PDF Solutions(PDFS) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter revenue was $20.5 million, a 4% increase from the prior quarter [22] - Solutions revenue was $16.7 million, a sequential increase of $4 million [22] - Gainshare revenue was $3.9 million, lower by $3.2 million from the prior quarter [22] - Non-GAAP profit was $842,000 in Q1 compared to a loss of $366,000 in Q4 [29] - Non-GAAP earnings per share was $0.03 with shares outstanding for Q1 at 32.5 million [29] Business Line Data and Key Metrics Changes - Analytics revenue, which includes Exensio, DFI, and Characterization Vehicle technology, was over 60% of solutions revenue [12] - Significant contracts signed included enterprise deployment of Exensio-Yield on the cloud and additional licenses for Exensio-Control [13] - DFI gross margins improved due to revenue from a major foundry [25] Market Data and Key Metrics Changes - Interest in cloud offerings grew significantly in Q1, driven by the ability to leverage big data capabilities [15] - The company is seeing high interest in DFI from multiple leading-edge logic providers and memory markets [10][39] Company Strategy and Development Direction - The company aims to be the end-to-end analytics and manufacturing control provider of choice in the semiconductor industry [5] - The acquisition of Stream Mosaic is expected to enhance AI capabilities and integrate with the Exensio platform [17][18] - The focus remains on transitioning to a ratable subscription model for software, which is anticipated to improve gross margins over time [26] Management's Comments on Operating Environment and Future Outlook - Management expects continued customer adoption of Exensio analytic software and DFI throughout 2019 [19] - The company anticipates that gainshare revenue will remain variable and not necessarily ratable [35] - Management expressed optimism about the ability to ship more machines in 2019 and into 2020 [52] Other Important Information - Cash at the end of Q1 was $90.4 million, down from $96.1 million in the prior quarter [30] - The company plans to present at three investor conferences in May [31] Q&A Session Summary Question: Can you provide more detail on the resolution with the foundry? - The amendment to the contract was $3.3 million, with additional revenues expected for the rest of the year [33][34] Question: What is the outlook for gainshare revenue? - Gainshare revenue is expected to remain variable and not necessarily align with semiconductor demand [35] Question: How is the ramp-up of the eProbe 250 at the Asian foundry progressing? - The company is on schedule to meet targets for Q2, with expectations to generate similar reports as in the lab [36] Question: What is the scale of the acquisition of Stream Mosaic? - The acquisition involved a small team and is expected to enhance the Exensio platform significantly [42][44] Question: Will operating expenses increase with the addition of Stream Mosaic? - Operating expenses are expected to increase slightly due to investments in business development and marketing [58]