Summary of PDF Solutions Investor Day 2025 Company Overview - **Company**: PDF Solutions (NasdaqGS:PDFS) - **Event**: 2025 Investor Day - **Date**: December 03, 2025 Industry Insights - **Semiconductor Industry Growth**: Expected to reach approximately $1.1 trillion by 2030, with a compound annual growth rate (CAGR) of around 10% to 12% [13][16][64] - **AI Integration**: 67% of all silicon is related to AI, with significant growth in edge computing applications [16] - **3D Technology**: Innovations in 3D manufacturing processes are crucial, impacting both packaging and front-end factories [17][19] - **Data Governance**: Increasing importance of data management and governance due to global operations and varying regulations across regions [20][21] Company Strategy and Developments - **Unified Analytics Platform**: Emphasis on the need for a unified analytics platform in the semiconductor industry, with PDF Solutions positioned as the largest independent analytics platform provider [15][16] - **Partnerships and Collaborations**: Focus on building partnerships with equipment vendors and fabless companies to enhance connectivity and data sharing [14][25][32] - **Cloud Transition**: Transitioning to cloud-based solutions began in 2019, with significant advancements in analytics capabilities [14][39] Financial Performance - **Revenue Growth**: Projected revenue growth rate of 21%-23% for 2025, with a historical growth rate of 19.5% [45][48] - **Gross Margin**: Non-GAAP gross margins have improved from the low 60s to approximately 76% [50] - **Operating Margin**: Targeting an operating margin of over 27%, up from previous targets of 20% [65] Key Metrics and Projections - **Market Opportunity**: Addressable market expected to double over the next seven years, driven by increasing software importance in manufacturing [37][38] - **Recurring Revenue**: Approximately 80% of total revenue is recurring, indicating a stable revenue model [57] - **Backlog Growth**: Backlog has increased from over $100 million in 2020 to over $290 million, reflecting strong customer relationships and long-term contracts [58] Product Innovations - **Exensio Platform Enhancements**: Excitement around scalable analytics capabilities and the ability to handle large datasets effectively [69] - **Subscription Model**: Transitioning to a subscription model for machine sales, providing customers with cost-effective options and ongoing value [58][67] Conclusion - **Strategic Positioning**: PDF Solutions is well-positioned to capitalize on the growth of the semiconductor industry, particularly through its analytics platform and partnerships - **Future Outlook**: The company aims to leverage AI and 3D technologies to drive efficiency and innovation in manufacturing processes, while maintaining strong financial performance and customer relationships [23][64]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue of $57.1 million, which is 10% higher than the previous quarter and 23% higher year-over-year [12][15] - Bookings for the quarter totaled over $100 million, with a backlog of $292 million, representing a 25% increase from the previous quarter and a 22% increase year-over-year [11][12] - Gross margin was reported at 76%, slightly ahead of the previous quarter and down 1% year-over-year, with a long-term target of 75% [13][15] - Earnings per share (EPS) for the quarter was $0.25, with a year-to-date EPS of $0.64, which is $0.06 ahead of the comparable period last year [15] Business Line Data and Key Metrics Changes - Analytics revenue reached $54.7 million, a 12% increase from the prior quarter and a 22% increase year-over-year, driven by business from leading-edge customers and equipment software [12][13] - Integrated yield ramp revenue accounted for 4% of total revenue in Q3, showing a slight decrease compared to the prior quarter but an increase year-over-year [13] Market Data and Key Metrics Changes - The company has expanded its customer base from approximately 150 customers in 2020 to over 370 customers today, including most of the equipment industry and multiple cloud providers [8] - The company noted significant investments in 3D manufacturing and geographic diversification of manufacturing locations, which may increase production costs and slow innovation [6][7] Company Strategy and Development Direction - The integration of Tiber AI Studio with Exensio, branded as Exensio Studio AI, is aimed at enhancing AI model management and deployment capabilities [4][5] - The company is focusing on AI-driven collaboration to enable cost-effective manufacturing processes in new locations [7] - The company aims to become a comprehensive analytics platform for the semiconductor supply chain, leveraging acquisitions and investments in technology [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong business activity and growth in backlog, reaffirming guidance for 21%-23% annual revenue growth for the year [16] - The management highlighted a positive outlook for 2026, driven by strong bookings and customer opportunities [36] Other Important Information - The company invested $6.3 million in capital expenditures during the quarter, lower than previous quarters, as it prepares for future demand [15][16] - The company is preparing for an analyst day and user conference on December 3rd, where it will share long-term growth targets [17] Q&A Session Summary Question: When does the revenue from the leased machines start? - Revenue generation from the leased machines is expected to begin within the next quarter or the quarter after, depending on the qualification and customer acceptance [21] Question: How does the pipeline of opportunities look for DFI? - The pipeline for DFI is strong, with ongoing discussions with several potential customers [23] Question: How is the go-to-market strategy for SecurWise developing? - The company is expanding SecurWise's market reach beyond equipment vendors to include fab companies, enhancing collaboration across the supply chain [25][28] Question: What is the customer concentration mix? - The company has a diverse customer base, with fabs representing 40%-50% of business, fabless and system companies around 35%-45%, and equipment vendors about 15% [33] Question: What is the outlook for 2026? - While specific guidance for 2026 has not been provided, management anticipates a strong year based on current backlog and opportunities [36] Question: What are the findings from SEMICON West regarding end markets? - There is a more broad-based enthusiasm among customers compared to previous months, particularly in advanced packaging and differentiated products [59][60]