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FormFactor (FORM - Free Report) delivered second-quarter 2023 adjusted earnings of 14 cents per share, which surpassed the Zacks Consensus Estimate by 16.7%. However, the bottom line decreased by 69.6% year over year.
Revenues of $155.92 million missed the Zacks Consensus Estimate of $162 million. The figure declined by 23.5% on a year-over-year basis.
The top-line decline was primarily attributed to softness in probe cards. Weak demand for DRAM, Flash and Foundry & Logic remained a concern.
Nevertheless, the company witnessed growing momentum in the systems business.
FormFactor, Inc. Price, Consensus and EPS Surprise
Probe card: Revenues from this segment were $115.3 million for the second quarter, down 31.2% year over year.
Foundry & Logic’s (accounting for 52.5% of revenues) revenues were $81.9 million, down 33.1% year over year.
Revenues for DRAM products (19.6% of revenues) were $30.5 million, reflecting a decrease of 17.1% year over year.
Flash’s revenues (1.9% of revenues) were $2.9 million, down 65.9% from the year-ago period’s level.
Systems: Revenues from this segment were $40.6 million (26% of revenues), up 12.1% year over year.
Regional Details
Revenues generated from the United States, Europe, Singapore and the Rest of the World were $42.7 million, $10.8 million, $2.8 million and $4.1 million, respectively. Revenues in the United States, Europe and the Rest of the World improved by 36.8%, 33.3% and 41.4% year over year, respectively. However, revenues in Singapore decreased by 60.6% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $29.5 million, $23.5 million, $27.9 million, $6.7 million and $7.9 million, respectively. Revenues from Taiwan, China, South Korea, Malaysia and Japan were down 41%, 52.7%, 3.1%, 58.6% and 20.2%, respectively, year over year.
Operating Results
On a non-GAAP basis, gross margin significantly contracted by 680 basis points (bps) year over year to 40.6% in the reported quarter.
Non-GAAP operating expenses decreased 4.4% year over year to $52.1 million. As a percentage of total second-quarter revenues, the metric expanded 670 bps year over year to 33.4%.
Non-GAAP operating margin was 7.2%, which contracted significantly from 20.7% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 1, 2023, cash and cash equivalents and marketable securities were $236.9 million compared with $236.3 million on Apr 1, 2023.
Cash generated from operating activities was $22.5 million for the reported quarter, up from $12.3 million in the previous quarter.
Capital expenditures were $20.5 million in the second quarter. Free cash flow was $2.1 million.
Guidance
FormFactor expects third-quarter 2023 revenues of $167 million (+/- $5 million). The Zacks Consensus Estimate for the same is currently pegged at $167.59 million.
Management expects a non-GAAP gross margin of 40% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 17 cents (+/- 4 cents) per share. The consensus mark for the same is pegged at 17 cents per share.
Zacks Rank & Stocks to Consider
Currently, FormFactor carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , each carrying a Zacks Rank #2.
Image: Bigstock
FormFactor's (FORM) Q2 Earnings Beat, Revenues Decline Y/Y
FormFactor (FORM - Free Report) delivered second-quarter 2023 adjusted earnings of 14 cents per share, which surpassed the Zacks Consensus Estimate by 16.7%. However, the bottom line decreased by 69.6% year over year.
Revenues of $155.92 million missed the Zacks Consensus Estimate of $162 million. The figure declined by 23.5% on a year-over-year basis.
The top-line decline was primarily attributed to softness in probe cards. Weak demand for DRAM, Flash and Foundry & Logic remained a concern.
Nevertheless, the company witnessed growing momentum in the systems business.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote
Segments in Detail
Probe card: Revenues from this segment were $115.3 million for the second quarter, down 31.2% year over year.
Foundry & Logic’s (accounting for 52.5% of revenues) revenues were $81.9 million, down 33.1% year over year.
Revenues for DRAM products (19.6% of revenues) were $30.5 million, reflecting a decrease of 17.1% year over year.
Flash’s revenues (1.9% of revenues) were $2.9 million, down 65.9% from the year-ago period’s level.
Systems: Revenues from this segment were $40.6 million (26% of revenues), up 12.1% year over year.
Regional Details
Revenues generated from the United States, Europe, Singapore and the Rest of the World were $42.7 million, $10.8 million, $2.8 million and $4.1 million, respectively. Revenues in the United States, Europe and the Rest of the World improved by 36.8%, 33.3% and 41.4% year over year, respectively. However, revenues in Singapore decreased by 60.6% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $29.5 million, $23.5 million, $27.9 million, $6.7 million and $7.9 million, respectively. Revenues from Taiwan, China, South Korea, Malaysia and Japan were down 41%, 52.7%, 3.1%, 58.6% and 20.2%, respectively, year over year.
Operating Results
On a non-GAAP basis, gross margin significantly contracted by 680 basis points (bps) year over year to 40.6% in the reported quarter.
Non-GAAP operating expenses decreased 4.4% year over year to $52.1 million. As a percentage of total second-quarter revenues, the metric expanded 670 bps year over year to 33.4%.
Non-GAAP operating margin was 7.2%, which contracted significantly from 20.7% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 1, 2023, cash and cash equivalents and marketable securities were $236.9 million compared with $236.3 million on Apr 1, 2023.
Cash generated from operating activities was $22.5 million for the reported quarter, up from $12.3 million in the previous quarter.
Capital expenditures were $20.5 million in the second quarter. Free cash flow was $2.1 million.
Guidance
FormFactor expects third-quarter 2023 revenues of $167 million (+/- $5 million). The Zacks Consensus Estimate for the same is currently pegged at $167.59 million.
Management expects a non-GAAP gross margin of 40% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 17 cents (+/- 4 cents) per share. The consensus mark for the same is pegged at 17 cents per share.
Zacks Rank & Stocks to Consider
Currently, FormFactor carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader technology sector are Salesforce (CRM - Free Report) , AvidXchange (AVDX - Free Report) and Akamai Technologies (AKAM - Free Report) , each carrying a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Salesforce shares have gained 70.7% in the year-to-date period. The long-term earnings growth rate for CRM is currently projected at 19.25%.
AvidXchange shares have increased 21.1% in the year-to-date period. The long-term earnings growth rate for AVDX is currently projected at 22.90%.
Akamai shares have gained 9.5% in the year-to-date period. The long-term earnings growth rate for AKAM is currently projected at 10%.