Total revenue for the second fiscal quarter of 2009 totaled $9.6 million, down 6% from $10.2 million in the first fiscal quarter of 2009 and down 55% when compared with total revenue of $21.1 million for the second fiscal quarter of 2008. Gainshare revenue totaled $2.3 million, down 4% from $2.4 million in the first fiscal quarter of 2009 and down 60% when compared to gainshare revenue of $5.7 million for the second fiscal quarter of 2008.

Net loss for the second fiscal quarter of 2009 was $6.6 million, or $0.25 per basic and diluted share, compared to a net loss of $7.3 million, or $0.28 per basic and diluted share in the first fiscal quarter of 2009 and net loss for the second fiscal quarter of 2008 of $1.9 million, or $0.07 per basic and diluted share.

"We saw increased business activity in the second quarter as compared to the first quarter of 2009, which will benefit us in coming quarters," stated John Kibarian, PDF Solutions' chief executive officer, president and a co-founder. "Further, we are expecting better Gainshare results in the near term now that wafer volumes are increasing."

In addition to using GAAP results in evaluating PDF Solutions' business, management also believes it is useful to evaluate results using a non-GAAP measure of net loss, which excludes stock-based compensation expense, amortization of acquired technology and intangible assets, restructuring charges, and their related income tax effects, as applicable. Using this non-GAAP measure, the non-GAAP net loss for the second fiscal quarter of 2009 totaled $3.7 million or $0.14 per basic and diluted share, compared with non-GAAP net income of $774,000, or $0.03 per basic and diluted share, for the second fiscal quarter of 2008.

As previously announced, PDF Solutions will discuss these results on a live conference call beginning at 3:00 p.m. Pacific Time/6:00 p.m. Eastern Time today. The call will be simultaneously web cast on PDF Solutions' website at http://ir.pdf.com/events.cfm. A replay of the web cast will be available at the same website address beginning approximately two hours after completion of the live call. A copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measures, which non-GAAP measures may be used periodically by PDF Solutions' management when discussing financial results with investors and analysts, will also be available on PDF Solutions' website at http://www.pdf.com/news_archive.phtml following the date of this release.

Effectiveness of Guidance:

The outlook set forth above represents PDF Solutions' expectations only as of the date of this release, and should not be viewed as a statement about PDF Solutions' expectations after this date. Although this release will remain available on PDF Solutions' website, its continued availability does not indicate that PDF Solutions is reaffirming or confirming its continued validity. PDF Solutions does not intend to report on its progress, or provide comments to analysts or investors on, or otherwise update, such guidance until it releases its quarterly results.

Information Regarding Use of Non-GAAP Financial Measures

In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP), PDF Solutions also provides certain non-GAAP financial measures that exclude the effects of stock-based compensation expense, amortization of acquired technology and intangible assets, restructuring charges, and their related income tax effects, as applicable. PDF Solutions' management believes that the presentation of these measures provides useful supplemental information to investors regarding PDF's operating results. These non-GAAP financial measures are used by management internally to evaluate the company's profitability and performance. PDF's management believes that excluding the effects of stock-based compensation expense, amortization of acquired technology and intangible assets, restructuring charges, and their related income tax effects, as applicable, provides a useful supplemental measure of the company's ongoing operations in light of the fact that none of these categories of expense has a current effect on the future uses of cash (with the exception of restructuring charges) nor do they have use with regards to the generation of current or future revenues. These non-GAAP results should not be considered an alternative to, or a substitute for, GAAP financial information, and may be different from similarly titled non-GAAP measures used by other companies. In particular, these non-GAAP financial measures are not a substitute for GAAP measures of income as a measure of performance, or to cash flows from operating, investing and financing activities as a measure of liquidity. Since management uses these non-GAAP financial measures internally to evaluate profitability and performance, PDF Solutions has included these non-GAAP measures to give investors an opportunity to see the company's financial results as viewed by management.