FORM Q1 Earnings Surpass Estimates, Stock Rises on Positive Outlook

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].