PDF Solutions (PDFS) shares soared 15.2% in the last trading session to close at $25.96. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 13.3% gain over the past four weeks.PDF Solutions is benefiting from strong revenue growth driven by innovative solutions like secureWISE, Sapience, Exensio, and increased adoption of AI and analytics in semiconductor manufacturing.This provider of software and services for semiconductor makers ...

Core Insights - PDF Solutions has signed a significant multi-year contract to expand its collaboration with a major global semiconductor manufacturer, deploying eProbe tools and associated analytics software across multiple high-volume manufacturing facilities [1][3][6] - The eProbe technology enables contactless testing of 3D semiconductor structures, optimized for specific wafer designs, and is supported by a comprehensive software suite for machine optimization and results analysis [2][4] - The contract validates PDF Solutions' strategic vision and highlights the importance of integrating process characterization data with design layout and in-line fabrication data to enhance yield diagnosis and variability control [5][6] Technology and Innovation - The eProbe technology is designed for advanced node development and high-volume manufacturing, facilitating faster yield learning in manufacturing environments [3][4] - The integration of eProbe DirectScan™ with Characterization Vehicle test chips and Exensio analytics software allows for improved detectability and root cause analysis at parts per billion (ppb) levels [5][6] Strategic Vision - PDF Solutions aims to create a cross-industry analytics and collaboration platform that connects key players in the semiconductor ecosystem, enhancing the value of secure connected solutions [6][7] - The company emphasizes the necessity of comprehensive connectivity for achieving faster yield ramps and successfully implementing AI solutions across the semiconductor supply chain [7] Financial Outlook - PDF Solutions reaffirms its revenue growth guidance for the full year 2025, projecting an increase of 21% to 23% compared to 2024 [8]

Core Insights - PDF Solutions reported record GAAP revenue of $51.7 million for Q2 2025, exceeding analyst expectations of $51.58 million, with a year-over-year increase of 24.0% driven by growth in its Analytics business following the SecureWise acquisition [1][5][9] - The company reaffirmed its annual revenue growth guidance for FY2025 at 21–23% [1][9] Financial Performance - Non-GAAP earnings per share for Q2 2025 were $0.19, slightly above the consensus estimate of $0.19, reflecting a year-over-year increase of 5.6% from $0.18 in Q2 2024 [2] - Gross margin (Non-GAAP) improved to 76%, up from 75% in the previous year [2] - Net income (Non-GAAP) was reported at $7.3 million, a 2.8% increase from $7.1 million in Q2 2024 [2] - The backlog increased to $232.6 million from $226.7 million in Q1 2025 [2][8] Business Overview - PDF Solutions provides software and cloud-based analytics platforms for the semiconductor industry, focusing on improving quality, yield, and operational efficiency through its Analytics platform, particularly the Exensio software suite [3] - The company is concentrating on expanding its analytics-driven product suite and integrating acquired solutions, forming strategic partnerships with industry leaders like Siemens and SAP [4] Segment Performance - The Analytics segment generated $48.8 million in revenue, a 28% year-over-year increase, accounting for 94.4% of total company revenue [5] - Integrated Yield Ramp solutions generated $2.9 million, a decline from previous periods, indicating potential project timing issues [6] Strategic Focus - Management highlighted strong customer demand for solutions in artificial intelligence, data integration, and manufacturing digitization [5] - The integration of SecureWise is progressing, contributing to recurring license and data usage revenue, although initial integration costs have elevated expenses [7] Market Considerations - Customer concentration remains a risk, with two customers accounting for 31% of revenues in 2024 [8] - Continued demand for analytics and enterprise-wide solutions is expected as the semiconductor industry increasingly adopts artificial intelligence and data-driven process improvements [10]

Core Viewpoint - PDF Solutions reported quarterly earnings of $0.19 per share, missing the Zacks Consensus Estimate of $0.20 per share, but showing an increase from $0.18 per share a year ago [1][2] Financial Performance - The company posted revenues of $51.73 million for the quarter ended June 2025, which was 2.4% below the Zacks Consensus Estimate, compared to $41.66 million in the same quarter last year [3] - The earnings surprise for the quarter was -5.00%, while the previous quarter saw a positive surprise of +10.53% [2] Stock Performance - PDF Solutions shares have declined approximately 17.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [4] - The current Zacks Rank for PDF Solutions is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $57 million, and for the current fiscal year, it is $0.88 on revenues of $217.7 million [8] - The industry outlook is favorable, with the Computer - Services sector ranking in the top 41% of over 250 Zacks industries, suggesting potential for outperformance [9]

Financial Data and Key Metrics Changes - The company achieved record revenues of $51.7 million for Q2, representing a 24% year-over-year increase and an 8% increase compared to the previous quarter [13][81]. - For the first half of the year, revenues grew by 20% year-over-year, meeting the long-term target of 20% revenue growth [14][82]. - Gross margins for Q2 were reported at 76%, exceeding the long-term target of 75% [15][84]. - The operating margin improved to 19% for Q2, up from the previous year [16][84]. - Earnings per share (EPS) for the quarter was $0.19, reflecting an 18% year-over-year growth for the first half of the year [17][85]. Business Line Data and Key Metrics Changes - Analytics revenue reached a record $48.8 million, up 28% from the same quarter last year, driven by characterization deals and the first full quarter of SecureWise revenues [14][82]. - Revenue contribution from integrated yield ramp decreased to $2.9 million from $3.5 million in the same quarter last year, attributed to the completion of fixed fee engagements [15][83]. - The backlog at the end of the quarter was $233 million, indicating growth momentum in bookings [15][83]. Market Data and Key Metrics Changes - Characterization bookings were particularly strong in Asia, with significant demand for solutions related to new node development [5][73]. - The company noted that a sizable fraction of revenue from China is derived from royalties and gain share from past deployments, which is expected to continue despite geopolitical tensions [40][108]. Company Strategy and Development Direction - The company anticipates revenue growth of 21% to 23% for the full year 2025, reaffirming prior guidance [4][18]. - The integration of SecureWise is progressing well, with expectations to complete system transitions by September [28][95]. - The company is focusing on enhancing supply chain orchestration through products like SecureWise and Sapient, which connect manufacturing operations to ERP systems [6][75]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to capitalize on trends in AI and advanced manufacturing processes [4][11]. - The company is optimistic about the growth opportunities in the semiconductor industry, particularly with the increasing demand for analytics and AI solutions [4][10]. - Management acknowledged the importance of the Chinese market while emphasizing a bifurcated operational strategy to mitigate risks [39][108]. Other Important Information - The company has consistently grown revenue, gross margins, and EPS from 2020 to 2024, with a 20% compound annual growth rate (CAGR) for revenue [12][80]. - The upcoming user conference and Analyst Day in December will showcase the impact of the PDF platform on the industry [11][79]. Q&A Session Summary Question: Can you provide more details on the traction with Sapient? - The recent contract was with an existing customer, focusing on the product side of an IDM, highlighting the need for visibility in supply chain management [22][92]. Question: How is the integration of SecureWise progressing? - The integration is on track for completion in September, with ongoing cross-training of sales teams and initial installations at OSATs [28][95]. Question: What is the expected run rate for CapEx spending? - The company anticipates managing CapEx at current levels or slightly below, depending on new opportunities that arise [32][101]. Question: How is the company positioned regarding potential disruptions in China? - The company has maintained a bifurcated operational strategy in China, allowing for continued revenue streams from past deployments despite geopolitical tensions [40][108]. Question: What is the outlook for the partnership with Intel? - Intel is expected to become a more significant customer, with the technology provided by the company becoming increasingly important as Intel opens its manufacturing to others [46][47].

PART I FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements of PDF Solutions, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial components [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | ASSETS | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $37,415 | $90,594 | | Short-term investments | $2,987 | $24,291 | | Accounts receivable, net | $69,264 | $73,649 | | Total current assets | $134,790 | $205,979 | | Property and equipment, net | $61,853 | $48,465 | | Goodwill | $96,798 | $14,953 | | Intangible assets, net | $56,330 | $12,307 | | Total assets | $391,133 | $315,289 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $6,555 | $8,255 | | Deferred revenues – current portion | $23,363 | $25,005 | | Current portion of long-term debt, net | $2,240 | — | | Total current liabilities | $56,963 | $60,542 | | Long-term debt, net | $65,877 | — | | Total liabilities | $133,613 | $69,252 | | Total stockholders' equity | $257,520 | $246,037 | | Total liabilities and stockholders' equity | $391,133 | $315,289 | - Total assets increased by **$75.8 million (24.0%)** from **$315.3 million** at December 31, 2024, to **$391.1 million** at June 30, 2025, primarily driven by significant increases in goodwill and intangible assets due to the SecureWise acquisition[8](index=8&type=chunk)[59](index=59&type=chunk)[117](index=117&type=chunk) - Total liabilities increased by **$64.4 million (93.0%)** from **$69.3 million** at December 31, 2024, to **$133.6 million** at June 30, 2025, mainly due to the addition of long-term debt to finance the SecureWise acquisition[8](index=8&type=chunk)[107](index=107&type=chunk)[117](index=117&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement details the company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $51,728 | $41,661 | $99,506 | $82,971 | | Costs of revenues | $14,886 | $12,230 | $27,841 | $25,759 | | Income (loss) from operations | $1,117 | $264 | $(2,438) | $(1,696) | | Net income (loss) | $1,146 | $1,705 | $(1,886) | $1,312 | | Basic EPS | $0.03 | $0.04 | $(0.05) | $0.03 | | Diluted EPS | $0.03 | $0.04 | $(0.05) | $0.03 | - Total revenues increased by **24% to $51.7 million** for Q2 2025 and by **20% to $99.5 million** for H1 2025, compared to the respective prior periods, primarily driven by growth in Analytics revenue[9](index=9&type=chunk)[135](index=135&type=chunk)[140](index=140&type=chunk) - Net income decreased to **$1.1 million** for Q2 2025 from **$1.7 million** in Q2 2024, and the company reported a net loss of **$1.9 million** for H1 2025 compared to a net income of **$1.3 million** in H1 2024, largely due to increased operating expenses, including acquisition costs for SecureWise, and interest expense[9](index=9&type=chunk)[135](index=135&type=chunk)[140](index=140&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This statement outlines changes in the company's equity accounts, including common stock, retained earnings, and other comprehensive income Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Component | Balance, Dec 31, 2024 | Shares Issued (Equity Plans) | Shares Withheld (Taxes) | Stock-based Comp. Expense | Comprehensive Income (Loss) | Balance, June 30, 2025 | | :-------------------------- | :-------------------- | :--------------------------- | :---------------------- | :------------------------ | :-------------------------- | :--------------------- | | Common Stock (Shares) | 38,801 | 362 | — | — | — | 39,163 | | Common Stock (Amount) | $6 | — | — | — | — | $6 | | Additional Paid-In Capital | $502,902 | $2,155 | — | $13,000 | — | $518,055 | | Treasury Stock (Shares) | 11,916 | — | 135 | — | — | 12,051 | | Treasury Stock (Amount) | $(159,352) | — | $(3,535) | — | — | $(162,887) | | Accumulated Deficit | $(93,988) | — | — | — | $(1,886) | $(95,874) | | Accumulated Other Comp. Loss | $(3,531) | — | — | — | $1,751 | $(1,780) | | Total Stockholders' Equity | $246,037 | $2,155 | $(3,535) | $13,000 | $(135) | $257,520 | - Total stockholders' equity increased by **$11.5 million** from **$246.0 million** at December 31, 2024, to **$257.5 million** at June 30, 2025[8](index=8&type=chunk)[10](index=10&type=chunk) - The increase in stockholders' equity was primarily driven by stock-based compensation expense of **$13.0 million** and shares issued under equity plans, partially offset by a net loss for the six months ended June 30, 2025, and shares withheld for taxes related to equity awards[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $3,425 | $(1,178) | | Net cash provided by (used in) investing activities | $(124,246) | $4,193 | | Net cash provided by (used in) financing activities | $66,645 | $(9,153) | | Effect of exchange rate changes on cash and cash equivalents | $997 | $(853) | | Net change in cash and cash equivalents | $(53,179) | $(6,991) | | Cash and cash equivalents at end of period | $37,415 | $91,987 | - Net cash provided by operating activities significantly improved to **$3.4 million** for H1 2025, compared to net cash used of **$1.2 million** in H1 2024, primarily due to higher customer collections[183](index=183&type=chunk) - Net cash used in investing activities dramatically increased to **$124.2 million** in H1 2025, primarily due to the **$129.7 million** payment for the SecureWise acquisition[184](index=184&type=chunk)[185](index=185&type=chunk) - Net cash provided by financing activities was **$66.6 million** in H1 2025, a substantial increase from net cash used of **$9.2 million** in H1 2024, driven by **$69.6 million** in proceeds from long-term debt to finance the SecureWise acquisition[187](index=187&type=chunk)[188](index=188&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the financial statement preparation basis and outlines the company's key accounting policies and estimates - The interim unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and GAAP, reflecting all necessary recurring adjustments[15](index=15&type=chunk) - Significant estimates include revenue recognition, useful lives of assets, fair value of convertible notes, credit loss allowance, goodwill impairment, deferred tax assets, lease obligations, stock-based compensation, and income tax uncertainties[17](index=17&type=chunk) - The company is evaluating the impact of new FASB ASUs: ASU 2023-09 (Income Tax Disclosures, effective 2025), ASU 2024-03 (Expense Disaggregation, effective 2026), and ASU 2025-05 (Credit Losses, effective 2025)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) [2. Revenue from Contracts with Customers](index=10&type=section&id=2.%20Revenue%20from%20Contracts%20with%20Customers) This note details the company's revenue recognition policies and disaggregates revenue by source and timing of transfer - Revenue is derived from two sources: Analytics (licenses, SaaS, DFI/CV systems) and Integrated Yield Ramp (performance incentives based on yield achievement, 'Gainshare')[23](index=23&type=chunk)[27](index=27&type=chunk)[35](index=35&type=chunk) Disaggregation of Revenue by Timing of Transfer | Timing of Revenue | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Over time | 70% | 72% | 65% | 69% | | Point-in-time | 30% | 28% | 35% | 31% | | Total | 100% | 100% | 100% | 100% | - International revenues accounted for approximately **61%** and **62%** of total revenues during the three and six months ended June 30, 2025, respectively[39](index=39&type=chunk) Contract Balances (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Total contract assets | $8,167 | $3,841 | | Total deferred revenues | $24,471 | $26,517 | | Total capitalized direct sales commission costs | $6,541 | $5,314 | - As of June 30, 2025, the aggregate amount of transaction price allocated to remaining performance obligations was approximately **$232.6 million**, with more than half expected to be recognized over the next two years[49](index=49&type=chunk) [3. Balance Sheet Components](index=15&type=section&id=3.%20Balance%20Sheet%20Components) This note provides detailed breakdowns and explanations for various asset and liability accounts on the balance sheet - Unbilled accounts receivable increased to **$29.3 million** at June 30, 2025, from **$23.0 million** at December 31, 2024[54](index=54&type=chunk) Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Prepaid expense | $8,112 | $6,481 | | Contract assets | $7,930 | $3,224 | | Costs capitalized to obtain revenue contracts | $2,381 | $2,929 | | Net investments in sales-type leases - current portion | $5,014 | $4,526 | | Income tax receivable | $1,687 | $285 | | Total prepaid expenses and other current assets | $25,124 | $17,445 | Property and Equipment, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Total property and equipment | $110,234 | $95,416 | | Less: Accumulated depreciation and amortization | $(48,381) | $(46,951) | | Total property and equipment, net | $61,853 | $48,465 | - Goodwill increased significantly by **$81.8 million** to **$96.8 million** at June 30, 2025, primarily due to the acquisition of SecureWise LLC[59](index=59&type=chunk) Intangible Assets, Net (in thousands) | Item | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :----------------------------------- | :-------------------------------- | :---------------------------------- | | Customer relationships | $29,672 | $1,633 | | Developed technology | $19,839 | $9,965 | | Tradename and trademarks | $6,631 | $478 | | Patent | $188 | $231 | | Noncompetition agreements | — | — | | Total | $56,330 | $12,307 | - Total amortization expense for acquired intangible assets was **$2.1 million** for Q2 2025 and **$3.1 million** for H1 2025, significantly higher than prior periods due to recent acquisitions[60](index=60&type=chunk) [4. Leases](index=19&type=section&id=4.%20Leases) This note outlines the company's lease arrangements, related expenses, and key lease terms - The company leases administrative and sales offices and equipment under non-cancellable operating leases expiring through 2031[65](index=65&type=chunk) Lease Expense (in thousands) | Lease Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $435 | $379 | $849 | $760 | | Short-term lease and variable lease expense | $193 | $272 | $400 | $486 | | Total lease expense | $628 | $651 | $1,249 | $1,246 | - The weighted average remaining lease term for operating leases was **3.4 years** with a weighted average discount rate of **6.2%** as of June 30, 2025[67](index=67&type=chunk) [5. Stockholders' Equity](index=20&type=section&id=5.%20Stockholders%27%20Equity) This note details changes in stockholders' equity, including stock repurchase programs and equity transactions - The 2022 stock repurchase program expired on April 11, 2024, with a total of **937,501 shares** repurchased for **$24.3 million**[68](index=68&type=chunk) - A new 2024 stock repurchase program was adopted on April 15, 2024, authorizing up to **$40.0 million** in repurchases over two years, but no shares have been repurchased under this program as of June 30, 2025[69](index=69&type=chunk) [6. Employee Benefit Plans](index=20&type=section&id=6.%20Employee%20Benefit%20Plans) This note describes the company's employee stock purchase plan and stock-based compensation arrangements - Under the 2021 Employee Stock Purchase Plan, **90,076 shares** were issued in H1 2025 at a weighted average price of **$23.68 per share**[72](index=72&type=chunk) - Unrecognized compensation cost related to the 2021 Purchase Plan was **$3.7 million** as of June 30, 2025, to be recognized over **1.6 years**[72](index=72&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Costs of revenues | $1,257 | $1,185 | $2,599 | $2,385 | | Research and development | $2,251 | $2,063 | $4,670 | $4,265 | | Selling, general, and administrative | $2,691 | $2,452 | $5,526 | $5,160 | | Total stock-based compensation expense | $6,199 | $5,700 | $12,795 | $11,810 | - Total unrecognized compensation cost related to RSUs was **$38.0 million** as of June 30, 2025, expected to be recognized over **2.3 years**[80](index=80&type=chunk) [7. Income Taxes](index=22&type=section&id=7.%20Income%20Taxes) This note provides information on income tax expense, effective tax rates, and unrecognized tax benefits - The company reported an income tax benefit of **$1.1 million** for H1 2025, a decrease of **$1.2 million** compared to an expense of **$(0.2) million** in H1 2024[82](index=82&type=chunk) - The effective tax rate was **36%** for H1 2025, up from **11%** for H1 2024, primarily due to changes in foreign, federal, and state taxes and the recognition of worldwide pre-tax income (loss)[82](index=82&type=chunk) - Unrecognized tax benefits totaled **$17.3 million** as of June 30, 2025, with **$2.4 million** potentially affecting the effective tax rate if recognized[83](index=83&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. (July 4, 2025) includes significant corporate tax provisions, which the company is currently assessing for impact on future financial statements[86](index=86&type=chunk) [8. Net Income (Loss) Per Share](index=23&type=section&id=8.%20Net%20Income%20%28Loss%29%20Per%20Share) This note presents the calculation of basic and diluted net income or loss per share Net Income (Loss) Per Share (in thousands except per share amount) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $1,146 | $1,705 | $(1,886) | $1,312 | | Basic EPS | $0.03 | $0.04 | $(0.05) | $0.03 | | Diluted EPS | $0.03 | $0.04 | $(0.05) | $0.03 | - For the six months ended June 30, 2025, diluted net loss per share was the same as basic net loss per share (**$0.05**) because the company was in a loss position, making potential common shares anti-dilutive[87](index=87&type=chunk) Anti-Dilutive Potential Common Shares (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-vested restricted stock units | 1,164 | 556 | 1,518 | 571 | | Outstanding stock options | 6 | — | 26 | — | | Shares issuable under employee stock purchase plan | 268 | — | 268 | — | | Total | 1,438 | 556 | 1,812 | 571 | [9. Customer and Geographic Information](index=24&type=section&id=9.%20Customer%20and%20Geographic%20Information) This note disaggregates revenue by major customers and geographic regions, highlighting market concentration - The company operates as one operating and reporting segment, providing differentiated data and analytics solutions to the semiconductor and electronics industries[90](index=90&type=chunk) Revenues from Major Customers (as % of total revenues) | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | A | 19% | 24% | 17% | 23% | | B | 12% | *% | 15% | 14% | | C | 17% | *% | 14% | *% | Revenues by Geographic Area (in thousands) | Geographic Area | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $19,954 (39%) | $19,223 (46%) | $38,182 (39%) | $36,956 (45%) | | Japan | $9,304 (18%) | $7,932 (19%) | $21,040 (21%) | $19,220 (23%) | | China | $12,190 (23%) | $7,000 (17%) | $20,233 (20%) | $11,853 (14%) | | Rest of the world | $10,280 (20%) | $7,506 (18%) | $20,051 (20%) | $14,942 (18%) | | Total revenues | $51,728 (100%) | $41,661 (100%) | $99,506 (100%) | $82,971 (100%) | [10. Fair Value Measurements](index=25&type=section&id=10.%20Fair%20Value%20Measurements) This note details the fair value hierarchy and measurements for the company's financial instruments - The company categorizes financial instruments into a three-level fair value hierarchy based on the observability of inputs[93](index=93&type=chunk) Fair Value Measurements Using (in thousands) | Assets | Classification | June 30, 2025 | Level 1 | Level 2 | Level 3 | | :----------------------------------- | :------------------------------- | :------------ | :-------- | :-------- | :-------- | | Money market mutual funds | Cash equivalents | $1,361 | $1,361 | — | — | | U.S. Government securities | Short-term investments | $2,987 | $2,987 | — | — | | Convertible note receivable | Other non-current assets | $2,087 | — | — | $2,087 | | Total | | $6,435 | $4,348 | — | $2,087 | - The convertible note receivable is measured using **Level 3 inputs**, reflecting unobservable value drivers[94](index=94&type=chunk) [11. Commitments and Contingencies](index=26&type=section&id=11.%20Commitments%20and%20Contingencies) This note discloses the company's purchase obligations, legal proceedings, and warranty indemnification commitments - The company has purchase obligations totaling **$36.1 million** as of June 30, 2025, with the majority due within the next 12 months[99](index=99&type=chunk) - The company is involved in an arbitration proceeding against SMIC New Technology Research & Development (Shanghai) Corporation for unpaid fees, with a decision pending from the Tribunal[103](index=103&type=chunk) - The company provides standard product warranties and indemnifies customers against intellectual property infringement claims, with historically insignificant related costs[97](index=97&type=chunk)[98](index=98&type=chunk) [12. Strategic Partnership Agreement with Advantest and Related Party Transactions](index=27&type=section&id=12.%20Strategic%20Partnership%20Agreement%20with%20Advantest%20and%20Related%20Party%20Transactions) This note describes the strategic partnership with Advantest and related financial transactions - The company has a long-term strategic partnership with Advantest Corporation, established in July 2020, involving equity investment, cloud-based application development, commercial licensing, and a 5-year Exensio analytics software subscription[104](index=104&type=chunk) Analytics Revenue from Advantest (in millions) | Period | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | Three Months Ended June 30, | $3.5 | $3.0 | | Six Months Ended June 30, | $7.1 | $5.9 | - Deferred revenue from Advantest decreased from **$8.3 million** at December 31, 2024, to **$2.3 million** at June 30, 2025[105](index=105&type=chunk) [13. Debt](index=28&type=section&id=13.%20Debt) This note provides details on the company's debt instruments, including terms, interest rates, and future principal payments Debt as of June 30, 2025 (in thousands) | Item | Amount | | :----------------------------------- | :----- | | Term loan | $24,375 | | Revolving credit facility | $45,000 | | Total debt (principal amount) | $69,375 | | Unamortized debt discount and financing costs | $(1,258) | | Total debt, net | $68,117 | | Current portion of long-term debt, net | $2,240 | | Long-term debt, net | $65,877 | - The company entered into a Credit Agreement on March 7, 2025, providing a **$45.0 million** revolving credit facility and a **$25.0 million** term loan facility, primarily to finance the SecureWise acquisition[107](index=107&type=chunk)[108](index=108&type=chunk)[114](index=114&type=chunk) - Borrowings accrue interest at variable rates based on SOFR or an alternate base rate, plus an applicable margin, and the company was in compliance with all debt covenants as of June 30, 2025[110](index=110&type=chunk)[111](index=111&type=chunk) Estimated Future Principal Payments of Total Long-Term Debt (in thousands) | Year Ending December 31, | Amount | | :----------------------------------- | :----- | | 2025 (remaining six months) | $1,250 | | 2026 | $2,500 | | 2027 | $2,500 | | 2028 | $2,500 | | 2029 | $2,500 | | 2030 | $58,125 | | Total future principal payments of long-term debt | $69,375 | [14. Business Combination](index=29&type=section&id=14.%20Business%20Combination) This note details the acquisition of SecureWise LLC, including the purchase price allocation and strategic rationale - On March 7, 2025, the company completed the acquisition of SecureWise LLC for a cash purchase price of **$130.0 million**, financed by cash on hand and new credit facilities[117](index=117&type=chunk) - The acquisition is expected to accelerate equipment makers' ability to leverage Exensio analytics software and expand the secure data exchange network[118](index=118&type=chunk) Preliminary Purchase Price Allocation for SecureWise Acquisition (in thousands) | Item | Amount | Amortization Period (Years) | | :----------------------------------- | :----- | :-------------------------- | | Cash | $1,049 | | | Accounts receivable | $2,969 | | | Prepaid and other assets | $1,049 | | | Fixed assets | $1,592 | | | Trademark | $6,600 | 5 | | Customer relationships | $28,900 | 13 | | Developed technology | $11,600 | 7 | | Goodwill | $81,799 | N/A | | Accounts payable and other current liabilities | $(4,791) | | | Total purchase price allocation | $130,767 | | - Transaction costs related to the SecureWise acquisition amounted to **$5.4 million**, with **$4.5 million** recorded in H1 2025[120](index=120&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and cash flows, highlighting key performance drivers, industry trends, critical accounting policies, and liquidity. It covers revenue and expense analysis, the impact of the SecureWise acquisition, and market risks [Forward-Looking Statements](index=31&type=section&id=Forward-Looking%20Statements) This section cautions readers about statements that project future events or results, which are subject to various risks and uncertainties - The discussion contains forward-looking statements subject to various risks and uncertainties, including business strategy, industry trends, macroeconomic factors, geopolitical tensions, and regulatory changes[126](index=126&type=chunk) [Overview](index=31&type=section&id=Overview) This section provides a general description of the company's business, products, services, and global operations - PDF Solutions offers products and services to the semiconductor and electronics industries, focusing on data connection, collection, management, transfer, and analysis to improve yield and quality[128](index=128&type=chunk) - Revenue is primarily derived from Analytics (software licenses, professional services, SaaS) and Integrated Yield Ramp (value-based variable fees or 'Gainshare')[128](index=128&type=chunk) - The company is headquartered in Santa Clara, California, with global operations in Canada, China, France, Germany, Italy, Japan, Korea, and Taiwan[129](index=129&type=chunk) [Acquisition of SecureWise LLC](index=32&type=section&id=Acquisition%20of%20SecureWise%20LLC) This section discusses the strategic rationale and expected benefits of the SecureWise LLC acquisition - The acquisition of SecureWise LLC on March 7, 2025, adds secure remote connectivity solutions to the product portfolio[130](index=130&type=chunk) - This acquisition is expected to accelerate equipment makers' ability to leverage Exensio analytics software and expand the secure data exchange (DEX) network for chip manufacturing optimization[130](index=130&type=chunk) [Industry Trends](index=32&type=section&id=Industry%20Trends) This section analyzes key industry developments, including technological advancements, market demand, and geopolitical factors affecting the business - Industry 4.0 and cloud computing are driving increased innovation in semiconductor manufacturing and analytics, leading to greater demand for cloud-based analytics programs[131](index=131&type=chunk) - Challenges in adopting Industry 4.0 and secure cloud computing create opportunities for the company's advanced analytics capabilities and supporting infrastructure[131](index=131&type=chunk) - Geopolitical tensions, changing export controls (especially concerning China), and uneven global economic performance (leading to lower wafer shipments and soft demand) may affect business opportunities and revenue[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) [Financial Highlights](index=33&type=section&id=Financial%20Highlights) This section summarizes key financial performance metrics, including revenues, net income, and segment-specific results Financial Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $51.7 | $41.6 | $99.5 | $82.9 | | Analytics revenue | $48.8 | $38.1 | $91.3 | $76.5 | | Integrated Yield Ramp revenue | $2.9 | $3.5 | $8.2 | $6.3 | | Net income (loss) | $1.1 | $1.7 | $(1.9) | $1.3 | | Costs of revenues (3-month change) | +$2.7 | | | | | Costs of revenues (6-month change) | | | +$2.1 | | - Analytics revenue increased by **28%** for Q2 2025 and **19%** for H1 2025, driven by CV systems, secureWISE products/services, and DFI systems, partially offset by decreased Exensio software licenses[135](index=135&type=chunk)[140](index=140&type=chunk) - Net income decreased for Q2 2025 and resulted in a net loss for H1 2025, primarily due to increased overall costs and expenses, including acquisition costs for SecureWise, and higher R&D and SG&A expenses[135](index=135&type=chunk)[140](index=140&type=chunk) [Critical Accounting Policies](index=34&type=section&id=Critical%20Accounting%20Policies) This section discusses the significant accounting policies and estimates that require management's judgment and assumptions - The preparation of financial statements requires significant estimates and assumptions, particularly for revenue recognition, valuation of long-lived assets (including goodwill and intangibles), stock-based compensation, and deferred tax assets[137](index=137&type=chunk) - There were no material changes to the critical accounting policies and estimates disclosed in the Annual Report on Form 10-K for the three and six months ended June 30, 2025[138](index=138&type=chunk) [Recent Accounting Pronouncements and Accounting Changes](index=34&type=section&id=Recent%20Accounting%20Pronouncements%20and%20Accounting%20Changes) This section refers to disclosures regarding new accounting standards and their potential impact on the financial statements - The company refers to Note 1 for a description of recent accounting pronouncements and changes, including their expected adoption dates and estimated effects[139](index=139&type=chunk) [Revenues, Costs of Revenues, and Gross Margin](index=35&type=section&id=Revenues%2C%20Costs%20of%20Revenues%2C%20and%20Gross%20Margin) This section analyzes the company's revenue streams, associated costs, and overall profitability margins Revenues, Costs of Revenues, and Gross Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Analytics Revenues | $48,822 | $38,114 | $10,708 | 28% | $91,293 | $76,577 | $14,716 | 19% | | Integrated Yield Ramp Revenues | $2,906 | $3,547 | $(641) | (18)% | $8,213 | $6,394 | $1,819 | 28% | | Total revenues | $51,728 | $41,661 | $10,067 | 24% | $99,506 | $82,971 | $16,535 | 20% | | Costs of revenues | $14,886 | $12,230 | $2,656 | 22% | $27,841 | $25,759 | $2,082 | 8% | | Gross profit | $36,842 | $29,431 | $7,411 | 25% | $71,665 | $57,212 | $14,453 | 25% | | Gross margin | 71% | 71% | | | 72% | 69% | | | - Analytics revenue growth in Q2 2025 was primarily driven by CV systems, secureWISE products/services, and DFI systems, while Integrated Yield Ramp revenue decreased due to fewer fixed-fee engagement hours, partially offset by higher Gainshare[142](index=142&type=chunk)[144](index=144&type=chunk) - Costs of revenues increased in both periods due to higher subcontractor costs, facilities/IT, hardware, and personnel-related costs[149](index=149&type=chunk)[150](index=150&type=chunk) - Gross margin remained flat at **71%** for Q2 2025 but increased by **three percentage points to 72%** for H1 2025, primarily due to higher Gainshare contribution[151](index=151&type=chunk)[152](index=152&type=chunk) [Research and Development Expenses](index=36&type=section&id=Research%20and%20Development) This section details the company's investments in research and development activities and their impact on expenses Research and Development Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Research and development | $14,913 | $12,649 | $2,264 | 18% | $29,541 | $25,633 | $3,908 | 15% | | As a percentage of total revenues | 29% | 30% | | | 30% | 31% | | | - R&D expenses increased by **$2.3 million (18%)** for Q2 2025 and **$3.9 million (15%)** for H1 2025, driven by higher personnel-related costs (headcount, salaries, bonuses, stock-based compensation), subcontractor fees (Cimetrix software), and facilities/IT costs[155](index=155&type=chunk)[156](index=156&type=chunk) [Selling, General, and Administrative Expenses](index=37&type=section&id=Selling%2C%20General%2C%20and%20Administrative) This section analyzes the trends and drivers of the company's selling, general, and administrative costs Selling, General, and Administrative Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Selling, general, and administrative | $19,744 | $16,259 | $3,485 | 21% | $43,116 | $32,757 | $10,359 | 32% | | As a percentage of total revenues | 38% | 39% | | | 43% | 39% | | | - SG&A expenses increased by **$3.5 million (21%)** for Q2 2025 and **$10.4 million (32%)** for H1 2025[159](index=159&type=chunk)[160](index=160&type=chunk) - Key drivers for the increase include higher personnel-related costs, subcontractor fees, facilities/IT costs, and **$4.5 million** in non-recurring legal, finance, and integration costs related to the SecureWise acquisition for H1 2025[159](index=159&type=chunk)[160](index=160&type=chunk) [Amortization of Acquired Intangible Assets](index=37&type=section&id=Amortization%20of%20Acquired%20Intangible%20Assets) This section discusses the amortization expense related to intangible assets acquired through business combinations Amortization of Acquired Intangible Assets (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Amortization of acquired intangible assets | $1,068 | $259 | $809 | 312% | $1,446 | $518 | $928 | 179% | - Amortization expense for acquired intangible assets significantly increased by **312%** for Q2 2025 and **179%** for H1 2025, primarily due to intangibles acquired from prior business combinations, including SecureWise[162](index=162&type=chunk) [Interest Expense](index=38&type=section&id=Interest%20Expense) This section details the interest costs incurred on the company's debt obligations Interest Expense (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Interest expense | $(1,242) | — | $(1,242) | (100)% | $(1,553) | — | $(1,553) | (100)% | - The company incurred **$1.2 million** in interest expense for Q2 2025 and **$1.6 million** for H1 2025, compared to none in the prior periods, due to long-term debt taken to finance the SecureWise acquisition[163](index=163&type=chunk) [Interest Income and Other, Net](index=38&type=section&id=Interest%20Income%20and%20Other%2C%20Net) This section reports on interest earned from investments and other non-operating income or expenses Interest Income and Other, Net (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Interest income and other, net | $196 | $1,479 | $(1,283) | (87)% | $1,066 | $3,171 | $(2,105) | (66)% | - Interest income and other, net decreased by **$1.3 million** for Q2 2025 and **$2.1 million** for H1 2025, primarily due to lower interest income from cash/investments and unfavorable foreign currency exchange rate fluctuations, partially offset by a recovery from previously written-off property and equipment[164](index=164&type=chunk)[165](index=165&type=chunk) [Income Tax Expense](index=38&type=section&id=Income%20Tax%20Expense) This section analyzes the company's income tax provisions, benefits, and effective tax rates Income Tax Benefit (Expense) (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Income tax benefit (expense) | $1,075 | $(38) | $(1,113) | (2,929)% | $1,039 | $(163) | $(1,202) | (737)% | - The company recorded an income tax benefit for both Q2 and H1 2025, a significant change from expenses in the prior year, mainly due to changes in foreign, federal, and state taxes and the recognition of worldwide pre-tax income (loss)[166](index=166&type=chunk) - The recently enacted OBBBA in the U.S. (July 4, 2025) is being assessed for its potential impact on future effective tax rates, liabilities, and cash taxes, with no impact included in H1 2025 results[168](index=168&type=chunk) [Liquidity and Capital Resources Overview](index=39&type=section&id=Liquidity%20and%20Capital%20Resources%20Overview) This section provides an overview of the company's cash position, working capital, and ability to meet financial obligations - Working capital decreased to **$77.8 million** at June 30, 2025, from **$145.4 million** at December 31, 2024[169](index=169&type=chunk) - Total cash, cash equivalents, and short-term investments decreased to **$40.4 million** at June 30, 2025, from **$114.9 million** at December 31, 2024[169](index=169&type=chunk) - The company believes existing cash resources and anticipated funds from operations will satisfy cash requirements for at least the next twelve months and the foreseeable future[171](index=171&type=chunk) [Term Loan and Revolving Credit Facility](index=39&type=section&id=Term%20Loan%20and%20Revolving%20Credit%20Facility) This section details the company's credit facilities, including terms, covenants, and utilization - On March 7, 2025, the company entered into a Credit Agreement for a **$45.0 million** revolving credit facility and a **$25.0 million** term loan facility[172](index=172&type=chunk)[173](index=173&type=chunk) - The facilities were used to partially finance the acquisition of SecureWise[179](index=179&type=chunk) - The Credit Agreement includes customary covenants, such as maintaining a consolidated total net leverage ratio not greater than **3.00 to 1.00** and a consolidated fixed charge coverage ratio not less than **1.25 to 1.00**, with which the company was in compliance as of June 30, 2025[176](index=176&type=chunk) [Repurchase of Company's Common Stock](index=40&type=section&id=Repurchase%20of%20Company%27s%20Common%20Stock) This section reports on any stock repurchase programs and their execution during the period - A new **$40.0 million** stock repurchase program was adopted on April 15, 2024, but no shares have been repurchased under this program as of June 30, 2025[180](index=180&type=chunk) [Cash Flow Data](index=40&type=section&id=Cash%20Flow%20Data) This section provides a summary and analysis of cash flows from operating, investing, and financing activities Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | | :----------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Operating activities | $3,425 | $(1,178) | $4,603 | | Investing activities | $(124,246) | $4,193 | $(128,439) | | Financing activities | $66,645 | $(9,153) | $75,798 | | Effect of exchange rate changes | $997 | $(853) | $1,850 | | Net change in cash and cash equivalents | $(53,179) | $(6,991) | $(46,188) | - Net cash provided by operating activities increased by **$4.6 million**, primarily due to higher collections from customers[183](index=183&type=chunk) - Net cash used in investing activities increased by **$128.4 million**, mainly due to the **$129.7 million** payment for the SecureWise acquisition[184](index=184&type=chunk)[185](index=185&type=chunk) - Net cash provided by financing activities increased by **$75.8 million**, driven by **$69.6 million** in proceeds from long-term debt for the SecureWise acquisition[187](index=187&type=chunk)[188](index=188&type=chunk) [Related Party Transactions](index=41&type=section&id=Related%20Party%20Transactions) This section refers to disclosures regarding transactions with related parties - Information regarding related party transactions with Advantest is detailed in Note 12[190](index=190&type=chunk) [Off-Balance Sheet Agreements](index=41&type=section&id=Off-Balance%20Sheet%20Agreements) This section confirms the absence of any material off-balance sheet arrangements - As of June 30, 2025, the company does not have any off-balance sheet arrangements, investments in special purpose entities, or undisclosed borrowings or debt[191](index=191&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, specifically focusing on interest rate risk and foreign currency exchange risk, and discusses potential impacts on financial performance [Interest Rate Risk](index=41&type=section&id=Interest%20Rate%20Risk) This section assesses the company's exposure to fluctuations in interest rates on its debt and investment portfolio - The company's exposure to interest rate risk relates to its investment portfolio and **$68.1 million** in variable-rate long-term debt[193](index=193&type=chunk)[196](index=196&type=chunk) - A hypothetical **100 basis point** increase in market interest rates would increase annual interest expense on variable-rate debt by an average of **$0.4 million**[196](index=196&type=chunk) [Foreign Currency and Exchange Risk](index=42&type=section&id=Foreign%20Currency%20and%20Exchange%20Risk) This section discusses the company's exposure to currency fluctuations from international operations and transactions - The company is exposed to foreign currency risks due to cash balances, receivables, and payables denominated in local currencies (Euro, Yen, Chinese Yuan, New Taiwan Dollar, Canadian Dollar) for international operations[197](index=197&type=chunk) - The company does not currently use foreign currency exchange contracts for trading or speculative purposes[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=42&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's assessment of the effectiveness of the company's disclosure controls and procedures - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[198](index=198&type=chunk) - The assessment of SecureWise's internal control over financial reporting was omitted due to SEC guidance, as the acquisition was completed on March 7, 2025[199](index=199&type=chunk) [Changes in Internal Control over Financial Reporting](index=42&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section discloses any material changes in the company's internal control over financial reporting - There were no material changes in the company's internal control over financial reporting during the six months ended June 30, 2025, other than the exclusion of SecureWise's internal controls from the assessment[200](index=200&type=chunk) PART II OTHER INFORMATION This section includes additional information not covered in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the detailed information on legal proceedings provided in the notes to the condensed consolidated financial statements - Information regarding legal proceedings is provided in Note 11, Commitments and Contingencies[201](index=201&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[202](index=202&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the absence of stock repurchases during the second quarter of 2025 - There were no stock repurchases during the second quarter of 2025[203](index=203&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities[204](index=204&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no mine safety disclosures to report - No mine safety disclosures[205](index=205&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This section provides other information, specifically noting the absence of insider trading arrangement adoptions or terminations - No directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[206](index=206&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements, certifications, and financial statements in XBRL format - The report includes exhibits such as the Equity Purchase Agreement for SecureWise, amended organizational documents, stock incentive plans, and certifications by executive officers[208](index=208&type=chunk) [SIGNATURES](index=45&type=section&id=SIGNATURES) This section contains the required signatures of the company's authorized officers, affirming the submission of the report - The report is signed by John K. Kibarian, President and Chief Executive Officer, and Adnan Raza, Executive Vice President, Finance and Chief Financial Officer, on August 7, 2025[212](index=212&type=chunk)

[Q2 2025 Results Overview](index=3&type=section&id=Q2%202025%20Results) PDF Solutions reported total revenues of **$51.7 million** in Q2 2025, marking an 8% sequential and 24% year-over-year increase, primarily driven by strong Analytics revenue growth despite a decline in Integrated yield ramp revenue Q2 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Total Revenues | $51.7M | | Non-GAAP Gross Margin | 76% | | GAAP Diluted EPS | $0.03 | | Non-GAAP Diluted EPS | $0.19 | | Operating Cash Flow | ($5.2M) | | Cash Used for Capital Expenditures | $8.5M | - **Total Revenues:** **$51.7 million**, up 8% over Q1 2025 and up 24% over Q2 2024[7](index=7&type=chunk) - **Analytics Revenue:** **$48.8 million**, up 15% over Q1 2025 and up 28% over Q2 2024[7](index=7&type=chunk) - **Integrated Yield Ramp Revenue:** **$2.9 million**, down 45% over Q1 2025 and down 18% over Q2 2024[7](index=7&type=chunk) [Key Financial & Operating Metrics](index=4&type=section&id=Key%20Financial%20%26%20Operating%20Metrics) The company demonstrated consistent quarterly revenue growth to **$51.7 million** in Q2 2025, though operating cash flow turned negative, while year-to-date revenues increased with positive operating cash flow compared to prior periods [Quarterly](index=4&type=section&id=Quarterly%20Metrics) Quarterly Financial and Operating Metrics (in thousands, except shares) | (in thousands, except shares) | Q2'25 | Q1'25 | Q4'24 | Q3'24 | Q2'24 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$51,728** | **$47,778** | **$50,085** | **$46,409** | **$41,661** | | GAAP Gross Margin | 71% | 73% | 68% | 73% | 71% | | Non-GAAP Gross Margin | 76% | 77% | 72% | 77% | 75% | | Outstanding Debt | $68,117 | $68,656 | $— | $— | $— | | **Operating Cash Flow** | **($5,215)** | **$8,640** | **$1,606** | **$9,275** | **$684** | | Cash Used for CAPEX | $8,526 | $8,203 | $5,847 | $4,595 | $5,320 | [Year to Date](index=5&type=section&id=Year%20to%20Date%20Metrics) Year-to-Date Financial and Operating Metrics (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | | **Revenues** | **$99,506** | **$82,971** | **$82,360** | | GAAP Gross Margin | 72% | 69% | 71% | | Non-GAAP Gross Margin | 76% | 73% | 74% | | **Operating Cash Flow** | **$3,425** | **($1,178)** | **($6,615)** | | Cash Used for CAPEX | $16,729 | $7,343 | $6,001 | [Revenue by Geographic Area](index=6&type=section&id=Revenue%20by%20Geographic%20Area) The United States remained the largest market at **39%** of Q2 2025 revenue, with China showing significant quarterly growth to **23%**, and year-to-date revenues from Japan and China increasing substantially [Quarterly](index=6&type=section&id=Quarterly%20Revenue%20by%20Geographic%20Area) Quarterly Revenue by Geographic Area (Dollars in thousands) | (Dollars in thousands) | Q2'25 | Q1'25 | Q2'24 | | :--- | :--- | :--- | :--- | | United States | $19,954 (39%) | $18,228 (38%) | $19,223 (46%) | | Japan | $9,304 (18%) | $11,736 (25%) | $7,932 (19%) | | China | $12,190 (23%) | $8,043 (17%) | $7,000 (17%) | | Taiwan | $1,503 (3%) | $1,494 (3%) | $954 (2%) | | Rest of the world | $8,777 (17%) | $8,277 (17%) | $6,552 (16%) | | **Total revenues** | **$51,728** | **$47,778** | **$41,661** | [Year to Date](index=7&type=section&id=Year%20to%20Date%20Revenue%20by%20Geographic%20Area) Year-to-Date Revenue by Geographic Area (Dollars in thousands) | (Dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | United States | $38,182 (38%) | $36,956 (45%) | | Japan | $21,040 (21%) | $19,220 (23%) | | China | $20,233 (20%) | $11,853 (14%) | | Taiwan | $2,997 (3%) | $1,834 (2%) | | Rest of the world | $17,054 (18%) | $13,108 (16%) | | **Total revenues** | **$99,506** | **$82,971** | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP financial results to non-GAAP measures by excluding items such as stock-based compensation, amortization of acquired technology, and non-recurring costs, providing insights into ongoing operational performance - The company provides non-GAAP financial measures to supplement its GAAP results, excluding items like stock-based compensation, amortization of acquired technology, certain legal expenses, and other non-recurring costs to offer management's view of ongoing operations[20](index=20&type=chunk) [Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income](index=9&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20(Loss)%20to%20Non-GAAP%20Net%20Income) Quarterly Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (in thousands) | (in thousands) | Q2'25 | Q1'25 | Q2'24 | | :--- | :--- | :--- | :--- | | **GAAP net income (loss)** | **$1,146** | **($3,032)** | **$1,705** | | Stock-based compensation | $6,199 | $6,596 | $5,700 | | Non-recurring costs | $159 | $4,345 | $— | | Other adjustments | ($783) | $1,236 | ($316) | | **Non-GAAP net income** | **$7,301** | **$8,115** | **$7,089** | Year-to-Date Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **GAAP net income (loss)** | **($1,886)** | **$1,312** | | Stock-based compensation | $12,795 | $11,810 | | Non-recurring costs | $4,504 | $— | | Other adjustments | ($1,001) | ($486) | | **Non-GAAP net income** | **$15,416** | **$12,836** | [Reconciliation of GAAP to Non-GAAP Spending by Function](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Spending%20by%20Function) Quarterly Reconciliation of GAAP to Non-GAAP Spending by Function (in thousands) | Quarterly (in thousands) | Q2'25 GAAP | Q2'25 Non-GAAP | Q2'24 GAAP | Q2'24 Non-GAAP | | :--- | :--- | :--- | :--- | :--- | | Cost of Revenue | $14,886 | $12,631 | $12,230 | $10,461 | | Research & Development | $14,913 | $12,662 | $12,649 | $10,586 | | Selling, General, & Admin. | $19,744 | $16,782 | $16,259 | $13,807 | Year-to-Date Reconciliation of GAAP to Non-GAAP Spending by Function (in thousands) | YTD (in thousands) | 2025 GAAP | 2025 Non-GAAP | 2024 GAAP | 2024 Non-GAAP | | :--- | :--- | :--- | :--- | :--- | | Cost of Revenue | $27,841 | $23,566 | $25,759 | $22,206 | | Research & Development | $29,541 | $24,871 | $25,633 | $21,368 | | Selling, General, & Admin. | $43,116 | $32,859 | $32,757 | $27,597 |

Core Viewpoint - PDF Solutions, Inc. reported strong financial results for the second quarter of 2025, with total revenues reaching $51.7 million, marking a 24% increase year-over-year, driven by robust analytics revenue growth and a positive outlook for future performance [2][9]. Financial Performance - Total revenues for Q2 2025 were $51.7 million, up from $47.8 million in Q1 2025 and $41.7 million in Q2 2024 [2]. - Analytics revenue was $48.8 million, compared to $42.5 million in Q1 2025 and $38.1 million in Q2 2024, reflecting a 28% year-over-year increase [2][9]. - Integrated Yield Ramp revenue was $2.9 million, down from $5.3 million in Q1 2025 but slightly up from $3.5 million in Q2 2024 [2]. Profitability Metrics - GAAP gross margin for Q2 2025 was 71%, compared to 73% in Q1 2025 and 71% in Q2 2024 [3]. - Non-GAAP gross margin was 76%, down from 77% in Q1 2025 but up from 75% in Q2 2024 [3]. - Net income on a GAAP basis was $1.1 million, or $0.03 per diluted share, a recovery from a net loss of $3.0 million in Q1 2025 [4]. - Non-GAAP net income was $7.3 million, or $0.19 per diluted share, compared to $8.1 million, or $0.21 per diluted share in Q1 2025 [5]. Future Outlook - The company anticipates continued growth, reaffirming its annual revenue growth guidance of 21-23% for 2025, driven by strong customer activity and advancements in AI-driven digitization [6]. - Backlog increased to $232.6 million as of June 30, 2025, indicating strong future revenue potential [9]. Company Overview - PDF Solutions provides comprehensive data solutions aimed at enhancing operational efficiency and profitability within the semiconductor and electronics industries [12]. - The company has a strong portfolio that includes the Sapience™ Manufacturing Hub and the newly acquired secureWISE® offering, which are designed to meet complex manufacturing and testing requirements [6].

Company Overview - PDF Solutions (PDFS) is expected to report earnings of $0.20 per share for the quarter ended June 2025, reflecting a year-over-year increase of +11.1% [3] - Revenues are anticipated to reach $53 million, which is a 27.2% increase compared to the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for release on August 7, and the stock price may rise if the actual results exceed expectations [2] - Conversely, if the results fall short, the stock may decline [2] Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their outlook [4] - The Most Accurate Estimate for PDF Solutions is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -17.95%, suggesting a bearish sentiment among analysts [11] Historical Performance - In the last reported quarter, PDF Solutions had an earnings surprise of +10.53%, posting earnings of $0.21 per share against an expectation of $0.19 [12] - The company has beaten consensus EPS estimates in each of the last four quarters [13] Comparative Analysis - CACI International, another player in the Zacks Computer - Services industry, is expected to report earnings of $6.54 per share, indicating a year-over-year change of -1.1% [17] - CACI's revenues are projected to be $2.3 billion, up 12.7% from the previous year [18] - CACI has an Earnings ESP of -0.08% and a Zacks Rank of 4 (Sell), making it difficult to predict a beat on the consensus EPS estimate [19]

Core Insights - PDF Solutions, Inc. will release its second quarter fiscal 2025 financial results on August 7, 2025, after market close [1] - A live teleconference will be hosted by CEO John Kibarian and CFO Adnan Raza on the same day at 2:00 p.m. Pacific Time [1] - The teleconference will also be available via webcast on the company's website [3] Company Overview - PDF Solutions provides comprehensive data solutions aimed at improving yield, quality, and operational efficiency in the semiconductor and electronics industry [4] - The company's products and services are utilized by Fortune 500 companies to achieve smart manufacturing goals through data collection and advanced analytics [4] - Founded in 1991, PDF Solutions is headquartered in Santa Clara, California, with operations in North America, Europe, and Asia [5]