FormFactor Posts Record Revenue as Margins Widen
Non-GAAP gross margin reached 53.3%, extending four consecutive quarters of improvement.
FormFactor Inc. (FORM), the semiconductor-testing supplier, posted record second-quarter revenue as demand for High Bandwidth Memory and Co-Packaged Optics lifted both operating segments.
Revenue rose 31.9% from a year earlier to $258.2 million and increased 14.2% sequentially, accelerating from 5.1% growth in the first quarter. GAAP diluted earnings climbed to $0.71 a share from $0.12 a year earlier, while adjusted earnings increased to $0.82 a share from $0.27.
The results topped each of FormFactor's prior outlook ranges. Revenue exceeded the high end by $13.2 million, while adjusted gross margin finished 2.3 percentage points above the company's upper bound and adjusted earnings beat it by $0.17 a share.
Probe Cards benefited from HBM demand, extending the momentum established by record DRAM revenue in the previous quarter. Systems gained from Co-Packaged Optics, an area FormFactor expanded through a multi-year partnership with Keystone Microtech after announcing the strategic acquisition of Keystone Photonics in the fourth quarter.
Profit growth outpaced the increase in expenses. GAAP operating income rose to $57.8 million from $12.3 million a year earlier, and adjusted operating income more than tripled to $72.0 million as adjusted operating expenses increased to $65.7 million from $52.5 million.
Lower restructuring costs contributed much of the GAAP margin improvement. Charges included in gross profit fell to $4.3 million from $21.5 million sequentially, while factory start-up costs declined to $4.9 million from $7.1 million. Operating cash flow increased to $61.8 million, and free cash flow reached $52.6 million as capital spending fell.
FormFactor's third-quarter outlook calls for another revenue record, with a midpoint of $270 million implying about 4.6% sequential growth. The company expects particular strength in Foundry & Logic and continued Systems momentum, while its outlook centers on a 54.0% adjusted gross margin and adjusted earnings of $0.86 a share.