Key Highlights

  • Revenue of USD 280.5 million rose 38.4% from a year earlier and marked a fourth consecutive quarterly record.
  • Non-GAAP earnings per share reached USD 1.04, versus USD 0.33 a year earlier, with GAAP EPS at USD 0.93.
  • Systems revenue hit a record USD 59.5 million, up 23% sequentially on co-packaged optics testing demand.
  • Fourth-quarter outlook calls for revenue near USD 285 million and non-GAAP EPS of USD 0.95 at the midpoint.

FormFactor, Inc. (NASDAQ:FORM) reported fiscal third-quarter 2026 revenue of USD 280.5 million, up 38.4% from USD 202.7 million a year earlier and 8.6% above the second quarter. The result was above a consensus estimate of USD 270.52 million. Non-GAAP earnings per diluted share were USD 1.04, above a consensus estimate of USD 0.86, while GAAP diluted EPS was USD 0.93 on net income of USD 73.8 million.

Management said revenue, gross margin and EPS each landed above the top of the guided range. Chief executive Mike Slessor attributed the growth to broad demand at the intersection of high-performance compute and advanced packaging, served largely from the existing manufacturing footprint. Foundry and Logic grew about 10% sequentially, while DRAM probe card revenue was roughly flat at record levels with a shift in mix from HBM toward DDR5.

Margins, Systems Strength and Cash Flow

GAAP gross margin was 54.7%, compared with 50.7% in the second quarter and 39.8% a year earlier. Non-GAAP gross margin reached 56.5%, up 320 basis points sequentially. Management said about USD 10.5 million, or roughly 380 basis points, came from tariff refunds and favorable subcomponent costs that are not anticipated to recur, which would put the underlying figure near 52.5% to 53%. Non-GAAP operating expenses were USD 64.4 million, or 23% of revenue, down from 25.4% in the prior quarter.

The Systems segment set a record at USD 59.5 million on demand for the TRITON system used in co-packaged optics. TRITON revenue for 2026 is now projected above USD 30 million, versus an initial range of USD 10 million to USD 20 million. Operating cash flow was USD 104.3 million and free cash flow was USD 64.8 million, while cash and marketable securities totaled about USD 399 million. No shares were repurchased in the quarter.

Guidance and Capacity Expansion

For the quarter ending December 26, 2026, the company guided to revenue of USD 285 million, plus or minus USD 10 million, non-GAAP gross margin of 54.0%, plus or minus 1.5 percentage points, and non-GAAP EPS of USD 0.95, plus or minus USD 0.09. The midpoint would take full-year 2026 revenue above USD 1 billion. Management described the gains from its current footprint as moderating near capacity limits and pointed to the new Farmers Branch factory as the source of added output.

Farmers Branch shipped its first production unit to a leading customer, and management targets annual probe card capability of about USD 400 million exiting 2027. Cash capital spending there is now guided to USD 100 million to USD 110 million for 2026, down from USD 140 million to USD 170 million, a shift in timing rather than scope. After quarter end, the company also announced an expanded partnership with Teradyne, which included a USD 300 million investment in FormFactor.

Items to Monitor

Four items stand out. The first is non-GAAP gross margin against the guided 54.0%, given that management cited about 53% as the baseline at current volumes and roughly 70 basis points of remaining tariff refund benefit in the fourth quarter. The second is Farmers Branch, where about USD 5 million of start-up costs is scheduled to move from operating expenses into cost of revenues in the fourth quarter. The third is Systems, where TRITON revenue is tracking above USD 30 million for the year. The fourth is the cash balance after the USD 300 million Teradyne investment, set against capital spending guided at similar levels in 2027.