PDF Solutions Q2 Earnings Call Highlights
PDF Solutions (NASDAQ:PDFS) reported second-quarter revenue growth of 19% from a year earlier and reaffirmed its expectation for 20% revenue growth for full-year 2026, citing stronger bookings across its semiconductor data analytics, equipment connectivity and inspection offerings.
Chief Executive Officer John Kibarian said the company’s second quarter built on a strong first quarter, with customer activity and new contracts supporting backlog growth. He said secureWISE and DirectScan each secured eight-figure contracts during the period, while Exensio products and services recorded several seven-figure agreements involving hyperscalers and photonics companies. Cimetrix bookings also reached a record high following a strong first quarter, he said.
Revenue, earnings and backlog rise
Chief Financial Officer Adnan Raza said all financial figures discussed on the call were non-GAAP measures. Total second-quarter revenue was $61.5 million, up 19% year over year. Revenue for the first six months of 2026 increased 22% from the comparable period a year earlier.
Platform revenue totaled $49.1 million in the quarter, increasing 14% year over year and 24% for the first half. Raza said platform revenue benefited from a DirectScan contract with a new customer operating outside the leading-edge semiconductor market. The company expects a meaningful portion of that contract’s revenue to be recognized over coming years.
Volume-based revenue increased 45% from the prior-year quarter, driven by Gainshare revenue and Cimetrix runtime licenses. PDF Solutions ended the quarter with total backlog of $271 million, up 10% from the preceding quarter and 16% from a year earlier.
Raza said the company does not include potential future Cimetrix runtime license revenue or Gainshare revenue in backlog, even though management views some of those amounts as highly probable. Based on its pipeline, the company expects strong booking momentum in the second half and anticipates exiting 2026 with a larger backlog.
- Second-quarter revenue: $61.5 million, up 19% year over year.
- First-half revenue growth: 22% year over year.
- Second-quarter platform revenue: $49.1 million, up 14% year over year.
- Backlog: $271 million, up 10% sequentially and 16% year over year.
- Non-GAAP earnings per share: $0.27, up 42% year over year.
DirectScan placements approach annual target
PDF Solutions placed three new eProbe e-beam inspection systems during the quarter, according to Kibarian. Two systems went to new customers: one as an evaluation and another under a five-year subscription arrangement. A third tool was placed at a new factory for an existing customer under a previously signed contract.
Combined with a machine shipped in the first quarter, the company said it is two-thirds of the way toward its goal for the year. Kibarian said the new five-year DirectScan customer is using the technology on a more mature process node, extending the application beyond the company’s prior focus on more advanced nodes and into mass production.
During the question-and-answer session, Kibarian said PDF Solutions believes the potential customer base for DirectScan has expanded beyond its prior estimate of five to 10 customers. The company is seeing demand from customers developing more mature nodes and is also pursuing an evaluation placement in the memory market.
He said evaluation-to-contract cycles for such systems typically take close to a year, while declining to predict whether or when the memory-market evaluation would convert. The company is also considering geographic expansion for the business later in 2026 or early 2027.
secureWISE contracts broadened across semiconductor operations
Kibarian said the large secureWISE booking in the quarter was with an existing equipment-company customer and represented the largest secureWISE contract the company was aware of. He described the eight-figure value as a minimum commitment, with both parties expecting activity to build from that base.
The agreement expands a multi-year deployment across 300-millimeter fabs, Kibarian said. PDF Solutions has also refreshed its largest secureWISE contracts and broadened secureWISE services to include front-end fabs as well as back-end test and assembly facilities.
Kibarian said the company sees secureWISE as a potential component of increased AI-agent-driven collaboration among semiconductor manufacturers, equipment suppliers and other industry participants. He said most secureWISE revenue already comes from data transmission across the network, which he characterized as a key part of AI data pipelines.
Margins, capital spending and balance sheet
Second-quarter gross margin was 73%, down from the first quarter because the earlier period included a higher mix of perpetual software licenses, Raza said. He expects gross margin to move back toward the company’s historical levels in the third quarter and said management has visibility toward its longer-term 77% gross-margin target.
Operating expenses rose 5% year over year, primarily due to increased research and development spending, partly offset by management of selling, general and administrative resources. Operating margin was 22%, approximately 300 basis points above the prior-year quarter. PDF Solutions continues to target a 27% operating-margin model.
The company ended the quarter with $114.9 million in cash and cash equivalents and $67.5 million in outstanding debt. Raza said a follow-on equity offering added $81.8 million to the balance sheet, including the sale of approximately 1.9 million primary shares, while facilitating Adventus’ exit from its equity stake.
Operating cash flow was $16.4 million during the quarter, while capital expenditures totaled $14.1 million, largely for eProbe tools and longer-lead-time components. Raza said capital spending is expected to increase sequentially in each of the next two quarters, although the full-year average quarterly spending level is expected to be similar to the second-quarter amount. The company expects to end the year with more cash than it held at the end of the second quarter while reducing debt through scheduled payments.
About PDF Solutions (NASDAQ:PDFS)
PDF Solutions, Inc, headquartered in Santa Clara, California, is a technology company that provides data-driven solutions for the semiconductor manufacturing industry. Founded in 1991, the company specializes in software and services designed to improve yield, productivity and profitability for semiconductor fabricators. Over its history, PDF Solutions has positioned itself as a partner to foundries, integrated device manufacturers (IDMs), assembly and test operations, offering tailored data analytics and engineering expertise.
The company's flagship offering, the Exensio platform, aggregates and analyzes data from process equipment, metrology and inspection systems to identify yield-limiting defects and process excursions.
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