pdfs20200930

pdfs20200930_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _______________ to ______________

Commission File Number 000-31311

PDF SOLUTIONS, INC.

(Exact name of Registrant as Specified in its Charter)

Delaware	25-1701361
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2858 De La Cruz Blvd.
Santa Clara, California	95050
(Address of Principal Executive Offices)	(Zip Code)

(408) 280-7900

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00015 par value	PDFS	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☑	Smaller reporting company ☑
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 36,929,776 shares of the Registrant’s Common Stock outstanding as of April 30, 2021.

Table of Contents

TABLE OF CONTENTS

	Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Comprehensive Loss	4
Condensed Consolidated Statements of Stockholders’ Equity	5
Condensed Consolidated Statements of Cash Flows	7
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	42
PART II OTHER INFORMATION
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3. Defaults Upon Senior Securities	44
Item 4. Mine Safety Disclosures	44
Item 5. Other Information	44
Item 6. Exhibits	45
SIGNATURES	46
INDEX TO EXHIBITS	45

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except par value)

	*March 31,*			*December 31,*
	*2021*			*2020*
ASSETS
Current assets:
Cash and cash equivalents	$	74,287		$	30,315
Short-term investments		57,999			114,981
Accounts receivable, net of allowance for doubtful accounts of $963 in 2021 and 2020		34,785			34,140
Prepaid expenses and other current assets		11,375			13,944
Total current assets		178,446			193,380
Property and equipment, net		38,147			39,242
Operating lease right-of-use assets, net		6,171			6,672
Goodwill		15,305			15,774
Intangible assets, net		23,724			24,573
Deferred tax assets, net		198			249
Other non-current assets		9,140			7,690
Total assets	$	271,131		$	287,580
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	967		$	4,399
Accrued compensation and related benefits		6,204			8,339
Accrued and other current liabilities		8,271			6,309
Operating lease liabilities – current portion		1,742			1,926
Deferred revenues – current portion		17,578			19,895
Billings in excess of recognized revenues		339			1,337
Total current liabilities		35,101			42,205
Long-term income taxes payable		2,911			2,956
Non-current operating lease liabilities		6,151			6,516
Other non-current liabilities		1,715			1,397
Total liabilities		45,878			53,074
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.00015 par value, 5,000 shares authorized, no shares issued and outstanding	$	—		$	—
Common stock, $0.00015 par value, 70,000 shares authorized; shares issued 46,804 and 46,400, respectively; shares outstanding 36,929 and 36,850, respectively		6			6
Additional paid-in-capital		412,031			407,173
Treasury stock at cost, 9,874 and 9,550 shares, respectively		(102,201	)		(96,215	)
Accumulated deficit		(83,830	)		(76,233	)
Accumulated other comprehensive loss		(753	)		(225	)
Total stockholders’ equity		225,253			234,506
Total liabilities and stockholders’ equity	$	271,131		$	287,580

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

Table of Contents

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(in thousands, except per share amounts)

	*Three Months Ended March 31,*
	*2021*			*2020*
Revenues:
Analytics	$	19,393		$	13,248
Integrated Yield Ramp		4,807			7,910
Total revenues		24,200			21,158

Costs and Expenses:
Costs of revenues		10,663			8,487
Research and development		10,841			8,590
Selling, general and administrative		9,464			7,895
Amortization of other acquired intangible assets		314			173
Interest and other expense (income), net		(441	)		20
Loss before income taxes		(6,641	)		(4,007	)
Income tax expense (benefit)		956			(3,479	)
Net loss	$	(7,597	)	$	(528	)

Other comprehensive loss:
Foreign currency translation adjustments, net of tax		(530	)		(166	)
Change in unrealized losses related to available-for-sale debt securities, net of tax		2			—
Total other comprehensive loss		(528	)		(166	)
Comprehensive loss	$	(8,125	)	$	(694	)

Net loss per share, basic and diluted	$	(0.21	)	$	(0.02	)

Weighted average common shares used to calculate net loss per share, basic and diluted		36,974			32,703

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

Table of Contents

PDF SOLUTIONS, INC.

CONDENDSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

	*Three Months Ended March 31, 2021*
																*Accumulated*
						*Additional*										*Other*			*Total*
	*Common Stock*					*Paid-In*		*Treasury Stock*					*Accumulated*			*Comprehensive*			*Stockholders’*
	*Shares*			*Amount*		*Capital*		*Shares*		*Amount*			*Deficit*			*Loss*			*Equity*
Balances, December 31, 2020		36,850		$	6	$	407,173		9,550	$	(96,215	)	$	(76,233	)	$	(225	)	$	234,506
Issuance of common stock in connection with employee stock purchase plan		100			—		921		—		—			—			—			921
Issuance of common stock in connection with exercise of options		81			—		568		—		—			—			—			568
Vesting of restricted stock units		149			—		—		—		—			—			—			—
Purchases of treasury stock in connection with tax withholdings on restricted stock grants		—			—		—		73		(1,463	)		—			—			(1,463	)
Repurchase of common stock		(251	)		—		—		251		(4,523	)		—			—			(4,523	)
Stock-based compensation expense		—			—		3,369		—		—			—						3,369
Comprehensive loss		—			—		—		—		—			(7,597	)		(528	)		(8,125	)
Balances, March 31, 2021		36,929		$	6	$	412,031		9,874	$	(102,201	)	$	(83,830	)	$	(753	)	$	225,253

Three Months Ended March 31, 2020

Accumulated

Additional

SEC Form 10-Q filed by PDF Solutions, Inc.