PDF Solutions Inc. (NASDAQ:PDFS) Q2 2019 Earnings Conference Call - Final Transcript

Aug 01, 2019 • 05:00 pm ET


PDF Solutions Inc. (NASDAQ:PDFS) Q2 2019 Earnings Conference Call - Final Transcript


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John K. Kibarian

evaluate either Extensio on the cloud, our AI-based solutions or both. These projects generate smaller revenue, but upon successful completion could lead to annual revenue rates that are multiples larger than our annual revenue run rate at these accounts today. The value of the cloud and AI are clear. In particular, customers evaluating Exensio on the cloud are able to see 5x to 30x better performance versus using Exensio on-premise with conventional relational databases.

A number of our customers, including mixed signal and some of the largest companies tell us their Exensio database is the largest database within their company. Those types of customers see the most substantial performance benefits from Exensio on the cloud. We believe that in the second half, a substantial number of these pilots will expand their deployments. This greatly increases the value we can offer to these customers, of course, it leads to much higher annual run rates of revenue.

The second highlight is DFI, where we continue to drive momentum in customer demos that should lead to future growth. As we mentioned on the April call, in Q2 our goal was to get [Indecipherable]manufacturer. The eProbe 250 achieved that milestone in the second quarter as the lead customer. This means that in the third quarter, should customer come on production wafers add volume, develop use cases for the unique DFI data can provide and increase effectiveness of their development and manufacturing. Beyond this lead foundry customer, DFI is being demoed at leading edge logic manufacturers. We -- If we see successful positive technical results, then in the next few quarters we anticipate resulting programs at these companies, similar in scope to our first account. We're also kicking off our first demonstration of the leading edge memory manufacturer. All this activity increases our confidence in the outlook for DFI. We are now ordering long lead parts to build more eProbe 250s in the near future.

Our third highlight is the opportunity that Exensio can afford in end-to-end analytics. In the past, customers used different systems for yield management, process control, assembly control and test analytics. Exensio is the first system that serves all these applications in a single flow. Just like design automation companies helped the chip industry move from using point tools to integrated design flow, Extensio is helping our customers realize the full potential of end-to-end analytics. This value of our core functionality is visible in the strong growth of our analytics revenue. Analytics revenue, which includes Exensio and DFI, grew to over 70% of our solutions revenue this quarter.

Analytics revenue was up over 40% from the same period last year and well over 10%, sequentially. The key growth driver for analytics revenue is expanding the footprint of Exensio and our large customer base. For example, one mixed signal customer using only our yield management module completed a pilot of our test module. If they adopted our annual revenue run rate, which then will double. There are over 130 Exensio customers today,