PDF SOLUTIONS INC
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
PDFS$37.61+9.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001437749-26-015610
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001437749-26-026294
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 94 current paragraphs.
47 unchanged; 24 reworded; 19 added; 11 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 11 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Secondary Offering
Current report
In May 2026, we completed a registered offering of an aggregate of 5,253,554 shares of our common stock at a price of $44.00 per share. The shares sold consisted of 3,306,924 shares held by a selling stockholder and 1,946,630 shares newly issued by us. The net proceeds to us from the sale of shares of our common stock were approximately $81.8 million, after deducting $3.9 million of underwriting discounts and commissions. We did not receive any proceeds from the sale of shares by the selling stockholder.
Current report
Platform revenue increased $19.5 million for the six months ended June 30, 2026, compared to the same period in 2025. The increase in Platform revenue was primarily due to higher revenue from DirectScan, CV, and secureWISE systems.
Current report
Volume-based revenue increased $2.6 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in revenue from Cimetrix runtime licenses and secureWISE data usage.
Current report
Costs of revenues increased $4.2 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to (i) a $2.8 million increase in hardware costs (including cost of leased assets under sales-type leases), (ii) a $0.9 million increase in facilities and IT-related costs (including depreciation and amortization expense of property and equipment), (iii) a $0.5 million increase in personnel-related costs due to increased headcount, employee benefits expense, and higher bonus expense, and (iv) a $0.4 million increase in software license and maintenance costs, partially offset by a $0.5 million decrease in subcontractor costs.
Current report
Gross margin for the three months ended June 30, 2026, decreased two percentage points to 69%, compared to 71% for the same period in 2025, primarily driven by higher costs of revenues compared to the increase in revenues.
Current report
Gross margin for the six months ended June 30, 2026, decreased two percentage points to 70%, compared to 72% for the same period in 2025, primarily driven by higher costs of revenues compared to the increase in revenues.
Current report
Research and development expenses increased $6.1 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to (i) a $3.7 million increase in personnel-related costs due to increased headcount, higher bonus expense, and employee benefits expense, partially offset by an increase in capitalized software development costs, (ii) a $1.3 million increase in facilities and IT-related costs (including depreciation and amortization expense of property and equipment), (iii) a $0.6 million increase in subcontractor costs, and (iv) a $0.4 million increase in software license and maintenance costs.
Current report
Selling, general, and administrative expenses decreased $6.6 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to (i) a $4.5 million decrease in acquisition-related and integration costs related to the acquisition of SecureWise, (ii) a $2.6 million decrease in personnel-related costs mainly due to lower compensation expense allocated to selling and marketing activities, and stock-based compensation expense, and (iii) a $0.9 million decrease in facilities and IT-related costs, including shipping costs and third-party cloud-services related costs, partially offset by (i) a $0.5 million increase in legal expenses related to the arbitration proceeding over a disputed customer contract, (ii) a $0.3 million increase in software licenses and maintenance costs, (iii) a $0.3 million increase in travel expenses, and (iv) a $0.3 million increase in subcontractor expenses.
Current report
The amortization expense for the three months ended June 30, 2026, was flat compared to the same period in 2025.
Current report
Interest expense slightly decreased by $0.1 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to slightly lower interest rates on our long-term debt and lower outstanding debt balance.
Current report
Interest income and other, net increased $0.2 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to a $1.7 million net favorable fluctuations in foreign currency exchange rates, partially offset by a $0.7 million decrease in interest income primarily due to a lower average balance of cash and cash equivalents during the first half of 2026, and $0.6 million decrease in other income due to a one-time recovery from previously written-off property and equipment in the second quarter of 2025.
Current report
Income Tax Benefit (Expense)
Current report
We have historically maintained a full valuation allowance against all the domestic DTAs because it was more likely than not that the DTAs will not be realized. The valuation allowance was approximately $69.9 million as of June 30, 2026, and December 31, 2025, which was related to U.S. net federal and state DTAs. The worldwide net DTA balances were immaterial as of June 30, 2026, and December 31, 2025. We intend to continue maintaining a full valuation allowance on the DTAs until sufficient evidence indicates its DTAs will be realized. However, considering our current assessment of the probability of maintaining profitability, there is a reasonable possibility that in the short term, a portion, or all, of the valuation allowance would no longer be prudent. As such, we may release a portion, or all, of the valuation allowance against DTAs within the next 12 months. This release, if any, would result in the recognition of certain DTAs and a decrease to income tax expense for the period such release is recorded. We are currently evaluating both quantitative and qualitative factors that may impact the valuation allowance assessment. Therefore, the exact timing and amount of the valuation allowance release are subject to our profitability and projected ability to utilize our tax attributes, among other factors.
Current report
Secondary Offering
Current report
In May 2026, we completed a registered offering of an aggregate of 5,253,554 shares of the Company's common stock at a price of $44.00 per share. The shares sold consisted of 3,306,924 shares held by a selling stockholder and 1,946,630 shares newly issued by us. The net proceeds to us from the sale of shares of our common stock were approximately $81.8 million, after deducting $3.9 million of underwriting discounts and commissions. We did not receive any proceeds from the sale of shares by the selling stockholder.
Current report
As of June 30, 2026, our outstanding total debt, net of debt discounts and issuance costs, was $66.5 million, compared to $67.0 million as of December 31, 2025. We believe we have operating flexibility, cash flow, and access to capital markets to meet scheduled payments of our debt.
Current report
As of June 30, 2026, we were in compliance with all of the terms and conditions of the Credit Agreement, and management believes, based on its current financial projections, that we will be in compliance with our covenants over the next twelve months.See Note 6,Debt to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10‑Q.
Current report
Net Cash Flows Provided byFinancing Activities
Removed paragraphs (11)
Previous report
Volume-based revenue decreased $1.3 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to decrease in revenue from Gainshare, partially offset by an increase in secureWISE data usage.
Previous report
Income Tax Expense
Previous report
The Organization for Economic Co-operation and Development (“OECD”) has a framework to implement a global minimum corporate tax of 15% for companies with global revenue and profits above certain thresholds (referred to as Pillar 2). Although the U.S. has not enacted legislation to implement Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The OECD issued new administrative guidance on January 5, 2026, with respect to Pillar 2 which modifies key aspects of the framework for countries to enact in their own laws. Pillar 2 did not have an impact on our condensed consolidated financial statements for the first quarter of 2026 because we do not currently meet the 750 million Euro sales threshold.
Previous report
Borrowings under the Credit Facilities will accrue interest at rates equal, at our election, to (i) the alternate base rate, which is defined as the highest of (a) the federal funds effective rate in effect from time to time plus 0.50%, (b) the prime commercial lending rate in effect from time to time, and (c) the daily simple secured overnight financing rate (“SOFR”) plus 1.00% or (ii) SOFR, plus, in each case, the applicable margin. The applicable margin for the Revolving Credit Facility borrowings bearing interest at the alternate base rate ranges from 1.00% to 1.75%, and the applicable margin for Revolving Credit Facility borrowings bearing interest based on the SOFR ranges from 2.00% to 2.75%, in each case, based on our consolidated total net leverage ratio as of the most recently ended fiscal quarter. The applicable margin for Term Loan borrowings bearing interest at the alternate base rate ranges from 1.00% to 1.75%, and the applicable margin for Term Loan borrowings bearing interest based on the SOFR ranges from 2.00% to 2.75%, in each case, based on our consolidated total net leverage ratio as of the most recently ended fiscal quarter. We will pay an annual commitment fee during the term of the Credit Agreement at a rate per annum equal to 0.50% for any undrawn portion of the Revolving Credit Facility. The Company’s weighted average annual interest rate on its outstanding debt was 5.9% for the three months ended March 31, 2026.
Previous report
The Credit Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants. Negative covenants include, among others, restrictions on the incurrence of debt, the incurrence of liens, the making of investments and distributions, dividends, and stock buy-backs. In addition, the Credit Agreement requires that we maintain a consolidated total net leverage ratio of not greater than 3.00 to 1.00, and a consolidated fixed charge coverage ratio of not less than 1.25 to 1.00. As of March 31, 2026, we were in compliance with the covenants contained in the Credit Agreement.
Previous report
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.
Previous report
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.
Previous report
The Company used the amounts borrowed under the Credit Facilities to finance, in part, the purchase price paid for the acquisition of SecureWise.
Previous report
First Amendment to Credit Agreement
Previous report
Subsequently, on April 14, 2026, the 2024 Program expired.
Previous report
Net Cash Flows Provided by (Used in) Financing Activities
Reworded paragraphs (24)
Previous wording
The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “projected,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target” or “continue,” the negative effect of terms like these or other similar expressions.These statements include, but are not limited to, statements related to: the Company’s business strategy and objectives; the Company’s intellectual property and proprietary software, information and technology; the Company’s sales and marketing strategy, expectations regarding strategic alliances and relationships; investments in research and development; industry trends; macroeconomic factors, inventories, and demand; changing export controls and sanctions; U.S. administrative initiatives; investments in semiconductor manufacturing; geopolitical tensions and conflicts; fluctuations in the Company’s quarterly results; and other statements identified by words such as“could,” “expects,” “intends,” “may,” “plans,” “potential,” “should,” “will,” “would,”or similar expressions and the negatives of those terms. These statements are subject to future events, circumstances, uncertainties, and risks that could cause results to differ materially, including risks associated with: the effectiveness of the Company’s business and technology strategies; semiconductor industry trends and competition; rates of adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; cost and schedule of new product development and investments in research and development; the continuing impact of macroeconomic conditions, including inflation, changing interest rates and tariffs, the evolving trade regulatory environment and geopolitical tensions, and other trends impacting the semiconductor industry, the Company’s customers, operations, and supply and demand for its products; supply chain disruptions; changes in laws and regulations, including recent tax and data privacy laws and regulations, or the interpretation or enforcement thereof; the success of the Company’s strategic growth opportunities and partnerships; recent and future acquisitions, strategic alliances and relationships and the Company’s ability to successfully integrate acquired businesses and technologies; whether the Company can successfully convert backlog into revenue; customers’production volumes under contracts that provide Gainshare; the sufficiency of the Company’s cash resources and anticipated funds from operations; the Company’s ability to obtain additional financing if needed; the Company’s ability to use support and updates f…
Excerpt shortened here; the source contains the full paragraph.
Current wording
The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “projected,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target” or “continue,” the negative effect of terms like these or other similar expressions.These statements include, but are not limited to, statements related to: the Company’s business strategy and objectives; the Company’s intellectual property and proprietary software, information and technology; the Company’s sales and marketing strategy, expectations regarding strategic alliances and relationships; investments in research and development; industry trends; macroeconomic factors, inventories, and demand; changing export controls and sanctions; U.S. administrative initiatives; investments in semiconductor manufacturing; geopolitical tensions and conflicts; fluctuations in the Company’s quarterly results; and other statements identified by words such as“could,” “expects,” “intends,” “may,” “plans,” “potential,” “should,” “will,” “would,”or similar expressions and the negatives of those terms. These statements are subject to future events, circumstances, uncertainties, and risks that could cause results to differ materially, including risks associated with: the effectiveness of the Company’s business and technology strategies; semiconductor industry trends and competition; rates of adoption of the Company’s solutions by new and existing customers; project milestones or delays and performance criteria achieved; cost and schedule of new product development and investments in research and development; the continuing impact of macroeconomic conditions, including inflation, changing interest rates and tariffs, energy prices, the evolving trade regulatory environment and geopolitical tensions, and other trends impacting the semiconductor industry, the Company’s customers, operations, and supply and demand for its products; supply chain disruptions; changes in laws and regulations, including recent tax and data privacy laws and regulations, or the interpretation or enforcement thereof; the success of the Company’s strategic growth opportunities and partnerships; recent and future acquisitions, strategic alliances and relationships and the Company’s ability to successfully integrate acquired businesses and technologies; whether the Company can successfully convert backlog into revenue; customers’production volumes under contracts that provide Gainshare; the sufficiency of the Company’s cash resources and anticipated funds from operations; the Company’s ability to obtain additional financing if needed; the Company’s ability to use suppor…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Worldwide economic performance is uneven, and the possibility of a recession persists, leading to uneven demand. Geopolitical tensions and conflicts in various locations around the world have created volatility in the global financial markets and may have further global economic consequences, including potential disruptions of the global supply chain, heightened volatility of commodity and raw material prices, and increased fears of a global recession. Inventories of semiconductor devices remain elevated in some instances. With high inventories and soft demand for some product segments, some semiconductor fab utilization rates are also low and semiconductor capital equipment orders have been impacted for some vendors and market segments. As a result, some purchase cycles, especially for enterprise software and capital equipment and particularly with respect to larger deals, have lengthened in recent years and may continue to do so. Also, we have contractors located in the West Bank and in Israel, who are providing software development and customer technical support services. We have developed contingency plans to use alternative resources to continue serving customers, if needed. Any escalations in these areas could lead to disruptions or reductions in international trade, deter or prevent purchasing activity of customers, and negatively impact our development timelines and customer support (with respect to the conflicts in the Middle East) or China sales (with respect to U.S.-P.R.C. tensions) and financial results in general (with respect to global tensions).
Current wording
Worldwide economic performance is uneven, and the possibility of a recession persists, leading to uneven demand. Geopolitical tensions and conflicts in various locations around the world have created volatility in the global financial markets and may have further global economic consequences, including potential disruptions of the global supply chain, heightened volatility of commodity and raw material prices, increased energy prices, and increased fears of a global recession. Inventories of semiconductor devices remain elevated in some instances. With high inventories and soft demand for some product segments, some semiconductor fab utilization rates are also low and semiconductor capital equipment orders have been impacted for some vendors and market segments. As a result, some purchase cycles, especially for enterprise software and capital equipment and particularly with respect to larger deals, have lengthened in recent years and may continue to do so. Also, we have contractors located in the West Bank and in Israel, who are providing software development and customer technical support services. We have developed contingency plans to use alternative resources to continue serving customers, if needed. Any escalations in these areas could lead to disruptions or reductions in international trade, deter or prevent purchasing activity of customers, and negatively impact our development timelines and customer support (with respect to the conflicts in the Middle East) or China sales (with respect to U.S.-P.R.C. tensions) and financial results in general (with respect to global tensions).
Previous wording
For additional information about our critical accounting policies, see Note 1,Basis of Presentation and Summary of Significant Accounting Policies, and Note 2,Revenue from Contracts with Customers to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10‑Q and Part II Item 7**,***** **Management’s Discussion and Analysis of Financial Condition and Results of Operation, under the heading of“Critical Accounting Estimates” *in our Annual Report. There were no material changes during the three months ended March 31, 2026, to the items that we disclosed as our critical accounting policies and estimates in Part II, Item 7 of the Annual Report.
Current wording
For additional information about our critical accounting policies, see Note 1,Basis of Presentation and Summary of Significant Accounting Policies, and Note 2,Revenue from Contracts with Customers to our unaudited condensed consolidated financial statements in this Quarterly Report on Form 10‑Q and Part II Item 7**,***** **Management’s Discussion and Analysis of Financial Condition and Results of Operation, under the heading of“Critical Accounting Estimates” *in our Annual Report. There were no material changes during the six months ended June 30, 2026, to the items that we disclosed as our critical accounting policies and estimates in Part II, Item 7 of the Annual Report.
Previous wording
Discussion of Financial Data for the Three Months ended March 31, 2026 and 2025
Current wording
Discussion of Financial Data for the Three and Six Months ended June 30, 2026 and 2025
Previous wording
Platform revenue increased $13.6 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase in Platform revenue was primarily driven by higher revenue from CV and DirectScan systems, the addition of revenues related to SecureWISE systems, and increase in revenue from Exensio software and services.
Current wording
Platform revenue increased $5.9 million for the three months ended June 30, 2026, compared to the same period in 2025. The increase in Platform revenue was primarily due to higher revenue from DirectScan systems, partially offset by decreases in revenue from CV systems, Exensio software and services, and secureWISE systems.
Previous wording
Gross margin decreased one percentage point for the three months ended March 31, 2026, to 72% compared to 73% for the same period in 2025, primarily due to decrease in revenue from Gainshare and higher costs.
Current wording
Volume-based revenue increased $3.9 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in revenue from Gainshare and Cimetrix runtime licenses.
Previous wording
The increase in costs of revenues of $4.0 million for the three months ended March 31, 2026, compared to the same period in 2025, was primarily due to (i) a $1.8 million increase in personnel-related costs due to increased headcount and higher bonus expense, (ii) a $0.9 million increase in facilities and IT-related costs, including depreciation and amortization expense, (iii) a $0.7 million increase in software license and maintenance costs, (iv) a $0.3 million increase in amortization of acquired technology, and (v) a $0.2 million increase in travel expense.
Current wording
Costs of revenues increased $8.2 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to (i) a $2.8 million increase in hardware costs (including cost of leased assets under sales-type leases), (ii) a $2.3 million increase in personnel-related costs due to increased headcount and higher bonus expense, (iii) a $1.4 million increase in facilities and IT-related costs (including depreciation and amortization expense of property and equipment), (iv) a $1.3 million increase in software license and maintenance costs, (v) a $0.3 million increase in amortization of acquired technology, and (vi) a $0.2 million increase in travel expense, partially offset by a $0.4 million decrease in subcontractor costs.
Previous wording
Research and development expenses increased $3.7 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to (i) a $2.5 million increase in personnel-related costs due to increased headcount, higher bonus expense, and employee benefits expense, (ii) a $0.5 million increase in subcontractor fees primarily related to secureWISE systems and Exensio software, and (iii) a $0.5 million increase in facilities and IT-related costs, including depreciation and amortization expense.
Current wording
Research and development expenses increased $2.4 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to (i) a $1.2 million increase in personnel-related costs due to increased headcount, higher bonus expense, and employee benefits expense, partially offset by an increase in capitalized software development costs, (ii) a $0.8 million increase in facilities and IT-related costs (including depreciation and amortization expense of property and equipment), and (iii) a $0.3 million increase in software license and maintenance costs.
Previous wording
Selling, general, and administrative expenses decreased $5.9 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to (i) a $4.3 million decrease in acquisition and integration costs related to the acquisition of SecureWise, (ii) a $1.4 million decrease in personnel-related costs mainly due to lower compensation expense allocated to selling and marketing activities, and stock-based compensation expense, and (iii) a $0.5 million decrease in facilities and IT-related costs, partially offset by a $0.2 million increase in subcontractor expenses.
Current wording
Selling, general, and administrative expenses decreased $0.8 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to (i) a $1.2 million decrease in personnel-related costs mainly due to lower compensation expense allocated to selling and marketing activities, and (ii) a $0.3 million decrease in facilities and IT-related costs (including depreciation and amortization expense of property and equipment), partially offset by (i) a $0.4 million increase in legal expenses related to the arbitration proceeding over a disputed customer contract, and (ii) a $0.2 million increase in software licenses and maintenance costs.
Previous wording
Amortization of acquired intangible assets represents amortization expense on intangibles assets acquired from business combinations in prior years. The increase in amortization expense for the three months ended March 31, 2026, compared to the same period in 2025, was a result of the amortization of intangible assets acquired in the SecureWise acquisition in March 2025.
Current wording
The increase in amortization expense for the six months ended June 30, 2026, compared to the same period in 2025, was a result of the amortization of intangible assets acquired in the SecureWise acquisition in March 2025.
Previous wording
Interest expense is from our long-term debt that was used in financing the acquisition of SecureWise in March 2025, and the related amortization of debt discount and issuance costs. Interest expense increased $0.8 million for the three months ended March 31, 2026, compared to the same period in 2025, driven by a full quarter of interest on long-term debt and the amortization of debt discount and issuance costs in the first quarter of 2026, compared to approximately one month of interest following the drawdown of long-term debt in March 2025.
Current wording
Interest expense increased $0.6 million for the six months ended June 30, 2026, compared to the same period in 2025, was driven by a full two quarters of interest on long-term debt in 2026, compared to approximately four months of interest in 2025 following the drawdown of long-term debt in March 2025.
Previous wording
Interest income and other, net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Interest income and other, net decreased $0.3 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to $0.9 million decrease in interest income from cash and cash equivalents, partially offset by a $0.6 million net favorable fluctuations in foreign currency exchange rates.
Current wording
Interest income and other, net increased $0.5 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to a $1.1 million net favorable fluctuations in foreign currency exchange rates, and a $0.2 million increase in interest income from cash and cash equivalents, partially offset by a $0.6 million decrease in other income due to a one-time recovery from previously written-off property and equipment in the second quarter of 2025.
Previous wording
Income tax expense increased for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to the impact of enacted U.S. federal tax legislation, changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income in relation to their forecasted amounts for the full year.
Current wording
We had an income tax expense for three and six months ended June 30, 2026 and income tax benefit for comparative prior year periods. Income tax expense increased for the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to the impact of enacted U.S. federal tax legislation, changes in the foreign, federal and state taxes and year-to-date recognition of worldwide pre-tax income in relation to their forecasted amounts for the full year.
Previous wording
As of March 31, 2026, our working capital, defined as total current assets less total current liabilities, was $100.7 million, compared to $92.0 million as of December 31, 2025. Total cash and cash equivalents were $31.2 million as of March 31, 2026, compared to $42.2 million as of December 31, 2025. As of March 31, 2026, and December 31, 2025, cash and cash equivalents held by our foreign subsidiaries were $8.7 million and $6.7 million, respectively.
Current wording
As of June 30, 2026, our working capital, defined as total current assets less total current liabilities, was $179.3 million, compared to $92.0 million as of December 31, 2025. Total cash and cash equivalents were $114.9 million as of June 30, 2026, compared to $42.2 million as of December 31, 2025. As of June 30, 2026, and December 31, 2025, cash and cash equivalents held by our foreign subsidiaries were $12.3 million and $6.7 million, respectively.
Previous wording
Our material cash requirements include payments for capital expenditures, principal and interest payments on our debt, cash needed to fund our operating activities, operating lease payments, and purchase obligations to support our operations. Refer to Part I, Item 1, Financial Statements, Note 4,Leases, Note 5,Debt, and Note 12,Commitments and Contingencies for details relating to our material cash requirements for debt, leasing arrangements, including future maturities of operating lease liabilities, and purchase obligations, respectively.
Current wording
Our material cash requirements include payments for capital expenditures, principal and interest payments on our debt, cash needed to fund our operating activities, operating lease payments, and purchase obligations to support our operations. Additionally, we also use our available cash to pay for employees withholding tax obligations related to net share settlement of equity awards issued under the Company’s equity plan. Refer to Part I, Item 1, Financial Statements, Note 4,Leases, Note 5,Debt, Note 7,Employee Benefit Plans, and Note 12,Commitments and Contingencies for details relating to our material cash requirements for leasing arrangements, including future maturities of operating lease liabilities, debt, taxes related to net share settlement of equity awards, and purchase obligations, respectively. As we continuously grow our DirectScan systems business, we will also continuously invest in our DirectScan systems assets and our capital expenditures for the foreseeable future will be mainly related to the construction of these assets.
Previous wording
The Credit Agreement provides for (a) a revolving credit facility in an aggregate principal amount of $45 million (the “Revolving Credit Facility”) and (b) a term loan facility in an aggregate principal amount of $25 million (the “Term Loan” and together with the Revolving Credit Facility, the “Credit Facilities”).
Current wording
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.
Previous wording
On April 23, 2026, the Company entered into a First Amendment to Credit Agreement (the “Amendment”) with the Lenders and the Agent to amend the Credit Agreement dated as of March 7, 2025. The Amendment increases the Revolving Credit Facility to an aggregate principal amount of $75 million. The Amendment introduces leveraged-based adjustments to the annual Revolving Credit Facility commitment fee during the term of the Credit Agreement. Instead of a flat per annum rate of 0.50%, the Revolving Credit Facility commitment fee will be 0.50% when the total debt to EBITDA ratio is greater than or equal to 2.50 to 1.00, 0.35% when the total debt to EBITDA ratio is less than 2.50 to 1.00 but greater than or equal to 0.50 to 1.00 and 0.20% when the total debt to EBITDA ratio is less than 0.50 to 1.00. All other material terms of the Credit Agreement remain unchanged. Under this facility, $30.0 million is available for the issuance of letters of credit.
Current wording
On April 23, 2026, we entered into a First Amendment to Credit Agreement (the “Amendment”) with the Lenders and the Agent to amend the Credit Agreement which increased the Revolving Credit Facility to an aggregate principal amount of $75.0 million. Under this facility, $30.0 million is available to us for drawdown as of June 30, 2026.
Previous wording
Also, subsequently, in May 2026, the Board Directors adopted a new stock repurchase program (the “2026 Program”) to repurchase up to $50.0 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.
Current wording
In May 2026, the Board Directors adopted a new stock repurchase program (the “2026 Program”) to repurchase up to $50.0 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. As of June 30, 2026, $50.0 million remained available under the 2026 Program. See details of our stock repurchase program in Note 6,Stockholders’* Equity*to our condensed consolidated financial statements in this Quarterly Report on Form 10‑Q.
Previous wording
Net cash flows provided by operating activities were $1.7 million for the three months ended March 31, 2026, compared to $8.6 million for the same period in 2025. The decrease in net cash flows provided by operating activities between the periods was primarily driven by higher disbursements for operations, including payments related to vendor invoices and income taxes, lower collections from customers, and payments of interest related to bank loans, partially offset by a decrease in bonus payments under the Company’s bonus plan, and decrease in payments for business acquisition-related costs.
Current wording
Net cash flows provided by operating activities were $18.1 million for the six months ended June 30, 2026, compared to $3.4 million for the same period in 2025. The increase in net cash flows provided by operating activities between the periods was primarily driven by (i) higher collections from customers, (ii) the timing of payments under the Company’s bonus and incentive plans between the comparative periods, and (iii) a decrease in payments for business acquisition-related costs and income taxes, partially offset by an increase in payments of interest related to bank loans and decrease in interest income.
Previous wording
For the three months ended March 31, 2026, net cash flows used in investing activities were $10.5 million related to purchases and prepayments of property and equipment, mainly related to our DirectScan systems.
Current wording
For the six months ended June 30, 2026, net cash flows used in investing activities were $24.6 million related to purchases and prepayments of property and equipment, mainly related to our DirectScan systems assets and capitalized software development costs related to the next generation of Exensio Analytics Platform and Sapience Manufacturing Hub.
Previous wording
For the three months ended March 31, 2025, net cash flows used in investing activities were $123.9 million, which were primarily related to $129.7 million payments for the acquisition of SecureWise, net of cash acquired, $2.9 million purchases of short-term investments, and $8.2 million purchases and prepayments of property and equipment primarily related to our DirectScan systems, partially offset by $17.0 million proceeds from maturities and sales of short-term investments.
Current wording
For the six months ended June 30, 2025, net cash flows used in investing activities were $124.2 million, which were primarily related to $129.7 million payments for the acquisition of SecureWise, net of cash acquired, and $16.7 million purchases and prepayments of property and equipment primarily related to our DirectScan systems assets, partially offset by $21.6 million proceeds from maturities and sales, net of purchases of short-term investments, and $0.6 million recovery from previously written-off property and equipment.
Previous wording
For the three months ended March 31, 2026, net cash flows used in financing activities were $2.1 million, which primarily consisted of $3.7 million in cash payments for taxes related to net share settlement of equity awards, and $0.6 million repayment of long-term debt, partially offset by $2.2 million proceeds from our employee stock purchase plan and exercise of stock options.
Current wording
For the six months ended June 30, 2026, net cash flows provided by financing activities were $79.2 million, which primarily consisted of $81.8 million proceeds from shares issued under secondary offering, net of underwriting discounts and commissions of $3.9 million, and $2.3 million proceeds from shares issued under our equity plans, partially offset by $4.1 million in payments for taxes related to net share settlement of equity awards, and $0.6 million repayment of long-term debt.
Previous wording
For the three months ended March 31, 2025, net cash flows provided by financing activities were $68.0 million, which primarily consisted of $69.2 million proceeds from long-term debt, net of debt discount and issuance costs, that was used in financing the acquisition of SecureWise, and $2.1 million proceeds from our employee stock purchase plan, partially offset by $3.3 million in cash payments for taxes related to net share settlement of equity awards.
Current wording
For the six months ended June 30, 2025, net cash provided by financing activities were $66.6 million, which primarily consisted of $69.6 million proceeds from long-term debt, net of debt discount, that was used in financing the acquisition of SecureWise, and $2.2 million proceeds from shares issued under our equity plans, partially offset by (i) $3.5 million in payments for taxes related to net share settlement of equity awards, (ii) $0.9 million payments of debt issuance costs, and (iii) $0.6 million repayment of long-term debt.
Previous wording
Refer to Note 13,Strategic Partnership Agreement with Advantest and Related Party Transactions, to our condensed consolidated financial statements in this Quarterly Report on Form 10‑Q, for the discussion about related party transactions between the Company and Advantest (as defined therein).
Current wording
Refer to Note 13,Related Party Transactions, to our condensed consolidated financial statements in this Quarterly Report on Form 10‑Q, for the discussion about related party transactions between the Company and Advantest (as defined therein).
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Financial highlights for the six months ended June 30, 2026, are as follows:
Current report — wording carried from elsewhere
Amortization of acquired intangible assets represents amortization expense on intangibles assets acquired from business combinations in prior years.
Current report — wording carried from elsewhere
Interest expense is from our long-term debt that was used in financing the acquisition of SecureWise in March 2025, and the related amortization of debt discount and issuance costs.
Current report — wording carried from elsewhere
Interest income and other, net, primarily consists of interest income and foreign currency transaction exchange gains and losses.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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. In 2025, the Company repurchased 12,500 shares under the 2024 Program at an average price of $19.55 per share for an aggregate total price of $0.2 million. During the three months ended March 31, 2026, the Company did not repurchase any shares under the 2024 Program. As of March 31, 2026, approximately $39.8 million remained available under the 2024 Program.