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It has been about a month since the last earnings report for FormFactor (FORM). Shares have lost about 16.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FormFactor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
FormFactor Q4 Earnings Miss Estimates, Revenue Up Y/Y
FormFactor delivered fourth-quarter 2024 adjusted earnings of 27 cents per share, missing the Zacks Consensus Estimate by 6.90%. The bottom line increased 35% from the year-ago quarter.
Revenues of $189.5 million missed the Zacks Consensus Estimate by 19% and increased 12.7% year over year. The rise was driven by continued strength in the DRAM probe-card business, which surged 77.2% year over year.
However, FormFactor reported an 8.9% sequential decline in fourth-quarter revenues due to reduced Foundry & Logic probe-card sales.
FormFactor’s Segmental Details
Probe card revenues were $150.6 million, up 18.6% year over year.
Foundry & Logic revenues (44% of the total revenues) were $83.3 million, down 0.6% year over year.
DRAM revenues (33.6% of the total revenues) were $63.6 million, up 77.2% year over year. Strong demand drove a third consecutive record-setting quarter for DRAM probe-card revenues.
Flash revenues (2% of the total revenues) were $3.7 million. The reported figure fell 49.3% year over year.
Systems revenues (20.7% of the total revenues) were $39.2 million, down 4.9% year over year.
Revenues generated from Malaysia, Taiwan, China, the rest of the world, South Korea and Europe increased 66.7%, 45.4%, 43.3%, 40.7%, 26.5% and 1.1%, respectively, year over year.
However, revenues from the United States, Singapore and Japan declined 26.6%, 16.9% and 11%, respectively, year over year.
FORM’s Operating Results
In the fourth quarter of 2024, the gross margin contracted 190 basis points (bps) year over year to 40.2%.
Non-GAAP operating expenses increased 7% year over year to $55.2 million. As a percentage of revenues, operating expenses were down 150 bps year over year to 29.1%.
The non-GAAP operating margin compressed 40 bps year over year to 11%.
FormFactor’s Balance Sheet & Cash Flow
As of Dec. 28, 2024, cash and cash equivalents, and marketable securities were $360.0 million compared with $354.5 million as of Sept. 28, 2024.
Cash generated from operating activities was $35.9 million in the reported quarter, up from $9.2 million in the previous quarter.
The free cash flow was $28.8 million in the reported quarter compared with $20 million in the previous quarter. This increase was led by higher operating cash flows, primarily driven by greater non-cash expenses of $8 million, a $10.2-million reduction in working capital outflows and a $1.3-million decrease in capital expenditure.