FormFactor, Inc. (FORM) Earnings & Analysis

Latest quarter

FormFactor reported Q2 FY2026 revenue of $258.2 million, up from $195.8 million a year earlier and above its own guidance range. Diluted earnings per share rose to $0.71 from $0.12.

The company’s filing attributed growth in Foundry & Logic revenue to demand for networking and high-performance computing probe cards. DRAM revenue grew primarily because of demand for high-bandwidth memory designs used in generative AI, while Flash revenue declined as customer production activity and demand fell. The filing said sales of the Triton co-packaged-optics testing system drove Systems revenue growth.

FormFactor reported gross margin of 50.7%, compared with 37.3% a year earlier, and operating margin of 22.4%, compared with 6.29%. The filing attributed higher gross margins partly to product mix and factory utilization. Free cash flow was $52.7 million, compared with −$47.3 million a year earlier.

For the separate quarter ended September 2026, FormFactor reported revenue of $280.6 million against consensus of $270.6 million. Adjusted earnings per share were $1.04 against consensus of $0.86.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the Q1 2026 earnings call, CEO Mike Slessor said demand for DRAM probe cards had risen alongside high-bandwidth memory and DDR applications. For Q2, he expected HBM demand to increase further as a second customer adopted more of FormFactor’s Smart Matrix technology for stack testing. He also expected foundry and logic probe-card revenue to grow, led by data-center CPU applications alongside networking demand.

Asked about pricing and margins, Slessor said pricing was not a major driver of the improvement. He attributed it to lower manufacturing costs, better yields and shorter cycle times, although he said some customers were paying expedite fees for particular designs. He also said short lead times made demand visibility challenging, prompting more active discussions with customers.

CFO Aric McKinnis said the company had improved margins through workforce deployment, manufacturing yields, lower spending and shorter cycle times. He said some Q1 outperformance reflected timing, while faster restructuring savings and tariff relief accounted for another portion. McKinnis expected further gains to come at a more moderate pace.

On capacity, Slessor said FormFactor was operating at high utilization and preparing for GPU-related shipments and local support in the second half. McKinnis said the Farmers Branch expansion was expected to begin coming online later in 2026 and ramp during 2027. He said the company had prioritized cash for that ramp.

Asked about co-packaged optics, Slessor said FormFactor was focusing its initial production ramp on the first optical test insertion while discussing other insertions with partners and customers. He deferred a longer-term revenue opportunity discussion to Investor Day. On DRAM competition, he said FormFactor’s longer-term aim was to supply all major manufacturers for at-speed testing.

Guidance

On the Q1 call, Slessor said FormFactor expected 2026 co-packaged-optics revenue at the high end of its previously communicated $10.0 million to $20.0 million range.