FormFactor, Inc.

Thank you and welcome everyone to FormFactor's first quarter 2026 earnings conference call. On today's call are Chief Executive Officer Mike Slesher and Chief Financial Officer Eric McInnes. Before we begin, Stan Ficklestein, the company's Vice President of Investor Relations, will remind you of some important information.

Thank you. Today's company will be discussing gap P&N results and some important non-gap 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 subsequent integration, anticipated timeline for and benefits from farmers' branch, anticipated industry trends and volatility, the impact of regulatory changes, including tariffs, the anticipated volatility in demand for our products, our ability to develop, produce, and sell products and meet ongoing demands, advancements of artificial intelligence impact on industry and demand, and the assumptions upon which such statements are based. These statements are subject to known and unknown risk 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 physical year ended December 27, 2025, and in our other SEC filings, which are available on the SEC's website at www.sec.gov. Forward-looking statements are made us of today, April 29, 2026, and we assume no obligation to update them. With that, we will turn now the call over to form factor CEO, Mike Schleser.

Thanks for joining us today. FormFactor's first quarter revenue grew sequentially to another all-time record, with gross margin and earnings per share significantly above the high end of our outlook range. In the current second quarter, we expect to again set a revenue record and deliver sequential increases in both gross margin and earnings per share, extending the momentum that began in the second half of last year. These outstanding results exceed our target model on a quarterly run rate basis, and our current quarter outlook is expected to cap a string of results that validate the model on an annualized basis. We're proud to have delivered on this commitment, and at our upcoming investor day at the NASDAQ market site on May 11, members of FormFactor's executive leadership team will introduce our next target model, along with the strategic priorities, long-term growth opportunities, and operational initiatives that underpin it. We're also encouraged by how these financial results were achieved. We continue to benefit from our leadership position at the intersection of high performance compute and advanced packaging, two powerful trends transforming the semiconductor industry. Our growth is fueled both by strength in familiar areas like probe cards for high bandwidth memory and accelerating contributions from newer foundry and logic opportunities like networking. The first quarter growth in probe cards for networking applications caused the leader in high performance compute to become a 10% customer for the first time. And we're continuing to build our relationship with this leading customer in not only networking, but also probe cards for GPUs and systems for co-package optics. Operationally, these results represent a significant improvement from the execution challenges that previously limited our performance. While the pace of profitability improvement will moderate as we approach the limitations of our current footprint, later this year we expect our farmers branch site to come online, providing increased capacity with structurally lower costs. It will in turn create the foundation for future revenue growth and gross margin expansion. Eric will discuss our current operational performance in future plans later in the call. Turning now to segment and market level details, In DRAM probe cards, we delivered the expected sequential growth from the fourth quarter to reach another record, with increased demand in HBM applications paired with sustained demand in DDR applications. As you've heard recently from our major DRAM customers, the environment continues to be supply constrained in DRAM overall, and we expect our customers to dynamically shift their wafer start mix between a variety of HBM and DDR designs to maximize their opportunity. Since probe cards are specific to each customer chip design, we expect our DRAM mix to correspondingly shift between HBM and DDR while these unusual end market conditions persist. We're again forecasting record revenue in DRAM probe cards in the current quarter, driven by another step up in HBM demand. Most of this incremental growth is coming from a second customer's increased adoption of form factor's differentiated smart matrix, full wafer contactor technology. SmartMatrix provides a unique combination of high parallelism productivity and high speed performance, enabling our customers to test hundreds of completed HBM stacks simultaneously at the 10 gigabit plus IO data rate of HBM4. This capability is critical in advanced packaging processes like TSMC's COOS, where stack die test insertions provide the final test for the HBM stack before it's combined with GPUs or custom ASICs. Our second quarter outlook shows the impact of form factor's competitive advantage and the resulting market share gains as P&IO speeds and overall stack bandwidth for HBM continue the relentless increase as the industry progresses from HBM3 to HBM4 and then on to HBM5. Shifting now to the founder and logic probe card market, as expected, First quarter Foundry and Logic demand increased significantly over the fourth quarter, driven primarily by growth in probe cards for networking applications. In the current quarter, we expect continued growth in Foundry and Logic probe card revenue, driven primarily by incremental strength in data center CPU applications, building on top of continued strong demand in networking, as well as steady demand in PC and mobile. This data center CPU probe card demand is directly linked to the newly appreciated trend of increasing CPU compute intensity in AI inference use cases. This offers a powerful example of the value of form factors diversification strategy, as we strive to be a leading supplier to all major customers. In this case, we benefit from having put ourselves in a position to capitalize on unexpected demand for CPU probe cards from one of our long-term major customers. As we shared last quarter, we've continued to partner closely with this customer to support turnaround initiatives in their core business, as well as in their effort to become a leading foundry. In addition, Intel recently awarded us the 2026 Epic Supplier Award, recognizing our world-class commitment to continuous improvement, collaboration, and performance excellence. At the same time, as in HBM, we're successfully executing our strategy to be a top supplier to all the leading customers in the industry, as we continue to build the foundation for market share gains at a large, fabulous XPU customer. Specifically, we've now been awarded a second design, building off our successful qualification and initial design win. In addition, our production qualification in leading edge GPU applications at the world's largest foundry is nearing completion, with preparation now underway for second half volume shipments and production support. Finally, as an additional component of FormFactor's expanding high performance compute exposure, we continue to grow our custom ASIC business following a multi-million dollar design win in deepening engagement with several hyperscalers and their ASIC design partners. Turning to our system segment, in the first quarter we experienced the expected seasonal reduction in demand. In systems, our focus continues to be two-pronged. One, executing on the growth opportunity in co-package optics, and two, helping customers solve the challenges of building scalable and commercially viable quantum computers. Staying with quantum for the moment, in the first quarter, we announced the Flatiron Dilution Refrigerator, a new benchtop millikelvin platform designed to simplify optical and electrical measurements. and accelerate quantum device development, characterization, and chip scale validation. In CPO, we're building on our decade-long R&D engagement with leading customers in their development of silicon photonics in CPO, and are now beginning to ramp our Triton production test system co-developed with Advantest and Tokyo Electron. This ramp is accelerating, and we now expect 2026 CPO revenues to come in at the high end of the $10 to $20 million range we've previously communicated. This acceleration is driven by two factors. First, the growing volumes of CPO chips planned for later this year. And second, our leadership in the important test insertion one, which ensures known good die on the photonic integrated circuit or PIC wafer. Insertion 1 is proving to be a cost-effective and production-ready solution to ensure high yields of CPO modules built with advanced packaging processes like TSMC's COOP. Because of cost and complexity challenges, other test insertions like Insertion 2, after stacking the electrical die on the PIC, are proving to be difficult for customers to implement in production. Finally, we've successfully integrated our fourth quarter acquisition of Keystone Photonics, and our teams are collaborating to define and execute the world-leading silicon photonics and co-package optics probing roadmap. This includes electro-optical probe guards, which offer the promise of higher parallelism and higher throughput for our customers, as we bring together our technology leadership in both electrical and optical probing. Before turning the call over to Eric, I want to thank the Global Form Factor team. Achieving our target model is the result of their resilience in implementing multi-year investments in technology leadership, talent, customer focus, and operational execution. We're well positioned as test intensity and complexity continue to rise at the intersection of advanced packaging and high-performance compute, and we're excited to share our vision for the future of Form Factor at our May 11th Investor Day.