Pdf Solutions, Inc. · NASDAQ:PDFS
Pdf Solutions — Investor Day (October 2019)
25 slides from Pdf Solutions's investor day presentation, Oct 15, 2019
Slide 1: S1.7A - CFO Analyst Day Presentation
2019 PDF Solutions Analyst Day S1.7A - CFO Analyst Day Presentation October 15, 2019 Christine Russell, CFO
Slide 2: Forward-looking statements
This presentation may contain forward-looking statements regarding projected business performance, operating results, financial condition and other aspects of the Company, expressed by such language as “expected,” “anticipated,” “projected” and “forecasted.” Please be advised that such statements ar
Slide 3: Building a Platform for Success
Building a Platform for Success GROWTH - Analytics segment revenue CAGR of 35% since 2014 - Analytics now represents 50% of total revenues in TTM Q2 2019 vs 10% in 2014 - Total company gross margins expanding driven by high margin Analytics PROFITABILITY - 62% GAAP, and 67% non-GAAP, gross margins Y
Slide 4: Investing to Lead the Change
Investing to Lead the Change PDF Acquisitions and Product Releases Have Expanded Our Scope and TAM Gainshare Model “Selling Time to Volume” Subscription Model “Selling Data” 2015 2018 CV® Core Salland Acquisition o Proof of concept o Test, package, assembly mgmt. Completed major data type migration
Slide 5: Analytics Revenue Growth
GROWTH Analytics Revenue Growth $45 $40.6 $40 $35 Revenue CAGR 35% $30 $ Million $25 $20 $15 $10.3 $10 $5 $0 2014 TTM Q2 2019 PDF Solutions, All Rights Reserved 5
Slide 6: Revenue: Analytics vs. IYR
GROWTH Revenue: Analytics vs. IYR Analytics IYR Revenue Revenue $45 $100 $40.6 $40 $89.9 $90 $35 $80 $30 $70 $ Million $ Million $60 $25 $50 $20 $41.3 $40 $15 $30 $10.3 $10 $20 $5 $10 $0 $0 2014 TTM Q2 2019 2014 TTM Q2 2019 PDF Solutions, All Rights Reserved 6
Slide 7: Revenue by Segment
GROWTH Revenue by Segment 2014 TTM Q2 2019 Analytics 10% Analytics 50% IYR 50% IYR 90% PDF Solutions, All Rights Reserved 7
Slide 8: Total Company Gross Margins
PROFITABILITY Total Company Gross Margins o First monetization of Total Company technology was IYR with Non-GAAP Gross Margins* associated royalties. 70% 66% 67% o IYR when combined with Gainshare created meaningful 65% margins. o Current gross margin 60% expansion driven by Analytics growth. 55% 55
Slide 9: Annual Recurring Revenue
VISIBILITY Annual Recurring Revenue ARR as % of Solutions o 31% ARR CAGR since 2014 60% o ARR is the value of the 50% contracted recurring revenue 50% components of multi-year subscriptions normalized to a 40% one-year period o ARR provides good level of 30% forward revenue visibility o Prior to 201
Slide 10: Analytics Retention Rate
VISIBILITY Analytics Retention Rate o High levels of predictability 100% to analytics business with 99% 97% customer retention rates YTD 2019 98% 97% 97% o Loyal customers with high customer satisfaction 96% o Analytics revenue per 95% Customer has increased by 94% almost 50% from 2014 93% through Q
Slide 11: Analytics Customer Adoption
DIVERSIFICATION Analytics Customer Adoption o Added more than 80 new Total # of Customers # of Customers More than 1 Analytics customers since 140 Product 2014, an increase of 171% 130 35 33 120 o 25% of customers utilize 30 more than one product 100 25 o Growth in Analytics Revenue 80 20 per accoun
Slide 12: Customer Concentration
DIVERSIFICATION Customer Concentration o Company has significantly 2014 YTD Q2 2019 diversified its customer base and concentration Other less Customer than 5% Other less A Customer than 5% 21% A 46% 34% o Over 100 different 52% customers account for nearly 50% of YTD Q2 2019 sales Customer C o Larg
Slide 13: Global Geographic Distribution
DIVERSIFICATION Global Geographic Distribution o Globally diverse TTM Q2 2019 geographic distribution o No more than 25% of sales come from any one country North America EMEA Mainland China Japan Taiwan Asia Other PDF Solutions, All Rights Reserved 13
Slide 14: Balance Sheet Strength
STRENGTH Balance Sheet Strength o Existing balance sheet strength provides ($ Million) foundation for investment in growth of analytics business both o Cash and cash equivalents (end of Q2 2019) $86.8 organically and inorganically o Debt $0 o Successful initiatives o Gainshare royalties expected to
Slide 15: Expanding Investment in Engineering Technology
INVESTMENT Expanding Investment in Engineering Technology o Company continues to $50 $46 invest greater than 50% $45 of operating expenses into new product $40 development and $35 deployment $32 $30 o PDF investments in engineering larger than $ Million $25 our largest independent $20 software compe
Slide 16: Increasing Investment in Sales & Marketing
INVESTMENT Increasing Investment in Sales & Marketing o Investment in sales and $12 $11.1 marketing driving adoption of Analytics $10 business o Expanded commissioned $8 sales force, hired $6.9 Marketing Director, hired Business Development $ Million $6 Director $4 $2 $0 2014 TTM Q2 2019 PDF Solutio
Slide 17: Long-Term Targets
VALUE Long-Term Targets Target Comparables Annual Analytics Revenue Growth 20% 14%* Non-GAAP Gross Margins >70% 85%** Non-GAAP Operating Margin 20% 22%** Comparables: Cadence, Splunk and Synopsys *Based on Analyst Estimates **Comparable data supplied by Zacks Research System and based on TTM Q2 2019
Slide 18: Trading at Discount to Comparables
VALUE Trading at Discount to Comparables PDFS Comparables (Discount)/Premium Enterprise Value/Sales (TTM) 4.03 7.44 (46%) Enterprise Value/Sales 3.15 6.86 (54%) (FY 20) * Non-GAAP P/E Ratio (FY19)* 57.8 49.4 17% Non-GAAP P/E Ratio (FY 20)* 23.4 43.3 (46%) Comparables: Cadence, Splunk and Synopsys; M
Slide 19: Summary
Summary Rapid Growth Disciplined Improved Capital Profitability Allocation Platform to Drive Shareholder Value Strong Increased Balance Sheet Visibility Enhanced Diversification PDF Solutions, All Rights Reserved 19
Slide 20: Financials - Appendix
SOLUTIONS’ / Financials - Appendix
Slide 21: Non-GAAP Presentation
Non-GAAP Presentation In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), the Company also provides certain non-GAAP financial measures. Non-GAAP net income excludes the effects of non-recurring item
Slide 22: GAAP to Non-GAAP Income Reconciliation (Annual)
GAAP to Non-GAAP Income Reconciliation (Annual) Trailing 12 in thousands (except share amounts, percent of revenue, and EPS) 2019 YTD months 2014 2015 2016 2017 2018 thru Q2 thru Q2-19 GAAP net income (loss) $ 18,462 $ 12,407 $ 9,103 $ (1,337) $ (7,716) $ (3,401) $ (8,597) Adjustments to reconcile G
Slide 23: GAAP to Non-GAAP Gross Margin Reconciliation
GAAP to Non-GAAP Gross Margin Reconciliation in thousands Trailing 12 2019 YTD months 2014 2015 2016 2017 2018 thru Q2 thru Q2-19 GAAP Gross Margin $ 60,449 $ 58,954 $ 63,013 $ 54,350 $ 42,992 $ 25,409 $ 44,944 Adjustments to reconcile GAAP gross margin (loss) to non-GAAP gross margin: Stock-based c
Slide 24: Balance Sheet
Balance Sheet ($ '000) Q2'19 Cash and short-term investments $86,817 Accounts receivable, net 38,949 Unbilled accounts receivable 13,432 Prepaids and other current 8,843 Property, plant and equipment, net 35,846 Operating lease right-of-use assets 7,974 Other assets 37,810 TOTAL ASSETS $229,671 Acco
Slide 25: Thank You
Thank You pdf-solutions pdfsolutionsinc pdfs.inc pdf_solutions pdf_cn