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FormFactor (FORM - Free Report) delivered fourth-quarter 2023 adjusted earnings of 20 cents per share, in line with the Zacks Consensus Estimate. The bottom-line figure increased by 15 cents from the year-ago quarter’s levels.
Revenues of $168.2 million beat the Zacks Consensus Estimate by 1.62% and increased 1.3% on a year-over-year basis. The top-line growth can primarily be attributed to growth in probe cards.
Formfactor’s success can also be attributed to advanced packaging applications like chiplets and tiles, high-bandwidth memory and co-packaged optics.
FormFactor, Inc. Price, Consensus and EPS Surprise
Probe card revenues were $127 million, up 2.1% year over year.
Foundry & Logic (accounting for 49.8% of revenues) revenues were $83.8 million, up 2.1% year over year.
The adoption of advanced packaging processes by major foundry and logic customers contributed to higher test intensity and complexity, positively impacting the foundry and logic probe card market.
DRAM revenues (21.3% of revenues) were $35.9 million, up 31.5% year over year. The upside was driven by the introduction of new DDR5 DRAM designs and the rising demand for probe cards used in testing high-bandwidth memory (HBM), a key enabler supporting the advancement of generative AI.
Flash revenues (4.3% of revenues) were $7.3 million, down 51.3% year over year.
Systems revenues (24.5% of revenues) were $41.2 million, down 1% year over year. The reduction in the system revenues was mainly due to the divestiture of the FRT metrology business.
FormFactor's Systems business maintained momentum driven by strong demand for test and measurement solutions in emerging fields such as co-packaged silicon photonics and quantum computing.
Regionally, revenues generated from the United States, Taiwan and South Korea increased 45.4%, 17.1% and 29.8% year over year, respectively.
Revenues generated from China, Europe, Japan, Malaysia, Singapore and the Rest of World were down 45.8%, 15.5%, 4.4%, 47.1%, 40.9% and 3.6%, respectively, year over year.
Operating Results
In fourth-quarter 2023, gross margin increased 1030 basis points (bps) year over year to 42.1% in the reported quarter.
Non-GAAP operating expenses increased 7.8% year over year to $51.6 million. As a percentage of revenues, operating expenses were 180 bps year over year to 30.7%.
The non-GAAP operating margin increased 850 bps year over year to 11.4%.
Balance Sheet & Cash Flow
As of Dec 30, 2023, cash and cash equivalents and marketable securities were $328.3 million compared with $244.4 million on Sep 30, 2023.
Cash generated from operating activities was $9.25 million for the reported quarter, down from $20.6 million in the previous quarter.
Free cash outflow was $310,000 for the reported quarter, down from $16.9 million reported in the previous quarter.
Guidance
FormFactor expects first-quarter 2024 revenues of $165 million (+/- $5 million).
The company expects a non-GAAP gross margin of 41% (+/- 1.5%).
On a non-GAAP basis, FormFactor expects earnings of 19 cents (+/- 4 cents) per share
Zacks Rank & Stocks to Consider
FormFactor currently carries a Zacks Rank #3 (Hold).
FORM’s shares have underperformed the Zacks Computer & Technology sector year to date. Shares have declined 8.6%, while the broader sector gained 5.7%.
Image: Bigstock
FormFactor (FORM) Q4 Earnings Meet Estimates, Revenues Rise
FormFactor (FORM - Free Report) delivered fourth-quarter 2023 adjusted earnings of 20 cents per share, in line with the Zacks Consensus Estimate. The bottom-line figure increased by 15 cents from the year-ago quarter’s levels.
Revenues of $168.2 million beat the Zacks Consensus Estimate by 1.62% and increased 1.3% on a year-over-year basis. The top-line growth can primarily be attributed to growth in probe cards.
Formfactor’s success can also be attributed to advanced packaging applications like chiplets and tiles, high-bandwidth memory and co-packaged optics.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote
Segments in Detail
Probe card revenues were $127 million, up 2.1% year over year.
Foundry & Logic (accounting for 49.8% of revenues) revenues were $83.8 million, up 2.1% year over year.
The adoption of advanced packaging processes by major foundry and logic customers contributed to higher test intensity and complexity, positively impacting the foundry and logic probe card market.
DRAM revenues (21.3% of revenues) were $35.9 million, up 31.5% year over year. The upside was driven by the introduction of new DDR5 DRAM designs and the rising demand for probe cards used in testing high-bandwidth memory (HBM), a key enabler supporting the advancement of generative AI.
Flash revenues (4.3% of revenues) were $7.3 million, down 51.3% year over year.
Systems revenues (24.5% of revenues) were $41.2 million, down 1% year over year. The reduction in the system revenues was mainly due to the divestiture of the FRT metrology business.
FormFactor's Systems business maintained momentum driven by strong demand for test and measurement solutions in emerging fields such as co-packaged silicon photonics and quantum computing.
Regionally, revenues generated from the United States, Taiwan and South Korea increased 45.4%, 17.1% and 29.8% year over year, respectively.
Revenues generated from China, Europe, Japan, Malaysia, Singapore and the Rest of World were down 45.8%, 15.5%, 4.4%, 47.1%, 40.9% and 3.6%, respectively, year over year.
Operating Results
In fourth-quarter 2023, gross margin increased 1030 basis points (bps) year over year to 42.1% in the reported quarter.
Non-GAAP operating expenses increased 7.8% year over year to $51.6 million. As a percentage of revenues, operating expenses were 180 bps year over year to 30.7%.
The non-GAAP operating margin increased 850 bps year over year to 11.4%.
Balance Sheet & Cash Flow
As of Dec 30, 2023, cash and cash equivalents and marketable securities were $328.3 million compared with $244.4 million on Sep 30, 2023.
Cash generated from operating activities was $9.25 million for the reported quarter, down from $20.6 million in the previous quarter.
Free cash outflow was $310,000 for the reported quarter, down from $16.9 million reported in the previous quarter.
Guidance
FormFactor expects first-quarter 2024 revenues of $165 million (+/- $5 million).
The company expects a non-GAAP gross margin of 41% (+/- 1.5%).
On a non-GAAP basis, FormFactor expects earnings of 19 cents (+/- 4 cents) per share
Zacks Rank & Stocks to Consider
FormFactor currently carries a Zacks Rank #3 (Hold).
FORM’s shares have underperformed the Zacks Computer & Technology sector year to date. Shares have declined 8.6%, while the broader sector gained 5.7%.
Blackline (BL - Free Report) , AvidXchange (AVDX - Free Report) and Shopify (SHOP - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Blackline’s shares have declined 3.5% in the year-to-date period. BL is set to report its fourth-quarter 2023 results on Feb 13.
AvidXchange’s shares have declined 6.4% in the year-to-date period. AVDX is set to report its fourth-quarter 2023 results on Feb 28.
Shopify’s shares have increased 9.3% in the year-to-date period. SHOP is set to report its fourth-quarter 2023 results on Feb 13.