Company Overview - FormFactor, Inc. (NASDAQ: FORM) is a leading provider of essential test and measurement technologies throughout the entire 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] Upcoming Financial Results - FormFactor will report its financial results for the 2025 fiscal second quarter on July 30, 2025, at 1:25 p.m. Pacific Time [1] - A live webcast of the conference call will be available on the Investors section of the company's website [1] - Preregistration is required to listen via telephone, and a replay of the conference call will be accessible approximately two hours after its conclusion [2]

Company Overview - FormFactor has a global presence with approximately 2,150 employees and manufactures over 115 million MEMS probes annually[7] - The company's trailing twelve months (TTM) revenue as of October 30, 2024, was $742 million[7] - FormFactor is recognized by industry leaders such as Intel, Samsung, Micron, SK hynix, and TSMC[7] Financial Performance - In 2023, FormFactor's revenue was $663 million[20] - The company's non-GAAP EPS in 2023 was $0.73[20] - The free cash flow for 2023 was $11 million[20] - The non-GAAP gross margin in 2023 was 40.7%[20] - The target model revenue is $850 million, with a target non-GAAP EPS of $2.00[87] - The target free cash flow is $160 million[87] Market and Growth - The advanced probe card market is estimated to be $2.0 billion, while the engineering systems market is $0.5 billion[47] - The advanced probe card market is expected to grow at an annual rate of 8%[52] - The engineering systems market is expected to grow at an annual rate of 3%[52] - FormFactor estimates its growth in the advanced probe card market to be 10%+ CAGR[79]

Core Insights - The article highlights the importance of lesser-known companies in the AI ecosystem, which are crucial for the foundational growth of AI technology [1][2][18] - These companies, often referred to as "hidden gems," provide essential infrastructure and services that support the AI revolution, contrasting with the more visible chip designers and software giants [1][2][18] Company Summaries Camtek - Camtek specializes in inspection and metrology equipment essential for semiconductor manufacturing, ensuring AI chips function correctly [5][7] - The company reported a 22% year-over-year revenue increase to $118.6 million and a 38% rise in net income to $34.3 million for Q1 2025 [6] - Management projects Q2 revenue between $120 million and $123 million, indicating a growth rate of 17% to 20% [6] - Camtek's market cap is $3.8 billion, and it is recognized as a key player in the advanced packaging market for AI applications [8] FormFactor - FormFactor addresses the challenge of testing AI chips with thousands of connections at high speeds, using advanced wafer probe cards [9][12] - The company reported Q1 2025 revenue of $171.4 million, with Q2 guidance set at $190 million, despite facing export restrictions [10] - FormFactor's acquisition of FICT Limited enhances its capabilities in advanced probe card components, and a $75 million share buyback reflects management's confidence [11] - The company is well-positioned to meet the increasing demands for sophisticated testing as AI chip complexity rises [12] Vertiv Holdings - Vertiv focuses on cooling solutions for AI data centers, which are critical for managing the heat generated by large-scale AI computations [13][16] - The company achieved Q1 2025 net sales of $2 billion, a 24% increase year-over-year, with a backlog 25% higher than the previous year [14] - Vertiv's collaboration with Nvidia and iGenius to deploy a large AI supercomputer in Italy showcases its role in AI infrastructure [15] - Full-year 2025 sales guidance has been raised to between $9.3 billion and $9.6 billion, reflecting the growing demand for thermal management solutions in AI [16] Industry Overview - The article emphasizes the interconnected roles of Camtek, FormFactor, and Vertiv in the AI ecosystem, where each company plays a vital part in the manufacturing, testing, and operational phases of AI chip deployment [17] - As AI adoption accelerates, the demand for inspection equipment, testing technology, and cooling infrastructure is expected to intensify, highlighting the critical nature of these "pick-and-shovel" companies [18]

Core Insights - FormFactor, Inc. has acquired a manufacturing facility in Farmers Branch, Texas for $55 million, which includes 50,000 square feet of clean room space, enhancing its operational flexibility and aligning with its long-term growth strategy [1][2][3] Company Strategy - The acquisition of the Texas facility is seen as a strategic move to secure a fit-for-purpose asset that will support the company's future manufacturing needs in a lower-cost operating region [2][3] - The company anticipates increased test intensity driven by advanced packaging technologies, leading to higher demand for its probe-card products, particularly in High Bandwidth Memory (HBM) [2][3] Operational Impact - The new facility is expected to provide cost-effective options to meet the anticipated long-term demand for semiconductor testing and measurement technologies [3]

A month has gone by since the last earnings report for FormFactor (FORM) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is FormFactor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Since Then?It turns out ...

Core Insights - FormFactor, Inc. has been recognized as the 1 global supplier in both the Test Subsystems and Focused Chip Making Equipment categories in TechInsights' 2025 global semiconductor industry customer satisfaction survey [1][3] - The company has received five-star ratings in multiple categories, marking twelve consecutive years of recognition in the Test Subsystems category [2][3] Company Performance - FormFactor consistently receives high rankings from customers for quality and technology leadership, reflecting its commitment to customer collaboration and support [3] - The company emphasizes its dedication to technology leadership, quality, and execution, particularly in response to increasing complexity in semiconductor testing driven by advancements in areas like advanced packaging and AI applications [3] Industry Context - TechInsights conducts annual surveys of semiconductor manufacturers to evaluate suppliers based on supplier performance, customer service, and product performance [2] - The recognition from TechInsights serves as a testament to FormFactor's ongoing investment in addressing customer challenges through collaboration, innovation, and support [3][5]

Core Viewpoint - FormFactor reported strong first-quarter 2025 results, with non-GAAP earnings surpassing estimates and a positive outlook for the second quarter, despite some revenue declines in specific segments [1][2][9]. Financial Performance - Non-GAAP earnings for Q1 2025 were 23 cents per share, exceeding the Zacks Consensus Estimate by 21.05% and increasing 27.8% year over year [1]. - Revenues reached $171.4 million, beating the Zacks Consensus Estimate by 0.79% and showing a year-over-year increase of 1.6%, although there was a sequential decline of 9.6% [1][2]. Segment Revenue Details - Probe card revenues were $136.6 million, down 0.1% year over year, primarily due to lower DRAM and Flash revenues [2]. - Foundry and Logic revenues accounted for 49.8% of total revenues at $85.3 million, down 1.7% year over year [3]. - DRAM revenues increased by 6.5% year over year to $48.9 million, while Flash revenues fell 40% to $2.4 million [3]. - Systems revenues rose 8.7% year over year to $34.8 million [3]. Geographic Revenue Performance - Revenues from Malaysia, Taiwan, Japan, and Singapore increased significantly, with growth rates of 36.8%, 51.8%, 21.2%, and 29.2% year over year, respectively [4]. - Conversely, revenues from the United States, South Korea, China, Europe, and the rest of the world saw declines of 12%, 14.8%, 12.8%, 11.4%, and 25.9% year over year, respectively [4]. Operating Results - The gross margin improved by 50 basis points year over year to 39.2% [5]. - Non-GAAP operating expenses decreased by 4% year over year to $50.2 million, with operating expenses as a percentage of revenues down 170 basis points to 29.3% [5]. - The non-GAAP operating margin increased by 220 basis points year over year to 9.9% [5]. Balance Sheet & Cash Flow - As of March 29, 2025, cash and cash equivalents, along with marketable securities, totaled $299.0 million, down from $360 million as of December 28, 2024 [6]. - Cash generated from operating activities was $23.5 million, a decrease from $35.9 million in the previous quarter [6]. - Free cash flow for the first quarter was $6.3 million, down from $28.8 million in the prior quarter, attributed to reduced operating cash flows and increased capital expenditure [7]. Future Outlook - FormFactor anticipates second-quarter 2025 revenues of $190 million (plus-or-minus $5 million), which is a 6.10% decline from the year-ago quarter [10]. - The company expects a non-GAAP gross margin of 40% (plus-or-minus 1.5%) and earnings of 30 cents per share (plus-or-minus 4 cents), indicating a 22.86% decline from the year-ago quarter [11]. - The company remains optimistic about long-term growth, driven by trends in advanced packaging, high-bandwidth memory, and co-packaged optics [9].

Company Performance - FormFactor reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and up from $0.18 per share a year ago, representing an earnings surprise of 21.05% [1] - The company posted revenues of $171.36 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.79%, and an increase from $168.73 million year-over-year [2] - Over the last four quarters, FormFactor has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - FormFactor shares have declined approximately 36.6% since the beginning of the year, compared to a decline of 5.5% for the S&P 500 [3] - The company's current Zacks Rank is 2 (Buy), indicating expectations for the stock to outperform the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.27 on revenues of $185.43 million, and for the current fiscal year, it is $1.26 on revenues of $772.83 million [7] - The Electronics - Semiconductors industry, to which FormFactor belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8]

Financial Data and Key Metrics Changes - In Q1, revenues were $171.4 million, a decrease of 9.6% from Q4 and an increase of 1.6% year-over-year [16] - Non-GAAP gross margin for Q1 was 39.2%, down from 40.2% in Q4 [18][19] - Non-GAAP EPS for Q1 was $0.23, down from $0.27 in Q4 [23] - GAAP net income for Q1 was $6.4 million, or $0.08 per diluted share, compared to $9.7 million, or $0.12 per diluted share in Q4 [22] Business Line Data and Key Metrics Changes - Probe card segment revenues were $136.5 million in Q1, a decrease of 9.2% from Q4, driven by lower DRAM and Flash revenues [17] - Foundry and Logic revenues increased to $85 million in Q1, a 2.4% increase from Q4, comprising 49.8% of total revenues [17] - DRAM revenues were $48.9 million in Q1, down 22.8% from Q4, representing 28.5% of total revenues [17] - Systems segment revenues were $34.8 million in Q1, a decrease from Q4, but expected to see moderate growth in Q2 [12][17] Market Data and Key Metrics Changes - The company anticipates double-digit sequential revenue growth in Q2, driven by demand from hyperscalers and investments in generative AI [5] - HBM probe card demand is expected to increase due to ongoing shipments for existing HBM3E designs and new HBM4 designs [8][10] - The company has seen a reduction in revenue from China due to tariffs and export controls, validating its decision to divest operations in that region [6][7] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and product offerings, particularly in HBM and advanced packaging [39] - A recent acquisition of FICT Limited enhances the company's access to multilayer organic substrates, crucial for advanced foundry and logic probe cards [11] - The company aims to achieve a target model of $2 non-GAAP EPS on $850 million of revenue, with a gross margin target of 47% [15][44] Management's Comments on Operating Environment and Future Outlook - Management noted that the current geopolitical and tariff environment creates uncertainty, impacting revenue and gross margins [5][6] - The company is taking a cautious approach to capital investments while evaluating the evolving tariff situation [24] - Management expressed optimism about the growth potential in the second half of 2025, particularly in the foundry and logic markets [63] Other Important Information - The company generated free cash flow of $6.3 million in Q1, down from $28.8 million in Q4, primarily due to lower profitability [23] - The company has initiated a new $75 million share repurchase program after fully utilizing the previous program [24] Q&A Session Summary Question: Impact of tariffs on revenue and margins - Management confirmed an estimated mid single-digit million dollar reduction in revenues due to tariffs, particularly affecting multinational customers in China [30][31] Question: Customer dynamics and revenue contributions - Management noted a return of a key customer to the top sales list, indicating increased activity in the client PC space and a focus on regaining competitive position [36][37] Question: DRAM business outlook - All projected growth in DRAM is expected to come from HBM, with steady demand in non-HBM applications [42] Question: Co-package optics and its impact - Management highlighted the potential for co-package optics to drive growth in both systems and probe card businesses, emphasizing the importance of collaboration with customers [65][86] Question: Advanced probe cards for GPUs - The company is making progress in qualifying advanced probe cards for GPUs, with expectations for positive updates in the second half of the year [72][73]

Company Overview - FormFactor has a global presence with approximately 2,200 employees [6] - The company manufactures over 115 million MEMS probes annually [6] - The company's trailing twelve months (TTM) revenue as of April 30, 2025, was $766 million [6, 7] Financial Performance - In 2024, FormFactor's revenue was $764 million [15] - The company's non-GAAP EPS in 2024 was $1.15 [15] - The non-GAAP gross margin in 2024 was 41.7% [15] - Free cash flow in 2024 was $83 million [15] - Q1 2025 revenue was $171.4 million with a gross margin of 39.2% and EPS of $0.23 [104] - Q2 2025 outlook projects revenue of $190 million +/- $5 million with a gross margin of 40.0% +/- 1.5% and EPS of $0.30 +/- $0.04 [104] Market and Growth - The served available market (SAM) for advanced probe cards and engineering systems is $2.75 billion [82] - The company is targeting $850 million in revenue with a non-GAAP EPS of $2.00 [83] - The advanced probe card market is projected to reach $2.6 billion in 2027 [76]