PDF Solutions (PDFS) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer – John Kibarian
• Chief Financial Officer – Adnan Raza

TAKEAWAYS

• Total Revenue — $68.3 million, representing 20% growth year over year and 11% growth compared to the prior quarter.
• Non-GAAP Gross Margin — 77%, expanding from 73% in the prior quarter due to reduced eProbe-related costs and controlled personnel expansion.
• Non-GAAP Operating Margin — 28%, an improvement from 22% in the second quarter while supporting increased spending in research and development.
• Non-GAAP EPS — $0.40, up 60% year over year from $0.25 in the same quarter of the prior year.
• Platform Revenue — $58.3 million, increasing 22% year over year driven by leading-edge customer engagements.
• Volume-based Revenue — $10.0 million, reflecting a 10% increase year over year driven by higher Cimetrix runtime licenses.
• Ending Backlog — $247.2 million, a decrease from $270.7 million at the end of the second quarter due to the timing of large contract closures.
• Annual Revenue Guidance — 20% growth, which management reaffirmed for the full year 2026.
• Operating Cash Flow — $13.8 million for the quarter, bringing the nine-month total to $31.8 million.
• Capital Expenditures — $15.1 million, primarily utilized to support tool equipment builds for future shipments.
• Cash and Equivalents — $107.1 million as of Sept. 30, 2026, including benefits from a May equity offering.
• Equipment Business Revenue — approximately 20% of total revenue, comprising the Cimetrix and secureWISE product lines.
• Significant Contracts — an eight-figure deal for an eProbe machine and Characterization Vehicle test chip, plus multiple seven-figure contracts for Exensio.
• GAAP Financials — $0.16 diluted EPS on $6.8 million in net income, with a 73% GAAP gross margin.
• Cloud Migration ARR — twofold to threefold increase, reflecting the historical uplift when transitioning customers from on-premise systems to cloud-based solutions.
• WFE Correlation — runtime licenses, which track with wafer fabrication equipment shipments, typically growing at rates similar to the 30% to 40% range seen in the broader industry.
• Long-term Targets — 77% gross margin and 27% operating margin, which management reaffirmed as part of its financial model.
• GAAP Net Income — $6.8 million, compared to $1.3 million in the third quarter of 2025.
• Nine-Month EPS — $0.99, representing a 55% increase over the $0.64 reported for the first nine months of the prior year.

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RISKS

• Kibarian noted that “sometimes they slip from one quarter to the next,” referring to the impact of large contract timing and potential fragmentation on quarterly backlog figures.

SUMMARY

PDF Solutions, Inc. (PDFS -13.24%) reported record quarterly revenue and expanded its margins through growth in its equipment business and leading-edge platform engagements. Management reaffirmed its full-year growth target and highlighted the launch of an AI-native analytics architecture. The company reported increased activity among equipment vendors and signed a significant contract for its electron-beam inspection technology. Financial performance was supported by a diversified customer base and the integration of recent acquisitions into a unified data platform.

• Management introduced Exensio Aurora, an AI-native architecture designed to process wide data sets that can include 5 million to 10 million tests per chiplet product.
• The company is expanding eProbe applications into flash technology while accelerating development for DRAM and logic in both research and production environments.
• Kibarian stated, “The equipment business is now about 20% of the total business,” noting it has been growing at rates in the high teens.
• The Cimetrix business achieved a record quarter for tool connectivity software as customers increased shipments of manufacturing tools.
• Kibarian indicated that geographic revenue diversification is expected as countries reshore semiconductor manufacturing, specifically citing activity in Japan, the U.S., and India.
• Kibarian noted that cloud migration historically resulted in a “twofold to threefold” increase in annual recurring revenue as customers leveraged cloud-based non-relational databases.
• The expansion of the industry has spread “from primarily on the leading edge to more broadly across many technologies,” according to Kibarian.

INDUSTRY GLOSSARY

• Exensio: A platform providing manufacturing analytics, process control, and test operations data collection for semiconductor production.
• eProbe: A noncontact electron-beam (e-beam) tool used for on-chip measurement and yield challenge detection.
• Cimetrix: Software products that provide industry-standard interfaces for semiconductor equipment manufacturers to enable tool connectivity.
• Characterization Vehicle (CV): A system consisting of test chips and specialized software used to measure and analyze semiconductor manufacturing process yield.
• secureWISE: A connectivity solution enabling secure remote access and data communication between fabrication plants and equipment vendors.
• WFE: Wafer Fabrication Equipment, referring to the machinery used to manufacture integrated circuits.
• DirectScan: A system using electron-beam technology for on-chip instrumentation and inspection.

Full Conference Call Transcript

Operator: Good day, everyone, and welcome to the PDF Solutions Inc. conference call to discuss its financial results for the third quarter conference call ending Wednesday, September 30, 2026. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. As a reminder, this conference is being recorded. If you have not yet received a copy of the corresponding press release, it has been posted to PDF’s website at www.pdf.com.

Some of the statements that will be made in the course of this conference are forward-looking, including statements regarding PDF’s future financial results and performance, growth rates, and demand for its solutions. PDF’s actual results could differ materially. You should refer to the section entitled “Risk Factors” on page 16 through 30 of PDF’s annual report on Form 10-K for the fiscal year ended December 31, 2025, and similar disclosures in subsequent SEC filings. The forward-looking statements and risks stated in this conference call are based on information available to PDF today. PDF assumes no obligation to update them. Now I’d like to introduce John Kibarian, PDF’s President and Chief Executive Officer, and Adnan Raza, PDF’s Chief Financial Officer. Mr.

Kibarian, please go ahead.

John Kibarian: Thank you for joining us on today’s c

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