Financial Data and Key Metrics Changes - The company achieved record revenues of $51.7 million for Q2, representing a 24% year-over-year increase and an 8% increase compared to the previous quarter [13][81]. - For the first half of the year, revenues grew by 20% year-over-year, meeting the long-term target of 20% revenue growth [14][82]. - Gross margins for Q2 were reported at 76%, exceeding the long-term target of 75% [15][84]. - The operating margin improved to 19% for Q2, up from the previous year [16][84]. - Earnings per share (EPS) for the quarter was $0.19, reflecting an 18% year-over-year growth for the first half of the year [17][85]. Business Line Data and Key Metrics Changes - Analytics revenue reached a record $48.8 million, up 28% from the same quarter last year, driven by characterization deals and the first full quarter of SecureWise revenues [14][82]. - Revenue contribution from integrated yield ramp decreased to $2.9 million from $3.5 million in the same quarter last year, attributed to the completion of fixed fee engagements [15][83]. - The backlog at the end of the quarter was $233 million, indicating growth momentum in bookings [15][83]. Market Data and Key Metrics Changes - Characterization bookings were particularly strong in Asia, with significant demand for solutions related to new node development [5][73]. - The company noted that a sizable fraction of revenue from China is derived from royalties and gain share from past deployments, which is expected to continue despite geopolitical tensions [40][108]. Company Strategy and Development Direction - The company anticipates revenue growth of 21% to 23% for the full year 2025, reaffirming prior guidance [4][18]. - The integration of SecureWise is progressing well, with expectations to complete system transitions by September [28][95]. - The company is focusing on enhancing supply chain orchestration through products like SecureWise and Sapient, which connect manufacturing operations to ERP systems [6][75]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to capitalize on trends in AI and advanced manufacturing processes [4][11]. - The company is optimistic about the growth opportunities in the semiconductor industry, particularly with the increasing demand for analytics and AI solutions [4][10]. - Management acknowledged the importance of the Chinese market while emphasizing a bifurcated operational strategy to mitigate risks [39][108]. Other Important Information - The company has consistently grown revenue, gross margins, and EPS from 2020 to 2024, with a 20% compound annual growth rate (CAGR) for revenue [12][80]. - The upcoming user conference and Analyst Day in December will showcase the impact of the PDF platform on the industry [11][79]. Q&A Session Summary Question: Can you provide more details on the traction with Sapient? - The recent contract was with an existing customer, focusing on the product side of an IDM, highlighting the need for visibility in supply chain management [22][92]. Question: How is the integration of SecureWise progressing? - The integration is on track for completion in September, with ongoing cross-training of sales teams and initial installations at OSATs [28][95]. Question: What is the expected run rate for CapEx spending? - The company anticipates managing CapEx at current levels or slightly below, depending on new opportunities that arise [32][101]. Question: How is the company positioned regarding potential disruptions in China? - The company has maintained a bifurcated operational strategy in China, allowing for continued revenue streams from past deployments despite geopolitical tensions [40][108]. Question: What is the outlook for the partnership with Intel? - Intel is expected to become a more significant customer, with the technology provided by the company becoming increasingly important as Intel opens its manufacturing to others [46][47].

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $47.8 million, up 16% year over year [13] - Analytics revenue was $42.5 million, an increase of 10% year over year, but lower compared to the prior quarter due to eProbe sales [13] - IYR revenue increased significantly by 86% year over year, driven by new gainshare contracts [13] - Gross margin for Q1 was 77%, compared to 72% in the prior quarter and the same quarter last year [15] - Operating margin remained stable at 18%, with net income totaling $8.1 million or $0.21 per share, up approximately 40% year over year [16] Business Line Data and Key Metrics Changes - Significant bookings were driven by enterprise-wide solutions, particularly the Sapiens Manufacturing Hub [5] - Exensio bookings were primarily from Fabless and OSATs for offline analytics and test operations [5] - Symmetric's bookings were strong as equipment vendors increased shipments of advanced tool control and communication modules [5] Market Data and Key Metrics Changes - The company noted that tariffs have not significantly impacted customer behavior, particularly in the software business [9] - The semiconductor industry remains focused on advanced nodes and complex packaging, which are strong drivers for the company's solutions [4][9] Company Strategy and Development Direction - The company anticipates revenue growth of 21% to 23% for the year, despite macroeconomic uncertainties [10] - The integration of SecureWise is expected to enhance collaboration between OSATs, fabless foundries, and equipment vendors [8] - The company is refining plans for integration with its platform to leverage AI and machine learning capabilities [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of customers from a weak 2024 and noted strong demand for advanced processing solutions [4] - The company is optimistic about the potential for incremental revenue growth from shipped systems and ongoing customer engagements [6][10] - Management highlighted the importance of flexibility and nimbleness for customers in the current uncertain environment [70][72] Other Important Information - The company completed the acquisition of SecureWise for $130 million, which is expected to be accretive to earnings and operating margins [12][54] - The backlog at the end of the quarter was approximately $227 million, showing slight growth compared to the prior quarter [13] Q&A Session Summary Question: Details on revenue guidance and analytics growth - Management confirmed that overall expectations are in line with initial guidance, with meaningful growth anticipated in IYR due to a low base [20] - Advanced node capabilities are expected to drive analytics growth, with increased enterprise customer engagement [21][22] Question: Sales and marketing expense allocation - The company is investing in sales and marketing to support a wider product portfolio and enhance customer engagement [25][26] Question: SecureWise integration plan - Customers appreciate the security features of SecureWise, and the integration is expected to enhance collaboration across the supply chain [32][34] Question: Update on partnerships and potential contracts - The company has ongoing revenue from partnerships, including with Advantest, and anticipates growth in these relationships [61][62] Question: Capital allocation strategy - The company prioritizes debt reduction while remaining open to share buybacks when opportunities arise [78][80] Question: Gross margin profile of SecureWise - SecureWise is a highly recurring revenue business, expected to be accretive to overall gross margins [81][84]

Financial Data and Key Metrics Changes - Total revenues for the first quarter were $47.8 million, up 16% year over year [14] - Analytics revenue was $42.5 million, an increase of 10% year over year, but lower compared to the prior quarter [14] - IYR revenue increased significantly by 86% year over year, driven by new gainshare from customer engagement [14] - Gross margin for the first quarter was 77%, compared to 72% in the prior quarter and the same quarter last year [15] - Operating margin for the first quarter was 18%, consistent with the prior quarter and up from 12% year over year [16] - Net income for the quarter totaled $8.1 million, or $0.21 per share, up approximately 40% year over year [16] Business Line Data and Key Metrics Changes - Significant bookings were primarily for enterprise-wide solutions, particularly for Sapient's Manufacturing Hub Enterprise [5] - Exensio bookings were driven by Fabless and OSATs for offline analytics and test operations [5] - Symmetric's bookings were strong as equipment vendors utilized more runtime licenses [5] - SecureWise contributed less than one month of revenues, with expectations for IYR revenues to improve throughout the year [6] Market Data and Key Metrics Changes - The company anticipates growth of 21% to 23% for the year, despite macroeconomic uncertainties [11] - The semiconductor industry remains focused on advanced nodes and complex packaging, with no significant changes in customer behavior due to tariffs [10] Company Strategy and Development Direction - The company aims to establish itself as the leading independent data analytics platform optimized for the semiconductor industry [15] - Integration plans for SecureWise are being refined to enhance collaboration between OSATs, fabless foundries, and equipment vendors [8] - The company is focusing on enhancing its product offerings with machine learning and AI capabilities [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the customer environment is mixed, with some recovering from a weak 2024 while others maintain momentum [4] - The company remains optimistic about its growth trajectory, reaffirming revenue growth estimates for the year [11] - Management highlighted the importance of flexibility and nimbleness for customers in the current uncertain environment [70] Other Important Information - The company completed the acquisition of SecureWise for $130 million, which is expected to be accretive to earnings and operating margins [13][55] - The company ended the quarter with cash and short-term investments of $54 million, down from $115 million due to the acquisition [17] Q&A Session Summary Question: Details on revenue guidance and analytics growth - Management confirmed that overall expectations are in line with initial guidance, with meaningful growth anticipated in IYR due to a low base [20][21] Question: Sales and marketing expense increase - The increase in sales and marketing expenses is aimed at enhancing engagement across a wide variety of product offerings and supporting ongoing pilots converting into bookings [24][26] Question: SecureWise integration plan - Customers appreciate the security features of SecureWise, and the integration is expected to enhance collaboration and operational efficiency [32][34] Question: Pipeline for Sapient Manufacturing Hub - Management expects to close additional contracts for SMH enterprise this year, driven by new workflows and AI capabilities [41] Question: DFI systems shipment details - Both shipped DFI systems were to existing logic customers, with expectations to ship additional systems in the second half of the year [46][47] Question: Challenges in analytics growth - Management noted that new innovations take time to be digested, and the complexity of deployments can delay substantial bookings [51][52] Question: Capital allocation strategy - The company prioritizes debt reduction while remaining open to share buybacks when opportunities arise [78] Question: SecureWise gross margin profile - SecureWise is a highly recurring revenue business, and its acquisition is expected to be accretive to overall gross margins [81][83]

PDF Solutions, Inc. (NASDAQ:PDFS) Q4 2024 Earnings Conference Call February 13, 2025 5:00 PM ET Company Participants John Kibarian - President and CEO Adnan Raza - CFO Conference Call Participants Blair Abernethy - Rosenblatt Securities William Jellison - D.A. Davidson & Company Gus Richard - Northland Capital Markets 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 ...