Financial Highlights of First Quarter 2026
| ? | Quarterly total revenues of | |
| ? | GAAP gross margin of 72% and non-GAAP gross margin of 76% | |
| ? | GAAP operating margin of 10% and non-GAAP operating margin of 25% | |
| ? | GAAP diluted earnings per share (EPS) of | |
| ? | Ending backlog of | |
Total revenues for the first quarter of 2026 were
GAAP gross margin for the first quarter of 2026 was 72%, compared to 73% for the fourth quarter of 2025 and 73% for the first quarter of 2025.
Non-GAAP gross margin for the first quarter of 2026 was 76%, compared to 77% for the fourth quarter of 2025 and 77% for the first quarter of 2025.
GAAP operating margin for the first quarter of 2026 was 10%, compared to 6% for the fourth quarter of 2025 and (7%) for the first quarter of 2025.
Non-GAAP operating margin for the first quarter of 2026 was 25%, compared to 24% for the fourth quarter of 2025 and 18% for the first quarter of 2025.
GAAP net income for the first quarter of 2026 was
Non-GAAP net income for the first quarter of 2026 was
Financial Outlook
“We are proud to report another strong quarter,” said
Conference Call
As previously announced,
First Quarter 2026 Financial Commentary Available Online
A Management Report reviewing the Company’s first quarter 2026 financial results will be furnished to the Securities and Exchange Commission on Form 8-K and published on the Company’s website at http://ir.pdf.com/financial-reports. Analysts and investors are encouraged to review this commentary prior to participating in the conference call.
Information Regarding Use of Non-GAAP Financial Measures
In addition to providing results that are determined in accordance with accounting principles generally accepted in
About
Founded in 1991,
Characterization Vehicle,
Forward-Looking Statements
This press release and the planned conference call include forward-looking statements regarding the Company’s future expected business performance and financial results, including expectations about total revenue growth for 2026, progress towards long-term model target margins, portfolio strength and momentum and other statements identified by words such as “could,” “expects,” “intends,” “may,” “plans,” “potential,” “should,” “will,” “would,” or similar expressions and the negatives of those terms, that are subject to future events and circumstances. Other than statements of historical fact, all statements contained in this press release and the planned conference call are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those expressed in these forward-looking statements. Risks and uncertainties that could cause results to differ materially include risks associated with: the effectiveness of the Company’s business and technology strategies; current semiconductor industry trends and competition; rates of adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; cost and schedule of new product development and investments in research and development; the continuing impact of macroeconomic conditions, including inflation, changing interest rates and tariffs, the evolving trade regulatory environment and geopolitical tensions, armed conflicts, government shutdowns, and other trends impacting the semiconductor industry, the Company’s customers, operations, and supply and demand for its products; supply chain disruptions; changes in laws and regulations, including recent tax and data privacy laws and regulations, or the interpretation or enforcement thereof; the success of the Company’s strategic growth opportunities and partnerships; recent and future acquisitions, strategic alliances and relationships and the Company’s ability to successfully integrate acquired businesses and technologies; whether the Company can successfully convert backlog into revenue; customers’ production volumes under contracts that provide Gainshare; the sufficiency of the Company’s cash resources and anticipated funds from operations; the Company’s ability to obtain additional financing if needed and its ability to use support and updates for certain open-source software; and other risks and uncertainties discussed in PDF Solutions’ periodic public filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K for the year ended
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 31,153 | $ | 42,220 | ||||
| Accounts receivable, net | 96,016 | 82,938 | ||||||
| Prepaid expenses and other current assets | 48,475 | 38,735 | ||||||
| Total current assets | 175,644 | 163,893 | ||||||
| Property and equipment, net | 90,477 | 81,609 | ||||||
| Operating lease right-of-use assets, net | 4,592 | 4,778 | ||||||
| 95,006 | 95,005 | |||||||
| Intangible assets, net | 50,127 | 52,194 | ||||||
| Deferred tax assets, net | 44 | 69 | ||||||
| Other non-current assets | 14,674 | 21,149 | ||||||
| Total assets | $ | 430,564 | $ | 418,697 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 16,703 | $ | 17,076 | ||||
| Accrued compensation and related benefits | 23,874 | 22,437 | ||||||
| Accrued and other current liabilities | 6,977 | 8,719 | ||||||
| Operating lease liabilities ? current portion | 2,073 | 1,982 | ||||||
| Deferred revenues ? current portion | 23,102 | 19,441 | ||||||
| Current portion of long-term debt, net | 2,238 | 2,236 | ||||||
| Total current liabilities | 74,967 | 71,891 | ||||||
| Long-term income taxes | 4,580 | 4,273 | ||||||
| Operating lease liabilities – non-current portion | 3,475 | 3,838 | ||||||
| Long-term debt, net | 64,214 | 64,763 | ||||||
| Other non-current liabilities | 2,863 | 2,910 | ||||||
| Total liabilities | 150,099 | 147,675 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock and additional paid-in capital | 542,182 | 533,509 | ||||||
| (169,518 | ) | (165,808 | ) | |||||
| Accumulated deficit | (89,837 | ) | (94,628 | ) | ||||
| Accumulated other comprehensive loss | (2,362 | ) | (2,051 | ) | ||||
| Total stockholders’ equity | 280,465 | 271,022 | ||||||
| Total liabilities and stockholders’ equity | $ | 430,564 | $ | 418,697 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
| Three Months Ended | ||||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Revenues (1): | ||||||||||||
| Platform | $ | 50,936 | $ | 52,503 | $ | 37,321 | ||||||
| Volume-based | 9,194 | 9,900 | 10,457 | |||||||||
| Total revenues | 60,130 | 62,403 | 47,778 | |||||||||
| Costs and Expenses: | ||||||||||||
| Costs of revenues | 16,938 | 16,942 | 12,955 | |||||||||
| Research and development | 18,328 | 19,258 | 14,628 | |||||||||
| Selling, general, and administrative | 17,492 | 21,676 | 23,372 | |||||||||
| Amortization of acquired intangible assets | 1,059 | 1,069 | 378 | |||||||||
| Income (loss) from operations | 6,313 | 3,458 | (3,555 | ) | ||||||||
| Interest expense | (1,089 | ) | (1,164 | ) | (311 | ) | ||||||
| Interest income and other, net | 592 | 345 | 870 | |||||||||
| Income (loss) before income tax expense | 5,816 | 2,639 | (2,996 | ) | ||||||||
| Income tax expense | (1,025 | ) | (2,687 | ) | (36 | ) | ||||||
| Net income (loss) | $ | 4,791 | $ | (48 | ) | $ | (3,032 | ) | ||||
| Net income (loss) per share: | ||||||||||||
| Basic | $ | 0.12 | $ | (0.00 | ) | $ | (0.08 | ) | ||||
| Diluted | $ | 0.12 | $ | (0.00 | ) | $ | (0.08 | ) | ||||
| Weighted average common shares used to calculate net income (loss) per share: | ||||||||||||
| Basic | 39,857 | 39,524 | 39,088 | |||||||||
| Diluted | 40,377 | 39,524 | 39,088 | |||||||||
| (1 | ) | In the fourth quarter of 2025, the Company updated its presentation of revenue categories. The Company now presents revenue in the following categories: Platform and Volume-based. Platform revenue is derived from the following primary offerings: licenses for software (other than |
RECONCILIATION OF GAAP GROSS PROFIT AND MARGIN TO NON-GAAP GROSS PROFIT AND MARGIN (UNAUDITED)
(In thousands)
| Three Months Ended | ||||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| GAAP | ||||||||||||
| Total revenues | $ | 60,130 | $ | 62,403 | $ | 47,778 | ||||||
| Costs of revenues | 16,938 | 16,942 | 12,955 | |||||||||
| GAAP gross profit | $ | 43,192 | $ | 45,461 | $ | 34,823 | ||||||
| GAAP gross margin | 72 | % | 73 | % | 73 | % | ||||||
| Non-GAAP | ||||||||||||
| GAAP gross profit | $ | 43,192 | $ | 45,461 | $ | 34,823 | ||||||
| Adjustments to reconcile GAAP to non-GAAP gross profit: | ||||||||||||
| Stock-based compensation expense | 1,279 | 1,379 | 1,342 | |||||||||
| Amortization of acquired technology under costs of revenues | 998 | 998 | 678 | |||||||||
| Non-GAAP gross profit | $ | 45,469 | $ | 47,838 | $ | 36,843 | ||||||
| Non-GAAP gross margin | 76 | % | 77 | % | 77 | % | ||||||
RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS AND OPERATING MARGIN TO NON-GAAP INCOME FROM OPERATIONS AND OPERATING MARGIN (UNAUDITED)
(In thousands)
| Three Months Ended | ||||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| GAAP income (loss) from operations | $ | 6,313 | $ | 3,458 | $ | (3,555 | ) | |||||
| GAAP operating margin | 10 | % | 6 | % | (7 | )% | ||||||
| Adjustments to reconcile GAAP to non-GAAP income (loss) from operations: | ||||||||||||
| Stock-based compensation expense | 6,396 | 6,866 | 6,596 | |||||||||
| Amortization of acquired intangible assets | 2,057 | 2,066 | 1,056 | |||||||||
| Expenses for certain legal proceedings (1) | 210 | 2,574 | 115 | |||||||||
| Acquisition-related and integration costs | 8 | 2 | 4,345 | |||||||||
| Non-GAAP income from operations | $ | 14,984 | $ | 14,966 | $ | 8,557 | ||||||
| Non-GAAP operating margin | 25 | % | 24 | % | 18 | % | ||||||
| (1 | ) | Represents legal costs and expenses related to a certain arbitration proceeding, which are expected to continue until this matter is fully resolved. |
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (UNAUDITED)
(In thousands, except per share amounts)
| Three Months Ended | ||||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| GAAP net income (loss) | $ | 4,791 | $ | (48 | ) | $ | (3,032 | ) | ||||
| Adjustments to reconcile GAAP net income (loss) to non-GAAP net income: | ||||||||||||
| Stock-based compensation expense | 6,396 | 6,866 | 6,596 | |||||||||
| Amortization of acquired intangible assets | 2,057 | 2,066 | 1,056 | |||||||||
| Expenses for certain legal proceedings (1) | 210 | 2,574 | 115 | |||||||||
| Acquisition-related and integration costs | 8 | 2 | 4,345 | |||||||||
| Amortization of debt issuance costs | 65 | 55 | 5 | |||||||||
| Tax impact of valuation allowance for deferred tax assets and reconciling items (2) | (878 | ) | 495 | (970 | ) | |||||||
| Non-GAAP net income | $ | 12,649 | $ | 12,010 | $ | 8,115 | ||||||
| GAAP net income (loss) per diluted share | $ | 0.12 | $ | (0.00 | ) | $ | (0.08 | ) | ||||
| Non-GAAP net income per diluted share | $ | 0.31 | $ | 0.30 | $ | 0.21 | ||||||
| Weighted average common shares used in GAAP net income (loss) per diluted share calculation | 40,377 | 39,524 | 39,088 | |||||||||
| Weighted average common shares used in non-GAAP net income per diluted share calculation | 40,377 | 39,911 | 39,285 | |||||||||
| (1 | ) | Represents legal costs and expenses related to a certain arbitration proceeding, which are expected to continue until this matter is fully resolved. |
| (2 | ) | The difference between the GAAP and non-GAAP income tax provisions is primarily due to the valuation allowance on a GAAP basis and non-GAAP adjustments. For example, on a GAAP basis, the Company does not receive a deferred tax benefit for foreign tax credits or research and development credits after the valuation allowance. The Company’s non-GAAP tax rate and resulting non-GAAP tax expense is not calculated with a full |
| Company Contacts: | ||
| Chief Financial Officer | Investor Relations | |
| Tel: (408) 280-7900 | Tel: (408) 938-6491 | |
| Email: adnan.raza@pdf.com | Email: sonia.segovia@pdf.com |
