PDF SOLUTIONS INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The interim unaudited condensed consolidated financial statements included herein have been prepared by PDF Solutions, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to Quarterly Report on Form10‑Q and Article10 of Regulation S-X. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments) to present a fair statement of results for the interim periods presented. The operating results for any interim period arenot necessarily indicative of the results that* maybe expected for other interim periods or the full fiscal year. The interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form10‑K* for the year ended* December 31, 2025*, filed with the SEC on* February 24, 2026 (the“2025* 10-K”).

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

The unaudited condensed consolidated balance sheet as of* December 31, 2025*, has been derived from the audited consolidated financial statements but doesnot include all disclosures required by U.S. GAAP.

Use of Estimates

The preparation of financial statements in conformity with 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 interim unaudited condensed consolidated financial statements include revenue recognition, the estimated useful lives of property and equipment and intangible assets, fair value of convertible note receivable, assumptions made in analysis of allowance for credit losses, impairment of goodwill and long-lived assets, realization of deferred tax assets (“DTAs”), and accounting for lease obligations, stock-based compensation expense, and income tax uncertainties and contingencies. From time to time, the Company* mayenter into contingent fee arrangements with external legal firms that mayrepresent 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.

Stock-based Compensation

In* August 2026,the Company established a new market-based performance stock unit (“PSU”) program. Under this PSU program, PSUs vest based on market conditions; therefore, the fair value of each PSU will be measured under a Monte Carlo simulation in order to simulate a range of possible future stock prices for the Company over the vesting period. The Monte Carlo simulation valuation model requires the use of various assumptions, including the stock price volatility and risk-free interest rate as of the valuation date corresponding to the length of time remaining in the vesting period. The Company recognizes stock-based compensation expense for awards with market conditions ratably for each vesting tranche, if more than one, over the vesting period using the accelerated attribution method and it isnot* reversed if the market condition isnot met.

9

Change in Presentation of Revenues

Beginning with the2025 10-K, the Company updated its presentation of revenue categories. The change in presentation of revenues doesnot 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):

Recent Accounting Standards

Recently Adopted Accounting Pronouncements

In* July 2025,the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2025-05, Financial Instruments-Credit Losses (Topic326):* Measurement of Credit Losses for Accounts Receivable and Contract Assets.This ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification (“ASC”)606, Revenue from Contracts with Customers. The Company adopted this ASU on January 1, 2026,and elected to adopt the provisions of the practical expedient prospectively. The adoption of this ASU didnot have a material effect on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement–* Reporting Comprehensive Income*–* Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses*. This ASU requires the disaggregation of certain expenses in the notes to the consolidated financial statements, to provide enhanced transparency into the expense captions presented on the face of the income statement. Additionally, in* January 2025,FASB issued ASU**2025-01*,* Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date* to clarify the effective date of ASU2024-03. This ASU is effective for annual periods beginning after* December 15, 2026,and for interim periods within annual reporting periods beginning after December 15, 2027,*with early adoption permitted. The Company is currently evaluating the impact of this ASU on the condensed consolidated financial statements and related disclosures.

In* September 2025,the FASB issued ASU2025*-06*, Intangibles*–* Goodwill and Other– **Internal-Use Software (Subtopic350-40),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 impact of this ASU on the condensed consolidated financial statements and related disclosures.

In* December 2025,the FASB issued ASU2025*-11, Interim Reporting (Topic270*): Narrow-Scope Improvements,* which intends to improve the navigability of the guidance in ASC270, 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 currently evaluating the impact of this ASU on the condensed consolidated financial statements and related disclosures.

10

In* December 2025,the FASB issued ASU2025*-12, Codification Improvements, which addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. 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 ASC260,* Earnings Per Share, retrospectively. All other amendments* may*be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on the condensed consolidated financial statements and related disclosures.

Management has reviewed other recently issued accounting pronouncements issued or proposed by the FASB and doesnot believe any of these accounting pronouncements has had or will have a material impact on the condensed consolidated financial statements.

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company recognizes revenue in accordance with FASB ASC Topic606, Revenue from Contracts with Customers, and its related amendments (collectively known as “ASC606”). ASC606 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.

The Company determines revenue recognition through the followingfive steps:

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.

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 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; software-as-a-service (“SaaS”); 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. 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 isfirst made available to customers.

11

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 Topic842, 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 recorded under Platform revenue in the condensed consolidated statements of operations and comprehensive income (loss). Payments under sales-type leases are discounted using the interest rate implicit in the lease. 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 condensed consolidated balance sheets.

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 categories that depict how the nature, amount, timing, and 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:

12

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

International revenues accounted for approximately 67% and 47% of the Company’s total revenues during thethree months ended* September 30, 2026,and2025*, respectively, and approximately 57% of the Company’s total revenues during thenine months ended* September 30, 2026,and2025*.

Significant Judgments

Judgments and estimates are required under ASC606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under ASC606 for the Company’s arrangements* maybe dependent on contract-specific terms and may*vary in some instances.

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. Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. 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, 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, ornot 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 the SSP isnot directly observable because the Company doesnot 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 doesnot 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. The Company’s estimation process can be based on historical data, trends, seasonality, changes in the contract rate, knowledge of the changes in the industry and changes in the customer’s manufacturing environment learned through discussions with customers and sales personnel. As a result of accruing revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true-up revenue to the actual amounts reported.

13

Contract Balances

The Company performs its obligations under a contract with a customer by licensing software or providing services in exchange for consideration from the customer. The timing of the Company’s performance often differs from the timing of the customer’s payment, which results in the recognition of a receivable, a contract asset, or a contract liability.

The Company classifies the right to consideration in exchange for software or services transferred to a customer as either a receivable or a contract asset. 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. 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 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. The total current contract assets included in prepaid expenses and other current assets in the condensed consolidated balance sheets were $27.7 million and $11.3 million as of* September 30, 2026*, and* December 31, 2025,respectively. The $16.4 million increase in contract assets during thenine* months ended* September 30, 2026*, was primarily due to revenue recognized during thenine months ended* September 30, 2026*, for which the payment is subject to conditions other than the passage of time. The Company didnot record any asset impairment charges related to contract assets during thethree andnine months ended* September 30, 2026*, and2025.

Deferred revenues and billings in excess of recognized revenues consist substantially of amounts invoiced in advance of revenue recognition and are recognized as the revenue recognition criteria are met. Deferred revenues that will be recognized during the succeedingtwelve-month period are recorded as current deferred revenues and the remaining portion is recorded in other non-current liabilities in the condensed consolidated balance sheets. The $16.4 million increase in contract liabilities during thenine months ended* September 30, 2026*, reflected the timing of revenue recognition relative to billings for products and services from which there are unsatisfied performance obligations to customers such that revenue hadnot yet been recognized as of* September 30, 2026*.

Deferred revenues were as follows (in thousands):

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

14

As of* September 30, 2026*, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied was approximately $247.2 million. Given the applicable contract terms with customers, the majority of this amount is expected to be recognized as revenue over the nexttwo years, with the remainder recognized thereafter. This amount doesnot include significant contracts to which the customer isnot committed, future sales-based or usage-based royalty payments in exchange for a license of IP, and future payments for performance obligations from on-demand arrangements. This amount is subject to change due to future revaluations of variable consideration, terminations, other contract modifications, or currency adjustments. The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to the scope, change in timing of delivery of products and services, or contract modifications.

The adjustment to revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods were decreases of $0.6 million and $1.0 million during thethree months ended* September 30, 2026,and2025*, respectively, and increases of $6.9 million and $0.2 million during thenine months ended* September 30, 2026,and2025*, 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, fromone tofive years. Amortization expense related to these capitalized costs is recognized over the period associated with the revenue from which the cost was incurred.

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

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

There wasno impairment loss in relation to the costs capitalized for the periods presented.

Practical Expedient

The Company doesnot adjust the transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to beone year or less. The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists, and determined its contracts didnot include a material significant financing component during thethree andnine months ended* September 30, 2026,and2025*.

15

3. BALANCE SHEET COMPONENTS

Accounts Receivable

Accounts receivable includes amounts that are unbilled at the end of the period that are expected to be billed and collected within a12‑month period. Unbilled accounts receivable, included in accounts receivable, totaled $39.5 million and $44.8 million as of* September 30, 2026*, and* December 31, 2025*, respectively. Unbilled accounts receivable that arenot expected to be billed and collected during the succeeding12‑month period are recorded in other non-current assets and totaled $7.6 million and $8.7 million as of* September 30, 2026*, and* December 31, 2025*, respectively.

The Company performs ongoing credit evaluations of its customers’ financial condition. An allowance for credit losses is maintained for probable credit losses based upon the Company’s assessment of the expected collectibility of the accounts receivable. The allowance for credit losses is reviewed on a quarterly basis to assess the adequacy of the allowance. The allowance for credit losses was $0.9 million as of* September 30, 2026*, and* December 31, 2025*.

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following (in thousands):

Property and Equipment

Property and equipment, net consist of the following (in thousands):

Test equipment mainly includes DirectScan system and CV system assets at customer sites that generate revenue. Property and equipment in progress represent mainly the development or construction of property and equipment that havenot yet been placed in service for the Company’s intended use and arenot depreciated. Depreciation and amortization expense was $2.2 million and $1.1 million during thethree months ended* September 30, 2026,and2025*, respectively, and $5.9 million and $2.6 million during thenine months ended* September 30, 2026*, and2025, respectively.

16

Goodwill and Intangible Assets, Net

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

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

The weighted average amortization period for acquired identifiable intangible assets was 8.2 years as of* September 30, 2026*. The amortization expense related to intangible assets were as follows (in thousands):

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

There wasno impairment charge for goodwill and intangible assets during thethree andnine months ended* September 30, 2026*, and2025.

17

Other Non-current Assets

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

Maturities of leases payments under sales-type leases as of* September 30, 2026*, were as follows (in thousands):

There wasno allowance for credit losses on lease receivables as of* September 30, 2026*, and* December 31, 2025*. The Company’s ongoing risk management strategy for residual assets includes performing regular reviews of estimated residual values.

18

Accrued and other current liabilities

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

4. LEASES

The Company leases administrative and sales offices and certain equipment under non-cancellable operating leases, which contain various renewal or termination options and, in some cases, require payment of common area costs, taxes and utilities. These operating leases expire at various dates through2033. The Company hadno leases that were classified as a financing lease as of* September 30, 2026*, and* December 31, 2025*.

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

Supplemental information related to operating leases were as follows:

19

Maturities of operating lease liabilities as of* September 30, 2026*, were as follows (in thousands):

5. DEBT

Debt consisted of the following (in thousands):

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.*

20

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 Revolving Credit Facility includes a payment of an annual commitment fee during the term of the Credit Agreement at a rate per annum equal to 0.50% for any undrawn amount, which was later amended in* April 2026to a leveraged-based adjustment to the annual Revolving Credit Facility commitment fee (seeFirst Amendment to Credit Agreementsection below). The Company’s weighted average annual interest rate on its outstanding debt was 6.0% and 6.5% for thenine* months ended* September 30, 2026*, and2025, respectively.

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 ofnot greater than 3.00 to1.00, and a consolidated fixed charge coverage ratio ofnot less than 1.25 to1.00. As of* September 30, 2026*, 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, including65% 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 Note14, Business Combination).

First Amendment to Credit Agreement

On* April 23, 2026,the Company entered into a First Amendment to Credit Agreement (the “Amendment”) with the Lenders and the Agent to increase the Revolving Credit Facility to an aggregate principal amount of $75.0 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 earnings before interest, taxes, depreciation, and amortization (“EBITDA”) ratio (as defined in the Amendment) is greater than or equal to2.50* to1.00, 0.35% when the total debt to EBITDA ratio is less than2.50 to1.00 but greater than or equal to0.50 to1.00 and 0.20% when the total debt to EBITDA ratio is less than0.50 to1.00. All other material terms of the Credit Agreement remain unchanged. Under this facility, $30.0 million is available to the Company for drawdown as of* September 30, 2026*.

Future Payments on Total Debt

As of* September 30, 2026*, the estimated future principal payments of the total long-term debt were as follows (in thousands):

21

6. STOCKHOLDERS’** EQUITY**

Stock Repurchase Program

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 Rule10b5-1 plans, from time to time, over the nexttwo years from the adoption date. The Company repurchased a total of 12,500 shares under the2024 Program at an average price of $19.55 per share for an aggregate total price of $0.2 million. The2024 Program expired on* April 14, 2026.*

In* May**2026,* the Board of 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 Rule10b5-1 plans, from time to time, over the nexttwo years from the adoption date. As of* September 30, 2026*, $50.0 million remained available under the2026 Program.

Secondary Offering

On* May13,* 2026, the Company entered into an underwriting agreement with Morgan Stanley & Co. LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), and Advantest America, Inc. (the “Selling Stockholder”) in connection with (i) the offering, issuance and sale by the Company of 1,946,630 shares of the Company’s common stock, $0.00015 par value per share, including 685,246 shares sold pursuant to the Underwriters’ full exercise of their option to purchase additional shares, and (ii) the offering and sale by the Selling Stockholder of 3,306,924 shares of the Company’s common stock, at an offering price of $44.00 per share, less underwriting discounts and commissions (collectively, the “Offering”). The Offering closed on* May15,* 2026. The Offering was made pursuant to an effective shelf registration statement on Form S-3 filed with the SEC. The net proceeds to the Company from the sale of shares of newly issued common stock were approximately $81.8 million, after deducting $3.9 million of underwriting discounts and commissions. The Company didnot receive any proceeds from the sale of shares by the Selling Stockholder.

7. EMPLOYEE BENEFIT PLANS

Stock-Based Compensation

Stock-based compensation expense related to stock awards (including stock options, RSUs, PSUs, and ESPP) is measured based on the fair value of the awards granted and recognized as an expense over the requisite service period*.* Stock-based compensation expense before taxes related to the Company’s stock incentive plan and employee stock purchase plan was allocated as follows (in thousands):

Stock Incentive Plan

On* November**16,* 2011, the Company’s stockholders initially approved the2011 Stock Incentive Plan, which has been amended and restated by the Board of Directors and approved by the Company’s stockholders a number of times since then (as amended through the date of this report, the*“2011* Plan”). The most recent amendment, approved by the Company’s Board of Directors on* April 23, 2026,and the stockholders on June 16, 2026,increased the number of shares reserved for issuance under such plan by an additional 0.8 million shares, to a total of 16.7 million shares, and extended the deadline to grant incentive stock options to April 23, 2036.As of September 30, 2026*,3.0 million shares were available for future grant under the2011 Plan.

22

Restricted Stock Units

RSU activity and related information were as follows:

Stock-based compensation related to RSUs is estimated at the grant date based on the award’s fair value and is recognized on a straight-line basis over the vesting periods, generallyfour years. As of* September 30, 2026*, there was $65.7 million of total unrecognized compensation cost related unvested RSUs which is expected to be recognized over a remaining weighted average period of 1.5 years. Additional information related to RSUs is as follows:

The Company withholds common stock to satisfy employee tax withholding obligations in connection with the vesting of RSUs and treats RSUs withheld for tax withholding in a similar manner to common stock repurchases and reports such shares as treasury stock. Shares withheld for taxes related to employees’ tax withholding obligation for shares issued under the equity plans and the respective amounts are reflected in the condensed consolidated statements of stockholders’ equity.

Performance Stock Units

In* September 2026,under the PSU program, the Company granted 500,000 PSUs to certain members of the senior management team, which will vest at the end of athree-year vesting period that began on September 1, 2026.For each PSU, the number of shares that can be earned ranges from 0% to 100% of the target number of shares if the Company's average closing stock price over the30* trading days leading up to the end of thethree-year vesting period equals or exceeds a certain target market price, and subject to continuous employment through the vesting date.

The average grant date fair value of $18.58 per PSU was estimated based on a Monte Carlo simulation as of the date of grant assuming expected volatility of 53.3%, a risk-free rate of 4.4%, and a dividend yield of 0%. Stock-based compensation expense for PSUs is recognized ratably over thethree-year vesting period and isnot reversed if the market condition isnot met. As of* September 30, 2026*, there was a total of $9.0 million of unrecognized stock-based compensation expense related to unvested PSUs, which is expected to be recognized over a remaining weighted average period of 2.9 years.

Stock Options

There wereno stock options granted during thenine months ended* September 30, 2026,and2025*. As of* September 30, 2026*, the outstanding stock options totaled 12,557 shares. Total fair value of shares vested during thethree andnine months ended* September 30, 2026*, was immaterial. As of* September 30, 2026*, there wasno remaining unrecognized compensation cost related to unvested stock options.

Employee Stock Purchase Plan

On* June 15, 2021,the Company’s stockholders initially approved the2021* 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”). The most recent amendment, approved by the Company’s Board of Directors on* April 23, 2026,and the stockholders on June 16, 2026,increased the number of shares reserved for issuance under such plan by an additional 0.2 million shares, to a total of 1.6 million shares. The2021* Purchase Plan commenced on* August 1, 2021,and provides fortwenty-four-month offering periods withfour six*-month purchase periods in each offering period. As of* September 30, 2026*,0.6 million shares were available for future issuance under the2021 Purchase Plan.

23

The Company estimated the fair value of purchase rights granted under the2021 Purchase Plan during the period using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions, resulting in the following weighted average fair values:

During thenine months ended* September 30, 2026,and2025*, a total of 231,920 shares and 197,414 shares, respectively, were issued under the2021 Purchase Plan, at a weighted average purchase price of $18.67 per share and $21.08 per share, respectively. As of* September 30, 2026*, the estimated unrecognized compensation cost related to the2021 Purchase Plan was $2.1 million, which is expected to be recognized over a weighted average period of 1.1 years.

8. INCOME TAXES

Income tax expense increased by $1.7 million for thenine months ended* September 30, 2026*, to $2.9 million income tax expense compared to $1.2 million income tax expense for thenine months ended* September 30, 2025*. The Company’s effective tax rate was 15% for thenine months ended* September 30, 2026*, compared to 205% for thenine months ended* September 30, 2025*. The increase in income tax expense was primarily due to changes in the foreign, federal and state taxes, and year-to-date recognition of worldwide pre-tax income (loss) in relation to their forecasted amounts for the full year. The Company’s provision for income taxes for thenine months ended* September 30, 2026* was primarily attributable to foreign taxes, U.S. federal and state taxes.

The Company’s total amount of unrecognized tax benefits, excluding interest, as of* September 30, 2026*, was $17.9 million, of which $2.8 million, if recognized, would affect the Company’s effective tax rate. The Company’s total amount of unrecognized tax benefits, excluding interest, as of* December 31, 2025*, was $17.1 million, of which $2.5 million, if recognized, would affect the Company’s effective tax rate. As of* September 30, 2026*, the Company has recorded unrecognized tax benefits of $3.5 million, including interest of $0.7 million, as long-term taxes payable in the condensed consolidated balance sheets. The remaining $15.1 million has been recorded within the Company’s DTAs, which is subject to a full valuation allowance.

The valuation allowance was approximately $69.9 million as of* September 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* September 30, 2026*, and* December 31, 2025*. The Company has historically maintained a full valuation allowance against all the domestic DTAs because it was more likely thannot that the DTAs willnot be realized. The Company intends to continue maintaining a full valuation allowance on the DTAs until sufficient evidence indicates its DTAs will be realized. However, considering the Company’s 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 willno longer be prudent. As such, the Company* mayrelease a portion, or all, of the valuation allowance against DTAs within the next12* months. This release, if any, will result in the recognition of certain DTAs and a decrease to income tax expense for the period such release is recorded. The Company is 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 the Company’s profitability and projected ability to utilize the Company’s tax attributes, among other factors.

The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S. federal and various state and foreign jurisdictions. For U.S. federal and California income tax purposes, the statute of limitations currently remains open for the tax years ended 2022 to present and 2021 to present, respectively. In addition, all of the net operating loss and research and development credit carryforwards that* maybe utilized in future years maybe subject to federal and state examination. In May 2026,the Company received a notice from the Department of the Treasury Internal Revenue Service (“IRS”) that the Company’s federal income tax return for2023* was selected for examination. The examination remains in its early stages, andno proposed adjustments have been raised by the IRS to date. The Company isnot currently under any other income tax examinations in the U.S. for any other periods or in any other of its major foreign subsidiaries’ jurisdictions.

24

9. NET INCOME (LOSS) PER SHARE

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 (excluding outstanding stock options, nonvested restricted stock units and shares subject to repurchase). Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding for the period plus the potential effect of dilutive securities which are convertible into common shares (using the treasury stock method), except in cases in which the effect would be anti-dilutive. The following is a reconciliation of the numerators and denominators used in computing basic and diluted net income (loss) per share (in thousands except per share amount):

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

The following table summarizes the potential shares of common stock that werenot 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):

10. CUSTOMER AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, reviews discrete financial information including total revenues, gross profit, and net income (loss) presented on a consolidated basis for purposes of regularly making operating decisions about allocation of resources and financial performance assessment. Further, the CODM reviews and utilizes functional expenses (costs of revenues, research and development, and selling, general and administrative) at the consolidated level to manage the Company’s operations. Other segment items included in the condensed consolidated net income (loss) are amortization of acquired intangible assets, interest expense, interest income and other, net and income tax expense, which are reflected in the condensed consolidated statements of operations and comprehensive income (loss). Accordingly, because it doesnot distinguish between markets, the Company considers itself asone operating and reporting segment, specifically the provision of services for differentiated data and analytics solutions to the semiconductor and electronics industries.

25

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

Revenues from individual customers, each of which was approximately10% or more of the Company’s consolidated total revenues, were as follows:

• represents less than10%

Gross accounts receivable balances (including amounts that are unbilled) from individual customers, each of which was approximately10% or more of the Company’s gross accounts receivable balance, were as follows:

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

(1) Includes assets deployed at customer sites which could be outside the United States.

26

11. FAIR VALUE MEASUREMENTS

The Company's cash equivalents are classified within Level1 of the fair value hierarchy because their fair values are derived from quoted market prices. Other current assets are classified within Level3 because factors used to develop the estimated fair value are unobservable inputs that arenot supported by market activity. The Company’s financial assets measured at fair value on a recurring basis and the classification by level of input within the fair value hierarchy were as follows (in thousands):

12. COMMITMENTS AND CONTINGENCIES

Operating Leases — Refer to Note4, Leases, for the discussion about the Company’s lease commitments.

Indemnifications — The Company generally provides a warranty to its customers that its software will perform substantially in accordance with documented specifications typically for a period of90 days following initial delivery of its products. The Company also indemnifies certain customers fromthird-party claims of intellectual property infringement relating to the use of its products. Historically, costs related to these guarantees havenot been significant. 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 its DirectScan system generally include post-sales support and repairs or replacement of a product atno 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* September 30, 2026*, and* December 31, 2025*.

Purchase Obligations — The Company has purchase obligations with certain suppliers for the purchase of goods and services entered into in the ordinary course of business. As of* September 30, 2026*, total outstanding purchase obligations were $67.9 million, the majority of which is due within the next2 years.

27

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

In addition, the Bylaws of the Company provide that the Company is required to indemnify its officers and directors even when indemnification would otherwise be discretionary, and the Company is required to advance expenses to its officers and directors as incurred in connection with proceedings against them for which they* maybe indemnified. The Company has entered into indemnification agreements with its officers and directors containing provisions that are in some respects broader than the specific indemnification provisions contained in the Delaware General Corporation Law. The indemnification agreements require the Company to indemnify its officers and directors against liabilities that mayarise by reason of their status or service as officers and directors other than for liabilities arising from willful misconduct of a culpable nature, to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors’ and officers’ insurance if available on reasonable terms. The Company has obtained directors’ and officers’ liability insurance in amounts comparable to other companies of the Company’s size and in the Company’s industry. Since a maximum obligation of the Company isnot* explicitly stated in the Company’s Bylaws or in its indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated.

Legal Proceedings — 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, and recognizes gains related to litigation at the earlier of when the gain has been realized or when it is realizable in accordance with FASB requirements. As of* September 30, 2026*, the Company wasnot party to any material legal proceedings for which a loss was probable or an amount was accrued.

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 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.In November 2025,the Tribunal issued a confidential arbitration award (the “Award”), which is in favor of the Company. In August 2026,the Tribunal issued a confidential award as to the parties’ costs (the “Costs Award”), which is also in favor of the Company. In February 2026,SMIC filed an application with the High Court of Hong Kong seeking to set the Award aside, and a hearing on the application was held in September 2026.A decision hasnot* yet been issued. The Company believes the set aside application is without merit and is pursuing judicial enforcement of the Award in various jurisdictions.No payments on either the Award or the Costs Award have been received by the Company to date and, at this time, there isno assurance that the Company will receive all or any part of the Award or the Costs Award. Accordingly,no amounts have been recognized in connection with the Award or the Costs Award as of* September 30, 2026*.

13. RELATED PARTY TRANSACTIONS

Through* May 15, 2026,Advantest Corporation through its wholly-owned subsidiary, Advantest America, Inc. (collectively referred to herein as “Advantest”) was a related party because it owned more than5%* of the Company’s outstanding equity following the purchase by Advantest of 3,306,924 shares of common stock from the Company in* July 2020pursuant to a securities purchase agreement entered into between them, for aggregate gross proceeds to the Company of $65.2 million. On May 15, 2026,as a result of the Offering, Advantest ceased to be a related party. See Note6,* Stockholders’ Equity.

In* July 2020,the Company and Advantest also entered into (i) a development agreement for Advantest tools to leverage the Company’s Exensio analytics software; (ii) a commercialization agreement providing for the license tothird* parties of solutions resulting from the development work; and, (iii) a cloud-based subscription for Exensio analytics software and related services. The Exensio subscription expired in* July 2025,*while the development and commercialization agreements continue in effect.

For thethree months ended* September 30, 2026,there wasno revenue recognized from Advantest as a related party, and for thenine* months ended* September 30, 2026,$0.7 million was recognized from Advantest as a related party. For thethree* andnine months ended* September 30, 2025,revenue recognized from Advantest as a related party was $1.4 million and $8.5 million, respectively. Since it wasno* longer a related party as of* September 30, 2026*, there wereno accounts receivable and deferred revenue from Advantest as of such date. As of* December 31, 2025*, accounts receivable from Advantest wasnot material and deferred revenue amounted to $8.3 million.

28

14. BUSINESS COMBINATION

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 acquired SecureWise 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 ASC Topic805, 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 athird-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. 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-related and integration costs related to the acquisition of SecureWise amounted to $5.4 million, of which the Company recorded $4.5 million in2025 and $0.9 million in2024.

The Company finalized the allocation of the purchase price to the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date, upon completion of the measurement period. The following table summarizes the final allocation of the purchase price for the acquisition of SecureWise, as of the date of the completion of the Transaction (in thousands, except amortization period):

Pro forma information reflecting the impact of the Transaction hasnot been presented as the Transaction wasnot material to the Company’s financial results.

29