Financial Data and Key Metrics Changes - The company reported record total revenues of $219.0 million for the full year 2025, a 22% increase from $179.5 million in 2024, and Q4 revenues of $62.4 million, up 25% year-over-year from $50.1 million [15][19] - Gross margin for Q4 was 77%, and operating margin was 24%, while for the full year, gross margin was 76% and operating margin was 21%, exceeding previous long-term targets [19][23] - Earnings per share (EPS) for the full year was $0.94, reflecting a 12% growth from $0.84 in the prior year [21] Business Line Data and Key Metrics Changes - Platform revenue for Q4 was $52.5 million, up 20% year-over-year, while volume-based revenue was $9.9 million, up 58% [16] - For the full year, platform revenue was $181.0 million, a 15% increase, and volume-based revenue was $38 million, up 70% year-over-year [17] - Recurring revenue for Q4 was $61.1 million, up 62% year-over-year, and for the full year, it was $205.1 million, a 41% increase [17] Market Data and Key Metrics Changes - The semiconductor industry is projected to exceed $1 trillion in revenue, with increasing complexity in manufacturing processes driving demand for AI-driven collaboration [4][12] - The company anticipates continued growth in 2026, consistent with a long-term target of 20% CAGR, driven by increased customer activity across various segments [12][23] Company Strategy and Development Direction - The company aims to evolve from an analytics platform provider to an AI-driven collaboration platform, enhancing its offerings to meet the needs of customers in the semiconductor industry [5][11] - Strategic acquisitions, such as secureWISE, and partnerships with companies like SAP are integral to expanding the company's capabilities and market reach [7][18] - The focus for the next phase includes establishing orchestration, analytics, and data components across the industry [11][23] Management's Comments on Operating Environment and Future Outlook - Management highlighted the accelerating need for AI-driven collaboration in the semiconductor industry, with expectations for increased customer activity in 2026 [12][23] - The company is optimistic about launching advanced memory solutions and expanding its eProbe machine installations, anticipating nearly doubling the number in the field [12][23] - Management expressed confidence in achieving revenue growth consistent with long-term targets, even without inorganic growth contributions [13][23] Other Important Information - The company ended 2025 with a backlog of $254 million and generated positive operating cash flow of approximately $24 million [18][22] - Capital expenditures for 2025 were approximately $33 million, primarily related to DirectScan systems, with expectations for similar spending in 2026 [22] Q&A Session Summary Question: Clarification on DirectScan systems shipped - The company confirmed that four DirectScan systems were shipped in 2025, with a total of six currently in the field [30] Question: CapEx spending and future expectations - Management indicated that CapEx spending in 2026 is expected to be managed evenly throughout the year, with potential variations [38] Question: SAP relationship and expectations - The company continues to see increased needs for orchestration and expects to build on its partnership with SAP to enhance customer engagement [42][44] Question: Balance sheet and debt levels - Management expressed comfort with current debt levels, indicating a focus on balancing CapEx spending while gradually paying down debt [46][49] Question: Revenue methodology and growth expectations - The company provided insights into its new revenue categorization, emphasizing the importance of volume-based revenue and cross-selling opportunities with secureWISE [52][56]

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]