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.
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%.
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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.
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%.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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