come of a first that. say, a incremental dynamic business. an book, from with derivative up That test, Our announced I continues all-ratable was It's we with year, to them times that. a parametric couple continues see

booking out ACS Those additional of QX So products, entering layering X more, and on announced more. customers on We're Edge products year pilots. obviously, it's products incrementally with Advantest demos I announced every last out. with we time are when store. are think, they in We've some their in them those doing

is start we at also over So valuable our announced which today revenue. should that at Christian, products this really -- announcing their dynamic quarters, conference, week, going few we're -- point some incrementally capability. demonstrating they at like next additional the leverage on start driving we actually, user AI/ML test, this anticipate Voice parametric then this And

released own the data having So store model PDF all feed now. set next are of statistical are -- anticipate can and or data Customers modeling so, or they ML environment. first rule-based were back. allowing those applications. feed the bring their releasable leverage their primarily tool quarter over on for These applications we forward, model and And model-based those products

apps on And store, and their then have we north would anticipate would X eval somewhere cycle. going we through of same of then kind we those the selling anticipate by

directly analytics sell store. and their if our boxes advanced point accounts, So to the for Edge revenue. commitment in would the sell with start different in vision modeling products or Edge the us PDF, say, helped capability, other market, advanced has to with so, that modeling we've for I not the where vision them year it's and more meantime, through been driving their more even the box In point each think for I to both hopefully, our to the marketplace, Advantest these bringing next and over will

Operator

questions. Thank joining Thank call. today's Ladies are more you. concludes for gentlemen, no there on time, this and At the you us this program.

PDF Solutions (PDFS) 9 May 232023 Q1 Earnings call transcript