FormFactor(US:FORM)2025-04-30 20:25Financial 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]