PDF Solutions(US:PDFS)2020-11-08 13:54Financial Data and Key Metrics Changes - Total revenues for Q3 were $23.1 million, up 8% quarter-over-quarter and up 5% year-over-year [28] - Analytics revenue for Q3 was $14.3 million, growing 13% year-over-year but down 5% compared to the prior quarter [28] - Integrated Yield Ramp revenue was $8.8 million, up 41% sequentially but down 5% year-over-year [33] - Non-GAAP gross margins for the quarter were 63%, consistent with the prior quarter and down slightly from 64% year-over-year [36] - Non-GAAP net profit was $0.1 million, with non-GAAP earnings per share at $0.00 [39] Business Line Data and Key Metrics Changes - Analytics represented 62% of total revenues for Q3 and 65% year-to-date through Q3 [24][33] - The transition to an analytics company has seen analytics as a percentage of total revenue increase from 45% in 2018 to 64% on a last 12-month basis through Q3 2020 [24] - Strong bookings for Q3 exceeded total bookings for the full year of 2019, indicating significant growth momentum [25][26] Market Data and Key Metrics Changes - Strong bookings particularly in China, with renewed activity starting at the end of Q1 and building through Q3 [9] - Increased interest in Exensio analytics from various sectors, including automotive and semiconductor industries [11][20] Company Strategy and Development Direction - The company is focused on becoming a leading provider of differentiated data and analytics solutions, with ongoing investments in cloud infrastructure [41][42] - The partnership with Advantest is seen as a significant step, expected to generate over $50 million over its term [15][30] - Continued investment in analytics is anticipated, with a long-term growth target of 20% annually for the analytics business [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the semiconductor industry continues to see investment despite the pandemic, with foundries reporting high manufacturing volumes [20] - The company expects broad-based interest in Exensio and analytics products in the fourth quarter [20] - Management expressed confidence in the long-term potential of the analytics business and the strategic partnerships being developed [42] Other Important Information - Cash and short-term investments grew to $168 million at the end of Q3, up from $100 million year-over-year, primarily due to a $65 million investment from Advantest [39][40] - The company has no debt and is positioned to invest in various initiatives to enhance its product offerings [41] Q&A Session Summary Question: About the IYR contract decision - Management explained that the decision to pursue an Integrated Yield Ramp contract instead of a subscription was based on better long-term economics for a specific customer [48][49] Question: Impact of legal expenses on SG&A - Legal expenses increased by $0.6 million due to various factors, including the Advantest partnership [54] Question: Future potential contracts similar to Advantest - Management indicated that while there are opportunities, such partnerships would be rare and typically involve a small number of customers [70][74] Question: Timeline for DFI machine shipments - Shipments for DFI machines are expected to slip into early 2021 due to various delays, but revenue generation is ongoing through pilot programs [76][78]