Good day. Thank you for standing by. Welcome to PDF Solutions First Quarter 2022 Conference Call. [Operator Instructions]. I would now like to hand the call over to Joseph Diaz of Lytham Partners. Sir, please go ahead..

Thank you, Christian, and thanks to all of you for joining us today on the call. I appreciate your time and your ongoing interest in PDF Solutions. As the operator indicated, my name is Joe 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 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, 2021, and similar disclosures in subsequent SEC filings. With that said, I'd 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 for your questions. Let me now turn the call over to John Kibarian, President and CEO of PDF Solutions.

John?.

Thank you, Joe. The first quarter was a great start to our year. Before Adnan discusses the financials in detail, I have some comments about the nature of our business in the quarter and our perceptions of the market. The first quarter bookings built a strong trend in 2021 with many of the same themes that we experienced last year continuing.

For the industry in the first quarter, supply constraints, COVID lockdowns and sanctions as a result of the Ukraine war made for uneven availability of equipment, wafers and consumables. Customers expressed to us increased uncertainty in meeting shipment requirements and increasingly noticed our customers' executives spending effort to ensure supply.

Despite this backdrop, and in some cases, because of these trends, we had a very strong bookings quarter. We did see some customer ship fewer tools than we had anticipated, which impacted the contribution from run-time licenses to analytics revenue in the quarter.

At the same time, the contribution from gain share to integrated yield ramp revenue was improved modestly as a result of increased wafer shipments. We also experienced uptick in Exensio process control perpetual licenses as customers build out new capacity.

Overall, in the first quarter, the macro trends, while not all positive for our business tended to break in our favor from a revenue perspective. Beyond these puts and takes that were a function of the macro challenges and opportunities, our business activity and results were very strong in the quarter.

I will briefly touch on some highlights in bookings and partnership activities. First, building on the Quick Start contract that was signed with the leading-edge customer in the fourth quarter of last year and as anticipated, we signed a large follow-on contract.

This makes it possible for this customer to use PDF characterization vehicle test chips, DFM software and Exensio Analytics to optimize its PD case and foundry interface for a broad range of chip designs. Second, and consistent with recent history, the largest Exensio contract in the quarter was for a cloud deployment.

This contract was for one of our first cloud renewals as the customer was one of the early adopters of Exensio Cloud in 2019. The renewal grew ARR from this customer well over 50% as they took advantage of tiered storage and expanded usage.

There were other Exensio Cloud contracts in the quarter as well as contracts for Exensio Process Control and test modules. These were at both new and existing customers. Third, we continue to experience strong customer adoption of our SDKs for Cimetrix's connectivity products.

And while impacted by supply chain, still strong shipments of runtime licenses on an absolute basis. We ended the quarter with record runtime license backlog, which speaks to our customers' challenges in making equipment shipments, but also gives us confidence in the future contribution from onetime licenses.

Finally, collaboration with -- collaborating with other industry leaders continues to be an important par of our business. As we discussed last quarter, we announced our partnership with Siemens EDA to link Exensio with Tessent diagnostic products. Our first webinar in Q1 was highly attended, and the follow-up customer interest is high.

In April, we announced a collaboration with Kulicke & Soffa to link Exensio with their assembly manufacturing equipment. This partnership builds on our existing OEM relationship, where K&S includes our Exensio analytics for assembly operations to enable traceability.

Like our Siemens collaboration, this expanded engagement starts off with an early customer access program. Our relationships with Advantest, Siemens and K&S all speak to our customers' desire to add more analytics to the back-end assembly and test.

This is particularly true for chip and system companies, employing system in package processes to implement 2.5D and 3D chip systems. Advantest's Voice User Conference is coming up next week, and we anticipate announcing new products as a result of our continued collaboration in conjunction with this conference.

IBM, SiView's user group conferences also soon, and we'll be working with IBM to outline our collaboration for SiView customers. Overall, customer and partner activities in the first quarter were strong and consistent with our expectations entering the year.

Now 1 quarter into 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 cross-section of customers.

Given the industry tailwinds I just summarized and in spite of the macroeconomic uncertainty, we remain confident in the outlook we provided earlier this year. Before I turn the call over to Adnan, I would like to thank all of the PDF employees and contractors for their efforts during the first quarter.

We managed to work in tight concert, navigating many of the challenges to have the strongest revenue quarter in the history of the company.

Now I'll turn the call over to Adnan who will review the financials and provide his perspective on the business Adnan?.

Thank you, John. Good afternoon, everyone. Good to speak with you again today, and I hope all of you and your families are doing well. We're pleased to review the financial results of the first quarter of 2022. As mentioned, our earnings release and unaudited report are posted in the Invest Relations section of our website.

Our Form 10-Q was also filed with SEC today. Please note that all of the financial results we discuss in today's call are on a non-GAAP basis, and a reconciliation to GAAP financials is provided in the materials on our website. We are off to a strong start in 2022.

Total revenues for the first quarter came in at $33.5 million, up 38% over last year's first quarter and up 12% versus the prior quarter of Q4 2021. Analytics revenue came in at $30.4 million, an increase of 57% year-over-year and 12% quarter-over-quarter.

The increase versus prior quarter was driven primarily by the start of a new leading-edge booking, which John spoke about and increased Exensio software license sales. Analytics represented 91% of total Q1 revenues.

For the quarter, Integrated Yield Ramp revenue was $3.1 million, a year-over-year decrease versus $4.8 million and a quarter-over-quarter increase versus $2.6 million. This quarter-over-quarter improvement was primarily due to higher wafer volumes driving gain share.

We believe that our transition to a leading analytics provider to the global semiconductor supply chain is progressing well and is widely recognized within the industry.

John also spoke about the progress of our ongoing and future plans for collaborations via insurance with Advantest, Siemens, Kulicke & Soffa and IBM, all important influential leaders in our industry. We're pleased that non-GAAP gross margin for the first quarter came in at 69% versus 61% year-over-year and 65% quarter-over-quarter.

We improved our margins as we started to reap the benefits of scale in our cloud business, allowing us more efficient cloud spend and the ability to apply application engineering resources to presales and product management rather than customer support.

We also benefited from increased perpetual software license sales during the quarter, both of which together contributed to getting closer to our 70% long-term gross margin target. Bookings for the quarter increased more than 90%, and our backlog at the end of the quarter grew to a healthy $196.8 million.

Non-GAAP net income for the quarter totaled $3.7 million or $0.09 per share versus a non-GAAP net loss of $1.9 million or $0.05 per share loss in the year ago period, year-over-year increase of $0.14 per share. Turning to the balance sheet. We have carefully managed our cash position and carry 0 debt.

In Q1 '22, we purchased approximately $5.8 million worth of shares. After the conclusion of the quarter, we purchased an additional $16.7 million worth of shares in a privately negotiated transaction when a block of approximately 715,000 shares became available.

The total number of shares purchased this year totaled 933,458 at an average price of $24.07 per share for a total year-to-date buybacks of $22.5 million. Our latest share count of 36.9 million shares as of May 6, 2022, as noted on the cover of our 10-Q, is now lower than the number of shares outstanding when we filed our Form 10-K for the year 2020.

As we look to the next quarter and the rest of the year, we expect to increase cost in Q2 as we wrap investment again to continue delivering on the increased interest in our products and solutions. We expect Q2 total revenue to be similar to Q1 levels.

And for the full year 2022, we expect total revenue growth to be between 20% to 25% on a year-over-year basis. All in all, it was a solid first quarter. We are pleased with the organic growth of our Analytics business and are making good progress to meet or exceed our target model gross margin of 70%.

With that, let me turn the call over to the operator for Q&A.

Operator?.

[Operator Instructions]. Your first question is from Christian Schwab from Craig-Hallum..

This is Tyler on behalf of Christian. So first, I guess I wanted to ask the announcement of the partnership with Kulicke & Soffa during the quarter. That's multiple back-end customers we're partnering with now.

I was wondering, is that what we should expect going forward, more back-end equipment partnerships? Or how do you feel about the possibility of partnerships more on the front end?.

Yes. Sure, Tyler. This is John. We do see we are engaged with customers on the front end as well. There's just -- the back end was something where there was very little analytics historically and very simple processes. Complexity has gone up.

The desire to have more automation and more analytics, we hear across our customers that are doing analog and sensor systems to the most complex computer systems chips. So we see a lot of opportunity there. There's a lot of needs. So probably it's more balanced at the back end on the front end, but we do have front-end customers moving also..

That sounds great. And then maybe a little bit on the model, the gross margin is obviously really strong in Q1. That's great to see.

It sounded like I just want to confirm, I guess, that there wasn't anything onetime in nature in that? And would it be fair to expect that kind of 69% to go forward as you trend towards the 70% target?.

Yes, I think that's fair. We've become increasingly confident in the way we've been able to manage our business, getting comfortable with the scale we're achieving and also what we're seeing in the outlook for the rest of the year.

I think you can picked that up also in our comments that we expect the revenue to be 20% to 25%, which is a little bit of a more positive change compared to the last earnings release as well..

[Operator Instructions]. Your next question is from Tom Diffely from D.A. Davidson..

Let me a question or two questions. So I guess on the collaborations with Advantest, Kulicke, Siemens, IBM.

John, maybe just talk a little bit about what is your investment going into those collaborations? What are your projected time lines before they drive your end market revenue and just kind of how you view those collectively?.

Sure. Yes. I mean I think we're learning as we go, Tom. For sure, they take a few quarters at least. I mean, generally before we announced them, we've been working on them for quite a while.

In the case of K&S for over a year on early analysis and prototypes of Exensio modules to take advantage of their data, leveraging, our traceability, looking for what kinds of things machine learning can pick up on manufacturing. So by the time you folks see them, there's already been a good solid year of investment, typically sometimes longer.

And then we -- as I said in the prepared remarks, we look to do early access to our programs. They may have some small amount of revenue associated with them. They're really the revenues mostly to make sure we've got some level of commitment on the part of the customers are deploying.

And then those will take some months to quarters, and then they start kicking in revenue. If you look at Advantest, it was about 9 months after the contract was announced when we started getting revenue above the minimum level there, and we expect similar maybe sometimes 6 months, but in that range..

Okay.

And are these contracts that these 4-plus companies are going to have with their customers and you'll get a percentage of that? Or how do you think the contracts will be ultimately structured?.

Yes, that's -- again, something that's a work in progress, Tom. So some of them are sell-through as customers want to sell to the customer that they want to -- our partner wants to sell to the customer directly and manage the contracting.

We've done that with Advantest and have been specific customer situations when IBM has been the front and they've done the selling and then the contract between them and the customer for a bundle of Exensio and their software systems and then they pass through to us certain amounts of revenue.

There are also ones where we are in these early access programs, each selling our part. And then as we see the pattern that develops through those Early Access programs, each selling our part.

And then we see the pattern that develops through those early access programs, we may choose to continue to sell separately and just have a connectors or choose to leverage the channel. One of our interests, of course, is to leverage our partners' channels.

As you know, because of PDF's history, we've never built out a very, very large selling channel, yet we think there's an awful lot of latent interest in our platform. So we like to leverage their channel as much as possible, and sometimes that does mean having them have the direct relationship with the customer..

Okay. Great. That's helpful.

And then, Adnan, when you look at the cost of these programs, is there any dramatic change to your cost structure once they start, and once they start to produce revenue in the sense that are there certain costs that like nonrecurring engineering costs that get lumped into the later date?.

No. I mean the perspective you take on all these engagements is like John said, right, either their incremental revenue contribution that we're getting from the revenue that they're getting or it's revenue directly to us. But in all those cases, we want these to be positive marginal contribution.

So nothing that would tend to make our model ahead in a regressive direction. We feel pretty good about some of the engagements. And frankly, some of these have also been yielding results and are already part of our results over the past couple of periods. So we feel pretty good about these engagements..

Okay.

And then, John, just finally, maybe a little update on the progress on the DFI tool in the field?.

Yes. We feel very good about that. In full manufacturing running now basically tens of wafers a week, we don't get time on it to do any R&D-related work or set up of -- so it's, I think, moving along quite well.

We -- at the SPIE conference, some semiconductor engineers that had firsthand experience with the capabilities we're presenting on keynotes and talked about what they saw in the machine and what it was capable of doing in the overall approach, and we were really pleased with the comments made in the public setting..

Great. And then do you think this is essentially augmenting, I guess, call it, the optical inspection work? And are they working closely together? Or is just one set up to replace it ultimately at....

I think it's generally, the devices have gotten many, many years ago, we involved in this whole thing was a focus on the things you can't see. I think one of the technology leaders from NVIDIA, when he spoke at our user conference that, expect the invisible.

If you look at the early applications, it's a lot to look at open contacts and vias, which you can't see optically because the surface of the wafer looks great. The machine's [indiscernible] is scanning billions of those per hour.

And when you look at a complex chip, even a 50 square millimeter chip, there's so many billions of those features on a chip that you need to have visibility to 5 billion or 10 billion minimum per wafer just see if you're at your target yields.

So we feel we have the only ability to see opens on an in-line inspection case that's very much dependent on all the analysis system does on the design. Database as a software, our DFM software for that. And then all the analysis on the back end with Exensio to look for the trends and the layout features that are there.

So I think it's quite complementary to optical inspection. And our industry for decades has had a problem of not being able to see open now that we're trying to do more and more with 3D open across layers is an increasingly important problem. So we feel like the DFI program is skating to where the puck is going in terms of inspection problems..

Your next question is from Gus Richard from Northland..

Nice Quarter. Just on the top line, 90% is now the analytics business, which I would imagine is pretty predictable.

Can you give me a sense of how much of your guidance between '20 and '25 is sort of already in backlog, if you will?.

Yes. The color we give on our backlog that we put in our 10-Q as well, consistent with the last 2 quarters of this backlog more than half is within the next 2 years. I think within that, it's also fair to say that the majority of that happens within this next year. Look, we're starting to get increasingly confident every year.

We don't break out the specifics, but I will tell you in our internal board decks over the last 2 years, we've been putting every year as part of our annual operating plan, what percentage of next year is booking for. And I can tell you that percentage has been going higher.

So it's all a function of having this recurring revenue across a variety of streams of our business. We keep working on other areas.

Today, for example, on the Cimetrix side that are run time to also explore how to make those recurring as well, and parts of that are headed there, but again, very small and lots of opportunity, but increased confidence..

Yes. From a product standpoint side, the Exensio and the leading-edge stuff, Gus, is all ratable, right? There's some perpetual licenses on the Exensio side, but it's, in any given quarter, it's under 10% of the analytics revenue.

The piece that we're still working on I think the runtime licenses on Cimetrix's comes down to when customers ship, as I said in my prepared remarks, we had anticipated them shipping a little bit more this quarter than they actually shipped.

We saw our backlog go up to records, I mean, really super level, which gives us some predictability about run-time licenses over the next couple of quarters. But we're still learning that piece of the business, Gus. In that piece, it's kind of a shadow backlog.

We know they're going to ship something, but we don't really know each quarter how much it's going to be..

Okay. That was super helpful. And then R&D came in a lot higher than I thought, and gross margin came in a lot higher than I thought depending on what an engineer is doing, they're either allocated to COGS or R&D? Was there a little bit of that in the quarter? Do we think about R&D at this run rate? Or is that going to go up a little bit more..

Yes. So a couple of comments, right? One that I think Tyler already asked. So we feel pretty good about our gross margin targets going forward. So that should be a proving point about how we're feeling about the cost and the management of cost.

Second, specifically within the quarter, look, it's also that time of the year starting with Q1 where we start to accrue some personnel-related bonuses and things like that. So that's part of the reason why you're seeing a little bit of a jump as well.

Most of our jump was related to some of these accruals and some onetime things related to the headcount. But overall, on the R&D as a percentage of margin and our gross margin target is feeling pretty good about the rest of the year where we are..

Very helpful..

A little bit of color on that question. Yes, just a lot of the improvements as the first -- when we first get Exensio on the cloud, we didn't take advantage of a lot of the features that were in the cloud systems themselves.

As I talked about tiered storage in our prepared remarks, we're taking advantage of features that are available on the hardware on the call that our on-premise customers just don't have.

So now we're able to go back and say to customers, well, why manage backups, backup cost you a lot of money, and it's a pain and you never can find them when you need them. And the engineers always go back and ask for them when you have a field return.

We now offer a feature called tiered storage and Exensio, and we're offering another tier this year, where they can effectively just let the software manage pushed the data to colder and colder and cheaper storage.

To the engineer, it still looks like an SQL query, so he never has to go -- or she has to go and ask IT for getting an RMA off the backup tape. It's always there. But it's from a cost standpoint, extremely cost effective for the customer.

And these are ways we're improving the margin on the Exensio cloud deployments by giving customers more features that let them manage their total cost of doing analytics lower while growing what they spend with us. And that's why that ARR was up so much on that kind of features like that. And you'll see us do more and more of those things..

Got it. Got it. All right. Very helpful. And then I think my last one is the quick-start contract expanded to a full-blown contract, and you're talking about helping your customer develop PDKs. And I'm just wondering if you could talk a little bit more about that. I don't believe I've ever heard you work in that arena before.

And just kind of wondering what it is you're doing for the customer and sort of how you're helping them along with their customer enablement..

Yes. So with any of these technologies at the leading-edge, the interaction between Foundation IP, the modeling support, all needs to be validated with Silicon across a very, very broad layout usage.

Nowadays, you can say this is your design role, but that design win will behave differently in different density environments with different neighborhood environments. And as you know, we've always had the highest density of information per unit time and per unit area in the industry.

We feel when you look at what you can get off of PDF systems and just the analytics that we provide onetime when an engineer was asked by an executive what's the difference with PDF. It's like, wow, we test maybe 30% of those test chips that we design, and we analyze 30% of that.

So we're looking at 10% of our data, the PDF systems we look at all of it, right? And so that exhaustiveness is really important as you try to go from supporting a very narrow set of IP to supporting a very broad set of designs and IP as you broaden out the number of designs that are going into a leading-edge technology, which typically happens as you look at moving away from a single product family to multiple product families are opening up factory availability.

So that capability has always been there, and it was effectively given away as part of gain share to us. And as we've unbundled the -- what was the gain share, we have been able to create a series of applications that we're able to license on a subscription. So it was embedded in the -- it was like, well, we're on the hook for hitting a yield target.

So we gave away a lot of that stuff to help the customer at the yield target. And in hindsight, probably we under capital, or under monetize it. Now we can sell it directly to the organization -- part of the organization that wants that benefit and charge for it separately and deliver, therefore, additional capability over time with that application..

Okay. I understand what you're doing. And does this -- is this capability per node? Is it a time-based licensing you can use it anywhere you want. How....

It's a time-based license, I mean it's a subscription across node or a family of notes depending on where the contract is structured. It comes with a set of vehicles set of Exensio Cloud, analytics and part of that is additional vehicles.

So as they bring on new products, new product families, sometimes associated with third-party customers that are able to use the vehicles in conjunction with those IP families. So it's really around that design manufacturing interface..

Got it. And if they need additional CDs, is that incremental charge for them? Or is....

There's incremental charges on top of a base level. There is an assumption associated with MPWs for a certain amount of customers that are coming into the product to a technology node and then there's upcharges if they want to use more than that as it's designed..

Got it. Got it.

And then if you can help me out, is this as the size of an old IYR contract? Or is it smaller? Can you size it relative to prior opportunities or business models?.

Yes. These contracts tend to be in the -- as you can see from our announcements, the quick-start was in the single-digit million range. These tend to be in the double-digit millions range recognized over a couple of years. So they're relatively sizable.

Obviously, what we want to do is extend the subscription period because -- and make sure that the system is adding value over a longer time period. The renewal -- how these renew is going to be very important for us to watch in, the more we see these renew the happier will be, we're in the early innings on this..

[Operator Instructions]. Your next question is from Blair Abernethy from Rosenblatt Securities..

Thanks. Nice quarter, guys..

Thank you..

Just a couple of follow-ups here. John, I just wonder maybe on the DFI, I guess, 2 things really.

One is, are you seeing any or experiencing any supply chain issues with components going into your end of the product that may be slowing or delaying you in any way now or near term? And just in terms of the backlog, the growth -- the sequential growth of 10% is very healthy.

Is that all really Exensio driving that? Or is DFI part of that as well? Just kind of wanted to get some color into that backlog growth..

Sure. So first to answer your question on supply chain. For sure, when we do go and order things, we've had some customers even on computers who wanted to deploy Exensio process control on-premise, and they've asked us to purchase the computing configure for Exensio.

And we found the lead times for everything to, of course, be up like everybody else is. And there's always abilities to buy your way to the front of the line in many cases. So there are always ways to ameliorate those concerns should you need to.

We feel very good about our availability of what we need on the DFI eProbe program for the remainder of this year. Certainly, embedded in our expectations for the remainder of this year, as Adnan said 20% to 25% growth. It is not gated by an availability of any single -- any part for anything. So we don't see that as being really a factor for us.

And if you keep on extending shortage and unavailability of components out over a multiyear time period, yes, it would affect it could impact us. But for the remainder of this year, that will not be a limiter on our business that we see.

And greatly for our cloud customers and one of the things I always like pointing out to customers when they're considering putting Exensio on-premise or Exensio on cloud.

We can spin them up on cloud tomorrow, right? If they want us to order equipment and ship it on-premise, it could be 6, 8, 12 weeks, right? So availability on cloud is always much more immediate. And for the DFI programs, we've got enough capacity for what we need to do for the remainder of this year. I think that's the answer on the supply chain.

I think I'll turn it over to Adnan for the second question you asked..

Yes. I think on the second question, look, I mean, if you look within the analytics business, again, as others have pointed out, 90% plus of revenue. And we feel pretty good. I mean within that, when we look at the 3 components that John also talked about, right, the Exensio piece, the leading-edge pieces or the CCG piece.

We track progress of each one of them within our businesses. And we're pretty pleased with how they did quarter-over-quarter and obviously, year-over-year as well. Then in terms of a booking color, which you asked about as well, yes, when we do sign these larger deals, leading-edge deals will contribute to the total booking growth, of course.

But at the same time, we're also pleased with the booking that we saw in the Exensio business and then as well as the CCG business. I'll give you 2 colors, right, john already talked about the leading edge. But with an Exensio, it's the type and the quality of the booking that we're starting to focus much more on.

The comment that John made about the ARR growth for that customer that came up for renewal of greater than 50% ARR, that's precisely the kind of thing we like to drive.

In the CCG business, yes, it is mostly perpetual and we book and we ship, but what's important is how much more booking there is that we weren't able to ship or might be for booking in the future. So the backlog even for that business starting to reach very strong levels is another positive indicator. So all in all, tool pretty good.

Of course, focusing on making sure that we continue to deliver growth from all the 3 components of analytics..

Okay. Great. And just shifting to your -- I mean, margins, gross margins were solid this quarter.

As you look at Adnan, as you look at some of these partnerships that you're supporting, you're taking on versus your R&D, internal R&D spend, how are you looking at capital allocation, if you will, or you have limited resources, so how are you sort of deciding where you're going to spend this year? And what's sort of your hiring outlook for the rest of this year?.

Yes. Good question. So look, I mean, part of the reason as I think it was us who was asking about head count spend increases as well, particularly on the R&D side. So -- and also in the total OpEx side. If you look at it, it's really some of the head count hiring we did.

So we actually were surprised that we were able to add head count higher than what we were even thinking. So we were able to kind of get some of the hiring done faster than what we've thought, which in this environment, we're pretty happy about. So that's part of what drove the R&D increase.

Second piece is when the business is doing strong, obviously, with the sales, there's going to be sales bonuses and commissions. So that was the second piece there. And the third piece is what I alluded to earlier in terms of this time of the year start to [indiscernible] of the bonuses.

So in terms of capital allocation for the new business look, we think of them in 2 ways, either is it a business that's going to contribute to us revenue coming through that partner or it's going to be a new deal. In both of those cases, we look at it like we do for other deals on a deal-by-deal basis to see what resources we have.

And sometimes we'll get contractors. We obviously use a meaningful number today, and we expand our contract that elastic need with the needs of our business. So we will continue to manage that. The goal is going to be making sure that we deliver on the margins and incrementally improve from where we are..

All right. I'm showing no further questions at this time. I would now like to turn the call back to CEO of PDF Solutions, Mr. John Kibarian for closing comments..

Thank you for participating in our Q1 call. We look forward to talking with you again soon. Have a great day..

Ladies and gentlemen, this does conclude PDF Solutions first quarter conference call. Thank you for participating. You may now disconnect..