PDF Solutions(PDFS) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q2 were $21.4 million, up 1% versus the prior quarter and 4% year-over-year [31] - Non-GAAP net profit was $0.5 million with non-GAAP earnings per share of $0.01 [38] - Cash grew to $103 million at the end of Q2, an increase of approximately $17 million year-over-year [38] Business Line Data and Key Metrics Changes - Analytics revenue for Q2 was $15.2 million, growing 15% compared to Q1 2020 and 27% year-over-year [31] - Integrated Yield Ramp (IYR) revenue was $6.2 million, down $1.7 million sequentially and down $2.4 million year-over-year [33] - Analytics represented 71% of total revenues in Q2 compared to 58% for the calendar year 2019 [33] Market Data and Key Metrics Changes - Bookings for Q2 were nearly double those of Q2 2019, and bookings for the first half of 2020 exceeded the entire calendar year of 2019 [30] - Strong demand was noted from fabless foundries and integrated device manufacturers (IDMs) in the high-performance computing (HPC) segment [13] Company Strategy and Development Direction - The company is focusing on transitioning to an analytics-driven business model, with significant investments in cloud infrastructure and software [34][39] - A five-year partnership with Advantest was announced, expected to generate a minimum of $50 million in direct revenue [16][39] - The partnership aims to enhance the Exensio analytics platform and expand its deployment in the semiconductor industry [18][20] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the semiconductor industry's continued investment despite COVID-19 impacts, anticipating accelerated interest in products in the second half of the year [24] - The company expects demand for HPC solutions to persist, driven by technical milestones achieved with key customers [14] Other Important Information - The company achieved a non-GAAP gross margin of 63% for the quarter, down from 67% year-over-year, with expectations to reach a long-term target of 70% [35] - The company has no debt and a strong balance sheet, allowing for investments in new product areas and technology acquisitions [38][72] Q&A Session Summary Question: Clarification on the Advantest partnership revenue - The $50 million expected over five years is the minimum commitment of licenses to Advantest, with additional revenue from joint products being developed [44] Question: Impact of Intel's 7-nanometer process delay - The management refrained from discussing specific customers but noted that yield challenges are a broader industry issue, presenting opportunities for the company [46] Question: Characteristics of Advantest as a first major customer - Test generates significant data, and the company sees opportunities across the supply chain, not just with Advantest [51] Question: Future engagement with other equipment vendors - The company is engaged with other equipment vendors to leverage Exensio for data analytics and improve customer support [67] Question: Plans for cash on the balance sheet - The company is looking to acquire smaller companies that can enhance the Exensio platform and provide unique data or analytics capabilities [72]