Financial Data and Key Metrics Changes - FormFactor's Q3 2025 revenue was $202.7 million, with non-GAAP gross margins at 41%, up 250 basis points from 38.5% in Q2 2025 [20][22] - GAAP gross margins for Q3 were 39.8%, compared to 37.3% in Q2 [23] - Non-GAAP EPS for Q3 was $0.33, exceeding the high end of the outlook range of $0.21 to $0.29 [20][24] - Free cash flow in Q3 was $19.7 million, a significant improvement from negative $47.1 million in Q2 [24][25] Business Line Data and Key Metrics Changes - The Probecard segment saw a 254 basis point increase in gross margins, while the systems segment increased by 260 basis points to 40.8% and 42%, respectively [22] - DRAM Probecards achieved double-digit sequential growth in Q3, primarily driven by HBM, with HBM revenue around $40 million [9][49] - The systems segment is expected to continue its growth trajectory into Q4, supported by seasonal demand and advancements in co-packaged optics [13][14] Market Data and Key Metrics Changes - The foundry and logic probecard market experienced weaker demand in Q3, with expectations of similar levels in Q4 [11][12] - Despite a broader PC recovery, significant growth in probecards for CPU applications has not been observed, as demand is being met by existing legacy designs [11][12] - The company is focused on diversifying its customer base in the foundry and logic markets, with ongoing qualifications for major GPU applications [13][40] Company Strategy and Development Direction - The company aims to achieve a target model gross margin of 47%, with a focus on both short-term and long-term initiatives to improve profitability [6][15] - Key strategies include optimizing operational effectiveness, reducing manufacturing costs, and expanding capacity through the new Farmers Branch facility [17][25] - The company is committed to developing differentiated products to increase market share and pricing power, particularly in advanced packaging and high-performance compute [7][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving sequentially higher revenue and gross margins in Q4, driven by improved demand and cost reduction initiatives [5][26] - The transition to HBM4 is expected to increase test intensity and complexity, providing a competitive advantage for FormFactor [10][31] - Management acknowledged ongoing challenges from tariffs but is actively taking steps to mitigate their impact on gross margins [26][27] Other Important Information - The company plans to invest between $140 million and $170 million in the Farmers Branch facility over 2026, which is expected to enhance gross margins in the long term [25][66] - The share repurchase program aims to offset dilution from stock-based compensation, with $70.9 million remaining for future purchases [25] Q&A Session Summary Question: Insights on HBM growth and Probecard intensity - Management noted that HBM4 is expected to drive increased test intensity and complexity, leading to growth in Probecard demand as the technology evolves [31][32] Question: Contribution of tactical versus structural improvements to gross margin - Management indicated that both tactical and structural improvements are essential, with ongoing actions expected to yield benefits in the coming quarters [34] Question: Factors contributing to gross margin targets - Management clarified that improvements in manufacturing cycle time and yield are independent of product mix, contributing to the path towards target gross margins [38] Question: Impact of CPU and GPU customer ramps on foundry and logic - Management highlighted the significant addressable markets associated with CPU and GPU opportunities, though quantifying the impact remains challenging [40] Question: Revenue growth drivers in Q4 - Management confirmed that revenue growth in Q4 is expected to be driven by non-HBM DRAM applications, with ongoing improvements in gross margins [42][43] Question: Timing of capacity increase from Farmers Branch - Initial capacity from the Farmers Branch facility is expected to come online late in 2026, with the majority in 2027 [44] Question: HBM revenue specifics for Q3 - Management disclosed that HBM revenue for Q3 was approximately $40 million, with expectations for continued growth into Q4 [49] Question: Revenue from top CPU customer - Management acknowledged that a major CPU customer did not contribute significantly in Q3 but emphasized the importance of the long-term partnership [51][52] Question: ASIC projects engagement updates - Management noted ongoing engagements with major hyperscalers in the custom ASIC space, with expectations for future growth as specifications align with GPU requirements [53][54] Question: Gross margin improvement contributions - Management indicated that mix, volume, and cost improvement actions all contributed to the improved gross margins, with cost improvements being a significant factor [58]

Company Overview - FormFactor has a global presence with approximately 2,250 employees and manufactures over 115 million MEMS probes annually[6] - The company's trailing twelve months (TTM) revenue as of September 27, 2025, was $759 million[6,7] - FormFactor is recognized by industry leaders such as Intel, Samsung, Micron, SK hynix, and TSMC, with these customers accounting for over 10% of revenue in one or more quarters since Q3 FY20[6,7] Financial Performance & Targets - In 2024, FormFactor's revenue was $764 million, with a non-GAAP EPS of $1.15 and free cash flow of $83 million[17] - The company's target model aims for $850 million in revenue, a non-GAAP gross margin of 47%, a non-GAAP operating margin of 22%, and a non-GAAP diluted EPS of $2.00[84] - The target capital expenditure model is projected to be between 3.5% and 4.0% of revenue, equating to $30 million - $35 million[96] Market Position & Growth - FormFactor is the 1 global supplier in both Test Subsystems and Focused Chip Making Equipment categories[21] - The company estimates the advanced probe card market to be $2.6 billion in 2027[76] - FormFactor aims for a 5%+ CAGR in the Engineering Systems market, exceeding the market's 3% CAGR[79] Recent Financial Results - In Q3 2025, FormFactor's revenue was $202.7 million with a gross margin of 41% and a diluted EPS of $0.33[105] - The outlook for Q4 2025 projects revenue of $210 million (±$5 million) with a gross margin of 42% (±1.5%) and diluted EPS of $0.35 (±$0.04)[105]

Financial Performance - Q3 2025 revenue was $202.7 million, a 3.5% increase from Q2 2025 and a 2.5% decrease from Q3 2024[1] - GAAP net income for Q3 2025 was $15.7 million, or $0.20 per diluted share, compared to $9.1 million, or $0.12 per diluted share in Q2 2025[3] - Non-GAAP net income for Q3 2025 was $25.7 million, or $0.33 per diluted share, compared to $21.2 million, or $0.27 per diluted share in Q2 2025[4] - Gross margin for Q3 2025 was 39.8%, up from 37.3% in Q2 2025, but down from 40.7% in Q3 2024[3] - GAAP gross profit for the three months ended September 27, 2025, was $80,626,000, an increase from $72,938,000 in the previous quarter[18] - Non-GAAP gross profit for the nine months ended September 27, 2025, was $225,642,000, compared to $242,405,000 for the same period in 2024, reflecting a decrease of 6.9%[18] - GAAP net income for the three months ended September 27, 2025, was $15,656,000, up from $9,086,000 in the previous quarter, representing a 72.5% increase[20] - Non-GAAP net income for the nine months ended September 27, 2025, was $64,910,000, compared to $68,893,000 for the same period in 2024, a decrease of 5.4%[20] - GAAP operating income for the three months ended September 27, 2025, was $18,005,000, compared to $12,306,000 in the previous quarter, an increase of 46.5%[18] - Non-GAAP operating income for the three months ended September 27, 2025, was $28,591,000, compared to $22,849,000 in the previous quarter, reflecting a 25.4% increase[18] Cash Flow and Liquidity - Free cash flow for Q3 2025 was $19.7 million, compared to negative $47.1 million in Q2 2025[5] - Free cash flow for the three months ended September 27, 2025, was $19,658,000, a significant recovery from a negative $47,100,000 in the previous quarter[20] - The company emphasizes the importance of free cash flow as a measure of liquidity, which is preferred by many investors[25] - GAAP net cash provided by operating activities for the nine months ended September 27, 2025, was $69,423,000, down from $81,621,000 in the same period in 2024[22] - Total cash, cash equivalents, and restricted cash at the end of the period was $101,111,000, down from $197,206,000 at the beginning of the period[22] - Cash and cash equivalents increased to $97,678 million in September 2025, compared to $67,380 million in June 2025, a significant rise of 45%[24] Assets and Liabilities - Total assets increased to $1,202,992 million in September 2025, up from $1,181,608 million in June 2025, representing a growth of 1.6%[24] - Total current assets rose to $559,260 million in September 2025, compared to $525,262 million in June 2025, marking an increase of 6.5%[24] - Total liabilities decreased slightly to $193,377 million in September 2025 from $191,585 million in June 2025, a reduction of 0.9%[24] - Stockholders' equity reached $1,009,615 million in September 2025, up from $990,023 million in June 2025, reflecting a growth of 2.6%[24] - Accounts receivable net of allowance for credit losses grew to $133,316 million in September 2025, up from $115,199 million in June 2025, an increase of 15.7%[24] - Deferred revenue increased to $21,623 million in September 2025, compared to $16,450 million in June 2025, representing a growth of 31.5%[24] Future Outlook - For Q4 2025, the company expects revenue of $210 million +/- $5 million and a gross margin of 42.0% +/- 1.5%[8] - The Systems Segment is expected to see additional revenue growth in Q4 2025 with increased momentum towards co-packaged optics production[7] Operational Initiatives - The company is implementing rapid gross margin improvement actions, resulting in a 250 basis point increase from Q2 2025[2] - The company continues to focus on long-term structural initiatives to further enhance gross margins[2] - DRAM probe cards achieved double-digit sequential growth, driven by HBM growth[7] - The company continues to incur expenses similar to non-GAAP adjustments, indicating ongoing operational costs that may impact financial results[25] - Non-GAAP net income and related measures are used by management for planning and forecasting future periods, indicating a focus on operational performance[25]

Core Insights - FormFactor, Inc. reported Q3 fiscal 2025 revenues of $202.7 million, a 3.5% increase from Q2 2025 but a 2.5% decrease from Q3 2024 [1] - The company expects to deliver higher results in Q4 2025, building on the profitability improvement initiatives [7] Financial Performance - GAAP net income for Q3 2025 was $15.7 million, or $0.20 per diluted share, compared to $9.1 million, or $0.12 per diluted share in Q2 2025, and $18.7 million, or $0.24 per diluted share in Q3 2024 [3] - Non-GAAP net income for Q3 2025 was $25.7 million, or $0.33 per diluted share, compared to $21.2 million, or $0.27 per diluted share in Q2 2025, and $27.2 million, or $0.35 per diluted share in Q3 2024 [4] - Gross margin for Q3 2025 was 39.8%, up from 37.3% in Q2 2025 but down from 40.7% in Q3 2024 [3] Cash Flow and Operating Activities - GAAP net cash provided by operating activities for Q3 2025 was $27.0 million, compared to $18.9 million in Q2 2025 and $26.7 million in Q3 2024 [5] - Free cash flow for Q3 2025 was $19.7 million, a significant recovery from negative $47.1 million in Q2 2025 [5] Outlook - For Q4 2025, FormFactor anticipates revenues of approximately $210 million, with a gross margin of around 40.0% [7] - The company expects continued improvement in profitability and gross margins due to ongoing initiatives [2][8]

Core Viewpoint - FormFactor (NASDAQ: FORM) has seen significant stock appreciation, with its market cap increasing by approximately one-third over the past six weeks, indicating strong performance in the semiconductor testing and measuring solutions sector [1]. Company Summary - FormFactor is a supplier of test and measuring solutions specifically for the semiconductor industry, highlighting its niche focus within a growing market [1].

Core Viewpoint - FormFactor, Inc. is set to report its financial results for the fiscal third quarter of 2025 on October 29, 2025, at 1:25 p.m. Pacific Time, with a live webcast available for public access [1]. Company Overview - FormFactor, Inc. (NASDAQ: FORM) is a prominent provider of test and measurement technologies throughout the entire integrated circuit (IC) life cycle, including characterization, modeling, reliability, design debugging, qualification, and production testing [3]. - The company supports semiconductor firms in enhancing profitability by optimizing device performance and improving yield knowledge [3]. - FormFactor operates a network of facilities across Asia, Europe, and North America to serve its customers [3].

Core Viewpoint - Benchmark Electronics, Inc. has appointed Dr. Michael Slessor to its Board of Directors, enhancing its leadership with his extensive experience in the semiconductor industry [1] Company Summary - Dr. Slessor has over 25 years of experience in the semiconductor sector, indicating a strong background that could benefit Benchmark Electronics [1] - He is currently the CEO of FormFactor, Inc., a leader in advanced wafer test solutions, which highlights his expertise in a critical area of technology [1] - Dr. Slessor joined FormFactor through its acquisition of MicroProbe in 2012, showcasing his long-term commitment and experience in the industry [1]

Group 1 - FormFactor, Inc. will participate in the 17th Annual CEO Investor Summit 2025 on October 7th in Phoenix, Arizona [1] - The CEO Investor Summit is held annually during the SEMICON West industry trade show, and this year it will take place in downtown Phoenix [2] - The event will feature a "round-robin" format allowing investors and analysts to meet with management teams from 12 participating companies [2][3] Group 2 - The 12 management teams participating in the summit include companies such as ACM Research, Aehr Test Systems, and FormFactor [3] - Attendance is by invitation only and limited to accredited investors and publishing research analysts, with a registration deadline of September 26, 2025 [4] Group 3 - FormFactor, Inc. is a leading provider of test and measurement technologies for the semiconductor industry, supporting the entire IC life cycle [5] - The company operates facilities across Asia, Europe, and North America, helping semiconductor companies optimize device performance and advance yield knowledge [5]

Core Viewpoint - FormFactor's recent earnings report shows mixed results, with revenues slightly declining year over year, while earnings per share exceeded estimates, indicating potential challenges ahead for the company [2][5]. Financial Performance - FormFactor reported Q2 2025 non-GAAP earnings of 27 cents per share, surpassing the Zacks Consensus Estimate by 10%, but down 23% year over year [2]. - Revenues for the quarter were $195.8 million, beating estimates by 2.87%, but decreased by 0.9% year over year [2]. - The gross margin contracted by 680 basis points year over year to 38.5%, while non-GAAP operating expenses decreased by 13.8% to $52.5 million [5]. Segment Revenue Breakdown - Probe card revenues accounted for 82.8% of total revenues at $162.1 million, down 2.8% year over year [3]. - Foundry and Logic revenues were $99.5 million, down 4.1% year over year, while DRAM revenues decreased by 1.6% to $57.1 million [3]. - Flash revenues increased by 7.8% to $5.5 million, and Systems revenues rose by 9.8% to $33.7 million [3]. Geographic Revenue Trends - Revenues from Taiwan, Japan, South Korea, and Singapore increased by 18.1%, 93.4%, 16.3%, and 48.9% year over year, respectively [4]. - Conversely, revenues from the United States, China, Europe, and the rest of the world declined by 14.6%, 62.5%, 18.2%, and 45.2% year over year, respectively [4]. Cash Flow and Balance Sheet - As of June 28, 2025, cash and cash equivalents totaled $249.3 million, down from $299 million as of March 29, 2025 [6]. - Cash generated from operating activities was $18.9 million, down from $23.5 million in the previous quarter, with free cash flow reported as negative $47.1 million [6]. Future Guidance - For Q3 2025, FormFactor expects revenues of $200 million (+/- $5 million) and a non-GAAP gross margin of 40% (+/- 1.5%) [7]. - The company anticipates non-GAAP earnings of 25 cents (+/- 4 cents) per share for the upcoming quarter [7]. Market Sentiment and Estimates - Since the earnings release, there has been a downward trend in estimates, with the consensus estimate shifting down by 26.95% [8][9]. - FormFactor currently holds a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [11]. Investment Scores - FormFactor has a subpar Growth Score of D and a Momentum Score of F, while holding a middle 20% score of C on the value side, resulting in an aggregate VGM Score of D [10].

Core Points - FormFactor, Inc. has appointed Aric McKinnis as the new Senior Vice President and Chief Financial Officer, succeeding Shai Shahar who resigned effective August 8, 2025 [1][2] - The company reaffirmed its financial outlook for the third quarter of 2025, which was initially issued on July 30, 2025 [3] Company Overview - FormFactor, Inc. is a leading provider of essential test and measurement technologies throughout the semiconductor product life cycle, including characterization, modeling, reliability, design debug, qualification, and production testing [4] - The company serves customers globally through its facilities located in Asia, Europe, and North America [4]