FormFactor, Inc.

FormFactor reported Q2 revenue of $258.2 million, up $32.1 million, or about 14%, from Q1. GAAP gross margin was 50.7%, up from 38.4% in Q1, and non-GAAP gross margin was 53.3%, 34 bps higher sequentially and nearly 15 percentage points above Q2 last year. GAAP net income was $56.2 million, or $0.71 per share, versus $20.4 million, or $0.26 per share, in Q1; non-GAAP net income was $65 million, or $0.82 per share, versus $44.5 million, or $0.56 per share. Free cash flow was $52.6 million, cash from operations was $61.8 million, and total cash and investments ended at $349 million. For Q3, management guided to revenue of $270 million, plus or minus $10 million, non-GAAP gross margin of 54% plus or minus 150 bps, non-GAAP operating expenses of $70 million, plus or minus $2 million, and non-GAAP EPS of $0.86, plus or minus $0.09. Full-year 2026 cash CapEx for Farmers Branch and capacity additions is expected to be between $140 million and $170 million, and preproduction ramp costs are now expected to be $25 million to $30 million in total for 2026.

Mike Slessor emphasized that Q2 set all-time records for revenue, gross profit, and EPS, while the company also crossed two milestones toward its new target model: a $1 billion annual revenue run rate and 50% gross margin. He framed the quarter as evidence of strong demand at the intersection of high-performance compute and advanced packaging, with broad growth in HBM, CPU, and CPO. His tone was confident and constructive, stressing diversification across customers and applications and describing CPO and advanced packaging as early innings of a larger growth opportunity.

Aric McKinnis highlighted operating leverage and margin expansion, pointing to Q2 non-GAAP gross margin of 53.3% and non-GAAP EPS of $0.82, with baseline gross margin estimated around 51% at current volumes after removing nonrecurring items like tariff refunds and precious metal reclaim. He said Q2 revenue was $258.2 million, free cash flow was $52.6 million, cash from operations was $61.8 million, and cash and investments ended at $349 million. He also reiterated 2026 Farmers Branch cash capex of $140 million to $170 million, preproduction ramp costs of $25 million to $30 million for 2026, and noted the company is largely self-funding the investment; he added that share repurchases were paused in Q2 and $70.9 million remains authorized under the buyback program.

Analysts pressed on whether the 51% or 53.3% gross margin figure should be viewed as the baseline, and management clarified that 53.3% included nonrecurring tariff refunds and precious metal reclaim, while 51% is the sustainable baseline at current volumes; Farmers Branch should be accretive as it ramps. Questions also focused on CPO timing, with management saying 2026 CPO revenue should exceed the original $10 million to $20 million range and that quarterly progression is accelerating, though it is still early and hard to forecast precisely. On CPU, HBM, and hyperscaler demand, management said the company is qualified or shipping in several key opportunities, but some ramps will take time and capacity constraints remain a governor until Farmers Branch comes online.