PDF Solutions Q1 Earnings Call Highlights

Key Points

• PDF Solutions reported Q1 revenue of $60.1 million (up 26% YoY), with platform revenue rising 36%, operating margin at 25%, net income of $12.6 million, and a backlog of $246 million.
• The company is investing heavily in eProbe systems—shipping one in Q1 and targeting six eProbe systems in 2026—with about $10 million of CapEx this quarter that reduced cash and a majority of machines on subscription to drive recurring revenue.
• Management highlighted strong bookings for Exensio and Cimetrix, expects an AI-enabled Exensio analytics beta in Q3, and is expanding secureWISE beyond equipment makers into fabs, OSATs and fabless customers while reiterating a ~20% revenue growth target and long-term margin goals.

PDF Solutions NASDAQ: PDFS reported first-quarter 2026 results highlighted by double-digit million-dollar bookings, 26% year-over-year revenue growth, and continued investment in its eProbe inspection platform as the company targets broader adoption of its analytics and manufacturing connectivity offerings across the semiconductor industry.

Management cites strong start to 2026 and ongoing AI-driven demand

President and CEO John Kibarian said the first quarter represented “a good start to the year” as the company advanced its goal of becoming a “leading commercial data analytics and mission-critical platform for the semiconductor industry.” He pointed to the quarter’s bookings mix, business activity, and product development progress as evidence of momentum.

Kibarian said bookings strength was particularly notable in Exensio and Cimetrix. He attributed Exensio’s performance mainly to “larger deployments,” including an “enterprise-wide deployment for Exensio Test at a large IDM.” He said Cimetrix bookings benefited partly from larger customers ordering runtime licenses “in anticipation of additional machine shipments in future quarters.”

Kibarian also described an active sales environment “across all aspects of the semiconductor industry, from hyperscalers to equipment vendors,” and said the company is seeing “significant activity” in characterization and DFI as customers pursue advanced processes and products. He said he expects this activity to translate into stronger bookings in that category as 2026 progresses.

On product development, Kibarian said the company’s “new AI-enabled Exensio analytics systems” remain on track and are expected to reach beta release in the third quarter. He added that customer interest has been “very high.”

More broadly, Kibarian framed the current period as unusually consequential for the semiconductor sector, arguing that AI is changing how engineering work is performed and that executives are increasingly focused on AI’s impact in R&D and manufacturing. He said customer CEOs he met in Asia were interested in how PDF Solutions is using AI and described the company as “a leader in bringing AI to manufacturing.”

Q1 financial results: revenue up 26%, operating margin expands

Chief Financial Officer Adnan Raza said the company’s reported figures on the call were presented on a non-GAAP basis, with reconciliations provided in company materials. Raza said results benefited from “multiple large bookings during the quarter,” including:

• A “double-digit million-dollar Exensio Test Operations booking” to help a customer manage geographically distributed operations
• An Exensio renewal with a large fabless customer focused on “better analytics”
• A booking for fab control software for a large fab customer in Asia

Raza said the company ended the quarter with backlog of $246 million, up 9% from the year-ago quarter.

Total first-quarter revenue was $60.1 million, up 26% year over year. Platform revenue totaled $50.9 million, up 36%, which Raza attributed to strength in leading-edge solutions, Exensio software, and “one complete quarter of secureWISE revenues.” Volume-based revenue was $9.2 million, down 12% year over year, primarily due to lower Gainshare, according to Raza.

Gross margin was 76% compared with 77% in the prior quarter. Raza said the change was driven by a small increase in cost of revenue with a smaller revenue base “as expected.” Operating margin was 25%, compared with 24% in the prior quarter and 18% in the year-ago quarter. Raza said operating profit was approximately $15 million, slightly above the prior quarter and 75% higher than the $8.6 million operating profit recorded in the first quarter of 2025.

Net income was $12.6 million, or $0.31 per share, compared with $8.1 million, or $0.21 per share, in the year-ago period. Raza said EPS should improve as the company approaches its long-term model, citing business scale and costs rising more slowly than revenue.

Cash balance declines on eProbe-related CapEx; revolver expanded

Raza said PDF Solutions ended the quarter with $31 million in cash, equivalents, and short-term investments, down from $42 million at the end of the prior quarter. He attributed the change primarily to about $10 million used for capital expenditures “related primarily to building eProbe systems and fulfilling the customer demand we have spoken about.”

Raza said the company expects capital spending to increase in 2026 versus 2025 given demand, but said this will be “balanced by customer collections,” and he expects cash to grow over coming quarters “particularly the second half of the year.” He also noted that after quarter-end, the company expanded its revolving credit facility, leaving $30 million of unused revolver capacity available.

eProbe shipments: targeting six in 2026 with mix of new and existing customers

Kibarian said the company shipped one eProbe in the first quarter and expects that machine to begin contributing to revenue in the second quarter. He added that capital investment in eProbe was “meaningful” as PDF Solutions builds additional machines to support its goal of shipping six eProbe systems in 2026.

During Q&A, Kibarian told Rosenblatt Securities analyst Blair Abernethy that about a third of 2026’s planned eProbe shipments are expected to go to net new customers, with the remainder largely repeat orders. He said one of the six machines will likely be a demo machine, and “probably, five of the six will be revenue generating.”

Asked about the pipeline beyond 2026, Kibarian said the company sees “quite a bit of interest” and is exploring what it can do regarding additional machines, including additional demo systems, though execution capacity is a gating factor. “What we don’t get to this year, we will start serving next year,” he said.

In a separate exchange, Kibarian said the majority of eProbe machines are on subscription and are expected to remain subscribed, which he said creates a foundation that can support revenue growth over time as the installed base expands. He also discussed the broader e-beam inspection category, saying e-beam is increasingly important for identifying 3D defects and that the overall market is “on the order of a billion-dollar market,” while noting that subscription-versus-perpetual comparisons can change how the opportunity is modeled.

secureWISE: expansion beyond equipment makers to fabs, OSATs, and fabless

Kibarian also discussed secureWISE, noting the company marked its first anniversary of ownership during the quarter. He said the system provides secure end-to-end remote access and monitoring for manufacturing equipment and that, over the past year, PDF Solutions invested in R&D, expanded the customer base to include fab owners in addition to equipment makers, and began expanding into OSATs and fabless companies.

In response to Abernethy’s question about pipeline, Kibarian said selling secureWISE directly to fabs highlighted the value of its security and auditing capabilities, including the ability to log access to data and machines in an auditable way over multiple years. He also referenced a user conference discussion in which Intel described standardizing on secureWISE, which Kibarian said helped increase interest among equipment vendors. He said the company now has “quite a deep pipeline” and has pilots underway to extend secureWISE into OSAT and fabless use cases, leveraging PDF Solutions’ existing DEX services footprint in parts of the back-end ecosystem.

Looking ahead, Kibarian and Raza both reiterated expectations that 2026 revenue will grow year over year consistent with the company’s long-term 20% target. Raza added that the company expects to make “meaningful progress” toward its long-term operating model, which includes a 27% operating margin target and 77% gross margin.

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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