FORM's Q4 Earnings Miss Estimates, Stock Declines on Cautious Outlook

FormFactor FORM 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.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.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, Inc. Price, Consensus and EPS Surprise  FormFactor, Inc. price-consensus-eps-surprise-chart | FormFactor, Inc. QuoteFollowing the results, KLAC shares fell 27.07% in after-hours trading on Feb. 5, as weak demand in high-volume markets like client PCs and mobile handsets, along with anticipated sequential declines in non-HBM DRAM probe cards and Systems, impacted the first-quarter 2025 guidance.FormFactor’s Segmental DetailsProbe 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 ResultsIn 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 FlowAs 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.FORM’s Q1 GuidanceFormFactor is facing headwinds due to weaker demand in high-volume markets like client PCs and mobile handsets. The expected sequential decline in demand for non-HBM DRAM probe cards and Systems further reinforces a cautious outlook for the first quarter of 2025.FORM expects first-quarter 2025 revenues of $170 million (+/- $5 million). The Zacks Consensus Estimate is pegged at $192.72 million, indicating 14.22% growth from the figure reported in the year-ago quarter.The company expects a non-GAAP gross margin of 38% (+/- 1.5%).On a non-GAAP basis, FORM expects earnings of 19 cents (+/- 4 cents) per share. The Zacks Consensus Estimate is pegged at 33 cents per share, indicating 83.33% growth from the figure reported in the year-ago quarter.FormFactor’s Zacks Rank & Other Stocks to ConsiderThe company currently carries a Zacks Rank #2 (Buy).Twilio TWLO, JFrog FROG and Quantum QMCO are some other top-ranked stocks in the broader sector.Twilio sports a Zacks Rank #1 (Strong Buy), whereas JFrog and Quantum carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.Twilio shares have soared 113.1% over the past year. TWLO is set to report fourth-quarter 2024 results on Feb. 13.Shares of Quantum have skyrocketed 183.6% over the past year. QCOM is set to report third-quarter fiscal 2025 results on Feb. 12.JFrog shares have returned 5.1% over the past year. FROG is set to post fourth-quarter fiscal 2024 results on Feb. 13.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FormFactor, Inc. (FORM): Free Stock Analysis Report Twilio Inc. (TWLO): Free Stock Analysis Report Quantum Corporation (QMCO): Free Stock Analysis Report JFrog Ltd. (FROG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks