FormFactor (FORM) Beats Q3 Earnings, Revenue Estimates - Analyst Blog - NASDAQ.com

FormFactor (FORM) Beats Q3 Earnings, Revenue Estimates - Analyst Blog - NASDAQ.com:

FormFactor reached a milestone by accomplishing profitability in two consecutive quarters since the fourth quarter of fiscal 2007. The sequential increase in the bottom line was primarily driven by increased revenues aided by higher demand and improving execution.



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Revenue



Revenues of $73.9 million were up 9.8% sequentially and 9.3% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $73.0 million. The sequential increase was limited to the System on Chip (SoC) and DRAM segments. However, the NAND Flash segment declined. Region-wise, Japan was the strongest sequentially, but the increase in the Asia/Pacific and North America was also significant.



Revenues by Geography



Asia-Pacific contributed 33% of third quarter 2014 revenues (up 14.5% from the prior quarter but down 10.6% from the year-ago quarter). North America's share was 26% (up 14.6% from the prior quarter and 14% from the year-ago quarter) while South Korea brought in 20% of the revenues (down 1.4% from the prior quarter but up 15.1% from the year-ago quarter). Europe/Middle East accounted for 11% of the revenues (down 9.9% sequentially but up 90.7% on a year-over-year basis). Japan contributed the remaining 10% (up 39.2% sequentially and 16.4% from the year-ago quarter).



Revenues by End User



SoC revenues in the third quarter amounted to $39.4 million, up 7.9% from the prior quarter and 24.3% from the year-ago quarter. Overall strength in the market was driven by strong demand across mobile computing, personal computers and servers and continued momentum in copper pillar applications.The company also witnessed broad-based demand for SoC probe cards in markets like industrial and automotive in the quarter.



Reported revenues for  DRAM  products were $31.4 million, up 18.9% sequentially and 9.0% on a year-over-year basis. The increase can be attributed to the fact that DRAM customers invested in new technology nodes and new memory communication interface standards like DDR4 and LPDDR4. Each new standard leads to new designs, which in turn drive new probe cards.



Flash  revenues were $3.1 million in the third quarter, a decline of 31.1% from the prior quarter and 56.3% from the year-ago quarter. NOR Flash revenues decreased $2.0 million in the third quarter to $1.1 million, while NAND Flash revenues increased $0.6 million to $2.0 million in the quarter.



The new NAND Flash probe card, Vector, contributed meaningfully to the $2 million of NAND Flash revenues in the quarter.



Margins



Non-GAAP gross profit was $28.4 million, or 38.5% of revenues, compared with non-GAAP gross profit of $24.4 million, or 36.2% of revenues in the prior quarter. The increase in this quarter's non-GAAP gross margin was attributed to increased absorption of fixed cost as a result of higher factory utilization manufacturing efficiencies.



Non-GAAP operating profit was $4.9 million, compared with $1.4 million in the previous quarter.



Operating expenses adjusted for restructuring, acquisition, amortization, integration and asset impairment charges came in at $23.5 million, up 2.3% sequentially and 5.2% from the year-ago quarter. Operating margin of 6.6% jumped 457 basis points sequentially and was more or less consistent with the prior year.



Pro forma net income was $5.1 million (9 cents a share) compared with $1.4 million (2 cents a share) in the previous quarter and a loss of $6.5 million (12 cents a share) in the year-ago quarter.



On a GAAP basis, net loss for the third quarter of fiscal 2014 was $ 0.3 million, or $0.00 per fully-diluted share, compared to a net loss of $ 4.3 million, or $0.08 per fully-diluted share in the previous quarter, and a net loss for the third quarter of fiscal 2013 of $10.7 million, or $0.20 per fully-diluted share.

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