FormFactor, Inc. reported third‑quarter fiscal 2025 revenue of $202.7 million, a 3.5% sequential increase from $195.8 million in Q2 and a 2.5% decline from $207.9 million in the same period a year earlier. GAAP net income was $15.7 million, or $0.20 per diluted share, while non‑GAAP net income reached $25.7 million, or $0.33 per diluted share. Non‑GAAP earnings per share were $0.33, up from $0.27 in Q2 and $0.35 in Q3 2024.
Gross margin on a GAAP basis improved to 39.8%, a 2.5‑percentage‑point lift from 37.3% in Q2 and a 0.9‑percentage‑point decline from 40.7% in Q3 2024. The margin gain reflects a 250‑basis‑point sequential improvement driven by targeted cost‑control initiatives, including labor reductions and manufacturing efficiencies, and a favorable product mix shift toward higher‑margin HBM probe cards. DRAM probe cards achieved double‑digit sequential growth, while momentum toward initial volume production of co‑packaged optics added further margin upside.
Segment performance showed the Probe Card segment generating $120.4 million in revenue with a 42.1% gross margin, up from $115.6 million and 40.8% in Q2. The Systems segment contributed $82.3 million in revenue with a 35.6% margin, slightly below the 36.2% margin reported in Q2. The combined segment results underpin the company’s overall margin improvement trajectory.
Management guided Q4 revenue to a midpoint of $210 million, 5.2% above consensus, and projected a non‑GAAP gross margin of 41.0% to 42.0%. The guidance reflects the impact of the “One Big Beautiful Bill” tax reform, which is expected to increase the effective tax rate for the quarter but will not materially affect operating performance. The company reiterated its focus on margin improvement actions that have already produced a 250‑basis‑point lift in Q3 and expects the trend to continue into the next quarter.
Strategic investments continue to support the margin program. The acquisition of a Texas manufacturing facility in Farmers Branch and a 20% stake in FICT Limited have reduced manufacturing costs and secured critical substrate supply. Free cash flow improved to $19.7 million in Q3 from a negative $47.1 million in Q2, largely due to the Texas facility investment. The company remains well positioned for the upcoming HBM4 transition and is expanding into co‑packaged optics and GPU/ASIC probe cards, while managing headwinds such as tariffs and cyclical demand in the semiconductor testing market.
Competitive context places FormFactor among peers such as Advantest and Teradyne, with demand closely tied to semiconductor capital expenditure cycles. The company’s focus on high‑margin HBM probe cards and advanced packaging solutions aligns with industry trends toward higher bandwidth memory and sophisticated packaging, supporting its target of $850 million in annual revenue and a 47% gross margin.
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