FormFactor (FORM) 27th Annual Needham Growth Conference summary

Business Overview and Technology Focus

• Operates in semiconductor test and measurement, with $750M trailing 12-month revenue and two main segments: probe cards (75-80% of revenue) and systems (25%).

• Maintains leadership in semiconductor test and measurement, serving major industry players like Intel, TSMC, Samsung, and SK hynix.

• Recognized for technical leadership, customer satisfaction, and supplier excellence, including Intel's 2024 EPIC Distinguished Supplier Award and SK hynix Best Partner Award.

• Early customer engagement and largest R&D budget in served markets create high barriers to entry and sustained innovation.

• Global workforce of about 2,000, with significant presence in Asia and a recent divestiture of direct China operations due to geopolitical headwinds.

Recent Performance and Financial Outlook

• Achieved record revenue in Q3 2024, driven by high bandwidth memory (HBM) demand for generative AI applications.

• 2023 revenue reached $663M, with non-GAAP gross margin at 40.7% and diluted EPS at $0.73.

• YTD 2024 revenue at $574M, gross margin 42.2%, and diluted EPS $0.88; Q3 2024 saw record DRAM probe card revenue.

• Target model aims for $850M revenue, 47% gross margin, 22% operating margin, $2.00 EPS, and $160M free cash flow.

• Q4 2024 results and Q1 2025 outlook to be provided in February; HBM remains a key growth driver.

HBM Business Dynamics and Future Growth

• HBM probe card business quadrupled from 2023 to 2024, with continued but more moderate growth expected in 2025.

• Growth is tied to new HBM3E and HBM4 designs, with increasing complexity and test intensity supporting competitive advantage.

• HBM probe card intensity is more than double the industry average due to advanced packaging and chiplet architectures, expected to persist through HBM4 and HBM5.

• Revenue is currently concentrated with one leading HBM customer, but differentiated technology positions the company for share gains with other DRAM manufacturers.

• Advanced packaging adoption addresses Moore's Law slowdown, increasing probe card demand and test intensity.