PDFS - Earnings call transcript Q4 2024

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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 2024 ending Tuesday, December 31, 2024. [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 Page 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 Kibarian, Financial President introduce ahead. Executive to and Adnan Chief Chief like PDF's Officer; Officer. I'd Now Kibarian, please and Raza, Mr. go

John Kibarian

Thank you joining on today's call. for us

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

the the year. for of about of XX% of second in ago, Exensio target year growth in when year in period then our improvement. being to year companies due This reflected the previous investments for roughly to revenue XX%. our year half packaging making was half revenue eProbe of was up compared XX% when The was year. and growth the the to Revenue the Control process comparable half second year, first And the during in our and the fourth A yield Process control the we the approach return the talked the anticipated about of half edge leading advanced sales same we rate up second half of for each the and quarter, would to growth in previous of year. the XXXX, second the and

then had happy eProbe to evaluation anticipated. customer, Similar manufacturing on that and this we revenue The to believe the [indiscernible] in the services quarter. to software converted elect machine to the announce to we customer ratable purchase will they of the a and achievement are the than other evaluation QX, For early due of subscribe the to sooner elected purchase the customers to hardware basis.

discuss we to and for beyond, As our eProbe purchases business. via model machine outlook the for we the of our [indiscernible] XXXX discuss will implications the

the quarter, of and for the software. symmetrics and workshop. attendees as organizations Advantest, Electron from external from XX to Analog the licenses [indiscernible], Beyond Tokyo engineers communication quarter sponsored eProbe an executive control partner presentations fourth in run-time other majority from as the fourth AI Exensio XXX were [indiscernible]. in SAP and listen executives in Also the Qualcomm, bookings well from Devices, presentations Intel, purchase more we of our than quarter,

There messages. were clear a few

First, manufacturing it the flow. across semicluctor data to semantic model align to using is necessary a organize data

from the they Across on provided key business. like a necessary and to insights. the speakers there tangible the tools told good of excitement the breadth there can They fantastic. based And applications. supply connections the and is focus an AI/ML was community, systems across semiconductor impact that direct Second, was other have panels to range that and about of topics us the on enterprise third, is -- AI. attendees chain the are collaboration on take Feedback actions necessary.

we the Overall, excited to industry interest the a proud and half experience key event important second year our the to solutions the the are nexus for of topic. are growth members return to of customer very that discuss delivering. were the in company in see to was we and We this products

of view our XXXX. to Turning

this is From into as other see very memory our we go a are we in in investing, similar advanced build perspective, logic, position a industry in that an accomplishments product we cautious have more much Customers upon advanced customer our and packaging year, XXXX. As of sectors will high-bandwidth while We outlook. base XXXX. a

a around, anticipate advanced logic, also eProbe, being year and while From drive the X power, loss shipments the machine expand revenue machines. of purchases advanced the the via DRAM. will all will able applications For quarter-to-quarter. some convert all We axide ship and lumpiness contact including to we to for additional timing mechanisms, business perspective, not expanding the applications over in gate yield for could

test Cimetrix this Like as subscribe then optionally control, sold services [indiscernible] to bookings manufacturing drive and as eProbe analytics expressed customers buy the hub QX, to and the application desire software. a to connectivity Ops, the are in of us year. Exensio well modules, manufacturing process machines including anticipated and ML most and

system the business process IYR recovering from particularly in factories, volumes year, to on business across high-voltage fabless semiconductors to and few declined logic gain our improvements Today, companies. new to analytics devices. in equipment customers are spans drive foundries. our more Asia, in most this Years is spread ago, the was manufacturing advanced much revenue past years, makers, packaging of as balanced for discrete advanced While has mostly share. systems expected our advanced foundries, it It we from IDMs, dependent at development using anticipate

growth grow we a with some to XX%, approaching with albeit projected is revenues rate the at associated potential to lumpiness quarter-to-quarter eProbe sales. -- while mixed, So industry year-over-year be anticipate total year-over-year growth

contractors I success with I call want and in to more and Adnan? results. customers, over comments a you Adnan shareholders achieve working the employees, the help look the thank now to its all on XXXX our turn XXXX. that will detailed forward for to company in

Adnan Raza

to everyone. you Good afternoon, Good John. speak today. again you, with Thank

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

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

SEC with the February is report the We our file Form on of audit by expect to complete. XXXX our end XX-K annual after

described As all or change financial are changes file a results are accounting call necessary preliminary in estimates we the considered and this reflect in to XX-K. that adjustments to identifying subject should result, time be our to any prior

note financial reconciliation our materials in Please discussed are today's provided website. will in a basis, on that is and on a all the GAAP the non-GAAP financials results be to call

pleased total million. $XX.X revenues report We annual with total again QX year quarterly and strong are We of to the record finished revenues.

the ahead year-over-year, rate growth pleased target our of We XX% are quarter revenue model. that our long-term for grew total

nearly full period prior $XXX.X XXXX, of during of million For year XXXX, $XXX.X of year-over-year where half total generated an the revenues second the record we of growth the we which saw the million increase, in XXXX, comparable year. increased over the all versus XX% X%

XX% in over year Our period of grew year-over-year the XX% revenue for and analytics the QX XXXX. comparable full prior year a the basis on

would we the fourth eProbe During strong increased quarter, run Cimetrix multiple booked growth the and the This believe including, and with successful investments experienced global We X base to now our systems evaluation see in the from of in particularly Exensio sale major we for the licenses, leading-edge the marks pleased time we in leading-edge DFI of validate customers. EFRA were renewals momentum completed Asia. companies success an on the fourth made. of quarter, orders for importantly, we semiconductor the platform. driven by conversion a customer the

to the prior was We for Overall, ramp by the than we of yield are for are the the fourth revenue quarter the improvement in revenue year, quarter which revenue in offset more full the growth. we analytics the compared pleased same pleased the of year. saw our growth decline, also revenue with with quarter our integrated and spite IYR previous

revenue total as year. quarter XX% analytics revenue machine XX% depending portfolio the timing of This percentage Our mentioned, of in mix sales, quarter-to-quarter and total vary John full for on for within gains revenue the may of increases the for accounted and product of anticipated and IYR analytics. the the

year company years results, we as the this XXXX XXXX few it that Just was calls, well year XXXX, for a felt the as year another worth analytics in year for total prior the revenue for rate of full noteworthy repeat for to XXXX is we and our year XXXX regarding last row. achievement on noting earnings full revenue our highlighted a more than

due year gross was and basis, gross margin our of The quarter, XX% margin EPS EPS part our in target to driven per overall we we share. compared was XX%, XX%, very on a Despite $X.XX. by of spending. gross our reported grow the which gain fact previous $X.XX share, full full fourth basis, model a of moves control the towards our margin reported and year. XX% was of decreased gross able we but were growth, margin, margins of better gross For year high gross that On in us margin year-over-year to XX% also the to

operating full a our to the year-over-year invested in basis. our X% map on platform, R&D We Turning and product analytics advance road spend to R&D expenses. by increasing

activity. expenses and meet sales customer increased G&A basis, spending higher a combined expenses sales Our by to marketing marketing presales and were on year-over-year SG&A predominantly increased and or by XX% driven

On side, decrease vendor, to the expenses against time. the we ongoing litigation G&A which incurred we expect to over related

the EPS EPS full share $X.XX versus For XX% reported XXXX, the a and of of we year growth year. prior

$XX cash flow million $XX on million CapEx of buybacks. related our we eProbe to spent year, operating During share DFI on approximately the systems and approximately generated primarily approximately $X million and positive

are flow our history. positive of with another with consistent year We generation pleased cash operating

cash We was XXXX million $XXX to of spending compared primarily to decrease of where we Turning sheet. with at the discussed. approximately equivalents short-term balance just XXXX, ended to the that and end the and the approximately million due investments $XXX

XXXX October target in our up revenue long company XX% we XX% We Analyst XX% margin. and are growth Day rate, we margin against our XXXX, to remain gross model environment, of in macro the committed term, total our year-over-year proud over operating the set performance and at

financial our to another outlook year turning forward XXXX. growth. to We Now for of look

the by which the our manufacturing, industry we energy the for strength distributed Our and growth. expect to of drive the trends macro bolstered outlook both and in short-term the of weakness semiconductor AI, reflects electrification year pipeline,

We the the the customer to success during 'XX. system of DFI another pleased are particular, leading-edge other including, of system with the sale also eProbe QX in

ship multiple we in to during Given and activity for machines XXXX. overall the customer we market, are engagement DFI expect seeing the

in can of we assistance the business, of Exensio edge and see To phase. connectivity reiterate to mix an lumpiness portfolio comments press quarter-over-quarter, increased to business grow this XXXX, but year as diverse on an and annual DFI driven our we eProbe our year-over-year as we book we're expect revenue one, rate to starting John's of growing and composed full Cimetrix expect the operator adoption equipment business software, systems, the the on entering call session. fill, we leading business are a XX% for A basis, two, and as turn grow strong software expect as just total by question-and-answer the look basis. the on With release, to software; the we commence of: growth eProbe interest we customer Operator? the I'll total at our to As a product base approach over that,

Operator

question from our And first Instructions] [Operator Abernethy Blair Securities. comes with Rosenblatt

Blair Abernethy

you just wonder with a if provide could John, color little the us on maybe more eProbe. I

in Just on the pipeline. particular,

sales? talked backlog. additional around other about these had in year. this looking just I the question this follow-on deals are XXX. the maybe year? It around potentially customers to Or came you new Are So several was you add And

some was sense in it maybe what's XXX Just backlog think the in I of well. QX? as happening

John Kibarian

Sure.

my it As be be combination as pilots did customers. as as a new an yes, will we existing one customer capability and and is things in well issues. show unique QX the of looks customers, logic I impressive think new advanced and remarks, it application base. of with DRAM design We results for some repeat the very DRAM. machine the to as sales positive customers a we're anticipate DRAM the of some as From couple prepared the space, for in and QX able combination that in advanced of sales their far Again, will said to I eProbe, as for well understanding as on a eProbe yield in of quite particular, were

part, believe when little do title as is this do So little they questionable how they There right, So we're greater conservative take as you because than and first the when X we the to to a we learn right? machines. being that we have sale, requirements to we and paperwork things the subscribing of convert do machine, machines, will was I over remarks, revenue lot ship on in this as needed of said opposed in title a other my we to it. turn bit of how year prepared us, a many that, we

we This the one That I have these in changed think, year your it in percentage So on learning a book the difference the the little for a the business is I machines, of this will backlog we've are change, in Have have little would of you much way We is that others. right? there. change. for would -- learned we it with create anticipate learning. not characteristics higher revenue seeing as had Initially, a bit. customer. seen something nature past. kind of build backlog, you been the revenue of it, terms to subscription than would done think We question we're This bit gets probably that we have

higher we a have this shift. XXXX beyond will out with higher a likely at terms look rate as revenue model We

Blair Abernethy

Okay.

what And I in out? what's looking have the is customers -- guess, of process customers? the does Great. to new broadening pipeline the the it the with of mean sales keep -- at terms starting Okay. Do capacity new I this? you

John Kibarian

machine like that year first actually, we installed converted we to of the it Yes. revenue this in shipped, that last We the was year. quarter --

on if just anticipate kind think [indiscernible] and we that of and making you the across going potentially demo We first people's into we customers business. half that of you have And we're year. year that When make basis that, on machines customers converting it's enough not like early to hand. -- not this we're in different on look getting transition dependent basically a we sure will ship through the any year want the enough that this you enough so application machines one. quarters, subsequent as next space, in you're a in

machines. manufacturing in year, and of a we of that us lumpiness small So facility, forward the for quarter-over-quarter half said for the with up facility, seeing they in going engagements we an That's a QX could more do next a what right? additional starting bunch came it number in then really probably higher in a customer customer a a -- positives on whole early to this this manufacturing the into number are technologies year, we the than the to half QX number need new the suited we first with a and they different R&D machine of of that effectively of year not us in out which into selling back applications and number thought hands figure We've ongoing That seats set process be e-valves that could had, people's very we us to eProbe why the now. learned us. customers that of lot okay, a right to for, lot second the got valve about be we valuable a thought, that, how would of got of get

that's we're doing so what year. And in this

Blair Abernethy

it. Got

a sounds ago. levels picked have like activity earlier, it up from certainly year the So

John Kibarian

Absolutely.

Operator

question & with Jellison Davidson Company. William comes from Our D.A. next

Will Jellison

first the you. for is John, one

growth PDF outlook last that about as specifically be Over few how saw here you is today, of has publication And to product the model customer and this very the far? circuit the months, active so what to And sometimes curious, I adoption been I'm product important on that year? receptivity the talking ups. yourself sit

John Kibarian

high. Yes, on We . to question, converted It's customers that's great Will. been MLOps XXXX a Yes. quite in

capabilities due because things We we we in data, out measure like. which data part marketing in pilots due uses increase on sales like to what percentage to to engineer so of we also MLOps, a the putting can expenses, AI, guided -- analytics, of see customers the actually have expect ongoing other an like in number and part MLOps looks

to engineer so data. in words, at when may their store X% X% or at may terabytes look may a terabytes customer -- other only or XXX the look -- of their And data, engineers only XX XX of XX

So X% has and AI engineers sure real that the look looking data all or the you then really the make at X% want the signal. -- at can

analytics. offline Also, place this the and to customers are I what things, done as said business applications, be got in online their for remarks, as applications in my prepared gone will of -- Both ongoing. our a important of we properly all XXXX. we've those data and have learning need MLOps They pilots number pilots, they So have in put to aligned.

correctly need they're talked very So good system. to job And that's in metafields you back and the systems, -- now And AI talk going they're a learning all that. getting Advantest the able that systems, talked doing of AI can't just my ERP the user to I also X that. the the okay, our conference realizing, equipment do apply our be speakers about other Teradyne really I at whether wasn't about at you and AI or until to conference that and

need that going final I where [indiscernible] is to to go test. and be at of sort know tested wafer

AI have the things ERP it scale Exensio So test impact to scale the the systems. deployments like on our and of the guided Sapiens of have for on our impact cloud connection and of will or and the indirect manufacturing scale MLOps MES analytics. direct business But will hub an in also those, the deployments, deployment also the

the So else's. whether the AI, And to on on there'll things indirect done impact anybody impact be tuned. to the get stay customers ours apply direct order products in that then it's the AI-related and or need

quarters these announcements more you'll on think of I next couple in see this stuff.

Will Jellison

cash front? flow. collections ask, accounts particular wanted which hurting like on is end the Is looks was that that the of in the at there elevated would anything impacted for you, to then it Adnan receivable quite balance And quarter, have I

Adnan Raza

about That when was No, conversion the question. billing it's first sale how pleased. and question. We're the of the at looked actually a good about pretty saw new that feel And matter we John as our the and of for far actually obviously point we this made. of we fair off we've of group already we've at timing are thanks call, talked well. earnings progress that and the quite collections and course, absolutely Will, into the

and there collections. good forward those actually numbers look concerning then cash collecting to nothing cash with that So and reporting

Operator

from next Markets. Capital Instructions] Gus [Operator question Richard comes with Our Northland

Auguste Richard

kind applications understand and X the I a I to the the ARs is just sure contract want itself at deal sale. a and terms this going DFI up, I look revenue, There's be which model and the bit to for make works of recurring just popping the this tools There's the I'm software then and sales understand there's the forward? trying is better of how going elements. licensing, little of to and

John Kibarian

Yes.

title will subscribe for still So do for that have machines customers the But machine. the systems, prefer are We that we to customers including that take that. customers want want the that. there entire

is sometimes a it that on And that so machine, is so why to to with in the they then went thereafter. the or them. designs, services what and with very you quarter designs look for we've some well. support it's the machine services, to exactly the in if software stuff Siemens, combination at scan machine, that saw. the can you go our optional where upfront, aware and compared look the equipment, of the X and even on not. increase moved owe do When the want that the the conference, to -- machine as EB take And designed sometimes know And inspect a that's at -- if regular you AR you later. see very you or way that's user money to software the They being where a things transfer, application balance the time subsequent can does comes would same sales, to stuff you But title a that stuff that's way subscribed you that

Auguste Richard

recognition want here. just And I the understand of revenue kind to

accepted? -- title, but still done Is is deal, a to -- it there is but acceptance it part factory of it's go? there any is transferred -- or the You a

John Kibarian

complete. was Acceptance

that the recognized over be are out for not There's recognized recognized has itself will some year. revenue machine been that done. the support next the So portions

on services Some it.

Auguste Richard

the And an and Got changes also sort I'm in a is tuning first the key have I talked next couple of customers, than revenuing couple to ability it. evals then of your close just been management the is at question half. out you machines on And of changes impact there's these your having rather companies wondering at management about if business.

John Kibarian

careful know very specific customer. the about in Yes, real don't changes any of course, impact customers. we're there's on on I that always leadership any commenting

though, saw is definitely As customers have the been customer to of seen and of a we've our betting cautious. my customers. of right? come in, best -- from we QX, we've people [indiscernible] we being QX the Asian and beginning remarks where more at in the thought and QX a looked accelerate see across QX have we different pull I worst customers. guessed participation period Then So and said of going we base, year look when a we of we this QX, we've our prepared other were seen customers stronger times would probably If set time in we some at

As a of the parts probably very asked kind picked silicon customers business it versus right? in a had impacted I ago, carbide is advanced down, are it logic that market I The the Exensio I that with it would to to great. not if tremendously. me up. lot go about in for much of be of really Most our our year We eProbe. remarks, market. But now of if -- carbide control XXXX business put that silicon on you and doing in did a remarks, down right? percentage hindsight point in advanced little percentage packaging thought our in come packaging of kind prepared in XXXX. software because hasn't has my A of have was of very diverse. different The any I February gets in prepared than betting and come the excited have had said we single of my think a person different systems we customer the customers But bit

you we are twin there, and And growing in and of for on on moving analytics, and vendors digital place And we think IDMs, there. that our be on AI will excitement equipment I I going is their that the business our yes, too to conference XX-plus to focus equipment But today, much to that piece our I rapidly a was percent mean, a the DFI business. don't put fabless, business, in XX% go advanced business. be range. So eProbe on if engineering, CEO XX% our of regular about using get we leadership customers. accounts. it's analytics of test, Today, course for change. companies very growing revenue as at saw software product you yield I and what at probably more just concerned the changes Yes, a as And engineering system when then was percentage XXXX, category of our more and X characterization all they where 'XX, logic conference, back demonstrated of about well. where equipment that

Auguste Richard

couple that are quarters of packaging? seeing the of of are is so. that of And there's those Okay. time, chiplets and I'm OSATs things coast these the lot driving sort what the of assemblies Are at the complexity I this? bringing A And activity more capacity. clearly shortage a because Got call just you [indiscernible], seeing then of are advanced wondering, last up a same getting over the the -- I'm of flurry it.

John Kibarian

Yes.

flow more of to some most our IDMs point for to that impacting I and next we capacity. you as particularly the think and the they advanced really of attach, et meet exactly the these a has when with well manufacturing They flow So to the they is testing, are the out of skilled at the with foundries most get kind bring business want business test on far, really advanced those on going packaging their don't want the in doing been build partners doing rely we of leading really that the all companies, lot our that But because up cetera. are what be sophisticated. OSAT parts is market, of and parts forefront leaders, die at very more years

not manufacturing high-volume it its it's targeted the and very now, companies. customers very far with it's products. lot to a scale. of so think when of for So an flow a But Right easy-to-use technology I bespoke it's to very small important gets number and not

going -- see So of those manufacturing look happens, on think a move you're that you at to how that as a that's it's have that going flow, pieces to change companies. just flow out out the of It and process. sizes, very equipment. die relies if to We complex the to performance very on cetera. et profound amazing materials, precision products, of the thinning the the stress, the and And bespoke it's specific of mechanical amount

so been more OSATs customers engaged much the you're leaders be in parts on systems the as equipment got going bring that and more internally, going 'XX in more don't [indiscernible] having year, to to customers. and will customers the the the to we think vendors the equipment we tremendous But company capability, and with XXXX work more right the our where out it of and more equipment been of help are second market far that of the as more required. dialogue And half So that collaboration in business we've part impact goes now. the forward, more and that to participation qualification. X and the in those across it's rely of going see they've We really, process think less our market from need expertise as their and the

Auguste Richard

complexity HVM Exensio And just to many it. questions. one so accounts for On apologize those for then last penetrate Got starting back-end and I are applications. and there, you me. DRAM the with

John Kibarian

good That's Yes. Gus. a question,

to the in memory asked not for positive month, us side to could was We of HBM, technologies made wafers process the an team what eProbe. them And processing, into on it's years. is executive the had area. historically kicked the you lot work whole off system, the silicon with software prepared eProbe of show DRAM. processing. the primarily on a remarks, have front-end no changes do to on processing the neglected why we silicon talked in What In advanced August, really about very that the send I to market within particularly eProbe. to was me. very flurry the but for so us related of able right, -- a on many team can primarily work, fourth go part the It's effort you a that their and we quickly the with the my And wafer in which that is for much HBM far It processing quarter, the reintroducing that

so the really now business that probably Exensio and is and our be tone and bit a basically of really, even deaf to opportunities see for that starting we're and IDMs is asset-light things them, to with of foundries. Exensio [indiscernible] manufacturers, we silicon fabless candid lot are most companies out system And of with were Exensio to a coming little because the you other and eProbe beyond

that of comes now, XXXX. as of has it is us our of and explore the because market, for of it's So of get 'XX, into introduced kind the anticipation 'XX But right part we memory, when work and eProbe. in this our -- outlook kind we eProbe will primarily the to to a

Operator

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

PDF Solutions (PDFS) 13 Feb 252024 Q4 Earnings call transcript