STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2023

STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

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, which were all negotiated on arm’s length basis with commercial customary terms.

● 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. On June 5, 2022, the parties amended Amendment #1 to provide another approved Data Exchange Network (DEX) Site (as defined therein). On November 11, 2022, the parties entered into a further amendment to Amendment #1 that provided, effective October 31, 2022: (i) flexibility for Advantest to spend the remainder of their committed $50.0 million over the remainder of the original term on its choice of products and services from a price list, instead of limiting Advantest to the original, fixed bundle of software and services; (ii) revised exclusivity; and (iii) the Company with free access/use of certain Advantest software.

● 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 were not significant for the three months ended March 31, 2023 and 2022.

● 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 months ended March 31, 2023 and 2022.

Analytics revenue recognized from Advantest was $1.8 million and $2.6 million during the three months ended March 31, 2023 and 2022, respectively. There were no outstanding accounts receivable from Advantest as of March 31, 2023. Accounts receivable from Advantest amounted to $0.3 million as of December 31, 2022. Deferred revenue amounted to $5.9 million and $7.1 million as of March 31, 2023, and December 31, 2022, respectively. There was no occurrence of any termination events under these agreements as of the issuance of these condensed consolidated financial statements.