What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 561 added, 141 removed, 536 unchanged (57% of the section changed)

5 unchanged sentences

Cash and cash equivalents

$ 37,415 $ 90,594

Short-term investments

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

96,798 14,953

Intangible assets, net

56,330 12,307

Deferred tax assets, net

Other non-current assets

35,310 29,513

$ 391,133 $ 315,289

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

$ 6,555 $ 8,255

Accrued compensation and related benefits

13,984 16,855

Accrued and other current liabilities

1 unchanged sentence

Deferred revenues – current portion

23,363 25,005

Current portion of long-term debt, net

Total current liabilities

56,963 60,542

Long-term income taxes

3 unchanged sentences

Total liabilities

133,613 69,252

Commitments and contingencies (Note 11)

5 unchanged sentences

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

257,520 246,037

Total liabilities and stockholders’ equity

$ 391,133 $ 315,289

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

PDF SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Integrated Yield Ramp

5 unchanged sentences

Amortization of acquired intangible assets

Loss from operations

Income (loss) from operations

Interest expense

Other income (expense), net

Loss before income tax expense

Income tax expense

Other comprehensive loss:

Interest income and other, net

Income (loss) before income tax benefit (expense)

Income tax benefit (expense)

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustments, net of tax

Change in unrealized loss related to available-for-sale debt securities, net of tax

Change in unrealized gain (loss) related to available-for-sale debt securities, net of tax

Total other comprehensive income (loss)

Comprehensive loss

Net loss per share:

Weighted average common shares used to calculate net loss per share:

Comprehensive income (loss)

Net income (loss) per share:

Weighted average common shares used to calculate net income (loss) per share:

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(in thousands)

Three Months Ended March 31, 2025

Three-Month Periods in the Six Months Ended June 30, 2025

Treasury Stock

2 unchanged sentences

Balances, December 31, 2024

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Shares issued under equity plans

Shares withheld for taxes related to shares issued under equity plans

Stock-based compensation expense

1 unchanged sentence

Balances, March 31, 2025

Three Months Ended March 31, 2024

Shares issued under equity plans

Shares withheld for taxes related to shares issued under equity plans

Stock-based compensation expense

Comprehensive income

Balances, June 30, 2025

Three-Month Periods in the Six Months Ended June 30, 2024

Treasury Stock

2 unchanged sentences

Balances, December 31, 2023

Shares issued under equity plans

Shares withheld for taxes related to shares issued under equity plans

Repurchase of common stock

Issuance of common stock in connection with employee stock purchase plan

Issuance of common stock in connection with exercise of options

Vesting of restricted stock units

Purchases of treasury stock in connection with tax withholdings on restricted stock awards

Stock-based compensation expense

1 unchanged sentence

Balances, March 31, 2024

Shares issued under equity plans

Shares withheld for taxes related to shares issued under equity plans

Stock-based compensation expense

Comprehensive income (loss)

Balances, June 30, 2024

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Stock-based compensation expense

3 unchanged sentences

Net accretion of discounts on short-term investments

Recovery from previously written-off property and equipment

Deferred taxes

15 unchanged sentences

Prepayment for the purchase of property and equipment

Recovery from previously written-off property and equipment

Payment for business acquisition, net of cash acquired

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from long-term debt, net of payment of debt financing costs

Proceeds from exercise of stock options

Proceeds from employee stock purchase plan

Proceeds from long-term debt, net of debt financing costs

Payments of debt issuance costs

Repayments of long-term debt

Proceeds from exercise of stock options and employee stock purchase plan

Payments for taxes related to net share settlement of equity awards

9 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental disclosure of cash flow information:

Cash paid during the year for income taxes

Cash paid for income taxes

Cash paid for amounts included in the measurement of operating lease liabilities

Cash paid for interest on long-term debt

Supplemental disclosure of noncash information:

2 unchanged sentences

Stock-based compensation capitalized as property and equipment

Property and equipment transferred to sales-type leases

Property and equipment transferred to sales-type leases and from other non-current assets, net

Operating lease liabilities arising from obtaining right-of-use assets

Debt financing costs included in accounts payable

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

16 unchanged sentences

Reclassification of Prior Period Amount

Certain immaterial prior period amounts on the condensed consolidated balance sheet and condensed consolidated statements of cash flows have been reclassified to conform with current period presentation.

Certain immaterial prior period amounts on the condensed consolidated balance sheet, condensed consolidated statements of stockholders' equity, and condensed consolidated statements of cash flows have been reclassified to conform with current period presentation.

Recent Accounting Standards

15 unchanged sentences

The Company is currently evaluating the impact of the new standard on the consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025 - 05, Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient to measure credit losses on accounts receivable and contract assets.

The ASU is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods.

Early adoption is permitted.

The Company is currently evaluating the timing of the adoption and the impact of the new standard on the consolidated financial statements and related disclosures.

Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB and does not believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements.

17 unchanged sentences

Analytics revenue is derived from the following primary offerings:

licenses and services for standalone software (which is primarily Exensio ® and Cimetrix ® products), software-as-a-service (“SaaS”) (which is primarily Exensio ® products and includes secureWISE ® products and services), and Design-for-Inspection™ (“DFI™”) systems and Characterization Vehicle ® (“CV ® ”) systems that do not include performance incentives based on customers’ yield achievement.

Revenue from standalone software is recognized depending on whether the license is perpetual or time-based.

licenses and services for on-premise software (which is primarily Exensio ® and Cimetrix ® products, and includes some secureWISE ® products), software-as-a-service (“SaaS”) (which is primarily Exensio products, and includes some secureWISE products and services), and Design-for-Inspection™ (“DFI™”) systems and Characterization Vehicle ® (“CV ® ”) systems that do not include performance incentives based on customers’ yield achievement.

Revenue from on-premise software is recognized depending on whether the license is perpetual or time-based.

Perpetual ( one -time charge) license software is recognized at the time of the inception of the arrangement when control transfers to the customers if the software license is considered as a separate performance obligation from the services offered by the Company.

1 unchanged sentence

Revenue from time-based-licensed software is allocated to each performance obligation and is recognized either at a point in time or over time as follows.

The license component is recognized at the time when control transfers to customers, with the post-

contract support component recognized ratably over the committed term of the contract.

The license component is recognized at the time when control transfers to customers, with the post-contract support component recognized ratably over the committed term of the contract.

For contracts with any combination of licenses, support, and other services, distinct performance obligations are accounted for separately.

For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP attributed to each performance obligation.

Revenue from SaaS arrangements, which allow for the use of a software product or service over a contractually determined period of time without the customer having to take possession of the software, e.g., cloud-based or via a network of secureWISE servers, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers.

Revenue from SaaS arrangements, which allow for the use of a software product or service over a contractually determined period of time without the customer taking possession of the software, e.g., cloud-based or via a network of secureWISE servers, is accounted for as a subscription and is recognized as revenue ratably, on a straight-line basis, over the subscription period beginning on the date the service is first made available to customers.

For contracts with any combination of SaaS and related services, distinct performance obligations are accounted for separately.

19 unchanged sentences

Integrated Yield Ramp Revenue

Integrated Yield Ramp revenue is derived from the Company’s fixed-fee engagements that include performance incentives based on customers’ yield achievement (which consists primarily of Gainshare royalties) typically based on customer’s wafer shipments, pertaining to these fixed-price contracts, which royalties are variable.

Revenue under these project-based contracts, which are delivered over a specific period of time, typically for a fixed-fee component paid on a set schedule, is recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract.

Integrated Yield Ramp revenue is comprised of all fees from the Company’s contracts that include any performance incentives based on customers’ yield achievement.

Fixed fees under these project-based contracts, which are delivered over a specific period of time and typically paid on a set schedule, are recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract.

Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs and allocates the transaction price of the contract to each performance obligation on a relative basis using the SSP.

1 unchanged sentence

Please refer to the “Significant Judgments” section of this Note for further discussion.

The Gainshare contained in Integrated Yield Ramp contracts is a variable fee related to continued usage of the Company’s intellectual property after the fixed-fee service period ends, based on a customer’s yield achievement.

Revenue derived from Gainshare is contingent upon the Company’s customers reaching certain defined production yield levels.

Gainshare periods are generally subsequent to the delivery of all contractual services and performance obligations.

The Company records Gainshare as a usage-based royalty derived from customers’ usage of intellectual property and records it in the same period in which the usage occurs.

Variable fees contained in Integrated Yield Ramp contracts that relate to continued usage of the Company’s intellectual property after the fixed-fee service period ends depend on a customer’s yield achievement (which the Company refers to as “Gainshare fees”) and are generally subsequent to the delivery of all contractual services and performance obligations.

The Company typically recognizes Gainshare as a usage-based royalty derived from customers’ usage of intellectual property in the same period in which the usage occurs.

Disaggregation of Revenue

3 unchanged sentences

The following table represents a disaggregation of revenue percentage by timing of revenue:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

70 % 72 % 65 % 69 %

Point-in-time

International revenues accounted for approximately 62 % and 57 % of the Company’s total revenues during the three months ended March 31, 2025 and 2024, respectively.

30 % 28 % 35 % 31 %

100 % 100 % 100 % 100 %

International revenues accounted for approximately 61 % and 54 % of the Company’s total revenues during the three months ended June 30, 2025 and 2024 , respectively, and approximately 62 % and 55 % of the Company’s total revenues during the six months ended June 30, 2025 and 2024 , respectively.

See Note 9, Customer and Geographic Information .

10 unchanged sentences

The Company is required to estimate the range of the SSPs for each performance obligation and in instances where the SSP is not directly observable because the Company does not license the software or sell the service separately, the Company determines the SSP using information that may include market conditions and other observable inputs.

The Company is required to record Gainshare revenue in the same period in which the usage occurs.

The Company is required to recognize Gainshare revenue in the same period in which the usage occurs.

Because the Company generally does not receive the acknowledgment reports from its customers during a given quarter within the time frame necessary to adequately review the reports and include the actual amounts in quarterly results for such quarter, the Company accrues the related revenue based on estimates of customers underlying sales achievement.

8 unchanged sentences

The contract assets are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level.

The contract assets consist of the following (in thousands):

The contract assets were as follows (in thousands):

Current (included in Prepaid expenses and other current assets)

$ 7,930 $ 3,224

Non-current (included in Other non-current assets)

Total contract assets

$ 8,167 $ 3,841

The Company did not record any asset impairment charges related to contract assets for the periods presented.

1 unchanged sentence

Deferred revenues that will be recognized during the succeeding twelve -month period are recorded as current deferred revenues and the remaining portion is recorded in other non-current liabilities in the condensed consolidated balance sheets.

Deferred revenues were the following (in thousands):

Deferred revenues were as follows (in thousands):

$ 23,363 $ 25,005

Non-current (included in Other non-current liabilities)

Total deferred revenues

$ 24,471 $ 26,517

Additional information related to deferred revenue were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Revenue recognized that was included in the deferred revenues and billings in excess of recognized revenues balances at the beginning of each year

As of March 31, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $ 226.7 million.

$ 12,063 $ 14,453 $ 18,625 $ 18,929

As of June 30, 2025 , the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $ 232.6 million.

Given the applicable contract terms with customers, more than half of this amount is expected to be recognized as revenue over the next two years with the remainder to be recognized thereafter.

2 unchanged sentences

The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was an increase of $ 0.2 million and a decrease of $ 0.6 million during the three months ended March 31, 2025 and 2024, respectively.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods was a decrease of $ 1.5 million and a decrease of $ 0.3 million during the three months ended June 30, 2025 and 2024 , respectively, and an increase of $ 0.2 million and a decrease of $ 1.1 million during the six months ended June 30, 2025 and 2024 , respectively.

These amounts primarily represent changes in estimated percentage-of-completion based contracts and changes in actual versus estimated Gainshare.

2 unchanged sentences

Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred.

Total capitalized direct sales commission costs and related fees were the following (in thousands):

Total capitalized direct sales commission costs and related fees were as follows (in thousands):

Current (included in Prepaid expenses and other current assets)

$ 2,381 $ 2,929

Non-current (included in Other non-current assets)

Total capitalized direct sales commission costs

Amortization of capitalized direct sales commission costs was the following (in thousands):

Three Months Ended March 31,

$ 6,541 $ 5,314

Amortization of capitalized direct sales commission costs were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Amortization of capitalized direct sales commission costs

$ 625 $ 640 $ 1,497 $ 1,274

There was no impairment loss in relation to the costs capitalized for the periods presented.

1 unchanged sentence

The Company does not adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less.

The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts did not include a material significant financing component during the three months ended March 31, 2025 and 2024.

BALANCE SHEET COMPONENTS

1 unchanged sentence

Accounts receivable include amounts that are unbilled at the end of the period that are expected to be billed and collected within a 12‑month period.

Unbilled accounts receivable, included in accounts receivable, totaled $ 27.0 million and $ 23.0 million as of March 31, 2025, and December 31, 2024, respectively.

Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12-month period are recorded in other non-current assets and totaled $ 8.6 million and $ 9.0 million as of March 31, 2025, and December 31, 2024, respectively.

Unbilled accounts receivable, included in accounts receivable, totaled $ 29.3 million and $ 23.0 million as of June 30, 2025 , and December 31, 2024 , respectively.

Unbilled accounts receivable that are not expected to be billed and collected during the succeeding 12‑month period are recorded in other non-current assets and totaled $ 8.7 million and $ 9.0 million as of June 30, 2025 , and December 31, 2024 , respectively.

The Company performs ongoing credit evaluations of its customers’ financial condition.

1 unchanged sentence

The allowance for credit losses is reviewed on a quarterly basis to assess the adequacy of the allowance.

The allowance for credit losses was $ 0.9 million as of March 31, 2025 and December 31, 2024.

The allowance for credit losses was $ 0.9 million as of June 30, 2025 and December 31, 2024 .

Prepaid expenses and other current assets

1 unchanged sentence

Prepaid expense

$ 8,112 $ 6,481

Contract assets

3 unchanged sentences

Total prepaid expenses and other current assets

$ 25,124 $ 17,445

Property and Equipment

1 unchanged sentence

Computer equipment

$ 13,597 $ 10,799

Software and capitalized software development cost

3 unchanged sentences

Test equipment

24,378 22,680

Property and equipment in progress:

DFI system assets

40,819 34,935

CV system and other assets

Total property and equipment

110,234 95,416

Accumulated depreciation and amortization

( 48,381 ) ( 46,951 )

Total property and equipment, net

$ 61,853 $ 48,465

Test equipment mainly includes DFI™ system and CV® system assets at customer sites that are contributing to revenue.

Property and equipment in progress represent the development or construction of property and equipment that have not yet been placed in service for the Company’s intended use and are not depreciated.

Depreciation and amortization expense was $ 0.7 million and $ 1.1 million for the three months ended March 31, 2025 and 2024, respectively.

Depreciation and amortization expense was $ 0.8 million and $ 1.1 million for the three months ended June 30, 2025 and 2024 , respectively, and $ 1.5 million and $ 2.1 million for the six months ended June 30, 2025 and 2024 , respectively.

Goodwill and Intangible Assets, Net

The following table summarizes goodwill transactions for the periods presented (in thousands):

Three Months Ended March 31,

Balance at beginning of the period

The changes in goodwill were as follows (in thousands):

Six Months Ended June 30,

Balance at the beginning of period

$ 14,953 $ 15,029

Foreign currency translation adjustment

Balance at end of the period

Balance at the end of period

$ 96,798 $ 14,953

The Company completed the acquisition of SecureWise LLC (“SecureWise”) on March 7, 2025.

1 unchanged sentence

Intangible assets, net, consisted of the following (in thousands):

March 31, 2025

June 30, 2025

December 31, 2024

1 unchanged sentence

Customer relationships

1 - 13 $ 38,404 $ ( 8,732 ) $ 29,672 $ 9,499 $ ( 7,866 ) $ 1,633

Developed technology

4 - 9 46,219 ( 26,380 ) 19,839 34,566 ( 24,601 ) 9,965

Tradename and trademarks

2 - 10 8,198 ( 1,567 ) 6,631 1,598 ( 1,120 ) 478

6 - 10 2,100 ( 1,912 ) 188 2,100 ( 1,869 ) 231

Noncompetition agreements

The weighted average amortization period for acquired identifiable intangible assets was 9.1 years as of March 31, 2025.

848 ( 848 ) — 848 ( 848 ) —

$ 95,769 $ ( 39,439 ) $ 56,330 $ 48,611 $ ( 36,304 ) $ 12,307

The weighted average amortization period for acquired identifiable intangible assets was 8.9 years as of June 30, 2025 .

The amortization expense related to intangible assets were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Amortization of acquired technology (included in costs of revenues)

$ 998 $ 584 $ 1,676 $ 1,168

Amortization of acquired intangible assets (presented separately under costs and expenses)

Total amortization of acquired intangible assets

The estimated future amortization of acquired identifiable intangible assets as follows (in thousands):

1,068 259 1,446 518

Total amortization expense

$ 2,066 $ 843 $ 3,122 $ 1,686

The estimated future amortization of acquired identifiable intangible assets were as follows (in thousands):

Year Ending December 31,

2025 (remaining nine months)

2025 (remaining six months)

2030 and thereafter

Total future amortization expense

There was no impairment charges for goodwill and intangible assets during the three months ended March 31, 2025 and 2024.

There was no impairment charges for goodwill and intangible assets during the three and six months ended June 30, 2025 and 2024 .

Other Non-current Assets

1 unchanged sentence

Net investments in sales-type leases (3)

$ 17,856 $ 13,226

Unbilled accounts receivable (2)

2 unchanged sentences

Total other non-current assets

$ 35,310 $ 29,513

See Note 2, Revenue from Contracts with Customers .

See Note 3, Balance Sheet Components – Accounts Receivable .

(3) The Company had net investments in sales-type leases for its DFI™ system and CV® system assets.

The following table summarizes the components of the Company’s net investments in sales-type leases in the condensed consolidated balance sheets (in thousands):

The Company’s net investments in sales-type leases were for its DFI system and CV system assets.

The components of net investments in sales-type leases were as follows (in thousands):

Present value of lease receivables

$ 11,924 $ 13,238

Contract liability

Net lease receivables

11,924 10,003

Unguaranteed residual assets

Total net investments in sales-type leases

$ 22,870 $ 17,752

Current (included in Prepaid expenses and other current assets)

$ 5,014 $ 4,526

Non-current (included in Other non-current assets)

17,856 13,226

Total net investments in sales-type leases

Maturities of leases payments under sales-type leases as of March 31, 2025, were as follows (in thousands):

$ 22,870 $ 17,752

Maturities of leases payments under sales-type leases as of June 30, 2025 , were as follows (in thousands):

Year Ending December 31,

2025 (remaining nine months)

2025 (remaining six months)

2029 and thereafter

Total future sales-type lease payments

Present value adjustment (a)

Present value adjustment (1)

Present value of lease receivables

(a) Calculated using the rate implicit in the lease determined for each lease.

There was no allowance for credit losses on lease receivables as of March 31, 2025, and December 31, 2024.

Calculated using the rate implicit in the lease determined for each lease.

There was no allowance for credit losses on lease receivables as of June 30, 2025 , and December 31, 2024 .

The Company’s ongoing risk management strategy for residual assets includes performing regular reviews of estimated residual values.

1 unchanged sentence

These operating leases expire at various dates through 2031.

The Company had no leases that were classified as a financing lease as of March 31, 2025, and December 31, 2024.

The Company had no leases that were classified as a financing lease as of June 30, 2025 , and December 31, 2024 .

Lease expense was comprised of the following (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease expense

$ 435 $ 379 $ 849 $ 760

Short-term lease and variable lease expense (1)

193 272 400 486

Total lease expense

$ 628 $ 651 $ 1,249 $ 1,246

Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

3 unchanged sentences

Weighted average discount rate for operating lease liabilities

Maturities of operating lease liabilities as of March 31, 2025 were as follows (in thousands):

Maturities of operating lease liabilities as of June 30, 2025 , were as follows (in thousands):

Year Ending December 31,

2025 (remaining nine months)

2025 (remaining six months)

2030 and thereafter

Total future minimum lease payments

Present value of future minimum lease payments under operating lease liabilities

Reported as of March 31, 2025:

Reported as of June 30, 2025:

Operating lease liabilities – current

2 unchanged sentences

Calculated using incremental borrowing interest rate for each lease.

As of March 31, 2025, the Company had additional undiscounted future minimum payments of $ 0.4 million relating to an operating lease for an office space that had been signed but had not yet commenced.

This operating lease will commence during the second quarter of 2025 and will have a lease term of approximately 6.2 years.

STOCKHOLDERS ’ EQUITY

1 unchanged sentence

On April 11, 2022, the Board of Directors adopted a stock repurchase program (the “2022 Program”) to repurchase up to $ 35.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5 - 1 plans, from time to time, over the next two years from the adoption date.

During the three months ended March 31, 2024, 201,561 shares were repurchased by the Company under the 2022 Program at an average price of $ 34.23 per share for an aggregate total price of $ 6.9 million.

During the six months ended June 30, 2024, 201,561 shares were repurchased by the Company under the 2022 Program at an average price of $ 34.23 per share for an aggregate total price of $ 6.9 million.

In total, the Company repurchased 937,501 shares under the 2022 Program at an average price of $ 25.96 per share for an aggregate total price of $ 24.3 million.

1 unchanged sentence

On April 15, 2024, the Board of Directors adopted a new stock repurchase program (the “2024 Program”) to repurchase up to $ 40.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5 - 1 plans, from time to time, over the next two years from the adoption date.

The Company has no t repurchased any shares under the 2024 Program as of March 31, 2025.

The Company has not repurchased any shares under the 2024 Program as of June 30, 2025 .

EMPLOYEE BENEFIT PLANS

4 unchanged sentences

The Company estimated the fair value of purchase rights granted under the 2021 Purchase Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values:

Three Months Ended March 31,

Six Months Ended June 30,

Expected life (in years)

40.22 % 41.40 %

Risk-free interest rate

4.22 % 4.62 %

Expected dividend

Weighted average fair value of purchase rights granted during the year

During the three months ended March 31, 2025 and 2024, a total of 89,508 shares and 73,854 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 23.68 per share and $ 25.94 per share, respectively.

As of March 31, 2025, unrecognized compensation cost related to the 2021 Purchase Plan was $ 6.6 million, which is expected to be recognized over a weighted average period of 1.8 years.

As of March 31, 2025, 548,973 shares were available for future issuance under the 2021 Purchase Plan.

Subsequently, on April 28, 2025, the Company’s Board of Directors approved an amendment and restatement of the 2021 Purchase Plan, which is subject to stockholder approval at the 2025 annual meeting of stockholders, to, among other things, increase the number of shares reserved for issuance for an additional 0.2 million shares to a total of 1.4 million shares.

Weighted average fair value of purchase rights granted during the period

$ 9.36 $ 10.89

During the six months ended June 30, 2025 and 2024 , a total of 90,076 shares and 73,854 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 23.68 per share and $ 25.94 per share, respectively.

As of June 30, 2025 , unrecognized compensation cost related to the 2021 Purchase Plan was $ 3.7 million, which is expected to be recognized over a weighted average period of 1.6 years.

As of June 30, 2025 , 748,405 shares were available for future issuance under the 2021 Purchase Plan.

Stock Incentive Plan

5 unchanged sentences

Stock options generally expire ten years from the date of grant and become vested and exercisable over a four -year period.

As of March 31, 2025, 15.1 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 3.5 million shares were available for future grant.

The number of shares reserved and available under the 2011 Plan includes 0.5 million shares that were subject to awards previously made under the 2001 Plan and were forfeited, expired, or repurchased by the Company after the adoption of the 2011 Plan through March 31, 2025.

As of March 31, 2025, there were no outstanding awards that had been granted outside of the 2011 Plan.

Subsequently, on April 28, 2025, the Company’s Board of Directors approved an amendment and restatement of the 2011 Plan, which is subject to stockholder approval at the 2025 annual meeting of stockholders, to, among other things, increase the number of shares reserved for issuance for an additional 0.8 million shares to a total of 15.9 million shares.

As of June 30, 2025 , 15.9 million shares of common stock were reserved to cover stock-based awards under the 2011 Plan, of which 4.3 million shares were available for future grant.

As of June 30, 2025 , there were no outstanding awards that had been granted outside of the 2011 Plan.

The Company estimated the fair value of share-based awards granted under the 2011 Stock Plan during the period using the Black-Scholes-Merton option-pricing model.

There were no stock options granted during the three months ended March 31, 2025 and 2024.

There were no stock options granted during the six months ended June 30, 2025 and 2024 .

Stock-Based Compensation

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Stock-based compensation expense before taxes related to the Company’s stock plan and employee stock purchase plan was allocated as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Costs of revenues

$ 1,257 $ 1,185 $ 2,599 $ 2,385

Research and development

2,251 2,063 4,670 4,265

Selling, general, and administrative

2,691 2,452 5,526 5,160

Total stock-based compensation expense

$ 6,199 $ 5,700 $ 12,795 $ 11,810

Stock Award Activities

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Nonvested, January 1, 2025

Nonvested, March 31, 2025

The weighted average grant date fair values of RSUs granted during the three months ended March 31, 2025 and 2024 were $ 24.90 and $ 33.17 , respectively.

1,885 $ 33.14

( 406 ) 29.77

Nonvested, June 30, 2025

1,518 $ 33.60

The weighted average grant date fair values of RSUs granted during the six months ended June 30, 2025 and 2024 were $ 23.66 and $ 33.63 , respectively.

The total fair value of RSUs vested were as follows (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Fair value of restricted stock units vested

As of March 31, 2025, there was $ 43.7 million of total unrecognized compensation cost related RSUs which is expected to be recognized over a weighted average period of 2.4 years.

$ 10,501 $ 12,833

As of June 30, 2025 , there was $ 38.0 million of total unrecognized compensation cost related RSUs which is expected to be recognized over a weighted average period of 2.3 years.

RSUs do not have rights to dividends prior to vesting.

Stock Options

As of March 31, 2025, the outstanding stock options totaled 26,679 shares.

Total fair value of shares vested during the three months ended March 31, 2025 was immaterial.

As of March 31, 2025, there was no remaining unrecognized compensation cost related to unvested stock options.

Income tax expense decreased by $ 0.1 million for the three months ended March 31, 2025 to $ 36 thousand as compared to $ 0.1 million for the three months ended March 31, 2024.

The Company’s effective tax rate was ( 1.2 %) for the three months ended March 31, 2025 compared to ( 47 %) for the three months ended March 31, 2024.

The increase was primarily due to changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income in relation to their forecasted amounts for full years.

The Company’s provision for income taxes for the three months ended March 31, 2025, was primarily attributable to federal, state and foreign taxes.

The Company’s total amount of unrecognized tax benefits, excluding interest, as of March 31, 2025, was $ 16.9 million, of which $ 2.3 million, if recognized, would affect the Company’s effective tax rate.

As of June 30, 2025 , the outstanding stock options totaled 25,761 shares.

Total fair value of shares vested during the six months ended June 30, 2025 was immaterial.

As of June 30, 2025 , there was no remaining unrecognized compensation cost related to unvested stock options.

Income tax expense decreased by $ 1.2 million for the six months ended June 30, 2025 , to $ 1.1 million tax benefit as compared to ($ 0.2 ) million income tax expense for the six months ended June 30, 2024 .

The Company’s effective tax rate was 36 % for the six months ended June 30, 2025 , compared to 11 % for the six months ended June 30, 2024 .

The increase was primarily due to changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income (loss) in relation to their forecasted amounts for the full year.

The Company’s provision for income taxes for the six months ended June 30, 2025 , was primarily attributable to federal, state and foreign taxes.

The Company’s total amount of unrecognized tax benefits, excluding interest, as of June 30, 2025 , was $ 17.3 million, of which $ 2.4 million, if recognized, would affect the Company’s effective tax rate.

The Company’s total amount of unrecognized tax benefits, excluding interest, as of December 31, 2024 , was $ 16.6 million, of which $ 2.1 million, if recognized, would affect the Company’s effective tax rate.

As of March 31, 2025, the Company has recorded unrecognized tax benefits of $ 2.9 million, including interest of $ 0.7 million, as long-term taxes payable in the condensed consolidated balance sheets.

As of June 30, 2025 , the Company has recorded unrecognized tax benefits of $ 3.0 million, including interest of $ 0.6 million, as long-term taxes payable in the condensed consolidated balance sheets.

The remaining $ 14.9 million has been recorded within the Company’s DTAs, which is subject to a full valuation allowance.

The valuation allowance was approximately $ 67.9 million as of March 31, 2025, and December 31, 2024, which was related to U.S.

The valuation allowance was approximately $ 67.9 million as of June 30, 2025 , and December 31, 2024 , which was related to U.S.

net federal and state DTAs.

The worldwide net DTAs balance were immaterial as of March 31, 2025 and December 31, 2024.

The worldwide net DTAs balance were immaterial as of June 30, 2025 , and December 31, 2024 .

The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S.

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or any other of its major foreign subsidiaries’ jurisdictions.

NET LOSS PER SHARE

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period (excluding outstanding stock options, nonvested restricted stock units and shares subject to repurchase).

Diluted net loss per share is computed using the weighted average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

The OBBBA includes significant provisions regarding corporate taxes, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions.

The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company is currently assessing the impact on the Company's consolidated financial statements.

As the OBBBA was signed into law after the close of the Company's second quarter, no impact has been included in the Company's operating results for the six months ended June 30, 2025.

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period (excluding outstanding stock options, nonvested restricted stock units and shares subject to repurchase).

Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive.

The following is a reconciliation of the numerators and denominators used in computing basic and diluted net loss per share (in thousands except per share amount):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

$ 1,146 $ 1,705 $ ( 1,886 ) $ 1,312

Basic weighted average common shares outstanding

39,148 38,619 39,118 38,456

Effect of dilutive stock options, unvested restricted stock units, and shares of common stock expected to be issued under employee stock purchase plan

112 513 — 533

Diluted weighted average common shares outstanding

Net loss per share:

For the three months ended March 31, 2025 and 2024, because the Company was in a loss position, diluted net loss per share is the same as basic net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

39,260 39,132 39,118 38,989

Net income (loss) per share:

$ 0.03 $ 0.04 $ ( 0.05 ) $ 0.03

For the six months ended June 30, 2025 , because the Company was in a loss position, diluted net loss per share is the same as basic net loss per share as the inclusion of the potential common shares would have been anti-dilutive.

The following table summarizes the potential shares of common stock that were not included in the diluted net loss per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Non-vested restricted stock units

1,164 556 1,518 571

Outstanding stock options

Shares issuable under employee stock purchase plan

1,438 556 1,812 571

CUSTOMER AND GEOGRAPHIC INFORMATION

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Further, the CODM reviews and utilizes functional expenses (costs of revenues, research and development, and selling, general and administrative) at the consolidated level to manage the Company’s operations.

Other segment items included in the condensed consolidated net income (loss) are amortization of acquired intangible assets, interest expense, other income (expense), net and income tax expense, which are reflected in the condensed consolidated statements of comprehensive income (loss).

Other segment items included in the condensed consolidated net income (loss) are amortization of acquired intangible assets, interest expense, interest income and other, net and income tax expense, which are reflected in the condensed consolidated statements of comprehensive income (loss).

Accordingly, the Company considers itself as one operating and reporting segment because it does not distinguish between markets, specifically the provision of services for differentiated data and analytics solutions to the semiconductor and electronics industries.

The following table presents segment total revenues, costs of revenues, gross profit, and net loss for the periods presented (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Total revenues

$ 51,728 $ 41,661 $ 99,506 $ 82,971

Costs of revenues

Revenues from an individual customer that are approximately 10% or more of the Company’s consolidated total revenues are as follows:

Three Months Ended March 31,

$ 14,886 $ 12,230 $ 27,841 $ 25,759

$ 36,842 $ 29,431 $ 71,665 $ 57,212

Net income (loss)

$ 1,146 $ 1,705 $ ( 1,886 ) $ 1,312

Revenues from an individual customer that are approximately 10% or more of the Company’s consolidated total revenues were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

19 % 24 % 17 % 23 %

12 % * % 15 % 14 %

17 % * % 14 % * %

* represents less than 10%

Gross accounts receivable balances (including amounts that are unbilled) from individual customers that are approximately 10% or more of the Company’s gross accounts receivable balance are as follows:

Revenues from customers by geographic area based on the location of the customers’ work sites are as follows (amounts in thousands):

Three Months Ended March 31,

* represents less than 10%

Revenues from customers by geographic area based on the location of the customers’ work sites were as follows (amounts in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

United States

$ 19,954 39 % $ 19,223 46 % $ 38,182 39 % $ 36,956 45 %

9,304 18 7,932 19 21,040 21 19,220 23

12,190 23 7,000 17 20,233 20 11,853 14

Rest of the world

10,280 20 7,506 18 20,051 20 14,942 18

Total revenues

Long-lived assets, net by geographic area are as follows (in thousands):

$ 51,728 100 % $ 41,661 100 % $ 99,506 100 % $ 82,971 100 %

Long-lived assets, net by geographic area were as follows (in thousands):

United States (1)

$ 75,236 $ 58,782

Rest of the world

Total long-lived assets, net

$ 77,642 $ 60,243

( 1 ) Includes assets deployed at customer sites which could be outside the U.S.

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Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table represents the Company’s assets measured at fair value on a recurring basis and the basis for those measurements (in thousands):

The Company’s financial assets measured at fair value on a recurring basis and the basis for those measurements were as follows (in thousands):

Fair Value Measurements Using

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Cash equivalents

$ 1,361 $ 1,361 $ — $ —

Available-for-sale debt securities:

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Short-term investments

2,987 2,987 — —

Convertible note receivable (2)

Other non-current assets

2,087 — — 2,087

$ 6,435 $ 4,348 $ — $ 2,087

Fair Value Measurements Using

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Cash equivalents

$ 66,213 $ 66,213 $ — $ —

Available-for-sale debt securities:

1 unchanged sentence

Short-term investments

24,291 24,291 — —

Convertible note receivable (2)

Other non-current assets

2,038 — — 2,038

$ 92,542 $ 90,504 $ — $ 2,038

The amortized cost of the Company’s investments in U.S.

Government securities approximated their fair value due to their short-term maturities, and there have been no events or changes in circumstances that would have had a significant effect on the fair value of these securities in the periods presented.

For the three months ended March 31, 2025 and 2024, there were no material realized or unrealized gains or losses, either individually or in the aggregate.

For the three and six months ended June 30, 2025 and 2024 , there were no material realized or unrealized gains or losses, either individually or in the aggregate.

In August 2024, the Company purchased a $ 2.0 million non-marketable convertible promissory note from an unrelated third party (the “convertible note”).

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The standard warranty reserve is based on estimated total expected costs to fulfill our warranty obligation based on best available information as of the reporting date.

The standard warranty reserve was immaterial as of March 31, 2025 and December 31, 2024.

The standard warranty reserve was immaterial as of June 30, 2025 , and December 31, 2024 .

Purchase Obligations — The Company has purchase obligations with certain suppliers for the purchase of goods and services entered into in the ordinary course of business.

As of March 31, 2025, total outstanding purchase obligations were $ 37.6 million, the majority of which is due within the next 12 months.

As of June 30, 2025 , total outstanding purchase obligations were $ 36.1 million, the majority of which is due within the next 12 months.

Indemnification of Officers and Directors — As permitted by the Delaware General Corporation Law, the Company has included a provision in its certificate of incorporation to eliminate the personal liability of its officers and directors for monetary damages for breach or alleged breach of their fiduciary duties as officers or directors.

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The Company accrues for losses related to litigation when a potential loss is probable, and the loss can be reasonably estimated in accordance with FASB requirements.

As of March 31, 2025, the Company was not party to any material legal proceedings for which a loss was probable or an amount was accrued.

As of June 30, 2025 , the Company was not party to any material legal proceedings for which a loss was probable or an amount was accrued.

From time to time, the Company may enter into contingent fee arrangements with external legal firms that may represent the Company in legal proceedings related to disputes.

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and (iv) a 5 -year cloud-based subscription for Exensio analytics software and related services.

Analytics revenue recognized from Advantest was $ 3.6 million and $ 2.9 million during the three months ended March 31, 2025 and 2024, respectively.

Accounts receivable from Advantest were not material as of March 31, 2025 and December 31, 2024.

Deferred revenue amounted to $ 5.8 million and $ 8.3 million as of March 31,2025, and December 31, 2024, respectively.

Debt as of March 31, 2025 consisted of (in thousands):

Analytics revenue recognized from Advantest was $ 3.5 million and $ 3.0 million during the three months ended June 30, 2025 and 2024 , respectively, and $ 7.1 million and $ 5.9 million during the six months ended June 30, 2025 and 2024 , respectively.

Accounts receivable from Advantest were not material as of June 30, 2025 , and December 31, 2024 .

Deferred revenue amounted to $ 2.3 million and $ 8.3 million as of June 30, 2025 , and December 31, 2024 , respectively.

Debt as of June 30, 2025 , consisted of (in thousands):

Revolving credit facility

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The Credit Agreement provides for (a) a revolving credit facility in an aggregate principal amount of $ 45.0 million (the “Revolving Credit Facility”) and (b) a term loan facility in an aggregate principal amount of $ 25.0 million (the “Term Loan” and together with the Revolving Credit Facility, the “Credit Facilities”).

The principal of the Revolving Credit facility is due as a balloon payment of $ 45.0 million in March 2030.

The principal of the Term Loan is due in the amount of $ 0.6 million quarterly and a balloon payment of $ 13.1 million in March 2030.

Borrowings under the Credit Facilities will accrue interest at rates equal, at the Company’s election, to (i) the alternate base rate, which is defined as the highest of (a) the federal funds effective rate in effect from time to time plus 0.50 %, (b) the prime commercial lending rate in effect from time to time, and (c) the daily simple secured overnight financing rate (“SOFR”) plus 1.00 % or (ii) SOFR, plus, in each case, the applicable margin.

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In addition, the Credit Agreement requires that the Company maintain a consolidated total net leverage ratio of not greater than 3.00 to 1.00, and a consolidated fixed charge coverage ratio of not less than 1.25 to 1.00.

As of March 31, 2025, the Company was in compliance with the covenants contained in the Credit Agreement.

As of June 30, 2025 , the Company was in compliance with the covenants contained in the Credit Agreement.

The Credit Agreement contains customary events of default.

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Future Payments on Total Debt

As of March 31, 2025, the estimated future principal payments of the total long-term debt were as follows (in thousands):

As of June 30, 2025 , the estimated future principal payments of the total long-term debt were as follows (in thousands):

Year Ending December 31,

2025 (remaining nine months)

2025 (remaining six months)

Total future principal payments of long-term debt

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The Company expensed all transaction costs in the period in which they were incurred.

The total non-recurring legal, finance, integration and other costs related to the acquisition of SecureWise amounted to $ 5.3 million, of which $ 4.4 million was recorded in the first quarter of 2025 and $ 0.9 million in the fourth quarter of 2024.

The total non-recurring legal, finance, integration and other costs related to the acquisition of SecureWise amounted to $ 5.4 million, of which $ 4.5 million was recorded in the six months ended June 30, 2025, and $ 0.9 million in the fourth quarter of 2024.

The preliminary allocation of the purchase price for the acquisition of SecureWise, as of the date of the completion of the Transaction, is as follows (in thousands, except amortization period):

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Pro forma information reflecting the impact of the Transaction has not been presented as the Transaction was not material to the Company’s financial results.

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

Forward-Looking Statements

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

All statements other than statements of historical fact may be forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “projected,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target” or “continue,” the negative effect of terms like these or other similar expressions.

These statements include, but are not limited to, statements related to:

the Company ’ s business strategy and objectives;

the Company ’ s intellectual property and proprietary software, information and technology;

the Company ’ s sales and marketing strategy, expectations regarding strategic alliances and relationships;

investments in research and development;

industry trends;

macroeconomic factors, inventories, and demand;

changing export controls and sanctions;

administrative initiatives;

investments in semiconductor manufacturing;

geopolitical tensions and conflicts;

fluctuations in the Company ’ s quarterly results;

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, 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, 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;

the Company ’ s ability to use support and updates for certain open-source software;

and other risks and uncertainties discussed in the Company ’ s filings with the Securities and Exchange Commission ( “ SEC ” ).

These forward-looking statements are only predictions.

Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those anticipated or projected.

All forward-looking statements and other information included in this document are based on information available to us on the date of filing and we further caution investors that our business and financial performance are subject to substantial risks and uncertainties.

We assume no obligation to update publicly any such forward-looking statements.

In evaluating these statements, you should specifically consider various factors, including the risk factors set forth in Item 1.

“Business” and Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (the “Annual Report”).

All references to “we,” “us,” “our,” “PDF,” “PDF Solutions” or “the Company” refer to PDF Solutions, Inc.

Cimetrix, CV, DFI, Exensio, PDF Solutions, secureWISE, and the Cimetrix, Exensio, PDF Solutions, and secureWISE logos, are trademarks or registered trademarks of PDF Solutions, Inc.

or its subsidiaries.

We offer products and services designed to empower organizations across the semiconductor and electronics ecosystems to connect, collect, manage, transfer, and analyze data about design, equipment, manufacturing, and test to improve the yield and quality of their products.

We derive revenues from two sources:

Analytics and Integrated Yield Ramp.

Our offerings combine proprietary software, professional services using proven methodologies, third-party cloud-hosting platforms for software-as-a-service (“SaaS”), electrical measurement hardware tools, and physical intellectual property (“IP”) for integrated circuit (“IC”) designs.

We primarily monetize our offerings through license fees and contract fees for professional services and SaaS.

In some cases, especially on our historical Integrated Yield Ramp engagements, we also receive a value-based variable fee or royalty, which we call Gainshare.

Our products, services, and solutions have been sold to integrated device manufacturers (“IDMs”), fabless semiconductor companies, foundries, out-sourced semiconductor assembly and test (“OSATs”), capital equipment manufacturers, and system houses.

We are headquartered in Santa Clara, California and also operate worldwide with offices in Canada, China, France, Germany, Italy, Japan, Korea, and Taiwan.

Acquisition of SecureWise LLC

On March 7, 2025, we completed the acquisition of SecureWise LLC (“SecureWise”), a Delaware limited liability company (see Note 14, Business Combinations , in the notes to the condensed consolidated financial statements (unaudited) in Part I, Item 1 of this Quarterly Report on Form 10-Q), and added the widely-used, secure, remote secureWISE connectivity solution to our products and services portfolio.

We expect this acquisition to also accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage our Exensio analytics software and to expand the capability of our secure data exchange (“DEX”) outsourced semiconductor assembly and test (“OSAT”) network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

Industry Trends

Certain trends may affect our Analytics revenue specifically.

In particular, the confluence of Industry 4.0 (i.e.

the fourth industrial revolution, or the automation and data exchange in manufacturing technologies and processes) and cloud computing (i.e.

the on-demand availability of computing resources and data storage without direct active management by the user) is driving increased innovation in semiconductor and electronics manufacturing and analytics, as well as in the organization of information technology (“IT”) networks and computing at semiconductor and electronics companies across the ecosystem.

First, the ubiquity of wireless connectivity and sensor technology enables any manufacturing company to augment its factories and visualize its entire production line.

In parallel, the cost per terabyte of data storage has generally decreased over time.

The combination of these two trends means that more data is collected and stored than ever before.

Further, semiconductor companies are striving to analyze these very large data sets in real-time to make rapid decisions that measurably improve manufacturing efficiency and quality.

In parallel, the traditional practice of on-site data storage, even for highly sensitive data, is changing.

The ability to cost-effectively and securely store, analyze, and retrieve massive quantities of data from the cloud versus on-premise enables data to be utilized across a much broader population of users, frequently resulting in greater demands on analytics programs.

The combination of these latter two trends means that cloud-based, analytics programs that effectively manage identity management, physical security, and data protection are increasingly in demand for insights and efficiencies across the organizations of these companies.

We believe that all these trends will continue for the next few years, and the challenges involved in adopting Industry 4.0 and secure cloud computing will create opportunities for our combination of advanced analytics capabilities, proven and established supporting infrastructure, and professional services to configure our products to meet customers’ specialized needs.

Other trends may continue to affect our Characterization services business and Integrated Yield Ramp revenue specifically.

For example, semiconductor manufacturers may experience lower wafer shipments due to weakness in the global economy, which would negatively impact the gainshare component of our Integrated Yield Ramp revenue.

The logic foundry market at the leading-edge nodes, such as 5nm and smaller, underwent significant change over the past few years.

The leading foundry continues to dominate market share.

This trend will likely continue to impact our Characterization services business on these nodes.

We expect most logic foundries to invest in derivatives of older process nodes, such as 14nm, to extract additional value as many of their customers will not move to advanced nodes due to either technological barriers or restrictive economics.

Foundries that participate at leading edge nodes are expected to continue to invest in new technologies such as memory, 2.5D and 3D packaging, extreme ultraviolet lithography, and 3D architectures such as backside power and gate-all-around transistors, as well as new innovations in process control and variability management.

We expect China’s investment in semiconductors to continue.

Compliance with changing U.S.

export restrictions limit our possible business with Chinese semiconductor manufacturers on advanced nodes.

As a result of these market developments, we have chosen to focus our resources and investments in products (including differentiated data), services, and solutions for analytics.

There are other global or business trends that may affect our business opportunities generally as follows:

Macroeconomy, inventories, and demand .

The worldwide economic performance is uneven, and the possibility of a recession persists, leading to uneven demand.

Inventories of semiconductor devices remain elevated in some instances.

With high inventories and soft demand for some product segments, some semiconductor fab utilization rates are also low and semiconductor capital equipment orders have been impacted for some vendors and market segments.

As a result, some purchase cycles, especially for enterprise software and capital equipment and particularly with respect to larger deals, have lengthened in recent years and may continue to do so.

Changing export controls and sanctions .

government continues intense export controls and sanctions focused on the destinations of and/or entities in the People’s Republic of China (“P.R.C.”), Russian Federation, and Belarus.

Some customers in the P.R.C.

have expressed concern about the potential for supply chain disruption due to such regulations.

This has in some cases, and could in the future, negatively impact the demand for our products and services by these customers.

More recently, increased volatility has appeared in controls as economic transactional views compete with traditional national security views in the U.S.

For illustration, in late May 2025, the government issued orders (known as “is-informed” letters) further restricting electronic design automation products intended for P.R.C.

The government rescinded these orders in early July 2025, according to news reports.

Other jurisdictions with important roles in our industry continue to update some of their export control regulations to further align with the U.S.

Continued tight restrictions, rapid evolution, and/or unpredictability in regulations each could negatively affect our sales.

Based on our current assessments, we expect the near-term impact of these evolving trade restrictions on our business to be limited but shifting and competing policy directions leave much unknown.

Administrative Initiatives.

Administration has made and is expected to continue to make changes to U.S.

trade policy, including renegotiating or terminating existing trade agreements and leveraging tariffs.

For example, the U.S.

recently imposed additional tariffs on imports from China, Canada, and Mexico.

We do not import into the U.S.

a significant volume of goods of those countries.

Trade conflict through exchange of tariffs and other retaliatory actions are expected to impact worldwide supply chains, increase prices and put downward pressure on economic activity, and could negatively affect our future sales in various geographic markets.

The uncertainty caused by these recent regulations and the potential for additional future restrictions could negatively affect our future sales, including in but not limited to the P.R.C.

Tax legislation continues to evolve globally with new laws and regulations that create uncertainty in the global economy.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

which includes significant provisions regarding corporate taxes, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions.

The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

These legislative changes could have a material impact on our future effective tax rate, tax liabilities, and cash tax, which we are currently assessing the impact on our consolidated financial statements.

Geopolitical tensions/conflicts .

Geopolitical tensions and conflicts in various locations around the world have created volatility in the global financial markets and may have further global economic consequences, including potential disruptions of the global supply chain, heightened volatility of commodity and raw material prices, and increased fears of a global recession.

We have contractors located in the West Bank and in Israel, who are providing software development and customer technical support services, and we have developed contingency plans to use alternative resources to continue serving customers, if needed.

Any escalations could lead to disruptions or reductions in international trade, deter or prevent purchasing activity of customers, and negatively impact our development timelines and customer support (with respect to the conflicts in the Middle East) or China sales (with respect to U.S.-P.R.C.

tensions) and financial results in general (with respect to global tensions).

Financial Highlights

Financial highlights for the three months ended June 30, 2025, are as follows:

Total revenues were $51.7 million, an increase of $10.1 million, or 24%, compared to the three months ended June 30, 2024.

Analytics revenue was $48.8 million, an increase of $10.7 million, or 28%, compared to the three months ended June 30, 2024.

The increase in Analytics revenue was primarily driven by an increase in revenues from CV systems, the addition of revenues related to secureWISE products and services, and an increase in revenues from DFI systems, partially offset by a decrease in revenues from Exensio software licenses.

Integrated Yield Ramp revenue was $2.9 million, a decrease of $0.6 million, or 18%, compared to the three months ended June 30, 2024.

The decrease in Integrated Yield Ramp revenue was primarily due to decrease in hours worked on fixed-fees engagements, partially offset by higher Gainshare from increased customer wafer shipments at non-leading-edge nodes.

Costs of revenues increased by $2.7 million, compared to the three months ended June 30, 2024, primarily due to increases in subcontractor costs, facilities and IT-related costs including depreciation and amortization expense, hardware costs and personnel-related costs.

Net income was $1.1 million, compared to a net income of $1.7 million for the three months ended June 30, 2024.

The decrease in net income was primarily attributable to an increase in overall costs and expenses mainly due to acquisition costs related to the acquisition of SecureWise, partially offset by increase in total revenues and recognized income tax benefits during the quarter.

Financial highlights for the six months ended June 30, 2025, are as follows:

Total revenues were $99.5 million, an increase of $16.5 million, or 20%, compared to the six months ended June 30, 2024.

Analytics revenue was $91.3 million, an increase of $14.7 million, or 19%, compared to the six months ended June 30, 2024.

The increase in Analytics revenue was primarily driven by an increase in revenues from CV systems, the addition of revenues related to secureWISE products and services, and an increase in revenues from Cimetrix software licenses, partially offset by a decrease in revenues from DFI systems.

Integrated Yield Ramp revenue was $8.2 million, an increase of $1.8 million, or 28%, compared to the six months ended June 30, 2024.

The increase in Integrated Yield Ramp revenue was primarily due to higher Gainshare from increased customer wafer shipments at non-leading-edge nodes;

partially offset by a decrease in hours worked on fixed-fees engagements.

Costs of revenues increased by $2.1 million, compared to the six months ended June 30, 2024, primarily due to increases in subcontractor costs, personnel-related costs, and facilities and IT-related costs including depreciation and amortization expense, partially offset by hardware costs.

Net loss was $1.9 million, compared to a net income of $1.3 million for the six months ended June 30, 2024.

The decrease in net income was primarily attributable to (i) an increase in sales and marketing activities, and general and administrative expenses, which was primarily due to acquisition costs related to the acquisition of SecureWise, and (ii) an increase in research and development expenses, partially offset by an increase in total revenues.

Critical Accounting Policies

Our discussion and analysis of our financial conditions, results of operations and cash flows are based on our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America.

Our preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

The most significant estimates and assumptions relate to revenue recognition, valuation of long-lived assets including goodwill and intangible assets, stock-based compensation and the realization of deferred tax assets (“DTAs”).

Actual amounts may differ from such estimates under different assumptions or conditions.

For additional information about our critical accounting policies, see Note 1, Basis of Presentation and Summary of Significant Accounting Policies , and Note 2, Revenue from Contracts with Customers to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10‑Q and Part II Item 7 , Management ’ s Discussion and Analysis of Financial Condition and Results of Operation, under the heading of “ Critical Accounting Estimates ” in our Annual Report.

There were no material changes during the three and six months ended June 30, 2025, to the items that we disclosed as our critical accounting policies and estimates in Part II, Item 7 of the Annual Report.

Recent Accounting Pronouncements and Accounting Changes

See Note 1, Basis of Presentation and Summary of Significant Accounting Policies , to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10‑Q, for a description of recent accounting pronouncements and accounting changes, including the expected dates of adoption and estimated effects, if any, on our condensed consolidated financial statements.

Results of Operations

Discussion of Financial Data for the Three and Six Months ended June 30, 2025 and 2024

Revenues, Costs of Revenues, and Gross Margin

Three Months Ended

Six Months Ended

(Dollars in thousands)

Integrated Yield Ramp

Total revenues

Costs of revenues

Analytics revenue as a percentage of total revenues

Integrated Yield Ramp revenue as a percentage of total revenues

Analytics Revenue

Analytics revenue increased $10.7 million for the three months ended June 30, 2025, compared to the same period in 2024.

Analytics revenue increased $14.7 million for the six months ended June 30, 2025, compared to the same period in 2024.

The increase in Analytics revenue was primarily driven by an increase in revenues from CV systems, the addition of revenues related to secureWISE products and services, and an increase in revenues from Cimetrix software licenses, partially offset by a decrease in revenues from DFI systems.

Integrated Yield Ramp Revenue

Integrated Yield Ramp revenue decreased $0.6 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to decrease in hours worked on fixed fee engagements, partially offset by higher Gainshare from increased customer wafer shipments at non-leading-edge nodes.

Integrated Yield Ramp revenue increased $1.8 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to higher Gainshare from increased customer wafer shipments at non-leading-edge nodes, partially offset by a decrease in hours worked on fixed-fees engagements.

Our Integrated Yield Ramp revenue may continue to fluctuate from period to period primarily due to the contribution of Gainshare, which is dependent on many factors that are outside our control, including among others, continued production of ICs by our customers at facilities at which we generate Gainshare, sustained yield improvements by our customers, and whether we enter into new contracts containing Gainshare.

Our Analytics and Integrated Yield Ramp revenues may also fluctuate in the future and are dependent on a number of factors, including the semiconductor industry’s continued acceptance of our products, services and solutions, the timing of purchases by existing and new customers, cancellations by existing customers, and our ability to attract new customers and penetrate new markets, supply chain challenges and further penetration of our current customer base.

Fluctuations in future results may also occur if any of our significant customers renegotiate pre-existing contractual commitments, including due to adverse changes in their own business.

Costs of Revenues

Costs of revenues consist primarily of costs incurred to provide and support our services, costs recognized in connection with licensing our software, IT and facilities-related costs, and amortization of acquired technology.

Service costs include material costs, hardware costs (including cost of leased assets under sales-type lease), personnel-related costs (including compensation, employee benefits, bonus and stock-based compensation expense), subcontractor costs, overhead costs, travel expenses, and allocated facilities-related costs.

Software license costs consist of costs associated with third-party cloud-delivery related expenses and licensing third-party software used by us in providing services to our customers in solution engagements or sold in conjunction with our software products.

The increase in costs of revenues of $2.7 million for the three months ended June 30, 2025, compared to the same period in 2024, was primarily due to (i) a $0.9 million increase in subcontractor costs, (ii) a $0.6 million increase in facilities and IT-related costs including depreciation and amortization expense, (iii) a $0.6 million increase in hardware costs, (iv) a $0.4 million increase in third-party cloud-delivery costs, and (v) a $0.1 million increase in personnel-related costs due to increased headcount and worldwide salary increases.

The increase in costs of revenues of $2.1 million for the six months ended June 30, 2025, compared to the same period in 2024, was primarily due to (i) a $1.3 million increase in subcontractor costs, (ii) a $0.8 million increase in personnel-related costs due to higher wages, and (iii) a $0.3 million increase in facilities and IT-related costs including depreciation and amortization expense, partially offset by a $0.4 million decrease in hardware costs.

Gross margin was flat at 71% for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to higher Analytics revenue and contributions to revenue from Gainshare, offset by corresponding increases in costs of revenues.

Gross margin increased three percentage points for the six months ended June 30, 2025, to 72%, compared to 69% for the same period in 2024.

The higher gross margin during the six months ended June 30, 2025, was primarily due to higher contribution to revenue from Gainshare for the six months ended June 30, 2025.

Operating Expenses:

Research and Development

Three Months Ended

Six Months Ended

(Dollars in thousands)

Research and development

As a percentage of total revenues

Research and development expenses consist primarily of personnel-related costs (including compensation, employee benefits, bonus and stock-based compensation expense), outside development services, travel expenses, third-party cloud-services related costs, IT and facilities cost allocations to support product development activities.

Research and development expenses increased $2.3 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $1.4 million increase in personnel-related costs due to increased headcount, worldwide salary increases, bonus and stock-based compensation expense, (ii) a $0.4 million increase in subcontractor fees primarily related to Cimetrix software, and (iii) a $0.4 million increase in facilities and IT-related costs.

Research and development expenses increased $3.9 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $1.7 million increase in personnel-related costs due to increased headcount, worldwide salary increases, bonus and stock-based compensation expense, (ii) a $1.1 million increase in subcontractor fees primarily related to Cimetrix software, (iii) a $0.8 million increase in facilities and IT-related costs, and (iv) a $0.3 million increase in travel expenses.

We anticipate our expenses in research and development will fluctuate in absolute dollars from period to period as a result of the size and the timing of product development projects.

Selling, General, and Administrative

Three Months Ended

Six Months Ended

(Dollars in thousands)

Selling, general, and administrative

As a percentage of total revenues

Selling, general, and administrative expenses consist primarily of personnel-related costs (including compensation, employee benefits, bonus, commission and stock-based compensation expense for sales, marketing, and general and administrative personnel), legal, tax and accounting services, marketing communications and trade conference-related expenses, third-party cloud-services related costs, travel, business acquisition costs, IT and facilities cost allocations.

Selling, general, and administrative expenses increased $3.5 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $3.1 million increase in personnel-related costs mainly resulting from increased headcount, worldwide salary increases, bonus expense, and stock-based compensation expense, (ii) a $0.5 million increase in subcontractor fees, (iii) $0.2 million in non-recurring legal, finance, integration, and other costs related to the acquisition of SecureWise, and (iv) a $0.2 million travel expense, partially offset by a $0.6 million decrease in general legal and professional fees.

Selling, general, and administrative expenses increased $10.4 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $5.3 million increase in personnel-related costs mainly resulting from increased headcount, worldwide salary increases, bonus expense, and stock-based compensation expense, (ii) a $0.4 million increase in subcontractor fees, (iii) a $1.2 million increase in facilities and IT-related costs including shipping costs and depreciation expense, (iv) $4.5 million in non-recurring legal, finance, integration, and other costs related to the acquisition of SecureWise, and (v) $0.3 million of travel expense, partially offset by a $1.3 million decrease in general legal and professional fees.

We anticipate our selling, general, and administrative expenses will fluctuate in absolute dollars from period to period as a result of cost control initiatives and to support increased selling efforts in the future.

Amortization of Acquired Intangible Assets

Three Months Ended

Six Months Ended

(Dollars in thousands)

Amortization of acquired intangible assets

Amortization of acquired intangible assets primarily consists of amortization of intangibles acquired from prior business combinations.

Interest Expense

Three Months Ended

Six Months Ended

(Dollars in thousands)

Interest expense

Interest expense is from our long-term debt that was used in financing the acquisition of SecureWise, and amortization of debt discount and financing costs.

Interest Income and Other, Net

Three Months Ended

Six Months Ended

(Dollars in thousands)

Interest income and other, net

Interest income and other, net, primarily consists of interest income and foreign currency transaction exchange gains and losses.

Interest income and other, net decreased $1.3 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) $1.3 million decrease in interest income from cash, cash equivalents and short-term investments, and (ii) $0.8 million net unfavorable fluctuations in foreign currency exchange rates, partially offset by a $0.6 million recovery from previously written-off property and equipment.

Interest income and other, net decreased $2.1 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to (i) a $1.9 million decrease in interest income from cash, cash equivalents and short-term investments, and (ii) $1.0 million net unfavorable fluctuations in foreign currency exchange rates, partially offset by a $0.6 million recovery from previously written-off property and equipment.

Income Tax Expense

Three Months Ended

Six Months Ended

(Dollars in thousands)

Income tax benefit (expense)

Income tax expense decreased for the three and six months ended June 30, 2025, compared to the same period in 2024, primarily due to changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income in relation to their forecasted amounts for full years.

Any significant change in our future effective tax rates could adversely impact our consolidated financial position, results of operations and cash flows.

Our future tax rates may be adversely affected by a number of factors including increase in expenses not deductible for tax purposes, new or changing tax legislation in the United States and in foreign countries where we are subject to tax jurisdictions, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, our ability to use tax attributes such as research and development tax credits and net operation losses, the tax effects of employee stock activity, audit examinations with adverse outcomes, changes in accounting principles generally accepted in the United States of America and the effectiveness of our tax planning strategies.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.

The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

We are currently assessing the impact on our consolidated financial statements.

As the OBBBA was signed into law after the close of our second quarter, no impact has been included in our operating results for the six months ended June 30, 2025.

Liquidity and Capital Resources

As of June 30, 2025, our working capital, defined as total current assets less total current liabilities, was $77.8 million, compared to $145.4 million as of December 31, 2024.

Total cash, cash equivalents, and short-term investments were $40.4 million as of June 30, 2025, compared to cash, cash equivalents, and short-term investments of $114.9 million as of December 31, 2024.

As of June 30, 2025, and December 31, 2024, cash and cash equivalents held by our foreign subsidiaries were $13.1 million and $13.3 million, respectively.

Our material cash requirements include principal and interest payments on our debt, operating lease payments, and purchase obligations to support our operations.

Refer to Part I, Item 1, Financial Statements, Note 13, Debt , Note 4, Leases , Note 14, Business Combination and Note 11, Commitments and Contingencies for details relating to our material cash requirements for debt, leasing arrangements, including future maturities of operating lease liabilities, and purchase obligations, respectively.

We believe that our existing cash resources and anticipated funds from operations will satisfy our cash requirements to fund our operating activities, capital expenditures, other obligations including repayment of long-term debt and corresponding interest for at least the next twelve months, and thereafter for the foreseeable future;

however, we will continue to evaluate if we require additional funding to meet our longer-term needs.

Term Loan and Revolving Credit Facility

On March 7, 2025, we entered into a Credit Agreement (the “Credit Agreement”) with the lenders who are party to the Credit Agreement and the lenders who may become a party to the Credit Agreement pursuant to the terms thereof (the “Lenders”) and Wells Fargo Bank, National Association, as administrative agent to the Lenders (the “Agent”).

The Credit Agreement provides for (a) a revolving credit facility in an aggregate principal amount of $45 million (the “Revolving Credit Facility”) and (b) a term loan facility in an aggregate principal amount of $25 million (the “Term Loan” and together with the Revolving Credit Facility, the “Credit Facilities”).

The principal of the Revolving Credit facility is due as a balloon payment of $45.0 million in March 2030.

The principal of the Term Loan is due in the amount of $0.6 million quarterly and a balloon payment of $13.1 million in March 2030.

Borrowings under the Credit Facilities will accrue interest at rates equal, at our election, to (i) the alternate base rate, which is defined as the highest of (a) the federal funds effective rate in effect from time to time plus 0.50%, (b) the prime commercial lending rate in effect from time to time, and (c) the daily simple secured overnight financing rate (“SOFR”) plus 1.00% or (ii) SOFR, plus, in each case, the applicable margin.

The applicable margin for the Revolving Credit Facility borrowings bearing interest at the alternate base rate ranges from 1.00% to 1.75%, and the applicable margin for Revolving Credit Facility borrowings bearing interest based on the SOFR ranges from 2.00% to 2.75%, in each case, based on our consolidated total net leverage ratio as of the most recently ended fiscal quarter.

The applicable margin for Term Loan borrowings bearing interest at the alternate base rate ranges from 1.00% to 1.75%, and the applicable margin for Term Loan borrowings bearing interest based on the SOFR ranges from 2.00% to 2.75%, in each case, based on our consolidated total net leverage ratio as of the most recently ended fiscal quarter.

We will pay an annual commitment fee during the term of the Credit Agreement at a rate per annum equal to 0.50% for any undrawn portion of the Revolving Credit Facility.

The Credit Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants.

Negative covenants include, among others, restrictions on the incurrence of debt, the incurrence of liens, the making of investments and distributions, dividends, and stock buy-backs.

In addition, the Credit Agreement requires that we maintain a consolidated total net leverage ratio of not greater than 3.00 to 1.00, and a consolidated fixed charge coverage ratio of not less than 1.25 to 1.00.

As of June 30, 2025, we were in compliance with the covenants contained in the Credit Agreement.

The Credit Agreement contains customary events of default.

Upon the occurrence and during the continuance of an event of default, the Agent may declare the outstanding advances and all other obligations under the Credit Agreement immediately due and payable.

The obligations under the Credit Agreement are guaranteed by all present and future material domestic subsidiaries of the Company (collectively with the Company referred to herein as the “Credit Parties”), subject to customary exceptions, and are secured by the equity interests of the Credit Parties (other than the Company) and substantially all of the personal property owned by the Credit Parties, including 65% of the equity interests of certain foreign subsidiaries owned by the Credit Parties.

The Company used the amounts borrowed under the Credit Facilities to finance, in part, the purchase price paid for the acquisition of SecureWise.

Repurchase of Company ’ s Common Stock

On April 15, 2024, the Board of Directors adopted a stock repurchase program (the “2024 Program”) to repurchase up to $40.0 million of the Company’s common stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, from time to time, over the next two years from the adoption date.

The actual timing and amount of repurchases are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.

The 2024 Program does not obligate the Company to acquire a minimum amount of shares and may be modified, suspended or terminated without prior notice.

The Company has not repurchased any shares under the 2024 Program as of June 30, 2025.

Cash Flow Data

The following table summarizes our cash flows for the periods presented:

Six Months Ended

(In thousands)

Net cash flows provided by (used in):

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Net Cash Flows Provided by (Used in) Operating Activities

Cash flows provided by operating activities during the six months ended June 30, 2025, consisted of net loss, adjusted for certain non-cash items which primarily consisted of depreciation and amortization, stock-based compensation expense, amortization of acquired intangible expense, amortization of costs capitalized to obtain revenue contracts, net accretion of discounts on short-term investments, accretion of unguaranteed residual assets and net change in operating assets and liabilities.

Net cash flows provided by operating activities was $3.4 million for the six months ended June 30, 2025, compared to net cash used in operating activities of $1.2 million for the six months ended June 30, 2024.

The increase in net cash provided by operating activities between the periods was driven primarily by higher collections from customers, partially offset by (i) an increase in bonus payments under the Company’s bonus plan, and (ii) increases in payments of personnel-related costs and vendor invoices.

Net Cash Flows Provided by (Used in) Investing Activities

Net cash used in investing activities was $124.2 million for the six months ended June 30, 2025, compared to net cash provided by investing activities of $4.2 million for the six months ended June 30, 2024.

For the six months ended June 30, 2025, net cash used in investing activities primarily related to $129.7 million payments for the acquisition of SecureWise, net of cash acquired and $16.7 million purchases and prepayments of property and equipment primarily related to our DFI systems, partially offset by $21.6 million proceeds from maturities and sales, net of purchases of short-term investments and $0.6 million recovery from previously written-off property and equipment.

For the six months ended June 30, 2024, net cash provided by investing activities primarily related to proceeds from maturities and sales of short-term investments of $37.0 million, partially offset by purchases of short-term investments of $25.5 million and purchases of property and equipment of $7.3 million primarily related to our DFI systems.

Net Cash Flows Provided by (Used in) Financing Activities

Net cash provided by financing activities was $66.6 million for the six months ended June 30, 2025, compared to net cash used in financing activities of $9.2 million for the six months ended June 30, 2024.

For the six months ended June 30, 2025, net cash provided by financing activities primarily consisted of $69.6 million proceeds from long-term debt, net of debt discount, that was used in financing the acquisition of SecureWise and $2.2 million proceeds from our employee stock purchase plan, partially offset by (i) $3.5 million in cash payments for taxes related to net share settlement of equity awards, (ii) $0.9 million payments of debt issuance costs, and (iii) $0.6 million repayment of long-term debt.

For the six months ended June 30, 2024, net cash used in financing activities primarily consisted of repurchases of common stock of $6.9 million, and $4.3 million in cash payments for taxes related to net share settlement of equity awards, partially offset by $2.0 million of proceeds from our employee stock purchase plan and exercise of stock options.

Related Party Transactions

Refer to Note 12, Strategic Partnership Agreement with Advantest and Related Party Transactions , to our condensed consolidated financial statements in this Quarterly Report on Form 10‑Q, for the discussion about related party transactions between the Company and Advantest (as defined therein).

Off-Balance Sheet Agreements

As of June 30, 2025, we do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements