Good day. Thank you for standing by. Welcome to the PDF Solutions’ Third Quarter 2021 Conference Call. At this time, all participants’ line are in a listen only mode. After the speakers’ presentation, there will be a question-and-answer session for which instructions will be given at that time.

I would now like to hand the call over to Joseph Diaz of Lytham 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 Lytham Partners, we are 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’s actual results could differ materially.

The forward-looking statements and risks referred 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 entitled 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 would like to introduce John Kibarian, 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 to your questions. Let me now turn the call over to John Kibarian, President and CEO of PDF Solutions.

John?.

Thank you for joining us on today’s call. If you have not already seen our earnings press release and management report and 10-Q for the quarter, please go to the Investors section of our website, where each has been posted. I will start the discussion by providing commentary on the third quarter.

From there, I'll provide our impression to the semiconductor industry and conclude with our expectations for PDF’s business for the reminder of the year before handing the call over to Adnan for more detailed financial update. Highlights for the third quarter demonstrate the progress the PDF team has made over the last few years.

As we've discussed over many quarters, some significant legacy Gainshare contracts ended in the first half of this year. This meant that Q3 for us could have been a challenging quarter.

That said, by the second quarter of this year, we had expressed confidence that given a strong bookings and valuable nature of our analytics business, we anticipated that Q3 despite the Gainshare headwind would be up modestly in terms of revenue versus Q2.

Now, with the third quarter behind us, we can report that the company achieved record revenue, with meaningful quarter-over-quarter growth. Despite the significant drop in very high margin Gainshare revenue, we also saw improvements in our gross margins and net margins. This is due to achieving more scale under our Analytics subscriptions.

As a result, even with the headwind of decreasing Gainshare, we made progress towards our target gross margins. Turning to bookings, the third quarter was particularly strong and exceeded even last year's third quarter bookings. As some of you remember, it was one year ago that we closed the Advantest partnership, and with it a $50 million contract.

At the time, we reported that it was remarkable quarter, as the partnership had taken years of meaningful discussions to bring to fruition. We communicated then that we did not expect to meet or exceed the previous -- that performance level for a while.

Exceeding the previous bookings milestone in just four quarters speaks of demand of our products and services.

When we consider all of these factors, we believe that from a financial metrics perspective, this quarter has demonstrated that the company's transition to analytics will lead to improved growth and financial leverage as we bring the business to scale. Now, let me provide a little more detail about the bookings in the quarter.

Our bookings in Q3 timely came from Analytics. We had a strong quarter in Exensio bookings, with the majority of Exensio bookings on a dollar basis continuing to be from customers moving to the cloud.

This included another 8 figure cloud bookings, as an enterprise customer moved from on-premise to cloud deployment in order to leverage the benefits of Exensio’s big data storage and end to end performance.

This quarter also included a Tier 1 auto supplier that renewed its initial Exensio cloud deployment, as it expands the use of silicon and the electrification of car drivetrains.

As semiconductors become more critical to automobile manufacturing, we are seeing manufacturers look to use Exensio's capabilities to improve visibility in their technology and supply chain.

We also had a strong Exensio bookings from front-end fabs deploying Exensio process control, as the demand for additional fab capacity drove further deployments of Exensio.

Building with the demand for semiconductor capital equipment, we experienced another quarter of strong Cimetrix runtime license bookings, as equipment companies ordered Cimetrix connectivity and equipment control software licenses to ship with their products.

As I discussed earlier, Yield Ramp revenue was down significantly as legacy Gainshare contracts completed. While we're not emphasizing integrated Yield Ramp contracts, we have started to see some increases in the volume reports from customers including Chinese fabs where we are seeing significant equipment installs.

We anticipate modest improvements in integrated Yield Ramp revenue going forward. Lastly, as some of you may remember, we reported a quick start Analytics contract that's signed in Q2. We completed the follow on multiyear contract in Q3.

This contract includes use of our characterization systems for electrical test, a DFI e-beam system, and Exensio systems including our DFM software. As a result, we began shipment of our [PD fast testing] eProbe DFI measurement systems to their facility.

For customers innovating on the leading edge, speed comes from having huge relevant datasets to be able to see failures in the parts per billion level. We believe that our DFI and CV systems provide the largest datasets, which enable superior learning using our Exensio Analytics software.

Our DFM capabilities allow our customers to anticipate how improvements in manufacturing will impact future products, which is particularly important for foundries which must support a rich set of designs.

With a strong booking spanning our Exensio Cimetrix conductivity characterization vehicles and DFI systems, the third quarter demonstrates that PDF’s broad value and strategic prevalence across various industries from high voltage power IC manufacturing to the most advanced process technology development, from equipment companies to system manufacturers, PDF’s manufacturing Analytics platform is becoming ubiquitous in the IC industry.

Now, let me turn to our perspective on the IC industry and expectations for the fourth quarter. The industry continues to operate at a high level for manufacturing and R&D. Maximizing existing operational effectiveness, as well as developing new products and processes is critical to the industry in this setting.

As a result, customer interest in our products and solutions remain strong. We are pleased with the progress in the first three quarters of the year in making PDF Solutions the manufacturing analytics platform for the industry. This enables us to build recurring revenue streams to provide greater visibility and predictability to our financial results.

Finally, I want to thank our employees for nimbly supporting our customers and continuing to innovate in the COVID-19 environment. Now, I'll turn the call over to Adnan for a review of the financials. After which, we will open the call up to your questions.

Adnan?.

Thank you, John. Good afternoon, everyone. Good to speak with you again today. And I hope all of you and your families are keeping safe. We are pleased to review the financial results of the third quarter and to bring you up to date on the progress of the business.

We posted our earnings release and management report under Investor Relations section of our website. Our Form 10-Q has also been filed with the SEC today. Please note that all of the financial results we discuss in today's call will be on a non-GAAP basis and a reconciliation to GAAP financials is provided in the materials on our website.

Financial results for the third quarter 2021 continued the strong momentum of the first half of the year. Third quarter total revenue was $29.6 million, up 28% from the comparable quarter last year and up 8% on a sequential basis from Q2 2021.

Analytics revenue was up 90% to $27.2 million in Q3 2021 versus $14.3 million in the third quarter of last year and was up 39% sequentially from the prior quarter this year.

While we do not expect this level of Analytics growth the next quarter, based on continued strong bookings we expect year-over-year revenue and backlog to continue to grow this year. For the quarter, Analytics represented 92% of total revenue.

IYR revenue for the quarter was $2.4 million versus $8.8 million during last year's third quarter and represented approximately 8% of total revenue for the quarter, as some of the IYR contracts came to the end of their Gainshare period.

We expect that IYR revenue will pick up marginally in coming quarters for the reasons John highlighted in his prepared remarks. The IYR component of our business is lumpy by its very nature. And as we have previously stated, if customers want to engage in IYR in a meaningful way, that's a benefit to PDF shareholders, we will certainly work with them.

Our transition to become the leading analytics software provider to the global semiconductor supply chain is continuing at a very consistent pace. And we expect that to carry on going forward. Booking momentum remained strong. Our bookings for Q3 exceeded the extraordinarily successful bookings of Q3 of last year, when Advantest became a customer.

For the nine months through Q3 2021, our bookings have now exceeded the bookings for all of prior year 2020, which in of itself was a remarkable booking growth year. Backlog at the end of the third quarter totaled to $181 million. On a sequential basis that represents an increase of 30% from the $139 million the prior quarter.

Notably, compared to the third quarter of 2020, our backlog is up 60% on a year-over-year basis. Our strong bookings growth and sizeable ending backlog sets a meaningful base for total revenue growth into 2022 and beyond.

Our cost of sales and operating expenses for the quarter were essentially flat on a sequential basis compared with the second quarter of 2021. While we have a strong focus on managing expenses, we will make the necessary investments to enhance our technological capabilities and competitive positions.

This quarter, we were able to expand gross margins to 66% and continue our progress towards the 70% gross margin goal we shared in our fall 2019 Analyst Day. We were also able to deliver $2.4 million of operating income this quarter, compared to the almost breakeven operating income last quarter.

We're pleased with the positive $0.09 of non-GAAP EPS reported this quarter as a result of the strength in our revenues and management of expenses. We're also profitable on a non-GAAP net income basis for the nine months of 2020.

Turning to the balance sheet, we ended the quarter with cash and cash equivalents of approximately $141 million, compared to $139 million for the prior quarter, and no debt. Cash flow from operations for the third quarter was positive $4 million. We have also generated $3.8 million of cash flow from operations on a year-to-date basis.

We expect to end the year with another continued year of operating cash flow generation. Our business continues to be strong across all sectors. We expect full year 2021 total revenues to grow on a year-over-year basis near the top end of previously communicated 20% to 25% range.

We also expect full year 2021 Analytics revenue to grow on a year-over-year basis more than 50%. We feel that we're well positioned for 2022. With that, I'll turn the call over to the operator to commence the question-and-answer session.

Operator?.

[Operator Instructions]. Your first question comes from the line of Blair Abernethy of Rosenblatt Securities..

Just wonder, if we could talk a little bit about, with the growth that you're seeing in the Analytics business, the Exensio platform, just what are you doing on the go-to-market side in terms of your plans for the balance this year and looking into next year? Are you ramping up your sales rep capacity? Are you looking at partnerships? Just kind of want to get a sense of what you're doing to continue that momentum?.

Thank you, Blair. So partnerships are very important. The Advantest partnership has demonstrated that. And we do see other partnerships out there that we've been working on for quite a while that we believe at some point over the next few quarters will come to fruition in different ways.

As we've moved more and more users of Exensio onto the cloud, there's a lot we can do to make it easier for them to use Exensio with all the other systems and hardware that they need to operate in order to get produced chips. So, when it's an on-premise system it’s very difficult to do because every customer deploys in different way.

As they move to our cloud solution, it's much easier to kind of help them be more productive with the platform. So partnerships are very important.

As well as to your point around building out our channel and our ability to reach more customers, we had the benefit of having been in business for a long time and kind of grown Exensio over many years kind of organically, over 130 Exensio customers out there, are substantially more that now.

And we're able to go back to them and move them, we don't feel any of them are fully penetrated, move them from using parts of the platform to using the broader session of the platform. First step again for that is to move them to the cloud, where we can then upgrade them with more modules and more capability quite comfortably.

So those two areas, move into the cloud and partnerships are the two biggest things we're doing Blair, and then subsequently, more investments in the channel and more applications on the platform..

Your next question is from Tyler Burmeister of Craig-Hallum..

Hey, guys, this is Tyler on behalf of Christian. Thanks for letting us have a couple of questions. John it’s great to hear the -- your quick start contracts complete in the quarter and you signed an additional multiyear contract with a customer, I think you said.

I was just wondering, any additional color you could give us there on maybe the size of that contract, the timing, near-term, long-term of it, any additional color there would be great? Thanks..

Sure, Tyler. Yes, we were happy to sign that contract as well. As you can imagine, based on the components of the technology, it pretty much is, many of the components of PDF, with exception of Cimetrix, it includes Exensio, the ease-in capability and electrical test characterization of vehicle, the Exensio DFM modules as well.

So it's a very big set of technology and all encompassing departments. So as you can imagine, contract wise, it's one of the larger contracts we've done on a subscription basis. It's multiyear, minimum of a couple of years of extensions. So it's quite substantial in that regard as well.

That gives a lot of time to really have the customer get value out of systems and then deploy it more broadly. We, of course, hope to build on this with this customer as well as others, because we feel the platform is quite valuable. And with the investments now going on in the leading edge, we believe it's quite an opportunity for the solution..

That's great to hear. And then this year, a very strong year for your Analytics business, going to grow over 50%. But you also have seen some record bookings heading into next year.

Would it be fair to assume you're going to continue to be able to grow the Analytics business ahead of what I think is 20% CAGR target in the next year?.

Yes. It’s a great question, Tyler. We're doing our strategic planning now. As we get into 2022, we will provide our perspective on growth rate.

We had said at Analyst Day that we thought Analytics to grow 20% and the business would asymptotically approach 20% as Analytics with the majority of the business now you can see in Q3 Analytics was 92% of the total business.

And we're giving guidance that the growth for the overall company would exceed between 20% and 25%, close to the higher end of that range. So obviously, we're kind of already a little bit beyond where we previously expected the business to be. But we're going to go and look at how the remainder of the year works on what we think the future looks.

Obviously, the industry overall is very robust. That would give us some confidence that we need to see the details of how things work before we kind of say anything more..

[Operator Instructions]. Your next question is from Gus Richard of Northland..

John, congratulations on the large contract and Exensio deal as well. I'm just wondering if I can dig into that contract a little bit.

Can you give us any color on the sort of the split between DFI, CVs and an Exensio on that contract?.

Yes. I don't know how we would go about doing that, Gus. I mean the reality is it was a bundle of all those things. Obviously, from a cost standpoint, if you look at our cost to deploy, the DFI, and we have the biggest costs and the machine is the most significant, but I think in terms of value it’s a more judgmental thing.

I think what the customer is buying is an integrated solution that really helps them get technologies developed more robustly and more to a higher level of manufacturability quicker.

So it's hard to say, what's the piece that really makes a difference?.

Let me try it this way.

In the contract, how much of it is recurring and how much of it was like an upfront placement into DFI, use it like…?.

It's all recurring, Gus. It's a subscription paid on multiple years..

So all the pieces?.

Correct..

Okay.

And is it reasonable to assume was similar in size the Advantest deal?.

Gus, we are really not disclosing what -- I mean, obviously, it's a significant deal, right? So -- but the specific number we haven't disclosed..

And then in terms of the IYR business, it sounds like the Gainshare has hit sort of a bottom and should -- with volume increase moving forward, are there any other contracts that you see rolling off in the near term that would be meaningful?.

No, we don't really at this time..

And then the last one for me.

Are there any fixed fee in the IYR left? Or is it just one Chinese foundry or is that it or are there more?.

That's a good point, Gus, there. If you remember in the second quarter of this year, we did sign a relatively large multiyear fixed fee contract that goes out over four years. That is in that number as well. .

Okay. It was a fairly substantial sequential decline in that business.

And I'm just -- sort of was there a lot of fixed fee revenue in the second quarter?.

No, it was a couple -- the number of contracts are actually aspired to end at the end of Q2, so on the Gainshare side. So Gainshare fell off pretty substantially. I mean there was some drop off in fixed fee revenue, not because contracts ended, but just the percent completion, ability to actually deploy vehicles and things to that account.

So it was some small amount of revenue decline quarter-over-quarter on a fixed fee basis due to just deployment capabilities, primarily in China, but the majority of that decline was in number of -- not just one, but a number of Gainshare contracts coming to their end. .

And then the final one for me.

Given the large contracts in the quarter, is there any incremental operating expenses required to support the new contracts that are starting to deploy?.

Yes, I mean, our expenses, we expect that we've brought them to the right level. In going from now into Q4, we expect there may be a slight increase in some of those expenses. But hopefully, our revenue is also maybe flat to slightly up. So we'll manage the expenses along with those revenues.

But it's good to have this problem that we have, as we have more customers to meet demand for both on the Analytics side, as well as the continued engagements from the past on the IYR side that we just talked about..

I think specific to your question, Gus, the capability required to meet that large contract is in place..

[Operator Instructions]. Your next question is from Gary Schnierow of RiverPark Funds..

Following up on Gus’ question, absent that big quick start contract, your core Exensio business, I'm assuming that still grew quarter-over-quarter?.

In a way that we are very pleased about. We don't disclose the numbers. But on a percentage basis it's -- yes, it would annualize to a number well ahead of our 20% that we’ve talked about..

And can you talk about your CapEx in the quarter? It looks like you stepped that up significantly.

What that is and why you felt doing that?.

Yes, I mean, as John explained, we had the big contract. And as I think he was being asked about what are the different components of that contract, you obviously heard him talk about different machines we have as well.

So, some of the machines that we have in our lab as we start to get them ready for customer shipment, there will be some upgrades that we have to do on those machines and predominantly that's what drove the increase.

From time to time, we will also be updating these machines as you know this number was more like around 500 for Q1 and Q2 but markedly lower compared to last year, which was also lower. So every year we have started to bring that number down.

But as we get ready to ship machines or do some special projects for customers, sometimes in our lab, we will from time to time be spending to upgrade the different hardware pieces....

Also as we deploy DEX nodes across that environment, you'll see us have CapEx tick up for hardware that we place at OSATs too, which I think this past quarter was small piece of that number. But I believe in Q4, there'll be another pieces also with that..

So when you're saying about the -- getting the equipment ready, it sounds like the CapEx step up is not necessary -- is not just for the quick start contract but getting equipment ready in anticipation of other contracts or in hope of other contracts.

Is that fair?.

Yes. There’s equipment purchase primarily on the -- both on electrical tests, on the [ease-in] side but for that contract, IYR contract, some other anticipated activities. And as I said, I'm not sure in Q3, I know that we've been making some purchase -- and I don't remember exactly the timing for computing to support DEX nodes at specific OSATs.

And those are -- they're all in that number. There’s not one that I think just dominate it..

Let me ask it a different way.

Is part of the CapEx to have additional eProbe machines?.

We have additional eProbe machines, Gary, but it may be to replace some components on the eProbe machines for new applications that we're developing. So in that terms, it could have involved it. But it's not just for -- specifically for machine shipment to clarify. Probably that machine has very little CapEx associated with it at all..

Your next question is from Corey Tobin of William Blair. .

I just want to come back to the sequential increase in Analytics revenue, is a real nice move up.

Is this a new baseline we should think about? Like is the $27 million we saw this quarter, the majority of it recurring, and therefore we should expect to see to grow up that $27 million as we move ahead the Q4 and into 2022?.

Look, I mean, our focus has been to continue to transition the business towards analytics and that too on multiple prongs, not just the Exensio software, but also on the other pieces within analytics. So yes, we're starting to feel comfortable with this level of Analytics revenue..

Meaning that’s we should build off it from here. There's not a …..

That's right. And look, I mean, precisely to help you all think about how to model, this is kind of why we put some of those thoughts around what we expect the total revenue to be doing for this whole year, near the 25% range that we had prior communicated as well as the Analytics business.

So hopefully, when you go back into the math, you'll see that we're saying that for one quarter left, the numbers will support the similar levels of Analytics revenue or slightly up..

And then the contract value that you mentioned, the large contract.

That's a TCV value, that's the total contract value or is that the annual contract value?.

I think we reported the total -- we haven't reported a specific value or the total contract value. But it on both an annual basis and a multiyear basis, it’s a very substantial contract in both of those if you look at it..

And I guess you were referencing the 8 figure bookings you talked about….

8 figure, that is total contract value for the Exensio project. .

That’s a TCV number, okay. Congrats again. Thank you..

[Operator Instructions]. Your next question is from Orin Hirschman of AIGH Investment Partners..

Thank you. AIGH Investment Partners. And again, congratulations, I'll add to that, that really seeing the breakthrough numbers here.

In terms of a very large contract, is that total contract value reflected in the bookings this quarter or only part of it?.

The parts that are non-cancelable. So, yes. .

Okay. Just in terms of general trends, if I asked you, yield improvements and automation in general versus smaller line with becoming more critical, and you becoming more critical for that, what's driving this? Because this is kind of turning explosive on you, which you have been hoping for, for the last few years.

What are the drivers here?.

Thanks, Orin. Yes. As I said in my -- what's really cool about this right now is -- and I think you kind of alluded to it in your question, it was where we were -- really just falls into the foundry that was doing the advanced notes, and that got to be a very small number of customers, and our relevance is only there.

But if you look at this quarter, we had seven, eight figure contracts that were signed by companies that do the trailing of the trailing edge, high voltage stuff, microcontrollers and things like that.

And then yes, we still are very relevant to the leading edge companies as evidenced by that large contract that was signed on the heels of the quick-start. So it's a broad base of demand now for our analytics, because investment is going on, not just from leading edge now.

But also new derivatives on trailing edge nodes, new capacity on trailing edge nodes, more companies like that Tier 1 auto supplier, who now -- silicon for the drivetrain is becoming super critical, and therefore they want Exensio Analytics. So it is a very broad based business. And this quarter, I think it showed that..

Just two follow-ups. Just on what sort of that drivetrain application, you'd never necessarily think that a company like that might think it's not a normal bouncy type of situation. You'd never think of them thinking like so deeply and thinking analytics for a better yield. Is it more than that? Is that without analytics, yield is poor.

What is it? Why would they even think of that?.

Yes. Because, if you just look at the electrification of cars, then high voltage transistors is super important. They set quality. They set things like the possibility of the car catching fire, they set reliability and lifetime of that car. So manufacturing of those components is really important.

We've noticed in our customer base, chip companies getting into wafer making, right, you've seen [NFT] announce that they are making their own wafers.

We see companies that did -- on semi that did primarily 200 millimeter manufacturing, getting to 300 millimeter and we see companies like DENSO and Bosch start building out fabs and getting into that silicon -- high voltage silicon capability, because so much of the value is there in the car.

And you may not use ADASH for a long time, there's mandates about when you're going to be using electric cars. So as we see that, the market is moving very, very fast and it's changing quite a bit. And, Exensio Analytics is a very viable way to understand how to get to the highest level of quality, operational effectiveness and yield.

So it is a viable capability for these companies and many of them were already customers of ours, and they're expanding. And some of them are kind of new customers for us, like, the auto suppliers who want to be in the Tier 1 auto, who want to be in the silicon business, because it's how they control their destiny..

Out of curiosity, if you can say those two power names that you mentioned existing customers and/or new customers?.

Probably, we're always careful about who we say is our customer. But suffice it to say, we've always sold first to top tiers of every market we get into typically..

A question on silicon carbide, silicon carbide requires a lot more tests, obviously very delicate to handle super high voltages, difficult tests. And much more rigorous testing that's being done.

Is that -- is there a module you have specifically for that? Is that [stickier] again, so it’s not one of the drivers here on new power customers?.

That’s a great insight. Yes. It is an area that we have capability on Exensio test, and they have very complex burn-in, test process, burn-in. And we have in Exensio unique modules that are able to load that data and align it and analyze it.

And that has been something we've been piloting with those customers today, there's not an important part of our revenue. But we believe it will more and more be an important -- more important part of our revenue because of exactly the hot points you highlighted in your question..

Last comment. On one of the previous calls you’ve given out, it wasn't even really important in the all scheme of things with the following caveat, you've given out a number just to give an indication of what kind of data points at Analytics and data points are being pulled in every day by your customers.

And I forgot the number, it was an astounding number. As you're transitioning almost from being associated with the semi cap space, which isn't the best place to be right now, by the way, and maybe for the next few years but there's more here where once in a while people are actually thinking a lot of the SaaS name finally.

You probably process more data points than many SaaS companies do at this point, and certainly more mission critical in a way.

Is it impossible to give out -- for giving out some metrics in some creative nice way that people will be able to understand just what type of incredible processing that you are doing for these customers?.

Yes. That's a great point. We are tracking out the amount of data poured into Exensio clouds for our core customers. And as your question kind of alluded to, we had a number of customers move on an enterprise basis to Exensio. We expect that many of those customers will be up and running at company.

It's a transition that takes months just to even load all of their data because they want historical data too into the cloud system and on to on-premise system. I think as I'll go through 2020 we will start communicating what the size Exensio cloud database is.

And yes, it will be in the multiple petabytes of data and processed daily, your insight is quite sharp. Yes, it was -- the numbers on a daily basis are quite large. Now how they compared to all clouding stuff, I'm sure there's lots of things that are big.

But in terms of mission critical manufacturing data, it is a very big dataset we process for customers’ data. And a lot of that data comes from places that are outside their four-walls, from their suppliers and foundry tests and assembly that will get loaded. And so it is a complex web that we're building out for the customer base. .

And if I may just one last question and I'm sorry I'm taking so much time. But just in terms of being able to cross utilize what you learned across customers, I believe that you are able to do that obviously anonymously.

If that is the case, is at some point will you become almost like a must-have because they need -- they want, they need that cross-analytics in order to get the best bang for the buck?.

Yes, must-have is always a super strong word. And I'm always -- there's always clever people out there. So that word always makes me nervous.

But the point that you bring up there, we do always in customers’ contracts, retain the rights to use the data to make our algorithms better, because it benefits them if our algorithms can help them find insights better.

And of course, the larger dataset that we sit on, and we can let our algorithms run, the more effective our algorithms can be for our customer base overall. And so we hope it increases importance for our customers.

And we'd like it to be the platform that is the most -- the analytics platform is the most effective one for the industries, but must is always a super strong word, so I am nervous about that work. But your general thesis, yes, we would agree with that general thesis.

And yes, every time I meet with operations executives, and I meet with them from the fabs, this is IBMs and the fabs all the time, maybe mostly on Zoom, but I still meet with lots of them.

They want us to make sure that our algorithms can see quality issues more subtly -- subtle quality issues sooner and more effectively for them because they don't want -- last thing they want to do -- one of the guy said to me just this week, I don't want to be explaining to my customer I mean all the supply chain, why we have this problem.

This is something that's embarrassing, what happens, so your software has got to catch it. So they want us to hone our algorithms for exactly what you described, Orin. And hopefully that will make us important to them..

[Operator Instructions]. No questions at this time, and I would like to turn the call to John Kibarian, CEO of PDF Solutions for closing remarks..

Thank you for participating in our Q3 call. We look forward to talking with you again soon. Stay safe and have a great day. Goodbye, everyone..

This concludes today's conference. Thank you for participating. You may now disconnect..