PDF Solutions, Inc.

Good day and thank you for standing by. Welcome to the PDF Solutions' fourth quarter and year-end 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Four instructions will be given at that time, and I would now like to hand the call over to Mr. Joseph Diaz of Latham Partners. Please go ahead, sir.

Thank you, operator, and thanks to all of you for joining us today on this call. We appreciate your time and your ongoing interest in PDF solutions. As the operator indicated, my name is Joseph Diaz. I'm with Litham Partners. We're the investor relations consulting firm for PDF. If you do not yet have a copy of today's press release, it's available on the company's website at pdf.com. Some of the statements made during this conference call will be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. including statements regarding PDF's future financial results, performance, growth rates, and demand for its solutions. PDF results could differ materially. The forward-looking statements and risks referred to on this call are based on information available to PDF today. The company has no obligation to update them. You are advised to refer to the section titled Risk Factors on the company's annual report on Form 10-K for the fiscal year ended December 31, 2020, and similar disclosures in subsequent SEC filings. With that, I'd like to introduce John Kabarian, PDF Solutions President and Chief Executive Officer. He will be followed by Adnan Raza, Executive Vice President and Chief Financial Officer. At the conclusion of management's prepared remarks, we will open the call for your questions. Let me now turn the call over to John Kabarian, President and CEO of PDF Solutions. John.

Thank you for joining us on today's call. If you've not already seen our earnings press release and management report for the fourth quarter and the full year, please go to the investor section of our website where each has been posted. As Adam will discuss in more detail, 2021 was a record year for total revenue and a year where our analytics business achieved tremendous growth. Also exciting is the foundation that we have laid to establish stronger business in 2022 and beyond. In the fourth quarter, we celebrated our 30th year in business. So today, in addition to summarizing the progress we made in Q4 and 2021 and providing our expectations for the coming year, I'll provide some perspective on our journey, what has gotten PDF to this point, and what we believe will position us for continued long-term success. During our 30 years, we have been a leader in analytics for semiconductor manufacturing, demonstrating consistent and persistent innovation. We have advanced the application and capabilities of our products and solutions by combining a team with extended longevity and deep knowledge of the company with a continuous addition of new team members that bring unique perspectives. Besides our dedication to manufacturing analytics, Virtually everything else has changed over the years, including our customer base, selling and marketing strategy, and fundamental business model. For many years, our business was defined by the integrated yield ramp, or what we call an IYR. In that business, we accelerate our customer's yield ramp by combining analytics with our characterization systems that provide the missing quality information that enable yield engineers to make the best improvements. By the end of 2014, we realized that drivers of the IYR business, robust geometry scaling, and competitive foundry market were waning. However, we believe that the future drivers for the semiconductor industry would benefit from new applications of our manufacturing analytics. Where the IYR business had a handful of customers and a unique business model, the new opportunities are across the entire industry and affect every aspect of chip manufacturing, not just the foundries ramping new nodes. Today, PDF's customers number over 300. They include equipment companies that use our software to control their tools and communicate data from their tools to the fabs, fabless and system companies that use our systems to qualify new products faster, control yield and drive test quality, and IBMs and foundries that use our software to control their way for fabrication and increasingly package processing. Many of these customers benefit from our cloud offering where the systems are managed by PDF for better availability and performance. The business model, once tied primarily to the ramp up of new nodes, is now primarily subscriptions where customers pay radically for access to, whether to the cloud or on-premise systems. Q4 and 2021 demonstrate the success of the evolution that we have been making over the many years. In particular, analytics is now the vast majority of our revenue. The customer base is much deeper and broader than before. Development and manufacturing of new nodes is still an important part of our business, as evidenced by the new yield ramp and the leading edge analytics engagement signed in the second and third quarters of 2021. However, the majority of our Accenture customers use our analytics platform for products that are built from more mature nodes. Overall for 2021 bookings were up substantially over year over year and grew faster than chip industry revenues. As we increase the value that we deliver to our customers from our cloud deployments and applications of CV and DFI systems for leading edge. Our business with equipment vendors also grew faster than the market as more companies vetted from our advanced control and communications options for symmetric software. The synergy between Symmetrix products and the Accentio platform enables PDF to advance the standards for new kinds of process equipment information and provide new analytics applications. For the fourth quarter, we extended many of the trends we experienced in the previous quarters. Again, Accentio Cloud and on-premise subscriptions were important contributions to our bookings. Symmetrix runtime license activity with our equipment OEMs was also strong as they shipped our software with their tools. In the fourth quarter, we also signed another Quick Start contract with a leading-edge customer, this time to apply our CV systems and design for manufacturability applications. We anticipate the Quick Start to convert to significant business in 2022. During the quarter, we also announced our partnership with Siemens EDA, to link Xcensio with Tessent diagnostic products. Customers on the Xcensio cloud will be able to use Tessent to further their root cause understanding by leveraging the market leading logic and memory diagnostics capabilities from Siemens EDA. Coupled with our partnership with Adventest and Xcensio's new product introduction module, we believe Xcensio customers will be able to bring up their products faster and achieve entitlement yields, which are critical in this supply limited world. Following up on our December announcement, we had our first webinar for the Siemens partnership in January and experienced strong interest from engineers at IBM, Fabulous, and system companies. This builds on our collaboration with IBM for interoperability between SciView and Accentio. Our Advantest, Siemens, and IBM partnerships, as well as our strong partnerships with all of our Symmetrix OEMs, build on the foundation of PDF as an open and collaborative platform for semiconductor industry analytics. They all stem from our core belief that analytics is more valuable to each of our customers when our capability is integrated with the world's semiconductor processing equipment, is available at any manufacturing facility in the world, whether owned by a direct customer or one of their suppliers, and is linked with the other software systems such as EDA and MES. We believe that analytics, besides being useful when there are mountains of data to train algorithms, like in the case for mature nodes, also can aid our customers for new process nodes, new assembly processing, and products for which conventional machine learning techniques are inadequate. As we begin in 2022, the semiconductor environment remains robust, and demand for integrated circuits is broad-based. We anticipate continued demand for our analytics platform, particularly on the cloud, from a broad-based cross-section of customers, including equipment companies, fads, OSATs, fabless, system companies, and tier one auto suppliers. Governments, car makers, and tier one suppliers, and system companies are all realizing the importance of semiconductor supply chain. This is driving interest in PDF's products and services. Given the industry tailwinds I just summarized, we anticipate continued revenue growth. At our 2019 Analyst Day, we set a long-term growth target for analytics at 20% compound annual growth rate, and we have subsequently reconfirmed this. We met this target in 2021, not only for analytics revenue, but for total revenue also. In 2022, we again anticipate overall company revenue to grow above 20%, in part due to strong 2021 bookings, and continued momentum in new bookings. For 2022, we also anticipate lower gainshare levels for the year as we see the full year impact of the gainshare contracts that concluded in the second quarter of 2021. Our confidence in total revenue growth over 20% with full year of gainshare decline implies that we anticipate analytics going meaningfully above our 20% target again. Overall, we expect 2022 to be a year of continued revenue growth. I started off this talk reflecting on the past 30 years and the evolution we have made in our business over the last eight years. I want to take this time to remind our stockholders, employees, contractors, and customers what this experience has reinforced in our culture. We have demonstrated that we are willing and able to reinvent just about every aspect of our company, to make sure PDF solutions can serve our customer needs. While reinventing our business, we remain true to our values, employees, and partners, while respectful to our stockholders. For example, over these last years, we have developed the ability to serve our customers' test floor control, e-beam characterization, equipment data collection, and assembly manufacturing, all while building a SaaS business model from whole cloth. We have accomplished these things by believing in our team while welcoming new teammates and entire companies so we can deliver the solutions our customers need. This was accomplished by anticipating the changes our customers were going to see and make sure we could be there for them in advance of their needs. Executives at our customers tell me that this anticipation and persistent investment for their future needs is one of the key reasons why they select PDF as a critical supplier. Moving forward, we will build on both our ability to sustain our differentiated capabilities while developing and adopting new solutions that will enable us to serve our customers' present and future needs. Finally, I want to thank all of our PDF employees and contractors for their efforts during what has been an exceptional year. We managed to work in tight concert, executing our largest bookings and revenue year in the history of the company. Now we'll turn the call over to Adnan, who will review the finances and provide his perspective on our business.