PDF Solutions (PDFS) 8-K PDF Solutions® Reports First Quarter 2006 Results

Exhibit 99.1

News Release

Investor Relations Contact:	Corporate Communications Contact:
Steven Melman, V.P. of Investor Relations	Abbie Kendall, Principal
PDF Solutions, Inc.	Armstrong Kendall, Inc.
Tel: (408) 938-6445	Tel: (503) 672-4681
Email: steven.melman@pdf.com	Email: abbie@akipr.com

PDF Solutions^® Reports First Quarter
2006 Results

Record Gain Share Contributes to 13^th Sequential Quarter of Revenue Growth

     SAN JOSE, Calif.—April 20, 2006—PDF Solutions, Inc. (Nasdaq: PDFS) the leading provider of process-design integration technologies to enhance IC manufacturability, today announced financial results for its first fiscal quarter ended March 31, 2006.

     Revenue for the first fiscal quarter of 2006 totaled a record $19.9 million, an increase of 10%, compared with revenue of $18.1 million for the first fiscal quarter of 2005. Gain share revenue for the first fiscal quarter of 2006 totaled a record $5.0 million, an increase of 140%, compared to the first fiscal quarter of 2005. On a GAAP basis, net income for the first fiscal quarter of 2006 totaled $268,000, or $0.01 per diluted share, compared with net income of $1.4 million, or $0.05 per diluted share, for the first fiscal quarter of 2005. The adoptions of SFAS 123(R) during the first fiscal quarter of 2006 resulted in $2.2 million in stock-based compensation expense or approximately $0.08 per diluted share.

     In addition to using GAAP results in evaluating PDF Solutions’ business, management also believes it is useful to measure results using a non-GAAP measure of net income or loss, which excludes amortization of stock-based compensation and acquired intangible assets. Using this non-GAAP measure, net income for the first fiscal quarter of 2006 totaled approximately $3.3 million, or $0.12 per diluted share, compared with non-GAAP net income of approximately $2.7 million, or $0.10 per diluted share, for the first fiscal quarter of 2005.

     As previously announced, PDF will hold a live conference call beginning at 3:00 p.m. Pacific Time/6:00 p.m. Eastern Time today to discuss these results. A live webcast of this

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conference call will be available on PDF Solutions’ website at http://ir.pdf.com/medialist.cfm. A replay of the call will be available at the same website address beginning approximately two hours after completion of the live call. Further, a copy of this press release, including the disclosure and reconciliation of certain non-GAAP financial measures to the comparable GAAP measure, which non-GAAP measures may be used periodically by PDF Solutions’ management when discussing financial results with investors and analysts, will be available on PDF Solutions’ website at http://www.pdf.com/news_archive.phtml following the date of this release.

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 amortization of stock-based compensation and acquired intangible assets. 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 measure the company’s profitability and performance. PDF’s management believes that excluding the effects of amortization of stock-based compensation and acquired intangible assets provides a useful supplemental measure of the company’s ongoing operations in light of the fact that neither category of expense has a current effect on the future uses of cash 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 measure profitability and performance, PDF has included these non-GAAP measures to give investors an opportunity to see the company’s financial results as viewed by management. A reconciliation of the non-GAAP financial measures to the comparable GAAP financial measure is provided at the end of the company’s financial statements presented below.

About PDF Solutions

PDF Solutions, Inc. (Nasdaq: PDFS) is the leading provider of process-design integration technologies for manufacturing integrated circuits (ICs). PDF Solutions’ software, methodologies and services enable semiconductor companies to create IC designs that can be more easily manufactured using manufacturing processes that are more capable. By simulating deep sub-micron product and process interactions, the PDF solution offers clients reduced time to market, increased IC yield and performance, and enhanced product reliability and profitability. Headquartered in San Jose, Calif., PDF Solutions operates worldwide with additional offices in Europe and Japan. For more information, visit www.pdf.com.

PDF Solutions^Ò is a registered trademark of PDF Solutions, Inc.

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PDF SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)

	March 31,			December 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	40,135		$	60,506
Short-term investments		24,923			—
Accounts receivable, net of allowances		21,579			22,082
Prepaid expenses and other current assets		1,762			1,992
Deferred tax assets		730			908
Total current assets		89,129			85,488
Property and equipment, net		3,635			3,328
Goodwill		39,886			39,886
Intangible assets, net		8,287			9,787
Deferred tax assets		823			877
Other assets		487			526
Total assets	$	142,247		$	139,892
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	986		$	1,728
Accrued compensation and related benefits		2,937			4,922
Other accrued liabilities		1,240			1,469
Taxes payable		5,037			4,950
Deferred revenues		3,259			2,281
Billings in excess of recognized revenue		590			1,604
Total current liabilities		14,049			16,954
Long-term liabilities		230			257
Total liabilities		14,279			17,211
Stockholders’ equity:
Common stock		4			4
Additional paid-in-capital		146,728			141,720
Treasury stock, at cost		(5,549	)		(5,549	)
Deferred stock-based compensation		—			(27	)
Accumulated deficit		(13,184	)		(13,451	)
Accumulated other comprehensive loss		(31	)		(16	)
Total stockholders’ equity		127,968			122,681
Total liabilities and stockholders’ equity	$	142,247		$	139,892

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PDF SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

	Three Months Ended
	March 31,		March 31,
	2006		2005
Revenue:
Design-to-silicon-yield solutions:
Integrated solutions	$	12,229	$	12,557
Software licenses		2,612		3,449
Gain share		5,016		2,087
Total revenue		19,857		18,093
Cost and expenses:
Cost of design-to-silicon-yield solutions:
Direct costs of design-to-silicon-yield solutions:
Integrated solutions		6,429		5,750
Software licenses		11		157
Amortization of acquired core technology		1,266		1,266
Research and development		6,256		5,378
Selling, general and administrative		4,956		3,914
Amortization of other acquired intangible assets		235		235
Total costs and expenses		19,153		16,700
Income from operations		704		1,393
Interest and other income		635		272
Income before taxes		1,339		1,665
Tax provision		1,071		271
Net income	$	268	$	1,394
Net income per share:
Basic	$	0.01	$	0.05
Diluted	$	0.01	$	0.05
Weighted average common shares:
Basic		26,542		25,696
Diluted		28,223		27,129

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PDF SOLUTIONS, INC.
IMPACT OF NON-GAAP ADJUSTMENTS ON REPORTED NET INCOME (UNAUDITED)
(In thousands, except per share amounts)

	Three Months Ended							Three Months Ended
	March 31, 2006							March 31, 2005
	As reported		Adjustments			Non-GAAP		As reported		Adjustments			Non-GAAP
Revenue:
Design to-silicon-yield solutions:
Integrated solutions	$	12,229	$	—		$	12,229	$	12,557	$	—		$	12,557
Software licenses		2,612		—			2,612		3,449		—			3,449
Gain share		5,016		—			5,016		2,087		—			2,087
Total revenue		19,857		—			19,857		18,093		—			18,093
Cost and expenses:
Cost of design-to-silicon-yield solutions:
Direct cost of design-to-silicon-yield solutions:
Integrated solutions		6,429		(621	) (a)		5,808		5,750		—			5,750
Software licenses		11		—			11		157		—			157
Amortization of acquired core technology		1,266		(1,266	) (b)		—		1,266		(1,266	) (b)		—
Research and development		6,256		(618	) (a)		5,638		5,378		(42	) (a)		5,336
Selling, general and administrative		4,956		(929	) (a)		4,027		3,914		—			3,914
Amortization of other acquired intangible assets		235		(235	) (b)		—		235		(235	) (b)		—
Total costs and expenses		19,153		(3,669	)		15,484		16,700		(1,543	)		15,157
Income from operations		704		3,669			4,373		1,393		1,543			2,936
Interest and other income		635		—			635		272		—			272
Income before taxes		1,339		3,669			5,008		1,665		1,543			3,208
Tax provision		1,071		673	(a,b)		1,744		271		238	(b)		509
Net income	$	268	$	2,996		$	3,264	$	1,394	$	1,305		$	2,699
Net income per share — diluted	$	0.01	$	0.11		$	0.12	$	0.05	$	0.05		$	0.10
Weighted average common shares — diluted(c)		28,223		28,223			28,223		27,129		27,129			27,129

Notes:
(a)	The non-GAAP adjustments represent the reversal of stock-based compensation, net of taxes.
(b)	The non-GAAP adjustments represent the reversal of amortization of intangible assets, net of taxes.
(c)	The shares used in computing non-GAAP net income for the three months ended March 31, 2006 and 2005 include the dilutive impact of common stock options.

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