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.

Following 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 Details

Probe 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 Results

In 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 Flow

As 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 Guidance

FormFactor 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 Consider

The 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.

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 Report

To read this article on Zacks.com click here.

Zacks Investment Research