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Investing.com -- FormFactor, Inc. (NASDAQ:FORM) reported third-quarter earnings that exceeded analyst expectations and provided an upbeat outlook for the fourth quarter, sending shares soaring 9% in after-hours trading on Wednesday.
The semiconductor testing equipment supplier posted adjusted earnings of $0.33 per share for the quarter ended September 27, significantly beating the analyst consensus of $0.25. Revenue came in at $202.7 million, surpassing estimates of $199.97 million, though representing a 2.5% decrease YoY from $207.9 million. The company’s performance showed sequential improvement with revenue increasing 3.5% from the second quarter’s $195.8 million.
FormFactor ’s stock jumped 9% after hours following the strong results and guidance that exceeded Wall Street expectations. For the fourth quarter, the company forecasts revenue of $210 million (±$5 million), above the consensus estimate of $208 million, and adjusted earnings of $0.35 (±$0.04) per share, well above analyst expectations of $0.29.
"We are focused on, and committed to, improving our profitability as we return to a path to our target model," said Mike Slessor, CEO of FormFactor. "We are executing a program of rapid and immediate gross margin improvement actions that have already produced the 250 basis point increase from the second quarter, and which we anticipate will continue in the fourth quarter and throughout next year."
The company highlighted that DRAM probe cards achieved expected double-digit sequential growth, reaching a new record primarily from growth in High Bandwidth Memory (HBM). FormFactor’s Systems Segment delivered its anticipated third quarter revenue increase, with additional growth expected in the fourth quarter.
Gross margin improved to 41.0% on a non-GAAP basis, up from 38.5% in the second quarter but down from 42.2% in the same quarter last year. Free cash flow for the third quarter was $19.7 million, a significant improvement from negative $47.1 million in the previous quarter.
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