What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-27 · 260 added, 222 removed, 679 unchanged (42% of the section changed)

10 unchanged sentences

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

8 unchanged sentences

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

2 unchanged sentences

Contracts with customers can include various combinations of licenses, subscriptions, products and services, some of which are distinct and are accounted for as separate performance obligations.

Significant judgment

is exercised by the Company in determining revenue recognition for customer agreements, including determining whether licenses, subscriptions, and services are distinct performance obligations, determining the standalone selling price (“SSP”) attributed to each performance obligation, establishing the pattern of delivery for each distinct performance obligation, and estimating variable consideration when determining the amount of revenue to recognize.

In addition, for revenue under project-based contracts for fixed-price services, revenue is recognized as services are performed using a percentage-of-completion (“POC”) method based on costs or labor-hours input method.

Significant judgment is exercised by the Company in determining revenue recognition for customer agreements, including determining whether licenses, subscriptions, and services are distinct performance obligations, determining the standalone selling price (“SSP”) attributed to each performance obligation, establishing the pattern of delivery for each distinct performance obligation, and estimating variable consideration when determining the amount of revenue to recognize.

In addition, for revenue

under project-based contracts for fixed-price services, revenue is recognized as services are performed using a percentage-of-completion (“POC”) method based on costs or labor-hours input method.

Estimated costs to complete each contract are based on i) future labor and product costs and ii) expected productivity efficiencies.

23 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2023 and 2022 and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023 and the related notes (collectively referred to as the “consolidated financial statements”) of the Company, and our report dated February 27, 2024 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2024 and 2023 and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”) of the Company, and our report dated February 27, 2025, expressed unqualified opinion on those consolidated financial statements.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the entity’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

64 unchanged sentences

Amortization of acquired intangible assets

Write-down in value of property and equipment

Interest and other expense (income), net

Income (loss) before income tax expense

Income before income tax expense

Income tax expense

14 unchanged sentences

Stockholders’

Income (Loss)

Balances, January 1, 2022

13 unchanged sentences

Stock-based compensation expense

Comprehensive loss

Comprehensive income

Balances, December 31, 2023

5 unchanged sentences

Stock-based compensation expense

Comprehensive income

Comprehensive income (loss)

Balances, December 31, 2024

7 unchanged sentences

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

Depreciation and amortization

Stock-based compensation expense

Depreciation and amortization

Amortization of acquired intangible assets

1 unchanged sentence

Net accretion of discounts on short-term investments

Write-down in value of property and equipment

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

Deferred taxes

14 unchanged sentences

Purchases of short-term investments

Purchase of convertible promissory note

Proceeds from sale of property and equipment

6 unchanged sentences

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

11 unchanged sentences

Supplemental disclosure of cash flow information:

Cash paid during the year for taxes

Cash paid during the year for income taxes

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

Supplemental disclosure of noncash information:

Property and equipment received and accrued in accounts payable and accrued and other liabilities

Advances for purchase of fixed assets transferred from prepaid assets to property and equipment

Advances for purchase of property and equipment transferred from prepaid assets to property and equipment

Property and equipment received and accrued in accounts payable and accrued and other current liabilities

Net carrying value of property and equipment sold and expensed in cost of revenues, and transferred to sales-type leases

Stock-based compensation capitalized as property and equipment

Operating lease liabilities arising from obtaining right-of-use assets

Property and equipment transferred to sales-type leases

See A ccompanying Notes to Consolidated Financial Statements.

18 unchanged sentences

The Company primarily sells its products and services to companies in Asia, Europe, and North America within the semiconductor industry.

As of December 31, 2023, two customers accounted for 50 % of the Company’s gross accounts receivable and one customer accounted for 35 % of the Company’s total revenues for 2023.

As of December 31, 2022, three customers accounted for 53 % of the Company’s gross accounts receivable and two customers accounted for 41 % of the Company’s revenues for 2022.

As of December 31, 2024, four customers accounted for 57 % of the Company’s gross accounts receivable and two customers accounted for 31 % of the Company’s total revenues for 2024.

As of December 31, 2023, two customers accounted for 50 % of the Company’s gross accounts receivable and one customer accounted for 35 % of the Company’s revenues for 2023.

Two customers accounted for 41 % of the Company’s revenues for 2022.

See Note 11 for further details.

See Note 12, “Customer and Geographic Information” for further details.

The Company does not require collateral or other security to support accounts receivable.

6 unchanged sentences

In the event any of these suppliers delay or discontinue providing such products and services to the Company, it may be difficult for the Company to replace such suppliers, software, or parts in a timely manner or at all, which could delay or make impossible the Company’s ability to deliver or adequately support its software systems or to complete and deliver its eProbe systems to its customers, and could negatively impact the Company’s future financial results of operations.

Cash and Cash Equivalents, and Short-term Investments

The Company considers all highly liquid investments with effective maturities of 90 days or less on the date of purchase to be cash equivalents and investments with effective maturities greater than 90 days but less than one year to be short-term investments.

The Company classifies its securities with readily determinable market values as “available-for-sale”.

Short-term investments include available-for-sale securities and are carried at estimated fair value, with the unrealized gains and unrealized non-credit-related losses, net of tax, reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity.

Cash and Cash Equivalents, and Investments

The Company considers all highly liquid investments with effective maturities of 90 days or less on the date of purchase to be cash equivalents.

Investments with effective maturities greater than 90 days but less than one year are considered short-term investments, while investments with effective maturities greater than one year are considered long-term investments.

The Company classifies its securities as available-for-sale investments and are carried at estimated fair value, with the unrealized gains and unrealized non-credit-related losses, net of tax, reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity.

Unrealized credit-related losses are recorded to interest and other expense (income), net in the Consolidated Statements of Comprehensive Income (Loss) with a corresponding allowance for credit-related losses in the Consolidated Balance Sheets.

Realized gains and losses are based on the specific identification method and are included as a component of interest and other expense (income), net in the Consolidated Statements of Comprehensive Income (Loss).

The Company periodically reviews short-term investments for impairment.

The Company periodically reviews its investments for impairment.

For investments in unrealized loss positions, the Company assesses whether any portion of the decline in fair value below the amortized cost basis is due to credit-related factors if the Company neither intends to sell nor anticipates that it is more likely than not that it will be required to sell prior to recovery of the amortized cost basis.

The Company considers factors such as the extent to which the market value has been less than the amortized cost basis, any noted failure of the issuer to make scheduled interest or principal payments, changes to the rating of the security by a rating agency and other relevant credit-related factors in determining whether or not a credit loss exists.

There was no allowance for credit-related losses on any of the Company’s investments recognized in the years ended December 31, 2023, 2022 and 2021.

There was no allowance for credit-related losses on any of the Company’s investments recognized for the years ended December 31, 2024 and 2023.

As of December 31, 2024 and 2023, short-term investments consisted solely of U.S.

Government securities.

Government securities and long-term investments consisted of a non-marketable convertible promissory note.

The cost of these securities approximated fair value and there was no material gross realized or unrealized gains or losses as of December 31, 2024 and 2023.

Refer to Note 12, “Fair Value Measurements” for further discussion on the Company’s investments.

See Note 13, “Fair Value Measurements” for further discussion on the Company’s investments.

The Company recorded interest income from its cash, cash equivalents, and short-term investments of $ 5.6 million, $ 5.5 million and $ 1.5 million in the years ended December 31 2024, 2023 and 2022, respectively.

12 unchanged sentences

Computer equipment

Software and capitalized software development cost

Furniture, fixtures, and equipment

17 unchanged sentences

The Company has operating leases for administrative and sales offices, research and development laboratory and clean room.

The Company recognizes long-term operating lease rights and commitments as operating lease right-of-use

(“ROU”) assets, operating lease liabilities and operating lease liabilities, non-current, respectively, in the Consolidated Balance Sheets.

The Company recognizes long-term operating lease rights and commitments as operating lease right-of-use (“ROU”) assets, operating lease liabilities and operating lease liabilities, non-current, respectively, in the Consolidated Balance Sheets.

The Company elected to not separate lease and non-lease components for all of its leases.

8 unchanged sentences

Internally developed software is software developed to meet the Company’s internal needs to provide certain services to the customers.

The Company’s capitalized software development costs consist of internal compensation related costs and external direct costs incurred during the application development stage and are amortized over their useful lives, generally five to six years.

The costs to develop software that is marketed externally consisting of external direct costs and internal compensation related costs are capitalized once technological feasibility of the software product has been established.

3 unchanged sentences

These software development costs are amortized using the greater of the straight-line method or the usage method over its estimated useful life.

Cost of Revenues

Costs of revenues consist primarily of costs incurred to provide and support the Company’s services, costs recognized in connection with licensing its software, IT and facilities-related costs and amortization of acquired technology.

Service costs include material costs, hardware costs (including cost of leased assets under sales-type leases), personnel-related costs (including compensation, employee benefits, bonus and stock-based compensation expense), subcontractor costs, overhead costs, travel, and allocated facilities-related costs.

Costs of Revenues

Costs of revenues consist primarily of costs incurred to provide and support the Company’s services, costs recognized in connection with licensing its software, information technology (“IT”) and facilities-related costs and amortization of acquired technology.

Software license costs consist of costs associated with cloud-delivery related expenses and licensing third-party software used by the Company in providing services to its customers in solution engagements or sold in conjunction with the Company’s software products.

6 unchanged sentences

The Company accounts for stock-based compensation using the fair value method, which requires the Company to measure stock-based compensation based on the grant-date fair value of the awards and recognize the compensation expense over the requisite service period.

As stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

As stock-based compensation expense recognized is based on awards ultimately

expected to vest, it has been reduced for estimated forfeitures.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

5 unchanged sentences

The interest rate assumption is based upon observed Treasury yield curve rates appropriate for the expected life of the Company’s stock options.

The Company’s provision for income tax comprises its current tax liability and change in deferred tax assets and liabilities.

The Company’s income tax expense comprises current tax liability and change in deferred tax assets and liabilities.

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities.

11 unchanged sentences

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 weighted average number of common shares outstanding for the period.

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.

Dilutive potential common shares consist of incremental common shares issuable upon exercise of stock options, upon vesting of RSUs, contingently issuable shares for all periods and assumed issuance of shares under the Company’s employee stock purchase plan.

No dilutive potential common shares are included in the computation of any diluted per share amount when a loss from continuing operations was reported by the Company.

No dilutive potential common shares are included in the computation of any diluted per share amount when a loss from continuing operations is reported by the Company.

Foreign Currency Translation

3 unchanged sentences

Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Comprehensive Income (Loss).

Derivative Financial Instruments

The Company operates internationally and is exposed to potentially adverse movements in foreign currency exchange rates.

From time to time, the Company enters into foreign currency forward contracts to reduce the exposure to foreign currency exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities.

The Company does not use foreign currency contracts for speculative or trading purposes.

The Company records these forward contracts at fair value.

The counterparty to these foreign currency forward contracts is a financial institution that the Company believes is creditworthy, and therefore, we believe the credit risk of counterparty non-performance is not significant.

These foreign currency forward contracts are not designated for hedge accounting treatment.

Therefore, the change in fair value of these derivatives is recorded into earnings as a component of interest and other income (expense), net and offsets the change in fair value of the foreign currency denominated monetary assets and liabilities, which are also recorded in interest and other income (expense), net.

The duration of these forward contracts is usually three months.

Business Combinations

2 unchanged sentences

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, estimated replacement costs and future expected cash flows from acquired customers, acquired technology, acquired patents, and trade names from a market participant perspective, useful lives and discount rates.

Significant estimates in valuing certain intangible assets include, but are not limited to, estimated

replacement costs and future expected cash flows from acquired customers, acquired technology, acquired patents, and trade names from a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

5 unchanged sentences

See Note 7, “Commitments and Contingencies.”

Accounting Standards Adopted

In June 2016, the 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 ASU No.

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 accumulated deficit 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 consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No.

Recently Adopted Accounting Pronouncements

In November 2023, the 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 2023-09, Income Taxes (Topic 740):

Improvements to Reportable Segment Disclosures , which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The Company adopted this ASU for the year ended December 31, 2024.

The requirements of this ASU are disclosure-related and did not have an impact on the Company’s consolidated financial position and results of operations.

See Note 12, “Customer and Geographic Information” for further detail.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

2 unchanged sentences

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.

Entities are permitted to early adopt the standard for “annual financial statements that have not yet been issued or made available for issuance.” This ASU may be applied 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.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

This ASU requires the disaggregation of certain expenses in the notes to the consolidated financial statements, to provide enhanced transparency into the expense captions presented on the face of the income statement.

This ASU is effective on a prospective basis for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027, with early adoption permitted.

This ASU may be applied either prospectively or retrospectively.

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 consolidated financial statements.

1 unchanged sentence

Analytics revenue and Integrated Yield Ramp revenue.

The Company recognizes revenue in accordance with FASB Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , and its related amendments (collectively known as “ASC 606”).

ASC 606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers.

The Company recognizes revenue in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , and its related amendments (collectively known as “ASC 606”).

606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers.

Revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services.

5 unchanged sentences

● Recognition of revenue when, or as, performance obligations are satisfied

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

Contracts with multiple performance obligations

6 unchanged sentences

Perpetual (one-time charge) license software is recognized at the time of the inception of the arrangement when control transfers to the customers, if the software license is considered as a separate performance obligation from the services offered by the Company.

Revenue from post-contract support is recognized over the contract term on a straight-line basis, because we are providing (i) support and (ii) unspecified software updates on a when-and-if available basis over the contract term.

Revenue from post-contract support is recognized over the contract term on a straight-line basis, because the Company is providing (i) support and (ii) unspecified software updates on a when-and-if available basis over the contract term.

Revenue from time-based-licensed software is allocated to each performance obligation and is recognized either at a point in time or over time as follows.

8 unchanged sentences

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

Where there are not discrete performance obligations, historically, revenue is primarily recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract.

Where there are not

discrete performance obligations, historically, revenue is primarily recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract.

The estimation of percentage of completion method is complex and subject to many variables that require significant judgement.

7 unchanged sentences

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.

When 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 Consolidated Balance Sheets.

The Company generates revenue from the sale of DFI system products.

Revenue is recognized at a point in time when the Company’s performance obligations have been completed and the customer has accepted the product.

Integrated Yield Ramp Revenue

38 unchanged sentences

A receivable is a right to consideration that is unconditional, as compared to a contract asset, which is a right to consideration that is conditional upon factors other than the passage of time.

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.

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 December 31, 2023 and 2022, contract assets of $ 6.8 million and $ 3.3 million, respectively, are included in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets.

As of December 31, 2023 and 2022, contract assets of $ 0.9 million and nil , respectively, are included in other non-current assets in the accompanying Consolidated Balance Sheets.

The Company did not record any asset impairment charges related to contract assets during fiscal years 2023, 2022 and 2021.

The contract assets consisted of the following (in thousands):

Current (included in Prepaid expenses and other current assets)

Non-current (included in Other non-current assets)

Total contract assets

There was no asset impairment charge related to contract assets for the years 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 Consolidated Balance Sheets.

As of December 31, 2023 and 2022, the non-current portion of deferred revenues included in non-current liabilities was $ 1.8 million and $ 1.9 million, respectively.

Revenue recognized for the years ended December 31, 2023, 2022 and 2021, that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $ 24.8 million, $ 24.9 million and $ 16.9 million, respectively.

As of December 31, 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 $ 229.8 million.

Given the applicable contract terms with customers, the majority of this amount is expected to be recognized as revenue over the next three years , with the remainder in the following three years .

Deferred revenues consisted of the following (in thousands):

Non-current (included in Other non-current liabilities)

Total deferred revenues

Additional information related to deferred revenue were as follows (in thousands):

Year Ended December 31,

Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each year

As of December 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 $ 221.4 million.

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

This amount does not include significant contracts to which the customer is not committed, future sales-based or usage-based royalty payments in exchange for a license of IP, and future payments for performance obligations from on-demand arrangements.

1 unchanged sentence

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 in the years ended December 31, 2023, 2022 and 2021 from performance obligations satisfied (or partially satisfied) in previous periods was an increase of $ 3.7 million, an increase of $ 0.4 million and a decrease $ 0.4 million, respectively.

The adjustment to revenue recognized for the years ended December 31, 2024, 2023 and 2022 from performance obligations satisfied (or partially satisfied) in previous periods was an increase of $ 2.5 million, an increase of $ 3.7 million and an increase of $ 0.4 million, respectively.

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

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 Consolidated Balance Sheets as of December 31, 2023 and 2022 was $ 2.0 million and $ 1.7 million, respectively.

Total capitalized direct sales commission costs included in other non-current assets in the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022 was $ 2.6 million and $ 2.1 million, respectively.

Amortization of these assets for each of the years ended December 31, 2023, 2022 and 2021 was $ 2.1 million, $1.5 million and $ 0.7 million, respectively.

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

Total capitalized direct sales commission costs were as follows (in thousands):

Current (included in Prepaid expenses and other current assets)

Non-current (included in Other non-current assets)

Total capitalized direct sales commission costs

The amortization of capitalized direct sales commission costs were as follows (in thousands):

Year Ended December 31,

Amortization of capitalized direct sales commission costs

There was no impairment loss related to the capitalized direct sales commission costs for the years presented.

Practical Expedients

1 unchanged sentence

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 for the years ended December 31, 2024 , 2023 and 2022 .

BALANCE SHEET COMPONENTS

Property And Equipment

Property and equipment consist of (in thousands):

Property and equipment consisted of the following (in thousands):

Computer equipment

Software and capitalized software development cost

Furniture, fixtures, and equipment

5 unchanged sentences

CV system and other assets

Total property and equipment

Accumulated depreciation and amortization

Total property and equipment, net

Test equipment mainly includes DFI systems and CV systems assets at customer sites that are contributing to revenue.

1 unchanged sentence

Depreciation and amortization expense for the years ended December 31, 2024, 2023 and 2022 was $ 3.6 million, $ 5.0 million and $ 5.5 million, respectively.

In 2021, the Company wrote down the value of its property and equipment by $ 3.2 million related to its first-generation of e-beam tools for DFI systems wherein carrying values may not be fully recoverable due to lack of market demand and future needs of its customers for these tools.

Accrued and other current liabilities

Accrued and other current liabilities consisted of the following (in thousands):

Accrued expenses

Accrued taxes

Total accrued and other current liabilities

GOODWILL AND INTANGIBLE ASSETS

The Company completed the acquisition of Lantern Machinery Analytics, Inc.

in the year ended December 31, 2023.

Refer to Note 14 for additional information related to the goodwill and intangible assets added from this acquisition.

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

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

The following table summarizes goodwill transaction for the years ended December 31, 2024 and 2023 (in thousands):

1 unchanged sentence

Balance at beginning of year

Measurement period acquisition adjustment

Foreign currency translation adjustment

Balance at end of year

Intangible assets balance was $ 15.6 million and $ 18.1 million as of December 31, 2023 and 2022, respectively.

Intangible assets as of December 31, 2023 and 2022, consist of the following (in thousands):

The Company completed the acquisition of Lantern Machinery Analytics, Inc.

in the year ended December 31, 2023.

See Note 15, “Business Combination” for additional information related to the goodwill and intangible assets added from this acquisition.

Intangible assets consisted of the following (in thousands):

December 31, 2024

December 31, 2023

Acquired identifiable intangibles:

Acquired intangible assets:

Customer relationships

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The weighted average amortization period for acquired identifiable intangible assets was 4.4 years as of December 31, 2024.

The following table summarizes intangible assets amortization expense in the Consolidated Statements of Comprehensive Income (Loss) (in thousands):

The amortization expense related to intangible assets were as follows (in thousands):

Year Ended December 31,

Amortization of acquired technology included under costs of revenues

Amortization of acquired technology (included in costs of revenues)

Amortization of acquired intangible assets (presented separately under costs and expenses)

Total amortization of acquired intangible assets

The Company expects annual amortization of acquired identifiable intangible assets to be as follows (in thousands):

The Company estimates future amortization expense of acquired intangible assets as follows (in thousands):

Year Ending December 31,

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There were no impairment charges for goodwill and intangible assets for the years ended December 31, 2024, 2023 and 2022.

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

The termination of this lease reduced the Company’s operating lease ROU 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 Consolidated Statement of Comprehensive Loss for the year ended December 31, 2022.

OTHER NON-CURRENT ASSETS

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

Net investments in sales-type leases (3)

Unbilled accounts receivable (2)

Costs capitalized to obtain revenue contracts (1)

Contract assets (1)

Total other non-current assets

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

(2) See “Accounts Receivable” section of Note 1, “Description of Business and Summary of Significant Accounting Policies .

(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 net investments in sales-type leases in the Consolidated Balance Sheets (in thousands):

Present value of lease receivables

Contract liability

Net lease receivables

Unguaranteed residual assets

Total net investments in sales-type leases

Current (included in Prepaid expenses and other current assets)

Non-current (inlcuded in Other non-current assets)

Total net investments in sales-type leases

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

Year Ending December 31,

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 December 31, 2024 and 2023.

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

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

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Variable lease expense for the periods presented primarily included common area maintenance charges.

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

Supplemental information related to operating leases were as follows:

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

Weighted average discount rate for operating lease liabilities

Maturity of operating lease liabilities as of December 31, 2023, are as follows (in thousands):

Maturity of operating lease liabilities as of December 31, 2024 were as follows (in thousands):

Year Ending December 31,

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Present value of future minimum lease payments under operating lease liabilities

(1) As of December 31, 2023, the total operating lease liability includes $ 1.0 million related to an option to extend a lease term that is reasonably certain to be exercised .

Reported as of December 31, 2024:

Operating lease liabilities – current

Operating lease liabilities – non-current

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

(3) Includes the current portion of operating lease liabilities of $ 1.5 million as of December 31, 2023.

COMMITMENTS AND CONTINGENCIES

Strategic Partnership with Advantest

See Note 13 for the discussion about the Company’s commitments under the strategic partnership with Advantest.

See Note 14, “Strategic Partnership Agreement With Advantest And Related Party Transactions” for the discussion about the Company’s commitments under the strategic partnership with Advantest.

Operating Leases

Refer to Note 5, “Leases”, for the discussion about the Company’s lease commitments.

See Note 6, “Leases” for the discussion about the Company’s lease commitments.

Indemnifications

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The Company is unable to estimate the maximum potential impact of these guarantees on its future results of operations.

The Company’s standard product warranty terms for the sale of its DFI system product generally include post-sales support and repairs or replacement of a product at no additional charge for a contractually agreed period of time.

The standard warranty reserve is based on estimated total expected costs to fulfill our warranty obligation based on best available information as of the reporting date.

The standard warranty reserve was immaterial as of December 31, 2024 and nil as of December 31, 2023.

Purchase Obligations

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

As of December 31, 2023, total outstanding purchase obligations were $ 26.2 million, the majority of which are due within the next 2 years.

As of December 31, 2024, total outstanding purchase obligations were $ 30.8 million, the majority of which are due within the next 12 months .

Indemnification of Officers and Directors

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Contingent legal fees are accrued by the Company when they are probable and reasonably estimable.

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.

On May 6, 2020, the Company initiated an arbitration proceeding with the Hong Kong International Arbitration Center (the “Tribunal”) 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.

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 currently expected in 2024.

Final written submissions were submitted by the parties at the end of August 2023, and the parties submitted answers to the Tribunal’s final questions in August 2024.

The Company is awaiting the Tribunal’s decision on a judgment.

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 year ended December 31, 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.

During the year ended December 31, 2021, 251,212 shares were repurchased by the Company under the 2020 Program at an average price of $ 18.01 per share for an aggregate total price of $ 4.5 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, including through Rule 10b5-1 plans, from time to time, over the next two years.

During the year ended December 31, 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.

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 on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years from the adoption date.

During the year ended December 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 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.

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 stock repurchase 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 from the adoption date.

The Company has no t repurchased any shares under the 2024 Program as of December 31, 2024.

EMPLOYEE BENEFIT PLANS

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Employee Stock Purchase Plans

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.

On June 15, 2021, the Company’s stockholders initially approved the 2021 Employee Stock Purchase Plan, which has been amended and restated by the Board of Directors and approved by the Company’s stockholders since then (as amended through the date of this report, 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 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 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.

The Company estimated the fair value of purchase rights granted under the Employee Purchase Plans 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:

2021 Purchase Plan

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

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

Year Ended December 31,

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Expected dividend

Weighted average fair value of purchase rights granted during the period

During the years ended December 31, 2023 and 2022, a total of 223,608 and 182,083 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted-average purchase price of $ 17.14 per share and $ 16.15 per share, respectively.

During the years ended December 31, 2022 and 2021 a total of 5,203 and 108,623 shares, respectively, were issued under the 2010 Purchase Plan, at a weighted-average purchase price of $ 13.40 per share and $ 9.53 per share, respectively.

As of December 31, 2023, unrecognized compensation cost related to the 2021 Purchase Plan was $ 3.0 million.

This estimated unrecognized cost is expected to be recognized over a weighted average period of 1.5 years.

Weighted average fair value of purchase rights granted during the year

During the years ended December 31, 2024, 2023 and 2022, a total of 155,828 , 223,608 and 182,083 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 26.14 per share, $ 17.14 per share and $ 16.15 per share, respectively.

During the year ended December 31, 2022, a total of 5,203 shares were issued under the previously expired Employee Stock Purchase Plan adopted in 2010, at a weighted average purchase price of $ 13.40 per share per share.

As of December 31, 2024, unrecognized compensation cost related to the 2021 Purchase Plan was $ 2.0 million, which is expected to be recognized over a weighted average period of 1.2 years.

As of December 31, 2024, 638,481 shares were available for future issuance under the 2021 Purchase Plan.

Stock Incentive Plans

On November 16, 2011, the Company’s stockholders initially approved the 2011 Stock Incentive Plan, which has been amended and restated and approved by the Company’s stockholders a number of times since then (as amended, the “2011 Plan”).

Under the 2011 Plan, the Company may award stock options, stock appreciation rights (“SARs”), stock grants or stock units covering shares of the Company’s common stock to employees, directors, non-employee directors and contractors.

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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 December 31, 2024.

As of December 31, 2023, there were no outstanding awards that were granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”).

The Company has elected to use the Black-Scholes-Merton option-pricing model, which incorporates various assumptions including volatility, expected life, interest rate and expected dividend.

The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options.

The expected life of an award is based on historical experience and on the terms and conditions of the stock awards granted to employees.

The interest rate assumption is based upon observed Treasury yield curve rates appropriate for the expected life of the Company’s stock options.

No stock options were granted during the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2024, there were no outstanding awards granted outside of the 2011 Plan.

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

There were no stock options granted during the years ended December 31, 2024, 2023 and 2022.

Stock-based compensation Expense

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.

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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 $ 0.1 million for the year ended December 31, 2023, and nil for the years ended December 31, 2022 and 2021.

Additional information with respect to options under the Plans is as follows:

Stock Options Activity

Additional information related to stock options under the 2011 Plan were as follows:

Outstanding Options

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Exercisable, December 31, 2024

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 32.14 as of December 31, 2023, which would have been received by the option holders had all option holders exercised their options as of that date.

The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands):

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 27.08 as of December 31, 2024, which would have been received by the option holders had all option holders exercised their stock options as of that date.

The total intrinsic value of stock options exercised during the years presented were as follows (in thousands):

Year Ended December 31,

Intrinsic value of options exercised

Total remaining unrecognized compensation cost related to unvested stock options as of December 31, 2023, which is expected to be fully recognized in 2024, and total fair value of shares vested during the year ended December 31, 2023, was immaterial.

Nonvested shares (restricted stock units) were as follows:

Total fair value of stock options vested during the year ended December 31, 2024 was immaterial.

As of December 31, 2024, there was no remaining unrecognized compensation cost related to unvested stock options.

Restricted Stock Units Activity

Nonvested restricted stock units were as follows:

Average Grant

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Nonvested, December 31, 2024

The weighted average grant date fair values of restricted stock units granted during fiscal 2023, 2022 and 2021 were $ 43.46 , $ 23.23 and $ 19.43 , respectively.

The total fair value of restricted stock units vested during fiscal 2023, 2022 and 2021 was as follows (in thousands):

The weighted average grant date fair values of restricted stock units granted during the years ended December 31, 2024, 2023 and 2022 were $ 35.30 , $ 43.46 and $ 23.23 , respectively.

The total fair value of restricted stock units vested during the years presented were as follows (in thousands):

Year Ended December 31,

Fair value of restricted stock units vested

As of December 31, 2023, there was $ 45.4 million of total unrecognized compensation cost related to restricted stock units.

That cost is expected to be recognized over a weighted average period of 2.5 years.

As of December 31, 2024, there was $ 48.1 million of total unrecognized compensation cost related to restricted stock units, which 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.

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The Company may make discretionary matching contributions.

In fiscal 2023 and 2022, the Company matched from 50 % to 100 % of each employee’s contribution up to a maximum of 4 % of the employee’s total eligible earnings.

The Company’s matching contributions to the 401(k) Plan aggregated $ 1.7 million and $ 1.6 million for the years ended December 31, 2023 and 2022.

No discretionary Company contributions were made to the Plan through December 31, 2021.

During the years ended December 31, 2024, 2023 and 2022, the Company matched from 50 % to 100 % of each employee’s contribution up to a maximum of 4 % of the employee’s total eligible earnings.

The Company’s matching contributions to the 401(k) Plan aggregated $ 1.8 million, $ 1.7 million and $ 1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

During the years ended December 31, 2024, 2023 and 2022, income (loss) before income tax expense from U.S.

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Total income tax expense

The income tax expense differs from the amount estimated by applying the statutory federal income tax rate ( 21 % for 2023, 2022 and 2021) for the following reasons (in thousands):

The reconciliation between the statutory federal income tax expense and the Company’s effective income tax expense were as follows (in thousands):

Year Ended December 31,

Federal statutory tax expense

State tax provision

Federal statutory income tax expense

State income tax expense

Stock compensation expense

Foreign tax, net

Foreign-derived intangible income (FDII) deduction

Foreign taxes, net

Foreign-derived intangible income deduction

Change in valuation allowance

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Total income tax expense

As of December 31, 2023, the Company had federal and California net operating loss carry-forwards (“NOLs”) of approximately $ 7.2 million and $ 12.7 million, respectively.

Some of the federal NOLs, acquired as part of a past acquisition, have expirations at the end of this fiscal year and onwards, and the California NOLs begin expiring in 2028 onwards.

As of December 31, 2023, the Company had federal and state research and experimental and other tax credit (“R&D credits”) carry-forwards of approximately $ 23.7 million and $ 24.5 million, respectively.

As of December 31, 2024, the Company had federal and California net operating loss carry-forwards (“NOLs”) of $ 4.5 million and $ 13.0 million, respectively.

Some of the federal NOLs, acquired as part of past acquisitions, have expirations in 2025 onwards, and about $2.3 million of the federal NOLs have no expiration.

The California NOLs begin expiring in 2028 onwards.

As of December 31, 2024, the Company had federal and state research and experimental and other tax credit (“R&D credits”) carry-forwards of $ 24.7 million and $ 25.5 million, respectively.

The federal credits began to expire in 2022, while the California credits have no expiration.

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Based on all available evidence, both positive and negative, the Company determined a full valuation allowance was still appropriate for its federal and state net deferred tax assets (“DTAs”) as of December 31, 2024, primarily driven by a cumulative loss incurred over the 12-quarter period ended December 31, 2024 and the likelihood that the Company will not utilize tax attributes before they begin to expire.

The valuation allowance was approximately $ 64.2 million and $ 59.2 million as of December 31, 2023 and 2022, respectively.

The increase in the valuation allowance from December

31, 2022 to December 31, 2023 was primarily driven by an increase in capitalized research and experimental expenses and credits generated in the current year which require a valuation allowance.

Management will continue to evaluate the need for a valuation allowance and may change its conclusion in a future period based on any change in facts (e.g.

The valuation allowance was $ 67.9 million and $ 64.2 million as of December 31, 2024 and 2023, respectively.

The increase in the valuation allowance from December 31, 2023 to December 31, 2024 was primarily driven by an increase in capitalized research and experimental expenses and credits generated in the current year which require a valuation allowance.

Management will continue to evaluate the need for a

valuation allowance and may change its conclusion in a future period based on any change in facts (e.g.

12-quarter cumulative profit, significant new revenue, and other relevant factors).

If the Company concludes that it is more likely than not to utilize some or all of its U.S.

DTAs, it will release some or all of its valuation allowance and the Company’s tax provision will decrease in the period in which such determination is made.

DTAs, it will release some or all of its valuation allowance and the Company’s income tax expense will decrease in the period in which such determination is made.

Net deferred tax assets, after the U.S.

valuation allowance, were immaterial as of December 31, 2024 and 2023.

The components of the net deferred tax assets are comprised of (in thousands):

The components of the net deferred tax assets and liabilities consisted of the following (in thousands):

Deferred tax assets:

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valuation allowance

Deferred tax assets, net of valuation allowance

Total deferred tax assets, net of valuation allowance

Deferred tax liabilities:

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Intangible assets

Deferred tax liabilities

Net deferred tax assets (liabilities)

Total deferred tax liabilities

Net deferred tax liabilities

The Company classifies its liabilities for income tax exposures as long-term.

The Company includes interest related to unrecognized tax benefits within the Company’s income tax provision.

As of December 31, 2023, 2022 and 2021, the Company had accrued interest related to unrecognized tax benefits of $ 0.7 million.

In the years ended December 31, 2023, 2022 and 2021, the Company recognized (reversal of) charges for interest related to unrecognized tax benefits of ($ 15,000 ), ($ 61,000 ) and ($ 89,000 ) respectively, in the Consolidated Statements of Comprehensive Income (Loss).

The Company includes interest related to unrecognized tax benefits within the Company’s income tax expense.

As of December 31, 2024 and 2023, the Company had accrued interest related to unrecognized tax benefits of $ 0.6 million and $ 0.7 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, the Company recognized reversal of interest related to unrecognized tax benefits of ($ 20,000 ), ($ 15,000 ) and ($ 61,000 ) respectively, in the Consolidated Statements of Comprehensive Income (Loss).

The Company’s total amount of unrecognized tax benefits, excluding interest, as of December 31, 2024 was $ 16.6 million, of which $ 2.1 million, if recognized, would impact the Company’s effective tax rate.

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The Company does not expect the change in unrecognized tax benefits over the next twelve months to materially impact its results of operations and financial position.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Gross unrecognized tax benefits, January 1, 2021

Increases in tax positions for current year

Increases in tax positions for prior years

Lapse in statute of limitations

Gross unrecognized tax benefits, December 31, 2021

Increases in tax positions for current year

Increases in tax positions for prior years

Lapse in statute of limitations

Gross unrecognized tax benefits, December 31, 2022

A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows (in thousands):

Year Ended December 31,

Gross unrecognized tax benefits, beginning of year

Increases in tax positions for current year

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Lapse in statute of limitations

Gross unrecognized tax benefits, December 31, 2023

Gross unrecognized tax benefits, end of year

The Company does not provide deferred taxes on undistributed earnings of its foreign subsidiaries as it intends to indefinitely reinvest those earnings.

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or in any other of its major foreign subsidiaries’ jurisdictions.

Valuation allowance for DTAs is summarized (in thousands):

Valuation allowance for DTAs is summarized as follows (in thousands):

Write-offs of

NET INCOME (LOSS) PER SHARE

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):

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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)

Diluted weighted average shares outstanding

Basic weighted average common 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

Diluted weighted average common shares outstanding

Net income (loss) per share:

For the years ended December 31, 2022 and 2021, because the Company was in a loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

The following table sets forth potential shares of common stock that are 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):

For the year ended December 31, 2022, because the Company was in a loss position, basic net loss per share was the same as diluted net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

The following table summarizes the potential shares of common stock that are 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):

Year Ended December 31,

Outstanding options

Non-vested restricted stock units

Employee Stock Purchase Plan

Outstanding stock options

Shares issuable under employee stock purchase plan

CUSTOMER AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions, allocation of resources, and assessing financial performance.

Accordingly, the Company considers itself to be in one operating and reporting segment, specifically the provision of services for differentiated data and analytics solutions to the semiconductor and electronics industries.

The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, reviews discrete financial information including total revenues, gross profit, and net income (loss) presented on a consolidated basis for purposes of regularly making operating decisions about allocation of resources and financial performance assessment.

Further, the CODM reviews and utilizes functional expenses (costs of revenues, research and development, and selling, general and administrative) at the consolidated level to manage the Company’s operations.

Other segment items included in consolidated net income (loss) are amortization of acquired intangible assets, interest and other expense (income), net and income tax expense, which are reflected in the Consolidated Statements of Comprehensive Income (Loss).

Accordingly, the Company considers itself as one operating and reporting segment because it does not distinguish between markets, specifically the provision of services for differentiated data and analytics solutions to the semiconductor and electronics industries.

The following table presents segment total revenues, gross profit, and net income (loss) for the periods presented (in thousands):

Year Ended December 31,

Total revenues

Costs of revenues

Net income (loss)

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

Year Ended December 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:

represents less than 10%

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

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

Year Ended December 31,

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Total revenue

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

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

United States (1)

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The multiple assumptions used to value financial instruments are referred to as inputs, and a hierarchy for inputs used in measuring fair value is established, that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s

pricing based upon its own market assumptions.

These inputs are ranked according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

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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 December 31, 2023 and the basis for that measurement (in thousands):

The following table summarizes the fair value of the Company’s financial instruments (in thousands):

Fair Value Measurements Using

Inputs (Level 3)

Cash equivalents

Balance Sheet

Classification

Money market mutual funds

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

Cash equivalents

Available-for-sale debt securities:

Government securities (1)

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

Short-term investments

Convertible note receivable (2)

Non-current assets

Fair Value Measurements Using

Cash equivalents

Balance Sheet

Classification

Money market mutual funds

Government securities (1)

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

Cash equivalents

Available-for-sale debt securities:

Government securities (1)

Short-term investments

(1) The carrying amount of the Company’s investments in U.S.

Government securities approximate 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 as of December 31, 2024 and 2023.

(2) In August 2024, the Company purchased a $ 2.0 million non-marketable convertible promissory note from an unrelated third party (the “convertible note”).

The convertible note bears a 5 % interest rate annually and will mature in August 2026.

STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

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Analytics revenue recognized from Advantest during the years ended December 31, 2024, 2023 and 2022 was $ 12.7 million, $ 9.0 million and $ 10.3 million, respectively.

Accounts receivable from Advantest were no t material as of December 31, 2023 and amounted to $ 0.3 million as of December 31, 2022.

Accounts receivable from Advantest were no t material as of December 31, 2024 and 2023.

Deferred revenue amounted to $ 8.3 million and $ 9.4 million as of December 31, 2024 and 2023, respectively.

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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 AI/ML software for critical inspection and metrology steps at battery cell development and manufacturing processes for the electric vehicle industry.

headquartered in Canada, a privately-held provider of automated image analysis and feature extraction machine learning and artificial intelligence (“AI”) 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 software and product offerings to new and existing battery manufacturer customers.

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

As of December 31, 2023, payment made for this acquisition, net of cash acquired, amounted to $ 1.8 million and was funded from available cash of the Company.

Total payments 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):

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

SUBSEQUENT EVENTS

Pending Business Acquisition and Debt Financing

On February 19, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Telit IOT Solutions Inc., a Delaware corporation (the “Seller”), and SecureWise LLC, a Delaware limited liability company (the “Target”, or “secureWISE”), pursuant to which the Company will acquire the Seller’s secureWISE business (the “Business”) by means of a purchase of all of the outstanding equity interests of the Target held by the Seller (the “Transaction”).

The Purchase Agreement contains warranties, covenants, closing conditions and indemnities customary for acquisitions of this nature.

Upon completion of the Transaction (“Closing”), the Company expects the acquisition to accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage the Company’s Exensio analytics software and to expand the capability of the Company’s secure DEX OSAT network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

Pursuant to the Purchase Agreement, upon Closing, the Company will pay the Seller a cash purchase price of $ 130 million, subject to customary adjustments in respect of indebtedness, transaction expenses, cash and working capital of the Business.

The purchase price will be funded by a combination of cash on hand and new bank debt, as discussed below.

The Transaction was approved by the Company’s Board of Directors and is expected to close during the first calendar quarter of 2025.

In connection with the execution of the Purchase Agreement, the Company has delivered to the Seller a debt commitment letter (the “Debt Commitment Letter”) executed with Wells Fargo Bank, National Association (the “Commitment Party”), pursuant to which the Commitment Party has committed, subject to the terms and conditions contained therein, to provide the Company with (a) a revolving credit facility in an aggregate principal amount of $ 45 million and (b) a term loan facility in an aggregate principal amount of $ 25 million (the “Debt Financing”).

The proceeds of the Debt Financing are intended to fund, in part, the purchase price payable in the Transaction, on the terms and subject to the conditions set forth therein.

The Purchase Agreement does not include a financing contingency.

The funding of the Debt Financing is contingent upon the satisfaction or waiver of certain customary conditions set forth in the Debt Commitment Letter, including, without limitation, the execution and delivery of definitive documentation consistent with the Debt Commitment Letter.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data