PDF Solutions, Inc. Q1 FY2026 earnings call

• First quarter was a good start with solid progress on positioning as leading commercial data analytics and mission critical platform for semiconductor industry. Xsensio and Symmetrix had strong bookings. Shipped one E-Probe, anticipate it to contribute to revenue in Q2. Capital investments in E-Probe were meaningful. Selling activity was high across semiconductor industry. Development of new AI-enabled Accentio analytics systems on track, beta release anticipated in third quarter. Celebrated first anniversary with SecureWise, which provides secure end-to-end remote access and monitoring for manufacturing equipment, expanding into new markets like OSATs and fabless. - John Kabarian discussed industry environment, noting AI is changing engineering dramatically. Customer meetings had CEOs interested in AI use in R&D and manufacturing. PDF sees opportunities as platform transitions to AI and analytics platform used across industry. - Adnan Reza discussed financial results, multiple large bookings, backlog increase, revenue growth, platform revenue growth, volume-based revenue decline, gross margin, operating margin, net income, balance sheet with cash, cash equivalents, short-term investments, and expanded revolving credit facility.

Total revenues were up 26% compared to Q1 of the prior year. Platform revenue was $50.9 million for the quarter, up 36% versus the same quarter of last year. Volume-based revenue was $9.2 million, down 12% versus the same period of last year. Gross margin for the first quarter was 76%. Operating margin was 25%. Net income totaled $12.6 million or $0.31 per share, up 56% for net income and 48% for EPS on a year-over-year basis. Backlog ended the quarter at 246 million, up 9% versus the same quarter of last year.

• Reiterate 2026 revenue will grow year over year consistent with 20% long-term revenue growth target. - Make meaningful progress towards long-term target operating margin of 27% with gross margin of 77%. - Expect improvements in EPS as business scales with costs rising slower than revenues. - Anticipate to increase cap expense for 2026 versus last year, balanced by customer collections, expecting cash balance to grow over coming quarters, particularly second half.

Forward-looking statements made, actual results could differ materially. Should refer to Risk Factors on pages 16 through 30 of PDF's annual report on Form 10-K for the fiscal year ended December 31st, 2025, and similar disclosures in subsequent SEC filings.

• Q: Blair Abernathy asked about E-Probe new customers, pipeline, and 2027 pipeline.

A: About a third of 6 shipments this year to net new customers, others repeat. One demo machine. Interest in 2027, building additional machines. - Q: Clark Wright asked about CapEx guidance related to E-Probe, customer relationships growth.

A: CapEx related to meeting current demand for 6 machines this year. Customer relationships broadening with new types of customers, including equipment companies, and opportunities with Fabless and merchant semiconductor IDM. - Q: Christian Swab asked about margin targets tracking, E-Probe opportunity over multi-year.

A: Made progress towards 27% operating margin and 77% gross margin, expect sooner than typical three years. E-Probe has subscription base, growing market for eBEAM as fastest growing inspection product category in front end. - Q: Clark Wright asked about initiatives to gain share with leading edge FAB players.

A: Emphasis on E-Probe tie-in to design with AI capabilities, AI integration with Accenture for characterization vehicle data interpretation, and partnerships in industry for collaboration.