FORM's Q4 Earnings Miss Estimates, Stock Declines on Cautious Outlook

Core Insights - FormFactor (FORM) reported fourth-quarter 2024 adjusted earnings of 27 cents per share, missing the Zacks Consensus Estimate by 6.90%, but showing a 35% increase from the previous year [1] - Revenues for the quarter were $189.5 million, which missed the Zacks Consensus Estimate by 19% and increased by 12.7% year over year, driven by a 77.2% surge in the DRAM probe-card business [2] Financial Performance - Probe card revenues reached $150.6 million, up 18.6% year over year, while Foundry & Logic revenues were $83.3 million, down 0.6% year over year [4] - DRAM revenues accounted for 33.6% of total revenues at $63.6 million, marking a record-setting quarter, whereas Flash revenues fell 49.3% year over year to $3.7 million [4] - Systems revenues were $39.2 million, down 4.9% year over year [5] Geographic Revenue Breakdown - Revenues from Malaysia, Taiwan, China, the rest of the world, South Korea, and Europe saw significant year-over-year increases of 66.7%, 45.4%, 43.3%, 40.7%, 26.5%, and 1.1%, respectively [5] - Conversely, revenues from the United States, Singapore, and Japan declined by 26.6%, 16.9%, and 11%, respectively [5] Operating Metrics - The gross margin contracted by 190 basis points year over year to 40.2%, while non-GAAP operating expenses increased by 7% year over year to $55.2 million [6] - The non-GAAP operating margin compressed by 40 basis points year over year to 11% [6] Cash Flow and Balance Sheet - As of December 28, 2024, cash and cash equivalents, along with marketable securities, totaled $360.0 million, up from $354.5 million as of September 28, 2024 [7] - Cash generated from operating activities was $35.9 million in the reported quarter, significantly up from $9.2 million in the previous quarter [7] - Free cash flow increased to $28.8 million from $20 million in the previous quarter, driven by higher operating cash flows and reduced working capital outflows [8] Future Guidance - FormFactor anticipates first-quarter 2025 revenues of $170 million (+/- $5 million), which is below the Zacks Consensus Estimate of $192.72 million, indicating a cautious outlook due to weaker demand in high-volume markets [9] - The company expects a non-GAAP gross margin of 38% (+/- 1.5%) and earnings of 19 cents (+/- 4 cents) per share, compared to the Zacks Consensus Estimate of 33 cents per share [10]