• Q1 Revenue: $171.4 million, a decrease of 9.6% from Q4 and an increase of 1.6% year-over-year.
• Non-GAAP Gross Margin: 39.2%, near the high end of the range.
• Non-GAAP EPS: $0.23, at the high end of the outlook range.
• Probe Card Segment Revenue: $136.5 million, a decrease of 9.2% from Q4.
• System Segment Revenue: $34.8 million, a decrease from Q4, comprising 20.3% of total company revenues.
• Foundry and Logic Revenue: $85 million, a 2.4% increase from Q4.
• DRAM Revenue: $48.9 million, a 22.8% decrease from Q4.
• Flash Revenue: $2.4 million, down from Q4.
• GAAP Gross Margin: 37.7%, compared to 38.8% in Q4.
• Non-GAAP Operating Income: $16.9 million, a decrease of 19.2% from Q4.
• GAAP Net Income: $6.4 million or $0.08 per share.
• Non-GAAP Net Income: $18 million or $0.23 per share.
• Free Cash Flow: $6.3 million, compared to $28.8 million in Q4.
• Capital Expenditures: $18.6 million in Q1.
• Total Cash and Investments: $302 million, a decrease of $64 million from Q4.
• Q2 Revenue Outlook: $190 million plus or minus $5 million.
• Q2 Non-GAAP Gross Margin Outlook: 40% plus or minus 150 basis points.
• Q2 Non-GAAP EPS Outlook: $0.30 plus or minus $0.04.

• Warning! GuruFocus has detected 4 Warning Signs with FORM.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• FormFactor Inc (NASDAQ:FORM) anticipates double-digit sequential revenue growth in the second quarter, driven by increased demand in all major markets.
• The company is experiencing strong demand for high bandwidth memory (HBM) DRAM probe cards, driven by investments in generative AI.
• FormFactor Inc (NASDAQ:FORM) completed the acquisition of FICT Limited, enhancing access to multilayer organic substrates, which is crucial for advanced packaging.
• The company is seeing growth in its Systems segment, driven by innovations in quantum computing and high-performance computing.
• FormFactor Inc (NASDAQ:FORM) has a strong leadership position in the silicon photonics lab space, with plans to expand into production for co-packaged optics.

Negative Points

• First quarter revenue and profitability were sequentially lower due to reduced demand for DRAM probe cards and systems.
• Tariffs are causing revenue and gross margin reductions, with an estimated mid-single-digit million-dollar impact on revenues.
• The company faces direct cost impacts from tariffs on goods imported from non-U.S. suppliers, affecting gross margins.
• Revenue from China continues to decline due to tariff increases and U.S. export controls, impacting overall revenue.
• FormFactor Inc (NASDAQ:FORM) is experiencing lower DRAM and Flash revenues, contributing to a decrease in overall probe card segment revenues.

Q & A Highlights

Q: Can you explain the impact of tariffs on revenue and gross margin? A: Shai Shahar, CFO, confirmed a mid-single-digit million-dollar reduction in revenues due to tariffs, particularly affecting multinational customers outside the free trade zone. The gross margin is expected to decrease by one percentage point in Q2 due to import tariffs on supplies from countries like Japan and Germany.

Q: How is the DRAM business performing, and what is driving growth? A: Michael Slessor, CEO, stated that all growth in DRAM is from High Bandwidth Memory (HBM), with non-HBM DRAM remaining flat. The growth is driven by continued strength in HBM3, acceleration of HBM4, and contributions from multiple HBM customers.

Q: What are the expectations for foundry and logic probe card demand in the second half of the year? A: Michael Slessor, CEO, mentioned that while tariffs and geopolitical issues create uncertainty, there is an expectation for growth in foundry and logic demand driven by consumer markets, assuming a rational outcome to the current trade situation.

Q: How is FormFactor positioned in the co-package optics (CPO) market? A: Michael Slessor, CEO, highlighted FormFactor's leadership in the lab space for silicon photonics and co-package optics, with plans to extend this to production. The company is collaborating closely with customers to optimize test insertions for CPO.

Q: What is the impact of the new FICT partnership on FormFactor's business? A: Michael Slessor, CEO, emphasized that the partnership with FICT provides access to unique multilayer organic substrate technology, crucial for advanced probe cards. The partnership is more about technology access than tariff impacts, as FICT's manufacturing is based in Japan.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.