What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-24 compared with 2025-02-27 · 639 added, 285 removed, 654 unchanged (59% of the section changed)

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of PDF Solutions, Inc.

(a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

(a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

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The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Revenue Recognition

As described in Note 2 to the consolidated financial statements, the Company derives revenue from Analytics and Integrated Yield Ramp.

As described in Note 2 to the consolidated financial statements, the Company derives revenue from Platform and Volume-based revenue.

Contracts with customers can include various combinations of licenses, subscriptions, products and services, some of which are distinct and are accounted for as separate performance obligations.

Significant judgment is exercised by the Company in determining revenue recognition for customer agreements, including determining whether licenses, subscriptions and services are distinct performance obligations, determining the standalone selling price (“SSP”) attributed to each performance obligation, establishing the pattern of delivery for each distinct performance obligation and estimating variable consideration when determining the amount of revenue to recognize.

In addition, for revenue

under project-based contracts for fixed-price services, revenue is recognized as services are performed using a percentage-of-completion (“POC”) method based on costs or labor-hours input method.

In addition, for revenue under project-based contracts for fixed-price services, revenue is recognized as services are performed using a percentage-of-completion (“POC”) method based on costs or the labor-hours input method.

Estimated costs to complete each contract are based on i) future labor and product costs and ii) expected productivity efficiencies.

Changes in these estimates can have a material effect on revenue recognized and/or related costs.

Finally, the Company recognizes Gainshare royalty revenue in the same period in which the usage occurs.

Changes in these estimates can have a material effect on revenue recognized and/or the related costs.

Finally, the Company recognizes Gainshare revenue in the same period in which the usage occurs.

The Company accrues the related revenue based on estimates of customers’ underlying sales achievements.

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In addition, significant judgment is required in determining the total estimated contract costs for fixed-price contracts, which in turn leads to significant auditor judgment, subjectivity and effort in performing audit procedures and in evaluating audit evidence relating to the total estimated contract costs.

Significant judgment is also required in recording Gainshare royalty revenue in the same period in which the usage occurs.

The Company generally does not receive acknowledgment reports from customers during a given quarter, so the Company is required to accrue the related revenue based on estimates of customers underlying sales achievement, which in turn leads to significant auditor judgment, subjectivity, and effort in evaluating the reasonableness of these estimates based on historical data, trends, seasonality and other factors.

Significant judgment is also required in recording Gainshare revenue in the same period in which the usage occurs.

The Company generally does not receive acknowledgment reports from customers during a given quarter, so the Company is required to accrue the related revenue based on estimates of customers’ underlying sales achievements, which in turn leads to significant auditor judgment, subjectivity and effort in evaluating the reasonableness of these estimates based on historical data, trends, seasonality and other factors.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of internal controls relating to the revenue recognition process, including internal controls related to (1) the identification of distinct performance obligations and data used to establish SSP for licenses, subscriptions, products and services, (2) project estimates to completion for fixed fee arrangements accounted for under POC and (3) estimates of Gainshare royalty revenue accrual and subsequent true-ups.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls related to (1) the identification of distinct performance obligations and data used to establish SSP for licenses, subscriptions, products and services, (2) project estimates to completion for fixed-fee arrangements accounted for under POC and (3) estimates of Gainshare revenue accrual and subsequent true-ups.

These procedures also included, among others, evaluating management’s significant accounting policies related to these customer agreements for reasonableness.

In addition, for a sample of customer agreements, we obtained and read contract source documents, including master agreements and other documents that were part of the agreement, tested management’s identification of significant terms for completeness, including the identification of distinct performance obligations and variable consideration, assessed the terms in the customer agreements and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions and tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the consolidated financial statements.

In addition, we evaluated the reasonableness of management’s estimates of SSP for projects and services that are not sold separately, where applicable, costs to complete for project-based contracts for fixed-price services and customers’ underlying achievements for royalty revenue.

In addition, we evaluated the reasonableness of management’s estimates of SSP for projects and services that are not sold separately and, where applicable, costs to complete for project-based contracts for fixed-price services and customers’ underlying achievements for Gainshare revenue.

We have served as the Company’s auditor since 2018.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2024 and 2023 and the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”) of the Company, and our report dated February 27, 2025, expressed unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2025 and 2024 and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”) of the Company, and our report dated February 24, 2026, expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the entity’s internal control over financial reporting based on our audit.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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Definition and Limitations of Internal Control over Financial Reporting

An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the entity;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the consolidated financial statements.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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Cash and cash equivalents

$ 42,220 $ 90,594

Short-term investments

Accounts receivable, net of allowance for credit losses

82,938 73,649

Prepaid expenses and other current assets

38,735 17,445

Total current assets

163,893 205,979

Property and equipment, net

81,609 48,465

Operating lease right-of-use assets, net

95,005 14,953

Intangible assets, net

52,194 12,307

Deferred tax assets, net

Other non-current assets

21,149 29,513

$ 418,697 $ 315,289

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable

$ 17,076 $ 8,255

Accrued compensation and related benefits

22,437 16,855

Accrued and other current liabilities

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Deferred revenues – current portion

Billings in excess of recognized revenues

19,441 25,005

Current portion of long-term debt, net

Total current liabilities

71,891 60,542

Long-term income taxes

Non-current portion of operating lease liabilities

Operating lease liabilities – non-current portion

Long-term debt, net

Other non-current liabilities

Total liabilities

147,675 69,252

Commitments and contingencies (Note 8)

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Additional paid-in capital

533,503 502,902

Treasury stock, at cost, 12,185 and 11,916 shares, respectively

( 165,808 ) ( 159,352 )

Accumulated deficit

( 94,628 ) ( 93,988 )

Accumulated other comprehensive loss

( 2,051 ) ( 3,531 )

Total stockholders’ equity

271,022 246,037

Total liabilities and stockholders’ equity

$ 418,697 $ 315,289

See Accompanying Notes to Consolidated Financial Statements.

PDF SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share amounts)

Year Ended December 31,

Integrated Yield Ramp

$ 181,025 $ 157,166 $ 147,509

37,999 22,299 18,326

Total revenues

219,024 179,465 165,835

Costs and Expenses:

Costs of revenues

60,623 54,144 51,749

Research and development

64,234 53,566 50,736

Selling, general, and administrative

84,736 69,924 62,216

Amortization of acquired intangible assets

Interest and other expense (income), net

3,584 896 1,285

Income (loss) from operations

5,847 935 ( 151 )

Interest expense

( 3,955 ) — —

Interest income and other, net

1,309 5,644 5,020

Income before income tax expense

3,201 6,579 4,869

Income tax expense

( 3,841 ) ( 2,522 ) ( 1,764 )

Net income (loss)

$ ( 640 ) $ 4,057 $ 3,105

Other comprehensive income (loss):

Foreign currency translation adjustments, net of tax

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

1,489 ( 1,143 ) 148

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

( 9 ) ( 1 ) 15

Total other comprehensive income (loss)

Comprehensive income (loss)

1,480 ( 1,144 ) 163

Comprehensive income

$ 840 $ 2,913 $ 3,268

Net income (loss) per share:

$ ( 0.02 ) $ 0.11 $ 0.08

$ ( 0.02 ) $ 0.10 $ 0.08

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

39,317 38,602 38,015

39,317 39,047 38,937

See Accompanying Notes to Consolidated Financial Statements.

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Stockholders’

Income (Loss)

Balances, January 1, 2023

37,431 $ 6 $ 447,415 11,182 $ ( 133,709 ) $ ( 101,150 ) $ ( 2,550 ) $ 210,012

Shares issued under equity plans

879 — 4,324 — — — — 4,324

Shares withheld for taxes related to shares issued under equity plans

— — — 257 ( 9,471 ) — — ( 9,471 )

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 vesting of restricted stock

( 21 ) — — 21 ( 743 ) — — ( 743 )

Stock-based compensation expense

Comprehensive loss

— — 21,556 — — — — 21,556

Comprehensive income

— — — — — 3,105 163 3,268

Balances, December 31, 2023

38,289 6 473,295 11,460 ( 143,923 ) ( 98,045 ) ( 2,387 ) 228,946

Shares issued under equity plans

714 — 4,196 — — — — 4,196

Shares withheld for taxes related to shares issued under equity plans

— — — 254 ( 8,530 ) — — ( 8,530 )

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 vesting of restricted stock

( 202 ) — — 202 ( 6,899 ) — — ( 6,899 )

Stock-based compensation expense

Comprehensive income

— — 25,411 — — — — 25,411

Comprehensive income (loss)

— — — — — 4,057 ( 1,144 ) 2,913

Balances, December 31, 2024

38,801 6 502,902 11,916 ( 159,352 ) ( 93,988 ) ( 3,531 ) 246,037

Shares issued under equity plans

753 — 4,244 — — — — 4,244

Shares withheld for taxes related to shares issued under equity plans

— — — 256 ( 6,212 ) — — ( 6,212 )

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 vesting of restricted stock

( 13 ) — — 13 ( 244 ) — — ( 244 )

Stock-based compensation expense

— — 26,357 — — — — 26,357

Comprehensive income (loss)

— — — — — ( 640 ) 1,480 840

Balances, December 31, 2025

39,541 $ 6 $ 533,503 12,185 $ ( 165,808 ) $ ( 94,628 ) $ ( 2,051 ) $ 271,022

See Accompanying Notes to Consolidated Financial Statements.

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Net income (loss)

$ ( 640 ) $ 4,057 $ 3,105

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

Stock-based compensation expense

25,925 25,047 21,484

Depreciation and amortization

4,085 3,628 4,986

Amortization of acquired intangible assets

7,255 3,231 3,551

Amortization of costs capitalized to obtain revenue contracts

3,155 2,674 2,142

Net accretion of discounts on short-term investments

( 279 ) ( 1,542 ) ( 1,174 )

Loss on damaged equipment in-transit, net of (recovery) from previously written-off property and equipment

( 641 ) 586 —

Deferred taxes

895 ( 74 ) ( 108 )

( 103 ) 2,386 ( 198 )

Changes in operating assets and liabilities:

Accounts receivable

( 6,343 ) ( 28,800 ) ( 2,748 )

Prepaid expenses and other current assets

( 16,361 ) ( 2,033 ) ( 7,329 )

Operating lease right-of-use assets

1,589 1,580 1,205

Other non-current assets

6,574 ( 3,577 ) ( 4,166 )

Accounts payable

4,882 2,791 ( 2,145 )

Accrued compensation and related benefits

5,255 2,288 ( 2,188 )

Accrued and other liabilities

( 2,630 ) 1,780 110

Deferred revenues

Billings in excess of recognized revenues

( 6,866 ) ( 2,629 ) ( 640 )

Operating lease liabilities

( 1,699 ) ( 1,690 ) ( 1,287 )

Net cash provided by operating activities

24,053 9,703 14,600

Cash flows from investing activities:

Proceeds from maturities and sales of short-term investments

27,498 68,125 43,800

Purchases of short-term investments

( 2,937 ) ( 54,331 ) ( 59,598 )

Purchase of convertible promissory note

Proceeds from sale of property and equipment

— ( 2,000 ) —

Purchases of property and equipment

( 32,631 ) ( 17,155 ) ( 11,236 )

Prepayment for the purchase of property and equipment

( 214 ) ( 630 ) ( 89 )

Proceeds from sale and recovery from previously written-off property and equipment

Purchases of intangible assets

Payment for business acquisition, net of cash acquired

Net cash provided by (used in) investing activities

( 129,718 ) — ( 1,823 )

Net cash used in investing activities

( 137,361 ) ( 5,936 ) ( 28,991 )

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from employee stock purchase plan

Proceeds from long-term debt, net of debt discount

Payments of debt issuance costs

Repayments of long-term debt

( 1,875 ) — —

Proceeds from exercise of stock options and employee stock purchase plan

4,244 4,196 4,324

Payments for taxes related to net share settlement of equity awards

( 6,212 ) ( 8,530 ) ( 9,471 )

Repurchases of common stock

Net cash used in financing activities

( 244 ) ( 6,899 ) ( 743 )

Net cash provided by (used in) financing activities

64,563 ( 11,233 ) ( 5,890 )

Effect of exchange rate changes on cash and cash equivalents

371 ( 918 ) ( 365 )

Net change in cash and cash equivalents

( 48,374 ) ( 8,384 ) ( 20,646 )

Cash and cash equivalents at beginning of year

90,594 98,978 119,624

Cash and cash equivalents at end of year

$ 42,220 $ 90,594 $ 98,978

Continued on next page.

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Supplemental disclosure of cash flow information:

Cash paid during the year for income taxes

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

Cash payments for:

$ 2,701 $ 2,562 $ 3,783

Amounts included in the measurement of operating lease liabilities

$ 1,960 $ 1,784 $ 1,648

Interest on long-term debt

$ 3,720 $ — $ —

Supplemental disclosure of noncash information:

Advances for purchase of property and equipment transferred from prepaid assets to property and equipment

Prepayments for purchase of property and equipment transferred from prepaid assets to property and equipment

$ 505 $ 89 $ 66

Property and equipment received and accrued in accounts payable and accrued and other current liabilities

Net carrying value of property and equipment sold and expensed in cost of revenues, and transferred to sales-type leases

$ 12,291 $ 7,272 $ 1,599

Net carrying value of property and equipment sold and expensed in cost of revenues, and property and equipment transferred to sales-type leases and from other non-current assets, net

$ 3,242 $ 7,157 $ 8,076

Stock-based compensation capitalized as property and equipment

$ 432 $ 364 $ 72

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

$ 2,292 $ 718 $ 131

See A ccompanying Notes to Consolidated Financial Statements.

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The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all significant intercompany balances and transactions.

Reclassification

Certain immaterial prior period amounts have been reclassified to conform with current period presentation with no effect on previously reported total assets, total liabilities, stockholders' equity or net income.

Change in Presentation of Revenues

As the Company’s business has evolved to include revenue from a broader portfolio of products and services, as a result of organic and inorganic expansion, beginning with this Annual Report on Form 10 -K, the Company updated its presentation of revenue categories.

Previously, the Company presented revenue in two categories:

Analytics and Integrated Yield Ramp.

Analytics revenue was derived from the following offerings:

licenses and services for on-premise software, software-as-a-service (“SaaS”), licenses and purchase contracts for DirectScan™ systems (formerly known as “DFI systems”), and Characterization Vehicle® systems that did not include performance incentives based on customers’ yield achievement.

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

The Company now presents revenue in the following categories:

Platform and Volume-based.

Platform revenue is derived from the Company's following offerings:

licenses for software (other than Cimetrix® runtime licenses) and related software maintenance and technical support services;

engineering services;

fixed fees associated with CV® systems;

and licenses and purchase contracts for DirectScan systems.

Volume-based revenue is derived from Cimetrix runtime licenses, secureWISE® data, and Gainshare.

See Note 2, “Revenue from Contracts with Customers.”

The change in presentation of revenues does not change the Company’s total revenues or total costs of revenues.

The following table presents reclassified historical amounts to conform to the current period’s presentation (in thousands):

Year Ended December 31,

Previously Reported

Change in Presentation Reclassification

Current Presentation

Previously Reported

Change in Presentation Reclassification

Current Presentation

$ 169,253 $ ( 169,253 ) $ — $ 152,085 $ ( 152,085 ) $ —

Integrated Yield Ramp

10,212 ( 10,212 ) — 13,750 ( 13,750 ) —

N/A 157,166 157,166 N/A 147,509 147,509

N/A 22,299 22,299 N/A 18,326 18,326

$ 179,465 $ — $ 179,465 $ 165,835 $ — $ 165,835

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates in these financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for credit losses, fair values of assets acquired and liabilities assumed in business combinations, impairment of goodwill and long-lived assets, valuation for deferred tax assets, and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies.

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates in these consolidated financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, assumptions made in analysis of allowance for credit losses, fair values of assets acquired and liabilities assumed in business combinations, impairment of goodwill and long-lived assets, valuation for deferred tax assets, and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies.

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.

The Company’s policy is to accrue contingent legal fees when they are probable and reasonably estimable.

Actual results could differ from those estimates and may result in material effects on the Company’s operating results and financial position.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable.

As of December 31, 2024, and periodically throughout the year, the Company had cash balances in various operating accounts in excess of federally insured limits.

The Company maintains its cash and cash equivalents and short-term investments with what it considers high credit quality financial institutions.

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, and accounts receivable.

As of December 31, 2025 and 2024, and periodically throughout the year, the Company had cash balances in various operating accounts in excess of federally insured limits.

The Company maintains its cash and cash equivalents with what it considers high credit quality financial institutions.

The Company primarily sells its products and services to companies in Asia, Europe, and North America within the semiconductor industry.

As of December 31, 2025 , two customers accounted for 64 % of the Company’s gross accounts receivable and three customers accounted for 53 % of the Company’s total revenues for 2025 .

As of December 31, 2024 , four customers accounted for 57 % of the Company’s gross accounts receivable and two customers accounted for 31 % of the Company’s total revenues for 2024 .

As of December 31, 2023, two customers accounted for 50 % of the Company’s gross accounts receivable and one customer accounted for 35 % of the Company’s revenues for 2023.

Two customers accounted for 41 % of the Company’s revenues for 2022.

One customer accounted for 35 % of the Company’s revenues for 2023.

See Note 13, “Customer and Geographic Information” for further details.

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Supplier Concentration

Some of the Company’s vendors provide highly specialized, differentiated products and services related to the Company’s eProbe system and some licensors provide key enabling software for the Company’s products and services.

In the event any of these suppliers delay or discontinue providing such products and services to the Company, it may be difficult for the Company to replace such suppliers, software, or parts in a timely manner or at all, which could delay or make impossible the Company’s ability to deliver or adequately support its software systems or to complete and deliver its eProbe systems to its customers, and could negatively impact the Company’s future financial results of operations.

Cash and Cash Equivalents, and Investments

Some of the Company’s vendors provide highly specialized, differentiated products and services related to the Company’s DirectScan system and some licensors provide key enabling software for the Company’s products and services.

In the event any of these suppliers delay or discontinue providing such products and services to the Company, it may be difficult for the Company to replace such suppliers, software, or parts in a timely manner or at all, which could delay or make impossible the Company’s ability to deliver or adequately support its software systems or to complete and deliver its DirectScan systems to its customers, and could negatively impact the Company’s future financial results of operations.

Cash, Cash Equivalents, and Investments

The Company considers all highly liquid investments with effective maturities of 90 days or less on the date of purchase to be cash equivalents.

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The Company classifies its securities as available-for-sale investments and are carried at estimated fair value, with the unrealized gains and unrealized non-credit-related losses, net of tax, reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity.

Unrealized credit-related losses are recorded to interest and other expense (income), net in the Consolidated Statements of Comprehensive Income (Loss) with a corresponding allowance for credit-related losses in the Consolidated Balance Sheets.

Realized gains and losses are based on the specific identification method and are included as a component of interest and other expense (income), net in the Consolidated Statements of Comprehensive Income (Loss).

Unrealized credit-related losses are recorded to interest income and other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss) with a corresponding allowance for credit-related losses in the Consolidated Balance Sheets.

Realized gains and losses are based on the specific identification method and are included as a component of interest income and other, net in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company periodically reviews its investments for impairment.

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The Company considers factors such as the extent to which the market value has been less than the amortized cost basis, any noted failure of the issuer to make scheduled interest or principal payments, changes to the rating of the security by a rating agency and other relevant credit-related factors in determining whether or not a credit loss exists.

There was no allowance for credit-related losses on any of the Company’s investments recognized for the years ended December 31, 2024 and 2023.

As of December 31, 2024 and 2023, short-term investments consisted solely of U.S.

Government securities and long-term investments consisted of a non-marketable convertible promissory note.

There was no allowance for credit-related losses on any of the Company’s investments recognized during the years ended December 31, 2025 and 2024 .

Short-term investments consisted solely of U.S.

Government securities and other current investments consisted of a non-marketable convertible promissory note.

The cost of these securities approximated fair value and there was no material gross realized or unrealized gains or losses as of December 31, 2025 and 2024 .

See Note 14, “Fair Value Measurements” for further discussion on the Company’s investments.

The Company recorded interest income from its cash, cash equivalents, and short-term investments of $ 5.6 million, $ 5.5 million and $ 1.5 million in the years ended December 31 2024, 2023 and 2022, respectively.

The Company recorded interest income from its cash, cash equivalents, and short-term investments of $ 1.5 million, $ 5.6 million and $ 5.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Accounts Receivable

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.

Accounts receivable includes 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 are determined on an individual contract basis.

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The changes in allowance for credit losses are summarized below (in thousands):

$ 890 $ 168 $ ( 168 ) $ 890

$ 890 $ — — $ 890

$ 890 $ 20 $ ( 20 ) $ 890

Additions to the accounts receivable reserve for credit losses are charged to bad debt expense.

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The Company has operating leases for administrative and sales offices, research and development laboratory and clean room.

The Company recognizes long-term operating lease rights and commitments as operating lease right-of-use (“ROU”) assets, operating lease liabilities and operating lease liabilities, non-current, respectively, in the Consolidated Balance Sheets.

The Company recognizes long-term operating lease rights and commitments as operating lease right-of-use (“ROU”) assets and operating lease liabilities, respectively, in the Consolidated Balance Sheets.

The Company elected to not separate lease and non-lease components for all of its leases.

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The Company accounts for stock-based compensation using the fair value method, which requires the Company to measure stock-based compensation based on the grant-date fair value of the awards and recognize the compensation expense over the requisite service period.

As stock-based compensation expense recognized is based on awards ultimately

expected to vest, it has been reduced for estimated forfeitures.

As stock-based compensation expense recognized is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

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These awards are subject to time-based vesting which generally occurs over a period of four years.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton option-pricing model, which incorporates various assumptions including volatility, expected life and interest rates.

The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options.

The expected life is based on historical experience and on the terms and conditions of the stock options granted.

The interest rate assumption is based upon observed Treasury yield curve rates appropriate for the expected life of the Company’s stock options.

The Company’s income tax expense comprises current tax liability and change in deferred tax assets and liabilities.

The fair value of the Company’s stock options and purchase rights granted under employee stock purchase plan is estimated using the Black-Scholes-Merton option-pricing model, which incorporates various assumptions including volatility, expected life and interest rates.

The expected life is based on historical experience and on the terms and conditions of the stock options granted and purchase rights granted under employee stock purchase plan.

The interest rate assumption is based upon observed Treasury yield curve rates appropriate for the expected life of the Company’s stock options and purchase rights granted under employee stock purchase plan.

The Company’s income tax expense comprises current tax liability and changes in deferred tax assets and liabilities.

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities.

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An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

To the extent the final tax liabilities are different from the amounts originally accrued, the increases or decreases are recorded as income tax expense or benefit in the Consolidated Statements of Comprehensive Income (Loss).

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by weighted average number of common shares outstanding for the period.

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period.

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.

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The functional currency of the Company’s foreign subsidiaries is the local currency for the respective subsidiary.

The assets and liabilities are translated at the period-end exchange rate, and statements of comprehensive income (loss) are translated at the average exchange rate during the year.

The assets and liabilities are translated at the period-end exchange rate, and Statements of Operations and Comprehensive Income (Loss) are translated at the average exchange rate during the year.

Gains and losses resulting from foreign currency translations are included as a component of other comprehensive income (loss).

Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Comprehensive Income (Loss).

Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Business Combinations

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Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, estimated

replacement costs and future expected cash flows from acquired customers, acquired technology, acquired patents, and trade names from a market participant perspective, useful lives and discount rates.

Significant estimates in valuing certain intangible assets include, but are not limited to, estimated replacement costs and future expected cash flows from acquired customers, acquired technology, acquired patents, and trade names from a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

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During the measurement period, which is not to exceed one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings in the Consolidated Statements of Operations and Comprehensive Income (Loss).

From time to time, the Company is subject to various claims and legal proceedings that arise in the ordinary course of business.

The Company accrues for losses related to litigation when a potential loss is probable and the loss can be reasonably estimated in accordance with Financial Accounting Standards Board (“FASB”) requirements.

The Company accrues for losses related to litigation when a potential loss is probable and the loss can be reasonably estimated, and recognizes gains related to litigation at the earlier of when the gain has been realized or when it is realizable in accordance with Financial Accounting Standards Board (“FASB”) requirements.

See Note 8, “Commitments and Contingencies.”

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The Company adopted this ASU for the year ended December 31, 2024.

The requirements of this ASU are disclosure-related and did not have an impact on the Company’s consolidated financial position and results of operations.

See Note 12, “Customer and Geographic Information” for further detail.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures .

This ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024.

Entities are permitted to early adopt the standard for “annual financial statements that have not yet been issued or made available for issuance.” This ASU may be applied either prospectively or retrospectively.

The Company will adopt this ASU on a prospective basis.

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

Improvements to Income Tax Disclosures (“ASU 2023 - 09” ).

This ASU included amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The Company adopted this ASU on January 1, 2025 prospectively.

Prior period disclosures have not been adjusted to reflect the new disclosure requirements.

See required disclosures in Note 11, “Income Taxes.”

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No.

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The Company is currently evaluating 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 consolidated financial statements.

The Company derives revenue from two sources:

Analytics revenue and Integrated Yield Ramp revenue.

The Company recognizes revenue in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers , and its related amendments (collectively known as “ASC 606”).

606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers.

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.

This 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.

In September 2025, the FASB issued ASU 2025 - 06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350 - 40 ), related to accounting for internal-use software costs.

The amendments in this ASU improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods.

This ASU is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, and permits prospective, modified prospective or retrospective adoption.

The Company is currently evaluating the effects of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025 - 11, Interim Reporting (Topic 270 ):

Narrow-Scope Improvements, which intends to improve the navigability of the guidance in Accounting Standards Codification (“ASC”) 270, Interim Reporting , and clarify when it applies.

The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods.

This ASU is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, and permits prospective or full retrospective adoption.

Early adoption is permitted.

The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025 - 12, Codification Improvements , which addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S.

The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply.

This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years.

Entities are required to apply the amendments to ASC 260, Earnings Per Share , retrospectively.

All other amendments may be applied prospectively or retrospectively.

Early adoption is permitted.

The Company is evaluating the impact of this guidance on its 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 have had or will have a material impact on the consolidated financial statements.

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , and its related amendments (collectively known as “ASC 606” ).

ASC 606 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers.

Revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services.

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The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectibility of consideration is probable.

Contracts with multiple performance obligations

The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations.

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 standalone selling price (“SSP”).

Analytics Revenue

Analytics revenue is derived from the following primary offerings:

licenses and services for standalone software (which is primarily Exensio ® and Cimetrix ® products), SaaS (which is primarily Exensio products), and DFI™ systems and CV ® systems (including Characterization services) 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.

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.

Revenue from post-contract support is recognized over the contract term on a straight-line basis, because the Company is providing (i) support and (ii) unspecified software updates on a when-and-if available basis over the contract term.

For contracts with any combination of the Company’s products and services, distinct performance obligations are accounted for separately.

For contracts with these multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the standalone selling price (“SSP”) attributed to each performance obligation.

Revenue for each of these components is recognized as described below and reported as either Platform or Volume-based revenue.

Platform Revenue

Platform revenue is derived from the following primary offerings:

licenses for software (other than Cimetrix runtime licenses) and related software maintenance and technical support services;

engineering services;

fixed fees associated with CV systems;

and licenses and purchase contracts for DirectScan systems.

Revenue from licenses for software, other than Cimetrix runtime licenses, 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 as the software license is considered as a separate performance obligation from the services offered by the Company.

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.

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

For contracts with multiple performance obligations, we allocate 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 cloud-based software product or service over a contractually determined period of time without the customer having to take possession of software, 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.

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

Revenue from DFI systems and CV systems (including Characterization services) that do not include performance incentives based on customers’ yield achievement is recognized primarily as services are performed.

Where there are distinct performance obligations, the Company allocates revenue to all deliverables based on their SSPs.

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

Where there are not

discrete performance obligations, historically, revenue is primarily 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.

The estimation of percentage of completion method is complex and subject to many variables that require significant judgement.

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

The Company also leases some of its DFI system and CV system assets to some customers.

The Company determines the existence of a lease when the customer controls the use of these identified assets for a period of time defined in the lease agreement and classifies such leases as operating leases or sales-type leases.

A lease is classified as a sales-type lease if it meets certain criteria under Topic 842, Leases;

otherwise, it is classified as an operating lease.

The license component is recognized at the time when control transfers to customers.

Revenue from related software maintenance and technical support services, or post-contract support, is recognized over the contract term on a straight-line basis because the Company generally provides (i) support and (ii) certain software updates on a when-and-if available basis over the contract term.

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.

Revenue from engineering services and fixed fees associated with CV systems (including Characterization services) is recognized primarily 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.

The estimation of percentage of completion method is complex and subject to many variables that require significant judgment.

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

When a CV system engagement includes CV test chip designs that were previously developed by the Company and reused with only minimal rework or were previously developed by the Company and adapted to different customer applications with limited rework, the revenue allocated to these CV test chip designs is recognized when the rework is completed at a point in time upon delivery or contract signature, whichever is later.

All revenue associated with other CV test chip designs are recognized over time using a percentage of completion method.

Revenue from purchase contracts for DirectScan systems is recognized at a point in time when the Company’s performance obligations have been completed, and the customer has accepted the product.

Revenue from licenses for hardware is recognized depending on whether the Company classifies the contract as an operating or a sales-type lease.

Where the customer controls the use of identified assets for a period of time defined in a contract, it will be classified as a sales-type lease if it meets certain criteria under ASC Topic 842, Leases , otherwise, it will be classified as an operating lease.

Operating lease revenue is recognized on a straight-line basis over the lease term.

Sales-type lease revenue and corresponding lease receivables are recognized at lease commencement based on the present value of the future lease payments, and related interest income on lease receivable is recognized over the lease term and are recorded under Analytics Revenue in the Consolidated Statements of Comprehensive Income (Loss).

Sales-type lease revenue and corresponding lease receivables are recognized at lease commencement based on the present value of the future lease payments, and related interest income on lease receivable is recognized over the lease term and recorded under Platform revenue in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Payments under sales-type leases are discounted using the interest rate implicit in the lease.

When leases are embedded in contracts with customers that include non-lease performance obligations, the Company allocates consideration in the contract between lease and non-lease components based on their relative SSPs.

Assets subject to operating leases remain in Property and equipment and continue to be depreciated.

When the Company’s leases are embedded in contracts with customers that include non-lease performance obligations, the Company allocates consideration in the contract between lease and non-lease components based on their relative SSPs.

Assets subject to operating leases are included in property and equipment and subject to depreciation.

Assets subject to sales-type leases are derecognized from property and equipment, net at lease commencement and a net investment in the lease asset is recognized in prepaid expenses and other current assets and other non-current assets in the Consolidated Balance Sheets.

The Company generates revenue from the sale of DFI system products.

Revenue is recognized at a point in time when the Company’s performance obligations have been completed and the customer has accepted the product.

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-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 SSP.

Similar to the services provided in connection with DFI systems and CV systems that are contributing to Analytics revenue, due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex and subject to many variables that require significant judgement.

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

The Gainshare royalty contained in Integrated Yield Ramp contracts is a variable fee related to continued usage of the Company’s IP 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 royalty 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 IP and records it in the same period in which the usage occurs.

Volume-based Revenue

Volume-based revenue is derived from Cimetrix runtime licenses, secureWISE data, and Gainshare.

Accordingly, this revenue typically fluctuates based on customers’ production tool shipments and deployment cycles, data transferred through the secureWISE network, and wafer manufacturing volume, as applicable.

Revenue from Cimetrix runtime licenses is recognized at a point in time when the software is delivered via issuance of a license file.

Revenue from secureWISE data is recognized over the period the data transfer is incurred.

Revenue from Gainshare is typically recognized at a point in time based on customers’ wafer manufacturing volumes.

Please refer to the “Significant Judgments” section of this Note for discussion about the Company’s judgments and estimates pertaining to Gainshare revenue.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into the timing of the transfer of goods and services and the geographical regions.

The Company determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s performance obligations are satisfied either over time or at a point-in-time.

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

The Company disaggregates revenue from contracts with customers into categories which depict how the nature, amount, timing, uncertainty of revenue and cash flows are affected by economic factors, and how it could provide meaningful information to its management and investors.

The following table shows the percentage of total revenue that is classified as recurring and upfront for the periods presented:

Year Ended December 31,

Point-in-time

Recurring revenue (1)

94 % 81 % 87 %

Upfront revenue (2)

6 % 19 % 13 %

100 % 100 % 100 %

Recurring revenue is comprised of revenue that either recurs on a regular schedule (e.g., SaaS and other services and time-based licenses) or is a type of revenue that generally has often re-occurred in the past (e.g., Cimetrix runtime licenses, secureWISE data, and Gainshare), and that is not Upfront revenue.

Though these types of revenue have re-occurred in the past, past events are not necessarily indicative of future results and no assurance can be provided that they will occur in the future.

Upfront revenue is comprised of revenue from Exensio perpetual licenses, certain CV test chip designs, and hardware-related sales-type leases or sales.

The following table shows revenues from contracts with customers from geographical regions, based on billing address of the customer (amounts in thousands):

Year Ended December 31,

United States

$ 104,764 48 % $ 74,341 41 % $ 92,798 56 %

39,287 18 % 37,427 21 % 10,465 6 %

33,941 15 % 22,102 12 % 26,488 16 %

Rest of the world

41,032 19 % 45,595 26 % 36,084 22 %

Total revenue

$ 219,024 100 % $ 179,465 100 % $ 165,835 100 %

International revenues accounted for approximately 52 %, 59 %, and 44 % of total revenues for the years ended December 31, 2025, 2024 and 2023, respectively.

See Note 12, “Customer and Geographic Information.”

Significant Judgments

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Due to the complexity of certain contracts, the actual revenue recognition treatment required under ASC 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances.

For revenue under project-based contracts for fixed-price implementation services, revenue is recognized as services are performed using a percentage-of-completion method based on costs or labor-hours input method, whichever is the most appropriate measure of the progress towards completion of the contract.

For revenue under project-based contracts for fixed-price services, revenue is recognized as services are performed using a percentage-of-completion method based on costs or labor-hours input method, whichever is the most appropriate measure of the progress towards completion of the contract.

Due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex, subject to many variables and requires significant judgment.

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These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are reflected in revenue on a cumulative catch-up basis in the period in which the circumstances that gave rise to the revision become known.

The Company’s contracts with customers often include promises to transfer products, licenses software and provide services, including professional services, technical support services, and rights to unspecified updates to a customer.

The Company’s contracts with customers often include promises to transfer products, software licenses and provide services, including professional services, technical support services, and rights to unspecified updates to a customer.

Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or not distinct and thus accounted for together, requires significant judgment.

The Company rarely licenses software on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation.

In instances where 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 royalty revenue in the same period in which the usage occurs.

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 typically recognizes 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.

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A receivable is a right to consideration that is unconditional, as compared to a contract asset, which is a right to consideration that is conditional upon factors other than the passage of time.

of the Company’s contract assets represent unbilled amounts related to fixed-price service contracts when the revenue recognized exceeds the amount billed to the customer.

The contract assets are generally classified as current and are recorded on a net basis with deferred revenue (i.e.

The majority of the Company’s contract assets represent unbilled amounts related to fixed-price service contracts when the revenue recognized exceeds the amount billed to the customer.

The $ 7.4 million increase in contract assets as of December 31, 2025 compared to December 31, 2024 was primarily due to revenue recognized in 2025 for which the payment is subject to conditions other than the passage of time.

The contract assets are generally classified as current and are recorded on a net basis with deferred revenues (i.e.

contract liabilities) at the contract level.

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Current (included in Prepaid expenses and other current assets)

$ 11,267 $ 3,224

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

Total contract assets

$ 11,267 $ 3,841

There was no asset impairment charge related to contract assets for the years presented.

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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 Consolidated Balance Sheets.

Deferred revenues consisted of the following (in thousands):

The $ 6.2 million decrease in contract liabilities as of December 31, 2025 compared to December 31, 2024 was primarily driven by revenue recognized in 2025, partially offset by new billing from products and services from which there are unsatisfied performance obligations to customers, and revenue had not yet been recognized as of December 31, 2025, and increase in deferred revenue from the acquisition of SecureWise.

Deferred revenues were as follows (in thousands):

$ 19,441 $ 25,005

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

Total deferred revenues

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

$ 20,306 $ 26,517

Additional information related to deferred revenues was as follows (in thousands):

Year Ended December 31,

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

$ 24,717 $ 27,654 $ 24,776

As of December 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 $ 254.2 million.

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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 for the years ended December 31, 2024, 2023 and 2022 from performance obligations satisfied (or partially satisfied) in previous periods was an increase of $ 2.5 million, an increase of $ 3.7 million and an increase of $ 0.4 million, respectively.

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

The adjustment to revenue recognized for the years ended December 31, 2025, 2024 and 2023 from performance obligations satisfied (or partially satisfied) in previous periods were increases of $ 0.2 million, $ 2.5 million, and $ 3.7 million, respectively.

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

Costs to Obtain or Fulfill a Contract

The Company capitalizes the incremental costs to obtain or fulfill a contract with a customer, including direct sales commissions and related fees, when it expects to recover those costs.

The Company determined the period of benefit by taking into consideration the terms of its customer contracts, generally, from one to five years.

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

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Current (included in Prepaid expenses and other current assets)

$ 2,489 $ 2,929

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

Total capitalized direct sales commission costs

$ 5,884 $ 5,314

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

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Amortization of capitalized direct sales commission costs

$ 3,155 $ 2,674 $ 2,142

There was no impairment loss related to the capitalized direct sales commission costs for the years presented.

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BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets

Prepaid and other current assets were as follows (in thousands):

Net investments in sales-type leases - current portion (1)

$ 14,248 $ 4,526

Contract assets (2)

Prepaid expense

Costs capitalized to obtain revenue contracts (3)

Total prepaid expenses and other current assets

$ 38,735 $ 17,445

See Note 5, “Other Non-Current Assets.”

See “Contract Balances” section of Note 2, “Revenue from Contracts with Customers.”

See “Costs to Obtain or Fulfill a Contract” section of Note 2, “Revenue from Contracts with Customers.”

Property and Equipment

Property and equipment consisted of the following (in thousands):

Property and equipment were as follows (in thousands):

Computer equipment

$ 14,547 $ 10,799

Software and capitalized software development cost

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Test equipment

33,268 22,680

Property and equipment in progress:

DFI system assets

DirectScan system assets

49,184 34,935

CV system and other assets

Total property and equipment

132,466 95,416

Accumulated depreciation and amortization

( 50,857 ) ( 46,951 )

Total property and equipment, net

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

$ 81,609 $ 48,465

Test equipment mainly includes DirectScan systems and CV systems 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 for the years ended December 31, 2024, 2023 and 2022 was $ 3.6 million, $ 5.0 million and $ 5.5 million, respectively.

Depreciation and amortization expense for the years ended December 31, 2025, 2024 and 2023 were $ 4.1 million, $ 3.6 million, and $ 5.0 million, respectively.

Accrued and other current liabilities

Accrued and other current liabilities consisted of the following (in thousands):

Accrued and other current liabilities were as follows (in thousands):

Accrued expenses

Accrued taxes

$ 7,061 $ 7,156

Accrued income taxes

Total accrued and other current liabilities

$ 8,719 $ 8,752

GOODWILL AND INTANGIBLE ASSETS

As of December 31, 2024 and 2023, the carrying amount of goodwill was $ 15.0 million .

The following table summarizes goodwill transaction for the years ended December 31, 2024 and 2023 (in thousands):

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

See Note 16, “Business Combination” for additional information related to the goodwill and intangible assets added from this acquisition.

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

Year Ended December 31,

Balance at beginning of year

Balance at the beginning of year

$ 14,953 $ 15,029

Measurement period acquisition adjustment

Foreign currency translation adjustment

Balance at end of year

The Company completed the acquisition of Lantern Machinery Analytics, Inc.

in the year ended December 31, 2023.

See Note 15, “Business Combination” for additional information related to the goodwill and intangible assets added from this acquisition.

Intangible assets consisted of the following (in thousands):

Balance at the end of year

$ 95,005 $ 14,953

Intangible assets were as follows (in thousands):

December 31, 2025

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Customer relationships

1 - 13 $ 38,404 $ ( 10,034 ) $ 28,370 $ 9,499 $ ( 7,866 ) $ 1,633

Developed technology

4 - 9 46,215 ( 28,466 ) 17,749 34,566 ( 24,601 ) 9,965

Tradename and trademarks

2 - 10 8,198 ( 2,267 ) 5,931 1,598 ( 1,120 ) 478

6 - 10 2,100 ( 1,956 ) 144 2,100 ( 1,869 ) 231

Noncompetition agreements

3 848 ( 848 ) — 848 ( 848 ) —

$ 95,765 $ ( 43,571 ) $ 52,194 $ 48,611 $ ( 36,304 ) $ 12,307

The weighted average amortization period for acquired identifiable intangible assets was 8.6 years as of December 31, 2025 .

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

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

Year Ended December 31,

Amortization of acquired technology (included in costs of revenues)

$ 3,671 $ 2,335 $ 2,266

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

Total amortization of acquired intangible assets

The Company estimates future amortization expense of acquired intangible assets as follows (in thousands):

3,584 896 1,285

Total amortization expense

$ 7,255 $ 3,231 $ 3,551

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

Year Ending December 31,

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OTHER NON-CURRENT ASSETS

Other non-current assets consisted of the following (in thousands):

Net investments in sales-type leases (3)

Other non-current assets were as follows (in thousands):

Unbilled accounts receivable (1)

$ 8,719 $ 8,983

Costs capitalized to obtain revenue contracts (2)

Contract assets (2)

Net investments in sales-type leases (3)

Total other non-current assets

(1) See Note 2, Revenue from Contracts with Customers .

$ 21,149 $ 29,513

See “Accounts Receivable” section of Note 1, “Description of Business and Summary of Significant Accounting Policies .

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

See Note 2, “Revenue from Contracts with Customers.”

The Company had net investments in sales-type leases for its DirectScan system and CV system assets.

The following table summarizes the components of the net investments in sales-type leases in the Consolidated Balance Sheets (in thousands):

Present value of lease receivables

$ 10,890 $ 13,238

Contract liability

Net lease receivables

10,890 10,003

Unguaranteed residual assets

Total net investments in sales-type leases

$ 21,836 $ 17,752

Current (included in Prepaid expenses and other current assets)

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

$ 14,248 $ 4,526

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

Total net investments in sales-type leases

$ 21,836 $ 17,752

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

Year Ending December 31,

2030 and thereafter

Total future sales-type lease payments

Present value adjustment (a)

Implied interest (1)

Present value of lease receivables

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

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

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

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Operating lease expense

$ 1,790 $ 1,577 $ 1,534

Short-term lease and variable lease expense (1)

730 1,049 923

Total lease expense

(1) Net of gain recognized upon lease termination of $ 0.1 million in the year ended December 31, 2022.

$ 2,520 $ 2,626 $ 2,457

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

5 unchanged sentences

Year Ending December 31,

2031 and thereafter

Total future minimum lease payments

3 unchanged sentences

Operating lease liabilities – non-current

Total operating lease liabilities

Calculated using incremental borrowing interest rate for each lease.

Long-term debt was as follows (in thousands):

Revolving credit facility

Total debt (principal amount)

Unamortized debt discount and issuance costs

Total debt, net of unamortized debt discount and issuance costs

Current portion of long-term debt, net

Long-term debt, net

Total debt, net

On March 7, 2025, the Company 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 $ 45.0 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.

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 the Company’s 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 the Company’s consolidated total net leverage ratio as of the most recently ended fiscal quarter.

The Company 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 Company’s weighted average annual interest rate on its outstanding debt was 6.47 % for the year ended December 31, 2025.

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 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 December 31, 2025, the Company was 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.

See Note 16, “Business Combination.”

Future Payments on Total Debt

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

Year Ending December 31,

Total future principal payments of long-term debt

COMMITMENTS AND CONTINGENCIES

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The Company is unable to estimate the maximum potential impact of these guarantees on its future results of operations.

The Company’s standard product warranty terms for the sale of its DFI system product generally include post-sales support and repairs or replacement of a product at no additional charge for a contractually agreed period of time.

The Company’s standard product warranty terms for the sale of its DirectScan system product generally include post-sales support and repairs or replacement of a product at no additional charge for a contractually agreed period of time.

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 December 31, 2024 and nil as of December 31, 2023.

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

Purchase Obligations

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

As of December 31, 2024, total outstanding purchase obligations were $ 30.8 million, the majority of which are due within the next 12 months .

As of December 31, 2025 , total outstanding purchase obligations were $ 65.3 million, the majority of which are due within the next 2 years.

Indemnification of Officers and Directors

6 unchanged sentences

From time to time, the Company is subject to various claims and legal proceedings that arise in the ordinary course of business.

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 December 31, 2024, except as disclosed below, 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.

Contingent legal fees are accrued by the Company when they are probable and reasonably estimable.

As of December 31, 2025 , except as disclosed below, the Company was not party to any material legal proceedings.

On May 6, 2020, the Company initiated an arbitration proceeding with the Hong Kong International Arbitration Center (the “Tribunal”) against SMIC New Technology Research & Development (Shanghai) Corporation (“SMIC”) due to SMIC’s failure to pay fees due to the Company under a series of contracts.

The Company seeks to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future (or a lump sum payment to end the contract), and costs associated with bringing the arbitration proceeding.

SMIC denies liability and an arbitration hearing was held in February 2023.

Final written submissions were submitted by the parties at the end of August 2023, and the parties submitted answers to the Tribunal’s final questions in August 2024.

The Company is awaiting the Tribunal’s decision on a judgment.

The Company sought to recover the unpaid fees, a declaration requiring SMIC to pay fees under the contracts in the future (or a lump sum payment to end the contract), and costs associated with bringing the arbitration proceeding.

SMIC denied liability and an arbitration hearing was held in February 2023.

On November 12, 2025, the Tribunal issued a confidential arbitration award (the “Award”), which is in favor of the Company.

The Company is separately pursuing an award as to costs.

No payments under the Award have been received by the Company to date and in February 2026, SMIC filed an application with the High Court of Hong Kong seeking to set the Award aside.

The Company believes the set aside application is without merit and intends to defend it, and is pursuing judicial enforcement of the Award.

There can be no assurances that the Company will receive all or any part of the Award.

Accordingly, no amounts have been recognized in connection with the Award as of December 31, 2025 .

STOCKHOLDERS’ EQUITY

3 unchanged sentences

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.

The 2022 Program expired on April 11, 2024, and 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 December 31, 2024.

The 2022 Program expired on April 11, 2024.

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.

During the year ended December 31, 2025 , 12,500 shares were repurchased by the Company under the 2024 Program at an average price of $ 19.55 per share for an aggregate total price of $ 0.2 million.

As of December 31, 2025 , approximately $ 39.8 million remained available under the 2024 Program authorization.

EMPLOYEE BENEFIT PLANS

On December 31, 2024, the Company had the following stock-based compensation plans:

Employee Stock Purchase Plans

Employee Stock Purchase Plan

On June 15, 2021, the Company’s stockholders initially approved the 2021 Employee Stock Purchase Plan, which has been amended and restated by the Board of Directors and approved by the Company’s stockholders since then (as amended through the date of this report, the “2021 Purchase Plan”).

4 unchanged sentences

Expected life (in years)

1.25 1.25 1.25

44.70 % 40.97 % 43.66 %

Risk-free interest rate

4.07 % 4.61 % 5.15 %

Expected dividend

Weighted average fair value of purchase rights granted during the year

During the years ended December 31, 2024, 2023 and 2022, a total of 155,828 , 223,608 and 182,083 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 26.14 per share, $ 17.14 per share and $ 16.15 per share, respectively.

During the year ended December 31, 2022, a total of 5,203 shares were issued under the previously expired Employee Stock Purchase Plan adopted in 2010, at a weighted average purchase price of $ 13.40 per share per share.

Weighted average fair value of purchase rights granted during the period

$ 8.78 $ 10.91 $ 15.71

For the years ended December 31, 2025, 2024 and 2023, a total of 197,414 , 155,828 , and 223,608 shares, respectively, were issued under the 2021 Purchase Plan, at a weighted average purchase price of $ 21.08 per share, $ 26.14 per share, and $ 17.4 per share, respectively.

As of December 31, 2025 , unrecognized compensation cost related to the 2021 Purchase Plan was $ 2.8 million, which is expected to be recognized over a weighted average period of 1.6 years.

19 unchanged sentences

Costs of revenues

$ 5,252 $ 5,087 4,169

Research and development

9,460 8,958 7,711

Selling, general, and administrative

Stock-based compensation expense

Stock Options Activity

Additional information related to stock options under the 2011 Plan were as follows:

Outstanding Options

(in thousands)

Outstanding, January 1, 2024

Outstanding, December 31, 2024

Vested and expected to vest, December 31, 2024

Exercisable, December 31, 2024

The aggregate intrinsic value in the table above represents the total intrinsic value based on the Company’s closing stock price of $ 27.08 as of December 31, 2024, which would have been received by the option holders had all option holders exercised their stock options as of that date.

The total intrinsic value of stock options exercised during the years presented were as follows (in thousands):

Year Ended December 31,

Intrinsic value of options exercised

Total fair value of stock options vested during the year ended December 31, 2024 was immaterial.

As of December 31, 2024, there was no remaining unrecognized compensation cost related to unvested stock options.

11,213 11,002 9,604

Total stock-based compensation expense

$ 25,925 $ 25,047 $ 21,484

Restricted Stock Units Activity

4 unchanged sentences

Nonvested, January 1, 2025

1,885 $ 33.14

( 805 ) 29.57

Nonvested, December 31, 2025

The weighted average grant date fair values of restricted stock units granted during the years ended December 31, 2024, 2023 and 2022 were $ 35.30 , $ 43.46 and $ 23.23 , respectively.

The total fair value of restricted stock units vested during the years presented were as follows (in thousands):

2,005 $ 29.08

The weighted average grant date fair values of restricted stock units granted for the years ended December 31, 2025, 2024 and 2023 were $ 22.12 , $ 35.30 , and $ 43.46 , respectively.

Additional information related to restricted stock units were as follows (in thousands):

Year Ended December 31,

Fair value of restricted stock units vested

Total fair value of restricted stock units vested

$ 19,421 $ 26,963 $ 32,786

As of December 31, 2025 , there was $ 44.6 million of total unrecognized compensation cost related to restricted stock units, which is expected to be recognized over a weighted average period of 2.6 years.

Restricted stock units do not have rights to dividends prior to vesting.

Stock Options Activity

As of December 31, 2025, the outstanding and exercisable stock options totaled 19,636 shares, with a weighted average exercise price of $ 16.68 per share, aggregate intrinsic value of $ 0.2 million, and weighted average remaining contractual term of 3.1 years.

During the year ended December 31, 2025, there were no stock option grants and stock option exercises were immaterial.

The total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 was $ 0.1 million, $ 0.2 million and $ 0.6 million, respectively.

Total fair value of stock options vested was nil during the year ended December 31, 2025, and immaterial during the years ended December 31, 2024 and 2023.

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

401 (k) Savings Plan

The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) covering substantially all of its US employees.

The Company sponsors a 401 (k) Retirement Savings Plan (the “401 (k) Plan”) covering substantially all of its U.S.

The Company’s 401 (k) Plan is a defined contribution plan with a 401 (k) salary deferral arrangement qualified under appropriate provisions of the Internal Revenue Code (the “Code”) and applicable state laws.

3 unchanged sentences

The Company may make discretionary matching contributions.

During the years ended December 31, 2024, 2023 and 2022, the Company matched from 50 % to 100 % of each employee’s contribution up to a maximum of 4 % of the employee’s total eligible earnings.

For the years ended December 31, 2025, 2024 and 2023, the Company matched from 50 % to 100 % of each employee’s contribution up to a maximum of 4 % of the employee’s total eligible earnings.

The Company’s matching contributions to the 401 (k) Plan aggregated $ 2.1 million, $ 1.8 million and $ 1.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.

During the years ended December 31, 2024, 2023 and 2022, income (loss) before income tax expense from U.S.

operations was $ 4.8 million, $ 3.2 million and ($ 1.2 ) million, respectively, and income before income tax expense from foreign operations was $ 1.8 million, $ 1.7 million and $ 1.7 million, respectively.

Income before income tax expense was as follows (in thousands):

Year Ended December 31,

(In thousands)

$ 2,691 $ 4,765 $ 3,220

510 1,814 1,649

Income before income tax expense

$ 3,201 $ 6,579 $ 4,869

The components of income tax expense were as follows (in thousands):

Year Ended December 31,

Current tax expense:

$ 398 $ 213 $ 1,854

333 286 ( 437 )

2,228 1,976 452

Total current tax expense

2,959 2,475 1,869

Deferred tax expense:

( 79 ) 38 ( 108 )

Total deferred tax expense

882 47 ( 105 )

Total income tax expense

The reconciliation between the statutory federal income tax expense and the Company’s effective income tax expense were as follows (in thousands):

$ 3,841 $ 2,522 $ 1,764

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

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted.

OBBBA contained U.S.

corporate tax provisions under which the Company elected to expense U.S.

incurred research or experimental expenditures immediately.

As a result of this election, the Company recognized a favorable cash tax benefit of approximately $ 1.3 million and reduction of effective tax rate by approximately 40 % in 2025.

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

The Company will continue to assess the impact on the effective tax rate for future periods.

During the year ended December 31, 2025, the Company adopted ASU 2023 - 09 prospectively to enhance the income taxes disclosures regarding income taxes paid and the rate reconciliation disclosure.

Prior period disclosures have not been adjusted to reflect the new disclosure requirements.

Income taxes paid by jurisdiction, net of refunds received were as follows (in thousands):

Year Ended December 31, 2025

State and Local:

Total State and Local

Total Foreign

Total income taxes paid, net of refunds

The reconciliation between the statutory federal income tax expense and the Company’s effective income tax expense after the adoption of ASU 2023 - 09 were as follows (amounts in thousands):

Year Ended December 31, 2025

Federal statutory income tax expense

State and local income taxes, net of federal income tax effect

Change in valuation allowance

Nontaxable or nondeductible items:

Stock compensation expense

Meals expense

Section 162(m) limitation

branch income

Sales-type lease interest income

Other nontaxable or nondeductible items

Foreign tax credits

( 1,995 ) ( 62 )

Other tax credits

Cross-border tax laws:

Foreign-derived intangible income deduction

( 403 ) ( 13 )

Worldwide changes in unrecognized tax benefits

Foreign tax effects:

Foreign permanent differences

Prior year true up

Foreign withholding tax

Other adjustment

Foreign permanent differences

( 133 ) ( 4 )

Foreign withholding tax

Other adjustment

Foreign permanent differences

Tax rate differential

Other adjustment

Foreign withholding tax

Other foreign jurisdictions

Deferred tax asset adjustment

Transaction costs

( 198 ) ( 6 )

Other adjustment

Global effective income tax expense

$ 3,841 120 %

* Percentage rounds to less than 1.0%.

The reconciliation between the statutory federal income tax expense and the Company’s effective income tax expense for the years prior to the adoption of ASU 2023 - 09 were as follows (in thousands):

Year Ended December 31,

Federal statutory income tax expense

$ 1,382 $ 1,016

State income tax expense

Stock compensation expense

286 ( 1,747 )

( 2,795 ) ( 3,214 )

Foreign taxes, net

Foreign-derived intangible income deduction

( 2,052 ) ( 1,612 )

Change in valuation allowance

1 unchanged sentence

Unrealized tax benefit reserve changes

Total income tax expense

Global effective income tax expense

$ 2,522 $ 1,764

As of December 31, 2025 , the Company had federal and California net operating loss carry-forwards (“NOLs”) of $ 2.0 million and $ 13.0 million, respectively.

Some of the federal NOLs, acquired as part of past acquisitions, have expirations in 2025 onwards, and about $2.3 million of the federal NOLs have no expiration.

Some of the federal NOLs, acquired as part of past acquisitions, have expirations in 2025 onwards, and approximately $ 0.9 million of the federal NOLs have no expiration.

The California NOLs begin expiring in 2028 onwards.

2 unchanged sentences

The extent to which the federal and state credit carry-forwards can be used to offset future tax liabilities, respectively, may be limited, depending on the extent of ownership changes within any three -year period as provided in the Tax Reform Act of 1986 and the California Conformity Act of 1987.

The Company assesses its deferred tax assets for recoverability on a regular basis, and where applicable, a valuation allowance is recorded to reduce the total deferred tax asset to an amount that will, more likely than not, be realized in the future.

Based on all available evidence, both positive and negative, the Company determined a full valuation allowance was still appropriate for its federal and state net deferred tax assets (“DTAs”) as of December 31, 2024, primarily driven by a cumulative loss incurred over the 12-quarter period ended December 31, 2024 and the likelihood that the Company will not utilize tax attributes before they begin to expire.

The Company assesses its deferred tax assets for recoverability at each reporting period, and where applicable, a valuation allowance is recorded to reduce the total deferred tax assets to an amount that will, more likely than not, be realized in the future.

Based on all available evidence, both positive and negative, the Company determined a full valuation allowance was still appropriate for its U.S.

federal and state net deferred tax assets (“DTAs”) as of December 31, 2025 .

The valuation allowance was $ 69.9 million and $ 67.9 million as of December 31, 2025 and 2024 , respectively.

The increase in the valuation allowance from December 31, 2023 to December 31, 2024 was primarily driven by an increase in capitalized research and experimental expenses and credits generated in the current year which require a valuation allowance.

Management will continue to evaluate the need for a

valuation allowance and may change its conclusion in a future period based on any change in facts (e.g.

12-quarter cumulative profit, significant new revenue, and other relevant factors).

The increase in the valuation allowance from December 31, 2024 to December 31, 2025 was primarily driven by an increase in deferred revenues and various accrual items in the current year which require a valuation allowance.

Management will continue to evaluate the need for a valuation allowance and may change its conclusion in a future period based on any change in facts (e.g., significant new revenue and other relevant factors).

If the Company concludes that it is more likely than not to utilize some or all of its U.S.

DTAs, it will release some or all of its valuation allowance and the Company’s income tax expense will decrease in the period in which such determination is made.

Net deferred tax assets, after the U.S.

Net DTAs, after the U.S.

valuation allowance, were immaterial as of December 31, 2025 and 2024 .

The components of the net deferred tax assets and liabilities consisted of the following (in thousands):

The components of the net DTAs and liabilities consisted of the following (in thousands):

Deferred tax assets:

Net operating loss carry forward

Research and development and other credit carry forward

Foreign tax credit carry forward

Net operating loss carry-forwards

$ 1,880 $ 2,414

Research and development and other credit carry-forwards

32,657 31,988

Foreign tax credit carry-forwards

Capitalized research and experimental expenses

24,932 26,426

Accruals deductible in different periods

1 unchanged sentence

Total deferred tax assets

73,460 72,054

valuation allowance

( 69,874 ) ( 67,946 )

Total deferred tax assets, net of valuation allowance

1 unchanged sentence

Property and equipment, net

( 1,233 ) ( 752 )

Operating lease right-of-use assets

( 922 ) ( 1,082 )

Intangible assets

( 2,418 ) ( 2,366 )

Total deferred tax liabilities

( 4,573 ) ( 4,200 )

Net deferred tax liabilities

$ ( 987 ) $ ( 92 )

The Company classifies its liabilities for income tax exposures as long-term.

1 unchanged sentence

As of December 31, 2025 and 2024 , the Company had accrued interest related to unrecognized tax benefits of $ 0.7 million and $ 0.6 million, respectively.

For the years ended December 31, 2024, 2023 and 2022, the Company recognized reversal of interest related to unrecognized tax benefits of ($ 20,000 ), ($ 15,000 ) and ($ 61,000 ) respectively, in the Consolidated Statements of Comprehensive Income (Loss).

For the years ended December 31, 2025, 2024 and 2023, the Company recognized changes in interest charges related to unrecognized tax benefits of $( 75,000 ), $( 20,000 ), and $( 15,000 ), respectively, in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company’s total amount of unrecognized tax benefits, excluding interest, as of December 31, 2025 was $ 17.1 million, of which $ 2.5 million, if recognized, would impact the Company’s effective tax rate.

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Gross unrecognized tax benefits, beginning of year

$ 16,569 $ 15,937 $ 15,109

Increases in tax positions for current year

1,171 1,290 1,469

Increases in tax positions for prior years

Lapse in statute of limitations

( 615 ) ( 658 ) ( 732 )

Gross unrecognized tax benefits, end of year

$ 17,125 $ 16,569 $ 15,937

The Company does not provide deferred taxes on undistributed earnings of its foreign subsidiaries as it intends to indefinitely reinvest those earnings.

6 unchanged sentences

Valuation allowance for DTAs is summarized as follows (in thousands):

Write-offs of

Balance at Beginning of Year

Charged to Income Tax Expense

Deductions/ Write-offs of Accounts

Balance at End of Year

$ 67,946 $ 1,928 $ — $ 69,874

$ 64,152 $ 3,794 $ — $ 67,946

$ 59,215 $ 4,937 $ — $ 64,152

NET INCOME (LOSS) PER SHARE

2 unchanged sentences

Net income (loss)

$ ( 640 ) $ 4,057 $ 3,105

Basic weighted average common shares outstanding

39,317 38,602 38,015

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

Diluted weighted average common shares outstanding

39,317 39,047 38,937

Net income (loss) per share:

$ ( 0.02 ) $ 0.11 $ 0.08

$ ( 0.02 ) $ 0.10 $ 0.08

For the year ended December 31, 2025 , because the Company was in a loss position, basic net loss per share was the same as diluted 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 are not included in the diluted net income (loss) per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):

Year Ended December 31,

Non-vested restricted stock units

2,005 843 351

Outstanding stock options

Shares issuable under employee stock purchase plan

2,096 912 351

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 consolidated net income (loss) are amortization of acquired intangible assets, interest and other expense (income), net and income tax expense, which are reflected in the 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.

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Total revenues

$ 219,024 $ 179,465 $ 165,835

Costs of revenues

$ 60,623 $ 54,144 $ 51,749

$ 158,401 $ 125,321 $ 114,086

Net income (loss)

$ ( 640 ) $ 4,057 $ 3,105

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

Year Ended December 31,

30 % 19 % 35 %

13 % 12 % * %

* represents less than 10%

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* represents less than 10%

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

Year Ended December 31,

United States

Rest of the world

Total revenue

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

United States (1)

$ 94,426 $ 58,782

Rest of the world

Total long-lived assets, net

$ 97,333 $ 60,243

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

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Cash equivalents

$ 14,535 $ 14,535 $ — $ —

Available-for-sale debt securities:

Government securities (1)

Short-term investments

Convertible note receivable (1)

Non-current assets

Other current assets

2,138 — — 2,138

$ 16,673 $ 14,535 $ — $ 2,138

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

(1) The carrying amount of the Company’s investments in U.S.

Government securities approximate 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 as of December 31, 2024 and 2023.

24,291 24,291 — —

Convertible note receivable (1)

Other non-current assets

2,038 — — 2,038

$ 92,542 $ 90,504 $ — $ 2,038

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

The convertible note bears a 5 % interest rate annually and will mature in August 2026.

The carrying amount of the Company’s investments in U.S.

STRATEGIC PARTNERSHIP AGREEMENT WITH ADVANTEST AND RELATED PARTY TRANSACTIONS

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(iii) a commercial agreement providing for the license to third parties of solutions that result from the development work that combine Advantest’s testing applications and our Exensio platform;

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

Analytics revenue recognized from Advantest during the years ended December 31, 2024, 2023 and 2022 was $ 12.7 million, $ 9.0 million and $ 10.3 million, respectively.

Accounts receivable from Advantest were no t material as of December 31, 2024 and 2023.

and (iv) a 5 -year cloud-based subscription that expired in July 2025 for Exensio analytics software and related services.

Platform revenue recognized from Advantest during the years ended December 31, 2025, 2024 and 2023 was $ 8.8 million, $ 12.7 million, and $ 9.0 million, respectively.

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

Deferred revenue amounted to $ 0.7 million and $ 8.3 million as of December 31, 2025 and 2024 , respectively.

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BUSINESS COMBINATION

On July 5, 2023 (the “Acquisition Date”), the Company, through its wholly-owned subsidiary in Canada, PDF Solutions Canada, Ltd., acquired 100 % of the equity interest in Lantern Machinery Analytics, Inc.

headquartered in Canada, a privately-held provider of automated image analysis and feature extraction machine learning and artificial intelligence (“AI”) software for critical inspection and metrology steps at battery cell development and manufacturing processes for the electric vehicle industry.

This software will enhance the Company’s Exensio analytics software and product offerings to new and existing battery manufacturer customers.

The total cash consideration for this acquisition was $ 1.8 million, net of cash acquired, for all of the outstanding equity of Lantern Machinery Analytics, Inc.

The Company accounted for this acquisition as a business combination in accordance with FASB ASC Topic 805, Business Combinations .

SecureWise LLC

On February 19, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Telit IOT Solutions Inc., a Delaware corporation (the “Seller”), and SecureWise, pursuant to which the Company agreed to acquire the Seller’s SecureWise business (the “Business”) by means of a purchase of all of the outstanding equity interests of SecureWise held by the Seller (the “Transaction”).

On March 7, 2025, the Company completed the acquisition of the Business from the Seller pursuant to the Purchase Agreement for a cash purchase price of $ 130.0 million, subject to customary adjustments in respect of indebtedness, transaction expenses, cash and working capital of the Business, in each case, in accordance with the terms of the Purchase Agreement.

The Company financed the Transaction using a combination of cash on hand and borrowings under the Credit Facilities.

The Company expects the Transaction to accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage the Company’s Exensio analytics software and to expand the capability of the Company’s 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.

The Company accounted for the Transaction as a business combination in accordance with FASB ASC Topic 805, Business Combinations .

This method requires that assets acquired and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date.

The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values.

The fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third -party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets.

The estimated fair value of the identifiable assets acquired and liabilities assumed was based on management’s best estimates.

The fair value of the customer relationships was determined using the multi-period excess earnings income approach or cost approach.

The fair value of trade names and developed technology was determined using the relief-from-royalty method.

The fair value of acquired technology was determined using the cost approach.

The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.

The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectation for expanded sales opportunities to foster further business growth.

Due to the nature of the transaction, the goodwill associated with the acquisition is not deductible for tax purposes.

Total payments made for this acquisition, net of cash acquired, amounted to $ 1.8 million and was funded from available cash of the Company.

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

The goodwill associated with the acquisition is deductible for tax purposes.

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

The total acquisition and integration costs related to the acquisition of SecureWise amounted to $ 5.4 million, of which $ 4.5 million was recorded for the year ended December 31, 2025 , and $ 0.9 million in the fourth quarter of 2024.

The purchase price allocation for the acquisition of SecureWise were as follows (in thousands, except amortization period):

Period (Years)

Allocation of Purchase Price:

Fair value of tangible assets (including cash of $ 265 )

Fair value estimates of assets acquired and liabilities assumed

Accounts receivable

Prepaid and other assets

Property and equipment

Fair value of intangible assets:

Developed technology

Customer relationships

Total assets acquired

Deferred tax liabilities

Accounts payable and accrued expenses

Total liabilities assumed

Developed technology

Accounts payable and other current liabilities

Total purchase price allocation

Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company’s financial results.

SUBSEQUENT EVENTS

Pending Business Acquisition and Debt Financing

On February 19, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Telit IOT Solutions Inc., a Delaware corporation (the “Seller”), and SecureWise LLC, a Delaware limited liability company (the “Target”, or “secureWISE”), pursuant to which the Company will acquire the Seller’s secureWISE business (the “Business”) by means of a purchase of all of the outstanding equity interests of the Target held by the Seller (the “Transaction”).

The Purchase Agreement contains warranties, covenants, closing conditions and indemnities customary for acquisitions of this nature.

Upon completion of the Transaction (“Closing”), the Company expects the acquisition to accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage the Company’s Exensio analytics software and to expand the capability of the Company’s secure DEX OSAT network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

Pursuant to the Purchase Agreement, upon Closing, the Company will pay the Seller a cash purchase price of $ 130 million, subject to customary adjustments in respect of indebtedness, transaction expenses, cash and working capital of the Business.

The purchase price will be funded by a combination of cash on hand and new bank debt, as discussed below.

The Transaction was approved by the Company’s Board of Directors and is expected to close during the first calendar quarter of 2025.

In connection with the execution of the Purchase Agreement, the Company has delivered to the Seller a debt commitment letter (the “Debt Commitment Letter”) executed with Wells Fargo Bank, National Association (the “Commitment Party”), pursuant to which the Commitment Party has committed, subject to the terms and conditions contained therein, to provide the Company with (a) a revolving credit facility in an aggregate principal amount of $ 45 million and (b) a term loan facility in an aggregate principal amount of $ 25 million (the “Debt Financing”).

The proceeds of the Debt Financing are intended to fund, in part, the purchase price payable in the Transaction, on the terms and subject to the conditions set forth therein.

The Purchase Agreement does not include a financing contingency.

The funding of the Debt Financing is contingent upon the satisfaction or waiver of certain customary conditions set forth in the Debt Commitment Letter, including, without limitation, the execution and delivery of definitive documentation consistent with the Debt Commitment Letter.

The estimated fair value of the accounts receivable acquired approximates the contractual value of $ 3.0 million.

The purchase price has been allocated to assets acquired and liabilities assumed based on the Company’s best estimates and assumptions using the information available as of the acquisition date and throughout measurement period, not to exceed one year from the acquisition date.

The provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to the acquisition are subject to adjustments in subsequent periods as the Company finalizes its purchase price allocation to the individual assets acquired.

The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed.

The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

The purchase price allocation has been updated for measurement period adjustments which decreased goodwill by $ 1.7 million, primarily related to revised assessments of pre-acquisition amounts including prepaid and other current assets, and other current liabilities adjustment.

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.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data