PDF Solutions(US:PDFS)2025-05-08 20:20PART I FINANCIAL INFORMATION Financial Statements (Unaudited) The company's Q1 2025 financial statements show $47.8 million in revenue and a $3.0 million net loss, with the SecureWise acquisition significantly altering the balance sheet through increased assets and $70 million in new debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $43,734 | $90,594 | ($46,860) | | Goodwill | $96,645 | $14,953 | $81,692 | | Intangible assets, net | $58,357 | $12,307 | $46,050 | | Total assets | $389,972 | $315,289 | $74,683 | | Long-term debt, net | $66,416 | $0 | $66,416 | | Total liabilities | $140,992 | $69,252 | $71,740 | | Total stockholders' equity | $248,980 | $246,037 | $2,943 | Condensed Consolidated Statements of Comprehensive Loss (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $47,778 | $41,310 | +16% | | - Analytics | $42,471 | $38,463 | +10% | | - Integrated Yield Ramp | $5,307 | $2,847 | +86% | | Gross profit | $34,823 | $27,781 | +25% | | Loss from operations | ($3,555) | ($1,960) | +81% | | Net loss | ($3,032) | ($393) | +671% | | Net loss per share (basic & diluted) | ($0.08) | ($0.01) | ($0.07) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,640 | ($1,862) | | Net cash used in investing activities | ($123,861) | ($2,642) | | Net cash provided by (used in) financing activities | $67,958 | ($8,752) | | Net change in cash and cash equivalents | ($46,860) | ($13,722) | - On March 7, 2025, the company acquired SecureWise LLC for $130.0 million cash, financed by cash on hand and new credit facilities, with $81.7 million allocated to goodwill and $47.1 million to identifiable intangible assets124126129 - The SecureWise acquisition was financed by a new Credit Agreement on March 7, 2025, including a $45.0 million revolving credit facility and a $25.0 million term loan, resulting in $70.0 million total debt outstanding as of March 31, 2025114115121 - As of March 31, 2025, the company had approximately $226.7 million in remaining performance obligations, with over half expected to be recognized as revenue within the next two years52 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 16% revenue growth to increased demand and SecureWise contributions, while the $3.0 million net loss resulted from a 42% surge in SG&A expenses, primarily due to acquisition costs, with current liquidity deemed sufficient for future operations Revenue and Gross Margin Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues: | | | | | | Analytics | $42,471 | $38,463 | $4,008 | 10% | | Integrated Yield Ramp | $5,307 | $2,847 | $2,460 | 86% | | Total revenues | $47,778 | $41,310 | $6,468 | 16% | | Gross profit | $34,823 | $27,781 | $7,042 | 25% | | Gross margin | 73% | 67% | - | 6 p.p. | - The increase in Integrated Yield Ramp revenue was primarily due to higher Gainshare from increased customer wafer shipments at non-leading-edge nodes154 - Selling, general, and administrative (SG&A) expenses increased by $6.9 million (42%) year-over-year, mainly due to $4.3 million in non-recurring costs related to the SecureWise acquisition and a $1.9 million increase in personnel-related costs165166167 - The company completed the acquisition of SecureWise LLC on March 7, 2025, to expand its secure data exchange (DEX) network and accelerate equipment makers' ability to derive value from data using the Exensio platform138 - Cash and investments decreased from $114.9 million at year-end 2024 to $54.1 million as of March 31, 2025, primarily due to the SecureWise acquisition, which was partially financed by drawing $70 million from new credit facilities176191195 Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from interest rate fluctuations on its $70.0 million variable-rate debt, where a 100 basis point increase would raise annual interest expense by $0.5 million, and from unhedged foreign currency exposures in international operations - The company is exposed to interest rate risk on its $70.0 million of variable-rate debt, where a 100 basis point rate increase would raise annual interest expense by an average of $0.5 million203204205 - The company's investment portfolio of $54.1 million in cash, cash equivalents, and short-term U.S. Government securities is also subject to interest rate risk, though a 100 basis point change is expected to have an immaterial impact on its fair value201 - The company is exposed to foreign currency exchange risk as some revenues, expenditures, and cash balances are denominated in currencies such as the Euro, Yen, Chinese Yuan, New Taiwan Dollar, and Canadian Dollar, and does not currently engage in hedging activities206 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with the recently acquired SecureWise business excluded from the internal control over financial reporting assessment as permitted by SEC guidance - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025207 - The company's management excluded the newly acquired SecureWise business from its assessment of internal control over financial reporting for the quarter ended March 31, 2025, as the acquisition was completed on March 7, 2025208 PART II OTHER INFORMATION Legal Proceedings The company is awaiting a tribunal decision in an ongoing arbitration proceeding initiated in May 2020 against SMIC for failure to pay fees - The company initiated arbitration against SMIC in May 2020 over unpaid fees, and after a hearing in February 2023 and final submissions, the company is awaiting the tribunal's judgment110 Risk Factors As of the filing date, there were no material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - As of the filing date, there were no material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024211 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any of its common stock during the first quarter of 2025 - There were no stock repurchases during the first quarter of 2025212 Defaults Upon Senior Securities None reported Mine Safety Disclosures None reported Other Information During the quarter ended March 31, 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter215 Exhibits This section lists the exhibits filed with the Form 10-Q, including the Equity Purchase Agreement for the SecureWise acquisition, the new Credit Agreement, and certifications by the principal executive and financial officers