FormFactor 2025 Q1 Earnings Revenue Growth Amidst Declining Net Income

FormFactor (FORM) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The company saw a slight revenue increase of 1.6% to $171.36 million, surpassing analyst expectations of $170.03 million. However, net income significantly decreased, and EPS fell short of last year's figures. Despite a challenging first quarter, FormFactor has issued an optimistic guidance for Q2 2025, anticipating revenue growth driven by strategic areas amid current uncertainties. The guidance adjustment reflects the company's confidence in overcoming present challenges while aiming for double-digit sequential growth.

Revenue
FormFactor's total revenue increased by 1.6% to reach $171.36 million in Q1 2025, compared to $168.72 million in Q1 2024. The Probe Cards segment generated $136.52 million, representing the bulk of the revenue, while the Systems segment contributed $34.84 million. The Corporate and Other segment did not report any revenue, maintaining its position from the previous quarter.

Earnings/Net Income
FormFactor's EPS declined by 71.4%, falling to $0.08 in 2025 Q1 from $0.28 in 2024 Q1. Concurrently, net income experienced a substantial decrease, dropping to $6.40 million in 2025 Q1 from $21.78 million in 2024 Q1. The report indicates a disappointing EPS performance compared to the previous year.

Price Action
The stock price of FormFactor edged down by 0.10% during the latest trading day, climbed 5.27% during the most recent full trading week, and surged 16.36% month-to-date.

Post-Earnings Price Action Review
Investors adopting the strategy of acquiring FormFactor shares post-revenue increase and holding for 30 days realized a 13.07% return over the past five years. This return trails the benchmark return of 83.12%, reflecting a compound annual growth rate (CAGR) of 2.52%. The strategy encountered a maximum drawdown of -10.77% and a Sharpe ratio of 0.29, indicating moderate risk and returns. Despite the strategy's underperformance against the benchmark, it suggests potential for steady, albeit modest, gains in the context of sustained revenue growth scenarios.

CEO Commentary
“As expected, FormFactor reported sequentially lower first-quarter revenue and profitability due to anticipated reductions in demand for both DRAM probe cards and Systems,” said Mike Slessor, CEO of FormFactor, Inc. He expressed confidence in the long-term growth prospects for the company and the semiconductor industry, highlighting that growth will be driven by fundamental trends such as Advanced Packaging, High-Bandwidth-Memory, and Co-Packaged Optics. Slessor emphasized the importance of these strategic areas amid current challenges, maintaining an optimistic outlook despite the impact of export controls on DRAM shipments to China.

Guidance
For Q2 2025, FormFactor expects revenue of $190 million (±$5 million), indicating double-digit sequential growth. The projected gross margin is 38.5% (±1.5%), with non-GAAP EPS anticipated to be $0.30 (±$0.04). The company aims to achieve these targets across all major served markets and segments, despite uncertainties related to tariffs.

Additional News
FormFactor has announced a strategic move with the acquisition of a minority interest in FICT Limited, a key supplier of advanced probe card components. This acquisition is expected to enhance FormFactor's manufacturing capabilities and position within the semiconductor industry. Additionally, the company's Board of Directors has authorized a $75 million stock repurchase plan, set to expire on April 23, 2027, allowing for repurchases in the open market and through private negotiations. This initiative underscores FormFactor’s commitment to returning value to shareholders amidst current market fluctuations.