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01/11 16:05
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate a positive outlook. Strong growth is expected in HBM and DRAM, with significant revenue contributions from custom ASICs and networking silicon. Gross margins are improving, and the Farmers Branch facility will enhance future margins. Despite some uncertainties, such as the impact of CPU and GPU ramps, the overall sentiment is optimistic. The market cap suggests a moderate reaction, leading to a likely positive stock price movement in the next two weeks.
Revenue Q3 '25 revenues are $202.7 million, representing an increase from Q2 '25. The increase is attributed to higher demand in DRAM probe cards and systems segments.
Non-GAAP Gross Margins Non-GAAP gross margins for Q3 '25 were 41%, up 250 basis points from 38.5% in Q2 '25. This improvement is driven by reductions in labor costs, manufacturing spending, and operational efficiencies.
GAAP Gross Margins GAAP gross margins for Q3 '25 were 39.8%, up from 37.3% in Q2 '25. The increase is due to cost reduction initiatives and improved operational effectiveness.
Non-GAAP EPS Non-GAAP EPS for Q3 '25 was $0.33, up from $0.27 in Q2 '25. The increase is attributed to higher revenues and improved gross margins.
GAAP Net Income GAAP net income for Q3 '25 was $15.7 million or $0.20 per fully diluted share, compared to $9.1 million or $0.12 per share in Q2 '25. The increase is due to higher revenues and improved gross margins.
Non-GAAP Net Income Non-GAAP net income for Q3 '25 was $25.7 million or $0.33 per fully diluted share, up from $21.2 million or $0.27 per share in Q2 '25. The increase is driven by higher revenues and cost efficiencies.
Free Cash Flow Free cash flow in Q3 '25 was $19.7 million, compared to a negative $47.1 million in Q2 '25. The improvement is due to higher operating cash flows and the absence of a large investment made in Q2.
Operating Cash Flows Operating cash flows in Q3 '25 were $27 million, up from $18.9 million in Q2 '25. The increase is attributed to improved net income and gross margins.
Cash and Investments Total cash and investments at the end of Q3 '25 were $266 million, up $16.7 million from the previous quarter. The increase is due to improved free cash flow.
Development of differentiated new products: Focused on driving increased market share and pricing through innovation in advanced packaging and high-performance compute.
SmartMatrix architecture: Industry's only production-proven high parallelism probe card architecture operating at 10 gigabit plus frequencies, providing unique capabilities for high-bandwidth memory (HBM) testing.
Triton silicon photonics test system: Next-generation system developed in collaboration with Advantest and Tokyo Electron, enabling energy-efficient optical data transmission in data centers.
HBM and DRAM market: Achieved record growth in DRAM probe cards, driven by HBM and non-HBM applications like DDR5 and LPDDR4. Significant contributions from all three major HBM manufacturers.
GPU market: Steady progress in qualifications to produce market share gains and revenue growth. Pilot production stage for GPU probe cards with Apollo MEMS technology.
Co-packaged optics (CPO): Increased momentum towards initial production, supported by Triton system installations.
Gross margin improvement: Achieved a 250 basis point increase in Q3 and anticipate an additional 100 basis point increase in Q4. Targeting 47% non-GAAP gross margins by 2026.
Cost reduction initiatives: Implemented headcount reductions, overtime management, and manufacturing spending decreases, including precious metal recovery processes.
Operational efficiency: Focused on improving yields, reducing cycle times, and deploying automation to enhance manufacturing processes.
Farmers Branch, Texas facility: New manufacturing facility aimed at expanding capacity with lower operating costs and financial incentives.
Diversification and market share growth: Building foundation for market share gains in foundry, logic, and GPU markets, including qualification of Apollo MEMS probe card technology.
Focus on advanced packaging: Targeting growth in high-bandwidth memory, co-packaged optics, and quantum computing applications.
Macroeconomic and geopolitical conditions: Potential disruptions in supply chain, impacts of regulatory changes including tariffs and changes in export controls, and anticipated volatility in demand for products.
Gross margin improvement: Urgency in executing rapid gross margin improvement actions due to a disconnect between revenue run rate and gross margin levels. Short-term improvements are being implemented, but achieving the target model gross margin of 47% remains a challenge.
Dependence on key customers: HBM revenue is skewed towards the largest customer, creating a risk of over-reliance on a single customer for significant revenue.
Foundry and logic probe card market: Sequentially weaker demand in the third quarter and similar levels expected in the fourth quarter. Lack of significant growth in probe cards for CPU applications due to reliance on existing legacy node designs.
Tariffs and manufacturing costs: Tariffs are impacting gross margins by 150 to 200 basis points. Efforts to mitigate these impacts are ongoing but not yet resolved.
Operational efficiency: Challenges in reducing manufacturing cycle times, improving yields, and deploying automation to achieve cost benefits and meet customer demand.
Farmers Branch facility: Significant cash expenditures ($140 million to $170 million) required for the new manufacturing facility, with long-term gross margin improvements expected but not guaranteed.
Fourth Quarter Revenue and Gross Margin: The company expects sequentially higher revenue, earnings, and gross margin in the fourth quarter, building on the third quarter's performance. Revenue is projected at $210 million, plus or minus $5 million, with a non-GAAP gross margin of 42%, plus or minus 150 basis points.
Gross Margin Improvement: The company is targeting a 47% non-GAAP gross margin in its target model. Short-term improvements are expected to continue throughout 2026, with a 100 basis point increase anticipated in the fourth quarter. Longer-term structural initiatives, such as new product development and the Farmers Branch facility, are expected to further enhance gross margins.
HBM Revenue and Market Trends: The company anticipates record revenue in the fourth quarter from non-HBM applications like DDR5 and LPDDR4, driven by increased commodity DRAM demand. HBM revenue is expected to remain stable, with the transition to HBM4 offering opportunities for growth in 2026 due to increased test intensity and complexity.
Foundry and Logic Probe Card Market: Fourth quarter demand is expected to remain similar to the third quarter. Growth in probe cards for CPU applications is anticipated as customers ramp volume on new designs and leading-edge silicon nodes. The company is also progressing on GPU probe card qualifications, with volume orders expected in the first half of 2026.
Systems Segment Growth: Sequential revenue growth is forecasted for the fourth quarter, driven by seasonal trends, co-packaged optics (CPO) production, and investments in quantum computing. The Triton silicon photonics test system is expected to support the adoption of optical data transmission in data centers.
Farmers Branch Facility: The company plans to invest $140 million to $170 million in the Farmers Branch, Texas facility over 2026. This facility is expected to improve gross margins and support long-term growth.
Share Repurchase Program: During the third quarter, the company used $1.7 million to repurchase shares. At quarter end, $70.9 million remained available for future purchases under the $75 million 2-year buyback program that was approved and announced in April 2025. The objective of the share repurchase program is to offset dilution from stock-based compensation.
The earnings call summary and Q&A indicate a positive outlook. Strong growth is expected in HBM and DRAM, with significant revenue contributions from custom ASICs and networking silicon. Gross margins are improving, and the Farmers Branch facility will enhance future margins. Despite some uncertainties, such as the impact of CPU and GPU ramps, the overall sentiment is optimistic. The market cap suggests a moderate reaction, leading to a likely positive stock price movement in the next two weeks.
The earnings call reveals mixed signals: while there is strong revenue growth and optimistic guidance, challenges like negative free cash flow, tariff impacts, and margin pressures persist. The Q&A highlights management's focus on long-term growth in AI and semiconductor sectors, but also exposes uncertainties in market trends and gross margins. The market cap suggests moderate volatility, leading to a neutral prediction for stock price movement.
The earnings call presents a mixed outlook. Financial performance shows a slight revenue increase YoY, but a decline QoQ, with reduced gross margins and operating income. The Q&A highlights tariff-related uncertainties and dynamic market conditions, but also positive developments in customer relations and product demand. Share repurchase plans are a positive indicator, but the overall mixed signals lead to a neutral prediction. The market cap suggests moderate sensitivity to these factors, supporting a neutral stock price movement prediction.
The earnings call presents a mixed picture: while there's a slight increase in year-over-year revenue and a new share repurchase program, there's also a decline in sequential revenues, gross margins, and free cash flow. The Q&A reveals concerns about tariffs and uncertainties in gross margin impacts. Despite positive developments like partnerships and new product qualifications, these are offset by weak guidance and financial metrics. The market cap suggests a moderate reaction, aligning with a neutral sentiment.
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