FormFactor’s third quarter was marked by a positive market reaction, driven by operational improvements and product mix shifts discussed by management. CEO Mike Slessor highlighted the company’s focus on gross margin recovery, citing a 250 basis point sequential improvement from cost controls, labor reductions, and manufacturing efficiencies. Slessor explained, “We’re focused on and committed to improving our profitability to get back on a path to the 47% non-GAAP gross margins of our target model.” The company’s success in expanding its leadership in high-bandwidth memory (HBM) probe cards—particularly as test complexity increased with HBM4 adoption—was also a key driver of quarterly performance.

Is now the time to buy FORM? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From FormFactor’s Q3 Earnings Call

• Craig Ellis (B. Riley Securities) asked about the implications of the HBM4 transition and customization on probe card intensity. CEO Mike Slessor highlighted increased test complexity and said, “Tailwinds continue as we move to HBM4E and then 5.”
• Christian Schwab (Craig Hallum) questioned if margin expansion depends on business mix or cost initiatives. CFO Aric McKinnis replied that improvements are “mix independent,” focusing on underlying cost structure changes.
• Brian Chin (Stifel) asked how margin improvement is maintained with legacy DRAM growth. McKinnis explained gains are driven by cost actions, not just product mix, and are sustainable across cycles.
• Yu Shi (Needham & Company) probed on CPU customer revenue weakness. Slessor acknowledged the lower contribution but emphasized ongoing partnership and the importance of qualifying with additional major CPU and GPU customers.
• Tom Diffely (D.A. Davidson) sought detail on the drivers behind recent gross margin gains. McKinnis clarified that cost reductions outweighed positive product mix or volume changes this quarter.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the rate of margin improvement as operational changes take hold, (2) progress in customer qualifications for CPU and GPU probe cards, and (3) the commercial adoption of the Triton system for silicon photonics testing. Developments at the Farmers Branch facility and expansion in co-packaged optics will also be important signposts.

FormFactor currently trades at $50.60, up from $47.64 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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