Aehr Test(AEHR) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $21.4 million, an increase of 45% year-over-year from$ 14.8 million in Q2 2023 [5][32] - Non-GAAP net income was $6.7 million, representing a net profit margin of slightly over 31% [6][35] - For the first half of fiscal 2024, revenue grew by 65% compared to the same period last year [6] - GAAP gross margin for Q2 2024 was 51.1%, down from 53.4% in Q2 2023, primarily due to high inventory reserves and increased period costs [33] - Operating expenses increased by 24% year-over-year to$ 5.5 million, driven by higher headcount-related expenses [33] Business Line Data and Key Metrics Changes - WaferPak revenues were $9.2 million, accounting for 43% of total revenue, consistent with 45% in the prior year [32] - The revenue mix has shifted towards fewer systems and more WaferPaks due to customer design changes [9] Market Data and Key Metrics Changes - The slowing growth in the electric vehicle market has negatively impacted order timing, but the silicon carbide market is not decreasing, only experiencing a slower growth rate [6][10] - The total silicon carbide market is projected to grow at a CAGR of over 4% annually, reaching$ 8.5 billion by 2025, with significant opportunities in industrial and energy power conversion applications [21] Company Strategy and Development Direction - The company is taking a conservative approach to its fiscal year forecast, reducing revenue expectations by 15% to 25% to a range of $75 million to$ 85 million, still representing a year-over-year growth of 15% to 30% [10][39] - Aehr is expanding its customer base for silicon carbide and gallium nitride wafer-level burn-in solutions, with seven customers currently purchasing these solutions [18] - The company is investing in R&D and expanding manufacturing capacity to meet customer needs and reduce lead times [20][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for wafer-level burn-in solutions despite current order timing uncertainties [10][30] - The company remains optimistic about future growth opportunities in various markets, including battery and hybrid electric vehicles, industrial power conversion, and telecommunications [11][30] Other Important Information - The company has maintained a strong cash position of $50.5 million at the end of Q2 2024, flat from the previous quarter [36] - Interest income for Q2 2024 was$ 631,000, up from $263,000 in the same quarter last year [38] Q&A Session Summary Question: Anticipated revenue orders for the second half of the year - Management expects the second half of the fiscal year to be stronger than the first half, with a potential 60:40 split between Q4 and Q3 [43] Question: Long-term growth expectations - Management refrained from providing specific multi-year growth rates but indicated confidence in exceeding$ 100 million in revenue in the future [46][48] Question: Customer materiality in fiscal year 2025 - Management believes that significant customers will remain material but may not be the dominant source of revenue as other customers ramp up [50][52] Question: Targeting the Chinese market - The company is actively engaging with Chinese suppliers and exploring strategies to protect its IP while participating in the growing Chinese market for silicon carbide [54][56] Question: Recent changes in demand visibility - Management acknowledged a material change in demand visibility over the last 30 days, primarily due to shifts in customer forecasts [58][60] Question: Inventory and pricing strategy - Management is confident in maintaining pricing and margins despite increased inventory, emphasizing that they have not experienced pricing erosion [65][68]