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A month has gone by since the last earnings report for FormFactor (FORM). Shares have added about 12.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is FormFactor due for a pullback? 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 (FORM) Beats Earnings & Revenue Estimates in Q2
FormFactor Inc. reported second-quarter adjusted earnings of 27 cents per share, beating the Zacks Consensus Estimate by 3 cents. Also, earnings increased 75% sequentially but decreased 40% year over year.
Revenues decreased 5.9% from the year-ago quarter but were up 14.6% sequentially to $135.5 million, beating the Zacks Consensus Estimate of $134 million. The figure was within the company’s guided range of $130-$138 million.
Strong demand from the company’s largest customer aided second-quarter revenues.
Quarter Details
Probe card segment revenues were $111.6 million in the second quarter, up $16.7 million from the last reported quarter.
Within the probe card segment, Foundry & Logic revenues (46% of the revenues) increased on a sequential basis to $62.1 million. The increase was attributable to higher-than-anticipated revenues from the company’s largest customer.
During the quarter, FormFactor witnessed sequential increase in shipments of a new design to a foundry, which utilizes probe cards and advanced packaging applications at leading edge nodes. Moreover, probe card for RF applications increased in the second quarter.
Revenues for DRAM products (28% of the revenues) were $38.1 million, up 26%sequentially. Management stated that DRAM demand environment was robust in the quarter. Technology node transitions and a strong datacenter demand environment continued to positively impact probe card demand.
Flash revenues were $11.4 million, up sequentially. Almost half of the flash revenues were from NAND flash applications.
Systems revenues increased sequentially in the second quarter to $23.9 million.
Operating Details
On a non-GAAP basis, gross margin contracted170 basis points(bps) year over year but expanded 260 bps to 45.9%. The sequential increase was primarily due to a favorable product mix.
Non-GAAP operating expenses, including ERP implementation costs, were $39.6 million, up $3 million from the last reported quarter.
Balance Sheet & Cash Flow
As of Jun30, 2018, cash (comprising cash and cash equivalent as well as marketable securities) was $142.9 million compared with $142.1 million in the last reported quarter.
Cash from operations was $20.7 million compared with $9.3 million in the first quarter. Free cash flow was $16.8 million, up from $6.3 million in the last reported quarter.
Guidance
FormFactor expects third-quarter 2018 revenues between $130 million and $138 million.