PDF Solutions Inc reported second-quarter fiscal year 2026 revenues of $61.5 million, reflecting a 19% year-over-year increase. The semiconductor data analytics firm also saw its total backlog grow to $271 million, up 10% from the previous quarter.

The company reconfirmed its full-year guidance of 20% year-over-year revenue growth for 2026. Strong bookings momentum was driven by eight-figure contracts for SecureWise and DirectScan systems, alongside several seven-figure contracts for Exensio products. Demand in AI ecosystems continues to support this growth trajectory.

Financial Performance Overview

Revenue growth was supported by contributions from multiple product lines. Platform revenue reached $49.1 million, up 14% year-over-year. Volume-based revenue increased significantly by 45% compared to Q2 of last year, driven by strong gainshare and Cimetrix runtime licenses.

Gross margin for the quarter stood at 73%, lower than Q1 levels primarily due to a higher proportion of perpetual software licenses in the prior quarter. Management expects margins to revert to higher levels in the next quarter, with line-of-sight to the long-term target of 77%. Operating expenses rose only 5% year-over-year, contributing to an operating margin expansion of approximately 300 basis points.

Balance Sheet and Cash Flow

The company ended the quarter with cash and cash equivalents of $114.9 million, a substantial increase from $31.2 million in the prior quarter. This liquidity boost was aided by a follow-on equity offering that added $81.8 million to the balance sheet through the sale of approximately 1.9 million primary shares. Outstanding debt stands at $67.5 million.

Operating cash flow generated during the quarter was $16.4 million. Capital expenditure utilized $14.1 million, primarily for eProbe tools to meet customer demand. Management expects incremental capex increases in the next two quarters but anticipates ending the year with higher cash balances while reducing debt via scheduled payments.

What the Numbers Show

A notable divergence exists between the sequential decline in gross margin and the significant expansion in operating margin. While gross margin dipped to 73% due to mix shifts away from high-margin perpetual licenses, operating margin expanded by 300 basis points to 22%. This indicates that disciplined management of SG&A resources effectively offset the top-line margin pressure, allowing earnings per share to grow 42% year-over-year despite the gross margin contraction.

Strategic Developments

Key operational highlights include:

• Placement of three new eProbe inspection machines, with two going to new customers.
• Record eight-figure contract for SecureWise, expanding services to back-end test and assembly facilities.
• Cimetrix bookings reached record highs, reflecting robust activity across the equipment industry.
• Expansion of DirectScan systems into more mature process nodes and memory markets.

Management emphasized that the investment in semiconductors remains driven by the buildout of AI data centers. The company views itself as well-positioned to leverage AI agents for engineering and production execution within the semiconductor supply chain.

PDF Solutions (NASDAQ: PDFS) unveiled Exensio Aurora, a new analytics architecture designed to handle semiconductor manufacturing data at petabyte scale. The release targets the integration of agentic artificial intelligence across global supply chains.

The company plans to demonstrate the technology at its CONNECT 2026 event in San Francisco on October 15–16. A beta release for early adopters is scheduled for September 2026.

Structural Shift in Semiconductor Data

PDF Solutions identified a structural shift in the industry driven by advancements in 3D architecture, advanced packaging, and heterogeneous integration. These innovations are dissolving boundaries between front-end and back-end processes while dispersing production globally. This complexity has generated an explosion of data, yet the company notes that less than 5% of semiconductor manufacturing data is currently analyzed with conventional tools.

John Kibarian, CEO and co-founder of PDF Solutions, stated that the growth of hybrid packaging creates a larger and more complex global supply chain. He emphasized that delivering operational efficiency requires AI-driven collaboration applied at scale to align and analyze ecosystem data.

Limitations of Current Systems

Common business intelligence systems often struggle with semiconductor data that is both extremely long and wide. General-purpose cloud platforms frequently lack integration with manufacturing equipment, industry-grounded semantic models, or the ability to orchestrate actions across business applications.

In response to customer urging, PDF Solutions invested in a new analytics architecture over the past year. The new system leverages the company’s 35 years of experience to address these industry shifts.

Exensio Aurora Capabilities

Exensio Aurora is built on a design philosophy featuring server-side analytics with a lightweight client. It supports workflow-based operations, no-code creation of analysis types, and natural-language interfaces. Key features include:

• Scalable Analytics: The distributed engine is designed to deliver approximately 25X faster performance at comparable hardware cost. It brings only raw data needed for visualization to the client while keeping pre-computed analytics on petabyte-scale systems.
• Manufacturing Data House: This evolution of the semantic model supports 3D and higher-dimensional data, metadata for custom models, and powerful search capabilities for increasingly virtual and hierarchical data.
• Model Lifecycle: Built on Kubernetes, the platform enables central training with deployment to multiple edge locations, including outsourced assembly and test houses (OSATs) and test floors.
• Agentic AI: Customized large language model-enabled agents are designed to assemble full workflows, with options for on-premise deployment where cloud solutions are not preferred.
• Workflows: Every analytic, rule, and machine learning pipeline is structured as a workflow to encode best-practice playbooks and prevent AI hallucination.

Availability and Forward-Looking Statements

Exensio Aurora will first be available in September 2026 as part of a beta program. The release includes scalable analytics, scalable data APIs, automated analytics, StudioAI, and advanced feed-forward technology.

The company cautioned that forward-looking statements regarding product performance, adoption rates, and market acceptance are subject to risks. These include semiconductor industry trends, competition, macroeconomic conditions, and supply chain disruptions.