PDF SOLUTIONS INC Q3 FY2024 earnings call

• Bookings in the third quarter were driven by Exensio and Cimetrix connectivity software, with a large cloud customer renewing Exensio at a 50% increase in annual revenue. Advanced logic, advanced packaging, and high voltage semiconductor manufacturing fabs boosted process control licenses. - eProbe manufacturing evaluation at the second customer is proceeding well with potential for early completion, and utilization at the initial eProbe DirectScan customer remains high. Memory applications for eProbe showed promising results. - CapEx has been ramping up this year, with eProbe anticipated to drive revenue growth in Q4 and beyond. - A one-day AI executive workshop in San Francisco on December 12 was announced, bringing together customers, industry experts, and PDF folks to discuss AI in semiconductor manufacturing.

Total revenue for Q3 2024 was $46.4 million, which is 11% higher than the prior quarter and 10% higher than the same quarter of the previous year. Analytics revenue stood at $44.8 million, representing a 17% increase from the prior quarter and a 13% increase from the same quarter in 2023, comprising 96% of the quarter's revenue. Cimetrix connectivity products saw a slight improvement in runtime licenses during Q3. Integrated yield ramp (IYR) revenue was 4% of total revenues in Q3, lower by $1.9 million compared to the prior quarter and $1.2 million compared to the same quarter of the prior year.

• Expect Q4 year-over-year total revenues to grow in line with the long-term revenue growth target of 20%. - Anticipate improvement in integrated yield ramp revenue, with DFI evaluation completion earlier than expected. - Cloud bookings, which had a longer tail impact, will contribute over the next few quarters. - Modest improvement in runtime licenses on the Cimetrix side is expected.

Q: Blair Abernethy asks about the DFI pipeline beyond the first couple of customers, CapEx levels, and SG&A step up.

A: John Kibarian talks about a third customer in an integrated package, memory applications as a growth vector, and CapEx for the DFI platform; Adnan Raza discusses CapEx levels and SG&A being driven by sales and marketing investments.

Q: Gus Richard inquires about the perpetual license, Q4 revenue drivers, and eProbe market sizing.

A: John Kibarian mentions improvement in IYR, DFI evaluation completion earlier than expected, cloud bookings contributing over time, and eProbe's potential in logic and memory applications expanding the market.

Q: Blair Abernethy asks about the China market and SAP partnership.

A: John Kibarian states the China market is mixed, with advanced logic and packaging activity outside China, and SAP partnerships are ongoing with critical deployments and selling activities.

Q: William Jellison asks about MLOps pilots and the investment in a private company.

A: John Kibarian provides updates on MLOps pilots, and Adnan Raza details a $2 million investment in a convertible note for a private company with differentiated technology.

Q: Andrew Wiener asks about DFI demand, battery pilots, and how customers are approaching manufacturing processes.

A: John Kibarian gives updates on DFI demand range, battery pilot progress, and the unique approach of PDF's solutions in battery manufacturing compared to other systems