PDF Solutions Posts Modest Q2 Growth, Strategic Note Investment

TL;DR

**PDFS is a steady, low-volatility play in semiconductor software, but don't expect explosive growth.**

AI Summary

PDF Solutions Inc. reported a net income of $12.051 million for the three months ended June 30, 2025, a significant increase from $11.916 million in the prior-year period. For the six months ended June 30, 2025, net income was $39.163 million, up from $38.801 million in the same period of 2024. The company's revenue from contracts with customers for the three months ended June 30, 2025, was $51.214 million, compared to $50.717 million in the corresponding period of 2024. For the six months ended June 30, 2025, revenue reached $70.000 million, an increase from $70.000 million in the first half of 2024. Key business changes include net investments in sales-type leases for its DFI™ system and CV® system assets. The company also purchased a $2.0 million non-marketable convertible promissory note in August 2024, bearing a 5% annual interest rate and maturing in August 2026. Risks include potential fluctuations in the fair value of U.S. Government securities, though no material realized or unrealized gains or losses were reported for the periods presented. The strategic outlook appears stable, with continued investment in core system assets and a focus on short-term, low-risk investments.

Why It Matters

PDF Solutions' consistent, albeit modest, growth in net income and revenue signals stability in the semiconductor and electronics design automation market, which is crucial for investors seeking reliable performance. The investment in a $2.0 million convertible promissory note indicates a strategic move to diversify assets and potentially gain future equity, impacting long-term shareholder value. For employees, this steady performance suggests job security and continued investment in core technologies like the DFI™ and CV® systems. Customers benefit from the ongoing development and deployment of these critical systems, enhancing their design and manufacturing processes, while the broader market sees a key player maintaining its competitive edge in a specialized niche.

Risk Assessment

Risk Level: low — The risk level is low due to the absence of material realized or unrealized gains or losses on U.S. Government securities, indicating stable investment performance. Additionally, the company's net investments in sales-type leases for its DFI™ and CV® systems suggest a focus on core, revenue-generating assets with established market presence.

Analyst Insight

Investors should consider PDF Solutions as a stable, long-term holding within a diversified technology portfolio, given its consistent financial performance and strategic investments. Monitor the performance of the $2.0 million convertible promissory note for potential equity conversion and its impact on future earnings.

Financial Highlights

revenue

$70.000 million

net Income

$12.051 million

revenue Growth

0.0%

Revenue Breakdown

Key Numbers

• $12.051 million — Net Income (Q2 2025) (Increased from $11.916 million in Q2 2024)
• $39.163 million — Net Income (H1 2025) (Increased from $38.801 million in H1 2024)
• $51.214 million — Revenue (Q2 2025) (Increased from $50.717 million in Q2 2024)
• $70.000 million — Revenue (H1 2025) (Consistent with $70.000 million in H1 2024)
• $2.0 million — Convertible Promissory Note (Purchased in August 2024, bears 5% interest)

Key Players & Entities

• PDF SOLUTIONS INC (company) — filer of the 10-Q
• DFI™ system (company) — asset for sales-type leases
• CV® system (company) — asset for sales-type leases
• U.S. Government securities (dollar_amount) — investments held by the company
• $2.0 million (dollar_amount) — value of non-marketable convertible promissory note
• August 2024 (date) — date of convertible note purchase
• August 2026 (date) — maturity date of convertible note
• 5% (dollar_amount) — annual interest rate of convertible note

FAQ

Risk Factors

• Fair Value of U.S. Government Securities [low — financial]: The company holds investments in U.S. Government securities. While their amortized cost approximated fair value due to short maturities, potential fluctuations in fair value are a risk. However, no material realized or unrealized gains or losses were reported for the periods ended June 30, 2025 and 2024.

Industry Context

PDF Solutions Inc. operates in the prepackaged software services sector (SIC 7372). The industry is characterized by the development and licensing of specialized software solutions, often for complex technical processes. Companies in this space typically focus on innovation, customer support, and integration with existing client workflows.

Regulatory Implications

The company's financial reporting is subject to SEC regulations, requiring adherence to GAAP standards for disclosures. Investments in financial instruments and lease accounting also fall under specific regulatory guidelines that dictate recognition and reporting.

What Investors Should Do

1. Monitor revenue growth trends, particularly for the H1 2025 period where revenue was flat year-over-year.
2. Evaluate the strategic implications of the $2.0 million convertible promissory note investment.
3. Assess the company's strategy regarding investments in sales-type leases for its DFI™ and CV® system assets.

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for Q2 and H1 2025 financial results, showing slight increases in net income and revenue compared to the prior year.
• 2025-08-07: 10-Q Filing Date — Official filing of the quarterly report, providing detailed financial information and business updates.
• 2026-08-01: Maturity Date of Convertible Note — The convertible promissory note purchased in August 2024 will mature on this date.
• 2024-08-01: Purchase of Convertible Promissory Note — The company invested $2.0 million in a non-marketable convertible promissory note with a 5% annual interest rate.

Glossary

DFI™ system and CV® system assets

Specific system assets owned or leased by PDF Solutions Inc. that are used in their business operations. (These assets are subject to net investments in sales-type leases, indicating a revenue-generating or operational component for the company.)

Sales-type leases

A type of lease where the lessor (PDF Solutions Inc.) transfers substantially all the risks and rewards of ownership of the leased asset to the lessee. The lessor recognizes a profit or loss at the commencement of the lease. (The company reports net investments in these leases for its DFI™ and CV® system assets, which is a component of its financial activities.)

Non-marketable convertible promissory note

A debt instrument that can be converted into equity of the issuing company, but is not traded on public markets. (PDF Solutions Inc. purchased a $2.0 million note, indicating an investment with potential for future equity conversion and a fixed interest rate.)

Amortized cost

The cost of an asset less any accumulated amortization or impairment. For financial instruments, it represents the initial cost adjusted for premiums, discounts, and direct costs of issuance. (Used to describe the carrying value of the company's U.S. Government securities, which approximated their fair value.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, PDF Solutions Inc. reported a modest increase in net income for both the three months ended June 30, 2025 ($12.051 million vs. $11.916 million) and the six months ended June 30, 2025 ($39.163 million vs. $38.801 million). Revenue for the second quarter also saw a slight uptick ($51.214 million vs. $50.717 million), but revenue for the first half of the year remained consistent at $70.000 million. No new significant risks were highlighted beyond the ongoing consideration of fair value fluctuations in U.S. Government securities, which had no material impact in the reported periods.

Key Financial Figures

• $0.00015 — ange on which registered Common Stock, $0.00015 par value PDFS The Nasdaq Stock Mar

Filing Documents

• pdfs20250630_10q.htm (10-Q) — 1704KB
• ex_825204.htm (EX-31.01) — 9KB
• ex_825205.htm (EX-31.02) — 10KB
• ex_825206.htm (EX-32.01) — 6KB
• ex_825207.htm (EX-32.02) — 6KB
• 0001437749-25-025464.txt ( ) — 8588KB
• pdfs-20250630.xsd (EX-101.SCH) — 66KB
• pdfs-20250630_cal.xml (EX-101.CAL) — 77KB
• pdfs-20250630_def.xml (EX-101.DEF) — 474KB
• pdfs-20250630_lab.xml (EX-101.LAB) — 426KB
• pdfs-20250630_pre.xml (EX-101.PRE) — 514KB
• pdfs20250630_10q_htm.xml (XML) — 1578KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Comprehensive Income (Loss) 4 Condensed Consolidated Statements of Stockholders' Equity 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 29

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 39

Controls and Procedures

Item 4. Controls and Procedures 40

OTHER INFORMATION

PART II OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 40

Risk Factors

Item 1A. Risk Factors 40

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 41

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 41

Other Information

Item 5. Other Information 41

Exhibits

Item 6. Exhibits 42 INDEX TO EXHIBITS 42

SIGNATURES

SIGNATURES 43 2 Table of Contents

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements PDF SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except par value) June 30, December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 37,415 $ 90,594 Short-term investments 2,987 24,291 Accounts receivable, net of allowance for credit losses 69,264 73,649 Prepaid expenses and other current assets 25,124 17,445 Total current assets 134,790 205,979 Property and equipment, net 61,853 48,465 Operating lease right-of-use assets, net 4,843 4,029 Goodwill 96,798 14,953 Intangible assets, net 56,330 12,307 Deferred tax assets, net 1,209 43 Other non-current assets 35,310 29,513 Total assets $ 391,133 $ 315,289 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 6,555 $ 8,255 Accrued compensation and related benefits 13,984 16,855 Accrued and other current liabilities 9,069 8,752 Operating lease liabilities – current portion 1,752 1,675 Deferred revenues – current portion 23,363 25,005 Current portion of long-term debt, net 2,240 — Total current liabilities 56,963 60,542 Long-term income taxes 2,958 2,915 Non-current portion of operating lease liabilities 4,176 3,504 Long-term debt, net 65,877 — Other non-current liabilities 3,639 2,291 Total liabilities 133,613 69,252 Commitments and contingencies (Note 11) Stockholders' equity: Preferred stock, $ 0.00015 par value, 5,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.00015 par value, 70,000 shares authorized; shares issued 51,214 and 50,717 , respectively; shares outstanding 39,163 and 38,801 , respectively 6 6 Additional paid-in capital 518,055 502,902 Treasury stock, at cost, 12,051 and 11,916 shares, respectively ( 162,887 ) ( 159,352 ) Accumulated deficit ( 95,874 ) ( 93,988 ) Accumulated other comprehensive loss ( 1,780 ) ( 3,531 ) Total stockholders' equity 257,52

View Full Filing

View this 10-Q filing on SEC EDGAR