PDF Solutions, Inc. (PDFS) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong revenue growth, robust bookings, and strategic partnerships with companies like Intel, reflecting positive business momentum. Despite a slight decrease in cash equivalents due to CapEx, the company's focus on expanding its product lineup and customer base, along with optimistic future guidance, suggests a positive outlook. The Q&A section reveals strong analyst sentiment and confidence in growth prospects, although some details were vague. Considering the company's market cap, the stock price is likely to move positively by 2% to 8% over the next two weeks.
Key Financial Performance
Bookings Bookings for the third quarter totaled over $100 million, which is greater than the prior 2 quarters combined. On a year-to-date basis, bookings for the 3-quarter period were 49% higher than the comparable period of last year. The increase was driven by multiple large deals signed across the product portfolio of Exensio and secureWISE.
Backlog The backlog at the end of Q3 was $292 million, which is 25% higher than last quarter and 22% higher than the same period a year ago. The growth in backlog reflects the strong business activity and contracts closed during the quarter.
Total Revenue Total revenue for Q3 was $57.1 million, which is 10% higher than last quarter and 23% higher on a year-over-year basis. The growth was driven by business from leading-edge customers and equipment software.
Analytics Revenue Analytics revenue for Q3 was $54.7 million, which is 12% higher than the prior quarter and 22% higher on a year-over-year basis. The growth was attributed to business from leading-edge customers and equipment software.
Integrated Yield Ramp Revenue Integrated Yield Ramp revenue was 4% of total revenue in Q3, lower by $0.5 million compared to the prior quarter but up by $0.8 million on a year-over-year basis.
Gross Margins Gross margins for Q3 were 76%, slightly ahead of last quarter but down 1% compared to the same quarter last year. The decline year-over-year was due to meaningful perpetual software revenue in the prior year's quarter.
Operating Expenses Operating expenses in Q3 grew 3% compared to the prior quarter, primarily due to spending on development improvements for the platform and increased variable compensation accruals due to strong results.
Earnings Per Share (EPS) EPS for Q3 was $0.25, the strongest quarter for the year. For the first 3 quarters of 2025, EPS was $0.64, which is $0.06 ahead of the comparable period of last year.
Operating Cash Flow Operating cash flow for Q3 was $3.3 million, and for the first 9 months of the year, it was $6.7 million. The cash flow reflects investments in acquisitions and building eProbe machines.
Cash Balance The cash, cash equivalents, and short-term investments at the end of Q3 were approximately $35.9 million, compared to $40.4 million at the end of the prior quarter. The decrease was due to investments in CapEx and acquisitions.
Capital Expenditures (CapEx) CapEx for Q3 was $6.3 million, which is lower than $8.5 million in Q2 and $8.2 million in Q1. The investments were focused on building eProbe machines and integration costs for the secureWISE acquisition.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Exensio Studio AI: Integration of Tiber AI Studio into Exensio to enable engineers to train and deploy AI models effectively. This integration addresses challenges in scaling and maintaining large AI deployments.
eProbe Machines: Two additional machines shipped and being installed at a production site under a subscription model, expanding beyond R&D facilities.
Geographic Diversification: Increased investments in 3D manufacturing and geographic diversification of manufacturing locations to mitigate risks and enhance production efficiency.
Customer Base Expansion: Customer base grew from 150 in 2020 to over 370, including fabs, fabless, equipment companies, and cloud providers.
Revenue Growth: Achieved record quarterly revenue of $57.1 million, a 10% increase from the previous quarter and 23% year-over-year growth.
Backlog Growth: Backlog increased to $292 million, 25% higher than the previous quarter and 22% higher year-over-year.
Gross Margins: Reported gross margins of 76%, slightly ahead of the long-term target of 75%.
AI-Driven Collaboration: Promoting AI-driven collaboration to enhance cost-effective and efficient manufacturing, especially in geographically diversified locations.
Integration of Acquisitions: Integration of secureWISE and Cimetrix to provide comprehensive analytics and smart tools for the semiconductor supply chain.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Geographic Diversification of Manufacturing: Diversifying manufacturing locations comes with the risk of driving up production costs and slowing innovation. This could impact the economic viability of new processes, products, and facilities.
Scaling and Maintaining AI Deployments: Customers face challenges in scaling and maintaining large AI deployments, which could hinder the adoption and efficiency of AI-driven solutions.
Investment in SecureWISE and eProbe Machines: Significant cash investments in secureWISE acquisition and eProbe machines have been made, but the full subscription run rate return on these investments has not yet been realized, creating short-term financial strain.
Increased Operating Expenses: Operating expenses grew by 3% in Q3 due to development improvements and increased variable compensation, which could pressure margins if not offset by revenue growth.
Supply Chain and Production Risks: The integration of Cimetrix, secureWISE, and AI-enabled monitoring aims to improve production efficiency, but any delays or issues in this integration could disrupt operations.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Growth: The company reaffirms its prior guidance of 21% to 23% annual revenue growth for 2025.
Profitability and Cash Flow: The company anticipates cash to grow over the next year as integration costs of the secureWISE acquisition are largely behind and additional eProbe machines are shipped and qualified on a subscription model.
Long-term Financial Targets: The company plans to share more details about its long-term targets for the next phase of growth during the Analyst Day and user conference on December 3.
AI and Analytics Integration: The company is integrating Tiber AI Studio into Exensio to enable engineers to train and deploy AI models more effectively, addressing challenges in scaling and maintaining large AI deployments.
Market Trends and Investments: The industry is making significant investments in 3D manufacturing, geographic diversification of manufacturing locations, and AI-driven collaboration to enable cost-effective and efficient manufacturing.
Capital Expenditures: The company invested $6.3 million in CapEx during the quarter, primarily for building eProbe machines to meet customer demand in 2025 and 2026.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Stock Repurchase: We repurchased $0.2 million of our stock this quarter at a per share price of $19.55 per share.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:When will the machines under the lease model start generating revenue?
A:The machines are expected to start generating revenue within the next quarter or the quarter after, depending on the timing of qualifications and customer acceptances.
Q:How does the pipeline of opportunities look for the DFI?
A:The pipeline is quite strong, with active discussions with about 5 customers out of a potential 5-10 globally. The company is building more machines and expects to ship them in the first quarter of the coming year.
Q:How is the go-to-market strategy for secureWISE progressing?
A:The company has expanded secureWISE to include fabs and equipment vendors, creating collaboration across them. Intel has adopted secureWISE as their standard connectivity platform, and the company is integrating secureWISE with its DEX network. They see more opportunities for combined contracts and broader adoption.
Q:What is the customer concentration mix and how is secureWISE being used to expand the customer base?
A:Customer A's contribution increased from 19% to 38% year-over-year. The business is divided into fabs (40-50%), fabless and system companies (35-45%), and equipment vendors (15-20%). secureWISE is being used as a collaboration tool across these customer groups, helping to expand the customer base.
Q:What is the impact of the landmark contract announced in September on the company's future growth?
A:The company has not provided guidance for 2026 yet but expects a strong 2026 on top of good bookings in 2025. The landmark contract is seen as a setup for the next leg of growth.
Q:How many tools per fab are expected to be needed for the production site?
A:The minimum number is two tools per fab to ensure continuity in case one goes down. The company aims to go beyond two as the tools are highly utilized due to their unique capabilities.
Q:Are the systems being sent out for evaluation or revenue?
A:The systems being sent out are a mix of evaluation and revenue machines.
Q:What is the timeline for the Hybrid AI studio integration with the Exensio platform?
A:The integration is expected to be ready by the end of this quarter for early access customers.
Q:What is the renewal book for Exensio Analytics and any changes in contract terms?
A:The renewal book is robust, with typical contract terms of 3 years. The company signed one of the largest Exensio MA contracts this quarter and is focusing on scalable AI-first analytics capabilities.
Q:What progress has been made with Sapience and the partnership with SAP?
A:The company expects to announce additional customer business related to Sapience in Q4 and plans to unveil new capabilities targeted at fabless and system companies at their user conference.
Q:What findings were observed from SEMICON West regarding end markets?
A:The build-out on AI and advanced packaging continues, with a positive outlook for 2026. There is growing interest in advanced packaging and test flows among fabless customers.
Q:Has the shadow backlog for Cimetrix increased sequentially?
A:Yes, the shadow backlog has increased, with more equipment shipping with the company's software and customers using more Cimetrix modules.
Q:What is the opportunity for advanced test in the test space?
A:The opportunity lies in data feed-forward for advanced packaging, with pilots ongoing and some customers already in production. The majority of the business impact is expected in 2026.
Q:What is the status of the two DFIs shipped for qualification?
A:The tools could get qualified this quarter or next, but the timing is not critical for meeting guidance. The qualifications are more of a tailwind for 2026.
Q:Are there memory customers among the DFI opportunities?
A:Yes, there is interest from memory customers, and the company is preparing to ship machines for DRAM applications.
Q:What is the status of the Tiber integration?
A:The integration with Exensio is ongoing, and the company plans to support existing customers while selling the integrated version to semiconductor customers.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific timeline for 2026 guidance, stating that they will provide it after Q4. Additionally, they did not provide clear details on the exact number of tools required per fab beyond the minimum of two or the specific revenue impact of the Tiber integration.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Studio
AI collaboration
AI deployment
Analyst Day
CEO
Intel
RD
Studio AI
Tiber AI
Today
acquisition
analytics platform
balance sheet
characterization
cloud
customer base
eProbe machine
engineer
equipment OEMs
equipment vendor
fab test
fabs
figure contract
goal
hundred
integration
location
market share
network
process
production
secureWISE
share equipment
site
supplier
test floor
thousand
PDFS Transcript
PDF Solutions, Inc. (PDFS) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call highlights strong revenue growth, robust bookings, and strategic partnerships with companies like Intel, reflecting positive business momentum. Despite a slight decrease in cash equivalents due to CapEx, the company's focus on expanding its product lineup and customer base, along with optimistic future guidance, suggests a positive outlook. The Q&A section reveals strong analyst sentiment and confidence in growth prospects, although some details were vague. Considering the company's market cap, the stock price is likely to move positively by 2% to 8% over the next two weeks.
PDF Solutions, Inc. (PDFS) Q2 2025 Earnings Call Transcript
Positive8-9
The earnings call highlighted strong financial performance, including 24% YoY revenue growth and improved margins. The integration of SecureWise and partnerships, especially with SAP, are progressing well, enhancing product offerings. Despite some concerns about CapEx and China market disruptions, the company's strategic positioning and optimistic guidance, particularly with Intel, suggest positive sentiment. The market cap indicates moderate sensitivity to these factors, leading to a predicted positive stock price movement in the near term.
PDF Solutions, Inc. (PDFS) Q1 2025 Earnings Call Transcript
Unknown5-10
While PDF Solutions reported strong financial performance with a 16% revenue increase and improved margins, the Q&A section revealed concerns about the integration of SecureWise, potential revenue variability from eProbe sales, and economic uncertainties. The lack of a share repurchase program and increased debt are also concerns. However, positive aspects include strong bookings, growth in IYR revenue, and promising AI integration efforts. Given the mixed signals, the overall sentiment is neutral, with the stock likely to remain stable over the next two weeks.
Earnings call transcript: PDF Solutions Q4 2024 revenue beats expectations
Positive2-13
The earnings call revealed strong financial performance, with a 22% YoY revenue increase in Q4 and improved gross margins. The ongoing AI integration and successful product development, including eProbe and ModelOps, indicate future growth potential. Despite some risks like customer caution and supply chain challenges, the company's positive cash flow and share buybacks enhance shareholder value. The Q&A session highlighted management's confidence in the eProbe pipeline and ModelOps receptivity, balancing concerns about backlog changes. Given the company's small-cap status, the stock is likely to react positively, with a 2% to 8% increase expected.
PDFS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
