PDF Solutions — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenues for the second quarter of 2026 were $61.5 million, representing a 19% year-over-year increase compared to $51.7 million in the second quarter of 2025.
• GAAP gross margin was 69% in Q2 2026, down from 71% in Q2 2025 and 72% in Q1 2026; non-GAAP gross margin was 73%, down from 76% in both Q2 2025 and Q1 2026.
• GAAP operating margin was 8% in Q2 2026, an improvement from 2% in Q2 2025 and 10% in Q1 2026; non-GAAP operating margin was 22%, up from 19% in Q2 2025 and down from 25% in Q1 2026.
• GAAP diluted earnings per share (EPS) were $0.10 in Q2 2026, compared to $0.03 in Q2 2025 and $0.12 in Q1 2026.
• Non-GAAP diluted EPS were $0.27 in Q2 2026, compared to $0.19 in Q2 2025 and $0.31 in Q1 2026.
• GAAP net income was $4.3 million in Q2 2026, compared to $1.1 million in Q2 2025 and $4.8 million in Q1 2026.
• Non-GAAP net income was $11.4 million in Q2 2026, compared to $7.3 million in Q2 2025 and $12.6 million in Q1 2026.
• Ending backlog was $270.7 million in Q2 2026, up from $232.6 million in Q2 2025 and $246.4 million in Q1 2026.
• Cash and cash equivalents increased to $114.9 million as of June 30, 2026, from $42.2 million as of December 31, 2025.
• Total debt (current and long-term) was $66.5 million as of June 30, 2026, compared to $67.0 million as of December 31, 2025.
• Deferred revenue (current portion) was $20.3 million as of June 30, 2026, compared to $19.4 million as of December 31, 2025.

Guidance and Future Outlook

• The company reaffirmed its 20% annual revenue growth target for 2026.
• Management expects the significantly increased backlog to contribute to revenue over a number of years.

Business Segments and Product Lines

• Platform revenue was $49.1 million in Q2 2026, compared to $43.2 million in Q2 2025.
• Volume-based revenue was $12.4 million in Q2 2026, compared to $8.5 million in Q2 2025.
• The company reported major customer wins for its secureWISE system, DirectScan system, and Exensio product and services during the quarter.

Risks and Challenges

• The company faces ongoing legal proceedings related to a specific arbitration proceeding, with associated expenses expected to continue until the matter is fully resolved.
• Forward-looking statements highlight risks including semiconductor industry trends, competition, adoption rates, project delays, macroeconomic conditions (inflation, interest rates, tariffs, geopolitical tensions), supply chain disruptions, and the ability to convert backlog into revenue.

Management Commentary and Tone

• CEO John Kibarian stated the company continued on its growth trajectory enabled by a broad product and services portfolio addressing evolving semiconductor manufacturing needs.
• Management expressed confidence in the positive factors driving the quarter, including major customer wins and backlog growth.

Other Key Points

• In the fourth quarter of 2025, the company updated its revenue presentation to categorize revenue into "Platform" and "Volume-based" segments; prior periods were reclassified to conform.
• Platform revenue includes software licenses, maintenance, technical support, SaaS, engineering services, fixed fees for CV systems, and DirectScan system contracts.
• Volume-based revenue includes Cimetrix runtime licenses, secureWISE data, and Gainshare.
• Non-GAAP financial measures exclude stock-based compensation, amortization of acquired technology/intangibles, amortization of debt issuance costs, and certain non-recurring items like legal proceedings and acquisition costs.
• A reconciliation of GAAP to non-GAAP financial measures is provided in the accompanying financial statements.