FormFactor shares fall 11.65% after record results and lower fourth-quarter margin outlook
Key Facts
FormFactor shares fell 11.65% to $97.46 in the October 29 session, after closing at $110.31 in the previous session, with trading volume of 3.16 million shares. The decline came a day after the company reported third-quarter fiscal results for the period ended September 26, with revenue of $280.5 million. The company said revenue, gross margin and earnings per share exceeded the high end of its guidance for the quarter. But its published fourth-quarter outlook included a non-GAAP gross margin below the level recorded in the third quarter. The company did not explain the share-price movement in its results statement.
Third-quarter revenue rose 8.6% from $258.2 million in the second quarter and 38.4% from $202.7 million in the same period of 2025. FormFactor said the third quarter was its fourth consecutive quarter of record revenue, and its chief executive described the results as revenue, gross margin and earnings-per-share growth above the high end of the company’s guidance. GAAP net income was $73.8 million, or $0.93 per diluted share. On a non-GAAP basis, net income was $82.3 million and diluted earnings per share were $1.04. Free cash flow also rose to $64.8 million, compared with $52.6 million in the second quarter and $19.7 million in the third quarter of 2025.
GAAP gross margin improved to 54.7% in the third quarter, from 50.7% in the previous quarter and 39.8% a year earlier. Non-GAAP gross margin was 56.5%, compared with 53.3% in the second quarter and 41.0% in the same period of 2025. For the fourth quarter, the company set a non-GAAP gross margin outlook of 54.0%, with a range of 1.5 percentage points in either direction. It also forecast revenue of $285 million, plus or minus $10 million, and non-GAAP diluted earnings per share of $0.95, plus or minus $0.09. The fourth fiscal quarter ends on December 26, 2026.
By segment, Foundry & Logic revenue grew 10% from the previous quarter, while systems revenue rose more than 20% as demand increased for systems that combine optics with the package. Probe card revenue was $221.1 million, compared with $209.7 million in the second quarter and $166.4 million in the third quarter of 2025. Systems revenue was $59.5 million, compared with $48.5 million and $36.3 million in the corresponding periods. The company had described demand as broad-based in its second-quarter results, citing strength in its high-bandwidth memory and co-packaged optics initiatives. It said at the time that demand supported sequential increases in probe card and systems revenue, respectively.
Management said productivity gains across its existing manufacturing footprint are slowing as the facility approaches its capacity limits, and that the new Farmers Branch facility will add production capacity to support growth. The company opened the facility on October 22, saying the investment expands its ability to produce advanced probe cards. It linked the need for advanced test solutions to the rapid adoption of advanced packaging for high-performance computing chips, including GPU modules, custom ASIC chips and HBM. In its second-quarter statement, the chief executive said revenue had grown more than 30% over the previous four quarters, non-GAAP gross margin had expanded by 1,500 basis points, and earnings per share had tripled. The company places the new expansion within its plan to keep pace with demand as its current facility approaches its capacity limits.
The company said its fourth-quarter outlook reflects continued broad-based demand strength and that the Farmers Branch facility is progressing toward its initial target capacity as planned. The outlook puts quarterly revenue at $285 million, plus or minus $10 million. It also indicates a non-GAAP gross margin of 54.0%, with a range of 1.5 percentage points in either direction. Non-GAAP diluted earnings per share are estimated at $0.95, plus or minus $0.09. The guidance covers the fiscal quarter ending December 26, 2026.