Q1 2021 PDF Solutions Inc Earnings Call
[music].
It was the operator indicated my name is Joe D. As I'm, a managing partner at Lytham partner, we are the Investor relations consulting firm for P. D F.
If you do not yet have a copy of today's press release, it's available on the company's website at P. D. F Dot com. Some other statements made during the course of this conference call will be forward looking within the meaning from the private Securities Litigation Reform Act of 1995.
Including statements regarding tedious your financial results and performance road Rage and demand for it solutions for.
Sexual result could differ materially you.
You should refer to the section entitled Risk factors on the company's annual report on form 10-K for the fiscal year ended December 31, 2020, and similar disclosures and subsequent S. E C finds.
Forward looking statements and risks standard on this conference call are based on information available to PDF today. The company has no obligation to update them with.
With that said I'd like to introduce John could Berrien, PDF solutions, President and Chief Executive Officer, who will be followed by a non Roger Executive Vice President and Chief Financial Officer.
On the conclusion of management.
Paired remarks.
Open the call for your questions.
Let me now turn the call over to John Covariance, President and she Ya PDF solutions John.
Thank you for joining us on today's call if you're not always seen our earnings press release in management report for the first quarter. Please go to the investors selection of our website, where each has been posted.
Today, I will start with a summary of our goals for the year for Ya.
<unk> in Q1 and finished with our perspective on queue too and the remainder of the year.
After my remarks, I will turn the call over to other.
As most of you know my goal is to become the leading analytics company for the global semiconductor electronics supply chain.
We are focused on delivering business impact via improve cross the sufficiency and product liability.
Among the requirements the cheapest skull of providing the right data data quality and analytics at the equipment edge.
This is of growing importance not only to leading edge manufacturing, but also for manufacturers a more mature technologies across the supply chain.
Our acquisition of symmetric connectivity products and our equipment company partnerships, including Adventists directly address these requirement.
The tool intelligence that connectivity and equipment company partnerships provide coupled with extensive capabilities to ingest and drive actions from the data is the growth driver of our analytics business.
Increasingly our customers want to utilize extensive analytics on the cloud.
Do you have immediate access to their data and connectivity with their factor equipment processing their products to optimize their production.
Turning to the leading edge characterization solutions, including electrical test and our design for inspection provide these customers with the deep data and insights required to develop and control advanced processes.
Worldwide investments and leading at semiconductor manufacturing continues to increase and has become the focus of semiconductor consumers and governments as well as foundry and Fabless companies.
As a result, we anticipate bookings and contributions to analytics revenue from C V and D. F I systems and Q2 in the second half of the year to grow compare with Q1 in the first half from here.
We would probably do love for these products.
As part of an analytic solution, but do have some legacy customers are still buying a characterization capability as part of an integrated Yale ramp with game share royalties tied to the other treatment.
With the expected growth on our analytics revenue integrated.
Grab revenue as a percentage of total revenue will continue to decrease over time.
As we stayed in a February call. We are in a period of high higher growth for analytics revenue and associate investments as we head towards achieving a longterm model.
Our expectation for this year was for our analytics revenue to grow by greater than our annual target of 20 per cent.
And we anticipated are total company values to approach 20 per cent annual growth.
And the first quarter of 2021, we starting to see the results we anticipated in February are there any other.
The next revenue grew by more than 40 per cent compared with cute 120 20.
Growth in Q1 for total revenue was 14 per cent materially above the single digit year over year growth over the past few years, and particularly strong when factoring into decline and integrate deal ramp revenue.
Looking deeper into first quarter results.
Just contracts perfect sense of your process control accent for your club and all premise TB else for accents here father.
Additional strength came from increased run time license sales of a symmetric connectivity software, which is installed on capital equipment.
The strong and growing capital equipment volume suggests that this robust contribution to analytics revenue should continue through the year and is reflected within our annual growth expectations.
During the quarter.
We also have many new design wins for a connectivity solutions.
Meaning our equipment partners are designing our connectivity software into their products under development.
Which in turn will result in additional runtime licenses in the future.
We accelerate are investing we accelerated our investments and cloud infrastructure field deployment as well as a capability to support our customers on the leading edge.
Overall, PDF has always been willing to invest in head of business when there's future opportunity.
At the same time, we expect to generate cash from operations. This year as we typically do.
As we look towards the second quarter, we anticipate continued total revenue growth on a quarter over quarter sequential basis similar to what we achieved in Q1.
We believe this will come not just from strength an accent to you analytics in symmetric connectivity that we experienced in the first quarter.
But also from our characterization systems in Iowa solutions on the leading edge as he benefit from the investments we made in the first quarter.
In summary, I am really excited about the momentum achieved this quarter.
With some metrics as part of the team I am seeing more ways, the combination of analytics and connectivity differentiates us further in the marketplace.
Moreover, customers adoption of accent in the cloud is opening up new opportunities as they experienced the benefits of an integrated end to end platform.
Our recent increasing in deeper relationships.
Customer technical evaluations for D. F. I N C V systems are strengthening my conviction for the potential for leading edge business also.
Now I'll turn the call over the odd non who review the financials and provide an update provide his perspective on our business.
Thank you John Good afternoon, everyone get to speak with you again today and I Hope all of you and your families are keeping faith for.
For please to review the financial results for the first quarter and to bring you up to date on the progress of the business. We posted our earnings release in a manager to report an Investor Relations section of our web site or form 10-Q has also been filed with the SEC. Today. Please note that all other financial results for discussing today's call will be on a non-GAAP basis and the reconciliation to.
GAAP financials is provided in the materials on our website.
We are off to a good start in 2021.
<unk> and bookings for the quarter continue with the directional trend of 2020, where we book more than two and a half times the level of bookings a full ear 2019 for Q1 are total bookings, leaving aside symmetric we're double our prior quarter booking.
With a core business strength and transition to analytics continuing to deliver.
We continue to win large customer bookings with multiple accents here deals greater than a million dollars this quarter contributing to a recurring revenue.
In Q1 alone we have already booked approximately half the number of 1 million plus dollar accents of your contract compared to the total number of similar size contracts booked in all of 2020.
As customers appreciate accents here analytics on the cloud, we have experienced growth and the contract sizes as well our largest contract in the quarter was as an existing customer that increase their annual subscription license be by more than 30 per cent.
The strong bookings in 2020, and the first quarter of 2021 lead us to believe that depend NAMIC and the subsequent semiconductor shortage has acted as a catalyst and getting semiconductor manufacturers around the wall to manage their operations more efficiently and effectively that our analytic solutions.
Total revenue for the quarter was 20 for 2 million up 14% versus Q1, 2020, and up 8% versus the fourth quarter of 2020.
We were particularly pleased with a 26% revenue increase in Asia Pacific region, and a 22% increase in Europe on a year over year basis.
Analytics revenue was up 46% to $19.4 million versus Q1 of last year and up 34% sequentially from queue for 2020.
Contributions from acquisition of symmetric late apart and the growth of analytics revenue this quarter.
Even putting some metrics aside the core accent Seo business group double digit percentage horses queue for of 2020 and horses Q1 of 2020 was well ahead of our 20 per cent annual growth targets.
Within accents here, what we're seeing an increase in adoption of a cloud offerings as greater recognition of the convenience and effectiveness of our analytics.
From Israelite.
We also welcome new customers from some matrix in our list of top 20 analytics customers this quarter, which are very pleased about.
Our extensive plowed revenue in Q1 was more than double our extensive cloud revenue of comparable quarter last year.
Combined with the radical revenue derived from term based licenses staff cloud deals and recurring revenue streams from symmetric. We are building a strong are are based software analytics platform.
This gives us predictability, which coupled with growth of bookings and analytic platform allows us to feel comfortable about a large percentage of our next quarter's blonde accents here and symmetric revenues.
Within analytics, the DSI and characterization products from mine revenue was down on a sequential an annual basis for the quarter.
The confluence of geopolitical developments automotive supply chain shortages and increased U S focus on semiconductor production means that with our analytics DSI and characterization capabilities for a uniquely positioned to help achieve the industry vision.
Therefore, this year, we expect to capture more value from our investment.
For the first quarter of this year analytics comprised 80% of our total revenue.
This mix of analytics and Iwai art may change with the continued growth of the analytics business and potential future <unk>.
We are gaining traction as we continue our transition to becoming the largest independent provider of analytic software solutions to the global semiconductor supply chain.
R I Y our business contributors for $8 million in Q1 2021 revenue.
As most of you know this is a business that we have strategically deemphasize, but maintain it with a few selective customers while enjoying the royalty based high margin gain share revenues as we have previously mentioned, we expect gained share to decline in the second half of the year.
On a full year basis, we remain confident about analytics revenue growth to exceed our 20 per cent annual target and total revenues to approach 20% growth.
First Margaret for the quarter was 61% or for 65% in last year's first quarter and in line with 61% of the prior quarter.
Our expenses compared to last year or higher due to investments in cloud infrastructure to support our growing recurring revenue streams and from the acquisition of symmetric.
These strategic investments for support future analytics growth.
We remain committed to our 70% target gross margins with our growing accents here subscription and the metrics product revenues.
R&D expenses for the quarter or up to $1 million versus kiwano prior year, and other $6 million compared to queue for majority of wage increase as a result of the symmetric acquisition, coupled with some smaller increases from personnel and sub contractors.
SG&A expenses were up $1.3 million versus you want a prior year at 1.4 million compared to queue for driven by symmetric acquisition.
Taken together are total expenses, including cost of sales R&D and SG&A or in line with our plan and day believe we will be able to manage cost for similar levels, while delivering on the recurring in total revenue growth we are seen.
With that let's open up the call for questions. Operator, please start the Q&A.
That is counted the floor is open for a question. If you would like to ask a question. Please press star one on your telephone keypad again, that's far one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Okay.
Yeah.
Your first question comes from the line of Christian Schwab. Your line is open.
Great. Thanks.
Thanks for taking my question.
The commentary regarding large customer bookings kidney can we assume then.
That might be taken as a.
Reiteration of previous guidance that advantage would get to.
$10 million run rate before we exit the year.
Actually no.
These are bookings of new business of Christian. So this is our customers beyond advantest adopting accents you an overall analytics platform.
Okay.
Do we still expect the advantage to get to that type of ramp then by the end of the year I guess then.
Yes, we do a Christian and in fact, you know we did say that there was.
We announced in Q4 other pest out from Q4 products that.
Include PDF technology, we do believe that.
As we go through this year, we will get at least a little bit above that level as some other new products.
That generate additional license revenue for us are starting to sell through.
Got to happen by other.
Third quarter of this year.
Q3, alright perfect.
The industry.
It seems to be going through a lot of different changed who we have a large.
IBM out there, who has decided that they're going to try to become.
A substantial foundry in the future.
It reminds me of some of your other previous successes of other companies.
Who made that type of transition in the past.
Do you think there is I'm sure you know who I'm talking about do you think there is an opportunity for you guys there.
Any way to handicap that.
Would be helpful.
Sure Yeah.
It might per our prepared remarks, I talked about worldwide interest on the leading edge.
When we were when it gets to 60 when things got to be cover on 60 minutes it kind of speaks to.
How from kind of this is in the in the world.
I don't think it's just one company, we do see multiple companies around the world increasing their focus on the leading edge in the U S and China, and Taiwan, and Korea and other places we in my prepared remarks, I did talk about an increased amount of free sales activity on the leading edge in the first quarter in part due which heartburn.
Other than some higher expenses.
We took on those expenses because we felt that you know we can't predict any one single customer or any timing of anything single thing, but when this has happened in the past where the world's first focusing on leading edge. It's historically been pretty good for our leading edge business.
Yes can you give us an example of.
I was trying to think of previously win.
The IBM alliance happened in a certain set of customers kind of went from zero to a material number but I can't remember can you remind us of.
That kind of ramp yes, sure I mean, there were about three customers.
If you go back actually with Dan's prepared remarks, you know it was.
2009 of last year, we actually lost money for the year from operations.
And then once a day.
Our company has started to make that investment yes, John.
Couple of hundred million dollars from cash from operations over the last decade or so.
So when when those investments have been they tend to be very big.
But we can't say when or if that's going to happen. This time.
You know, but.
Our customers are making very very big bets because technology is very helpful.
Untangle, the Gordian knot that has no problems and so.
I think that speaks to why we've seen an increased.
Activity with customers around the world right I don't think it's anything specific to any single customer.
Alright fantastic. Thank you.
Okay.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question from the lineup for Gosh, Richard Your line is open.
Yes, thanks for taking my question.
Our questions.
What percentage of your.
Analytics business now is.
Based in the cloud.
Yeah.
We haven't broken that out specifically and I don't have the number in front of me.
You know I know that for Accenture, where does it for its becoming a sizable percentage of the total except their business, but I don't know off the top of my head.
Yes.
Collectively.
With time based licenses we have.
It's been a little bit why why it's like that.
We have a lot of customers, where they buy for cloud services through us so they pay for expenses.
And we we turn around and pay some of the money too.
Cloud supplier, we have other customers, who already have contracts with their cloud supplier for the hardware portion of it but they pay us for the cloud subscription or other expenses, including all the managed services.
Our gross margin that came from higher for the revenue slightly lower than we lump that in our time based licenses, but effectively it's cloud.
Because we manage for systems that we manage.
The data ingestion et cetera.
Who's paying for them.
The portion to the cloud provide the hardware provider.
What I'm trying to get at is how much for your.
Software revenue.
Ratable and how much share it is upfront.
Oh yeah.
Yeah.
The vast majority of its route of other I think last quarter there were.
Got it.
I would not set a number of customers that did bookings over $1 million all of those were either time based licenses or.
Or cloud contracts there was no.
Perpetual licenses and the large ones, we do still have some smaller customers that buy from.
Other expense on a perpetual basis, but it's a relatively minority of that business.
So for most of the revenue when you get a $1 million contract.
Turnover for two or three years.
Correct typically I think last quarter, almost everything was a three year term.
Perfect and then.
You know thinking about the electrical characterization business and its Barry.
Difference in the software business, although I know they are tied together.
Electrical characterization.
Be it.
I don't want to say pro but you know what I mean.
And DSI Hao.
Okay.
Does that fit into your business and how how do you plan on monetizing that moving forward.
Sure Yeah. So.
Uh huh.
In my prepared remarks, I did talk a little bit about you know one of his.
It's a small number of historical customers that we still do sell other myeloid basis, we've done that with them over many years now.
But for the most part I'll give you an example customer as a cloud deployment for <unk> for process control in their factory.
They are at this point more and more selling wafers.
They are not doing the product test, it's a partnership with the customer that's kind of treat them like a foundry, even though there historically not a foundry and then use our scribe line.
Test structures and systems as a way of establishing acceptance on the cloud. So it is the analytics application on the call that does a series of alignments in correlation to that scribe data, which is a very rich set of information with all the upstream data and I use that on on a basically like an MLP like application decide whether to.
Shipped away from to the customer at all.
The combination of the scribe line vehicles and the cloud offering that's the thing that they use and they use the quality in a number of other well.
Right.
How do you how do you charge for them.
Book to business model.
It's a subscription.
Okay.
You will do the characterization vehicles for the customer.
You will surprise.
The parametric tester.
And they'll pay a fee for for usage.
On an annual basis correct on an annual basis got it and then and the last one for me and I'll, let somebody ask for more questions.
Whats the status of <unk> in terms of placing additional systems.
In the field.
Your key customer.
Yeah. So.
As I said in my prepared remarks.
Have an increased level of intensity on the activity on <unk> in the first quarter of this year and we expect to place additional systems as we got into this.
The remainder of this year I think timing maybe early in the second quarter early third quarter, but we do expect that to happen.
Okay. This with multiple customers are.
We've got activity going on with multiple customers at this point cash.
Again part of my prepared remarks, I think there is a day.
Activity going on with three or four customers at this point.
Is it reasonable to assume they are all leading edge logic.
Yes, it's reasonable for months.
Yes, okay, Okay got it.
Alright, thanks, so much.
Your next question comes from the line.
As Andrew <unk>. Your line is open. Please go ahead.
Hi, good afternoon John.
Hey, Andrew.
Following up a little bit on Christian and Danny.
Gases question.
When we think about potential activity and DSI and provision for that matter with leading edge customers.
Is it.
Is built into your current.
Guidance more expectations of significant booking.
It's a small revenue contribution.
Just how should we think about that book given obviously the asp's, you've historically talked about particularly with ESI I would think if we start to see significant success selling multiple units at Atwood.
Yes.
At a tailwind that you didn't see when you were exiting when youre on last call and gave sort of a similar guidance.
Yeah. So.
Sure Kristina asked this question as well kind of a little bit different way in.
What kind of looking back in the past it takes years to build that up but we do we do it but you have the trunk for relatively large as we look out over the next few quarters. We do expect characterization that may be a mix of a little bit of yield ramp capability.
Some CV and DSI capability picking up over the next few quarters, we expect it to be more modest in the next couple of quarters and buildup.
From a revenue standpoint, and build up more substantially.
While the bookings can be relatively meaningful.
In this year, the bookings will be more meaningful for successful the bookings will be more meaningful than the revenue impact of the revenue impact will be relatively modest in this year.
Okay, and just to be clear.
When you say that some of the customers you're talking to at the leading edge.
Contemplating an <unk> model, so that would be.
I buy our services engagement with a royalty back end or would it be more.
Just fall in the <unk> category, but some sort of ratable.
Revenue recognition.
Yeah.
Yeah.
It might make sure I'm clear right.
An existing customer that's used to gain.
Gained share contracts from <unk> in the past and it is like the contracts we've done with them in the past, which is deploying measuring yields and establishing a gain share peering over many for many years.
Okay.
But the other leading edge players would likely fall within the analytics category the way that the DIY customer currently is.
Yeah, that's our expectation.
Okay.
And then secondarily, yes.
Yes, it was nice to hear that had a number of seven figure.
Wins in the first quarter can you talk a little bit about what type of ECR pilot or data.
Okay.
Pilot activity, you have ongoing and what the pipeline.
It looks like.
Yep Yep.
Yes sure.
The activity level on Accenture remains.
<unk> to increase and.
This past quarter.
There were.
Mix.
Of Fabless companies.
Primarily using the cloud some on premise.
Customers that use the extensive process control.
John that we're doing relatively large renewals in all the cases for process control there are only a couple of them.
Relatively big step ups in annual recurring run rate as Theres, new capability on process control that they wanted to include in their license of non talked about that in his prepared remarks, as we look at the second quarter and beyond we have a number of activities with customers a lot of continuation on the same theme.
Sort of customers that have been historically with <unk> on premise moving take Cynthia on the cloud to get that extra productivity, we're releasing some new capabilities for extensive cloud that help customers manage their data, particularly for.
Quality sensitive markets like automotive and things like that that are.
We're piloting with customers now and we anticipate seeing incremental upticks.
I've been told that the way I describe this is confusing but I call. It expand the landed when you look at PBF, we have a lot of <unk>.
Most semiconductor companies no PDF or buy something from PDF today. So we don't need to go and kind of knock on doors, we're focused on.
PDF means acrobat the customers that we sell to know that for PDF means and.
They already are using some part of <unk> and <unk>.
Mostly doing a lot of expansion. So a lot of it is there are some new names, but I would say the vast majority of it is extending inside of existing accounts.
Okay, and then I guess my last question is you sort of referenced with some metrics that.
There was issued are calling for sort of new design wins, where they are being designed into new.
New systems that are being developed I believe was how would you characterize that.
Just wondering how significant.
Those are meaning how much cash.
And either customer base for the served market opportunity from a market share opportunity perspective.
Sure Yeah.
Thanks for picking up on that Andrew So yes.
Quarter to quarter, as we've kind of coming to learn about this business.
How much of a onetime license you get is the work the team did a year or two ago getting the connectivity software designed into platforms, but they track very closely design wins places where customers evaluate our connectivity solutions versus alternatives do it themselves or other third party systems and the active.
This quarter the wins this quarter were up substantially over the kind of average run rate last year, and we'll see how that maintained for the remainder of the year, but we feel that bodes well for our run rate.
Opportunities next year and the following year as those products those hardware products get put into the field.
And we don't have it it's really hard to know how many more opportunities other than the ones that there.
<unk> advantage of but the success rate is quite high I think.
The connectivity partners is very strong and customers are very excited about connecting that with advanced analytics, because theres a lot of folks like advantest that have a tremendous amount of knowledge about their equipment that they want to make available to their customers in the form of analytics and connectivity for first step and analytics right you got to get the data off the tool to be able to do.
With it.
Great. Thank you.
Your next question comes from the line of some day.
Your line is open.
Yeah.
Yes.
Yeah. Good afternoon, I was hoping John just if you could talk a little bit of that.
As you transition to an analytic software company.
Has the how has your ability been to attract and retain talent from an employee point of view.
You should always asked the talent.
Yes.
But.
We feel pretty good about the talent that we've been able to retain we have locations in great places, Kevin and I were in Salt Lake City last week I finally got the vaccine. So that's all.
Good enough to travel and I got to meet the team there.
We have a great team there.
For metrics team in 2021 of the greatest places in Salt Lake City to work.
And so you know that.
That team is a strong team that's been able to grow and we feel very good about the PDF teams and the other locations we added.
To the Bay area this past year and we added also.
In Vancouver, we have an engineering team and we feel quite good about about those locations as well we've tried to pick locations where people want to live.
Obviously salt Lake came kind of came with the acquisition, but it's a great place to live and it's a great location for our team so.
<unk>.
Retention in the engineering side, it's been quite good and the.
Team acquisition in.
Particularly in industries, where.
We are living as cost effective has been very strong.
Okay, and then I guess related how much.
Shifting your workforce at this point is kind of a work from home environment and how much of it needs to be.
Like it's centrally located around maybe a lab or.
For the that you have.
Yeah, I think the.
I've always felt that the engine is perfect work environment is there their couch.
Growth in a bag of cheetos.
Yeah.
For the engineers, particularly interest doing software, which is the vast majority of them.
They all tell me they feel the productivity working from home has been quite high.
We've been doing surveys and whenever I do employee meetings.
We use the features and zoom often to collect data from the team and I think with.
What the new workplace is going to look like.
We're not going to go back to where we were before I'm not and I are in the office today, and we do have people coming into our offices now in the U S as well, our Dallas offices back up in Salt Lake never really closed.
And our offices in Asia folks go in every day, particularly in Taiwan and in China. So it's coming back, but I would say that people are not going to be back in typically five days a week it'll be working from home. Some number of days in working from work. Some number of days. We are trying to encourage people to stay near a city, where we have an office.
So they can go in some amount of time I I really believe the dialogues and whiteboard stuff, whether it's for business development for product vision and strategy is always valuable, but our teams are geographically spread out anyway. So a lot of the folks to interact with are not in the office, John Let's say in Santa Clara a lot of the folks who interact with or not in the Santa Clara office.
Anyway, they may be in the Salt Lake office.
And Dallas or Vancouver, wherever so our folks are going to be working in a distributed way on a going forward basis, probably more than we did in the past, but not 100% distributed.
Okay.
It's great to hear because lockup as we've talked to have or have any issues.
Ramping up software development teams and stuff it sounds like you've got a full complement in hand already.
We were thank you okay.
Your next question comes from the line of Gary Schneier Roundly. Your line is open.
Hi, John.
Gary.
I wanted to go back to the conversation on the CSI placement.
Yes.
I assume that that's those are the probes.
That is correct, yes and.
Can you tell us how many probes are have been placed already.
This.
Couple.
In factories at least in two different factories.
Okay.
So when you were saying increase activity additional systems I assume that.
More than one that youre going to place later this year.
Yes, we believe that.
Okay.
Okay.
That sounds great and.
Yeah.
Got it asked a question about <unk>.
Is it the vast majority of.
At your total analytics revenue was ratable or just extent revenue is ratable.
Can you clarify that.
Yes, and frankly, even within <unk>.
If you were to look at our components that go into the ratable revenue that John mentioned at the time based licenses.
<unk>.
Perpetual license some of the cloud licenses that we have as well as the ratable portion that we get from the symmetric because theres a portion there. That's ratable, yes is the software that shift from the machine to machine shipments, we get that revenue right away. But then there is some support and maintenance contracts that are that are ratable, so measuring as a percentage of.
And I know, we don't break this out but within our I was looking at your sensitivities as you, but if you looked at within the analytics is probably about half already that's ratable.
Do have to make some adjustments. This is why John was also cautious because within the way. We currently classify CBL. It lumps and there are a couple of things that lumped into the ratable as well as some of the upfront piece as well, which is why we need some more time to do that work for cleanup, but it's starting to head towards being about half ratable as a percentage of the analytics.
Great and it sounds like Youre, saying that youre working on getting a more specific number for us going forward.
Yes. This is I mean, it's a great question, everybody asset and we need to do that so as we've been transitioning the business, we expect that and hopefully by the later this year that we can be talking to you about that number if not sooner.
Okay great.
John in your prepared comments, you said that you expect second quarter.
Total revenue growth quarter over quarter to be similar to first quarter.
Yes growth for the fourth quarter.
Correct.
Okay and.
Is it fair that.
You know third quarter for second quarter, and fourth quarter over third quarter should be.
<unk>.
Quarterly growth rates or is there something that you see for the second half of the year.
You would expect that to slow down.
Yeah, we haven't given specific net we've given specific number on an annual basis.
Gary that we expect it to approach our total revenue growth to approach.
Our analytics growth target of 20%, but we haven't gone and broken it down specifically within the third and fourth quarter.
We have said we have the headwind of some gains from contracts tailing off in the second half of the year, but we feel very.
Comfortable about the bookings growth that we're experiencing in this customer activity to growth through that headwind. We grew through a relatively significant headwind. This quarter. As you know if you looked at the amount of revenue Q4 versus Q1 versus Q4, it was down pretty substantially yet we still growth.
So.
We're not breaking it out right now Q3 and Q4, but overall, we do expect the second half for the year to be stronger than the first half for the year.
Okay, great Yeah, I guess.
Trying to connect the dots.
Understanding that the iwai or is.
Yes.
Captain and analytics growing with your analytics was up.
46% year over year in the first quarter.
And I assume that healthy growth rates should continue.
But in your day.
Your press release, I think you just say greater than 20% growth.
It doesn't seem like much of a bogey.
Yes.
Well, we'd like to exceed our bogey.
Gary we feel pretty good about where we're going to be this year.
There's a lot of shifts like John mentioned happening right and then there is the <unk> five is that do you expect to win there's the ramp and the very successful for Metro acquisition of what the team there is delivering offset by the gain share. So there's a lot of moving pieces this year, which is why.
Comfortable saying, what we have.
No I appreciate that I guess just back by.
That additional.
Additional machines at.
Existing customer.
Yeah.
I think at this point, where we're comfortable saying is we've got activity going on with a handful of customers in exactly handicapping, where we installed wind I think so.
Not clear to me, we don't have a lot of bandwidth right. So we will be at some point limited by what we can bring up win and customers will have to see how important this is to them.
Who wants to make sure we have capacity for them.
Meaning you have.
Multiple customers interested you have more customers interest customers interested in more devices that you have at the moment.
Thanks.
I think for limited greatly by our capacity to install and bring up from where we are.
Some.
For machine limited limitations as well, but I think right now we're just still with the pandemic you I think for Thomas asking questions like can people work from home and for everyone on the <unk>.
So Patrick side, absolutely for the DIY side not so much.
And so that I would like to kind of not.
These two specific there because its going to go see what's going to come through for us how many of these things we could do.
Got it okay, great. Thanks.
Okay.
The last question that we have is from the line of Orin Hirschman. Your line is open.
Hi, congratulations on the progress.
Alright.
Hi in terms of.
Now we're features smaller line width.
And more difficult yield situations.
Does that is that making a difference in terms of the acceleration in the bookings.
What is driving that acceleration is it just.
In general the expansion.
We have capacity.
It does yes color, even then you're getting a lot of color, but can you give even more.
Sure.
I think in general for greater extent, Seo and symmetric connectivity.
Really just.
The increased activity in semiconductors, particularly with the symmetric products. They ship with every piece of equipment and equipment volumes were up in Europe on many know many mature notes to its not about the leading edge with respect to design for inspection electrical characterization smaller feature sizes is one of the drivers.
I would say almost the most important one is to be the nature of the <unk> complex. The silicon processing. These days a lot of what you would normally expect on the surface of the wafer is what really drives yield loss right.
Conventional inspection today is still primarily using a light source. So you look at the surface of the wafer, but at least half of the yield loss.
That we see on leading edge part is really about the connections in between the layers, whether they're shorted or opened and electrical test structures as well as bid for.
Thanks for doing with DSI really allow you to look at those between layer draw.
Drivers and that we feel is a bigger driver for our characterization solutions per se than the feature size itself, but I would say broadly the analytics business is just about the increased activity in semiconductors. Overall, it's really just a characterization of the EFI that are very sensitive to the number of players investing on the leading edge.
Okay. This is a question I should know the answer to perhaps but I don't when you collect the billions of data points that you collect.
Obviously, they are available to the customer himself.
Or are those data points anonymously.
For the use of <unk> to continue to perfect algorithms across old customers.
Yes, that's a great question so in our cloud.
<unk> contracts.
Usually request from our customers allow that we can.
Use the data to improve our algorithms and prove our systems.
Because the customer benefits from the fact that.
Our data.
Our data systems can process data faster our algorithms can detect outliers and defects more effectively so it's good for the community overall, if we can make our analytics better and so we've put that in our contract and we mentioned we manage a few petabytes.
<unk>.
Expenses managing Petabytes of data. These days, we on our cloud solutions for the measure managing grow.
<unk> fraction of that and so we use.
Kind of our existing.
Capabilities and sandbox is to optimize and improve things like our ability to load data in parallel SaaS to retrieve data fast and our customers will benefit from newer analytics newer ways for slicing and dicing data.
Mhm.
And finally in terms of.
Again, I don't know if there is an answer that you guys know that yourself in terms of how long it will take.
Uh huh.
Goldcorp.
So many instruments and different back end et cetera.
How many years before that really gets to the point is a critical critical mass where you can.
Get a picture from beginning to end of the of the whole.
The whole cycle of the chip.
Right through final packaging and assembly.
Maybe you could do it perhaps even today of course, an individual company if they so desire.
Does that isn't on loans.
And how long does it take.
Yeah.
I think what youre getting youre getting at a very important point on so our industry and our customers generally speaking.
Some of our Fabless customers.
Our chip they order away from from a foundry they send it to and that was thought to be tested to another facility package to another facility to be tested and then eventually gets shipped to.
Our system manufacturer like <unk>, and our Fox kind of put into our system and never did that chip ever go through a facility that had that fabless companies name on it so visibility of data across their supply chain is very important and we provide a capability called the decks nodes.
Give customers the ability to see their data at their assets and at least at some points as they come out of their foundries.
Visibility inside the foundry process is relatively limited. These days. So there is some level of that today for our customers I think it can always be better than what is available today. Some of that is due to the limitations in the way the boundaries between companies.
For sure for test and for some of the packaging and <unk>.
Final test capabilities, our customers use of DEXTENZA to get transparency, there and we are expanding that network of available suppliers.
As we go through this year, so more and more they're likely suppliers already covered under the system.
And last part of my question just the metrics.
How much does that accelerate this whole process for you.
That's a great point quite a bit on so from.
The metrics are.
30 year company with a long history of defining the standards for data collection I think they share something like 10 of the standards bodies at semi but also in the Taiwan print Circuit Board Association and many of the other industry associations, whether it's in fun and factories and assembly.
And printed circuit board manufacturer print Circuit Board backend.
They are the leaders in.
Working with the community in an open source way and open way to define the standards in an open way obviously, our software supports the standards, but we want.
The world to adopt them. So we view that as an open fashion, we have quite a long history through that acquisition of working very closely with about 200 equipment vendors, where we help them deploy those standards that means and that's why my last set of prepared remarks.
We see a lot of ways, we can bring closer together the analytics with that those data collection standards and new enhancements in the standards. So the latest.
Things that have not had been proposed to standards, but have not been fully accepted yet we're implementing those from the software. So our customers can get access to that because people always want the newest way to look at data.
More insight about their equipment for matrix is really quite an important piece to the overall vision of.
And 10 analytics.
On the cloud across the manufacturing supply chain, it's a very important part.
And will that be done in short order in terms of being able to get the cost yes.
For that.
Analytics.
One of the advantages of.
Acquiring a company with a 30 year history is that it can look like short order from the two of us coming together, but it's due to a tremendous amount of hard work that that team made over many years for decades in effect to really define out these standards.
And get them adopted in the industry get them into the equipment and now connect them from the equipment to the cloud through product day developed cost sapient coupled with.
Except for your data collection engines, so things we can do.
Pretty quickly.
In a matter of quarters to CMV.
Okay, great. Thanks very much.
Okay.
There are no further questions at this time I would like to turn the call back to Mr. John to their Yang CEO of PDF solutions. Please go ahead.
Thank you for participating in our Q1 call. We look forward to talking with you again soon have a great day.
This concludes today's conference call. Thank you all for joining you may now disconnect.
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John.
Okay.
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