PDFS - Earnings call 4 2023 | PDF Solutions, Inc.

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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 Sunday, December 31, 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 at PDF's website at www.pdf.com.

Some of the statements that will be made in the course of this conference are forward-looking statements, 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 and 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

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

John Kibarian

Thank you on call. for joining us today's

market our you've for where posted. Today, been start on the year for conclude Adnan our the our perspective If year, on we provide then an overview each on earnings with report and and with the we'll financial the of call the turn XXXX I for before and a quarter focus and of the questions. prospects of particular results full outlook management semiconductor his the our seen with website and then Solutions provide already fourth QX. to a perspective will please has on press not business will go review our release section over beyond. PDF Investors

XXXX, Conference Users semiconductor electronics our industries. and strides Looking in is end-to-end the for visible our October. the at great on company made the This back platform goal of analytics being in particularly progress

including Renesas, and of our Xx was presentations many conference. We turnout and last registered over partners, of had attendance from XXX companies, First, with the others. Intel, which SAP, represents over fantastic people Devices, XXX from Advantest Analog customers our

our product and and application our products. engineers our new revealed maps managers developers Second, and road demonstrated

test digital bring operations use they enable accelerate Talks product our quality. our of our enable XX% manufacturing processes, issues guide their to product and described to to find enterprise. connecting new a overhead Customers for development, analytics Design-for-Inspection by to and our use engineering cell products AI reduction to manufacturing automation of up in products their included platform transformation technology yield revolutionize faster, hub and solution and manufacturing the operator to Sabine how

and above a Turnout previous We also from progress meeting. year community investors significant Overall, updated our for was positive product feedback Our substantially information we investors. for our analysts. XXXX of and partners, development. customers, analysts also was received provided in our from investors the

for Xx eProbe the X shipped to find Our ship the and machines in eProbe both existing a a issues was customer. in manufacturing new was The machine the and one at by an middle DFI team metallization layers. to able the it customer, line has model XXXX to year, previous generation, of yield the evaluation throughput optimized of and quarter, a this fourth

and teams deliver first ERP to Exensio Our hub XXXX. information. Sapience manufacturing the applications for in Sapience for the and our to work the link analytics We SAP's system together a product solution contract signed this customer factory to

another. The in models Ops putting be AI in chips quality, applied AI them at operating interest millions the chain time production putting to right thing, data then this models properly the fantastic. Ops yield challenge Building challenge our to and enables supply so movement to by chips model's while PDF's and in in tests. is part machine AI models on available released to customers the tell solve can real product. production They the improve the advanced is complexity manufacturing desire orchestrating ML floor ML due product to the test Customers we that Finally, apply of Ops increasing packaging. to ML a entire has operations. the data, and online of management and flow. monitoring AI of the of models the of the been producing have us get our is one from ML and is Customer execution

quarter. pilot this in customers with are deployments We

course students this able ML While to the familiar look manufacturing. data Carnegie there industry semiconductor new ops great, this been offering Masters real-world Mellon the software. Teaming AI with interest University, and with in cost models to work to pioneered new the with Intel past has develop and The are fact we enough fall. AI has Exensio been using our a future. that in is, both engineers are forward in were and Feedback not we expand

All product in effort positive development growth the applications marketing, of resulted and our in field business.

contracted the that XX%. a the backdrop year, revenue of we against XX% industry For grew

I earlier, depth. the comment will on As financials in Adnan said

the bookings by process Exensio QX test our driven in While we as first Bookings were and strong, built control muted, bookings in deployed and were solutions. analytics QX manufacturing X again customers quarters backlog. were

the bookings customers to equipment originally helped wafer weakness second the strong of despite performance run revenue due The and share shipping gain in for time our in less year. product half we licenses than expected fabs

Exensio booked our contract part transfer the California DoD to The the labs Commons contractors leverage we defense quarter, the first advanced connect wanted of new technologies contractor's in with Finally, smooth as to to and to Mi Southern program. of products. universities fabs

We and and are made is AI in the factory by floor. and of is the technology to reinvigoration XXXX this manufacturing ML driving development proud IC bringing and to already we summary, program in underway. In with the included be work PDF progress

view to will and to be QX the cases, down. reporting weak the Turning many of of and are XXXX, generally our of half equipment They our first half Many expect that are customers return growth. will of customers in year relatively XXXX. foundry now reporting second fabless

increasingly the only economy some manufacturing possible, intelligence of electrification experiencing increased semiconductor the driven by trends intelligent and products the that weakness, are -- diversification geographic energy near-term AI accelerating. of make long-term While the customers are

significantly expect backlog the trends last we and Our up industry, build significant macro can versus be the outlook for and longer-term year for year to short-term we weakness expect have the growth. both meaningfully. in reflects the the that year, IC Overall, bookings to

similar year-over-year suggests half in of will to of XXXX, the roughly we the half front look the for on last. we we basis and returning in positioned in when the truly appreciate future. last contractors, opportunities model expect be XXXX, year. Overall, partners year us progress we of year for the first to see year effort made the growth our to revenue in consider and flat to the customers growth that we When have second a and compared employees, the double-digit the the the XX% company for the of Our year

the on call over turn Adnan? comments more and results. details I'll our Now, Adnan to for

Adnan Raza

you, everyone. Good Thank afternoon, John.

full to quarter fourth the pleased are year of of the XXXX. review We financial and the results

posted management a our the in Relations said, we our earnings As website. Investor and release John report of section

GAAP by financials and of Our with the quarter basis, today's versus to call materials ended will February be Form will the our SEC the growing the our complete. all after by with reconciliation the a is note filed the audit provided annual a the financial is on I'm discuss third that that of John, results fourth non-GAAP on website. Like final end Please XX-K quarter in results 'XX. backlog XXXX pleased in also we of be we

was backlog at $XXX million. of end Our year the the

of $XXX.X year-over-year full the record XX% million versus increase. in generated XXXX, we For a year revenue $XXX.X million XXXX,

here. worth are items highlighting Two

revenue the on our First, grew for XX% full XX% year a analytics year-over-year basis.

of John revenues. revenue against the out, company the rate delivered contracted that XX% total XX%. full an as for And a year growth the backdrop in we Second, decline IYR industry pointed XX%

declining the total X% XX%. 'XX, year-over-year was and of million, our a revenue growing $XX.X For slightly revenue fourth IYR basis quarter analytics revenue on up with

gross our quarter, fourth and reported margin per the For $X.XX EPS we was of share. XX%,

$X.XX. results. 'XX comments. I we detailed Turning of On basis, full margin our will EPS back XX%, to and gross now full year year a the provide was reported

percentage versus prior Cimetrix revenue year, connectivity generate despite end For $XXX.X market equipment to ship due to in shipments. licenses decline their revenue million equipment the and full runtime the that the XX% down year, were customers which analytics increased fact double-digit

We double-digit solid dominant for has now provider solidified and semiconductor the the to progress mission our the XX% global our overall full supply of for analytics contributions as of are is Important the component revenues chain. Analytics total become software year. making leading on to business our revenue quarter, revenue the our of came we product systems from some key the revenues. Analytics signed from DFI in Exensio also dollar saw adoption contributions to signed fourth eProbe year, customers. large million particularly by continued analytics adding recurring deals during deals

our We leading-edge has customer are manufacturing eProbe at pleased machine their evaluation. now facility for DFI a that second

year. shipments We our With growth equipment stay respect watch to a full with weakness Cimetrix basis to for products, we on continue affecting of year-over-year the engaged to customers which tool the signs for in shipments. declined to software equipment revenue, see in contribution

analytics for in the as revenue as year it our a the the this with is total well prior XXXX our highlighted XXXX full year achievement. at for is revenue year full noting XXXX. for year noteworthy more on last call another was yet Just company This year row earnings year than this results, for XXXX we worth

as For of reduction completion better from XX%, margin at fee revenues margins and for that due full able improve primarily the total we gross some IYR volumes projects expanding grow on to Despite gross revenue fixed business gainshare on driven $XX.X another decreased, key year by which gross margin down comprised XXXX, cloud the margins. full gainshare in were from customers. Gross XXXX, the million revenues was 'XX spending is of at we optimized up year-over-year X% part a fact infrastructure year for of XXX% year XX% reduced increased to basis, the gainshare, engagement and XX% scale. from to production shocking in

Turning to operating expenses.

for year XXXX. 'XX expenses control XX% XX% the of to full margins operating also our the full growth compared the expand We to to the year for

between to to the the During growth in in resources funding are the our better activities our of seeing we we sales our managed and pipeline. R&D team while use presales opportunities distribute engage year,

XXXX, the XXXX. per For XX% for $X.XX growth of reported than reported the year compared more prior share, meaningful to we we the share of year a a EPS $X.XX

collection million, initiative EV business. During of million about on battery $X.X the million operating acquisition data $XX.X cash our we on positive $XX.X for million for we flow of on CapEx for leading-edge of analytics and Machinery generated buybacks. the share year, which $X.X Lantern systems spent our

We consistent year operating capital of with are pleased with generation, history. positive another our

of to in Analyst against no XXXX, balance equivalents We're performance total the of year-over-year margin October million carry and of $XXX.X $XXX.X compared set XX% 'XX with at investments environment growth of year revenue debt. of the we proud the XX% the gross 'XX and company last operating committed the we continue margin. end and long-term the cash XX% We remain to targets short-term at million to to our rate, Turning sheet. Day ended and and macro year

outlook. Now turning to financial our

we look to XXXX, year. forward For another growth

our of our our the said, in strength weakness the release, and of electrification, in pipeline, reflects manufacturing, the macro by year energy outlook earnings growth. AI, bolstered and stated distributed semiconductor significant drive trends As which industry short-term the for both and John the can

flat As of XX% of result, comparable first we XXXX grow the be I'll period year, expect prior commence a second the of the the prior that, the revenue period over of the comparable the call and over half turn operator to half for for to year. With over revenue question-and-answer for Operator? the the year the by to to session.

Operator

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

Blair Abernethy

John, DFI. question pipeline as around point? us you you've if that XXXX? DFI look customer. the at And -- kind some from give just just revenue this what is to have to my forward second first started a recognize wonder shipped does for color like And great of any some look you I -- was It's into that? can you just sort of around the

John Kibarian

Sure.

to here -- what we of for the ship is the quite So quarter, said number this capable in but the customer us California, ship Asia. here, fourth to did by a facility technical the wafers I manufacturing this customer came of East of yes, We seeing having evaluation a evaluation. in machine wafers is [indiscernible] is in our

and has in machine and Conference the our it's adopter after using machine Users it to over Users uptimes wafers, the you facility to So is the the past they And was the that be really able we fall, able this had repeatability there. used And that show as were to ship what early able scan Conference. to that maintains customer to production the wafers, our at wafers, demonstrate it purpose day. day our there do

the evaluation. we be this we demonstrate and out that have that achievement will good of success revenue confidence convert we've able So set then into that to upon milestones for

year, customers existing a terms this this year customer well adding do this the In outlook of year. year, for we anticipate as in additional in this customers expanding as within

than ship to a so a for as of shipping at able let's quite say, more this machines with couple ordered this shipping, start end bit be end expect few But able the year more we're early we just to a already expect to year -- year next rate to we'll a year. we're accelerated to of contributing revenue. able and to -- We we be machines, capital but this we've to get quite

contributed So you say last this year, that revenue. X today, machines

that year. number Xx of this over expect We the by end

Blair Abernethy

growth? equipment flat you you confidence for sort first understand I'm gives of wondering, tepid go Great. substantial to But you your help pretty and I still shipments guess, what just maybe Okay. IYR can the with and the in the with the half business a pretty mean, being effectively us half. your I thoughts from half first to And rationale, I can that second can guidance guidance, --

John Kibarian

Yes.

question, we on. of completed quarter, signed in Adnan said, saw and of great It's have quarter, we in bit as And quarter it's were that the activity next fourth activity have of ongoing, large contracts bookings large. the which then a a couple going in quite So quarter fourth a this bookings which some QX, Blair. that have very the

growth. to of booking of half over And build and the substantially bookings that second year a QX standpoint. on year through year, given business, of drives from be the half expect to first get momentum you just in the We that the then nature as ratable the last incremental this

deep The bookings little in very QX. will are QX. The gainshare year. the activities And customers business weather situation are in more internal in It more little So QX the with macro feel drive is the in more as we and involvement. more very -- the lot pretty it -- licenses runtime will of reason that growth we a see or drive in then incrementally you [indiscernible] overall revenue us. customers book There like the for we that we like half in about. get revenue that discussions it in our QX, second of with similar do the that [indiscernible] specific we're outside confident to

Blair Abernethy

get it. So I

So to in the opposed your equipment control market have to for more on as business to you or back more Cimetrix. on the side what waiting come it's you the

John Kibarian

Correct. Right. We're not forecasting.

the forecasting get We better towards of second are year half growth not ton modestly. forecasting we We're the getting gainshare. of equipment as a in

selling growth this forecasting get that really in activities, Analytics QX of of are in the QX ton year, We in -- around half happened some in of half particular. the a more QX, which of primarily sorry, the and of and first year we happens second this as

Blair Abernethy

Okay.

Okay. last Great. And I if one can. question, just

highlight, would made SAP, the progress it significant -- you've sounds John? there on side any be Just like with partnership you'd partnership other

John Kibarian

in release my think talk I -- did new we prepared product what the to SAP. remarks about on

that we've momentum. generate and of revenue Of to course, are in we've a with products number done generating conjunction that continue Advantest had

with also Ops ML on have their we in interfaced the pilots with Edge infrastructure box. the of Advantest Some that --

to two bookings with on expect market start them pilots the as customers. number And more partners additional with that active additional partners do our When are go year. with be expect in other our we throughout bookings with at So driving we driving those we we as work to of this of look that, beyond partners will we we drive customers. go do a us

Operator

Davidson line & comes Our Jellison next from Co. question of of the William D.A.

Will Jellison

I'll ask queue. two and then get in back

front as uptake metrics existing that, well? more Analytics overall observations. you wondering level on of updated one within And see your per on first metric. then revenue just I'm within you the The customer the module share can is if customer any base or that Any color

Adnan Raza

this And would we over as quarter, expect absolutely. well. metric look, going Day the we did well. case would the we last Analyst this number quarters, seen that last the post we're And the calculating few as that trend But that as for and Yes, post finalizing quarter to that every the we've number itself. up, of be quarter, it

on by that scale nice X larger dollar In in customers about with a adoption that large that of are the deals made call additional referenced of continued -- in we million double-digit talked about, large as the our customers, we using to products terms the deal. the customers terms comments the see it's with

state post the as about some So days deck few for next investor the we the metric our that details on those metrics. in about of

Will Jellison

Absolutely.

then a it to as last in and And from the reinvested investing those intensity incremental your there further to margin should October of going of was was get into just PDF investment on I profit it get is sales Okay. those target gross second PDF capture your up impression Day And is to effort going a opportunities? wondering question expect approaches remember I was getting step the the concerted of that sales lot whether not the that even in level or pursues to opportunities Analyst and XX% that that we marketing. to more and presently as more marketing.

Adnan Raza

side. Yes. in Look, we this talked mean, frankly, to bucket, we you do early we've through about growth, ], know if as I it's you, in with that where on marketing [ that And plan candidly spend the been we number tell combined side. would really -- within increased G&A some year, I and but year, of SG&A not is sales the I'll a the the reported and S&M

the add hired of to new the saw salespeople portfolio. of our especially that some have grab and them in to people, we some some dislocation given M&A and We the market good the

proof S&M. on to that question the okay, and you together early you ask great, back X What say, And are add spend where points. the the you you

us call on that along is the you're those I think lines. hearing from the tone

time to plan operating is a annual we early the then every you Board. of a sharing at top-down we looking we also are year our do that guidance at we we the that's deal up the good how prepare this able we're with and end of And year, and the give presented And Board, us to catching time. the You're today. present to as the that, views This for the view. timing

the in to S&M up hopefully we've pipeline results already early more starting to spend chock benefit did X strength show yes, that in the the we the deals of in of and increased QX some come. that hopefully, So and is

John Kibarian

Yes.

think this maybe around, -- year, full think when marketing cap little throughout up I look mean basis, I lot and get we I now asked that a we than this a it of year? last be think the incremental for you what as of reason just does increase will into you okay, investments, bit But year's a expenses will that happened XXXX. sales a every as the at make we quarter. this you year accounting modest why have but higher year, quarterly

expect we more to much So it don't rate. a increase going that -- we're at rapid incrementalize incrementally

fact, a last year, be an QX. than it at higher year's it In arguably, it full more go because will But be muted on number a a modestly QX, than annualized right? higher expense, was you've lot rate. over up not it just quarterly basis, will But a a basis, on

for. what of you that think were have might looking I been kind

Operator

Gus Our line from Instructions] of question Richard [Operator from Northland. next the comes

Auguste Richard

it they Industrial or X point test, like customers? could Analog assembly you deals Edge, products? sort on quarter, signed give fab were The enterprise-wide those that Yes. And more what leading any is in large of color kind were or of you've the

John Kibarian

Sure.

analytics going basic them in with So process capability fab result, they're -- that. with more and them of of capabilities. large. These all both in Both And a more relatively to than front-end now capabilities their Both the case top I base cross are before one that related. customers that worldwide. both as are have One, in more are one advanced been are deploying broadly, facilities capabilities on and customers of control advanced of the they're case, enterprise-wide can related other. answer are

that and are of is yes, to These working and part we others us. early we in for continuing expect fruits, getting in that sales so the this year number the the of building are are related pretty half we've of And what kind those a some of are there's talking two year as them. that of these first on. This larger closed substantial that contracts kind There to large the to larger were been this up marketing substantial the we've these a on. Will's back throughout even we around other of did all deals step work year again we that -- of were questions two, been investment number investments, in of in first than those

Auguste Richard

many the working a of are Okay. us there -- a size just more give you And then of X, your of these pipeline, you deals? of currently closed sense XX? can like on? you couple enterprise-wide Are deals How

John Kibarian

Yes. great a I I I mean, XX-XX top by don't head, if of my could Gus. we answer, rule. the us dollar case value the really give know for basis, I mean, a is always on as live

going probably XX% economy working maybe my level year. XX-plus percent a because energy driving silicon advanced The overall, really customers there's X that even XX-XX, I of really then sizable of tend nodes dollar fair of confidence of the those. there of there's be quite geared on our we battery It's said high-voltage don't meaningful, are are AI, X them, lot -- now of prepared is but head, packaging. drive just includes than process remarks, bookings off the advanced this year. top towards And of piece those technologies. first size to with I quite I enterprise about, I in the value this know that have a drivers the as handful are electrification that that's activity to substantially the these my of number. Collectively about spoke do given right similar deals -- some that are, there's that we're meaningful large. There bigger bookings things said, A represent number a that that as the those So are to a

piece diversification, of of customers and the QX those. in just get So that, ton we to more Ops of And see all have their semiconductors because the really for advanced but AI. geographic enterprise-wide we kind there capabilities DFI the ML these and somewhat activity going the then around of of all of then schemes leading-edge manufacturing, out by a nature number X to control want a driven representative

So overall, it's bookings don't know X X probably the but XX in that. that probably there's than for those I a fraction the -- XX And are range, more probably drive of or sizable the value XX% year. of

Auguste Richard

Got it.

very Okay. year flipping to then this DFI. just And pretty got of decent It through building. what you've terms sounds That was helpful. visibility like you're in

items Over you -- the there's I know of for in more have sort DFI, long material time potentially and go vendors for XXXX? deliveries you had order back some to your last XX have to lead days,

John Kibarian

delivery a a capital, we is XXXX at Gus. if it if number memory looking we're those XXXX And XXXX, up interest. XXXX, my things the up had step we because customer -- going and at machines versus of look you it in ship to and great we to per little It's more increase ordering 'XX of to we're close in point, impact vendors feel going how in getting for yes, Yes, can point pull to expect ship tighten we versus would like XXXX get, that you'll what -- than to times. We because our like the modest been bit. to to back does up try for say, is spend we availability in XXXX, on and our be see step where we've And expect correct. -- to a really

spend XXXX able than we and So we of spend more going ship able anticipation XXXX. are first the what our what would affect the XXXX. XXXX. We're in we're if go then be to and we're what first -- but even in needed in we okay. in we'd to you'll the planning, of the We affect vendors how spend year. think yes, could than have how would capital back pull we that setting discussing to are affect on XXXX, second -- more very already half that. shipping able we ourselves shipments, half to of the capital that, this mostly to more And it probably be be It's for even in much, up XXXX up of see our not part significantly would impact XXXX That

Auguste Richard

Got X? color, it. it helpful. advanced add X that year, prepared your expected you is super there to any color is memory, you Got additional it. then logic? That's any -- that this And Is in there is Any remarks helpful. mentioned customers or

John Kibarian

Yes.

We've So we continue to and year. -- contributed to logic we've see while. opportunities do in also above incrementally industry logic advanced we expect it a last year what in advanced been this contribute the for quite

notes see to could my we've joke in people where on with worked with new you products the An now about everybody executive those as and around -- chatting -- you these from hey, worked advanced would yield all we had accelerate virtually I more world with. trailing but at into what on one John, nanometer. But X and said, the really and than bringing of on interest companies XX, one as has a this, at getting and it everything with past me, ramps helped. you have of just we think up company areas PDF started this XX-nanometer be other really And hey, URAMs would so know, guys that's was edge, our we

just the broader So we leading than is aperture edge. think that the

of going starting other in to early a to industry. to we're also memory the early where double way the those But we some we're about know, have because on for in back very where what can it's starting get now you and opportunities. just some look dialogue. space at some talisman some were As the focused we're looks you you're edge do leading And in going

Asian So much of fab for while goal we penetrate for this able edge do this to enabled to in be part our and ship some we own to to We'd edge, that make that of the year do memory the the did to on in year. continue in got us and able demos at capacity be to lab additional year like trailing is quasi enough for customers them like logic. our end sure edge leading evals to customers, trailing the that XXXX we've

Auguste Richard

use? edge, Okay. last it many When you question. And the scrap these would over as leading Parametric advanced accelerate go this to you wafers like my their process. logic guys, to be them helpful wouldn't development more Test Or savings you talk it I for the promise as is DFI because because through would cost geometry not used learning you is a but

John Kibarian

It's Gus. it. up the a controlling and It's for great question, node bringing

has rates half design layouts If see contact opens open contacted a to the you short typically a on test you just models would the shorts would of look had of shorts on based forever, extract But those and them ], show yield [ opens, opens at vehicle that kind always was optically. of can't we you failure models -- -- intrinsic PDF and layers, between yield layers. because it and you product metal between loss see

failures measure failure And layer layer? want only tell it and that eProbe do only really you, via just the a couldn't all that test real a the because run ] tens shorts from a can product? opens. can the you, got test we at the [ have Well, look shorts give God, that, in the some tools not the you your went vehicle you way They a the tell does billions X.X had thing or months on a billion between well, took a product. to what a can you or [ a you can't do okay, solve the if test XX by customer is and to on John, we billion what's it in you it, And -- Depot billion on But says oh vehicle. failures you us vehicle happening like, and tell part guy and flows because in the ] see it to product, in that. look caught know, clouds layer. the was really that at our single of And inspection layer reaffiliate would contact at opens it's layup test to issues, we then or So no do vehicle way what gives to when really across to short

And why so you or we've can that's that real, measure quite That's XX-nanometer loss. of models, as right? half the always And game, change the is yield kind noted contacts people a XX Vias, in that year XX-nanometer, right? see and even And billion this it's our bit. actually matters of for --

hard line. to see Just in

Operator

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

PDF Solutions (PDFS) 15 Feb 242023 Q4 Earnings call transcript