AEHR TEST SYSTEMS
For the period ended Nov 29, 2024. Filed Jan 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 29, 2024 · Filed Jan 13, 2025
AEHR$53.57+9.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-08-30; filed 2024-10-11.
0001654954-24-012913
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-11-29; filed 2025-01-13.
0001654954-25-000285
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 42 previous paragraphs and 48 current paragraphs.
20 unchanged; 18 reworded; 10 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
In connection with the acquisition of Incal Technology, Inc. (“Incal”), our product portfolio further expanded to include packaged parts burn-in solutions for the full range of power and complexity of integrated circuits. Incal’s product lines feature the Sonoma series for ultra-high-power burn-in testing, the Tahoe series for medium-power reliability burn-in, and the Echo series for low-power and high parallelism testing. The Sonoma line, with its ultra-high-power capabilities, is specifically designed to address the reliability and burn-in needs of the burgeoning demand for AI accelerators, GPUs, high-performance computing (HPC) processors, and devices that can reach levels of power as high as 1600W. The Sonoma is available in its standard configuration, which hosts up to 22 slots per chamber, and in its production version, which has 12 slots per chamber. The Tahoe and Echo lines for medium-power and low-power burn-in solutions, respectively, target logic, SoC, and mixed-signal devices employed in mobile communications, mobility, medical, military, aerospace, and data center applications. These systems are frequently used by independent test and burn-in labs, as well as semiconductor manufacturers.
Current report
Revenue decreased to $26.6 million for the six months ended November 29, 2024 from $42.1 million for the six months ended November 30, 2023, driven by a decrease in shipments of our systems and in delivery of our services due to the continued softness in the power semiconductor demand for electric vehicles. Our systems revenue decreased by $15.3 million due to the decrease in our FOX-P systems revenue, which was partially offset by the increase in package parts burn-in systems revenue of $5.0 million in connection with the Incal acquisition. Our services revenue decreased by $0.4 million and was partially offset by an increase in our contactors revenue of $0.2 million.
Current report
Gross profit decreased to $5.4 million for the three months ended November 29, 2024 from $11.0 million for the three months ended November 30, 2023. Gross margin decreased to 40.1% for the three months ended November 29, 2024 from 51.1% for the three months ended November 30, 2023. The decrease in gross margin of 11.0 percentage points was primarily due to the amortization of acquired intangible assets, the acquisition related fair value adjustment to inventory, lower system shipments leading to reduced manufacturing efficiencies, and a change in product mix.
Current report
Gross profit decreased to $12.5 million for the six months ended November 29, 2024 from $20.9 million for the six months ended November 30, 2023. Gross margin decreased to 47.0% for the six months ended November 29, 2024 from 49.8% for the six months ended November 30, 2023. The 2.8 percentage point decrease in gross margin was primarily due to the amortization of acquired intangible assets, the acquisition related fair value adjustment to inventory, lower system shipments leading to reduced manufacturing efficiencies, and a change in product mix.
Current report
Research and development expenses increased to $4.6 million for the six months ended November 29, 2024, compared to $4.4 million for the six months ended November 30, 2023, primarily due to the higher employment costs and increased license subscription fees.
Current report
Selling, general and administrative expenses increased to $9.2 million for the six months ended November 29, 2024, compared to $6.9 million for the six months ended November 30, 2023. The increase was primarily driven by $1.1 million in additional selling, general and administrative expenses from the newly acquired business, $0.5 million in acquisition related costs and a $0.6 million increase in stock-based compensation expenses.
Current report
Income tax expense (benefit)
Current report
N.M. – not meaningful
Current report
For the three and six months ended November 29, 2024, the Company recognized an income tax benefit due to quarter-to-date and year-to-date losses in the U.S. For the three and six months ended November 30, 2023, income tax expense was primarily related to foreign operations as the Company maintained a full valuation allowance on all the U.S. net deferred tax assets through the first six months of fiscal 2024.
Current report
Net Cash Flows Provided by (Used in) Operating Activities
Removed paragraphs (4)
Previous report
Gross profit decreased to $7.1 million for the three months ended August 30, 2024 from $10.0 million for the three months ended August 31, 2023. Gross margin increased to 54.0% for the three months ended August 30, 2024 from 48.4% for the three months ended August 31, 2023. The increase in gross margin of 5.6 percentage points was primarily due to a decrease in material cost as a percentage of revenue driven by a product mix shift toward more contactor sales. This was partially offset by lower system shipments resulting in lower manufacturing efficiencies.
Previous report
Provision for Income Taxes
Previous report
Income tax expense increased due to the release of valuation allowance in the fourth quarter of fiscal 2024. Starting in fiscal 2025, the Company recognized U.S. federal and state income tax expense from the current period taxable income.
Previous report
Net Cash Flows Provided by Operating Activities
Reworded paragraphs (18)
Previous wording
We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and package part form, and have installed thousands of systems worldwide. Decarbonization and digitalization is driving increased quality, reliability, safety, and security needs of semiconductors used across multiple applications, including electric vehicles, electric vehicle charging infrastructure, solar and wind power, computing, data and telecommunications infrastructure, and solid-state memory and storage. The trend is driving additional test requirements, incremental capacity needs, and new opportunities for our test products and solutions.
Current wording
We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and package part form, and have installed thousands of systems worldwide. Decarbonization, generative AI and digitalization is driving increased quality, reliability, safety, and security needs of semiconductors used across multiple applications, including electric vehicles, electric vehicle charging infrastructure, solar and wind power, computing, data and telecommunications infrastructure, and solid-state memory and storage. The trend is driving additional test requirements, incremental capacity needs, and new opportunities for our test products and solutions.
Previous wording
Our net revenue consists primarily of sales of FOX-P systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, test fixtures, upgrades and spare parts, service contracts revenues, and non-recurring engineering charges. Our selling arrangements may include contractual customer acceptance provisions, which are mostly deemed perfunctory or inconsequential, and installation of the product occurs after shipment, transfer of title and risk of loss.
Current wording
Our net revenue consists primarily of sales of FOX-P systems, Sonoma/Tahoe/Echo systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, test fixtures, upgrades and spare parts, service contracts revenues, and non-recurring engineering charges. Our selling arrangements may include contractual customer acceptance provisions, which are mostly deemed perfunctory or inconsequential, and installation of the product occurs after shipment, transfer of title and risk of loss.
Previous wording
Except for the critical accounting estimates related to Business Combination and Impairment of Goodwill and Long-lived Assets newly discussed below, there have been no material changes to our critical accounting policies and estimates during the three months ended August 30, 2024 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.
Current wording
Except for the critical accounting estimates related to Business Combination and Impairment of Goodwill and Long-lived Assets newly discussed below, there have been no material changes to our critical accounting policies and estimates during the six months ended November 29, 2024 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.
Previous wording
We have not recorded any impairment charges during the three months ended August 30, 2024 and August 31, 2023.
Current wording
We have not recorded any impairment charges during the three and six months ended November 29, 2024 and November 30, 2023.
Previous wording
Beginning on June 1, 2024, we have changed our fiscal year to the 52- or 53-week period ending on the Friday nearest May 31. Our first fiscal quarter in fiscal 2025 ended on August 30, 2024, and our fiscal year 2025 will end on May 30, 2025.
Current wording
Beginning on June 1, 2024, we have changed our fiscal year to the 52- or 53-week period ending on the Friday nearest May 31. Our second fiscal quarter in fiscal 2025 ended on November 29, 2024, and our fiscal year 2025 will end on May 30, 2025.
Previous wording
We completed the acquisition of Incal Technology, Inc. (“Incal”) on July 31, 2024. Revenue from the acquired products and services subsequent to the acquisition date was not material to our results of operations for the three months ended August 30, 2024. However, we may quantitatively disclose the impact of the expense contributions from the acquisition where such discussions are significant to understanding our financial results.
Current wording
We completed the acquisition of Incal Technology, Inc. (“Incal”) on July 31, 2024. We may quantitatively disclose the impact of the revenue and expense contributions from the acquisition where such discussions are significant to understanding our financial results.
Previous wording
Discussion of Results of Operations for the Three Months Ended August 30, 2024 compared to the Three Months Ended August 31, 2023
Current wording
Discussion of Results of Operations for the Three and Six Months Ended November 29, 2024 compared to the Three and Six Months Ended November 30, 2023
Previous wording
Revenue decreased to $13.1 million for the three months ended August 30, 2024 from $20.6 million for the three months ended August 31, 2023, driven by a decrease in shipments of our systems and services due to the recent overall softness in the demand for electric vehicles. Our systems revenue decreased by $8.0 million and our services revenue decreased by $0.3 million, partially offset by an increase in our contactors revenue of $0.8 million.
Current wording
Revenue decreased to $13.5 million for the three months ended November 29, 2024 from $21.4 million for the three months ended November 30, 2023, driven by a decrease in shipments of our systems and contactors, as well as reduced delivery of our services, primarily due to the continued softness in the power semiconductor demand for electric vehicles. Our systems revenue decreased by $7.3 million due to the decrease in our FOX-P systems revenue, which was partially offset by the increase in package parts burn-in systems revenue of $4.8 million in connection with the Incal acquisition. Our contactors revenue decreased by $0.6 million and our services revenue decreased by $0.1 million.
Previous wording
On a geographic basis, revenues represent products that were shipped to or services that were performed at our customer locations. For the three months ended August 30, 2024 compared to the three months ended August 31, 2023, revenue decreased across all regions, primarily due to a decline in shipments of our systems driven by the recent overall softness in the demand for electric vehicles.
Current wording
On a geographic basis, revenues represent products that were shipped to or services that were performed at our customer locations. For the three and six months ended November 29, 2024 compared to the three and six months ended November 30, 2023, revenue decreased in Asia and Europe, primarily due to a decline in shipments of our systems driven by the continued softness in the power semiconductor demand for electric vehicles. This was partially offset by an increase in revenue in the United States, driven by contributions from Incal customers.
Previous wording
Research and development expenses consist primarily of compensation and benefits for product development personnel, outside development service costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Research and development expenses remained relatively flat at $2.4 million for the three months ended August 30, 2024, compared to $2.5 million for the three months ended August 31, 2023.
Current wording
Research and development expenses consist primarily of compensation and benefits for product development personnel, outside development service costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Research and development expenses increased to $2.3 million for the three months ended November 29, 2024, compared to $2.0 million for the three months ended November 30, 2023. The increase of $0.3 million was primarily driven by higher employment costs and increased license subscription fees due to an increase in headcount.
Previous wording
Selling, general and administrative expenses consist primarily of compensation and benefits for sales, marketing and general and administrative personnel, legal and accounting service costs, marketing communications costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Selling, general and administrative expenses increased to $4.6 million for the three months ended August 30, 2024, compared to $3.4 million for the three months ended August 31, 2023. The increase was primarily driven by $0.5 million in acquisition related costs, and $0.4 million in additional expenses from the newly acquired business.
Current wording
Selling, general and administrative expenses consist primarily of compensation and benefits for sales, marketing and general and administrative personnel, legal and accounting service costs, marketing communications costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Selling, general and administrative expenses increased to $4.6 million for the three months ended November 29, 2024, compared to $3.5 million for the three months ended November 30, 2023. The increase was primarily driven by a $0.7 million in additional expenses from the newly acquired business, a $0.3 million increase in stock-based compensation expenses and higher professional service fees.
Previous wording
Interest and Other Income (Expense), Net
Current wording
Interest and Other Income, Net
Previous wording
Interest and other income (expense), net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Interest and other income (expense), net, increased for the three months ended August 30, 2024, compared to the same periods in the prior year, primarily driven by higher interest income earned due to higher yields from our investments in money market funds.
Current wording
Interest and other income, net, primarily consists of interest income and foreign currency transaction exchange gains and losses. Interest and other income, net, decreased for the three and six months ended November 29, 2024, compared to the same periods in the prior year, primarily driven by lower interest income earned due to lower average cash balances and lower yields from our investments in money market funds.
Previous wording
Cash, cash equivalents, and restricted cash were $40.8 million as of August 30, 2024, compared to $51.1 million as of August 31, 2023. We believe that our existing cash resources and anticipated funds from operations will satisfy our cash requirements to fund our operating activities, capital expenditures and other obligations for the next twelve months.
Current wording
Cash, cash equivalents, and restricted cash were $35.2 million as of November 29, 2024, compared to $50.7 million as of November 30, 2023. We believe that our existing cash resources and anticipated funds from operations will satisfy our cash requirements to fund our operating activities, capital expenditures and other obligations for the next twelve months.
Previous wording
Cash flow from operating activities during the three months ended August 30, 2024 mostly consisted of net income, adjusted for certain non-cash items which primarily consisted of depreciation and amortization, share-based compensation expense and amortization of operating lease right-of-use assets. The $1.5 million decrease in cash flows from operating activities for the three months ended August 30, 2024, compared to the three months ended August 31, 2023, was driven primarily by a lower net income, a decrease in cash provided by deferred revenue due to timing of customer deposits and revenue recognition, a decrease in cash provided by collection of accounts receivable due to the lower revenue and an increase in cash used in prepaid expenses, partially offset by a decrease in cash used in inventory production due to anticipated lower customer demand.
Current wording
The $6.8 million decrease in cash flows from operating activities for the six months ended November 29, 2024, compared to the six months ended November 30, 2023, was driven primarily by a net loss in the current period, compared to a net income in the prior period, and a decrease in cash provided by collection of accounts receivable due to lower revenue, which were partially offset by a decrease in cash used in procuring inventory and payments to vendors and a smaller reduction in deferred revenue due to timing of customer deposits and revenue recognition.
Previous wording
Net cash provided by investing activities decreased by $28.5 million for the three months ended August 30, 2024 compared to the three months ended August 31, 2023. The decrease was primarily due to the maturity of our short-term investments of $18.0 million during the three months ended August 31, 2023, while there was no such maturity of investment during the three months ended August 30, 2024. Additionally, the Company paid $10.6 million to acquire Incal during the three months ended August 30, 2024.
Current wording
Net cash used in investing activities increased by $28.7 million for the six months ended November 29, 2024 compared to the six months ended November 30, 2023. The increase in net cash used was primarily due to the maturity of our short-term investments of $18.0 million during the six months ended November 30, 2023, while there was no such maturity of investment during the six months ended November 29, 2024. Additionally, the Company paid $10.6 million to acquire Incal during the six months ended November 29, 2024.
Previous wording
Net Cash Flows Used in Financing Activities
Current wording
Net Cash Flows Provided by (Used in) Financing Activities
Previous wording
Net cash used in financing activities decreased by $0.6 million for the three months ended August 30, 2024, compared to the three months ended August 31, 2023. The decrease was primarily due to a reduction in shares repurchased for tax withholdings on vesting of restricted stock units.
Current wording
Net cash provided by financing activities increased by $0.9 million for the six months ended November 29, 2024, compared to the six months ended November 30, 2023. The increase was primarily due to a reduction in shares repurchased for tax withholdings on vesting of restricted stock units, partially offset by a reduction in proceeds from issuance of common stock under employee plans.