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    PDFS
    Earnings call· Jun 2026(Q2 FY26)

    PDF SOLUTIONS Q2 FY26 earnings call PDFS

    Aug 6, 2026 Source

    Executive summary

    PDF Solutions Q2 FY26 — Strong Bookings and Revenue Growth Driven by AI and SecureWISE

    PDF Solutions delivered a strong second quarter, marked by robust bookings across its product portfolio, particularly for SecureWISE and DirectScan, driven by the expanding AI ecosystem. The company reaffirmed its full-year revenue growth target of 20% and expects gross margins to rebound, while strategically increasing CapEx to meet customer demand for its eProbe tools.

    Highlights

    5

    • Total revenues grew 19% YoY to $61.5 million.

    • Non-GAAP EPS increased 42% YoY to $0.27.

    • Total backlog grew 10% QoQ to $271 million.

    • SecureWISE secured an 8-figure contract, its largest ever.

    • Operating cash flow generated $16.4 million.

    Concerns

    3

    • Gross margin of 73% was lower QoQ due to higher perpetual software licenses in Q1.

    • CapEx increased to $14.1 million, mainly for eProbe tools and longer lead time items.

    • Higher component costs for DirectScan systems are impacting CapEx.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2026 revenue growth
    20% year-over-year
    high materiality
    High
    Gross margin
    increase next quarter towards the higher levels we have seen during the prior quarters
    medium materiality
    High
    Long-term gross margin target
    77%
    high materiality
    High
    Long-term operating margin target
    27%
    high materiality
    High
    Quarterly CapEx
    incrementally higher than Q2
    medium materiality
    High
    Full-year 2026 average quarterly CapEx
    similar to Q2
    medium materiality
    High
    Ending cash balance
    higher compared to Q2
    medium materiality
    High
    Ending debt balance
    bring down our debt balance via scheduled payments
    medium materiality
    High
    Bookings momentum
    strong
    medium materiality
    High
    Backlog
    grow our backlog as we exit this year
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Platform revenue
    Benefited this quarter from the DirectScan booking that John talked about, which is with a new non-leading-edge customer.
    6-month year-to-date growth: 24% YoY
    		$49.1 million14%——
    Volume-based revenue
    Driven by strong gain share and the strength in Cimetrix runtime licenses.
    		—45%——

    Operational metrics

    10
    Total revenues
    $61.5 millionup 19% on a year-over-year basis
    Q2 FY26

    Strong performance for the first half of the year.

    Gross margin
    73%lower versus Q1 of this year
    Q2 FY26

    Expected to increase next quarter towards historical higher levels.

    Operating margin
    22%about 300 basis points higher than the same quarter of last year
    Q2 FY26

    Remains committed to 27% target.

    Non-GAAP EPS
    $0.27up 42% versus the same quarter of last year
    Q2 FY26

    Strong profit growth.

    Cash and investments balance
    $114.9 millioncompared to $31.2 million of prior quarter
    Q2 FY26

    Significant increase due to equity offering.

    Outstanding debt
    $67.5 million
    Q2 FY26

    Expected to decrease via scheduled payments by year-end.

    CapEx
    $14.1 million
    Q2 FY26

    Expected to be incrementally higher in Q3 and Q4.

    Primary shares sold
    approximately 1.9 million
    Q2 FY26

    Part of Advantest's exit from equity stake.

    Proceeds from equity offering
    $81.8 million
    Q2 FY26

    Added to the balance sheet.

    eProbe machines placed
    3
    Q2 FY26

    Includes one 5-year subscription with a new customer for a mature process node.

    Industry KPIs

    7
    MetricValueDetails
    Backlog order book$271 millionUSD
    Ai data center revenue—
    Services installed base—
    Bookings net order intake—
    Design wins socket pipeline3machines
    Node platform ramp schedule—
    End market segment revenue mix—

    Orderbook & backlog

    1
    Total backlog$271 millionQ2 FY26

    up 10% versus last quarter and up 16% versus Q2 of last year

    Does not include potential future Cimetrix runtime licenses or gainshare revenues; includes meaningful revenue from DirectScan contract to be recognized over years.

    Product announcements

    3
    ProductTypeDetails
    eProbe e-beam inspection machinesmilestone
    DirectScan on mature process nodesexpansion
    SecureWISE services for front-end fabs and back-end test and assembly facilitiesexpansion

    Deals & partnerships

    4
    Existing customerLarge 8-figure contract for secureWISE8-figurea number of years

    Reaffirms secureWISE's availability in virtually all 300-millimeter fabs and expands services to front-end fabs and back-end test/assembly facilities.

    New customer8-figure contract for DirectScan systems8-figure5 years

    For a new non-leading-edge customer using DirectScan on a more mature process node, carrying them into mass production.

    Hyperscalers and photonics companiesMultiple 7-figure contracts for Exensio products and services7-figure

    Driven by the growth in the AI ecosystem.

    AdvantestAdvantest exited their equity stake in PDF Solutions

    Occurred via a follow-on equity offering where PDF Solutions sold approximately 1.9 million primary shares, adding $81.8 million to its balance sheet.

    Capital programs

    1
    eProbe tools CapExunderway
    Period spend: $14.1 million
    Funding: operating cash flow

    Benefit: meet the demand we are seeing and to order some of the longer lead time items as we look to future shipments

    Utilized $14.1 million towards CapEx, mainly for eProbe tools. Expect incrementally higher CapEx in Q3 and Q4.

    Risks & headwinds

    3
    Gross margin contraction due to perpetual software licensesQ2 FY26

    73% for Q2, lower versus Q1

    Mitigation: Expect gross margin to increase next quarter towards higher levels; line of sight to 77% long-term target.

    Higher component costs for CapExFY26

    increased CapEx year-over-year

    Mitigation: Working with supply chain to optimize timelines and costs, particularly around computing elements; still expect to grow cash balances and reduce debt.

    Supply chain issues for eProbe toolscurrent

    biggest issue has just been around time line and supply chain

    Mitigation: Working with supply chain to optimize time and ensure capacity; not limited from a capacity standpoint yet.

    What to watch in Q3 FY26

    5

    Gross margin trajectory

    next quarter (Q3 FY26)
    Current73% (non-GAAP) in Q2 FY26
    Targetincrease towards higher levels seen in prior quarters

    Why it matters

    Management expects a rebound after Q2's dip, which is crucial for profitability and progress towards the long-term 77% target.

    We expect our gross margin to increase next quarter towards the higher levels we have seen during the prior quarters, and we have line of sight to our long-term gross margin target model of 77%.

    Q&A highlights

    6

    Has the target audience for DirectScan systems expanded beyond the initial 5-10 customers, especially given the new contract for a mature process node?

    John Kibarian confirmed the target audience is expanding, particularly with customers developing more mature nodes, which was demonstrated by a significant new contract in Q2. He noted it's "definitely bigger than what we thought."

    “We do think it's expanding... it's definitely bigger than what we thought.”

    asked by Clark Wright · answered by John Kibarian

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Bookings Across Product Portfolio

    PDF Solutions experienced robust bookings in Q2 FY26, with 8-figure contracts for secureWISE and DirectScan, and multiple 7-figure contracts for Exensio products and services. These bookings were driven by hyperscalers, photonics companies, and equipment vendors, contributing to a growing backlog and meaningful revenue growth in the first half of the year.

    02

    eProbe and DirectScan Deployments

    The company placed three new eProbe e-beam inspection machines, two with new customers (one on a 5-year subscription for a mature process node) and one with an existing customer's new factory. These deployments put PDF Solutions two-thirds of the way to its annual goal for eProbe machines, demonstrating the value of DirectScan in mature nodes and expanding its customer base.

    03

    SecureWISE Market Expansion

    A significant 8-figure secureWISE contract with an existing customer reaffirmed its presence in nearly all 300-millimeter fabs globally and expanded its services to front-end fabs and back-end test/assembly facilities. Management sees secureWISE as a cornerstone for AI agent-driven collaboration across the semiconductor industry, with revenue increasingly derived from data transmission.

    04

    AI Transformation in Semiconductors

    The semiconductor industry's investment is driven by AI data center build-out, which is transforming both demand and engineering/production execution. PDF Solutions believes it is in the early stages of AI transformation in semiconductor manufacturing, anticipating increased opportunities across its product portfolio as the industry leverages AI agents for greater agility and cost-effectiveness.

    05

    Financial Performance and Outlook

    Total revenues grew 19% YoY to $61.5 million in Q2, with platform revenue up 14% and volume-based revenue up 45%. Non-GAAP gross margin was 73%, lower than Q1 due to perpetual software licenses, but is expected to rebound. Operating margin improved to 22%, up 300 bps YoY, due to disciplined spending. The company reaffirmed its 20% full-year revenue growth guidance.

    06

    Balance Sheet and Capital Allocation

    PDF Solutions ended Q2 with $114.9 million in cash and equivalents, a significant increase from the prior quarter, partly due to an equity offering that added $81.8 million. The company generated $16.4 million in operating cash flow and invested $14.1 million in CapEx for eProbe tools and long lead-time items. Management expects cash balances to grow and debt to decrease by year-end.

    AI-generated summary of the company’s earnings call. Not investment advice.