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AEHR TEST SYSTEMS (AEHR)·Q3 2025 Earnings Summary

Executive Summary

  • AEHR delivered revenue and EPS above consensus, driven by initial AI processor wafer-level burn-in (WLBI) and packaged part burn-in (PPBI) wins; management stated the quarter beat Street on both top and bottom lines, and S&P consensus indicates revenue and EPS beats for Q3 FY25 (Revenue: $18.31M vs $17.76M; EPS: $0.07 vs $0.04).* *
  • Mix diversified beyond SiC: AI processor burn-in represented over 35% of YTD revenue while SiC WLBI is tracking to <40% this year; four customers were >10% of quarterly revenue, three in new markets (AI WLBI, AI PPBI, GaN WLBI).
  • Guidance pivot: AEHR temporarily withdrew FY25 guidance due to tariff-related customer-ordering and logistics uncertainty, despite stating minimal direct tariff impact; bookings remained robust ($24.1M) with effective backlog $21.8M.
  • Margin color: Non-GAAP gross margin was 42.7%, pressured by one-time ERP standard-cost adjustments and under-absorption tied to facility renovations; mix shift vs. last year also weighed.
  • Forward catalysts: Ramp of AI processor WLBI and PPBI at a leading OSAT, GaN WLBI production, hard-disk component ramp (FOX-CP), and advancing NAND WLBI proof-of-concept toward a co-development phase.

What Went Well and What Went Wrong

  • What Went Well

    • AI processor burn-in traction: “we qualified, received orders for, and shipped the world’s first production WLBI systems specifically designed for AI processors… [customer] ordered multiple FOX-XP systems” (also multiple Sonoma PPBI systems to a hyperscaler).
    • Diversification: AI processor burn-in >35% of YTD revenue; SiC WLBI tracking to <40% (vs >90% last year).
    • Bookings/backlog momentum: Q3 bookings $24.1M; backlog $18.2M; effective backlog $21.8M post-quarter; four 10%+ revenue customers with three in new markets.

  • What Went Wrong

    • Guidance withdrawn: Management cited secondary tariff effects creating near-term order/shipment timing uncertainty; FY25 outlook pulled pending clarity.
    • Margin headwinds: Non-GAAP gross margin 42.7% was “lower than expected” due to ERP-driven one-time standard cost adjustments and high overhead under-absorption during Fremont renovations.
    • Working capital/cash: Cash and equivalents fell to $31.4M from $35.2M in Q2; operating cash usage YTD ($5.1M) amid integration and growth investments.

Financial Results

Income Statement Summary and EPS vs Estimates

MetricQ1 FY25 (Aug 30, 2024)Q2 FY25 (Nov 29, 2024)Q3 FY25 (Feb 28, 2025)
Revenue ($M)$13.12 $13.45 $18.31
GAAP Net Income (Loss) ($M)$0.66 $(1.03) $(0.64)
GAAP Diluted EPS ($)$0.02 $(0.03) $(0.02)
Non-GAAP Net Income (Loss) ($M)$2.15 $0.69 $1.98
Non-GAAP Diluted EPS ($)$0.07 $0.02 $0.07
Non-GAAP Gross Margin (%)n/a45.3% 42.7%
Q3 FY25 vs EstimatesRevenue ($M)EPS ($)
S&P Global Consensus$17.76*$0.04*
Actual$18.31 $0.07
ResultBeat*Beat*
  • Notes: Management said the quarter exceeded Street consensus for both revenue and bottom line.
  • Asterisk indicates values retrieved from S&P Global.*

YoY/Sequential context

  • Q3 revenue +142% YoY (vs $7.56M in Q3 FY24), primarily on AI FOX-XP shipments; YoY base from Q3 FY24 revenue $7.56M.

Revenue Mix (Product vs Services)

Revenue Mix ($M)Q1 FY25Q2 FY25Q3 FY25
Product$12.15 $11.99 $16.68
Services$0.97 $1.47 $1.63
Total$13.12 $13.45 $18.31

Operating Income

Operating Income ($M)Q1 FY25Q2 FY25Q3 FY25
GAAP$0.16 $(1.51) $(1.12)
Non-GAAP$1.65 $0.21 $1.51

KPIs and Business Mix

KPIQ1 FY25Q2 FY25Q3 FY25
Bookings ($M)$16.8 $9.2 $24.1
Backlog ($M)$16.6 $12.4 $18.2
Effective Backlog ($M)—$26.6 $21.8
Cash & Equivalents ($M)$40.8 $35.2 $31.4
WaferPak revenue %—64% 32%
>10% customers——4 (3 in new markets)
Mix notesAI evaluation underway AI WLBI/PPBI orders AI WLBI/PPBI ramps; AI >35% YTD; SiC WLBI <40% YTD

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY25 (ending May 30, 2025)≥ $70M (reiterated on Jan 13, 2025) Withdrawn (Apr 8, 2025) Withdrawn
Non-GAAP Profit Before TaxesFY25≥10% of revenue (reiterated on Jan 13, 2025) Withdrawn (Apr 8, 2025) Withdrawn
  • Rationale: tariff-related uncertainty could cause pauses/delays in customer orders, shipments, or supply chain.

Earnings Call Themes & Trends

TopicQ1 FY25 (Oct 10, 2024)Q2 FY25 (Jan 13, 2025)Q3 FY25 (Apr 8, 2025)Trend
AI/Technology initiativesAI WLBI evaluation progressing; plan to adopt FOX-XP upon success First AI WLBI customer; initial FOX-XP shipments; first AI PPBI production orders (Sonoma) Shipped world’s first AI WLBI systems; multiple Sonoma PPBI systems to hyperscaler; expanding power/automation roadmap Rapid expansion; commercialization underway
Supply chain/Tariffs—General timing variability; prebuilt systems shipped after quarter end Direct impact minimal; secondary tariff effects cause order/logistics uncertainty; mitigation via drop-ship/international assembly New short-term risk; mitigations in place
Product performanceFOX-XP high-power, multi-wafer capability (3500W/wafer) positioned for AI, photonics AI WLBI/PPBI momentum; Sonoma used for qual and now production Validated FOX-XP AI WLBI (9x 300mm); unique power control/patents; no probe pin burn-outs Strong moat emerging
Regional/End-market trendsSiC stabilizing; expected capacity expansion timeline China IP and demand risks; HDD ramp plans; GaN first production order Early SiC utilization recovery; GaN WLBI production; HDD orders late but urgent; photonics ramp likely this year Broader portfolio ramps
Regulatory/Legal—China IP suit; rising legal costs/class action defense Continued legal cost expectations; protect IP in China Ongoing
R&D/Integration—InCal integration progressing; facility upgrades; consolidation by FY-end Integration on track by FY-end; shut down InCal site by Q1 FY26 Execution on plan

Management Commentary

  • Strategy and diversification: “We are excited by the significant progress we’ve made this year in expanding into new key markets… particularly in diversifying our markets and customers beyond… silicon carbide WLBI.”
  • AI leadership: “We qualified, received orders for, and shipped the world’s first production WLBI systems specifically designed for AI processors… [and] shipped multiple Sonoma production burn-in systems this year to a world-leading hyperscaler.”
  • Competitive moat: “Aehr is the only company on the market that offers both a WLBI system as well as a PPBI system for… AI processors.”
  • Guidance stance: “We… do not believe that the impact of the tariff announcements… will significantly affect Aehr directly… [but] we are temporarily withdrawing our guidance… and will reassess as clarity develops.”
  • Margin drivers: “Non-GAAP gross margin… was lower than expected due to [ERP-related one-time charge]… [and] underabsorption due to [Fremont] renovation.”

Q&A Highlights

  • Tariffs and shipments: Near-term secondary tariff effects could alter shipment timing; company can drop-ship probers from Japan/Korea and shift assembly to international sites; avoiding customs bottlenecks and leveraging tariff drawback processes.
  • Backlog conversion: Not all backlog expected to ship in Q4 (multiple HDD systems staged; 1–2 planned this quarter); additional customer forecasts pending orders.
  • Growth rank order: AI (WLBI/PPBI) primary growth driver, with anticipated SiC recovery (upgrades, waferpacks, capacity), GaN production, silicon photonics ramp, and HDD adding; NAND WLBI targeted for early FY27 revenue.
  • Mix disclosure: PPBI revenue was “more than 20%” of Q3 revenue.

Estimates Context

  • S&P Global consensus for Q3 FY25: Revenue $17.76M (actual $18.31M) and EPS $0.04 (actual $0.07), both beats; only two covering estimates; target price consensus $24 (2 estimates).*
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Beat-and-withdraw quarter: Despite top- and bottom-line beats, guidance pull (tariff-related timing risks) is the near-term overhang; focus on order flow and shipment visibility. *
  • AI inflection: Commercial shipments for both AI WLBI (FOX-XP) and PPBI (Sonoma) validate a differentiated position; customer endorsements and no-probe damage features underscore moat.
  • Portfolio diversification reduces SiC cyclicality: AI already >35% YTD; SiC WLBI <40%; GaN WLBI production, HDD ramp, and silicon photonics should broaden revenue drivers into FY26.
  • Margins recoverability: Q3 non-GAAP GM impacted by one-offs (ERP standard-cost reset, under-absorption); completion of renovation/integration and higher volumes should aid absorption, though mix remains a swing factor.
  • Bookings/backlog support near-term revenue: Q3 bookings $24.1M, effective backlog $21.8M post-quarter; watch conversion cadence and HDD system staging into Q4.
  • Legal/IP watch-items: Continuing IP defense in China and US class action/derivative suits may elevate opex near-term but protect long-term positioning.
  • Medium-term thesis: If AI WLBI/PPBI ramps as outlined, plus photonics/GaN/HDD, AEHR’s TAM expands materially; NAND WLBI could be an FY27 catalyst if proof-of-concept transitions to co-development/production.

Appendix: Prior Period Detail

  • Q2 FY25 press release headline metrics: Revenue $13.5M; GAAP EPS $(0.03); Non-GAAP EPS $0.02; bookings $9.2M; backlog $12.4M; effective backlog $26.6M; cash $35.2M.

  • Q1 FY25 press release headline metrics: Revenue $13.1M; GAAP EPS $0.02; Non-GAAP EPS $0.07; bookings $16.8M; backlog $16.6M; cash $40.8M.

  • Asterisk indicates values retrieved from S&P Global.*