AEHR TEST SYSTEMS
For the period ended Feb 27, 2026. Filed Apr 8, 2026.
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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.
Feb 27, 2026 · Filed Apr 8, 2026
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 2025-11-28; filed 2026-01-12.
0001654954-26-000266
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-02-27; filed 2026-04-08.
0001654954-26-003348
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 43 previous paragraphs and 53 current paragraphs.
21 unchanged; 17 reworded; 14 added; 5 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 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 (14)
Current report
Our operating results and cash flows can vary significantly from period to period due to the timing, volume, and mix of customer orders, particularly because a substantial portion of our revenue is derived from a relatively small number of high-value systems sales. As a result, the number, type, and selling price of systems sold in a given period can materially affect revenue, gross margin, earnings, and operating cash flow.
Current report
Demand for our products is influenced by conditions in the semiconductor industry and in the end markets served by our customers, including demand related to generative AI, silicon photonics and power semiconductors including silicon carbide and gallium nitride. During fiscal 2025 and the first nine months of fiscal 2026, our operating performance was negatively affected by continued softness in demand in electric vehicle power semiconductors. Changes in customer investment cycles, order timing, and the pace of adoption of new technologies may continue to affect our results in future periods.
Current report
In addition, our results of operations have been affected by changes in revenue mix across systems, contactors, and services, as well as by the integration and contribution of the acquired business. Because these factors can affect revenue levels, gross margins, operating expenses, and working capital differently from period to period, past performance may not necessarily be indicative of future results. Our liquidity and cash flows may also be affected by the timing of large system shipments, investments in inventory and working capital, capital expenditures, acquisition-related cash uses, and investments in product development and market expansion.
Current report
Recent changes in U.S. tariff policy, including possible replacement tariffs and the availability, timing and amount of any potential refunds of previously paid tariffs, may affect the cost of our imported goods, our supply chain, and, accordingly, our gross margins and operating results. We have not yet determined the impact of such changes and are continuing to evaluate the potential impact of these developments.
Current report
Income Taxes
Current report
We recognize deferred tax assets (“DTAs”) for deductible temporary differences, net operating loss carryforwards, and tax credit carryforwards to the extent we conclude it is more likely than not that such DTAs will be realized. Our DTAs relate solely to U.S. federal and state income taxes. At each reporting date, we evaluate the realizability of our DTAs and record a valuation allowance when, based on all available evidence, we conclude that it is not more likely than not that some portion or all of our DTAs will be realized.
Current report
This assessment is a critical accounting estimate because it requires significant judgment in weighing both positive and negative evidence, with the most objective evidence generally carrying the greatest weight. In making this determination, we consider, among other factors: (i) recent operating results and cumulative pretax income (loss) in the United States; (ii) the duration and severity of any recent losses; (iii) projections of future taxable income based on our operating plans (including expected revenues, margins, and cost structure); (iv) the availability and feasibility of tax planning strategies; and (v) the expected utilization periods and limitations applicable to carryforwards.
Current report
During fiscal 2024, we released a valuation allowance of $21.9 million after concluding that it was more likely than not that our U.S. DTAs would be realized. However, because we incurred pretax losses in fiscal 2025, and losses continued through the nine months ended February 27, 2026, management continues to reassess at each reporting date whether sufficient positive evidence exists to support realization of our U.S. DTAs. This reassessment places increased emphasis on the evaluation of recent operating performance and our forecast of future taxable income, including the extent to which recent losses are expected to be temporary versus indicative of a sustained trend.
Current report
If actual results differ from our current estimates, if assumptions underlying our forecast of future taxable income change, or if negative evidence (including sustained losses) outweighs positive evidence, we may be required to record or adjust a valuation allowance. Any such change could have a material impact on our income tax provision and our results of operations in the period of the change.
Current report
For the three months ended February 27, 2026, revenue decreased by $8.0 million, compared to the same period in the prior year. This decrease was primarily driven by a $5.9 million decline in wafer-level burn-in systems revenue and a $4.3 million decline in wafer-level contactors revenue, mainly due to lower shipments of wafer-level burn-in products sold. In the prior year period, wafer-level burn-in products were sold to a new semiconductor customer serving AI applications and to a gallium nitride power semiconductor supplier. These decreases were partially offset by a $1.4 million increase in package-level burn-in boards and burn-in modules revenue and $0.9 million increase in package-level burn-in systems revenue, driven by a higher number of package-level burn-in products sold to customers in AI-related applications.
Current report
Research and development expenses increased by $1.2 million for the nine months ended February 27, 2026, compared to the same period in the prior year. The increase was primarily driven by $1.1 million of higher employment-related costs, including stock-based compensation, resulting from increased headcount, higher allocated office expenses of $0.5 million and higher project-related expenses of $0.3 million, which were partially offset by the one-time severance benefits of $0.7 million incurred in the prior year period following the passing of an executive officer.
Current report
Selling, general and administrative expenses decreased by $0.8 million for the nine months ended February 27, 2026, compared to the same period in the prior year, primarily due to lower professional service fees of $1.3 million and a lower bonus expense of $0.4 million partially offset by higher stock-based compensation of $1.1 million.
Current report
N.M.-Not meaningful
Current report
N.M.-Not meaningful
Removed paragraphs (5)
Previous report
For the three months ended November 28, 2025, revenue decreased by $3.6 million, compared to the same period in the prior year, primarily driven by lower shipments of contactors due to the ongoing softness in demand for electric vehicles. Contactors revenue decreased by $5.1 million, partially offset by an increase in package-level burn-in systems revenue of $1.6 million, driven by increased demand from customers in AI-related applications.
Previous report
Restructuring Charges
Previous report
There was a recovery of previously expensed restructuring charges for the three months ended November 28, 2025 primarily related to the early termination of the Incal lease, which resulted in a net credit of $0.2 million.
Previous report
For the six months ended November 28, 2025, restructuring costs associated with a workforce reduction implemented during the three months ended August 29, 2025 to better align our resources with our business needs were partially offset by a credit recognized during the three months ended November 28, 2025 resulting from the early termination of the Incal lease.
Previous report
For further explanation of our restructuring charges, see Note 10, Restructuring Charges, in Notes to Condensed Consolidated Financial Statements.
Reworded paragraphs (17)
Previous wording
We have developed and introduced several innovative products including the FOX-P family of test and burn-in systems and FOX WaferPak Aligner, FOX WaferPak Contactor, FOX DiePak Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices used in artificial intelligence. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full wafer contactor capable of testing wafers up to 300mm that enables Integrated Circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1,024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time.
Current wording
We have developed and introduced several innovative products including the FOX-P family of test and burn-in systems and FOX WaferPak Aligner, FOX WaferPak Contactor, FOX DiePak Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices used in AI. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full wafer contactor capable of testing wafers up to 300mm that enables Integrated Circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1,024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time.
Previous wording
Our net revenue consists primarily of sales of FOX-P systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, Sonoma systems, Tahoe systems, Echo systems, 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, WaferPak Aligners, WaferPak contactors, Sonoma systems, Tahoe systems, Echo systems, 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
There have been no material changes to our critical accounting policies and estimates during the six months ended November 28, 2025 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 30, 2025.
Current wording
There have been no material changes to our critical accounting policies and estimates during the nine months ended February 27, 2026 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 30, 2025. However, we have expanded the discussion below regarding income taxes to provide additional information about the significant judgments and estimates involved in assessing the realizability of deferred tax assets.
Previous wording
Discussion of Results of Operations for the Three and Six Months Ended November 28, 2025 compared to the Three and Six Months Ended November 29, 2024
Current wording
Discussion of Results of Operations for the Three and Nine Months Ended February 27, 2026 compared to the Three and Nine Months Ended February 28, 2025
Previous wording
For the six months ended November 28, 2025, revenue decreased by $5.7 million, compared to the same period in the prior year, primarily driven by lower shipments of contactors due to the ongoing softness in demand for electric vehicles. Contactors revenue decreased by $14.6 million, partially offset by an increase in systems revenue of $8.3 million, reflecting increased demand from customers in AI–related applications and other markets, and an increase in service revenue of $0.6 million.
Current wording
For the nine months ended February 27, 2026, revenue decreased by $13.7 million, compared to the same period in the prior year, primarily driven by a $21.2 million decrease in wafer-level contactors revenue due to significantly lower shipments, reflecting continued softness in demand related to electric vehicles. This decrease was partially offset by a $3.6 million increase in package-level burn-in boards and burn-in modules revenue and a $2.5 million increase in package-level burn-in systems revenue, primarily reflecting increased demand for package-level burn-in products from customers in AI–related applications and other markets, a $0.8 million increase in wafer-level burn-in systems revenue, and a $0.5 million increase in service revenue.
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 November 28, 2025, compared to the same period in the prior year, revenue decreased in both Asia and the United States primarily due to the ongoing softness in 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 months ended February 27, 2026, compared to the same period in the prior year, revenue decreased in the United States primarily due to lower sales of wafer-level burn-in systems and contactors to customers in the United States.
Previous wording
For the six months ended November 28, 2025, compared to the same period in the prior year, revenue decreased in Asia primarily due to the ongoing softness in demand for electric vehicles, which was partially offset by increases in FOX-P systems sold in the United States, Europe and Middle East, driven by customer demand outside of the electric vehicle market.
Current wording
For the nine months ended February 27, 2026, compared to the same period in the prior year, revenue decreased in Asia primarily due to the ongoing softness in demand for electric vehicles and revenue decreased in the United States primarily due to lower sales of wafer-level burn-in systems and contactors to a customer providing AI applications. These decreases were partially offset by higher revenue in Europe and the Middle East, primarily attributable to the memory market.
Previous wording
Gross profit decreased by $2.9 million for the three months ended November 28, 2025, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 14.4 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix, higher assembly and warranty costs, and increased freight expenses.
Current wording
Gross profit decreased by $3.8 million for the three months ended February 27, 2026, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 6.5 percentage points primarily due to a change in product mix toward package-level burn-in products, which have lower gross margins than wafer-level products, as well as higher assembly and warranty costs, and increased freight and tariff costs.
Previous wording
Gross profit decreased by $6.2 million for the six months ended November 28, 2025, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 17.0 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix, higher assembly and warranty costs, increased freight expenses, and higher tariffs on imported parts following recent government policy changes.
Current wording
Gross profit decreased by $10.0 million for the nine months ended February 27, 2026, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 12.9 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix toward package-level burn-in products, which have lower gross margins than wafer-level products, higher assembly and warranty costs, increased freight expenses, and higher tariffs on imported parts following the government policy changes.
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 increased by $0.7 million and $1.2 million, respectively, for the three and six months ended November 28, 2025, compared to the same periods in the prior year. The increase was primarily driven by higher employment-related costs, including stock-based compensation, resulting from increased headcount and higher project-related expenses.
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 remained consistent for the three months ended February 27, 2026, compared to the same period in the prior year, as higher employment-related costs of $0.3 million resulting from increased headcount and higher allocated office expenses of $0.3 million were partially offset by one-time severance benefits of $0.7 million incurred in the prior year period following the passing of an executive officer.
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 remained consistent for the three months and six months ended November 28, 2025, compared to the same periods in the prior year, as higher stock-based compensation was partially offset by lower professional service fees and lower accrual for bonuses.
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 decreased by $0.7 million for the three months ended February 27, 2026, compared to the same period in the prior year, primarily due to lower professional service fees of $0.5 million.
Previous wording
Interest and other income, net, primarily consists of interest income, foreign currency transaction exchange gains and losses and other non-operating income and expense. Interest income, net, decreased by $34,000 and $0.5 million for the three and six months ended November 28, 2025, respectively, compared to the same periods in the prior year, primarily driven by lower interest income earned on a lower average cash balances and lower yields from our investments in money market funds. For the six months ended November 28, 2025, other income, net, increased by $1.0 million, compared to the same period in the prior year, primarily attributable to the Employee Retention Credit (“ERC”) refund of $1.3 million received, net of a $0.3 million third-party service fee incurred in connection with the filing of the ERC claims during the six months ended November 28, 2025.
Current wording
Interest income, net, decreased by $0.6 million for the nine months ended February 27, 2026, compared to the same periods in the prior year, primarily driven by lower interest income earned on lower average cash balances and lower yields from our investments in money market funds. For the nine months ended February 27, 2026, other income (expense), net, increased by $1.1 million, compared to the same period in the prior year, primarily attributable to the Employee Retention Credit (“ERC”) refund of $1.3 million received, net of a $0.3 million third-party service fee incurred in connection with the filing of the ERC claims.
Previous wording
For the three and six months ended November 28, 2025, the Company recognized an income tax benefits of $1.2 million and $2.0 million, respectively, primarily driven by quarter-to-date and year-to-date losses in the United States. For the three and six months ended November 29, 2024, the income tax benefit was also primarily related to quarter-to-date and year-to-date losses in the United States.
Current wording
For the three and nine months ended February 27, 2026, the Company recognized income tax benefit of $0.8 million and $2.8 million, respectively, primarily driven by quarter-to-date and year-to-date losses in the United States. For the three and nine months ended February 28, 2025, the income tax benefit was also primarily related to quarter-to-date and year-to-date losses in the United States.
Previous wording
Cash, cash equivalents, and restricted cash were $31.0 million as of November 28, 2025, compared to $35.2 million as of November 29, 2024. 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 $37.1 million as of February 27, 2026, compared to $31.4 million as of February 28, 2025. 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
The $2.0 million increase in cash flows from operating activities for the six months ended November 28, 2025, compared to the same period in the prior year, was driven primarily by decreases in prepayments to vendor and in unbilled receivables, lower cash outflows for inventory purchases, and higher non-cash charges including stock-based compensation expense, partially offset by a higher loss before income tax benefit.
Current wording
Net cash flows used in operating activities for the nine months ended February 27, 2026 remained relatively consistent, compared to the same period in the prior year. The change was driven primarily by decreases in prepayments to vendor and in unbilled receivables, an increase in cash provided by collection of accounts receivable, lower cash outflows for inventory purchases, and higher non-cash charges including stock-based compensation expense, offset by a higher loss before income tax benefit and an increase in payment to vendors.
Previous wording
Net cash used in investing activities decreased by $7.5 million for the six months ended November 28, 2025, compared to the same period in the prior year. The decrease was primarily due to the $10.6 million payment to acquire Incal during the six months ended November 29, 2024, compared to a $1.8 million escrow release related to the acquisition during the current period. This decrease was partially offset by a $1.3 million increase in cash spending on property and equipment, primarily related to an office renovation.
Current wording
Net cash used in investing activities decreased by $9.5 million for the nine months ended February 27, 2026, compared to the same period in the prior year. The decrease was primarily due to the $11.1 million payment to acquire Incal during the nine months ended February 28, 2025, compared to a $1.8 million escrow release related to the acquisition during the nine months ended February 27, 2026.
Previous wording
Net cash provided by financing activities increased by $9.1 million for the six months ended November 28, 2025, compared to the same period in the prior year, primarily driven by net proceeds of $9.4 million from the issuance of common stock under the Company’s ATM offering program.
Current wording
Net cash provided by financing activities increased by $19.1 million for the nine months ended February 27, 2026, compared to the same period in the prior year, primarily driven by net proceeds of $19.6 million from the issuance of common stock under the Company’s ATM offering program, partially offset by a $0.8 million increase in shares repurchased for tax withholdings on vesting of restricted stock units.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Interest and other income, net, primarily consists of interest income, foreign currency transaction exchange gains and losses and other non-operating income and expense. Interest income, net, and other income (expense), net, remained consistent for the three months ended February 27, 2026, compared to the same period in the prior year.