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01/11 16:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Q1 Revenues $171,400,000, a decrease of 9.6% from Q4 and an increase of 1.6% year-over-year from Q1 2024.
Probe Card Segment Revenues $136,500,000, a decrease of $13,800,000 or 9.2% from Q4, driven by lower DRAM and Flash revenues, partially offset by higher Foundry and Logic revenues.
Systems Segment Revenues $34,800,000, a decrease of $4,400,000 from Q4, comprising 20.3% of total company revenues, down from 20.7% in Q4.
Foundry and Logic Revenues $85,000,000, a $2,000,000 or 2.4% increase from Q4, increasing to 49.8% of total company revenues compared to 44% in Q4.
DRAM Revenues $48,900,000, a decrease of $14,400,000 or 22.8% lower than Q4, decreasing to 28.5% of total quarterly revenues from 33.4% in Q4.
HBM Revenues $29,000,000, a decrease of $3,000,000 from $32,000,000 in Q4.
Flash Revenues $2,400,000, down $1,300,000 from Q4, representing 1.4% of total revenues in Q1 compared to 1.9% in Q4.
GAAP Gross Margin 37.7%, down from 38.8% in Q4.
Non-GAAP Gross Margin 39.2%, down 1 percentage point from 40.2% in Q4, driven by lower non-GAAP gross margins in the probe card segment.
Probe Card Segment Gross Margin 37.8%, a decrease of 2.2 percentage points compared to 40% in Q4, mainly due to decreasing revenue.
Systems Segment Gross Margin 44.5%, an increase of 3.7 percentage points compared to 40.8% in Q4, mainly due to a more favorable product mix and lower manufacturing spend.
GAAP Operating Expenses $61,300,000, down from $66,000,000 in Q4.
Non-GAAP Operating Expenses $50,200,000 or 29.3% of revenue, compared with $55,200,000 or 29.1% of revenues in Q4, a decrease mainly due to lower performance-based compensation.
GAAP Operating Income $3,300,000, down from $7,900,000 in Q4.
Non-GAAP Operating Income $16,900,000, down from $20,900,000 in Q4, a decrease of $4,000,000 or 19.2%, due to lower revenues and lower gross margins.
GAAP Net Income $6,400,000 or $0.08 per fully diluted share, compared with $9,700,000 or $0.12 per fully diluted share in Q4.
Non-GAAP Net Income $18,000,000 or $0.23 per fully diluted share, down from $21,300,000 or $0.27 per fully diluted share in Q4.
Free Cash Flow $6,300,000, down from $28,800,000 in Q4, primarily driven by lower profitability and greater outflows for working capital.
Capital Expenditures (CapEx) $18,600,000, compared to $7,700,000 in Q4.
Total Cash and Investments $302,000,000, a decrease of $64,000,000 from Q4, mainly due to the $67,000,000 paid for the investment in FICT.
Share Repurchase Program $22,100,000 used to repurchase shares in Q1, with a new two-year $75 million share repurchase program approved.
New Product Development: FormFactor is developing a new lower cost DRAM architecture for the non-HBM commodity market, with pilot volumes shipped to beta customers.
Acquisition: FormFactor completed the acquisition of FICT Limited, a leading supplier of multilayer organic substrates, enhancing access to critical technology.
Market Expansion: FormFactor anticipates double-digit sequential revenue growth in Q2 2025, driven by increased demand from hyperscalers investing in generative AI.
Customer Dynamics: FormFactor's former number one customer has returned to the 10% customer list, indicating a recovery in the client PC space.
Operational Efficiency: FormFactor is taking a wait-and-see approach regarding tariff impacts on supply chains and manufacturing footprint.
Cost Management: The company is implementing internal initiatives like lean manufacturing and automation to improve gross margins.
Strategic Shift: FormFactor is diversifying its revenue drivers away from client PCs towards high bandwidth memory (HBM) and generative AI applications.
Tariff Impact: The company expects a mid single-digit million dollar reduction in revenues due to tariffs, with a 1% impact on gross margins.
Tariff Impact on Revenue: The company anticipates a mid single-digit million dollar reduction in revenues due to tariffs, particularly affecting multinational customers operating outside of free trade zones.
Tariff Impact on Gross Margin: An estimated one percentage point reduction in gross margins is expected due to tariffs on imported supplies, primarily subcomponents from Japan and Germany.
Supply Chain Challenges: The company is facing challenges in supply chain logistics due to tariff-related costs, prompting some customers to reevaluate their supply chains.
Regulatory Issues: The tightening of export controls has limited the company's ability to ship probe cards for advanced DRAM designs to China, impacting revenue from that region.
Geopolitical Uncertainty: The ongoing geopolitical situation, particularly U.S.-China trade relations, creates uncertainty that could affect future revenue and operational decisions.
Economic Factors: The company is taking a wait-and-see approach regarding capital investments and supply chain changes in light of the evolving tariff environment.
Acquisition of FICT Limited: FormFactor completed the acquisition of FICT Limited, the leading supplier of multilayer organic substrates, enhancing access to critical technology.
Focus on Generative AI: The anticipated revenue growth is driven by hyperscalers' investments in generative AI, increasing demand for high bandwidth memory DRAM probe cards.
Tariff Management Strategy: FormFactor is taking a wait-and-see approach regarding tariff impacts on supply chains and manufacturing footprint.
Diversification Strategy: FormFactor is diversifying its customer base and revenue streams, particularly in HBM and advanced packaging markets.
CPO Development: FormFactor is extending its leadership in silicon photonics and co-package optics, with plans to ship multiple systems to support pilot production.
Q2 Revenue Outlook: FormFactor expects Q2 revenues to be approximately $190 million, plus or minus $5 million, with growth across all major markets.
Q2 Gross Margin Outlook: The company anticipates a non-GAAP gross margin of 40%, plus or minus 150 basis points, for Q2.
CapEx Guidance: CapEx for 2025 is expected to be between $35 million and $45 million.
Non-GAAP EPS Guidance: Non-GAAP earnings per share for Q2 is expected to be $0.30, plus or minus $0.04.
Impact of Tariffs: The Q2 outlook includes an estimated mid-single-digit million dollar reduction in revenues and a one percentage point reduction in gross margins due to tariffs.
Share Repurchase Program: During the first quarter, FormFactor used $22,100,000 to repurchase shares, fully utilizing the existing buyback program approximately seven months ahead of its expiration date. The Board of Directors approved a new two-year share repurchase program worth $75,000,000.
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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