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FormFactor(FORM) - 2025 Q1 - Earnings Call Transcript
2025-04-30 21:27
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]
FormFactor(FORM) - 2025 Q1 - Earnings Call Transcript
2025-04-30 20:25
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] - 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 by 2.4% to $85 million in Q1, representing 49.8% of total revenues [17] - DRAM revenues were $48.9 million in Q1, down 22.8% from Q4, comprising 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] - 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 [7] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and product offerings, particularly in HBM and advanced packaging [38] - 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 $2 of non-GAAP EPS on $850 million of revenue, with a target gross margin 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 anticipated growth in Q2 is not expected to be driven by tariff-related order acceleration, but rather by genuine demand increases [5] - The company is taking a cautious approach to capital investments in light of evolving geopolitical conditions [24] 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] - A new two-year share repurchase program of $75 million has been approved by the Board of Directors [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 outside free trade zones [29][30] Question: Customer dynamics and revenue contributions - A former top customer has returned to the list, indicating increased activity in the client PC space, which is expected to contribute positively to revenue [36][37] Question: DRAM business outlook - The growth in DRAM revenue is primarily driven by HBM, with expectations for continued strength in HBM3 and new contributions from HBM4 [41][42] Question: Systems sales and demand visibility - While visibility for individual orders is low, there is better long-term visibility for systems demand, particularly related to co-package optics [101]
FormFactor(FORM) - 2025 Q1 - Earnings Call Transcript
2025-04-30 20:25
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] - Non-GAAP EPS for Q1 was $0.23, down from $0.27 in Q4 [22] - 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 [21] 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 moderate growth is expected in Q2 [12][17] Market Data and Key Metrics Changes - The company expects double-digit sequential revenue growth in Q2, driven by demand from hyperscalers investing in generative AI [4] - DRAM probe card revenue is expected to return to record levels in Q2, with growth in HBM applications [7] - The company anticipates a significant increase in revenues in Q2 to approximately $190 million, with growth across all major markets [25] Company Strategy and Development Direction - The company is focusing on diversifying its customer base and product offerings, particularly in HBM and advanced packaging [38] - The acquisition of FICT Limited enhances the company's access to multilayer organic substrates, crucial for advanced foundry and logic probe cards [11] - The company is taking a cautious approach regarding tariff impacts and is evaluating its manufacturing footprint and supply chain [5][6] Management's Comments on Operating Environment and Future Outlook - Management noted that the current geopolitical and tariff environment creates uncertainty, impacting customer supply chains and logistics [5] - The company expects continued growth in HBM and advanced packaging driven by generative AI adoption [14] - Management emphasized the importance of executing internal initiatives to achieve target gross margins of 47% at $850 million in revenue [44] 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 [22] - The company repurchased $22.1 million in shares during Q1 and has approved a new $75 million share repurchase 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, primarily affecting multinational customers [29][30] Question: Customer dynamics and revenue potential - Management noted a resurgence in a key customer, indicating increased activity in the client PC space and a potential for continued strong activity [36][37] Question: DRAM revenue mix and growth expectations - All projected growth in DRAM is attributed to HBM, with steady demand in non-HBM applications [41] Question: Future of high bandwidth memory (HBM) - Management expects continued strong contributions from HBM3 and a transition to HBM4 in late 2025, with year-over-year growth anticipated [49][93] Question: Systems sales and demand visibility - Management indicated that while visibility for individual orders is low, broader trends in the systems business show positive demand, particularly for co-package optics [99] Question: Advanced probe cards and customer qualifications - Management confirmed ongoing qualifications for advanced probe cards with a major GPU manufacturer, indicating a strong relationship and multiple opportunities [68][70]
FormFactor(FORM) - 2024 Q4 - Earnings Call Transcript
2025-02-05 22:25
Financial Data and Key Metrics Changes - In Q4, revenues were $189.5 million, a decrease of 9% from the record revenues in Q3 and an increase of 12.7% year-over-year from Q4 2023 [16] - Non-GAAP gross margin for Q4 was 40.2%, down 0.8 percentage points from the midpoint of the outlook range [16] - Non-GAAP EPS for Q4 was $0.27, down from $0.35 in Q3 [24] - For fiscal 2024, total revenues were $764 million, up 15.2% from $663 million in fiscal 2023 [16] Business Line Data and Key Metrics Changes - Probe card segment revenues in Q4 were $150.3 million, a decrease of 12.7% from Q3, driven by lower Foundry and Logic and Flash revenues, partially offset by record DRAM revenue [17] - DRAM revenues reached a record $63.3 million in Q4, accounting for 33.4% of total quarterly revenues [18] - Foundry and Logic revenues were $83 million in Q4, a decrease of 22.5% from Q3, representing 44% of total revenues [18] Market Data and Key Metrics Changes - The semiconductor industry is experiencing contrasting dynamics, with strong growth in generative AI and high bandwidth memory (HBM) while facing weak demand in client PCs and mobile handsets [5][6] - HBM revenues for fiscal 2024 totaled $126 million, nearly a $100 million increase from fiscal 2023 [19] Company Strategy and Development Direction - The company announced the acquisition of FICT Limited to enhance its capabilities in advanced packaging and strengthen its supply chain [7][8] - Partnerships with Advantest Corporation aim to accelerate innovation in wafer-level testing for high-performance computing applications [8] Management's Comments on Operating Environment and Future Outlook - Management expects a sequential reduction in demand for non-HBM DRAM probe cards due to export controls affecting shipments to China [10] - The company anticipates an overall increase in demand for its products as it moves through 2025, driven by HBM and new customer qualifications [11][55] Other Important Information - The company generated free cash flow of $28.8 million in Q4, an increase from $20 million in Q3 [25] - The company repurchased shares worth $16.1 million during Q4, with $20.5 million remaining under the buyback program [26] Q&A Session Summary Question: Can you unpack the foundry logic DRAM between non-HBM and HBM? - The largest component of the non-HBM DRAM reduction in Q1 is associated with advanced DRAM probe cards shipping into China, which is expected to be zero due to export controls [33][34] Question: What is the outlook for non-HBM DRAM? - Non-HBM DRAM continues to operate at cyclical lows around $20 million per quarter, with limited activity expected [38] Question: Why is volume impacting the business in the near term? - Volume is impacted due to the need for new design releases to ramp in volume, which is currently limited by weak demand in markets like PCs and mobile [42][45] Question: What is the impact of the large U.S. customer not appearing on the 10% list? - There is broad-based weakness across foundry and logic, particularly in the microprocessor business, which did not contribute significantly to revenue [48] Question: What is the outlook for HBM and foundry logic business? - HBM and the transition to HBM4 are expected to drive growth, with a reasonable assumption of returning to $100 million levels in foundry and logic [55] Question: Can you elaborate on the hyperscalers' engagement? - The company is engaging with hyperscalers developing custom ASICs for AI applications, which is a new growth area [65] Question: What are the growth drivers in the systems business? - Growth in the systems segment is expected from the transition of silicon photonics and co-package optics to pilot production, alongside investments in quantum computing [76] Question: What is the margin outlook for HBM versus traditional DRAM? - HBM revenue has higher margins compared to traditional DRAM, but specific margin breakdowns were not provided [78]