Sign in
K&

KULICKE & SOFFA INDUSTRIES INC (KLIC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 revenue of $148.4M and non-GAAP EPS of $0.07 modestly beat S&P consensus ($145.5M revenue, $0.055 EPS), aided by stronger general semiconductor and memory utilization; GAAP EPS was $(0.06) as restructuring and equity compensation still weighed on GAAP results .*
  • Gross margin expanded sharply to 46.7% from 24.9% in Q2, reflecting normalization post-EA wind-down charges and improved mix; operating expense normalized to ~$75.3M GAAP ($68.0M non-GAAP) .
  • Q4 FY2025 guidance: revenue ~$170M ±$10M, GAAP EPS ~$0.08 ±10%, non-GAAP EPS ~$0.22 ±10%, non-GAAP OpEx ~$68M; management expects sequential improvement, with December quarter (Q1 FY2026) “flattish” vs September given ongoing tariff-related caution .
  • Strategic catalysts: momentum in Fluxless Thermal Compression (TCB) with first memory-system shipment targeted by end of calendar 2025, vertical wire adoption for low-power HBM/DDR applications, and broadening Advanced Dispense orders (auto OEM, IDMs, OSATs) .

What Went Well and What Went Wrong

What Went Well

  • Normalization of margins and execution: gross margin recovered to 46.7% and non-GAAP EPS reached $0.07; management highlighted “revenue above guidance” and disciplined cost control .
  • Strategic product momentum: initial POs in Advanced Dispense from an auto OEM, several IDMs and multiple OSATs; expanding portfolio to be showcased at Semicon Taiwan .
  • Advanced packaging traction: TCB progress with planned first memory shipment by year-end; confident roadmap and share gains across memory and logic applications .

What Went Wrong

  • Automotive/industrial demand softness: sequential revenue pressure and lingering weakness driven by tariff/trade uncertainty and Southeast Asia-specific customer hesitation .
  • GAAP profitability still negative: GAAP EPS of $(0.06) and GAAP operating loss $(6.1)M reflect non-core charges and equity compensation; non-GAAP profitability remains low (2.5% net margin) .
  • Limited capacity additions despite high utilization: customers running at elevated utilization (overall ~81%) but remain cautious on capex due to tariff uncertainty; auto utilization <70% .

Financial Results

Core P&L vs Prior Year and Prior Quarter

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$181.7 $162.0 $148.4
Gross Margin %—24.9% 46.7%
Operating Margin % (GAAP)4.6% (52.3)% (4.1)%
Net Income Margin % (GAAP)6.8% (52.2)% (2.2)%
Diluted EPS (GAAP) ($)$0.22 $(1.59) $(0.06)
Diluted EPS (Non-GAAP) ($)$0.35 $(0.52) $0.07

Consensus vs Actual (S&P Global)

MetricQ3 2025 ConsensusQ3 2025 Actual
Revenue ($USD Millions)$145.5M*$148.4M
Diluted EPS (Non-GAAP) ($)$0.055*$0.07
# of Estimates (Revenue / EPS)5 / 4*—

Values retrieved from S&P Global.*

KPIs and Balance Sheet

KPIQ3 2024Q2 2025Q3 2025
Cash from Operations ($M)$26.9 $79.9 $7.4
Adjusted Free Cash Flow ($M)$24.2 $78.0 $5.4
Total Cash + Short-term Investments ($M)$601.9 $581.5 $556.5
GAAP Operating Expenses ($M)$76.5 $125.1 $75.3
Dividend per Share ($)$0.20 $0.205 $0.205
Share Repurchases—$21.3M $21.6M; ~668K shares

Utilization (Q3 FY2025)

End MarketUtilization
General Semiconductor~83%
Memory~80%
Automotive<70%
Overall~81%

Guidance Changes

Q4 FY2025 Guidance (as of Q3 report)

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY2025N/A~$170M ±$10M New
GAAP Diluted EPSQ4 FY2025N/A~$0.08 ±10% New
Non-GAAP Diluted EPSQ4 FY2025N/A~$0.22 ±10% New
Operating Expenses (GAAP / Non-GAAP)Q4 FY2025N/A~$75.5M GAAP; ~$68.0M non-GAAP New
Effective Tax RateNear-termN/A>20% expected Maintained (qualitative)
DividendNext paymentPrior $0.205$0.205 declared for Oct 7, 2025 Maintained

Q3 FY2025 Guidance vs Actual (for accountability)

MetricPeriodPrevious Guidance (from Q2)ActualResult
RevenueQ3 FY2025~$145M ±$10M $148.4M Beat
GAAP Diluted EPSQ3 FY2025~$(0.09) ±10% $(0.06) Beat
Non-GAAP Diluted EPSQ3 FY2025~$0.05 ±10% $0.07 Beat

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Advanced DispenseOrders from U.S. IDM; building portfolio and customer engagement Initial POs from auto OEM, several IDMs, multiple OSATs; new capabilities to be introduced at Semicon Taiwan Adoption broadening
Vertical Wire (low-power HBM/DDR)Launch for DRAM packaging; ramp targeted first half FY2026 Higher-volume production planned in FY2026; enables low-power HBM and DDR bandwidth uplift (3–4x over LPDRAM) Momentum improving
TCB/FTC (Fluxless)FY2025 nearly fully booked; capacity constrained; expansion planned Initial memory FPC system shipment expected by end of CY2025; integrated physical + chemical prep enhances adoption Expanding use cases (logic → memory)
Supply chain/tariffsTariff uncertainty causing order hesitation, esp. SE Asia auto/industrial Customers cautious despite high utilization; Dec quarter likely flattish vs Sep Persistent headwind
Regional trendsChina mid-80s% utilization; Taiwan ~80% Overall ~81%; general semi ~83%, memory ~80%, auto <70% Improving core regions
EA business cessation$86.6M charges booked; < $15M residual expected through 1H FY2026 No new charges; focus on core advanced packaging Lapping completed

Management Commentary

  • “We continue to execute on multiple technology transitions… unlocking new opportunities across general semiconductor, memory, automotive, and industrial markets… encouraged by recent order momentum within our highest-volume regions.” – Fusen Chen, CEO .
  • “Gross margin came in at 46.7%… total operating expense $75.3M GAAP and $68.0M non-GAAP… effective tax rate will remain above 20% over the near term.” – Lester Wong, CFO .
  • On vertical wire and low-power HBM: “This new format… is anticipated to increase bandwidth by three to four times… vertical wire interconnects are enabling a more cost-effective production process.” – Fusen Chen .
  • On TCB memory entry: “We now expect to ship an initial FPC system by the end of calendar year 2025 to support the anticipated fluxless transition within the HBM space.” – Fusen Chen .

Q&A Highlights

  • Revenue trajectory: Management expects Q4 revenue of ~$170M; indicated December quarter likely flattish vs September due to tariff-related caution despite high utilization .
  • Utilization and drivers: Overall ~81% utilization; general semi and memory led sequential growth; auto remains soft (<70%) .
  • TCB scale and outlook: FY2025 TCB revenue targeted ~$60–$70M; FY2026 targeted ~$100M+, with 2028 market opportunity ~$0.9–$1.0B and K&S aiming for $250–$300M .
  • Technology approach: Integrated physical + chemical surface prep within FTC system to broaden adoption; management confident chemical-based fluxless remains best at interface integrity .
  • Foundry/customer dynamics: Engagements healthy; mix shifting with memory opportunity; capacity constraints being addressed .

Estimates Context

  • Q3 FY2025 beat: revenue $148.4M vs S&P consensus $145.5M; non-GAAP EPS $0.07 vs $0.055. We expect modest upward revisions in near-term models given sequential revenue uplift and margin normalization.*
  • Q4 FY2025 setup: S&P consensus revenue ~$169.8M and EPS ~$0.222 broadly align with management’s guide ($170M ±$10M; non-GAAP EPS ~$0.22), limiting surprise risk barring macro/tariff shifts.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quarterly execution improved: revenue and EPS beats vs guidance/consensus with sharp margin recovery; monitor sustainability as auto/industrial softness persists .*
  • Near-term path: Q4 guide implies ~15% sequential revenue increase; December quarter likely flattish as customers wait for tariff clarity, suggesting limited near-term capex acceleration .
  • Strategic growth vectors: TCB memory entry (first system shipment by year-end), vertical wire ramp for low-power HBM/DDR in FY2026, and expanding Advanced Dispense footprint support medium-term mix upgrade .
  • Capital returns intact: dividend maintained at $0.205/share and ongoing buybacks (668K shares repurchased in Q3; $21.6M) provide downside support .
  • Watch utilization and orders: Elevated utilization in China/Taiwan/general semi should translate to capex once tariff uncertainty subsides; signals to track include order intake and regional reallocation .
  • Margin trajectory: With EA wind-down charges largely behind, gross margin normalization and tighter OpEx underpin earnings leverage as volumes recover .
  • Risk factors: Tariff/macro uncertainty, auto/industrial demand, and capacity constraints in advanced packaging could modulate timing of growth; maintain scenario analysis around FY2026 ramps .

Notes:

  • All document-sourced figures and quotes include citations.
  • Consensus figures marked with an asterisk are Values retrieved from S&P Global.*