Q2 2026 FormFactor Inc Earnings Call Transcript
Key Points
- FormFactor Inc (FORM) achieved all-time record revenue, gross profit, and earnings per share in Q2 2026, surpassing a $1 billion annual revenue run rate and exceeding 50% gross margin.
- The company expects continued sequential growth in Q3 2026, driven by broad demand across high-performance compute and advanced packaging, including HBM4, DDR, and co-packaged optics (CPO).
- FormFactor Inc (FORM) is gaining market share in HBM4 with its differentiated SmartMatrix full-wafer contact technology, serving two major customers for high-speed stack die testing.
- The CPO business is accelerating, with 2026 revenue expected to significantly exceed the initial $20 million forecast, driven by leadership in test insertion 1 for photonic integrated circuits.
- Operational efficiencies, including yield and cycle time improvements, have driven gross margin expansion, with a new baseline non-GAAP gross margin of approximately 51% at current volumes.
- FormFactor Inc (FORM) faces a dynamic DRAM market with a significant mix shift from HBM to DDR in Q3 2026, as customers prioritize DDR wafer starts due to higher profitability.
- The company expects non-recurring items, such as tariff refunds and precious metal reclaims, to contribute about 300 basis points to Q3 gross margins, which may not be sustainable.
- Supply chain constraints remain a challenge, limiting the company's ability to ramp capacity for new and existing customers until the Farmers Branch site comes online in late 2026.
- The ramp of the Farmers Branch facility will incur inefficiencies in 2027, potentially offsetting gross margin improvements until the site reaches initial target capacity by early 2028.
- Market share gains at a new fabless CPU customer are progressing slowly, with only low single-digit share currently, due to capacity constraints and the time needed to build a new supply chain relationship.
Thank you, and welcome, everyone, to Form Factor's second 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.
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
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