What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-08 · 190 added, 231 removed, 379 unchanged (53% of the section changed)

3 unchanged sentences

(in thousands, except par value)

September 30,

Current assets:

1 unchanged sentence

Short-term investments

Accounts receivable, net of allowance for credit losses of $ 890 as of September 30, 2023 and December 31, 2022

Accounts receivable, net of allowance for credit losses of $ 890 as of March 31 , 2024 and December 31, 2023

Prepaid expenses and other current assets

14 unchanged sentences

Total current liabilities

Long-term income taxes payable

Long-term income taxes

Non-current portion of operating lease liabilities

17 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Integrated Yield Ramp

12 unchanged sentences

Change in unrealized gain (loss) related to available-for-sale debt securities, net of tax

Total other comprehensive loss

Total other comprehensive income (loss)

Comprehensive income (loss)

5 unchanged sentences

(in thousands)

Three Month Periods in the Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Treasury Stock

2 unchanged sentences

Balances, December 31, 2023

Issuance of common stock in connection with employee stock purchase plans

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Stock-based compensation expense

Comprehensive income

Balances, March 31, 2023

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Stock-based compensation expense

Comprehensive income (loss)

Balances, June 30, 2023

Repurchase of common stock

Issuance of common stock in connection with employee stock purchase plan

1 unchanged sentence

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Repurchase of common stock

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Stock-based compensation expense

Comprehensive loss

Balances, September 30, 2023

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – CONTINUED

(in thousands)

Three Month Periods in the Nine Months Ended September 30, 2022

Balances, March 31, 2024

Three Months Ended March 31, 2023

Treasury Stock

2 unchanged sentences

Balances, December 31, 2022

Issuance of common stock in connection with employee stock purchase plans

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of options

1 unchanged sentence

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Repurchase of common stock

Stock-based compensation expense

Comprehensive loss

Comprehensive income

Balances, March 31, 2023

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Repurchase of common stock

Stock-based compensation expense

Comprehensive loss

Balances, June 30, 2022

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock grants

Stock-based compensation expense

Comprehensive income (loss)

Balances, September 30, 2022

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

15 unchanged sentences

Operating lease liabilities

Net cash provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

1 unchanged sentence

Purchases of short-term investments

Proceeds from sale of property and equipment

Purchases of property and equipment

Prepayment for the purchase of property and equipment

Purchases of intangible assets

Payment for business acquisition, net of cash acquired

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from employee stock purchase plans

Proceeds from employee stock purchase plan

Payments for taxes related to net share settlement of equity awards

5 unchanged sentences

Cash and cash equivalents at end of period

Continued on next page.

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

(in thousands)

Three Months Ended March 31,

Supplemental disclosure of cash flow information:

Cash paid during the period for taxes

Cash paid during the year for taxes

Cash paid for amounts included in the measurement of operating lease liabilities

11 unchanged sentences

(the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.

Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.

The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments) to present a fair statement of results for the interim periods presented.

The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year.

The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023.

The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024.

The interim unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions.

2 unchanged sentences

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates in these condensed consolidated financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for credit losses, impairment of goodwill and long-lived assets, valuation for deferred tax assets (“DTAs”), and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies.

Significant estimates in these condensed consolidated financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for credit losses, impairment of goodwill and long-lived assets, realization of deferred tax assets (“DTAs”), and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies.

Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position.

Recent Accounting Standards

Accounting Standards Adopted

In June 2016, the Financial Accounting Standards Board (“FASB’) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU No.

2016-13”), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts.

2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses.

Subsequent to the issuance of ASU No.

2016-13, the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instrument, ASU No.

2019-05, Financial Instruments – Credit Losses (Topic 326) Targeted Transition Relief, ASU No.

2016-13, ASU No.

2019-10 Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU No.

2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses.

The subsequent ASUs do not change the core principle of the guidance in

Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU No.

The Company adopted this standard on January 1, 2023, using a modified retrospective approach, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption with prior periods not restated.

The adoption of ASU No.

2016-13 did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

Early adoption is permitted.

The Company is currently evaluating the impact of the new standard on the consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024.

Entities are permitted to early adopt the standard for “annual financial statements that have not yet been issued or made available for issuance.” Adoption is either prospectively or retrospectively, the Company will adopt this ASU on a prospective basis.

The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures.

Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB, and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements.

25 unchanged sentences

For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation.

Revenue from SaaS arrangements, which allow for the use of a cloud-based software product or service over a contractually determined period of time without the customer having to take possession of software, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers.

Revenue from SaaS arrangements, which allow for the use of a cloud-based software product or service over a contractually determined period of time without the customer having to take possession of the software, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers.

For contracts with any combination of SaaS and related services, distinct performance obligations are accounted for separately.

6 unchanged sentences

Please refer to the “Significant Judgments” section of this Note for further discussion.

The Company also leases some of its DFI system and CV system assets to some customers.

The Company determines the existence of a lease when the customer controls the use of these identified assets for a period of time defined in the lease agreement and classifies such leases as operating leases or sales-type leases.

A lease is classified as a sales-type lease if it meets certain criteria under ASC Topic 842, Leases;

otherwise, it is classified as an operating lease.

Operating lease revenue is recognized on a straight-line basis over the lease term.

Sales-type lease revenue and corresponding lease receivables are recognized at lease commencement based on the present value of the future lease payments, and related interest income on lease receivable is recognized over the lease term and are recorded under Analytics revenue in the accompanying condensed consolidated statements of comprehensive income (loss).

Payments under sales-type leases are discounted using the interest rate implicit in the lease.

When the Company’s leases are embedded in contracts with customers that include non-lease performance obligations, the Company allocates consideration in the contract between lease and non-lease components based on their relative SSPs.

Assets subject to operating leases remain in property and equipment and continue to be depreciated.

Assets subject to sales-type leases are derecognized from property and equipment, net at lease commencement and a net investment in the lease asset is recognized in prepaid expenses and other current assets and other non-current assets in the accompanying condensed consolidated balance sheets.

Integrated Yield Ramp Revenue

13 unchanged sentences

The following table represents a disaggregation of revenue percentage by timing of revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Point-in-time

International revenues accounted for approximately 42 % and 54 % of the Company’s total revenues during the three months ended September 30, 2023 and 2022, respectively.

International revenues accounted for approximately 44 % and 51 % of the Company’s total revenues during the nine months ended September 30, 2023 and 2022, respectively.

International revenues accounted for approximately 57 % and 43 % of the Company’s total revenues during the three months ended March 31, 2024 and 2023, respectively.

See Note 9, Customer and Geographic Information .

21 unchanged sentences

The majority of the Company’s contract assets represent unbilled amounts related to fixed-price service contracts when the revenue recognized exceeds the amount billed to the customer.

The contract assets are generally classified as current and are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level.

As of September 30, 2023 and December 31, 2022, the total contract assets included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets were $ 8.1 million and $ 3.3 million, respectively.

The contract assets are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level.

As of March 31, 2024 and December 31, 2023, the total contract assets included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets were $ 4.1 million and $ 6.8 million, respectively.

As of March 31, 2024 and December 31, 2023, contract assets of $ 0.7 million and $ 0.9 million, respectively, are included in other non-current assets in the accompanying condensed consolidated balance sheets.

The Company did not record any asset impairment charges related to contract assets for the periods presented.

Deferred revenues and billings in excess of recognized revenues consist substantially of amounts invoiced in advance of revenue recognition and are recognized as the revenue recognition criteria are met.

Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues and the remaining portion is recorded in other non-current liabilities in the accompanying condensed consolidated balance sheets.

As of September 30, 2023, and December 31, 2022, the non-current portion of deferred revenues included in non-current liabilities was $ 2.3 million and $ 1.9 million, respectively.

Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $ 13.1 million and $ 10.6 million during the three months ended September 30, 2023 and 2022, respectively, and $ 23.8 million and $ 16.3 million during the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $ 218.3 million.

Deferred revenues

that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues and the remaining portion is recorded in other non-current liabilities in the accompanying condensed consolidated balance sheets.

As of March 31, 2024, and December 31, 2023, the non-current portion of deferred revenues included in non-current liabilities was $ 1.4 million and $ 1.8 million, respectively.

Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $ 11.4 million and $ 11.4 million during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $ 262.2 million.

Given the applicable contract terms with customers, more than half of this amount is expected to be recognized as revenue over the next two years with the remainder to be recognized thereafter.

2 unchanged sentences

The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was a decrease of $ 0.6 million and an increase of $ 1.9 million during the three months ended September 30, 2023 and 2022, respectively, and an increase of $ 4.3 million and an increase of $ 0.4 million during the nine months ended September 30, 2023 and 2022, respectively.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was a decrease of $ 0.6 million and an increase of $ 2.5 million during the three months ended March 31, 2024 and 2023, respectively.

These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare.

2 unchanged sentences

Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred.

Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $ 2.0 million and $ 1.7 million, respectively.

Total capitalized direct sales commission costs included in other non-current assets in the accompanying condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, were $ 2.5 million and $ 2.1 million, respectively.

Amortization of these assets was $ 0.5 million and $ 0.4 million during the three months ended September 30, 2023 and 2022, respectively, and $ 1.5 million and $ 1.1 million during the nine months ended September 30, 2023 and 2022.

Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets as of March 31, 2024, and December 31, 2023, were $ 2.3 million and $ 2.0 million, respectively.

Total capitalized direct sales commission costs included in other non-current assets in the accompanying condensed consolidated balance sheets as of March 31, 2024, and December 31, 2023, were $ 3.6 million and $ 2.6 million, respectively.

Amortization of these assets was $ 0.6 million and $ 0.5 million during the three months ended March 31, 2024 and 2023, respectively.

There was no impairment loss in relation to the costs capitalized for the periods presented.

1 unchanged sentence

The Company does not adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less.

The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component during the three and nine months ended September 30, 2023 and 2022.

BALANCE SHEET COMPONENTS

1 unchanged sentence

Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12-month period.

Unbilled accounts receivable, included in accounts receivable, totaled $ 14.3 million and $ 13.5 million as of September 30, 2023, and December 31, 2022, respectively.

Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period are recorded in other non-current assets and totaled $ 0.8 million and $ 0.8 million as of September 30, 2023, and December 31, 2022, respectively.

Unbilled accounts receivable, included in accounts receivable, totaled $ 17.4 million and $ 16.4 million as of March 31, 2024, and December 31, 2023, respectively.

Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period are recorded in other non-current assets and totaled $ 2.2 million and $ 1.1 million as of March 31, 2024, and December 31, 2023, respectively.

The Company performs ongoing credit evaluations of its customers’ financial condition.

An allowance for credit losses is maintained for probable credit losses based upon the Company’s assessment of the expected collectability of the accounts receivable.

An allowance for credit losses is maintained for probable credit losses based upon the Company’s assessment of the expected collectibility of the accounts receivable.

The allowance for credit losses is reviewed on a quarterly basis to assess the adequacy of the allowance.

1 unchanged sentence

Property and equipment, net consist of the following (in thousands):

September 30,

Computer equipment

9 unchanged sentences

Property and equipment in progress represent the development or construction of property and equipment that have not yet been placed in service for the Company’s intended use and are not depreciated.

Depreciation and amortization expense was $ 1.2 million and $ 1.4 million during the three months ended September 30, 2023 and 2022, respectively, and $ 3.8 million and $ 4.2 million during the nine months ended September 30, 2023 and 2022, respectively.

Depreciation and amortization expense was $ 1.1 million and $ 1.3 million during the three months ended March 31, 2024 and 2023, respectively.

Goodwill and Intangible Assets, Net

As of September 30, 2023, and December 31, 2022, the carrying amount of goodwill was $ 15.0 million and $ 14.1 million, respectively.

Refer to Note 13, Business Combination , for the discussion about additional goodwill recognized during the three and nine months ended September 30, 2023.

As of March 31, 2024, and December 31, 2023, the carrying amount of goodwill was $ 15.0 million and $ 15.0 million, respectively.

Intangible assets, net, consisted of the following (in thousands):

September 30, 2023

March 31, 2024

December 31, 2023

4 unchanged sentences

Noncompetition agreements

The weighted average amortization period for acquired identifiable intangible assets was 5.5 years as of September 30, 2023.

The weighted average amortization period for acquired identifiable intangible assets was 5.0 years as of March 31, 2024.

The following table summarizes intangible assets amortization expense in the accompanying condensed consolidated statements of comprehensive income (loss) (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Amortization of acquired technology included under costs of revenues

3 unchanged sentences

Year Ending December 31,

2023 (remaining three months)

2024 (remaining nine months)

2029 and thereafter

Total future amortization expense

There were no impairment charges for goodwill and intangible assets during the three and nine months ended September 30, 2 0 23 and 2022.

There were no impairment charges for goodwill and intangible assets during the three months ended March 31, 2024 and 2023.

Other Non-current Assets

Other non-current assets consisted of the following (in thousands):

Costs capitalized to obtain revenue contracts – non-current (1)

Unbilled accounts receivable – non-current (2)

Contract assets – non-current (1)

Net investments in sales-type leases – non-current (3)

Deposits and other non-current prepaid expenses

Total other non-current assets

(1) See Note 2, Revenue from Contracts with Customers .

(2) See Note 3, Balance Sheet Components – Accounts Receivable .

(3) The Company had net investments in sales-type leases for its DFI™ system and CV® system assets.

The following table summarizes the components of the Company’s net investments in sales-type leases in the condensed consolidated balance sheets (in thousands):

Lease receivables

Unguaranteed residual assets

Net investments in sales-type leases

Current portion of lease receivables under prepaid expenses and other current assets

Net investments in sales-type leases – non-current

Maturities of leases payments under sales-type leases as of March 31, 2024, were as follows (in thousands):

Year Ending December 31,

2024 (remaining nine months)

Total future sales-type lease payments

Present value adjustment (a)

Present value of lease receivables

(a) Calculated using the rate implicit in the lease determined for each lease.

There was no allowance for credit losses on lease receivables as of March 31, 2024, and December 31, 2023.

The Company’s ongoing risk management strategy for residual assets includes performing regular reviews of estimated residual values.

The Company leases administrative and sales offices and certain equipment under non-cancellable operating leases, which contain various renewal options and, in some cases, require payment of common area costs, taxes and utilities.

These operating leases expire at various dates through 2028.

The Company had no leases that were classified as a financing lease as of September 30, 2023, and December 31, 2022.

In the first quarter of 2022, the Company early terminated an office lease contract.

The termination of this lease reduced the Company’s operating lease right-of-use assets and lease liabilities by approximately $ 0.5 million and $ 0.6 million, respectively.

The gain from the lease termination of approximately $ 0.1 million was recorded under selling, general, and administrative expense in the accompanying condensed consolidated statement of comprehensive income (loss) for the nine months ended September 30, 2022.

The Company had no leases that were classified as a financing lease as of March 31, 2024, and December 31, 2023.

Lease expense was comprised of the following (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating lease expense

1 unchanged sentence

Total lease expense

(1) Net of gain recognized upon lease termination of $ 0.1 million in the nine months ended September 30, 2022.

(1) Leases with an initial term of 12 months or less are not recorded on the accompanying condensed consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

1 unchanged sentence

Supplemental condensed consolidated balance sheets information related to operating leases was as follows:

September 30,

Weighted average remaining lease term under operating leases (in years)

Weighted average discount rate for operating lease liabilities

Maturities of operating lease liabilities as of September 30, 2023, were as follows (in thousands):

Maturities of operating lease liabilities as of March 31, 2024, were as follows (in thousands):

Year Ending December 31,

2023 (remaining three months)

2028 and thereafter

2024 (remaining nine months)

Total future minimum lease payments

Present value of future minimum lease payments under operating lease liabilities (3)

(1) As of September 30, 2023, the total operating lease liability includes approximately $ 0.9 million related to an option to extend a lease term that is reasonably certain to be exercised.

(1) As of March 31, 2024, the total operating lease liability includes approximately $ 1.0 million related to an option to extend a lease term that is reasonably certain to be exercised.

(2) Calculated using incremental borrowing interest rate for each lease.

(3) Includes the current portion of operating lease liabilities of $ 1.5 million as of September 30, 2023.

(3) Includes the current portion of operating lease liabilities of $ 1.6 million as of March 31, 2024.

STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On June 4, 2020, the Company’s Board of Directors adopted a stock repurchase program (the “2020 Program”) to repurchase up to $ 25.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, over the next two years .

During the nine months ended September 30, 2022, 218,858 shares were repurchased by the Company under the 2020 Program at an average price of $ 26.40 per share for an aggregate total price of $ 5.8 million.

In total, 470,070 shares were repurchased under the 2020 Program at an average price of $ 21.91 per share, for an aggregate total price of $ 10.3 million.

On April 11, 2022, the Board of Directors terminated the 2020 Program, and adopted a new program (the “2022 Program”) to repurchase up to $ 35.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, from time to time, over the next two years .

During the nine months ended September 30, 2022, 714,600 shares were repurchased by the Company under the 2022 Program at an average price of $ 23.36 per share for an aggregate total price of $ 16.7 million.

During the nine months ended September 30, 2023, 21,340 shares were repurchased by the Company under the 2022 Program at an average price of $ 34.81 per share for an aggregate total price of $ 0.7 million.

In total, the Company has repurchased 735,940 shares under the 2022 Program at an average price of $ 23.69 per share for an aggregate total price of $ 17.4 million.

On April 11, 2022, the Board of Directors adopted a stock repurchase program (the “2022 Program”) to repurchase up to $ 35.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years .

During the three months ended March 31, 2024, 201,561 shares were repurchased by the Company under the 2022 Program at an average price of $ 34.23 per share for an aggregate total price of $ 6.9 million.

In total, the Company repurchased 937,501 shares under the 2022 Program at an average price of $ 25.96 per share for an aggregate total price of $ 24.3 million.

The 2022 Program expired on April 11, 2024, and on April 15, 2024, the Board of Directors adopted a new program (the “2024 Program”) to repurchase up to $ 40.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years .

EMPLOYEE BENEFIT PLANS

On September 30, 2023, the Company had the following stock-based compensation plans:

On March 31, 2024, the Company had the following stock-based compensation plans:

Employee Stock Purchase Plan

In July 2001, the Company’s stockholders initially approved the 2001 Employee Stock Purchase Plan, which was subsequently amended and restated in 2010 (as amended, the “2010 Purchase Plan”) to extend the term of the plan through May 17, 2020.

Under the 2010 Purchase Plan, eligible employees could contribute up to 10 % of their compensation, as defined in the 2010 Purchase Plan, towards the purchase of shares of PDF common stock at a price of 85 % of the lower of the fair market value at the beginning of the offering period or the end of the purchase period.

The 2010 Purchase Plan provided for twenty-four-month offering periods with four six -month purchase periods in each offering period.

The 2010 Purchase Plan expired on May 17, 2020.

Existing offering periods under the 2010 Plan continued through the applicable expiration date and the final offering period expired on January 31, 2022.

On June 15, 2021, the Company’s stockholders approved the 2021 Employee Stock Purchase Plan, which has a ten-year term (the “2021 Purchase Plan” and, together with the 2010 Purchase Plan, the “Employee Purchase Plans”).

The terms of the 2021 Purchase Plan are substantially similar to those of the 2010 Purchase Plan.

A twenty-four-month offering period under the 2021 Purchase Plan commenced on August 1, 2021.

On June 15, 2021, the Company’s stockholders approved the 2021 Employee Stock Purchase Plan, which has a ten-year term (the “2021 Purchase Plan”).

Under the 2021 Purchase Plan, eligible employees can contribute up to 10 % of their compensation, as defined in the 2021 Purchase Plan, towards the purchase of shares of PDF common stock at a price of 85 % of the lower of the fair market value at the beginning of the offering period or the end of the purchase period.

The 2021 Purchase Plan commenced on August 1, 2021, and provided for twenty-four-month offering periods with four six-month purchase periods in each offering period.

On April 15, 2024, the Company’s Board of Directors approved another amendment and restatement of the 2021 Purchase Plan, which is subject to stockholder approval at the 2024 annual meeting of stockholders, to, among other things, increase the number of shares reserved for issuance under it to a total of 1.2 million shares, which is an increase of an additional 0.2 million shares, and to eliminate the term of the 2021 Purchase Plan.

The Company estimated the fair value of purchase rights granted under the 2021 Purchase Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values:

Nine Months Ended September 30,

Three Months Ended March 31,

Expected life (in years)

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Weighted average fair value of purchase rights granted during the period

During the three months ended September 30, 2023, a total of 125,392 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 17.30 per share.

During the three months ended September 30, 2022, a total of 92,043 shares were issued under the 2021 Purchase Plan, at a weighted-average purchase price of $ 16.40 per share.

During the nine months ended September 30, 2023, a total of 223,608 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 17.14 per share.

During the nine months ended September 30, 2022, a total of 182,083 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 16.15 per share.

During the nine months ended September 30, 2022, a total of 5,203 shares were issued under the 2010 Purchase Plan, at a weighted average purchase price of $ 13.40 per share.

As of September 30, 2023, unrecognized compensation cost related to the 2021 Purchase Plan was $ 3.9 million.

During the three months ended March 31, 2024, a total of 73,854 shares were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 25.94 per share.

During the three months ended March 31, 2023, a total of 98,216 shares were issued under the 2021 Purchase Plan, at a weighted-average purchase price of $ 16.93

As of March 31, 2024, unrecognized compensation cost related to the 2021 Purchase Plan was $ 4.0 million.

This estimated unrecognized cost is expected to be recognized over a weighted average period of 1.8 years.

As of September 30, 2023, 594,309 shares were available for future issuance under the 2021 Purchase Plan.

As of March 31, 2024, 520,455 shares were available for future issuance under the 2021 Purchase Plan.

Stock Incentive Plans

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Stock options generally expire ten years from the date of grant and become vested and exercisable over a four-year period.

As of September 30, 2023, 14.3 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.7 million shares were available for future grant.

The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired or repurchased by the Company after the adoption of the 2011 Plan through September 30, 2023.

As of September 30, 2023, there were no outstanding awards that had been granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”).

On April 15, 2024, the Company’s Board of Directors approved another amendment and restatement of the 2011 Plan, which is subject to stockholder approval at the 2024 annual meeting of stockholders, to, among other things, increase the number of shares reserved for awards under it to a total of 14.6 million shares, which is an increase of an additional 0.8 million shares, and to eliminate the term of the 2011 Plan.

As of March 31, 2024, 14.3 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.7 million shares were available for future grant.

As of March 31, 2024, there were no outstanding awards that had been granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”).

The Company estimated the fair value of share-based awards granted under the 2011 Stock Plan during the period using the Black-Scholes-Merton option-pricing model.

There were no stock options granted during the three and nine months ended September 30, 2023 and 2022.

There were no stock options granted during the three months ended March 31, 2024 and 2023.

Stock-Based Compensation

Stock-based compensation is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generally four years .

Stock-based compensation expense before taxes related to the Company’s stock plans and employee stock purchase plans was allocated as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Stock-based compensation expense before taxes related to the Company’s stock plan and employee stock purchase plan was allocated as follows (in thousands):

Three Months Ended March 31,

Costs of revenues

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Stock-based compensation expense

Stock-based compensation capitalized in the capitalized software development costs included in property and equipment, net, was immaterial for the three and nine months ended September 30, 2023.

Additional information with respect to options under the Stock Plans during the nine months ended September 30, 2023, is as follows:

Stock-based compensation capitalized in the capitalized software development costs included in property and equipment, net, was immaterial for the three months ended March 31, 2024.

Additional information with respect to options under the Stock Plans during the three months ended March 31, 2024, is as follows:

Outstanding Options

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(in thousands)

Outstanding, December 31, 2022

Outstanding, September 30, 2023

Vested and expected to vest, September 30, 2023

Exercisable, September 30, 2023

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 32.40 per share as of September 30, 2023.

The total intrinsic value of options exercised was $ 0.6 million during the nine months ended September 30, 2023.

Total remaining unrecognized compensation cost related to unvested stock options as of September 30, 2023, which is expected to be fully recognized in 2023, and total fair value of shares vested during the nine months ended September 30, 2023, were immaterial.

Nonvested restricted stock unit activity during the nine months ended September 30, 2023, was as follows:

Outstanding, January 1, 2024

Outstanding, March 31, 2024

Vested and expected to vest, March 31, 2024

Exercisable, March 31, 2024

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 33.67 per share as of March 31, 2024.

The total intrinsic value of options exercised during the three months ended March 31, 2024 and 2023 was as follows (in thousands):

Three Months Ended March 31,

Intrinsic value of options exercised

Total remaining unrecognized compensation cost related to unvested stock options as of March 31, 2024, which is expected to be fully recognized in 2024, and total fair value of shares vested during the three months ended March 31, 2024, were immaterial.

Nonvested restricted stock unit activity during the three months ended March 31, 2024, was as follows:

Average Grant

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(in thousands)

Nonvested, December 31, 2022

Nonvested, September 30, 2023

As of September 30, 2023, there was $ 48.6 million of total unrecognized compensation cost related to restricted stock units.

Nonvested, January 1, 2024

Nonvested, March 31, 2024

The weighted average grant date fair values of restricted stock units granted during the three months ended March 31, 2024 and 2023 were $ 33.17 and $ 33.46 , respectively.

The total fair value of restricted stock units vested during the three months ended March 31, 2024 and 2023 was as follows (in thousands):

Three Months Ended March 31,

Fair value of restricted stock units vested

As of March 31, 2024, there was $ 41.3 million of total unrecognized compensation cost related to restricted stock units.

That cost is expected to be recognized over a weighted average period of 2.4 years.

Restricted stock units do not have rights to dividends prior to vesting.

Income tax expense decreased by $ 0.8 million for the nine months ended September 30, 2023, to a $ 2.5 million income tax expense as compared to a $ 3.3 million income tax expense for the nine months ended September 30, 2022.

The Company’s effective tax rate was 53.1 % and ( 547.7 %) for the nine months ended September 30, 2023 and 2022, respectively.

The Company’s effective tax rate increased in the nine months ended September 30, 2023, as compared to the same period in 2022, primarily due to changes in the foreign and state taxes and year-to-date recognition of worldwide pre-tax income (loss) in relation to their forecasted amounts for full years.

Our provision for income taxes for the nine months ended September 30, 2023, was primarily attributable to foreign and state taxes.

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of September 30, 2023, was $ 15.9 million, of which $ 2.0 million, if recognized, would affect the Company’s effective tax rate.

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of December 31, 2022, was $ 15.1 million, of which $ 2.0 million, if recognized, would affect the Company’s effective tax rate.

As of September 30, 2023, the Company has recorded unrecognized tax benefits of $ 2.5 million, including interest and penalties of $ 0.6 million, as long-term taxes payable in the accompanying condensed consolidated balance sheet.

Income tax expense decreased by $ 0.3 million for the three months ended March 31, 2024, to a $ 0.1 million income tax expense as compared to a $ 0.4 million income tax expense for the three months ended March 31, 2023.

The Company’s effective tax rate was ( 47 %) and 52 % for the three months ended March 31, 2024 and 2023, respectively.

The Company’s effective tax rate decreased in the three months ended March 31, 2024, as compared to the same period in 2023, primarily due to changes in the foreign and state taxes and year-to-date recognition of worldwide pre-tax income (loss) in relation to their forecasted amounts for full years.

Our provision for income taxes for the three months ended March 31, 2024, was primarily attributable to foreign and state taxes.

The Company’s total amount of unrecognized tax benefits, excluding interest, as of March 31, 2024, was $ 16.8 million, of which $ 2.7 million, if recognized, would affect the Company’s effective tax rate.

The Company’s total amount of unrecognized tax benefits, excluding interest, as of December 31, 2023, was $ 15.9 million, of which $ 2.0 million, if recognized, would affect the Company’s effective tax rate.

As of March 31, 2024, the Company has recorded unrecognized tax benefits of $ 2.6 million, including interest of $ 0.7 million, as long-term taxes payable in the accompanying condensed consolidated balance sheet.

The remaining $ 14.2 million has been recorded within the Company’s DTAs, which is subject to a full valuation allowance.

The valuation allowance was approximately $ 59.2 million as of September 30, 2023, and December 31, 2022, which was related to U.S.

The valuation allowance was approximately $ 64.2 million as of March 31, 2024, and December 31, 2023, which was related to U.S.

net federal and state DTAs.

The worldwide net DTAs balance as of September 30, 2023, and December 31, 2022, were not significant.

The worldwide net DTAs balance as of March 31, 2024, and December 31, 2023, were not significant.

The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S.

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In addition, due to net operating loss carryback claims, the tax years 2013 through 2015 may be subject to federal examination and all of the net operating loss and research and development credit carryforwards that may be utilized in future years may be subject to federal and state examination.

The Company is not subject to income tax examinations in any other of its major foreign subsidiaries’ jurisdictions.

The Company is not currently under income tax examinations in any other of its major foreign subsidiaries’ jurisdictions.

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) by weighted average number of common shares outstanding for the period (excluding outstanding stock options and shares subject to repurchase).

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (excluding outstanding stock options and shares subject to repurchase).

Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive.

The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share (in thousands except per share amount):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net income (loss)

Basic weighted average shares outstanding

Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan(s)

Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan

Diluted weighted average shares outstanding

Net income (loss) per share:

For the three months ended September 30, 2023 and for the nine months ended September 30, 2022, because the Company was in a loss position, diluted net loss per share is the same as basic net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

The following table sets forth the weighted average potential shares of common stock that were not included in the diluted net income (loss) per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

For the three months ended March 31, 2024, because the Company was in a loss position, diluted net loss per share is the same as basic net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

The following table sets forth the potential shares of common stock that were not included in the diluted net income (loss) per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):

Three Months Ended March 31,

Outstanding options

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Revenues from an individual customer that are approximately 10% or more of the Company’s consolidated total revenues are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

* represents less than 10%

Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance are as follows:

September 30,

* represents less than 10%

Revenues from customers by geographic area based on the location of the customers’ work sites are as follows (amounts in thousands):

Three Months Ended September 30,

United States

Rest of the world

Total revenue

Nine Months Ended September 30,

Three Months Ended March 31,

United States

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Long-lived assets, net by geographic area are as follows (in thousands):

September 30,

United States (1)

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Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table represents the Company’s assets measured at fair value on a recurring basis as of September 30, 2023, and December 31, 2022, and the basis for those measurements (in thousands):

The following table represents the Company’s assets measured at fair value on a recurring basis as of March 31, 2024, and December 31, 2023, and the basis for those measurements (in thousands):

Fair Value Measurements Using

September 30,

Inputs (Level 3)

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Money market mutual funds

Government securities (1)

Short-term investments (available-for-sale debt securities)

Government securities (1)

(1) As of September 30, 2023, and December 31, 2022, the amortized cost of the Company’s investments in U.S Government securities approximated their fair value due to their short-term maturities, and there have been no events or changes in circumstances that would have had a significant effect on the fair value of these securities in the periods presented.

For the three and nine months ended September 30, 2023, there were no material realized or unrealized gains or losses, either individually or in the aggregate.

(1) As of March 31, 2024, and December 31, 2023, the amortized cost of the Company’s investments in U.S.

Government securities approximated their fair value due to their short-term maturities, and there have been no events or changes in circumstances that would have had a significant effect on the fair value of these securities in the periods presented.

For the three months ended March 31, 2024, there were no material realized or unrealized gains or losses, either individually or in the aggregate.

COMMITMENTS AND CONTINGENCIES

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Operating Leases — Refer to Note 4, Leases , for the discussion about the Company’s lease commitments.

Indemnifications — The Company generally provides a warranty to its customers that its software will perform substantially in accordance with documented specifications typically for a period of 90 days following initial delivery of its products.

initial delivery of its products.

The Company also indemnifies certain customers from third-party claims of intellectual property infringement relating to the use of its products.

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Purchase Obligations — The Company has purchase obligations with certain suppliers for the purchase of goods and services entered into in the ordinary course of business.

As of September 30, 2023, total outstanding purchase obligations were $ 24.6 million, the majority of which is due within the next 15 months.

Indemnification of Officers and Directors — As permitted by the Delaware general corporation law, the Company has included a provision in its certificate of incorporation to eliminate the personal liability of its officers and directors for monetary damages for breach or alleged breach of their fiduciary duties as officers or directors, other than in cases of fraud or other willful misconduct.

As of March 31, 2024, total outstanding purchase obligations were $ 25.5 million, the majority of which is due within the next 15 months.

Indemnification of Officers and Directors — As permitted by the Delaware general corporation law, the Company has included a provision in its certificate of incorporation to eliminate the personal liability of its directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, other than in cases of fraud or other willful misconduct.

In addition, the Bylaws of the Company provide that the Company is required to indemnify its officers and directors even when indemnification would otherwise be discretionary, and the Company is required to advance expenses to its officers and directors as incurred in connection with proceedings against them for which they may be indemnified.

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The Company accrues for losses related to litigation when a potential loss is probable, and the loss can be reasonably estimated in accordance with FASB requirements.

As of September 30, 2023, the Company was not party to any material legal proceedings for which a loss was probable or an amount was accrued.

As of March 31, 2024, the Company was not party to any material legal proceedings for which a loss was probable or an amount was accrued.

From time to time, the Company may enter into contingent fee arrangements with external legal firms that may represent the Company in legal proceedings related to disputes.

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On May 6, 2020, the Company initiated an arbitration proceeding with the Hong Kong International Arbitration Center against SMIC New Technology Research & Development (Shanghai) Corporation (“SMIC”) due to SMIC’s failure to pay fees due to the Company under a series of contracts.

The Company seeks to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future (or a lump sum payment to end the contract), and costs associated with

bringing the arbitration proceeding.

The Company seeks to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future (or a lump sum payment to end the contract), and costs associated with bringing the arbitration proceeding.

SMIC denies liability and an arbitration hearing was held in February 2023.

Final written submissions were submitted by the parties at the end of August 2023.

A decision is expected potentially within this calendar year.

A decision is expected this year.

STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

In July 2020, the Company entered into a long-term strategic partnership with Advantest Corporation through its wholly-owned subsidiary, Advantest America, Inc.

(collectively referred to herein as “Advantest”).

Analytics revenue recognized from Advantest was $ 2.6 million and $ 2.8 million during the three months ended September 30, 2023 and 2022, respectively, and $ 6.2 million and $ 8.1 million during the nine months ended September 30, 2023 and 2022, respectively.

Accounts receivable from Advantest was not material as of September 30, 2023 and amounted to $ 0.3 million as of December 31, 2022.

Deferred revenue amounted to $ 12.1 million and $ 7.1 million as of September 30, 2023, and December 31, 2022, respectively.

BUSINESS COMBINATION

On July 5, 2023 (the “Acquisition Date”), the Company, through its wholly-owned subsidiary in Canada, PDF Solutions Canada, Ltd., acquired 100 % of the equity interest in Lantern Machinery Analytics, Inc.

headquartered in Canada, a privately-held provider of automated image analysis and feature extraction artificial intelligence/machine learning software for critical inspection and metrology steps at battery cell development and manufacturing processes for the electric vehicle industry.

This software will enhance the Company’s Exensio analytics platform and product offerings to new and existing battery manufacturer customers.

The total cash consideration for this acquisition was $ 1.8 million, net of cash acquired, for all of the outstanding equity of Lantern Machinery Analytics, Inc.

The Company accounted for this acquisition as a business combination in accordance with FASB ASC Topic 805, Business Combinations .

This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the Acquisition Date.

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.

The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectation for expanded sales opportunities to foster further business growth.

Due to the nature of the transaction, the goodwill associated with the acquisition is not deductible for tax purposes.

As of September 30, 2023, payment made for this acquisition, net of cash acquired, amounted to $ 1.8 million and was funded from available cash of the Company.

The allocation of the purchase price for this acquisition, as of the date of the acquisition, is as follows (in thousands, except amortization period):

Period (Years)

Allocation of Purchase Price:

Fair value of tangible assets (including cash of $ 265 )

Fair value of intangible assets:

Developed technology

Customer relationships

Total assets acquired

Deferred tax liabilities

Accounts payable and accrued expenses

Total liabilities assumed

Total purchase price allocation

Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company’s financial results.

(collectively referred to herein as “Advantest”), which includes:

(i) a Securities Purchase Agreement wherein the Company issued and sold to Advantest America, Inc.,

an aggregate of 3,306,924 shares of its common stock, for aggregate gross proceeds of $ 65.2 million;

(ii) a significant agreement for its assistance in development of cloud-based applications for Advantest tools that leverages our Exensio analytics software;

(iii) a commercial agreement providing for the license to third parties of solutions that result from the development work that combine Advantest’s testing applications and our Exensio platform;

and (iv) a 5 -year cloud-based subscription for Exensio analytics software and related services.

Analytics revenue recognized from Advantest was $ 2.9 million and $ 1.8 million during the three months ended March 31, 2024 and 2023, respectively.

Accounts receivable from Advantest were $ 0.1 million as of March 31, 2024.

Accounts receivable from Advantest were not material as of December 31, 2023.

Deferred revenue amounted to $ 6.6 million and $ 9.4 million as of March 31, 2024, and December 31, 2023, respectively.

SUBSEQUENT EVENTS

Refer to Note 5, Stockholder’s Equity , for the discussion about the adoption of the 2024 Stock Repurchase Program.

Refer to Note 6, Employee Benefit Plans , for the discussion about the amendments to the 2011 Stock Incentive Plan and the 2021 Purchase Plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements