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AEHR TEST SYSTEMS (AEHR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 revenue was $16.6M; GAAP diluted EPS was $0.81, driven by a $20.8M tax benefit from releasing the full income tax valuation allowance; GAAP gross margin was 50.9% .
  • Mix skewed to consumables: WaferPak revenues were $12.4M and accounted for 75% of total revenue; bookings were $4.0M; backlog was $7.3M with “effective backlog” of $20.8M including early Q1 FY2025 orders .
  • FY2025 guidance: total revenue of at least $70M and net profit before taxes of at least 10% of revenue; company changed fiscal calendar to a 4-4-5 year ending the Friday closest to May 31 and expects to incur income tax expense beginning Q1 FY2025 .
  • Strategic catalysts: $12.7M WaferPak orders from a SiC customer for EV devices, acquisition of Incal Technology to address ultra-high-power AI processor burn-in, and an AI accelerator wafer-level burn-in evaluation targeted for production this fiscal year .
  • Wall Street consensus (S&P Global) was unavailable via tool; management stated results “surpassed analyst consensus,” but we cannot verify magnitudes today .

What Went Well and What Went Wrong

What Went Well

  • WaferPak consumables strength: WaferPak revenues rose to $12.4M in Q4, 75% of total, highlighting recurring revenue from design activity and installed base .
  • Strategic expansion: Announced $12.7M WaferPak orders for EV SiC production; closed/announced Incal acquisition to expand into packaged-part ultra-high-power burn-in for AI/GPU/network processors; and initiated AI accelerator wafer-level burn-in evaluation using high-power FOX-XP .
  • Management tone and outlook: “Our full-year revenue and net income results exceeded our previously provided guidance and surpassed analyst consensus” and “we believe we have significant opportunities for growth in fiscal 2025 and beyond” .

What Went Wrong

  • YoY decline and soft bookings: Q4 revenue fell 25% YoY to $16.6M amid EV demand slowdown and customer pushouts; bookings were only $4.0M in the quarter .
  • Margin pressure vs prior year: GAAP gross margin was 50.9%, down from 51.5% in Q4 last year, reflecting lower revenue and overhead absorption; operating income fell vs prior year .
  • Visibility and mix: Full-year bookings dropped to $49M vs $78.3M prior year; mix shifted away from systems to consumables due to delayed capacity ramps, and FY2025 includes higher OpEx and commissions that can weigh on near-term margins .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$22.269 $7.563 $16.600
GAAP Diluted EPS ($)$0.21 ($0.05) $0.81 (includes $20.8M tax benefit)
Non-GAAP Diluted EPS ($)$0.23 ($0.03) $0.84 (includes tax benefit; excludes SBC & acquisition costs)
GAAP Gross Margin (%)51.5% 41.7% 50.9%
Operating Income (GAAP) ($USD Millions)$5.639 ($2.046) $2.541
GAAP Net Income ($USD Millions)$6.111 ($1.471) $23.864 (tax benefit $20.8M)

Segment/Revenue Mix

Revenue ComponentQ4 2023Q3 2024Q4 2024
Product Revenue ($USD Millions)$21.002 $6.730 $15.805
Services Revenue ($USD Millions)$1.267 $0.833 $0.795
WaferPak Share of Total Revenue (%)38% 63% 75%

KPIs

KPIQ4 2024
Bookings ($USD Millions)$4.0
Backlog ($USD Millions)$7.3
Effective Backlog incl. early Q1 FY25 ($USD Millions)$20.8
Cash & Cash Equivalents ($USD Millions)$49.2
Operating Cash Flow (Quarter) ($USD Millions)$1.2

Non-GAAP Adjustments (Q4 2024)

  • Added back: Stock-based compensation $0.775M and acquisition-related costs $0.107M; Non-GAAP diluted EPS $0.84 vs GAAP $0.81 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2025Not previously providedAt least $70M New
Net Profit Before TaxesFY2025Not previously providedAt least 10% of revenue New
Income TaxesFY2025N/AExpect to incur income tax expense beginning Q1 FY2025 New
Fiscal CalendarEffective FY2025May 31 YEChanged to 4-4-5, year ends Friday closest to May 31 Changed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2024 – Jan 9, 2024)Previous Mentions (Q3 FY2024 – Apr 9, 2024)Current Period (Q4 FY2024 – Jul 16, 2024)Trend
EV/SiC demand & timingSlowing EV growth rate impacting order timing; customers push out systems; mix shifts to WaferPaks Continued pushouts; bookings improved; Asia EV demand stronger; module-based SiC ramp expected 2025–2026 Soft H2 EV demand drove lower revenue; $12.7M WaferPak orders; expect additional SiC customers and broader diversification in FY2025 Stabilizing; diversification; consumables carry near-term
AI initiativesEarly discussion: optical I/O and memory co-pack with AI; wafer-level burn-in potential for processors High-power FOX-XP (up to several thousand watts) for AI processors wafer-level; challenges: high current/thermal management AI accelerator evaluation secured; expect production FOX-XP this fiscal year; Incal adds packaged-part ultra-high-power capability Accelerating; concrete customer eval and capability expansion
Silicon Photonics (optical I/O)First major production system order; high-power FOX-XP config up to 3,500W/wafer and 9 wafers Shipped first high-power FOX-XP system; market timing uncertain but monitoring closely Highlighted new high-power config shipped prior year; opportunity tied to AI processor optical I/O roadmaps Execution progress; awaiting broader market ramps
GaN power semiconductorsInitial GaN system order; burn-in likely needed for auto/solar/industrial Additional GaN engagements; test nuances addressed; production burn-in expected in mission-critical apps Received forecasts for wafer-level production burn-in systems this fiscal year Building pipeline; potential FY2025 contribution
China/RegionalPlanning IP-secure approach to China; EV growth strong Extensive Asia visits; China/South Korea EV market robust; considering expanded presence/support Engaged with multiple Chinese SiC suppliers; expect one or more new customers within ~18 months Increasing engagement; near-term potential
R&D/OpExInvestments in aligner, ERP/controls Continued R&D in high-power configs and aligner; bookings improved OpEx higher YoY (R&D, legal, commissions, SOX) impacting near-term margins Elevated OpEx to support diversification

Management Commentary

  • CEO: “We received $12.7 million in orders…for FOX WaferPak full wafer Contactors to support production of silicon carbide…for electric vehicles” and “we have secured a commitment [from an AI accelerator] to evaluate our FOX solution…we expect they will utilize our new high-power FOX-XP systems for production…starting this fiscal year” .
  • CEO on Incal: Incal’s Sonoma high-power platform targets AI/GPU/network processors; combined portfolio positions Aehr to capture a meaningful share of >$100M annual reliability/burn-in market for AI processors .
  • CFO: “For the fiscal year ending on May 30, 2025, we expect total revenue of at least $70 million…[and] net profit before taxes of at least 10% of revenue,” and “we changed the company’s fiscal year-end to a [4-4-5] fiscal calendar…this change is expected to improve comparability” .
  • CFO: WaferPak revenues were $12.4M (75% of Q4 total); gross margin 50.9% vs 51.5% prior year; bookings $13.5M in first six weeks of Q1 FY2025 taking effective backlog to $20.8M .

Q&A Highlights

  • Incal contribution: Incal did ~$12M LTM; FY2025 guide takes a cautious stance; run rate could be ~$1M/month post-close, subject to customer visits and integration .
  • China pipeline: Engaged with multiple Chinese SiC players; well over a dozen qualified prospects, aiming to add “one or more” China customers within ~18 months .
  • AI accelerator clarity: Not Nvidia; customer is revenue-generating; wafer-level burn-in requires novel high-current delivery and thermal removal (up to ~3,000+ amps per wafer depending on device) .
  • OpEx and margins: Near-term OpEx higher due to R&D, legal, commissions, sales/finance (SOX); leveraging infrastructure to regain 20%+ operating margins as revenue scales back toward $100M run-rate .
  • Mix and visibility: FY2024 bookings fell vs prior year amid EV softness; consumables revenue offsets delayed systems; expectation to add diversified 10%+ customers in HDD, AI, GaN alongside SiC .

Estimates Context

  • S&P Global consensus EPS and revenue data were unavailable via the tool at this time; we cannot quantify beats/misses versus SPGI consensus in this report. Management stated full-year results “surpassed analyst consensus,” but we do not have independent SPGI data points today to validate magnitudes .
  • Implication: In absence of SPGI consensus, focus remains on company-reported trajectories (consumables strength, diversification, FY2025 floor guide) and qualitative catalysts that could drive estimate revisions in diversified markets (AI, photonics, GaN, HDD) .

Key Takeaways for Investors

  • Consumables are a resilient bridge: WaferPak revenues at 75% of Q4 total underpin cash generation while systems are pushed out; bookings and effective backlog entering Q1 FY2025 support near-term visibility .
  • FY2025 floor and margin construct: At least $70M revenue with ≥10% pre-tax margin provides a conservative baseline while diversification (AI/HDD/GaN/SiC China) rolls in .
  • AI is moving from narrative to execution: High-power wafer-level FOX-XP and Incal’s packaged-part platforms position Aehr across the AI reliability stack; a committed accelerator evaluation targets production this fiscal year .
  • Photonics optionality: High-power FOX-XP shipped for silicon photonics; optical I/O ramps tied to leading processor vendors’ roadmaps, creating medium-term upside .
  • China engagement increases TAM: Multiple Chinese SiC suppliers engaged with potential customer adds within ~18 months; expanded support/IP protection strategies are in motion .
  • Tax/Calendar changes: Expect income tax expense starting FY2025 and a 4-4-5 fiscal calendar, improving comparability; consider tax headwind vs prior periods with valuation allowance release .
  • Watch bookings/system mix: Systems normalization (alongside consumables) would be the clearest signal of capacity ramps resuming in EV/SiC and of diversified contributions from HDD, AI, and GaN .