EX-99.2 3 pdfs-20250213xex99d2.htm EX-99.2

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Exhibit 99.2

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Q4 2024 and Full Year 2024

Management Report

February 13, 2025

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Contents

Q4 2024 and Full Year 2024 Results

–  Overview

–  Key Financial & Operating Metrics

–  Revenue by Geographic Area

Q4 2024 and Full Year 2024 Non-GAAP Results

–  Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income

–  Reconciliation of GAAP to Non-GAAP Spending by Function

Related Information

The following commentary is provided by management and should be referenced in conjunction with PDF Solutions’ Fourth Quarter and Full Year 2024 financial results press release available on its Investor Relations website at http://www.pdf.com/financial-news. These remarks represent management’s current views of the Company’s financial and operational performance and are provided to give investors and analysts further insight into its performance in advance of the earnings call webcast. The Company disclaims any duty to update this information for future events.

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PDF Solutions Reports Fourth Quarter 2024 Results

Q4 2024 Key Metrics

financial results Summary

Revenue: $50.1M

GAAP Gross Margin: 68%

    Q4 2024 Total revenues of $50.1M, up 8% over Q3 2024, and up 22% over Q4 2023.

    Q4 2024 Analytics revenue of $47.9M, up 7% over Q3 2024, and up 22% over Q4 2023.

    Q4 2024 Integrated yield ramp revenue of $2.2M, up 30% over Q3 2024, and up 8% over Q4 2023.

Non-GAAP Gross Margin: 72%

GAAP Diluted EPS: $0.01

Non-GAAP Diluted EPS: $0.25

Operating Cash Flow: $1.6M

Cash Used for Capital Expenditures: $5.8M

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PDF Solutions Reports Full Year 2024 Results

Full Year 2024 Key Metrics

financial results Summary

Revenue: $179.5M

GAAP Gross Margin: 70%

    2024 Total revenues of $179.5M, up 8% over 2023.

    2024 Analytics revenue of $169.3M, up 11% over 2023.

    2024 Integrated yield ramp revenue of $10.2M, down 26% over 2023.

Non-GAAP Gross Margin: 74%

GAAP Diluted EPS: $0.10

Non-GAAP Diluted EPS: $0.84

Operating Cash Flow: $9.7M

Cash Used for Capital Expenditures: $17.8M

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Key Financial & Operating Metrics – Quarterly

(in thousands, except outstanding shares, which are in millions, and percentages)

Q4’24

  

  

Q3’24

  

  

Q2’24

  

  

Q1’24

  

  

Q4’23

Revenues

$50,085

$46,409

$41,661

$41,310

$41,125

GAAP Gross Margin

68%

73%

71%

67%

68%

Non-GAAP Gross Margin

72%

77%

75%

72%

72%

Outstanding Debt

 

$—

 

$—

$—

$—

$—

Operating Cash Flow

 

$1,606

 

$9,275

 

$684

($1,862)

$2,029

Cash Used for Capital Expenditures (CAPEX)

 

$5,847

 

$4,595

 

$5,320

$2,023

$2,408

$ Shares Repurchased

 

$—

 

$—

 

$—

$6,899

$—

Weighted Average Common Shares Outstanding

 

38.8

 

38.7

 

38.4

38.5

38.3

Effective Tax Rate Expense (Benefit)

 

63%

 

39%

 

2%

47%

(520)%

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Key Financial & Operating Metrics – Yearly

(in thousands, except outstanding shares, which are in millions, and percentages)

Year Ended December 31, 

2024

  

2023

  

2022

Revenues

 

 

$179,465

 

$165,835

 

$148,549

GAAP Gross Margin

 

70%

69%

68%

Non-GAAP Gross Margin

 

74%

73%

71%

Outstanding Debt

 

 

$—

 

$—

$—

Operating Cash Flow

 

 

$9,703

 

$14,600

 

$32,298

Cash Used for CAPEX

 

 

$17,785

 

$11,325

 

$8,430

$ Shares Repurchased

 

 

$6,899

 

$743

 

$22,471

Weighted Average Common Shares Outstanding

 

 

38.6

 

38.0

 

37.3

Effective Tax Rate Expense

 

 

38%

 

36%

 

830%

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Revenue by Geographic Area – Quarterly

(Dollars in thousands)

  

Q4’24

  

Q3’24

  

Q2’24

  

Q1’24

  

Q4’23

United States

 

$16,320

$21,065

$19,223

$17,733

$22,708

% of Total

 

33%

45%

46%

43%

55%

Japan

$11,932

$6,275

$7,932

$11,288

$2,460

% of Total

24%

14%

19%

27%

6%

China

 

$4,576

$5,673

$7,000

$4,853

$4,562

% of Total

 

9%

12%

17%

12%

11%

Taiwan

$1,150

$6,273

$954

$880

$4,679

% of Total

2%

14%

2%

2%

11%

Rest of the world

 

$16,107

$7,123

$6,552

$6,556

$6,716

% of Total

 

32%

15%

16%

16%

17%

Total revenues

 

$50,085

$46,409

$41,661

$41,310

$41,125

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Revenue by Geographic Area – Yearly

(Dollars in thousands)

  

Year Ended December 31, 

2024

2023

2022

United States

 

$74,341

$92,798

$73,625

% of Total

 

41%

56%

50%

Japan

 

$37,427

$10,465

$13,916

% of Total

 

21%

6%

9%

China

 

$22,102

$26,488

$24,494

% of Total

 

12%

16%

16%

Taiwan

$9,257

$9,339

$7,995

% of Total

5%

6%

6%

Rest of the world

$36,338

$26,745

$28,519

% of Total

21%

16%

19%

Total revenues

 

$179,465

$165,835

$148,549

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GAAP / Non-GAAP Presentation

In addition to providing results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company also provides certain non-GAAP financial measures. Non-GAAP gross profit and margin exclude stock-based compensation expense and the amortization of acquired technology under costs of revenues. Non-GAAP net income excludes stock-based compensation expense, amortization of acquired technology under costs of revenues, amortization of other acquired intangible assets, and the effects of certain non-recurring items, such as expenses for certain legal proceedings, non-recurring legal, tax and accounting service-related costs, loss on damaged equipment in-transit, net of recovery from previously written-off property and equipment, and their related income tax effects, as applicable, as well as adjustments for the valuation allowance for deferred tax assets and reconciling items. These non-GAAP financial measures are used by management internally to measure the Company’s profitability and performance. PDF Solutions’ management believes that these non-GAAP measures provide useful supplemental information to investors regarding the Company’s ongoing operations in light of the fact that none of these categories of expense and income has a current effect on the future uses of cash (with the exception of expenses related to certain legal proceedings and non-recurring legal, tax and accounting services) nor do they impact the generation of current or future revenues. These non-GAAP results should not be considered an alternative to, or a substitute for, GAAP financial information, and may differ from similarly titled non-GAAP measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for GAAP measures of income or loss as a measure of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity. Since management uses these non-GAAP financial measures internally to measure profitability and performance, PDF Solutions has included these non-GAAP measures to give investors an opportunity to see the Company’s financial results as viewed by management. A reconciliation of the comparable GAAP financial measures to the non-GAAP financial measures is included herein.

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Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income

Quarterly

(in thousands, except for per share amounts)

Q4’24

  

Q3’24

  

Q2’24

  

Q1’24

  

Q4’23

GAAP net income (loss)

$ 539

$ 2,206

$ 1,705

($ 393)

$ 887

Adjustments to reconcile GAAP net income (loss) to non-GAAP net income:

Stock-based compensation expense

6,507

6,730

5,700

6,110

5,923

Amortization of acquired technology under costs of revenues

583

584

584

584

586

Amortization of other acquired intangible assets

182

196

259

259

306

Expenses for certain legal proceedings (1)

69

75

Non-recurring legal, tax and accounting service-related costs

940

Loss on damaged equipment in-transit, net of (recovery) from previously written-off property and equipment

663

(55)

Tax impact of valuation allowance for deferred tax assets and reconciling items (2)

375

262

(1,159)

(813)

(2,060)

Non-GAAP net income

$ 9,858

$ 9,923

$ 7,089

$ 5,747

$ 5,717

GAAP net income (loss) per diluted share

$ 0.01

$ 0.06

$ 0.04

($ 0.01)

$ 0.02

Non-GAAP net income per diluted share

$ 0.25

$ 0.25

$ 0.18

$ 0.15

$ 0.15

Weighted average common shares used in GAAP net income (loss) per diluted share calculation

39,104

39,105

38,925

38,500

38,814

Weighted average common shares used in Non-GAAP net income per diluted share calculation

39,104

39,105

38,925

39,053

38,814


(1)Represents legal costs and expenses related to certain litigation and an arbitration proceeding which are expected to continue until these matters are resolved.
(2)The difference between the GAAP and non-GAAP income tax provisions is primarily due to the valuation allowance on a GAAP basis and non-GAAP adjustments. For example, on a GAAP basis, the Company does not receive a deferred tax benefit for foreign tax credits or research and development credits after the valuation allowance. The Company’s non-GAAP tax rate and resulting non-GAAP tax expense is not calculated with a full U.S. federal or state valuation allowance due to the Company’s cumulative non-GAAP income and management’s conclusion that it is more likely than not to utilize its net deferred tax assets (DTAs). Each reporting period, management evaluates the need for a valuation allowance and may place a valuation allowance against its U.S. net DTAs on a non-GAAP basis if it concludes it is more likely than not that it will not be able to utilize some or all of its U.S. DTAs on a non-GAAP basis.

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Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income

Yearly

(in thousands, except for per share amounts)

  

Year Ended December 31, 

2024

2023

2022

GAAP net income (loss)

$ 4,057

$ 3,105

($ 3,429)

Adjustments to reconcile GAAP net income (loss) to non-GAAP net income:

Stock-based compensation expense

25,047

21,484

19,649

Amortization of acquired technology

2,335

2,266

2,213

Amortization of other acquired intangible assets

896

1,285

1,270

Expenses for certain legal proceedings (1)

69

2,600

1,895

Non-recurring legal, tax and accounting service-related costs

940

209

Loss on damaged equipment in-transit, net of (recovery) from previously written-off property and equipment

608

(105)

Tax impact of valuation allowance for deferred tax assets and reconciling items (2)

(1,335)

(2,374)

1,326

Non-GAAP net income

$ 32,617

$ 28,470

$ 22,924

GAAP net income (loss) per diluted share

$ 0.10

$ 0.08

($ 0.09)

Non-GAAP net income per diluted share

$ 0.84

$ 0.73

$ 0.60

Weighted average common shares used in GAAP net income (loss) per diluted share calculation

39,047

38,937

37,309

Weighted average common shares used in Non-GAAP net income per diluted share calculation

39,047

38,937

38,130


(1)Represents legal costs and expenses related to certain litigation and an arbitration proceeding which are expected to continue until these matters are resolved.
(2)The difference between the GAAP and non-GAAP income tax provisions is primarily due to the valuation allowance on a GAAP basis and non-GAAP adjustments. For example, on a GAAP basis, the Company does not receive a deferred tax benefit for foreign tax credits or research and development credits after the valuation allowance. The Company’s non-GAAP tax rate and resulting non-GAAP tax expense is not calculated with a full U.S. federal or state valuation allowance due to the Company’s cumulative non-GAAP income and management’s conclusion that it is more likely than not to utilize its net DTAs. Each reporting period, management evaluates the need for a valuation allowance and may place a valuation allowance against its U.S. net DTAs on a non-GAAP basis if it concludes it is more likely than not that it will not be able to utilize some or all of its U.S. DTAs on a non-GAAP basis.

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Reconciliation of GAAP to Non-GAAP Spending by Function

Quarterly

(in thousands)

Q4’24

  

Q3’24

  

Q2’24

  

Q1’24

  

Q4’23

Cost of Revenue - GAAP

 

$ 15,901

$ 12,484

$ 12,230

$ 13,529

$ 13,194

Adjustments to reconcile GAAP Cost of Revenue to Non-GAAP Cost of Revenue:

 

Stock-based compensation expense

 

(1,336)

(1,366)

(1,185)

(1,200)

(1,147)

Amortization of acquired technology

 

(583)

(584)

(584)

(584)

(586)

Cost of Revenue - Non-GAAP

 

$ 13,982

$ 10,534

$ 10,461

$ 11,745

$ 11,461

Research & Development - GAAP

 

$ 14,417

$ 13,516

$ 12,649

$ 12,984

$ 12,308

Adjustments to reconcile GAAP R&D to Non-GAAP R&D:

Stock-based compensation expense

(2,318)

(2,375)

(2,063)

(2,202)

(2,102)

Research & Development - Non-GAAP

$ 12,099

$ 11,141

$ 10,586

$ 10,782

$ 10,206

Selling, General, & Administrative - GAAP

$ 19,073

$ 18,094

$ 16,259

$ 16,498

$ 16,194

Adjustment to reconcile GAAP SG&A to Non-GAAP SG&A:

Stock-based compensation expense

(2,853)

(2,989)

(2,452)

(2,708)

(2,674)

Expenses for certain legal proceedings (1)

(69)

(75)

Non-recurring legal, tax and accounting service-related costs

(940)

Selling, General, & Administrative - Non-GAAP

 

$ 15,211

$ 15,105

$ 13,807

$ 13,790

$ 13,445


(1)Represents legal costs and expenses related to certain litigation and an arbitration proceeding which are expected to continue until these matters are resolved.

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Reconciliation of GAAP to Non-GAAP Spending by Function

Yearly

(in thousands)

Year Ended December 31, 

2024

  

2023

  

2022

Cost of Revenue - GAAP

 

$ 54,144

$ 51,749

$ 47,907

Adjustments to reconcile GAAP Cost of Revenue to Non-GAAP Cost of Revenue:

 

Stock-based compensation expense

 

(5,087)

(4,169)

(2,974)

Amortization of acquired technology

 

(2,335)

(2,266)

(2,213)

Cost of Revenue - Non-GAAP

 

$ 46,722

$ 45,314

$ 42,720

Research & Development - GAAP

 

$ 53,566

$ 50,736

$ 56,126

Adjustments to reconcile GAAP R&D to Non-GAAP R&D:

Stock-based compensation expense

(8,958)

(7,711)

(9,391)

Research & Development - Non-GAAP

$ 44,608

$ 43,025

$ 46,735

Selling, General, & Administrative - GAAP

$ 69,924

$ 62,216

$ 45,338

Adjustment to reconcile GAAP SG&A to Non-GAAP SG&A:

Stock-based compensation expense

(11,002)

(9,604)

(7,284)

Expenses for certain legal proceedings (1)

(69)

(2,600)

(1,895)

Non-recurring legal, tax and accounting service-related costs

(940)

(209)

Selling, General, & Administrative - Non-GAAP

 

$ 57,913

$ 49,803

$ 36,159


(1)Represents legal costs and expenses related to certain litigation and an arbitration proceeding which are expected to continue until these matters are resolved.

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