0001558370-22-013302 | 10-Q | XBRL Viewer

Note 3 - STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2022

STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

3. STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

On July 29, 2020, the Company entered into a long-term strategic partnership with Advantest Corporation through its wholly-owned subsidiary, Advantest America, Inc. (collectively referred to herein as “Advantest”) that included the following agreements.

●

A Securities Purchase Agreement for the purchase by Advantest of an aggregate of 3,306,924 shares of the Company’s common stock for aggregate gross proceeds of $65.2 million and a related Stockholder Agreement.

●

An Amendment #1 to that certain Software License and Related Services Agreement, dated as of March 25, 2020, for an exclusive commercial arrangement in which the Company and Advantest collaborate on, and the Company initially hosts, develops and maintains, an Advantest-specific cloud layer on the Exensio platform.

●

An Amended and Restated Master Development Agreement with Advantest, pursuant to which the Company and Advantest agreed to collaborate on extensions to or combinations of both of their existing technology and new technology to address mutual customers’ needs through one or more development phases subject to certain conditions as set forth therein. Costs and expenses incurred related to this agreement have not been significant for the three and six months ended June 30, 2022 and 2021.

●

A Master Commercial Terms and Support Services Agreement for the commercialization and support of integrated products of the Company and Advantest that are the outcome of the above development agreement. No material costs and expenses were incurred related to the Commercial Agreement with Advantest during the three and six months ended June 30, 2022 and 2021.

Analytics revenue recognized from Advantest was $2.6 million and $5.3 million during the three and six months ended June 30, 2022, respectively, compared to $2.6 million and $5.2 million during the three and six months ended June 30, 2021, respectively. There were no outstanding accounts receivable from Advantest as of June 30, 2022, and December 31, 2021, and deferred revenue amounted to $1.6 million and $6.8 million as of June 30, 2022 and December 31, 2021, respectively. There was no occurrence of any termination events under these agreements as of the issuance of these condensed consolidated financial statements.

The Company carries out transactions with Advantest on arm’s length commercial customary terms.

Note 11 - FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2022

FAIR VALUE MEASUREMENTS

11. FAIR VALUE MEASUREMENTS

Fair value is the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The multiple assumptions used to value financial instruments are referred to as inputs, and a hierarchy for inputs used in measuring fair value is established, that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. These inputs are ranked according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.


Level 1 -	Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 -	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 -	Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table represents the Company’s assets measured at fair value on a recurring basis as of June 30, 2022, and December 31, 2021, and the basis for those measurements (in thousands):


	Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other
			Identical		Observable		Significant
	June 30,		Assets		Inputs		Unobservable
Assets	2022		(Level 1)		(Level 2)		Inputs (Level 3)
Cash equivalents
Money market mutual funds	$	65,020	$	65,020	$	—	$	—
Short-term investments (available-for-sale debt securities)
U.S. Government securities (1)		35,907		35,907		—		—
Total	$	100,927	$	100,927	$	—	$	—


	Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
Assets	2021		(Level 1)		(Level 2)		(Level 3)
Cash equivalents
Money market mutual funds	$	12,474	$	12,474	$	—	$	—
Short-term investments (available-for-sale debt securities)
U.S. Government securities (1)		112,542		112,542		—		—
Total	$	125,016	$	125,016	$	—	$	—

(1)

As of June 30, 2022, and December 31, 2021, the amortized cost of the Company’s investments in U.S Government Securities approximated their fair value due to their short-term maturities, and there have been no events or changes in circumstances that would have had a significant effect on the fair value of these securities in the periods presented. There was no material realized or unrealized gains or losses, either individually or in the aggregate.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Note 9 - NET LOSS PER SHARE - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Anti-dilutive securities (in shares)	774	1,165	937	1,253
Share-based Payment Arrangement, Option [Member]
Anti-dilutive securities (in shares)	45	194	73	209
Restricted Stock Units (RSUs) [Member]
Anti-dilutive securities (in shares)	684	970	795	1,038
Employee Stock Purchase Plan [Member]
Anti-dilutive securities (in shares)	45	1	69	6

Note 9 - NET LOSS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(1,147)	$	(4,484)	$	(5,297)	$	(12,081)
Denominator:
Basic weighted-average shares outstanding		37,028		37,004		37,316		36,989
Effect of dilutive options and restricted stock units		—		—		—		—
Diluted weighted-average shares outstanding		37,028		37,004		37,316		36,989

Net loss per share, basic and diluted	$	(0.03)	$	(0.12)	$	(0.14)	$	(0.33)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table sets forth potential shares of common stock that were not included in the diluted net loss per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Outstanding options	45	194	73	209
Nonvested restricted stock units	684	970	795	1,038
Employee Stock Purchase Plan	45	1	69	6
Total	774	1,165	937	1,253

Note 2 - REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Percent of revenues	100.00%	100.00%	100.00%	100.00%
Transferred over Time [Member]
Percent of revenues	74.00%	57.00%	72.00%	54.00%
Transferred at Point in Time [Member]
Percent of revenues	26.00%	43.00%	28.00%	46.00%

Note 7 - EMPLOYEE BENEFIT PLANS - Nonvested Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Nonvested, Opening Balance (in shares) \| shares	1,872
Granted (in shares) \| shares	331
Vested (in shares) \| shares	(462)
Forfeited (in shares) \| shares	(56)
Nonvested, Ending Balance (in shares) \| shares	1,685
Nonvested, weighted average grant date fair value (in dollars per share) \| $ / shares	$ 18.24
Granted, weighted average grant date fair value (in dollars per share) \| $ / shares	27.24
Vested, weighted average grant date fair value (in dollars per share) \| $ / shares	17.94
Forfeited, weighted average grant date fair value (in dollars per share) \| $ / shares	19.38
Nonvested, weighted average grant date fair value (in dollars per share) \| $ / shares	$ 20.05

Note 2 - REVENUE FROM CONTACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2022

REVENUE FROM CONTRACTS WITH CUSTOMERS

2. REVENUE FROM CONTRACT WITH CUSTOMERS

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company derives revenue from two sources: Analytics revenue and Integrated Yield Ramp revenue.

The Company recognizes revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC 606”). ASC 606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. Revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services.

The Company determines revenue recognition through the following five steps:

●

Identification of the contract, or contracts, with a customer

●

Identification of the performance obligations in the contract

●

Determination of the transaction price

●

Allocation of the transaction price to the performance obligations in the contract

●

Recognition of revenue when, or as, performance obligations are satisfied

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

Contracts with multiple performance obligations

The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price (“SSP”).

Analytics Revenue

Analytics revenue is derived from the following primary offerings: licenses and services for standalone software (which is primarily Exensio^® and Cimetrix^® products), software-as-a-service (“SaaS”) (which is primarily Exensio^® products), and DFI™ systems and CV^® systems that do not include performance incentives based on customers’ yield achievement.

Revenue from standalone software is recognized depending on whether the license is perpetual or time-based. Perpetual (one-time charge) license software is recognized at the time of the inception of the arrangement when control transfers to the customers, if the software license is considered as a separate performance obligation from the services offered by the Company. Revenue from post-contract support is recognized over the contract term on a straight-line basis, because we are providing (i) support and (ii) unspecified software updates on a when-and-if available basis over the contract term. Revenue from time-based-licensed software is allocated to each performance obligation and is recognized either at a point in time or over time as follows. The license component is recognized at the time when control transfers to customers, with the post-contract support component recognized ratably over the committed term of the contract. For contracts with any combination of licenses, support, and other services, distinct performance obligations are accounted for separately. For contracts with multiple performance obligations, we allocate the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation.

Revenue from SaaS arrangements, which allow for the use of a cloud-based software product or service over a contractually determined period of time without the customer having to take possession of software, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers. For contracts with any combination of SaaS and related services, distinct performance obligations are accounted for separately. For contracts with multiple performance obligations, we allocate the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation.

Revenue from DFI systems and CV systems that do not include performance incentives based on customers’ yield achievement is recognized primarily as services are performed. Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs. For those contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation. Where there are not discrete performance obligations, historically, revenue is primarily recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract. The estimation of percentage of completion method is complex and subject to many variables that require significant judgement. Please refer to the “Significant Judgments” section of this Note for further discussion.

Integrated Yield Ramp Revenue

Integrated Yield Ramp revenue is derived from the Company’s fixed-fee engagements that include performance incentives based on customers’ yield achievement (which consists primarily of Gainshare royalties) typically based on customer’s wafer shipments, pertaining to these fixed-price contracts, which royalties are variable.

Revenue under these project–based contracts, which are delivered over a specific period of time, typically for a fixed fee component paid on a set schedule, is recognized as services are performed using a percentage of completion method based on costs or labor-inputs, whichever is the most appropriate measure of the progress towards completion of the contract. Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs and allocates the transaction price of the contract to each performance obligation on a relative basis using SSP. Similar to the services

provided in connection with DFI systems and CV systems that are contributing to Analytics revenue, due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex and subject to many variables that require significant judgment. Please refer to the “Significant Judgments” section of this Note for further discussion.

The Gainshare royalty contained in Integrated Yield Ramp contracts is a variable fee related to continued usage of the Company’s intellectual property after the fixed-fee service period ends, based on a customer’s yield achievement. Revenue derived from Gainshare is contingent upon the Company’s customers reaching certain defined production yield levels. Gainshare royalty periods are generally subsequent to the delivery of all contractual services and performance obligations. The Company records Gainshare as a usage-based royalty derived from customers’ usage of intellectual property and records it in the same period in which the usage occurs.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into the timing of the transfer of goods and services and the geographical regions. The Company determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s performance obligations are satisfied either over time or at a point-in-time. The following table represents a disaggregation of revenue percentage by timing of revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Over time	74		57	%	72	%	54	%
Point-in-time	26		43	%	28	%	46	%
Total	100	%	100	%	100	%	100	%

International revenues accounted for approximately 51% and 49% of our total revenues during the three and six months ended June 30, 2022, respectively, compared to 56% and 60% of our total revenues during the three and six months ended June 30, 2021, respectively. See Note 10, Customer and Geographic Information.

Significant Judgments

Judgments and estimates are required under ASC 606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under ASC 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances.

For revenue under project-based contracts for fixed-price implementation services, revenue is recognized as services are performed using a percentage-of-completion method based on costs or labor-hours input method, whichever is the most appropriate measure of the progress towards completion of the contract. Due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex, subject to many variables and requires significant judgment. Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known.

The Company’s contracts with customers often include promises to transfer products, licenses software and provide services, including professional services, technical support services, and rights to unspecified updates to a customer. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment. The Company rarely licenses software on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where SSP is not directly observable because the Company does not license the software or sell the service separately, the Company determines the SSP using information that may include market conditions and other observable inputs.

The Company is required to record Gainshare royalty revenue in the same period in which the usage occurs. Because the Company generally does not receive the acknowledgment reports from its customers during a given quarter within the time frame necessary to adequately review the reports and include the actual amounts in quarterly results for such quarter, the Company accrues the related revenue based on estimates of customers underlying sales achievement. The Company’s estimation process can be based on historical data, trends, seasonality, changes in the contract rate, knowledge of the changes in the industry and changes in the customer’s manufacturing environment learned through discussions with customers and sales personnel. As a result of accruing revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true-up revenue to the actual amounts reported.

Contract Balances

The Company performs its obligations under a contract with a customer by licensing software or providing services in exchange for consideration from the customer. The timing of the Company’s performance often differs from the timing of the customer’s payment, which results in the recognition of a receivable, a contract asset or a contract liability.

The Company classifies the right to consideration in exchange for software or services transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional, as compared to a contract asset, which is a right to consideration that is conditional upon factors other than the passage of time. The majority of the Company’s contract assets represent unbilled amounts related to fixed-price service contracts when the revenue recognized exceeds the amount billed to the customer. The contract assets are generally classified as current and are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level. At June 30, 2022 and December 31, 2021, the total contract assets included in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets were $2.8 million and $0.4 million, respectively. The Company did not record any asset impairment charges related to contract assets for the periods presented.

Deferred revenues and billings in excess of recognized revenues consist substantially of amounts invoiced in advance of revenue recognition and are recognized as the revenue recognition criteria are met. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues and the remaining portion is recorded as non-current deferred revenues in the Condensed Consolidated Balance Sheets. Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each reporting period was $7.2 million and $6.5 million during the three months ended June 30, 2022 and 2021, respectively, and $11.8 million and $10.5 million during the six months ended June 30, 2022 and 2021, respectively.

At June 30, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $184.4 million. Given the applicable contract terms with customers, the majority of this amount is expected to be recognized as revenue over the next two years, with the remainder in the following three years. This amount does not include insignificant contracts to which the customer is not committed, nor significant contracts for which we recognize revenue equal to the amount we have the right to invoice for services performed, or future sales-based or usage-based royalty payments in exchange for a license of intellectual property. This amount is subject to change due to future revaluations of variable consideration, terminations, other contract modifications, or currency adjustments. The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was an increase of $0.5 million and a decrease $0.4 million during the three months ended June 30, 2022 and 2021, respectively, and an increase of $0.5 million and an increase of $0.1 million during the six months ended June 30, 2022 and 2021, respectively. These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare royalty.

Costs to obtain or fulfill a contract

The Company capitalizes the incremental costs to obtain or fulfill a contract with a customer, including direct sales commissions and related fees, when it expects to recover those costs. Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred. Total capitalized direct sales commission costs included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2022, and December 31, 2021, were $1.1 million and $0.6 million, respectively. Total capitalized direct sales commission costs included in other non-current assets in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2022, and December 31, 2021, were $1.8 million and $2.1 million, respectively. Amortization of these assets were $0.6 million and $0.2 million during the three months ended June 30, 2022 and 2021, respectively, and $0.8 million and $0.3 million during the six months ended June 30, 2022 and 2021, respectively. There was no impairment loss in relation to the costs capitalized for the periods presented.

Practical expedient

The Company does not adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less. The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component during the three and six months ended June 30, 2022 and 2021.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Note 10 - CUSTOMER AND GEOGRAPHIC INFORMATION (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Revenue by Major Customers by Reporting Segments

The Company had revenues from individual customers that are approximately 10% or more of the Company’s consolidated total revenues as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Customer	2022		2021		2022		2021
A	*	%	15	%	*	%	14	%
D	29	%	*	%	31	%	10	%

* represents less than 10%

Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance as follows:


	June 30,		December 31,
Customer	2022		2021
C	*	%	15	%
D	43	%	29	%

* represents less than 10%

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

Revenues from customers by geographic area based on the location of the customers’ work sites are as follows (amounts in thousands):


	Three Months Ended June 30,
	2022				2021
			Percentage				Percentage
	Revenues		of Revenues		Revenues		of Revenues
United States	$	17,086	49	%	$	12,095	44	%
China		4,539	13			4,289	16
Japan		2,794	8			2,450	9
Rest of the world		10,249	30			8,585	31
Total revenue	$	34,668	100	%	$	27,419	100	%


	Six Months Ended June 30,
	2022				2021
			Percentage				Percentage
	Revenues		of Revenues		Revenues		of Revenues
United States	$	34,577	51	%	$	20,651	40	%
China		8,659	13			6,028	12
Japan		5,401	8			6,028	12
Rest of the world		19,529	28			18,912	36
Total revenue	$	68,166	100	%	$	51,619	100	%

Long-lived assets, net by geographic area are as follows (in thousands):


	June 30,		December 31,
	2022		2021
United States (1)	$	42,288	$	39,158
Rest of the world		1,342		1,545
Total long-lived assets, net	$	43,630	$	40,703

(1) Includes assets deployed at customer sites which could be outside the U.S.

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country


	Six Months Ended June 30,
	2022				2021
			Percentage				Percentage
	Revenues		of Revenues		Revenues		of Revenues
United States	$	34,577	51	%	$	20,651	40	%
China		8,659	13			6,028	12
Japan		5,401	8			6,028	12
Rest of the world		19,529	28			18,912	36
Total revenue	$	68,166	100	%	$	51,619	100	%

Note 3 - STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jul. 29, 2020	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Revenue from Contract with Customer, Including Assessed Tax		$ 34,668	$ 27,419	$ 68,166	$ 51,619
Strategic Partnership for Joint Development and Sales Technology Solutions [Member]
Stock Issued During Period, Shares, New Issues (in shares)	3,306,924
Proceeds from Issuance of Common Stock	$ 65,200
Amendment #1 to Software License & Related Services Agreement [Member]
Revenue from Contract with Customer, Including Assessed Tax		2,600	$ 2,600	5,300	$ 5,200
Related Party Transaction, Due from (to) Related Party, Total		0		0		$ 0
Contract with Customer, Liability, Total		$ 1,600		$ 1,600		$ 6,800

- Definition

Receivables to be collected from (obligations owed to) related parties, net as of the balance sheet date where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (SX 210.4-08(k)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
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+ Details

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 41
-Subparagraph (a)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Note 4 - BALANCE SHEET COMPONENTS - Annual Amortization of Identifiable Intangible Assets (Details) $ in Thousands	Jun. 30, 2022 USD ($)
BALANCE SHEET COMPONENTS
2022 (remaining nine months)	$ 1,734
2023	3,444
2024	3,046
2025	2,882
2026	2,712
2027 and thereafter	5,687
Net Carrying Amount	$ 19,505

Note 5 - LEASES - Maturity of Operating Lease Liabilities (Details) $ in Thousands	Jun. 30, 2022 USD ($)
LEASES
2022 (remaining nine months)	$ 798
2023	1,488
2024	1,366
2025	1,258
2026	1,154
2027 and thereafter	1,701
Total future minimum lease payments	7,765
Less: Interest (2)	(997)
Present value of future minimum lease payments under operating lease liabilities (3)	$ 6,768

Note 11 - FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Fair Value, Assets Measured on Recurring Basis

The following table represents the Company’s assets measured at fair value on a recurring basis as of June 30, 2022, and December 31, 2021, and the basis for those measurements (in thousands):


	Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other
			Identical		Observable		Significant
	June 30,		Assets		Inputs		Unobservable
Assets	2022		(Level 1)		(Level 2)		Inputs (Level 3)
Cash equivalents
Money market mutual funds	$	65,020	$	65,020	$	—	$	—
Short-term investments (available-for-sale debt securities)
U.S. Government securities (1)		35,907		35,907		—		—
Total	$	100,927	$	100,927	$	—	$	—


	Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
Assets	2021		(Level 1)		(Level 2)		(Level 3)
Cash equivalents
Money market mutual funds	$	12,474	$	12,474	$	—	$	—
Short-term investments (available-for-sale debt securities)
U.S. Government securities (1)		112,542		112,542		—		—
Total	$	125,016	$	125,016	$	—	$	—

Note 7 - EMPLOYEE BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Share-based Payment Awards, Stock Options, Valuation Assumptions


	2021 Purchase Plan			2010 Purchase Plan
	Six Months Ended June 30,			Six Months Ended June 30,
	2022			2021
Expected life (in years)		1.25			1.25
Volatility		48.90	%		34.25	%
Risk-free interest rate		0.86	%		1.43	%
Expected dividend		—			—
Weighted average fair value of purchase rights granted during the period	$	10.76		$	4.83

Schedule of Share-based Payment Arrangement, Expensed and Capitalized Amounts

Stock-based compensation is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generally four years. Stock-based compensation expense before taxes related to the Company’s stock plans and employee stock purchase plans was allocated as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Costs of revenues	$	655	$	538	$	1,383	$	1,190
Research and development		1,810		1,126		4,978		2,714
Selling, general and administrative		1,407		1,078		3,064		2,207
Stock-based compensation expenses	$	3,872	$	2,742	$	9,425	$	6,111

Schedule of Share-based Payment Arrangement, Options Activity


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
	(in thousands)	per Share		(Years)	(in thousands)
Outstanding, January 1, 2022	226	$	12.78
Granted	—		—
Exercised	(87)		9.10
Canceled	(4)		13.30
Expired	(2)		8.79
Outstanding, June 30, 2022	133	$	15.19	3.80	$	848
Vested and expected to vest, June 30, 2022	133	$	15.18	3.78	$	843
Exercisable, June 30, 2022	112	$	15.16	3.22	$	714

Schedule of Share-based Payment Arrangement, Restricted Stock Unit Activity


		Weighted
		Average Grant
	Shares	Date Fair Value
	(in thousands)	Per Share
Nonvested, January 1, 2022	1,872	$	18.24
Granted	331	$	27.24
Vested	(462)	$	17.94
Forfeited	(56)	$	19.38
Nonvested, June 30, 2022	1,685	$	20.05

Note 7 - EMPLOYEE BENEFIT PLANS - Allocation of Recognized Period Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Stock-based compensation expenses	$ 3,872	$ 2,742	$ 9,425	$ 6,111
Cost of Sales [Member]
Stock-based compensation expenses	655	538	1,383	1,190
Research and Development Expense [Member]
Stock-based compensation expenses	1,810	1,126	4,978	2,714
Selling, General and Administrative Expenses [Member]
Stock-based compensation expenses	$ 1,407	$ 1,078	$ 3,064	$ 2,207

Note 7 - EMPLOYEE BENEFIT PLANS - Other (Details)				1 Months Ended	3 Months Ended		6 Months Ended		15 Months Ended	128 Months Ended
Note 7 - EMPLOYEE BENEFIT PLANS - Other (Details)	Jun. 15, 2021	Nov. 16, 2011 shares	Jul. 31, 2001	Jul. 31, 2001 item	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2021 shares	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2021 $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares	Dec. 31, 2021 shares	Dec. 31, 2001 shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Cumulative Forfeitures of Plan (in shares)							4,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance (in shares)					133,000		133,000		133,000	133,000	226,000
Share Price (in dollars per share) \| $ / shares					$ 21.51		$ 21.51		$ 21.51	$ 21.51
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value \| $							$ 1,500,000
Share-based Payment Arrangement, Option [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total \| $					$ 100,000		$ 100,000		$ 100,000	$ 100,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)							1 year 3 months 18 days
Restricted Stock Units (RSUs) [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total \| $					24,800,000		$ 24,800,000		$ 24,800,000	24,800,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)							2 years 3 months 18 days
Employee Stock Purchase Plan [Member]
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in shares)									0
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)							4 years
The 2010 Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate			10.00%	10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent			85.00%
Share-based Compensation Arrangement by Share-based Payment Award, Offering Period				24 months
Share-based Compensation Arrangement by Share-based Payment Award, Number of Purchase Period \| item				4
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in shares)							5,203	99,674
Employee Stock Purchase Plan Weighted Average Purchase Price of Shares Purchased (in dollars per share) \| $ / shares							$ 13.40	$ 9.24
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total \| $					0		$ 0		$ 0	0
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)				6 months
The 2021 Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Offering Period	24 months
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in shares)							90,040
Employee Stock Purchase Plan Weighted Average Purchase Price of Shares Purchased (in dollars per share) \| $ / shares							$ 15.90
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total \| $					$ 1,500,000		$ 1,500,000		$ 1,500,000	$ 1,500,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)							1 year 2 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)	10 years
Common Stock, Capital Shares Reserved for Future Issuance (in shares)					909,960		909,960		909,960	909,960
Twenty Eleven Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)		12,800,000
Share Based Compensation Arrangement By Share Based Payment Award Shares Reserved Decrease Rate (in shares)		1.33
Common Stock, Capital Shares Reserved for Future Issuance (in shares)					13,300,000		13,300,000		13,300,000	13,300,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)					4,500,000		4,500,000		4,500,000	4,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Cumulative Forfeitures of Plan (in shares)										500,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)					0	0	0	0
Twenty Eleven Stock Incentive Plan [Member] \| Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)		4 years
Shares Previously Issued Under the 2001 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)												3,500,000
Outside of the 2011, 2001 or IDS Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance (in shares)					0		0		0	0

Note 10 - CUSTOMER AND GEOGRAPHIC INFORMATION - Revenue Percentage by Major Customers (Details) - Customer Concentration Risk [Member]	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenue Benchmark [Member] \| Customer A [Member]
Concentration risk		15.00%			14.00%
Revenue Benchmark [Member] \| Customer D [Member]
Concentration risk	29.00%			31.00%	10.00%
Accounts Receivable [Member] \| Customer C [Member]
Concentration risk			15.00%
Accounts Receivable [Member] \| Customer D [Member]
Concentration risk			29.00%	43.00%

Note 4 - BALANCE SHEET COMPONENTS - Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Amortization Period (Year)	6 years 7 months 6 days
Gross Carrying Amount	$ 47,288	$ 47,288
Accumulated Amortization	(27,783)	(26,049)
Net Carrying Amount	19,505
Net Carrying Amount, Total	19,505	21,239
Customer Relationships [Member]
Gross Carrying Amount	9,407	9,407
Accumulated Amortization	(6,363)	(6,041)
Net Carrying Amount	$ 3,044	3,366
Customer Relationships [Member] \| Minimum [Member]
Amortization Period (Year)	1 year
Customer Relationships [Member] \| Maximum [Member]
Amortization Period (Year)	10 years
Developed Technology Rights [Member]
Gross Carrying Amount	$ 33,635	33,635
Accumulated Amortization	(18,447)	(17,250)
Net Carrying Amount	$ 15,188	16,385
Developed Technology Rights [Member] \| Minimum [Member]
Amortization Period (Year)	4 years
Developed Technology Rights [Member] \| Maximum [Member]
Amortization Period (Year)	9 years
Trademarks and Trade Names [Member]
Gross Carrying Amount	$ 1,598	1,598
Accumulated Amortization	(865)	(812)
Net Carrying Amount	$ 733	786
Trademarks and Trade Names [Member] \| Minimum [Member]
Amortization Period (Year)	2 years
Trademarks and Trade Names [Member] \| Maximum [Member]
Amortization Period (Year)	10 years
Patents [Member]
Gross Carrying Amount	$ 1,800	1,800
Accumulated Amortization	(1,660)	(1,640)
Net Carrying Amount	$ 140	160
Patents [Member] \| Minimum [Member]
Amortization Period (Year)	7 years
Patents [Member] \| Maximum [Member]
Amortization Period (Year)	10 years
Noncompete Agreements [Member]
Amortization Period (Year)	3 years
Gross Carrying Amount	$ 848	848
Accumulated Amortization	(448)	(306)
Net Carrying Amount	$ 400	$ 542

Note 9 - NET LOSS PER SHARE - Calculation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
NET LOSS PER SHARE
Net loss	$ (1,147)	$ (4,484)	$ (5,297)	$ (12,081)
Basic weighted-average shares outstanding (in shares)	37,028	37,004	37,316	36,989
Diluted weighted-average shares outstanding (in shares)	37,028	37,004	37,316	36,989
Basic (in dollars per share)	$ (0.03)	$ (0.12)	$ (0.14)	$ (0.33)
Diluted (in dollars per share)	$ (0.03)	$ (0.12)	$ (0.14)	$ (0.33)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 65
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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net loss	$ (5,297)	$ (12,081)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,773	3,345
Stock-based compensation expense	9,425	6,111
Amortization of acquired intangible assets	1,734	1,698
Amortization of costs capitalized to obtain revenue contracts	755	327
Deferred taxes	17	84
Other	20	133
Changes in operating assets and liabilities:
Accounts receivable	3,910	3,989
Prepaid expenses and other current assets	(3,208)	1,235
Operating lease right-of-use assets	1,238	740
Other non-current assets	1,002	362
Accounts payable	(3,633)	(1,723)
Accrued compensation and related benefits	1,362	(1,028)
Accrued and other liabilities	2,147	116
Deferred revenues	(4,789)	(3,514)
Billings in excess of recognized revenues	480	848
Operating lease liabilities	(1,316)	(837)
Net cash provided by (used in) operating activities	6,620	(195)
Cash flows from investing activities:
Proceeds from maturities and sales of short-term investments	112,500	109,000
Purchases of short-term investments	(35,920)	(45,992)
Purchases of property and equipment	(4,454)	(1,121)
Prepayment for the purchase of property and equipment	(133)
Net cash provided by investing activities	71,993	61,887
Cash flows from financing activities:
Proceeds from exercise of stock options	788	793
Proceeds from employee stock purchase plan	1,502	921
Payments for taxes related to net share settlement of equity awards	(4,189)	(2,350)
Repurchases of common stock	(22,471)	(4,523)
Net cash used in financing activities	(24,370)	(5,159)
Effect of exchange rate changes on cash and cash equivalents	(584)	(128)
Net change in cash, cash equivalents, and restricted cash	53,659	56,405
Cash, cash equivalents, and restricted cash at beginning of period	27,684	33,815
Cash, cash equivalents, and restricted cash at end of period	81,343	90,220
Reconciliation of cash, cash equivalents, and restricted cash to the balance sheets:
Cash and cash equivalents	81,343	87,201
Restricted cash		3,019
Total cash, cash equivalents and restricted cash	81,343	90,220
Supplemental disclosure of cash flow information:
Cash paid during the period for taxes	1,690	1,275
Cash paid for amounts included in the measurement of operating lease liabilities	795	1,076
Supplemental disclosure of noncash information:
Property and equipment received and accrued in accounts payable and accrued and other liabilities	2,466	530
Advances for purchase of fixed assets transferred from prepaid assets to property and equipment	333	963
Operating lease liabilities arising from obtaining right-of-use assets	$ 1,137
Release of restricted cash reducing goodwill due to the acquisition purchase price adjustment		$ 469

Note 12 - COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
COMMITMENTS AND CONTINGENCIES
Future Lease payments	$ 7,765
Term of Product Warranty	90 days
Purchase Obligation, Total	$ 14,000
Threshold payment period	12 months
Accrued amount	$ 0

Note 4 - BALANCE SHEET COMPONENTS (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Property, Plant and Equipment

Property and equipment, net consist of the following (in thousands):


	June 30,		December 31,
	2022		2021
Computer equipment	$	11,640	$	11,924
Software		5,391		5,419
Furniture, fixtures and equipment		2,491		2,506
Leasehold improvements		6,294		6,272
Laboratory and other equipment		4,249		3,981
Test equipment		28,204		24,452
Construction-in-progress		23,690		22,158
		81,959		76,712
Less: accumulated depreciation and amortization		(43,569)		(41,417)
Total	$	38,390	$	35,295

Schedule of Finite-Lived Intangible Assets, Net

Intangible assets, net, consisted of the following (in thousands):


		June 30, 2022						December 31, 2021
	Amortization	Gross				Net		Gross				Net
	Period	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(Years)	Amount		Amortization		Amount		Amount		Amortization		Amount
Acquired identifiable intangibles:
Customer relationships	1-10	$	9,407	$	(6,363)	$	3,044	$	9,407	$	(6,041)	$	3,366
Developed technology	4-9		33,635		(18,447)		15,188		33,635		(17,250)		16,385
Tradename and trademarks	2-10		1,598		(865)		733		1,598		(812)		786
Patent	7-10		1,800		(1,660)		140		1,800		(1,640)		160
Noncompetition agreements	3		848		(448)		400		848		(306)		542
Total		$	47,288	$	(27,783)	$	19,505	$	47,288	$	(26,049)	$	21,239

Schedule of Finite-lived Intangible Assets Amortization Expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Amortization of acquired technology included under Costs of Revenues	$	553	$	536	$	1,106	$	1,071
Amortization of acquired intangible assets presented separately under Costs and Expenses		314		313		628		627
Total amortization of acquired intangible assets	$	867	$	849	$	1,734	$	1,698

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Amortization of acquired technology included under Costs of Revenues	$	553	$	536	$	1,106	$	1,071
Amortization of acquired intangible assets presented separately under Costs and Expenses		314		313		628		627
Total amortization of acquired intangible assets	$	867	$	849	$	1,734	$	1,698

Note 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2022

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation, Policy

Basis of Presentation

The interim unaudited condensed consolidated financial statements included herein have been prepared by PDF Solutions, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments) to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions.

The condensed consolidated balance sheet at December 31, 2021, has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Use of Estimates, Policy

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for doubtful accounts, impairment of goodwill and long-lived assets, valuation for deferred tax assets, and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies. Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position.

The global COVID-19 pandemic (“COVID-19”) has impacted the operations and purchasing decisions of companies worldwide. As of the date of issuance of the condensed consolidated financial statements, the Company is not aware of any specific event or circumstance relating to COVID-19 that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements.

Revenue from Contracts with Customers, Policy

The Company determines revenue recognition through the following five steps:

●

Identification of the contract, or contracts, with a customer

●

Identification of the performance obligations in the contract

●

Determination of the transaction price

●

Allocation of the transaction price to the performance obligations in the contract

●

Recognition of revenue when, or as, performance obligations are satisfied

Contracts with multiple performance obligations

Accounts Receivable, Policy

Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12-month period.

Employee Stock Purchase Plan, Policy

In July 2001, the Company’s stockholders initially approved the 2001 Employee Stock Purchase Plan, which was subsequently amended and restated in 2010 (as amended, the “2010 Purchase Plan”) to extend the term of the plan through May 17, 2020. Under the 2010 Purchase Plan, eligible employees could contribute up to 10% of their compensation, as defined in the 2010 Purchase Plan, towards the purchase of shares of PDF common stock at a price of 85% of the lower of the fair market value at the beginning of the offering period or the end of the purchase period. The 2010 Purchase Plan provided for twenty-four-month offering periods with four six-month purchase periods in each offering period. The 2010 Purchase Plan expired on May 17, 2020. Existing offering periods under the 2010 Plan continued through the applicable expiration date and the final offering period expired on January 31, 2022. On June 15, 2021, the Company’s stockholders approved the 2021 Employee Stock Purchase Plan, which has a ten-year term (the “2021 Purchase Plan” and, together with the 2010 Purchase Plan, the “Employee Purchase Plans”). The terms of 2021 Purchase Plan are substantially similar to those of the 2010 Purchase Plan. A twenty-four-month offering period under the 2021 Purchase Plan commenced on August 1, 2021.

The Company estimated the fair value of purchase rights granted under the 2010 and the 2021 Purchase Plans during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values:

Earnings Per Share, Policy

Basic net loss per share is computed by dividing net loss by weighted average number of common shares outstanding for the period (excluding outstanding stock options and shares subject to repurchase). Diluted net loss per share is computed using the weighted-average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive.

Segment Reporting, Policy

The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions, allocation of resources, and assessing financial performance. Accordingly, the Company considers itself to be in one operating and reporting segment, specifically the provision of services for differentiated data and analytics solutions to the semiconductor and electronics industries.

Fair Value Measurement, Policy


Level 1 -	Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 -	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 -	Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

Recent Accounting Standards, Policy

Recent Accounting Standards

Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses. Subsequent to the issuance of ASU No. 2016-13, the FASB issued ASU No. 2018-19, Codification

Improvements to Topic 326, Financial Instruments – Credit Losses, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instrument, ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326) Targeted Transition Relief, ASU No. 2016-13, ASU No. 2019-10 Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU No. 2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses. The subsequent ASUs do not change the core principle of the guidance in ASU No. 2016-13. Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU No. 2016-13.

Additionally, ASU No. 2019-10 defers the effective date for the adoption of the new standard on credit losses for public filers that are considered small reporting companies (“SRC”) as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, which will be fiscal 2023 for the Company if it continues to be classified as an SRC. In February 2020, the FASB issued ASU 2020-02, which provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses. The subsequent amendments will have the same effective date and transition requirements as ASU No. 2016-13. Early adoption is permitted. Topic 326 requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. While the Company is currently evaluating the impact of Topic 326, the Company does not expect the adoption of this ASU to have a material impact on its condensed consolidated financial statements or the related disclosure.

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-20): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The guidance allows for either full retrospective adoption or modified retrospective adoption. Additionally, the ASU will require entities to use the “if-converted” method when calculating diluted earnings per share for convertible instruments. The ASU will be effective for annual reporting periods beginning after December 15, 2023 for SRCs and interim periods within those annual periods. Early adoption is permitted. The Company does not anticipate that the adoption of this ASU will have a significant impact on its condensed consolidated financial statements or the related disclosures.

Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB, and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements.

Note 10 - CUSTOMER AND GEOGRAPHIC INFORMATION - Long-lived Assets by Geographic Area (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Long-lived assets, net	$ 43,630	$ 40,703
UNITED STATES
Long-lived assets, net	42,288	39,158
Rest of the World [Member]
Long-lived assets, net	$ 1,342	$ 1,545

Note 11 - FAIR VALUE MEASUREMENTS - Fair Value, Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Total	$ 100,927	$ 125,016
Fair Value, Inputs, Level 1 [Member]
Total	100,927	125,016
Money Market Funds [Member]
Money market mutual funds	65,020	12,474
Money Market Funds [Member] \| Fair Value, Inputs, Level 1 [Member]
Money market mutual funds	65,020	12,474
US Government Corporations and Agencies Securities [Member]
Short-term investments	35,907	112,542
US Government Corporations and Agencies Securities [Member] \| Fair Value, Inputs, Level 1 [Member]
Short-term investments	$ 35,907	$ 112,542

Note 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions.

Use of Estimates

Recent Accounting Standards

Accounting Standards Not Yet Adopted

Note 6 - STOCKHOLDERS EQUITY

6 Months Ended

Jun. 30, 2022

STOCKHOLDERS EQUITY

6. STOCKHOLDERS' EQUITY

6. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On June 4, 2020, the Company’s Board of Directors adopted a stock repurchase program (the “2020 Program”) to repurchase up to $25.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, over the next two years. During the six months ended June 30, 2022, 218,858 shares were repurchased under the 2020 Program at an average price of $26.40 per share for an aggregate total price of $5.8 million. During the six months ended June 30, 2021, 251,212 shares were repurchased under the 2020 Program at an average price of $18.01 per share for an aggregate total price of $4.5 million. Through April 10, 2022, 470,070 shares had been repurchased under the 2020 Program at an average price of $21.91 per share, for an aggregate total price of $10.3 million.

On April 11, 2022, the Board of Directors terminated the 2020 Program, and adopted a new program (the “2022 Program”) to repurchase up to $35.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, from time to time, over the next two years. During the three and six months ended June 30, 2022, 714,600 shares were repurchased under the 2022 Program at an average price of $23.36 per share for an aggregate total price of $16.7 million.

Note 4 - BALANCE SHEET COMPONENTS

6 Months Ended

Jun. 30, 2022

BALANCE SHEET COMPONENTS

4. BALANCE SHEET COMPONENTS

Accounts receivable

Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12-month period. Unbilled accounts receivable, included in accounts receivable, totaled $8.9 million and $11.8 million as of June 30, 2022, and December 31, 2021, respectively. Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period is recorded in other non-current assets and totaled $1.1 million and $1.3 million as of June 30, 2022, and December 31, 2021, respectively.

The Company performs ongoing credit evaluations of its customers’ financial condition. An allowance for doubtful accounts is maintained for probable credit losses based upon the Company’s assessment of the expected collectability of the accounts receivable. The allowance for doubtful accounts is reviewed on a quarterly basis to assess the adequacy of the allowance.

Property and equipment

Property and equipment, net consist of the following (in thousands):


	June 30,		December 31,
	2022		2021
Computer equipment	$	11,640	$	11,924
Software		5,391		5,419
Furniture, fixtures and equipment		2,491		2,506
Leasehold improvements		6,294		6,272
Laboratory and other equipment		4,249		3,981
Test equipment		28,204		24,452
Construction-in-progress		23,690		22,158
		81,959		76,712
Less: accumulated depreciation and amortization		(43,569)		(41,417)
Total	$	38,390	$	35,295

Test equipment mainly includes DFI™ systems and CV^® systems assets at customer sites that are contributing to revenue. Among assets under construction, the construction-in-progress balance related to construction of DFI™ systems assets amounted to $19.8 million and $20.0 million as of June 30, 2022, and December 31, 2021, respectively. Depreciation and amortization expense was $1.4 million and $1.6 million during the three months ended June 30, 2022 and 2021, respectively, and $2.8 million and $3.3 million during the six months ended June 30, 2022 and 2021, respectively.

In the fourth quarter of 2021, the Company wrote down the value of its property and equipment by $3.2 million related to its first-generation of e-beam tools for DFI™ systems wherein carrying values may not be fully recoverable due to lack of market demand and future needs of our customers for these tools.

Goodwill and Intangible Assets, Net

As of June 30, 2022, and December 31, 2021, the carrying amount of goodwill was $14.1 million.

Intangible assets, net, consisted of the following (in thousands):


		June 30, 2022						December 31, 2021
	Amortization	Gross				Net		Gross				Net
	Period	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	(Years)	Amount		Amortization		Amount		Amount		Amortization		Amount
Acquired identifiable intangibles:
Customer relationships	1-10	$	9,407	$	(6,363)	$	3,044	$	9,407	$	(6,041)	$	3,366
Developed technology	4-9		33,635		(18,447)		15,188		33,635		(17,250)		16,385
Tradename and trademarks	2-10		1,598		(865)		733		1,598		(812)		786
Patent	7-10		1,800		(1,660)		140		1,800		(1,640)		160
Noncompetition agreements	3		848		(448)		400		848		(306)		542
Total		$	47,288	$	(27,783)	$	19,505	$	47,288	$	(26,049)	$	21,239

The weighted average amortization period for acquired identifiable intangible assets was 6.4 years as of June 30, 2022. The following table summarizes intangible assets amortization expense in the Condensed Consolidated Statements of Comprehensive Loss (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Amortization of acquired technology included under Costs of Revenues	$	553	$	536	$	1,106	$	1,071
Amortization of acquired intangible assets presented separately under Costs and Expenses		314		313		628		627
Total amortization of acquired intangible assets	$	867	$	849	$	1,734	$	1,698

The Company expects annual amortization of acquired identifiable intangible assets to be as follows (in thousands):


Year Ending December 31,	Amount
2022 (remaining six months)	$	1,734
2023		3,444
2024		3,046
2025		2,882
2026		2,712
2027 and thereafter		5,687
Total future amortization expense	$	19,505

There were no impairment charges for goodwill and intangible assets during the three and six months ended June 30, 2022 and 2021.

Note 12 - COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

Strategic Partnership with Advantest — See Note 3, Strategic Partnership Agreement with Advantest And Related Party Transactions, for the discussion about the Company’s commitments under the strategic partnership with Advantest.

Operating Leases — Refer to Note 5, Leases, for the discussion about the Company’s lease commitments.

Indemnifications — The Company generally provides a warranty to its customers that its software will perform substantially in accordance with documented specifications typically for a period of 90 days following initial delivery of its products. The Company also indemnifies certain customers from third-party claims of intellectual property infringement relating to the use of its products. Historically, costs related to these guarantees have not been significant. The Company is unable to estimate the maximum potential impact of these guarantees on its future results of operations.

Purchase Obligations — The Company has purchase obligations with certain suppliers for the purchase of goods and services entered in the ordinary course of business. As of June 30, 2022, total outstanding purchase obligations were $14.0 million, the majority of which is due within the next 12 months.

Indemnification of Officers and Directors — As permitted by the Delaware general corporation law, the Company has included a provision in its certificate of incorporation to eliminate the personal liability of its officers and directors for monetary damages for breach or alleged breach of their fiduciary duties as officers or directors, other than in cases of fraud or other willful misconduct.

In addition, the Bylaws of the Company provide that the Company is required to indemnify its officers and directors even when indemnification would otherwise be discretionary, and the Company is required to advance expenses to its officers and directors as incurred in connection with proceedings against them for which they may be indemnified. The Company has entered into indemnification agreements with its officers and directors containing provisions that are in some respects broader than the specific indemnification provisions contained in the Delaware general corporation law. The indemnification agreements require the Company to indemnify its officers and directors against liabilities that may arise by reason of their status or service as officers and directors other than for liabilities arising from willful misconduct of a culpable nature, to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors’ and officers’ insurance if available on reasonable terms. The Company has obtained directors’ and officers’ liability insurance in amounts comparable to other companies of the Company’s size and in the Company’s industry. Since a maximum obligation of the Company is not explicitly stated in the Company’s Bylaws or in its indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated.

Legal Proceedings — From time to time, the Company is subject to various claims and legal proceedings that arise in the ordinary course of business. The Company accrues for losses related to litigation when a potential loss is probable, and the loss can be reasonably estimated in accordance with FASB requirements. As of June 30, 2022, except as disclosed below, the Company was not party to any material legal proceedings, thus no loss was probable and no amount was accrued.

On May 6, 2020, the Company initiated an arbitration proceeding with the Hong Kong International Arbitration Center against SMIC New Technology Research & Development (Shanghai) Corporation (“SMIC”) due to SMIC’s failure to pay fees due to PDF under a series of contracts. The Company seeks to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future, and costs associated with bringing the arbitration proceeding. SMIC denies liability and the arbitration is on-going.

Note 4 - BALANCE SHEET COMPONENTS - Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Property and equipment, gross	$ 81,959	$ 76,712
Less: accumulated depreciation and amortization	(43,569)	(41,417)
Total	38,390	35,295
Computer Equipment [Member]
Property and equipment, gross	11,640	11,924
Software and Software Development Costs [Member]
Property and equipment, gross	5,391	5,419
Furniture and Fixtures [Member]
Property and equipment, gross	2,491	2,506
Leasehold Improvements [Member]
Property and equipment, gross	6,294	6,272
Laboratory and Test Equipment [Member]
Property and equipment, gross	4,249	3,981
Test Equipment [Member]
Property and equipment, gross	28,204	24,452
Construction in Progress [Member]
Property and equipment, gross	$ 23,690	$ 22,158

Note 10 - CUSTOMER AND GEOGRAPHIC INFORMATION - Other (Details)	6 Months Ended
	Jun. 30, 2022
CUSTOMER AND GEOGRAPHIC INFORMATION
Number of Operating Segments	1
Number of Reportable Segments	1

Note 4 - BALANCE SHEET COMPONENTS - Other (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Unbilled Receivables, Current	$ 8,900,000	$ 11,800,000		$ 8,900,000
Unbilled Receivables, Not Expected to be Billed and Collected in Next Twelve Months	1,100,000	1,300,000		1,100,000
Depreciation, Depletion and Amortization, Nonproduction, Total	1,400,000		$ 1,600,000	2,800,000	$ 3,300,000
Impairment of Intangible Assets, Finite-lived	0		0	0	0
Goodwill	14,123,000	14,123,000		14,123,000
Impairment of goodwill	0		0	0	0
Amortization of Intangible Assets, Total	867,000		849,000	$ 1,734,000	1,698,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life (Year)				6 years 7 months 6 days
Write-down in value of property and equipment		3,200,000
Cost of Sales [Member]
Amortization of Intangible Assets, Total	553,000		536,000	$ 1,106,000	1,071,000
Costs and Expenses [Member]
Amortization of Intangible Assets, Total	314,000		$ 313,000	628,000	$ 627,000
DFI Test Equipment [Member]
Construction in Progress, Gross	$ 19,800,000	$ 20,000,000.0		$ 19,800,000

Note 8 - INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Note 8 - INCOME TAXES (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
INCOME TAXES
Increase (Decrease) in Income Taxes			$ 1,500
Income Tax Expense (Benefit), Total	$ 1,306	$ 88	$ 2,493	$ 1,044
Effective Income Tax Rate Reconciliation, Percent, Total			88.90%	9.50%
Unrecognized Tax Benefits, Ending Balance	15,200		$ 15,200		$ 14,700
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	1,900		1,900		1,900
Unrecognized tax benefits including income tax penalties and interest accrued in long term liabilities	2,400		2,400
Unrecognized tax benefits related to income tax penalties and interest accrued in long-term liabilities	600		600
Unrecognized Tax Benefits In Deferred Tax Assets	13,400		13,400
Deferred Tax Assets, Valuation Allowance, Total	51,600		51,600		51,600
Net deferred tax assets	$ 46		$ 46		$ 75

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues:
Revenues	$ 34,668	$ 27,419	$ 68,166	$ 51,619
Costs and Expenses:
Costs of revenues	12,042	10,785	23,571	21,448
Research and development	13,374	11,064	27,463	21,905
Selling, general and administrative	9,770	9,410	20,609	18,874
Amortization of acquired intangible assets	314	313	628	627
Interest and other expense (income), net	(991)	243	(1,301)	(198)
Income (loss) before income taxes	159	(4,396)	(2,804)	(11,037)
Income tax expense	1,306	88	2,493	1,044
Net loss	(1,147)	(4,484)	(5,297)	(12,081)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	(1,037)	216	(1,434)	(314)
Change in unrealized losses related to available-for-sale debt securities, net of tax		(6)	(34)	(4)
Total other comprehensive income (loss)	(1,037)	210	(1,468)	(318)
Comprehensive loss	$ (2,184)	$ (4,274)	$ (6,765)	$ (12,399)
Net loss per share, basic (in dollars per share)	$ (0.03)	$ (0.12)	$ (0.14)	$ (0.33)
Net loss per share, diluted (in dollars per share)	$ (0.03)	$ (0.12)	$ (0.14)	$ (0.33)
Weighted average common shares used to calculate net loss per share, basic (in shares)	37,028	37,004	37,316	36,989
Weighted average common shares used to calculate net loss per share, diluted (in shares)	37,028	37,004	37,316	36,989
Analytics [Member]
Revenues:
Revenues	$ 31,117	$ 19,578	$ 61,543	$ 38,971
Integrated Yield Ramp [Member]
Revenues:
Revenues	$ 3,551	$ 7,841	$ 6,623	$ 12,648

Note 2 - REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative 2 (Details) - Software License and Related Services Agreement [Member] - Advantest America, Inc. [Member]	Jun. 30, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	3 years

Note 2 - REVENUE FROM CONTRACTS WITH CUSTOMERS - 1 (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) item	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Number of revenue sources \| item			2
Contract with Customer, Asset, after Allowance for Credit Loss, Current, Total	$ 2,800		$ 2,800		$ 400
Capitalized Contract Cost, Impairment Loss	0	$ 0	0	$ 0	0
Contract with Customer, Liability, Revenue Recognized	7,200	6,500	11,800	10,500
Revenue, Remaining Performance Obligation, Amount	184,400		184,400
Contract with Customer, Performance Obligation Satisfied in Previous Period	500	400	500	100
Capitalized Contract Cost, Amortization	600	$ 200	755	$ 327
Prepaid Expenses and Other Current Assets [Member]
Capitalized Contract Cost, Net, Total	1,100		1,100		600
Other Noncurrent Assets [Member]
Capitalized Contract Cost, Net, Total	$ 1,800		$ 1,800		$ 2,100
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member]
Concentration Risk, Percentage	100.00%	100.00%	100.00%	100.00%
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member] \| Non-US [Member]
Concentration Risk, Percentage	51.00%	56.00%	49.00%	60.00%

Note 5 - LEASES (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Lease Expenses

Lease expense was comprised of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease expense (1)	$	353	$	484	$	698	$	969
Short-term lease and variable lease expense (2)		274		233		557		407
Total lease expense	$	627	$	717	$	1,255	$	1,376

(1)

Net of gain recognized upon lease termination of $0.1 million in the six months ended June 30, 2022.

(2)

Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease expense for the periods presented primarily included common area maintenance charges.

Supplemental balance sheets information related to operating leases was as follows:


	June 30,			December 31,
	2022			2021
Weighted average remaining lease term under operating ROU leases (in years)		5.5			5.7
Weighted average discount rate for operating lease liabilities		4.96	%		5.25	%

Schedule of Operating Lease Liabilities and Maturities


	June 30,			December 31,
	2022			2021
Weighted average remaining lease term under operating ROU leases (in years)		5.5			5.7
Weighted average discount rate for operating lease liabilities		4.96	%		5.25	%

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts	$ 890	$ 890
Preferred stock, par value (in dollars per share)	$ 0.00015	$ 0.00015
Preferred stock, shares authorized (in shares)	5,000	5,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.00015	$ 0.00015
Common stock, shares authorized (in shares)	70,000	70,000
Common stock, shares issued (in shares)	48,058	47,414
Common stock, shares outstanding (in shares)	36,975	37,411
Treasury stock, shares (in shares)	11,083	10,003

Note 7 - EMPLOYEE BENEFIT PLANS - Stock Options, Valuation Assumptions (Details) - Employee Stock Purchase Plan [Member] - $ / shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Expected life (in years) (Year)	1 year 3 months	1 year 3 months
Volatility	48.90%	34.25%
Risk-free interest rate	0.86%	1.43%
Expected dividend	0.00%	0.00%
Weighted average fair value of purchase rights granted during the period (in dollars per share)	$ 10.76	$ 4.83

Note 10 - CUSTOMER AND GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2022

CUSTOMER AND GEOGRAPHIC INFORMATION

10. CUSTOMER AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.

The Company had revenues from individual customers that are approximately 10% or more of the Company’s consolidated total revenues as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Customer	2022		2021		2022		2021
A	*	%	15	%	*	%	14	%
D	29	%	*	%	31	%	10	%

* represents less than 10%

Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance as follows:


	June 30,		December 31,
Customer	2022		2021
C	*	%	15	%
D	43	%	29	%

* represents less than 10%

Revenues from customers by geographic area based on the location of the customers’ work sites are as follows (amounts in thousands):


	Three Months Ended June 30,
	2022				2021
			Percentage				Percentage
	Revenues		of Revenues		Revenues		of Revenues
United States	$	17,086	49	%	$	12,095	44	%
China		4,539	13			4,289	16
Japan		2,794	8			2,450	9
Rest of the world		10,249	30			8,585	31
Total revenue	$	34,668	100	%	$	27,419	100	%


	Six Months Ended June 30,
	2022				2021
			Percentage				Percentage
	Revenues		of Revenues		Revenues		of Revenues
United States	$	34,577	51	%	$	20,651	40	%
China		8,659	13			6,028	12
Japan		5,401	8			6,028	12
Rest of the world		19,529	28			18,912	36
Total revenue	$	68,166	100	%	$	51,619	100	%

Long-lived assets, net by geographic area are as follows (in thousands):


	June 30,		December 31,
	2022		2021
United States (1)	$	42,288	$	39,158
Rest of the world		1,342		1,545
Total long-lived assets, net	$	43,630	$	40,703

(1) Includes assets deployed at customer sites which could be outside the U.S.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Note 7 - EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2022

EMPLOYEE BENEFIT PLANS

7. EMPLOYEE BENEFIT PLANS

On June 30, 2022, the Company had the following stock-based compensation plans:

Employee Stock Purchase Plan


	2021 Purchase Plan			2010 Purchase Plan
	Six Months Ended June 30,			Six Months Ended June 30,
	2022			2021
Expected life (in years)		1.25			1.25
Volatility		48.90	%		34.25	%
Risk-free interest rate		0.86	%		1.43	%
Expected dividend		—			—
Weighted average fair value of purchase rights granted during the period	$	10.76		$	4.83

During the three months ended June 30, 2022 and 2021, no shares were issued under the Employee Purchase Plans. During the six months ended June 30, 2022, a total of 90,040 shares were issued under the 2021 Purchase Plan, at a weighted-average purchase price of $15.90 per share. During the six months ended June 30, 2022 and 2021, a total of 5,203 and 99,674 shares, respectively, were issued under the 2010 Purchase Plan, at a weighted-average purchase price of $13.40 per share and $9.24 per share, respectively. As of June 30, 2022, unrecognized compensation cost related to the 2021 Purchase Plan was $1.5 million. These costs are expected to be recognized over a weighted average period of 1.2 years. No unrecognized compensation cost related to the 2010 Purchase Plan as of June 30, 2022.

As of June 30, 2022, 909,960 shares were available for future issuance under the 2021 Purchase Plan.

Stock Incentive Plans

On November 16, 2011, the Company’s stockholders initially approved the 2011 Stock Incentive Plan, which has been amended and restated and approved by the Company’s stockholders a number of times since then (as amended, the “2011 Plan”). Under the 2011 Plan, the Company may award stock options, stock appreciation rights (“SARs”), stock grants or stock units covering shares of the Company’s common stock to employees, directors, non-employee directors and contractors. The aggregate number of shares reserved for awards under the 2011 Plan is 12,800,000 shares, plus up to 3,500,000 shares previously issued under the 2001 Stock Plan adopted by the Company in 2001, which expired in 2011 (the “2001 Plan”) that are either (i) forfeited or (ii) repurchased by the Company or are shares subject to awards previously issued under the 2001 Plan that expire or that terminate without having been exercised or settled in full on or after November 16, 2011. In case of awards other than options or SARs, the aggregate number of shares reserved under the 2011 Plan will be decreased at a rate of 1.33 shares issued pursuant to such awards. The exercise price for stock options must generally be at prices no less than the fair market value at the date of grant. Stock options generally expire ten years from the date of grant and become vested and exercisable over a four-year period.

As of June 30, 2022, 13.3 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 4.5 million shares were available for future grant. The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired or repurchased by the Company after the adoption of the 2011 Plan through June 30, 2022. As of June 30, 2022, there were no outstanding awards that had been granted outside of the 2011 or 2001 Plans (collectively, the “Stock Plans”).

The Company estimated the fair value of share-based awards granted under the 2011 Stock Plan during the period using the Black-Scholes-Merton option-pricing model. There were no stock options granted during the three and six months ended June 30, 2022 and 2021.

Stock-Based Compensation


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Costs of revenues	$	655	$	538	$	1,383	$	1,190
Research and development		1,810		1,126		4,978		2,714
Selling, general and administrative		1,407		1,078		3,064		2,207
Stock-based compensation expenses	$	3,872	$	2,742	$	9,425	$	6,111

Additional information with respect to options under the Stock Plans during the six months ended June 30, 2022, is as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Options	Price		Term	Value
	(in thousands)	per Share		(Years)	(in thousands)
Outstanding, January 1, 2022	226	$	12.78
Granted	—		—
Exercised	(87)		9.10
Canceled	(4)		13.30
Expired	(2)		8.79
Outstanding, June 30, 2022	133	$	15.19	3.80	$	848
Vested and expected to vest, June 30, 2022	133	$	15.18	3.78	$	843
Exercisable, June 30, 2022	112	$	15.16	3.22	$	714

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $21.51 per share as of June 30, 2022. The total intrinsic value of options exercised was $1.5 million during the six months ended June 30, 2022.

As of June 30, 2022, there was $0.1 million of total unrecognized compensation cost, net of forfeiture, related to unvested stock options, which is expected to be recognized over a weighted average period of 1.3 years. The total fair value of shares vested was immaterial during the six months ended June 30, 2022.

Nonvested restricted stock unit activity during the six months ended June 30, 2022, was as follows:


		Weighted
		Average Grant
	Shares	Date Fair Value
	(in thousands)	Per Share
Nonvested, January 1, 2022	1,872	$	18.24
Granted	331	$	27.24
Vested	(462)	$	17.94
Forfeited	(56)	$	19.38
Nonvested, June 30, 2022	1,685	$	20.05

As of June 30, 2022, there was $24.8 million of total unrecognized compensation cost related to restricted stock units. That cost is expected to be recognized over a weighted average period of 2.3 years. Restricted stock units do not have rights to dividends prior to vesting.

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2022	Aug. 05, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	000-31311
Entity Registrant Name	PDF SOLUTIONS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	25-1701361
Entity Address, Address Line One	2858 De La Cruz Blvd.
Entity Address, City or Town	Santa Clara
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95050
City Area Code	408
Local Phone Number	280-7900
Title of 12(b) Security	Common Stock, $0.00015 par value
Trading Symbol	PDFS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		37,276,873
Entity Central Index Key	0001120914
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022

Note 10 - CUSTOMER AND GEOGRAPHIC INFORMATION - Revenues by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues	$ 34,668	$ 27,419	$ 68,166	$ 51,619
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member]
Revenues	$ 34,668	$ 27,419	$ 68,166	$ 51,619
Concentration risk	100.00%	100.00%	100.00%	100.00%
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member] \| UNITED STATES
Revenues	$ 17,086	$ 12,095	$ 34,577	$ 20,651
Concentration risk	49.00%	44.00%	51.00%	40.00%
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member] \| CHINA
Revenues	$ 4,539	$ 4,289	$ 8,659	$ 6,028
Concentration risk	13.00%	16.00%	13.00%	12.00%
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member] \| JAPAN
Revenues	$ 2,794	$ 2,450	$ 5,401	$ 6,028
Concentration risk	8.00%	9.00%	8.00%	12.00%
Geographic Concentration Risk [Member] \| Revenue Benchmark [Member] \| Rest of the World [Member]
Revenues	$ 10,249	$ 8,585	$ 19,529	$ 18,912
Concentration risk	30.00%	31.00%	28.00%	36.00%

- Definition

+ References

+ Details

Note 7 - EMPLOYEE BENEFIT PLANS - Stock Options Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2022
EMPLOYEE BENEFIT PLANS
Outstanding, beginning balance (in shares)	226
Exercised (in shares)	(87)
Canceled (in shares)	(4)
Expired (in shares)	(2)
Outstanding, ending balance (in shares)	133
Vested and expected to vest (in shares)	133
Exercisable (in shares)	112
Outstanding, weighted average exercise price, beginning balance (in dollars per share)	$ 12.78
Exercised, weighted average exercise price (in dollars per share)	9.10
Canceled, weighted average exercise price (in dollars per share)	13.30
Expired, weighted average exercise price (in dollars per share)	8.79
Outstanding, weighted average exercise price, ending balance (in dollars per share)	15.19
Vested and expected to vest, weighted average exercise price (in dollars per share)	15.18
Exercisable, weighted average exercise price (in dollars per share)	$ 15.16
Outstanding, weighted average remaining contractual (Year)	3 years 9 months 18 days
Vested and expected to vest, weighted average remaining contractual term (Year)	3 years 9 months 10 days
Exercisable, weighted average remaining contractual term (Year)	3 years 2 months 19 days
Outstanding, aggregate intrinsic value	$ 848
Vested and expected to vest, aggregate intrinsic value	843
Exercisable, aggregate intrinsic value	$ 714

Note 5 - LEASES - Other (Details) $ in Thousands	3 Months Ended	6 Months Ended
Note 5 - LEASES - Other (Details) $ in Thousands	Mar. 31, 2022 USD ($)	Jun. 30, 2022 USD ($) lease	Dec. 31, 2021 USD ($) lease
LEASES
Number of finance leases \| lease		0	0
Operating Lease, Liability, Amount Related to Extension of Lease Term		$ 1,100
Operating Lease, Liability, Current		1,493	$ 1,758
Operating lease right of use assets decrease from early lease termination	$ 500
Operating lease liability decrease from early lease termination	$ 600
Lease termination gain		$ 100

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock Outstanding [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balances (in shares) at Dec. 31, 2020	36,850		9,550
Balances at Dec. 31, 2020	$ 6	$ 407,173	$ (96,215)	$ (76,233)	$ (225)	$ 234,506
Issuance of common stock in connection with employee stock purchase plan (in shares)	100
Issuance of common stock in connection with employee stock purchase plan		921				921
Issuance of common stock in connection with exercise of options (in shares)	81
Issuance of common stock in connection with exercise of options		568				568
Vesting of restricted stock units (in shares)	149
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares)			73
Purchases of treasury stock in connection with tax withholdings on restricted stock grants			$ (1,463)			(1,463)
Repurchase of common stock (in shares)	(251)		251
Repurchase of common stock			$ (4,523)			(4,523)
Stock-based compensation expense		3,369				3,369
Comprehensive income (loss)				(7,597)	(528)	(8,125)
Balances (in shares) at Mar. 31, 2021	36,929		9,874
Balances at Mar. 31, 2021	$ 6	412,031	$ (102,201)	(83,830)	(753)	225,253
Balances (in shares) at Dec. 31, 2020	36,850		9,550
Balances at Dec. 31, 2020	$ 6	407,173	$ (96,215)	(76,233)	(225)	234,506
Comprehensive income (loss)						(12,399)
Balances (in shares) at Jun. 30, 2021	37,086		9,925
Balances at Jun. 30, 2021	$ 6	415,063	$ (103,088)	(88,314)	(543)	223,124
Balances (in shares) at Mar. 31, 2021	36,929		9,874
Balances at Mar. 31, 2021	$ 6	412,031	$ (102,201)	(83,830)	(753)	225,253
Issuance of common stock in connection with exercise of options (in shares)	39
Issuance of common stock in connection with exercise of options		290				290
Vesting of restricted stock units (in shares)	118
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares)			51
Purchases of treasury stock in connection with tax withholdings on restricted stock grants			$ (887)			(887)
Stock-based compensation expense		2,742				2,742
Comprehensive income (loss)				(4,484)	210	(4,274)
Balances (in shares) at Jun. 30, 2021	37,086		9,925
Balances at Jun. 30, 2021	$ 6	415,063	$ (103,088)	(88,314)	(543)	223,124
Balances (in shares) at Mar. 31, 2021	36,929		9,874
Balances at Mar. 31, 2021	$ 6	412,031	$ (102,201)	(83,830)	(753)	225,253
Balances (in shares) at Jun. 30, 2022	36,975		11,083
Balances at Jun. 30, 2022	$ 6	434,784	$ (131,365)	(103,018)	(2,532)	197,875
Balances (in shares) at Dec. 31, 2021	37,411		10,003
Balances at Dec. 31, 2021	$ 6	423,069	$ (104,705)	(97,721)	(1,064)	219,585
Issuance of common stock in connection with employee stock purchase plan (in shares)	95
Issuance of common stock in connection with employee stock purchase plan		1,502				1,502
Issuance of common stock in connection with exercise of options (in shares)	75
Issuance of common stock in connection with exercise of options		675				675
Vesting of restricted stock units (in shares)	232
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares)			113
Purchases of treasury stock in connection with tax withholdings on restricted stock grants			$ (3,389)			(3,389)
Repurchase of common stock (in shares)	(219)		219
Repurchase of common stock			$ (5,778)			(5,778)
Stock-based compensation expense		5,553				5,553
Comprehensive income (loss)				(4,150)	(431)	(4,581)
Balances (in shares) at Mar. 31, 2022	37,594		10,335
Balances at Mar. 31, 2022	$ 6	430,799	$ (113,872)	(101,871)	(1,495)	213,567
Balances (in shares) at Dec. 31, 2021	37,411		10,003
Balances at Dec. 31, 2021	$ 6	423,069	$ (104,705)	(97,721)	(1,064)	$ 219,585
Issuance of common stock in connection with exercise of options (in shares)						87
Comprehensive income (loss)						$ (6,765)
Balances (in shares) at Jun. 30, 2022	36,975		11,083
Balances at Jun. 30, 2022	$ 6	434,784	$ (131,365)	(103,018)	(2,532)	197,875
Balances (in shares) at Mar. 31, 2022	37,594		10,335
Balances at Mar. 31, 2022	$ 6	430,799	$ (113,872)	(101,871)	(1,495)	213,567
Issuance of common stock in connection with exercise of options (in shares)	12
Issuance of common stock in connection with exercise of options		113				113
Vesting of restricted stock units (in shares)	84
Purchases of treasury stock in connection with tax withholdings on restricted stock grants (in shares)			33
Purchases of treasury stock in connection with tax withholdings on restricted stock grants			$ (800)			(800)
Repurchase of common stock (in shares)	(715)		715
Repurchase of common stock			$ (16,693)			(16,693)
Stock-based compensation expense		3,872				3,872
Comprehensive income (loss)				(1,147)	(1,037)	(2,184)
Balances (in shares) at Jun. 30, 2022	36,975		11,083
Balances at Jun. 30, 2022	$ 6	$ 434,784	$ (131,365)	$ (103,018)	$ (2,532)	$ 197,875

Note 5 - LEASES

6 Months Ended

Jun. 30, 2022

LEASES

5. LEASES

The Company leases administrative and sales offices and certain equipment under non-cancellable operating leases, which contain various renewal options and, in some cases, require payment of common area costs, taxes and utilities. These operating leases expire at various dates through 2028. The Company had no leases that were classified as a financing lease as of June 30, 2022, and December 31, 2021.

In the first quarter of 2022, the Company early terminated an office lease contract. The termination of this lease reduced the Company’s operating lease right-of-use assets and lease liabilities by approximately $0.5 million and $0.6 million, respectively. The gain from the lease termination of approximately $0.1 million was recorded under selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Loss for the six months ended June 30, 2022.

Lease expense was comprised of the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease expense (1)	$	353	$	484	$	698	$	969
Short-term lease and variable lease expense (2)		274		233		557		407
Total lease expense	$	627	$	717	$	1,255	$	1,376

(1)

Net of gain recognized upon lease termination of $0.1 million in the six months ended June 30, 2022.

(2)

Supplemental balance sheets information related to operating leases was as follows:


	June 30,			December 31,
	2022			2021
Weighted average remaining lease term under operating ROU leases (in years)		5.5			5.7
Weighted average discount rate for operating lease liabilities		4.96	%		5.25	%

Maturities of operating lease liabilities as of June 30, 2022, were as follows (in thousands):


Year Ending December 31,	Amount (1)
2022 (remaining six months)	$	798
2023		1,488
2024		1,366
2025		1,258
2026		1,154
2027 and thereafter		1,701
Total future minimum lease payments	$	7,765
Less: Interest (2)		(997)
Present value of future minimum lease payments under operating lease liabilities (3)	$	6,768

(1)

As of June 30, 2022, the total operating lease liability includes approximately $1.1 million related to an option to extend a lease term that is reasonably certain to be exercised.

(2)

Calculated using incremental borrowing interest rate for each lease.

(3)

Includes the current portion of operating lease liabilities of $1.5 million as of June 30, 2022.

Note 8 - INCOME TAXES

6 Months Ended

Jun. 30, 2022

INCOME TAXES

8. INCOME TAXES

Income tax expense increased $1.5 million for the six months ended June 30, 2022, to a $2.5 million income tax expense as compared to an income tax expense of $1.0 million for the six months ended June 30, 2021. The Company’s effective tax rate expense was (88.9%) and (9.5%) for the six months ended June 30, 2022 and 2021, respectively. The Company’s effective tax rate expense increased in the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to increases in foreign withholding taxes and changes in the geographic mix of worldwide income, which is subject to taxation at different statutory tax rates.

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of June 30, 2022, was $15.2 million, of which $1.9 million, if recognized, would affect the Company’s effective tax rate. The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of December 31, 2021, was $14.7 million, of which $1.9 million, if recognized, would affect the Company’s effective tax rate. As of June 30, 2022, the Company has recorded unrecognized tax benefits of $2.4 million, including interest and penalties of $0.6 million, as long-term taxes payable in its Condensed Consolidated Balance Sheet. The remaining $13.4 million has been recorded net of the Company’s deferred tax assets (“DTAs”), which is subject to a full valuation allowance.

The valuation allowance was approximately $51.6 million as of June 30, 2022, and December 31, 2021, which was related to U.S. net federal and state DTAs. The worldwide net deferred tax assets balance as of June 30, 2022, and December 31, 2021 were not significant.

The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S. federal, various state and foreign jurisdictions. For U.S. federal and California income tax purposes, the statute of limitations currently remains open for the tax years ending 2018 to present and 2017 to present, respectively. In addition, due to net operating loss carryback claims, the tax years 2013 through 2015 may be subject to federal examination and all of the net operating loss and research and development credit carryforwards that may be utilized in future years may be subject to federal and state examination. The Company is not subject to income tax examinations in any other of its major foreign subsidiaries’ jurisdictions.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Note 9 - NET LOSS PER SHARE

6 Months Ended

Jun. 30, 2022

NET LOSS PER SHARE

9. NET LOSS PER SHARE


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(1,147)	$	(4,484)	$	(5,297)	$	(12,081)
Denominator:
Basic weighted-average shares outstanding		37,028		37,004		37,316		36,989
Effect of dilutive options and restricted stock units		—		—		—		—
Diluted weighted-average shares outstanding		37,028		37,004		37,316		36,989

Net loss per share, basic and diluted	$	(0.03)	$	(0.12)	$	(0.14)	$	(0.33)

For the three and six months ended June 30, 2022 and 2021, because the Company was in a loss position, basic net loss per share is the same as diluted net loss per share as the inclusion of the potential common shares would have been anti-dilutive.


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Outstanding options	45	194	73	209
Nonvested restricted stock units	684	970	795	1,038
Employee Stock Purchase Plan	45	1	69	6
Total	774	1,165	937	1,253

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 81,343	$ 27,684
Short-term investments	35,907	112,542
Accounts receivable, net of allowance for doubtful accounts of $890 as of June 30, 2022 and December 31, 2021	36,117	40,087
Prepaid expenses and other current assets	10,408	8,194
Total current assets	163,775	188,507
Property and equipment, net	38,390	35,295
Operating lease right-of-use assets, net	5,240	5,408
Goodwill	14,123	14,123
Intangible assets, net	19,505	21,239
Deferred tax assets, net	46	75
Other non-current assets	8,088	9,121
Total assets	249,167	273,768
Current liabilities:
Accounts payable	3,382	5,554
Accrued compensation and related benefits	10,634	9,495
Accrued and other current liabilities	6,237	3,328
Operating lease liabilities - current portion	1,493	1,758
Deferred revenues - current portion	19,568	23,691
Billings in excess of recognized revenues	480
Total current liabilities	41,794	43,826
Long-term income taxes payable	2,475	2,656
Non-current operating lease liabilities	5,275	5,258
Non-current portion of deferred revenue	1,748	2,443
Total liabilities	51,292	54,183
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.00015 par value, 5,000 shares authorized, no shares issued and outstanding
Common stock, $0.00015 par value, 70,000 shares authorized; shares issued 48,058 and 47,414, respectively; shares outstanding 36,975 and 37,411, respectively	6	6
Additional paid-in-capital	434,784	423,069
Treasury stock at cost, 11,083 and 10,003 shares, respectively	(131,365)	(104,705)
Accumulated deficit	(103,018)	(97,721)
Accumulated other comprehensive loss	(2,532)	(1,064)
Total stockholders' equity	197,875	219,585
Total liabilities and stockholders' equity	$ 249,167	$ 273,768

Note 6 - STOCKHOLDERS EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended			6 Months Ended		22 Months Ended
	Apr. 11, 2022	Jun. 04, 2020	Jun. 30, 2022	Mar. 31, 2022	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Apr. 10, 2022
Treasury Stock, Value, Acquired, Cost Method			$ 16,693	$ 5,778	$ 4,523
The 2020 Stock Repurchase Program [Member]
Treasury Stock, Shares, Acquired (in shares)						218,858	251,212	470,070
Treasury Stock Acquired, Average Cost Per Share (in dollars per share)						$ 26.40	$ 18.01	$ 21.91
Treasury Stock, Value, Acquired, Cost Method						$ 5,800	$ 4,500	$ 10,300
Stock Repurchase Program, Authorized Amount		$ 25,000
Stock Repurchase Program, Period in Force (Year)		2 years
Stock Repurchase Program 2022 [Member]
Treasury Stock, Shares, Acquired (in shares)						714,600
Treasury Stock Acquired, Average Cost Per Share (in dollars per share)						$ 23.36
Treasury Stock, Value, Acquired, Cost Method						$ 16,700
Stock Repurchase Program, Authorized Amount	$ 35,000
Stock Repurchase Program, Period in Force (Year)	2 years

Note 2 - REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

6 Months Ended

Jun. 30, 2022

Notes Tables

Schedule of Disaggregation of Revenue


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Over time	74		57	%	72	%	54	%
Point-in-time	26		43	%	28	%	46	%
Total	100	%	100	%	100	%	100	%

Note 5 - LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
LEASES
Operating lease expense	$ 353	$ 484	$ 698	$ 969
Short-term lease and variable lease expense	274	233	557	407
Total lease expense	$ 627	$ 717	1,255	$ 1,376
Lease termination gain			$ 100
Weighted average remaining lease term under operating ROU leases (in years) (Year)	5 years 6 months		5 years 6 months		5 years 8 months 12 days
Weighted average discount rate for operating lease liabilities	4.96%		4.96%		5.25%
Operating lease ROU assets obtained (in thousands)			$ 1,137