FormFactor(US:FORM)2023-11-02 00:40Financial Data and Key Metrics Changes - Q3 2023 revenues were $171.6 million, a 10% sequential increase but a year-over-year decrease of 5.1% [72] - Non-GAAP gross margin and non-GAAP EPS were above the high end of the outlook range [72] - Q3 probe card segment revenues were $128.3 million, an increase of 11.3% from Q2, while DRAM revenues decreased by 10.2% to $27.4 million [72][73] Business Line Data and Key Metrics Changes - Foundry and logic probe card revenues increased to $96.4 million, a 17.7% increase from Q2, contributing 56.2% of total revenues [72] - System segment revenues reached a record $43.2 million, comprising 25.2% of total revenues, slightly down from 26% in Q2 [72] - Flash revenues increased to $4.5 million, a 55.2% increase from Q2 [72] Market Data and Key Metrics Changes - The company noted a stable demand environment across its diversified product portfolio, with signs of bottoming in key markets like client PC and mobile [68] - The foundry space experienced strong demand for probe cards testing high-performance compute designs [69] - The mobile handset market has been challenging, but there are indications of stabilization [46] Company Strategy and Development Direction - The company is focused on advanced packaging applications, including chiplets and high bandwidth memory, as key growth areas [68][70] - Investments in R&D are prioritized to maintain competitive differentiation and align with customer needs in advanced packaging [68][71] - The company aims to achieve a target model of $850 million in revenue with $2 of non-GAAP EPS [71] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the industry, noting that while demand remains cyclical, there are signs of stabilization [68] - The company expects to see a stronger contribution from DRAM probe cards in Q4, driven by HBM and DDR5 [76] - Management highlighted the importance of maintaining a balance between short-term results and long-term investments [68] Other Important Information - The company completed the sale of its FRT business, which impacted Q4 revenue outlook [68] - A new two-year $75 million share repurchase program was approved to offset dilution from stock-based compensation [74] - The company anticipates a decrease in CapEx for 2024 compared to 2023, focusing on capacity alignment with demand [74][75] Q&A Session All Questions and Answers Question: Can you provide clarity on HBM revenue in Q3 and expectations for Q4? - HBM revenue in Q3 was approximately $10 million, with expectations for strengthening in Q4, although volatility is anticipated [22][21] Question: What is the outlook for advanced packaging and its growth rate? - Advanced packaging is expected to significantly outgrow the industry, with the company well-positioned to capitalize on this trend [49] Question: How is the company addressing the challenges in the China market? - The company faces structural challenges due to export controls, but expects the domestic China business to stabilize over time [38] Question: What are the key areas of focus for R&D spending in the upcoming year? - R&D spending will focus on advanced packaging, chiplets, and aligning product roadmaps with customer needs [63]