PDF Solutions(PDFS) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2023, the company generated record revenue of $165.8 million, a 12$148.5 million in 2022 [20] - The gross margin for the fourth quarter was 72%, with an EPS of $0.15 per share, while the full-year gross margin was 73$0.73, up from $0.60 in 2022 [21][93] - The backlog at the end of 2023 was$230 million, indicating growth compared to the previous quarter [20] Business Line Data and Key Metrics Changes - Analytics revenue increased by 17% year-over-year to $152.1 million, while IYR revenue decreased by 24$13.8 million [21][23] - The decline in Cimetrix products revenue was attributed to reduced equipment shipments, affecting overall revenue contribution [22] - The company expects to ship more machines in 2024 compared to 2023, indicating a positive outlook for product deployment [54] Market Data and Key Metrics Changes - The semiconductor industry contracted by 10% in 2023, while the company managed to grow revenue by 12% [42][47] - The company anticipates a flat revenue performance in the first half of 2024, with a return to 20% growth in the second half [44][52] Company Strategy and Development Direction - The company aims to be the leading analytics software provider for the global semiconductor supply chain, focusing on AI and ML integration in manufacturing [48] - Strategic partnerships, particularly with SAP, are being leveraged to enhance product offerings and market reach [56] - The company is investing in sales and marketing to capture growth opportunities, with a focus on expanding its customer base [81][98] Management's Comments on Operating Environment and Future Outlook - Management noted short-term weakness in the semiconductor industry but highlighted long-term growth drivers such as AI, energy electrification, and geographic diversification [17][25] - The company expressed confidence in building on Q4 bookings momentum into 2024, despite current market challenges [31][55] Other Important Information - The company ended 2023 with cash and equivalents of $135.5 million and no debt, maintaining a strong financial position [51] - Positive operating cash flow of$14.6 million was reported, with significant investments in CapEx for data collection systems and acquisitions [93] Q&A Session Summary Question: Can you provide insights on DFI and revenue recognition? - The company shipped a DFI machine for evaluation and anticipates recognizing revenue as customer evaluations progress [53] Question: What gives confidence for substantial second-half growth? - Confidence stems from strong bookings activity and large contracts signed in Q4, with expectations for continued momentum in the first half of 2024 [55] Question: Can you elaborate on the analytics revenue per customer metric? - The company is seeing increased spend on sales and marketing, which is expected to yield positive results in the pipeline and bookings [58][97] Question: What is the outlook for advanced logic and customer adoption? - The company expects advanced logic to contribute incrementally this year, with ongoing discussions with various customers [88][90]