Financial Overview and Growth Strategy
Non-GAAP Presentation
In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles
in the United States of America (GAAP), the Company also provides certain non-GAAP financial measures. Non-
GAAP net income (loss) excludes the effects of non-recurring items (including adjustment to contingent
consideration related to acquisition, restructuring charges and severance payments, and expenses related to an
arbitration proceeding for a disputed contract with a customer), stock-based compensation expense, amortization
of acquired technology and other acquired intangible assets, and their related income tax effects, as applicable, as
well as adjustments for the non-cash portion of income taxes and tax impact of the CARES Act. These non-GAAP
financial measures are used by management internally to measure the Company's profitability and performance.
PDF Solutions' management believes that these non-GAAP measures provide useful supplemental measures to
investors regarding the Company's ongoing operations in light of the fact that none of these categories of expense
has a current effect on the future uses of cash (with the exception of certain non-recurring items) nor do they
impact the generation of current or future revenues. These non-GAAP results should not be considered an
alternative to, or a substitute for, GAAP financial information, and may be different from similarly titled non-GAAP
measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for
GAAP measures of income or loss as a measure of performance, or to cash flows from operating, investing and
financing activities as a measure of liquidity. Management uses these non-GAAP financial measures internally to
measure profitability and performance; these non-GAAP measures are presented here to give investors an
opportunity to see the Company's financial results as viewed by management. A detailed reconciliation of the
adjustments made to comparable GAAP measures is included herein.
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