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FormFactor (FORM - Free Report) reported first-quarter 2023 adjusted earnings of 16 cents per share, which surpassed the Zacks Consensus Estimate by 23.1%. However, the bottom line decreased 67.3% year over year.
Revenues of $167.4 million surpassed the Zacks Consensus Estimate of $162.2 million. However, the figure declined 15.1% on a year-over-year basis.
Weak demand in DRAM and Flash acted as an offset. Further, softness in Foundry & Logic was a concern.
Nevertheless, strength in Systems was a positive.
Segments in Detail
Probe card: Revenues from this segment were $127.3 million for the first quarter, down 20.4% year over year.
Foundry & Logic’s (accounting for 60.7% of revenues) revenues were $101.6 million, down 11% year over year.
Revenues for DRAM products (11.8% of revenues) were $19.8 million, reflecting a decrease of 42.6% year over year.
Flash revenues (3.5% of revenues) were $5.9 million, down 48.2% from the year-ago period’s level.
Systems: Revenues from this segment were $40.1 million (24% of revenues), up 7.8% year over year.
FormFactor, Inc. Price, Consensus and EPS Surprise
Revenues generated from the United States, Europe, Singapore, and the Rest of World were $37.7 million, $9.4 million, $5.3 million and $4.5 million, respectively. Revenues in the United States, Europe and the Rest of World increased 47.3%, 11.9% and 164.7%, respectively while revenues in Singapore decreased 51.4% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $40.3 million, $27.1 million, $20.8 million, $11.3 million and $11 million, respectively. Revenues from Taiwan, China, South Korea, and Malaysia were down 24.1%, 29.4%, 24.4% and 49.1%, respectively, year over year.
Revenues from Japan were up 17% from the year-ago quarter.
Operating Results
On a non-GAAP basis, the gross margin contracted significantly from 49% in the year-ago quarter to 38.4% in the reported quarter.
Non-GAAP operating expenses decreased 1.4% year over year to $51.2 million. As a percentage of revenues, the metric expanded 430 basis points (bps) year over year to 30.6%.
Non-GAAP operating margin was 7.9%, which contracted significantly from 22.7% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Apr 1, 2023, cash and cash equivalents and marketable securities were $236.3 million compared with $238.1 million on Dec 31, 2022.
Cash generated from operating activities was $12.3 million for the reported quarter, down from $44.2 million in the previous quarter.
Capital expenditure was $19.7 million in the first quarter. Free cash flow was an outflow of $7.3 million.
Guidance
FormFactor expects second-quarter 2023 revenues of $162 million (+/- $5 million). The Zacks Consensus Estimate for the same is currently pegged at $165.83 million.
Management expects a non-GAAP gross margin of 38% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 12 cents (+/- 4 cents) per share. The consensus mark for the metric is pegged at 16 cents per share.
For the second quarter, the company expects higher revenues for DRAM but lower revenues for Foundry & Logic.
The Systems business is anticipated to witness record revenues in the second quarter.
Zacks Rank & Stocks to Consider
Currently, FormFactor carries a Zacks Rank #3 (Hold).
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, implying growth of 12.4% from the year-ago quarter’s reported figure. A has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Paycor HCM is scheduled to report third-quarter fiscal 2023 results on May 10. The Zacks Consensus Estimate for PYCR’s earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the prior-year quarter’s reported figure. PYCR has gained 26% in the year-to-date period.
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FormFactor's (FORM) Q1 Earnings Beat, Revenues Decline Y/Y
FormFactor (FORM - Free Report) reported first-quarter 2023 adjusted earnings of 16 cents per share, which surpassed the Zacks Consensus Estimate by 23.1%. However, the bottom line decreased 67.3% year over year.
Revenues of $167.4 million surpassed the Zacks Consensus Estimate of $162.2 million. However, the figure declined 15.1% on a year-over-year basis.
Weak demand in DRAM and Flash acted as an offset. Further, softness in Foundry & Logic was a concern.
Nevertheless, strength in Systems was a positive.
Segments in Detail
Probe card: Revenues from this segment were $127.3 million for the first quarter, down 20.4% year over year.
Foundry & Logic’s (accounting for 60.7% of revenues) revenues were $101.6 million, down 11% year over year.
Revenues for DRAM products (11.8% of revenues) were $19.8 million, reflecting a decrease of 42.6% year over year.
Flash revenues (3.5% of revenues) were $5.9 million, down 48.2% from the year-ago period’s level.
Systems: Revenues from this segment were $40.1 million (24% of revenues), up 7.8% year over year.
FormFactor, Inc. Price, Consensus and EPS Surprise
FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. Quote
Regional Details
Revenues generated from the United States, Europe, Singapore, and the Rest of World were $37.7 million, $9.4 million, $5.3 million and $4.5 million, respectively. Revenues in the United States, Europe and the Rest of World increased 47.3%, 11.9% and 164.7%, respectively while revenues in Singapore decreased 51.4% year over year.
Revenues generated from Taiwan, China, South Korea, Malaysia and Japan were $40.3 million, $27.1 million, $20.8 million, $11.3 million and $11 million, respectively. Revenues from Taiwan, China, South Korea, and Malaysia were down 24.1%, 29.4%, 24.4% and 49.1%, respectively, year over year.
Revenues from Japan were up 17% from the year-ago quarter.
Operating Results
On a non-GAAP basis, the gross margin contracted significantly from 49% in the year-ago quarter to 38.4% in the reported quarter.
Non-GAAP operating expenses decreased 1.4% year over year to $51.2 million. As a percentage of revenues, the metric expanded 430 basis points (bps) year over year to 30.6%.
Non-GAAP operating margin was 7.9%, which contracted significantly from 22.7% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Apr 1, 2023, cash and cash equivalents and marketable securities were $236.3 million compared with $238.1 million on Dec 31, 2022.
Cash generated from operating activities was $12.3 million for the reported quarter, down from $44.2 million in the previous quarter.
Capital expenditure was $19.7 million in the first quarter. Free cash flow was an outflow of $7.3 million.
Guidance
FormFactor expects second-quarter 2023 revenues of $162 million (+/- $5 million). The Zacks Consensus Estimate for the same is currently pegged at $165.83 million.
Management expects a non-GAAP gross margin of 38% (+/- 1.5%).
On a non-GAAP basis, it projects earnings of 12 cents (+/- 4 cents) per share. The consensus mark for the metric is pegged at 16 cents per share.
For the second quarter, the company expects higher revenues for DRAM but lower revenues for Foundry & Logic.
The Systems business is anticipated to witness record revenues in the second quarter.
Zacks Rank & Stocks to Consider
Currently, FormFactor carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Agilent Technologies (A - Free Report) , DigitalOcean (DOCN - Free Report) and Paycor HCM (PYCR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent Technologies is set to report second-quarter fiscal 2023 results on May 23. The Zacks Consensus Estimate for A’s earnings is pegged at $1.27 per share, implying growth of 12.4% from the year-ago quarter’s reported figure. A has lost 11.6% in the year-to-date period.
DigitalOcean is scheduled to release first-quarter 2023 results on May 9. The Zacks Consensus Estimate for DOCN’s earnings is pegged at 29 cents per share, suggesting a jump from 7 cents per share reported in the prior-year quarter. DOCN has gained 25.5% in the year-to-date period.
Paycor HCM is scheduled to report third-quarter fiscal 2023 results on May 10. The Zacks Consensus Estimate for PYCR’s earnings is pegged at 15 cents per share, suggesting an increase of 36.4% from the prior-year quarter’s reported figure. PYCR has gained 26% in the year-to-date period.