PDF Solutions (NASDAQ:PDFS) executives used the company’s fourth-quarter earnings call to outline what CEO John Kibarian described as a “transformative year” in 2025, highlighting product expansion and acquisitions aimed at enabling “AI-driven collaboration” across semiconductor manufacturing and supply chains.
Management frames a shift toward orchestration and AI collaboration
Kibarian said several semiconductor trends are increasing demand for new manufacturing approaches, including more complex 3D structures in wafer fabrication and assembly, the shift from components to systems, and growing global manufacturing footprints that require collaboration across suppliers, factory operators, and customers. He also said the industry’s role as a driver of AI means chip companies increasingly need to use AI to keep pace with demand.
secureWISE acquisition and Exensio enhancements highlighted
Kibarian said PDF acquired secureWISE in 2025, describing it as a secure connectivity platform that connects equipment vendors to semiconductor fabs. He said the company “recommitted to the core secureWISE customers,” citing an “eight-figure contract” with a leading equipment supplier. He also referenced an “eight-figure contract” with a multinational IC manufacturing company to enable collaboration across its enterprise.
Management also discussed efforts to “reinvent analytics” within its Exensio platform. Kibarian outlined three initiatives PDF pursued in 2025:
- Enhancing the Exensio data model to support use cases beyond native analytics.
- Integrating an AI operations platform to let customers build and deploy AI pipelines within Exensio.
- Releasing Exensio Scalable Analytics to support interaction with datasets that previously required batch processing.
He said progress on these efforts was demonstrated during 2025, including a third-quarter announcement of a large eight-figure contract for Exensio Enterprise that included advanced database, AI operations capabilities, and scalable analytics. Kibarian also noted the company licensed the source code for Intel’s former cnvrg.io product, now referred to as Tiber AI Studio, and began selling it as Exensio Studio AI.
DirectScan and connectivity: data acquisition remains a focus
Kibarian said customer collaboration and AI models require robust data, and he highlighted record runtime license revenues in the company’s Cimetrix Connectivity business during 2025. He also said PDF shipped two eProbe inspection machines in the second half of 2025 to a customer site, pairing them with PDF’s FIRE and Exensio software in what the company calls DirectScan. Kibarian said the system enabled the customer to improve production control and yields by identifying new production issues in-line.
During the Q&A, CFO Adnan Raza confirmed the company shipped four DirectScan systems during 2025. He also said there are six systems currently in the field, including a prior CapEx sale. When asked about management’s comment that it expects to nearly double the number of eProbe machines in the field in 2026, Raza said investors should “contextualize” that goal against the current installed base of six systems.
Financial results: record revenue and margin expansion
Raza said all results discussed on the call were non-GAAP and preliminary ahead of the company’s planned 10-K filing by the end of February. He reported fourth-quarter 2025 total revenue of $62.4 million, up from $50.1 million a year earlier, representing 25% year-over-year growth. For full-year 2025, Raza said PDF generated record total revenue of $219.0 million, up from $179.5 million in 2024, a 22% increase.
Raza also detailed a new way the company is presenting revenue, breaking it into platform and volume-based categories, and also disaggregating revenue into recurring and upfront components. For the fourth quarter, he reported:
- Platform revenue: $52.5 million, up 20% year-over-year.
- Volume-based revenue: $9.9 million, up 58% year-over-year, driven primarily by GainShare and secureWISE.
- Recurring revenue: $61.1 million, up 62% year-over-year.
For full-year 2025, Raza reported platform revenue of $181.0 million (up 15%) and volume-based revenue of $38.0 million (up 70%). He said full-year recurring revenue was $205.1 million, up 41% year-over-year, driven primarily by Characterization Vehicle (CV) systems for the leading edge and secureWISE. He added that upfront revenue declined compared with the prior year due to the completion of a CapEx DirectScan system sale in the fourth quarter of 2024.
On profitability, Raza reported fourth-quarter gross margin of 77%, operating margin of 24%, and EPS of $0.30. For the full year, he reported gross margin of 76%, operating margin of 21%, and EPS of $0.94. Raza said those results exceeded the company’s prior long-term targets of 75% gross margin and 20% operating margin for 2025, and he noted the company revised its targets at Analyst Day to 77% gross margin and 27% operating margin.
Raza said operating expenses grew more slowly than revenue, citing full-year R&D expense growth of 23% driven by hires and subcontractors, while SG&A rose 14% with a “better focus on pre-sale spending.”
Cash flow, capital spending, and 2026 outlook
Raza said PDF generated approximately $24 million in operating cash flow in 2025 and spent approximately $33 million on capital expenditures, primarily related to DirectScan systems. He also said the company spent approximately $130 million on the secureWISE acquisition, funded with $70 million of debt and cash on the balance sheet.
At year-end, Raza said cash, equivalents, and short-term investments totaled approximately $42 million, while debt was approximately $68 million. Discussing capital allocation, he said the company expects to pay required debt amortization and aims over time to return to a position without debt, but also wants to rebuild its cash balance while continuing CapEx and other investments.
For 2026, Kibarian said customer activity has been elevated across fabless, fab, and equipment customers as demand for AI-driven collaboration accelerates. He pointed to opportunities related to “advanced memory” for Characterization Vehicle and DirectScan systems and said the company expects to nearly double the number of eProbe machines in the field. He also anticipated increased activity from IDM and fabless customers, particularly in the second half of 2026, as PDF releases more capabilities tied to Exensio Scalable Analytics and Studio AI. Raza reiterated that the company expects 2026 revenue growth to be consistent with its long-term target model of 20%.
About PDF Solutions (NASDAQ:PDFS)
PDF Solutions, Inc, headquartered in Santa Clara, California, is a technology company that provides data-driven solutions for the semiconductor manufacturing industry. Founded in 1991, the company specializes in software and services designed to improve yield, productivity and profitability for semiconductor fabricators. Over its history, PDF Solutions has positioned itself as a partner to foundries, integrated device manufacturers (IDMs), assembly and test operations, offering tailored data analytics and engineering expertise.
The company’s flagship offering, the Exensio platform, aggregates and analyzes data from process equipment, metrology and inspection systems to identify yield-limiting defects and process excursions.
