Earnings call transcript: FormFactor beats Q3 2026 estimates, stock slips after hours

FormFactor topped Wall Street’s expectations in the third quarter of 2026, reporting non-GAAP earnings of $1.04 a share on revenue of $280.5 million. Analysts had expected $0.86 a share on revenue of $270.52 million. The company also said revenue rose about 40% from a year earlier and marked its fourth straight quarter of record sales. Shares rose 3.24% in regular trading to $110.31, then slipped 1.59% after hours to $108.56 as investors weighed the beat against questions about how long margin gains can last.

FormFactor said the quarter reflected broad demand across its probe card and systems businesses, with strength tied to artificial intelligence infrastructure, advanced packaging and photonics. Chief Executive Mike Slessor said the company continued to grow revenue, gross margin and earnings while producing more output from its existing manufacturing base.

The company’s revenue growth remained broad-based. Foundry and logic sales rose 10% sequentially, DRAM revenue held near record levels, and systems revenue reached a record $59.5 million, up 23% from the prior quarter. FormFactor said it is benefiting from demand tied to GPUs, custom ASICs, data center CPUs and co-packaged optics.

The quarter also showed a stronger profitability profile than in the past. Management said the company has improved its DRAM cost structure and is extracting more output from the same footprint through better cycle times, yields and labor efficiency.

The company’s strong execution has caught Wall Street’s attention. According to InvestingPro, seven analysts have revised their earnings estimates upward for the upcoming period, while the platform’s Financial Health score of 2.94 rates FormFactor as "GOOD" overall. With a PEG ratio of just 0.48, the stock trades at an attractive valuation relative to its near-term growth prospects despite a trailing P/E of 76. InvestingPro subscribers have access to over 15 additional exclusive tips and advanced metrics for FORM.

FormFactor’s third-quarter results were ahead of expectations on both the top and bottom lines. Non-GAAP EPS of $1.04 beat the $0.86 consensus estimate by $0.18, or 20.9%. Revenue of $280.5 million exceeded the $270.52 million forecast by $9.98 million, or 3.7%.

The earnings beat was more pronounced than the revenue beat. That often matters to investors because it suggests the company is not only selling more, but also converting that sales growth into stronger profit. Still, management said roughly $0.09 of quarterly EPS came from tariff refunds, which means part of the margin strength was not fully recurring.

Even so, the quarter extended a clear trend. FormFactor said this was its fourth consecutive quarter of record revenue, and the company has been showing steady improvement in gross margin and operating leverage over the past year.

The stock’s reaction was mixed. Shares rose during the regular session to $110.31, up 3.24% from the prior close of $106.85, before easing to $108.56 in after-hours trading, down 1.59% from the close. The after-hours move suggests investors initially welcomed the beat, then became more cautious after reviewing the details of the quarter and the outlook.

Even after the pullback, the stock remained well above its 52-week low of $44.16, though still below the 52-week high of $160.27. The move leaves the shares in the middle-to-upper part of their yearly range.

The lack of a strong after-hours rally may reflect concern that some of the margin improvement came from non-recurring items, along with the fact that the stock had already risen during the session.

For the fourth quarter, FormFactor guided to revenue of $285 million, plus or minus $10 million, and non-GAAP EPS of $0.95, plus or minus $0.09. The company also forecast non-GAAP gross margin of 54% plus or minus 150 basis points and operating expenses of $69 million, plus or minus $2 million.

Management said the company remains on track to exceed $1 billion in revenue in 2026 for the first time. That milestone is supported by continued growth in foundry and logic, as well as strength in systems and DRAM.

A major focus is the new Farmers Branch facility in Texas. FormFactor said the site is now qualified for assembly and test, and the first production shipment was sent only days before the earnings call. Management expects the facility to ramp through 2027 and to exit that year with the capability to support about $400 million in annual probe card revenue.

The company also said capital spending in 2026 is now expected to be $100 million to $110 million, down from an earlier estimate of $140 million to $170 million, due to timing changes and better payment terms.

Slessor said the quarter reflected broad demand and stronger execution across the business. “During the third quarter, FormFactor again grew revenue, gross margin, and earnings per share, with each metric exceeding the high end of our outlook range,” he said.

He also pointed to the company’s manufacturing leverage. “On a year-over-year basis, we grew quarterly revenue close to 40%, within essentially the same manufacturing footprint,” Slessor said.

On the outlook for the new Texas factory, Chief Financial Officer Aric McKinnis said, “Over the course of the Farmers Branch ramp in 2027, we expect leverage from higher volumes and increased operational efficiency to effectively offset the temporary inefficiencies typically associated with new factory ramps.”

Management also highlighted the company’s position in photonics. Slessor said photonics is “a compelling solution for the power and energy challenges that the industry face,” adding that the opportunity is “really a question of when and not if.”

Analysts focused heavily on margins, capacity and the pace of the Farmers Branch ramp. Questions centered on why gross margin might stay near current levels in 2027 even as new capacity comes online. Management said the company expects temporary ramp inefficiencies, but believes higher volumes and better efficiency will offset them.

Another major topic was DRAM. Analysts asked whether HBM de-specing could hurt demand or probe card intensity. Management said it does not see a significant impact and expects continued HBM growth through 2026 and into 2027.

Questions also focused on growth in foundry and logic, especially GPUs and custom ASICs. Management said it shipped probe cards for a single GPU design to a leading foundry in multimillion-dollar volumes and expects more share gains in 2027 as Farmers Branch adds capacity.

Finally, analysts pressed for details on TRITON photonics. Management said demand has accelerated beyond earlier expectations and that the business is still in early stages, with room for further growth in CPO, near-package optics and pluggable devices.

Operator: Thank you, and welcome everyone to FormFactor’s third quarter 2026 earnings conference call. On today’s call are Chief Executive Officer, Mike Slessor, and Chief Financial Officer, Aric McKinnis. Before we begin, Stan Finkelstein, the company’s VP of Investor Relations, will remind you of some important information.

Stan Finkelstein, VP of Investor Relations, FormFactor: Thank you. Today, the company will be discussing GAAP P&L results and some important non-GAAP results intended to supplement your understanding of the company’s financials. Reconciliations of GAAP to non-GAAP measures and other financial information are available in the press release issued today by the company and on the investor relations section of our website. Today’s discussion contains forward-looking statements within the meaning of the federal securities laws. Examples of such forward-looking statements include those with respect to the projections of financial and business performance, future macroeconomic and geopolitical conditions, the benefits of acquisitions and investments, including the ramp-up of manufacturing facilities, anticipated industry trends, potential disruptions in our supply chain, the impacts of regulatory changes, including tariffs and changes in export controls, the anticipated volatility in demand for products, our ability to develop, produce, and sell products, and the assumptions upon which such statements are based.

These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed during this call. Information on risk factors and uncertainties is contained in our most recent filing on Form 10-K with the SEC for the fiscal year ended December 27, 2025, and in our other SEC filings which are available on the SEC’s website at www.sec.gov, and in our press release issued today. Forward-looking statements are made as of today, October 28, 2026, and we assume no obligation to update them. With that, we will now turn the call over to FormFactor CEO, Mike Slessor.

Mike Slessor, Chief Executive Officer, FormFactor: Thanks for joining us today. During the third quarter, FormFactor again grew revenue, gross margin, and earnings per share, with each metric exceeding the high end of our outlook range. These results continue a theme you’ve seen from us for the past year, namely broad-based growth and demand from our diversified leadership position at the intersection of high-performance compute and advanced packaging, and our ability to serve this demand by producing more output from our existing manufacturing footprint. On a year-over-year basis, we grew quarterly revenue close to 40%, within essentially the same manufacturing footprint. Our fourth-quarter outlook extends this trend. Although we are now reaching the limits of our ability to extract more output from our existing manufacturing footprint, we’re also bringing our new Farmers Branch factory online.

We recently qualified the assembly and test portion of this new facility, and only a few days ago, shipped the first production unit to a leading customer. We celebrated these milestones last week together with