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FormFactor (FORM) Q1 Earnings & Revenues Beat Estimates

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FormFactor Inc. (FORM - Free Report) reported first-quarter adjusted earnings of 33 cents per share, beating the Zacks Consensus Estimate of 21 cents. The figure decreased 19.5% sequentially but increased 65% year over year.

Revenues increased 21.6% from the year-ago quarter but decreased 10% sequentially to $160.8 million. The top line outpaced the Zacks Consensus Estimate by 14.7%.

The top line was driven by strong demand for both Foundry & Logic probe cards. Customer node transitions and new design releases also aided revenues.

Management continues to expect strong demand for Foundry & Logic probe cards in the near term. Though the company saw a sequential reduction in DRAM probe card demand in the first quarter, it expects long-term DRAM probe card demand to likely remain solid.

FormFactor Inc Price, Consensus and EPS Surprise

 

Quarter Details

Probe card segment revenues were $135 million in the first quarter, down 12% from the fourth quarter.

Within the probe card segment, Foundry & Logic sales (accounting for 66% of its total revenues) increased 1% on a sequential basis to $106 million.

Revenues for DRAM products (15% of revenues) were $25 million, down $18 million from the fourth quarter.

Flash revenues were $4.3 million, down on a sequential basis.

Systems revenues in the first quarter were $26 million, up 2% sequentially.

Operating Details

On a non-GAAP basis, gross margin expanded 40 basis points (bps) year over year and 200 bps sequentially to 46.1%. The increase was mainly due to higher gross margin in the Systems segment.

Non-GAAP operating expenses were $42.7 million in the first quarter, up from $38.1 million in the prior-year period. The increase was due to higher R&D investments.

Balance Sheet & Cash Flow

At the end of the first quarter, cash and cash equivalents, as well as marketable securities were $239.4 million compared with $220.9 million in the fourth quarter.

Cash flow from operations was $39.3 million in the first quarter versus $37.7 million in the fourth quarter. Free cash flow was $27.6 million, down from $31.6 million in the fourth quarter.

Guidance

FormFactor did not provide any guidance for the second quarter due to risks and uncertainties related to the COVID-19 crisis.

Zacks Rank & Stocks to Consider

Currently, FormFactor carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Akamai Technologies, Inc. (AKAM - Free Report) , Inuvo, Inc. (INUV - Free Report) and Shopify Inc. (SHOP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Akamai, Inuvo, and Shopify is currently projected at 12.3%, 30% and 25.8%, respectively.

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