PDFS · Technology(services-prepackaged software) · 10 years of annual accounts filed with the SEC · latest fiscal year ended 2025-12-31
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PDF Solutions Inc reported revenue of $219.0 million in fiscal 2025, after growing 8.2% a year over the previous 9 years. Its operating margin narrowed from 12.1% in 2016 to 2.7%, and it earned -0.3% on its invested capital in the latest year. Of the $157.2 million its operations generated over 10 years, 108.0% went to acquisitions and 79.1% back into the business; the share count rose 21.2%. On the accounting screens, it passes 3 of 9 Piotroski tests, its Altman Z'' of 2.73 is in the safe zone and its Beneish M-score is below the -1.78 line; none of the six cross-checks between its statements fires.
Revenue, fiscal 2025219.0M+8.2% a year over 9 years
Operating margin2.7%gross margin 72.3%
Return on invested capital-0.3%-0.1% on average over 2 years
Free cash flow after stock pay-34.5M-15.8% of revenue
Net debt ÷ EBITDA2.5×net debt 24.8M
Piotroski F-score3/9tests of improvement passed
Is it growing?
Revenue and the operating income it turns into. Growth that does not reach operating income is growth bought with margin.
RevenueOperating income
-100M0100M200M300M
2016Revenue 107.5MOperating income 13.0M
2017Revenue 101.9MOperating income 190,000
2018Revenue 85.8MOperating income -10.0M
2019Revenue 85.6MOperating income -7.4M
2020Revenue 88.0MOperating income -18.1M
2021Revenue 111.1MOperating income -18.3M
2022Revenue 148.5MOperating income 470,000
2023Revenue 165.8MOperating income -151,000
2024Revenue 179.5MOperating income 935,000
2025Revenue 219.0MOperating income 5.8M
2016201720182019202020212022202320242025
Compound growth a year
3 yrs
5 yrs
9 yrs
Revenue
+13.8%
+20.0%
+8.2%
Operating income
+131.7%
—
-8.5%
Shares
+1.8%
+2.7%
+2.2%
Falling shares are buybacks: each remaining share owns more of the company.
Does it earn more than its capital costs?
Margins say how much of each sale is kept; return on invested capital says how much the business earns on the money it needs to operate. Growth only creates value when that return is above the cost of the capital.
Needs a cost of capital, which comes from the valuation below.
Return on equity
-0.2%
Return on assets
-0.2%
Asset turnover
0.52×
Research & development
29.3% of revenue
Overheads (SG&A)
38.7% of revenue
Is the profit cash, and where does the cash go?
Net income is an accounting opinion; free cash flow is what was left in the bank after investing. Stock-based pay does not leave the bank — shareholders pay it through dilution — so it is shown taken off as well.
Net incomeFree cash flowAfter stock-based pay
-60M-40M-20M020M40M
2016Net income 9.1MFree cash flow -9.3MAfter stock-based pay -20.3M
2017Net income -1.3MFree cash flow 290,000After stock-based pay -11.5M
2018Net income -7.7MFree cash flow 222,000After stock-based pay -10.1M
2019Net income -5.4MFree cash flow 14.0MAfter stock-based pay 2.6M
2020Net income -40.4MFree cash flow 15.8MAfter stock-based pay 3.3M
2021Net income -21.5MFree cash flow 571,000After stock-based pay -12.4M
2022Net income -3.4MFree cash flow 23.9MAfter stock-based pay 4.2M
2023Net income 3.1MFree cash flow 3.4MAfter stock-based pay -18.1M
2024Net income 4.1MFree cash flow -7.5MAfter stock-based pay -32.5M
2025Net income -640,000Free cash flow -8.6MAfter stock-based pay -34.5M
2016201720182019202020212022202320242025
Where 10 years of operating cash went, 2016–2025
157.2M generated by the business. Each band is its share of that total.
Reinvested in the business 79%124.3M
Acquisitions 108%169.7M
Dividends 0%0
Share buybacks 42%65.4M
More than it generated: funded with cash or new debt -129%-202.2M
Over the same years it paid 162.0M in stock. The share count rose 21.2%. The buybacks did not even cover what was handed out in stock.
Per share
Earnings per shareFree cash flow per shareDividend per share
-$1.50-$1.00-$0.50$0.00$0.50$1.00
2016Earnings per share $0.28Free cash flow per share $-0.29
2017Earnings per share $-0.04Free cash flow per share $0.01
2018Earnings per share $-0.24Free cash flow per share $0.01
2019Earnings per share $-0.17Free cash flow per share $0.43
2020Earnings per share $-1.17Free cash flow per share $0.46
2021Earnings per share $-0.58Free cash flow per share $0.02
2022Earnings per share $-0.09Free cash flow per share $0.64
2023Earnings per share $0.08Free cash flow per share $0.09
2024Earnings per share $0.10Free cash flow per share $-0.19
2025Earnings per share $-0.02Free cash flow per share $-0.22
2016201720182019202020212022202320242025
Shares outstanding
Diluted shares
32M34M36M38M40M
2016Diluted shares 32.4M
2017Diluted shares 32.0M
2018Diluted shares 32.2M
2019Diluted shares 32.4M
2020Diluted shares 34.5M
2021Diluted shares 37.1M
2022Diluted shares 37.3M
2023Diluted shares 38.9M
2024Diluted shares 39.0M
2025Diluted shares 39.3M
2016201720182019202020212022202320242025
Debt and liquidity
Debt is not bad in itself; debt the business cannot service in a bad year is. Net debt is debt minus cash, and below zero the company holds more cash than it owes.
Net debt
-100M-50M050M
2016
2017
2018
2019
2020
2021
2022
2023
2024Net debt -90.6M
2025Net debt 24.8M
2016201720182019202020212022202320242025
Net debt ÷ EBITDA
2.5×
Interest coverage
1× operating income ÷ interest
Current ratio
2.28 current assets ÷ current liabilities
Cash conversion cycle
— collects in 138d
Three classic screens of the accounts
Each asks a different question of the same statements — is it improving, does it look like a company heading for distress, do the accounts resemble ones that were manipulated. None is a verdict; each shows what moves it.
Piotroski F-score
Is the business improving? Nine yes-or-no tests, this year against last.
3of 9 tests passed
✕ProfitableReturn on assets above zerofailed
✓Cash from operationsOperating cash flow above zeropassed
✕Profitability improvedReturn on assets higher than a year beforefailed
✓Profit backed by cashOperating cash flow above net income (low accruals)passed
✕Less long-term debtLong-term debt as a share of assets fellfailed
✕More liquidCurrent ratio higher than a year beforefailed
✕No new sharesShare count did not growfailed
✓Better gross marginGross margin higher than a year beforepassed
✕Sells more per assetAsset turnover higher than a year beforefailed
Where it misleads: it measures change, not level. An excellent business that stood still for a year scores low; a poor one recovering from a disaster scores high.
Altman Z''-score
Does the balance sheet look like those of companies that went bankrupt?
2.73safe zone
1.12.6
Working capital ÷ assets 0.22 × 6.56+1.44
Retained earnings ÷ assets -0.23 × 3.26-0.74
Operating income ÷ assets 0.01 × 6.72+0.09
Equity ÷ liabilities 1.84 × 1.05+1.93
Where it misleads: buybacks. A company that returns so much cash that its equity turns small or negative sinks the last two ratios without being anywhere near bankruptcy. Banks and insurers do not fit the model at all.
Beneish M-score
Do the accounts resemble those of companies that manipulated their earnings?
-2.36below the -1.78 line
-1.78
Receivables vs sales 0.92+0.85
Gross margin slipping 0.97+0.51
Soft assets 2.14+0.87
Sales growth 1.22+1.09
Slower depreciation 1.46+0.17
Overheads vs sales 0.99-0.17
Profit not in cash -0.06-0.28
Leverage rising 1.70-0.56
Where it misleads: fast growth and acquisitions. Sales growth carries a heavy weight, so a company growing 50% a year scores like a suspect without having done anything. It is a screen from a 1999 study, not an accusation.
Where the statements disagree
Cross-checks between the income statement, the balance sheet and the cash flow for the latest year, each with the benign reading and the worrying one.
None of the six cross-checks fires for the latest year: receivables and inventory move with revenue, profit turns into cash, investment keeps up with depreciation, the tax rate is ordinary and debt is moderate.
What is it worth, under which assumptions?
A company is worth the cash it will generate, brought back to today. This model projects revenue with growth that fades over the years, applies a free cash flow margin, and discounts the result at the cost of capital. Every assumption says where it came from, and all of them can be changed.
With a free cash flow margin at or below zero in year ten, the business never generates cash for its owners and a DCF says nothing useful. Set a positive margin for year ten to see what it would take.
What it has filed lately
The last twelve months at the SEC, most important first: annual and quarterly reports, events, large holders and insiders.
Every Form 4 filed in the last twelve months, read line by line: 6 filings by 4 people. Open-market purchases and sales are counted apart from awards, option exercises and shares withheld for taxes.
Bought on the open market—none in the period
Sold on the open market$227,9842 sale(s) by 2 insider(s)
Under pre-arranged plans0%of the sales followed a 10b5-1 plan set months earlier
A Form 4 says what happened, when, how many shares and at what price. It does not say why: a sale can be diversification, a tax bill or a plan fixed months earlier, and an award is pay, not a purchase. Nothing here is a reason to buy or sell anything.
Which large funds report holding it
From the Form 13F of the 28 institutions followed on this site, as of the end of their last reported quarter. A 13F is filed up to 45 days later and shows only long positions in US-listed shares.
Accounts from the company's own SEC filings; lines some companies do not report are shown as a dash rather than estimated. The risk-free rate is the 10-year US Treasury yield. A DCF is a way of making assumptions explicit, not a forecast: it states what the company would be worth if the assumptions held. The scores are screens that point where to look, not verdicts. Nothing here is a recommendation to buy or sell.
