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AEHR TEST SYSTEMS (AEHR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue was $13.5M, down 37% year-over-year and modestly up quarter-over-quarter; GAAP EPS was $(0.03) and non-GAAP EPS was $0.02, reflecting soft SiC demand and timing delays of expected system orders into Q3 .
  • Results missed S&P Global consensus: revenue $15.0M* vs actual $13.5M and EPS $0.03* vs non-GAAP $0.02; bookings were $9.2M and effective backlog rose to $26.6M, mitigating near-term visibility concerns .
  • Management reaffirmed FY25 guidance for at least $70M revenue and ≥10% non-GAAP PBT margin, citing acceleration in AI processor burn-in (first wafer-level AI customer and volume Sonoma packaged burn-in orders) and first GaN production order .
  • Stock-relevant catalysts: shipment timing from prebuilt AI/GaN systems, multi-market diversification (AI, GaN, HDD, silicon photonics), and China IP litigation risks impacting SiC bookings cadence .

What Went Well and What Went Wrong

What Went Well

  • First wafer-level AI processor customer selected FOX-XP for production burn-in; initial orders for multiple systems and WaferPaks secured, a “technological and commercial breakthrough” expanding TAM in AI .
  • First volume production Sonoma ultra-high-power packaged burn-in orders from a hyperscaler; shipments commenced to an Asian OSAT, positioning for AI packaged burn-in growth .
  • First GaN production order using FOX-XP, broadening beyond SiC with >40% CAGR market outlook and >10% power semi mix by 2028, per Yole/Frost & Sullivan references; management emphasized multi-market diversification .

What Went Wrong

  • YoY revenue fell to $13.5M from $21.4M; non-GAAP gross margin contracted to 45.3% vs 51.6% last year, driven by lower revenue and mix, while non-GAAP OpEx rose on Incal and legal costs .
  • Timing: prebuilt AI/GaN systems missed quarter-end due to PO finalization after Q2, depressing the quarter; management flagged volatility from high ASP systems and does not provide quarterly guidance .
  • China risks: IP suit filed against a local supplier; trade and competitive dynamics heighten risk to contemplated SiC orders and revenue from Chinese customers in FY25 .

Financial Results

Consolidated P&L and Margins (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD)$16.6M $13.119M $13.453M
GAAP EPS ($)$0.81 $0.02 $(0.03)
Non-GAAP EPS ($)$0.84 $0.07 $0.02
Gross Margin %50.9% (GAAP) 54.7% (Non-GAAP) 45.3% (Non-GAAP)
Non-GAAP Operating Expenses ($M)n/a$5.5 $5.9

Product vs Services, Recurring Mix (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Product Revenue ($)$15.805M $12.154M $11.985M
Services Revenue ($)$0.795M $0.965M $1.468M
WaferPak Revenue ($)$12.4M $12.1M $8.6M
WaferPak % of Total75% 92% 64%

KPIs and Balance Sheet (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Bookings ($)$4.0M $16.8M $9.2M
Backlog ($)$7.3M $16.6M $12.4M
Effective Backlog ($)$20.8M n/a$26.6M
Cash, Cash Equiv & Restricted ($)$49.2M $40.8M $35.2M
Cash from Operations ($)$1.8M FY24 $2.4M Q1 $(5.9)M Q2

vs. S&P Global Consensus (Q2 FY25)

MetricConsensusActual
Revenue ($)$15.032M*$13.453M
Primary EPS ($)$0.03*$0.02 (non-GAAP)

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY25≥$70M ≥$70M Maintained
Non-GAAP Net Profit Before TaxesFY25≥10% of revenue ≥10% of revenue Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI processors (wafer-level)Evaluation underway; high-power FOX-XP delivering 3500W/wafer and 2000A to 300mm wafers First wafer-level AI customer; multiple FOX-XP and WaferPak orders for production Accelerating
AI processors (packaged / Sonoma)Acquisition of Incal; early Sonoma orders from hyperscaler Volume production Sonoma orders; shipments started to OSAT Ramp starting
GaN power semiconductorsNegotiations with first GaN customer First GaN production order; >40% CAGR outlook Positive inflection
Silicon PhotonicsNew high-power FOX-XP for optical chip-to-chip announced in FY24 High-power silicon photonics WaferPaks designed; ramp expected Building
HDD componentsProduction ramp forecast; multiple FOX-CP systems expected H2 FY25 Lead HDD customer ramping; multiple production systems over next few quarters Firming
Supply chain/timingNot explicitPrebuilt AI/GaN systems slipped past quarter-end; shipment timing impacted Q2 Volatile
China/IP & macron/aIP lawsuit filed in China; trade/competitive risks may affect SiC bookings Risk elevated
R&D/OperationsERP go-live; facility consolidation plan for Incal Facility remodel adding capacity; Incal to be consolidated by fiscal year-end Capacity expanding

Management Commentary

  • “Securing our first AI processor customer for wafer level burn-in… represents a technological and commercial breakthrough… significantly expanding the market potential for our FOX-XP wafer level test and burn-in systems.”
  • “During the quarter, we secured our first production AI processor customer for package part burn-in… initial volume production orders for multiple Sonoma ultra-high-power systems… shipments have already commenced to their contract manufacturer in Asia.”
  • “We announced another exciting milestone with our first gallium nitride (GaN) semiconductor production order… GaN… is projected to surpass $2 billion in annual device sales by 2029.”
  • “Given the nature of our business… quarterly revenue can experience significant variability… both [AI and GaN] customers requested prebuilt systems… purchase orders were not finalized until after the quarter ended.”
  • “We filed a lawsuit in China against a local supplier for intellectual property infringement… heighten the risk associated with bookings and revenue from Chinese customers.”

Q&A Highlights

  • Shipping timing: Systems “on the shipping dock” with POs finalized after quarter end; Q2 would have been “significantly higher” absent end-of-quarter concessions, with orders moving into Q3 .
  • Mix and margins: Non-GAAP gross margin compressed; WaferPak has best margins, Aehr systems next, Incal systems lower; operational efficiencies expected as Incal manufacturing consolidates into Fremont .
  • Near-term drivers: Expect more AI production (wafer-level and packaged) and SiC orders with new customers; HDD looks attractive longer-term but near-term AI and SiC are bigger .
  • China/competition: Despite IP concerns, AEHR cites strong competitive advantage vs local tools; still acknowledges trade/regulatory uncertainty could delay a several-million-dollar system sale .
  • Memory pathways: Technical drivers in NAND/DRAM/HBM point toward higher test power and reliability needs pre-advanced packaging, aligning with AEHR capabilities .

Estimates Context

  • Q2 FY25 miss vs S&P Global consensus: revenue $15.0M* vs actual $13.5M and EPS $0.03* vs non-GAAP $0.02; backdrop included softness in SiC and PO timing .
  • Q1 FY25 beat vs S&P Global on both top and bottom lines: revenue $12.2M* vs actual $13.1M and EPS $0.015* vs non-GAAP $0.07 .
  • FY25 consensus $60.6M* vs AEHR reiterated at ≥$70M, implying upward estimate risk if execution on AI/GaN/HDD ramps and China SiC bookings materialize .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Diversification is real-time: AI wafer-level and packaged burn-in are moving from evaluation to initial production, adding a new growth vector and reducing reliance on SiC EV cycles .
  • Near-term revenue cadence depends on shipment timing of high-ASP systems; effective backlog of $26.6M supports sequential recovery into Q3/Q4 .
  • Margin trajectory hinges on mix: WaferPak drives higher margins; increased Incal system mix weighs near-term but should improve with consolidation and scale .
  • China exposure introduces headline and execution risk to SiC orders (IP litigation, trade), but management cites product superiority and longstanding presence in region .
  • HDD and silicon photonics represent credible incremental TAMs with production ramps forecast across the next few quarters and fiscal year .
  • Cash cushion ($35.2M) and no debt provide flexibility; new $100M shelf in place for opportunistic financing if required .
  • FY25 guide maintained despite Q2 softness; execution on AI/GaN/HDD offsets SiC challenges—monitor orders, backlog conversion, and gross margin mix each quarter .