FormFactor, Inc.

Q1 2026 revenue was $226.1 million, up sequentially to another record and $1.1 million above the midpoint of the $220 million to $230 million outlook range. GAAP gross margin was 38.4%, down 380 basis points from 42.2% in Q4 2025; non-GAAP gross margin was 49%, up 510 basis points from 43.9% in Q4 and 250 basis points above the high end of outlook. GAAP net income was $20.4 million, or $0.26 per diluted share, versus $23.2 million, or $0.29, in Q4; non-GAAP net income was $44.5 million, or $0.56 per diluted share, versus $36.6 million, or $0.46. Free cash flow was $30.7 million, cash flow from operations was $45 million, and quarter-end cash and investments were $303 million. For Q2 2026, the company expects revenue of $240 million plus or minus $5 million, non-GAAP gross margin of 49.5% plus or minus 150 basis points, non-GAAP operating expenses of $65 million plus or minus $2 million, a non-GAAP tax rate of 15% to 19%, and non-GAAP EPS of $0.61 plus or minus $0.04. Management also said Q2 gross margin outlook includes about 140 basis points of tariff impact, and that if previously paid tariffs become recoverable, the company could receive a refund of $9 million to $11 million.

Mike Slessor framed the quarter as evidence that FormFactor’s positioning at the intersection of high-performance compute and advanced packaging is working, with growth coming from HBM, networking, GPUs, co-packaged optics, and custom ASICs. He emphasized that execution has improved materially versus prior periods and said the company is entering its Investor Day with confidence and a new target model to discuss on May 11. His tone was upbeat but measured, repeatedly pointing to capacity constraints until Farmers Branch comes online later this year and ramps through 2027.

Aric McKinnis focused on gross margin expansion and operating discipline, saying the company achieved its 47% gross margin target model on a run-rate basis in Q1. He attributed the improvement to better workforce deployment, manufacturing yield gains, lower manufacturing spending, shorter cycle times, and restructuring actions, while noting that about half of the Q1 outperformance versus outlook was timing-related and half was durable. He highlighted Q1 free cash flow of $30.7 million, cash and investments of $303 million, planned 2026 Farmers Branch cash CapEx of $140 million to $170 million, and preproduction ramp costs and G&A of $20 million to $25 million, while reiterating that the company paused buybacks in Q1 and still has $70.9 million of authorization remaining.

Analysts pressed on whether the recent revenue strength is being capped by manufacturing capacity until Farmers Branch opens, and management said there is still room to improve output through yields, cycle times, and workforce efficiency, though the extent of further gains is uncertain. Questions also focused on the mix of networking versus other compute demand, the return of a large IDM customer toward 10% of revenue, and the durability of the gross margin gains; management said the customer mix is changing as new CPU demand improves, that Q2 could bring that major customer closer to the 10% threshold, and that most margin improvement is from lower COGS rather than pricing. On CPO, management said the business is still early, but Triton ramp is accelerating and the company now expects 2026 revenue at the high end of the prior range.