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]

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]

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]

Core Viewpoint - FormFactor, Inc. reported a decrease in first-quarter revenue and profitability due to reduced demand for DRAM probe cards and systems, but remains optimistic about long-term growth prospects in the semiconductor industry driven by trends in Advanced Packaging, High-Bandwidth Memory, and Co-Packaged Optics [2][3]. Financial Performance - Quarterly revenues for Q1 fiscal 2025 were $171.4 million, down 9.6% from $189.5 million in Q4 fiscal 2024, but up 1.6% from $168.7 million in Q1 fiscal 2024 [1]. - GAAP net income for Q1 fiscal 2025 was $6.4 million, or $0.08 per fully-diluted share, compared to $9.7 million, or $0.12 per share in Q4 fiscal 2024, and $21.8 million, or $0.28 per share in Q1 fiscal 2024 [3]. - Non-GAAP net income for Q1 fiscal 2025 was $18.0 million, or $0.23 per fully-diluted share, compared to $21.3 million, or $0.27 per share in Q4 fiscal 2024, and $14.3 million, or $0.18 per share in Q1 fiscal 2024 [4]. Gross Margin - GAAP gross margin for Q1 fiscal 2025 was 37.7%, down from 38.8% in Q4 fiscal 2024 and up from 37.2% in Q1 fiscal 2024 [3]. - Non-GAAP gross margin for Q1 fiscal 2025 was 39.2%, compared to 40.2% in Q4 fiscal 2024 and 38.7% in Q1 fiscal 2024 [4]. Cash Flow and Operating Activities - GAAP net cash provided by operating activities for Q1 fiscal 2025 was $23.5 million, down from $35.9 million in Q4 fiscal 2024 and $33.0 million in Q1 fiscal 2024 [6]. - Free cash flow for Q1 fiscal 2025 was $6.3 million, compared to $28.8 million in Q4 fiscal 2024 and $19.7 million in Q1 fiscal 2024 [6]. Future Outlook - The company expects double-digit sequential revenue growth for Q2 fiscal 2025, with increases across all major served markets and segments, despite uncertainties from the current tariff situation [7]. - For Q2 fiscal 2025, FormFactor projects revenue of approximately $190 million, with a gross margin of 38.5% and net income per diluted share of $0.18 [7]. Market Dynamics - Demand in the Foundry & Logic segment increased slightly, while there was a reduction in DRAM due to export controls affecting shipments to China [8]. - The company has completed the acquisition of a minority interest in FICT Limited, a key supplier of advanced probe card components [8].