PDF Solutions, Inc. Q3 FY2025 earnings call

• Bookings in the third quarter were strong with multiple large deals across Exensio and secureWISE. - Signed an extension contract with a large customer involving characterization vehicle infrastructure, Exensio software, and eProbe machines under subscription, with 2 additional machines shipped for installation. - Licensed Tiber AI Studio from Intel to integrate into Exensio for enabling AI model training and deployment. - Signed 8-figure contracts with a large IC manufacturer and an equipment OEM. - Contributions from Cimetrix connectivity were the strongest since the 2020 acquisition. - The industry is making significant investments in 3D manufacturing and geographic diversification of manufacturing, with AI-driven collaboration being critical. - Since 2020, PDF has driven results equal or exceeding long-term goals, with over 370 customers now including most equipment industry and cloud providers.

Total revenue for the third quarter was $57.1 million, which is a 10% increase from the prior quarter and a 23% year-over-year growth. Analytics revenue stood at $54.7 million, marking a 12% quarter-over-quarter increase and a 22% year-over-year growth. Integrated Yield Ramp revenue accounted for 4% of total revenue in Q3, being down $0.5 million from the prior quarter but up $0.8 million year-over-year. Gross margin was 76%, slightly higher than the previous quarter but down 1% compared to the same period last year.

• Reaffirmed the 21% to 23% annual revenue growth range for 2025. - No guidance has been provided for 2026 yet, but it is expected to have a strong 2026 following good bookings in 2025. - Anticipates cash to grow over the next year as investments start to yield returns.

Forward-looking statements made during the call, and actual results could differ materially. Reference should be made to the Risk Factors section in PDF's annual report on Form 10-K and subsequent SEC filings.

Q: About BFI machines, when do they start generating revenue?

A: Going through deployment and qualification, expecting within the next quarter or after depending on timing of qualifications and customer acceptances.

Q: Pipeline of DFI opportunities?

A: Quite strong, with plans to ship more machines in Q1 2026, actively engaged with 5-10 customers.

Q: SecureWISE go-to-market progress?

A: Had a Connected Summit, Intel presented using secureWISE, expanding into fabs and equipment vendors.

Q: Customer concentration mix?

A: Fabs account for 40-50% of business, fabless/system companies 35-45%, equipment vendors 15%, and secureWISE is key for collaboration across these customers.

Q: 2026 guidance?

A: No guidance has been provided yet, but there are seen opportunities for a strong 2026.

Q: Systems in production site, tools per fab?

A: Minimum of 2 tools, as critical for mission-critical manufacturing to handle potential downtime.

Q: Exensio contract term lengths?

A: Typically 3 years, with some contracts being 1-5 years, and the book of business is robust.

Q: Sapience progress?

A: Expect to announce something in Q4 related to Sapience at the user conference.

Q: SEMICON West findings?

A: Broader enthusiasm in the industry, fabless customers becoming manufacturers and needing communication with OSATs.

Q: Cimetrix backlog?

A: Strong quarter with more equipment shipping with PDF software than proprietary software systems.

Q: DFI tool qualification impact on guidance?

A: Qualification timing doesn't significantly impact 2025 guidance as there are other opportunities available.

Q: DFI customer base?

A: Including existing customers, new logic customers, and DRAM pilots.

Q: Tiber AI Studio integration?

A: Majority customers not in semiconductors, but integration with Exensio is beneficial for semiconductor customers