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Pdf Solutions (PDFS)
NASDAQ:PDFS
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PDF Solutions
(NASDAQ:PDFS)
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Rating:62Neutral
Price Target:
$35.00
▲(5.49% Upside)
Action:ReiteratedDate:02/25/26
The score is driven primarily by mixed financial fundamentals (strong growth and gross margins but negative free cash flow and higher leverage). Technicals are supportive with an established uptrend, while the latest earnings call adds confidence via reiterated ~20% growth guidance and strong backlog/recurring trends. Valuation is a headwind due to an extreme negative P/E and no dividend yield data.
Positive Factors
Strong revenue scaling
Sustained top‑line growth to $219M demonstrates durable commercial traction across semiconductor customers and expanding platform adoption. Scale supports longer‑term contract wins, network effects in data analytics, and the potential for operating leverage as platform revenue base grows.
High gross margins
Very high gross margins reflect software‑centric economics and differentiated analytics IP. Durable margin structure provides strong incremental profitability on new bookings, enabling reinvestment in R&D and capital equipment while preserving core unit economics across product and services.
Large recurring base and backlog
A large recurring revenue base and a $254M backlog give multi‑period revenue visibility and reduce single‑sale dependency. Enterprise contracts across fabless, fab and equipment segments create stickiness and upsell pathways, supporting steady platform monetization and customer lifetime value durability.
Negative Factors
Higher leverage from acquisition
The secureWISE acquisition materially increased debt from historically low levels, reducing financial flexibility. Elevated leverage heightens refinancing and interest‑cost risk if operating margins or cash generation falter, constraining strategic optionality for additional M&A or capital programs.
Negative free cash flow
Persistent negative free cash flow despite improving operating cash flow points to heavy CapEx and investment in machines and deployments. Ongoing negative FCF limits internal funding for growth or debt paydown and increases reliance on external financing, a structural pressure on capital allocation.
Revenue lumpiness and variability
Dependence on upfront CapEx sales and volume/gainshare streams tied to customer production creates structural lumpiness. This variability complicates forecasting, produces uneven cash conversion, and can magnify earnings volatility across quarters despite strong underlying demand trends.
PDF Solutions (PDFS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.31B
Dividend YieldN/A
Average Volume (3M)310.26K
Price to Earnings (P/E)―
Beta (1Y)1.57
Revenue Growth21.23%
EPS Growth-101.40%
CountryUS
Employees539
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.30
Shares Outstanding39,512,960
10 Day Avg. Volume307,109
30 Day Avg. Volume310,262
Financial Highlights & Ratios
PEG Ratio15.26
Price to Book (P/B)4.14
Price to Sales (P/S)5.12
P/FCF Ratio-130.77
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue6.14
Enterprise Value/Gross Profit8.44
Enterprise Value/Ebitda81.52
Forecast
1Y Price Target
$36.00Price Target Upside8.50% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)1.12
Revenue Forecast (FY)$262.25M
PDF Solutions Business Overview & Revenue Model
Company DescriptionPDF Solutions, Inc. provides proprietary software and physical intellectual property products for integrated circuit designs, electrical measurement hardware tools, proven methodologies, and professional services in the United States, China, Japan, Taiwan, and internationally. The company offers Exensio software products, such as Manufacturing Analytics that stores collected data in a common environment with a consistent view for enabling product engineers to identify and analyze production yield, performance, reliability, and other issues; Process Control that provides failure detection and classification capabilities for monitoring, alarming, and controlling manufacturing tool sets; Test Operations that offers data collection and analysis capabilities; and Assembly Operations that provides device manufacturers with the capability to link assembly and packaging data, including fabrication and characterization data over the product life cycle. It also provides design-for-inspection (DFI) Systems, such as DFI on-chip instruments; eProbe non-contactless E-beam tool; and Characterization Vehicle (CV) system, which includes CV test chips and pdFasTest electrical testers, as well as Exensio characterization software, designed to analyze the measurements collected from DFI on-chip instruments using the eProbe tool. In addition, the company offers Cimetrix software products that enables equipment manufacturers to provide industry standard interfaces on their products; and software-as-a-service, software related services, and characterization services. It sells its technologies and services through direct sales force, service teams, and strategic alliances to integrated device manufacturers, fabless semiconductor companies, foundries, equipment manufacturers, electronics manufacturing suppliers, original device manufacturers, out-sourced semiconductor assembly and test, and system houses. The company was founded in 1991 and is headquartered in Santa Clara, California.
How the Company Makes MoneyPDF Solutions generates revenue primarily through the sale of software licenses and related services. The company offers a subscription-based model for its software solutions, allowing clients to access its platforms on a recurring basis. Additionally, PDF Solutions earns revenue from professional services, including consulting and training, which help customers implement and maximize the value of its software. Key partnerships with major semiconductor manufacturers and technology firms enhance PDFS's market reach and contribute to its earnings by providing a stable customer base and opportunities for collaborative projects.
PDF Solutions Key Performance Indicators (KPIs)
PDF Solutions Earnings Call Summary
Earnings Call Date:Feb 12, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive operational and financial picture: record revenues, strong recurring revenue growth, expanding margins that exceeded prior targets, successful product launches and strategic acquisitions (secureWISE, Exensio enhancements, Exensio Studio AI), and a healthy backlog of $254M. Key challenges include increased leverage from the secureWISE acquisition (approx. $130M), modest cash on hand (~$42M) relative to debt (~$68M), lumpiness in upfront/CapEx revenue, and variability in Volume-based streams tied to customer production. Management reiterated a 20% revenue growth target for 2026 and longer term and signaled confidence in continued margin expansion, suggesting management believes positives outweigh near-term balance sheet and variability risks.Q4-2025 Updates
Positive Updates
Record Total Revenues and Strong YoY Growth
Q4 total revenue of $62.4M versus $50.1M a year prior (+25% YoY). Full year 2025 total revenue of $219.0M versus $179.5M in 2024 (+22% YoY). Company achieved record quarterly and annual revenue.
Platform and Volume Revenue Strength
Q4 Platform revenue $52.5M (+20% YoY) and Q4 Volume-based revenue $9.9M (+58% YoY). FY Platform revenue $181.0M (+15% YoY) and FY Volume revenue $38.0M (+70% YoY).
Recurring Revenue Expansion
Q4 recurring revenue $61.1M (+62% YoY). Full year recurring revenue $205.1M (+41% YoY), driven by Characterization Vehicle systems and secureWISE contributions.
Margins and EPS Above Targets
Q4 gross margin 77% and FY gross margin 76% (exceeding prior long‑term target of 75%). Q4 operating margin 24%, FY operating margin 21%. Reported FY EPS $0.94, up 12% versus $0.84 a year ago; Q4 EPS $0.30.
Product and Technology Milestones
Completed acquisition of secureWISE (largest acquisition), licensed Tiber AI Studio to create Exensio Studio AI, launched Exensio Scalable Analytics, and advanced Exensio data/AI operations work — demonstrating reinvention of analytics and orchestration capabilities.
Commercial Wins and Deployments
Signed multiple large (8‑figure) contracts across Sapience Manufacturing Hub, secureWISE and Exensio Enterprise; shipped four DirectScan systems and two eProbe machines in H2 2025; ended year with $254M backlog.
Operational Cash Generation and Investment
Generated positive operating cash flow of approximately $24M in 2025 while investing ~$33M in CapEx (DirectScan/eProbe machines) and funding strategic acquisition activity.
Reaffirmed Long-Term Targets and 2026 Outlook
Management reiterated a 20% long-term revenue CAGR target and expects 2026 revenue growth consistent with a 20% annual rate; margin targets were updated at Analyst Day to 77% gross and 27% operating.
Negative Updates
Upfront Revenue Decline
Upfront revenue declined year-over-year due to absence of a CapEx DirectScan sale that had occurred in Q4 2024, highlighting lumpiness in upfront/CapEx-related sales.
Increased Leverage from Acquisition
Spent approximately $130M to acquire secureWISE, funded by $70M of debt and balance sheet cash; ending 2025 debt balance approximately $68M with cash and equivalents plus short-term investments of about $42M, increasing leverage and near-term balance sheet pressure.
Concentration and Variability in Volume-Based Revenue
Volume-based revenue and Gainshare/runtime/license streams (including secureWISE and Cimetrix contributions) are more variable and tied to customer production cycles, creating potential revenue volatility despite strong YoY increases (Volume up 58% Q4, 70% FY).
Rising R&D and Ongoing Capital Intensity
R&D spending increased 23% YoY (driven by hires and subcontractors) and CapEx was ~$33M in 2025; continued capital intensity for machine shipments and development may pressure cash flow near-term despite projected normalization.
Preliminary Financials Subject to Audit
Management noted 2025 financial results are preliminary and subject to change pending completion of the audit and Form 10-K filing, introducing some near-term reporting uncertainty.
Limited Penetration in Some Regions
Management noted secureWISE is deployed in virtually all 300mm fabs globally but with exceptions in China, indicating pockets of limited penetration that could constrain addressable market reach in specific geographies.
Company Guidance
PDF guided that 2026 should be another growth year, forecasting full‑year total revenue growth "consistent with" its 20% target (and reiterating its long‑term model of 20% YoY revenue growth/CAGR, 77% gross margin and 27% operating margin); management said 2026 CapEx should be roughly similar to 2025’s ~$32.8M, expects operating cash flow to increase versus 2025 (2025 operating cash flow ≈$24M), plans to nearly double the number of eProbe/DirectScan machines in the field this year, and expects elevated customer activity across fabless, fab and equipment segments with continued growth from secureWISE/Cimetrix—all set against a $254M backlog, year‑end cash and short‑term investments of ≈$42M and ending debt of ≈$68M.PDF Solutions Financial Statement Overview
Summary
Strong revenue scaling (to $219M in 2025) and high gross margins (~74% in 2025) are positives, but consistency is mixed: 2025 net income slipped to a small loss, free cash flow remained negative (-$8.6M in 2025), and leverage rose sharply with debt increasing to ~$76.7M.Income Statement
Revenue has scaled meaningfully over time (from $88.0M in 2020 to $219.0M in 2025), with strong 2025 growth (5.96) and consistently high gross margins that improved to ~74.0% in 2025. Profitability is the key offset: net income swung from profits in 2023–2024 to a small loss in 2025 (net margin ~-0.3%), and operating profitability remains thin despite improvement (EBIT margin ~2.7% in 2025). Overall, the model shows attractive gross profitability and growth, but bottom-line consistency is still not fully established.63
Positive
Balance Sheet
Equity remains sizable and has grown over time ($271.0M in 2025 vs. $234.5M in 2020), supporting a solid capital base. However, leverage stepped up sharply in 2025: total debt rose to $76.7M (from ~$5–7M in prior years), pushing debt-to-equity to ~0.28 (vs. ~0.02–0.04 historically). Returns on equity are also weak and turned slightly negative in 2025, reflecting the earnings softness. The balance sheet is still equity-supported, but the sudden increase in debt raises risk and reduces flexibility if profitability doesn’t improve.58
Neutral
Cash Flow
Operating cash flow improved in 2025 to $24.1M (up from $9.7M in 2024), which is a positive signal for underlying cash generation. The main concern is conversion to free cash flow: free cash flow was negative in 2024 and 2025 (-$7.5M and -$8.6M), with a steep decline in 2025 versus 2024 (free cash flow growth -58.17). Cash generation appears more volatile than reported revenue growth, suggesting heavier investment needs and/or working-capital swings that pressure free cash flow.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 219.02M | 179.47M | 165.84M | 148.55M | 111.06M |
| Gross Profit | 162.07M | 125.32M | 114.09M | 100.64M | 66.87M |
| EBITDA | 18.50M | 5.46M | 6.12M | 4.70M | -6.26M |
| Net Income | -640.00K | 4.06M | 3.10M | -3.43M | -21.49M |
Balance Sheet | |||||
| Total Assets | 418.70M | 315.29M | 290.14M | 278.67M | 273.77M |
| Cash, Cash Equivalents and Short-Term Investments | 42.22M | 114.89M | 135.52M | 139.18M | 140.23M |
| Total Debt | 76.66M | 5.18M | 6.19M | 7.34M | 7.02M |
| Total Liabilities | 147.68M | 69.25M | 61.19M | 68.66M | 54.18M |
| Stockholders Equity | 271.02M | 246.04M | 228.95M | 210.01M | 219.59M |
Cash Flow | |||||
| Free Cash Flow | -8.58M | -7.45M | 3.13M | 23.72M | 190.00K |
| Operating Cash Flow | 24.05M | 9.70M | 14.60M | 32.30M | 4.24M |
| Investing Cash Flow | -137.36M | -5.94M | -28.99M | 84.60M | -4.67M |
| Financing Cash Flow | 64.56M | -11.23M | -5.89M | -24.31M | -5.53M |
PDF Solutions Technical Analysis
Positive
33.18
Price Trends
31.42
Positive
29.34
Positive
25.17
Positive
Market Momentum
0.30
Negative
55.41
Neutral
49.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PDFS, the sentiment is Positive. The current price of 33.18 is above the 20-day moving average (MA) of 31.72, above the 50-day MA of 31.42, and above the 200-day MA of 25.17, indicating a bullish trend. The MACD of 0.30 indicates Negative momentum. The RSI at 55.41 is Neutral, neither overbought nor oversold. The STOCH value of 49.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PDFS.
PDF Solutions Risk Analysis
PDF Solutions disclosed 33 risk factors in its most recent earnings report. PDF Solutions reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
PDF Solutions Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $529.50M | 80.17 | 6.53% | ― | 3.62% | -20.45% | |
62 Neutral | $1.31B | -1,963.31 | -0.25% | ― | 21.23% | -101.40% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $400.85M | -8.37 | -26.69% | ― | 13.09% | 32.34% | |
51 Neutral | $679.75M | -18.91 | -10.54% | ― | 6.54% | -19.17% | |
51 Neutral | $328.07M | -1.53 | -25.34% | ― | -7.43% | 61.36% |
* Technology Sector Average
PDFS
PDF Solutions
33.18
9.51
40.18%
SPT
Sprout Social
6.77
-21.32
-75.90%
BMBL
Bumble
2.91
-2.37
-44.89%
VTEX
VTEX
2.98
-1.73
-36.73%
RSKD
Riskified
4.42
-0.78
-15.00%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.