PDF Solutions — Third Quarter 2026 Earnings Summary

Financial Performance

• Total revenues reached a record $68.3 million for the third quarter of 2026, representing a 20% year-over-year increase compared to $57.1 million in the third quarter of 2025 and a 11% increase from $61.5 million in the second quarter of 2026.
• GAAP gross margin was 73% (up from 72% YoY and 69% QoQ), while non-GAAP gross margin was 77% (up from 76% YoY and 73% QoQ).
• GAAP operating margin was 12% (up from 8% YoY and 8% QoQ), while non-GAAP operating margin was 28% (up from 23% YoY and 22% QoQ).
• GAAP net income was $6.8 million ($0.16 per diluted share), compared to $1.3 million ($0.03 per diluted share) in the third quarter of 2025 and $4.3 million ($0.10 per diluted share) in the second quarter of 2026.
• Non-GAAP net income was $17.2 million ($0.40 per diluted share), compared to $9.8 million ($0.25 per diluted share) in the third quarter of 2025 and $11.4 million ($0.27 per diluted share) in the second quarter of 2026.
• Ending backlog was $247.2 million, down from $292.0 million in the third quarter of 2025 and $270.7 million in the second quarter of 2026.
• Cash and cash equivalents increased to $107.1 million as of September 30, 2026, from $42.2 million as of December 31, 2025.
• Total liabilities were $157.9 million as of September 30, 2026, compared to $147.7 million as of December 31, 2025.
• Long-term debt, net, stood at $63.1 million as of September 30, 2026, compared to $64.8 million as of December 31, 2025.
• Revenue breakdown for the quarter: Platform revenue was $58.3 million, and Volume-based revenue was $10.0 million.

Guidance and Future Outlook

• The company reaffirmed its annual revenue growth target of 20% for 2026 based on actual results through the third quarter and the pipeline for the fourth quarter.
• CEO John Kibarian stated the company continued its growth trajectory with total revenues 20% higher compared to the third quarter of 2025.

Business Segments and Product Lines

• On September 9, 2026, the company announced Exensio Aurora, a new highly-scalable analytics architecture.
• Exensio Aurora is designed to handle semiconductor manufacturing data at petabyte scale and securely deploy agentic AI across manufacturing operations and the supply chain.
• The new architecture aims to help semiconductor companies address challenges associated with the fast growth and transformation of the industry.

Market and Competitive Landscape

• The company serves the semiconductor and electronics ecosystem, providing data solutions to improve yield, quality, and operational efficiency.
• Products and services are utilized by Fortune 500 companies across the semiconductor ecosystem to achieve smart manufacturing goals.
• The company is an active member of SEMI, INEMI, TPCA, IPC, the OPC Foundation, and DMDII.

Risks and Challenges

• Risks include the effectiveness of business and technology strategies, current semiconductor industry trends, and competition.
• Potential challenges involve adoption rates of solutions, project milestones, delays, and performance criteria.
• Macroeconomic conditions such as inflation, changing interest rates, tariffs, energy prices, trade regulations, geopolitical tensions, and armed conflicts could impact results.
• Risks also include supply chain disruptions, changes in laws and regulations, and the ability to successfully convert backlog into revenue.
• Specific risks include the success of strategic growth opportunities, integration of acquired businesses, and the sufficiency of cash resources.

Management Commentary and Tone

• CEO John Kibarian expressed confidence in the company's growth trajectory and the strategic value of the new Exensio Aurora architecture.
• Management emphasized that the new architecture is purpose-built to address industry transformation challenges.
• The tone reflects a focus on scaling capabilities to handle petabyte-scale data and the deployment of agentic AI.

Other Key Points

• The company updated its revenue presentation in the fourth quarter of 2025, categorizing revenue into "Platform" and "Volume-based" segments.
• Non-GAAP financial measures exclude stock-based compensation, amortization of acquired technology/intangibles, and certain non-recurring items such as legal proceedings expenses and acquisition-related costs.
• A Management Report reviewing the third quarter 2026 financial results was furnished to the SEC on Form 8-K.
• The company hosts a live conference call for analysts and investors to discuss these results.
• A reconciliation of GAAP to non-GAAP financial measures is provided in the press release, detailing adjustments for stock-based compensation, amortization, legal expenses, and tax impacts.