Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 29, 2026 · Beat 5 of last 7 quarters
The Buildout is a website built on agentic AI tools, currently in beta, and could have factual errors.
FormFactor's record results and raised outlook underscore accelerating test intensity at the intersection of high-performance compute and advanced packaging, particularly in HBM4, co-packaged optics, and data center CPUs. The company's capacity expansion in Farmers Branch and expanded Taiwan footprint signal continued investment to support the AI infrastructure buildout, with implications for the broader semiconductor supply chain.
FormFactor delivered record Q2 revenue of $258.2M, up 14% sequentially, with non-GAAP gross margin of 53.3% and non-GAAP EPS of $0.82, both above guidance. DRAM probe card revenue grew sequentially to another record, with HBM comprising roughly two-thirds of DRAM revenue, driven by two customers adopting SmartMatrix for HBM4. Foundry and logic probe card revenue increased significantly, led by data center CPU demand, while systems revenue nearly doubled sequentially to a record $48.5M, driven by CPO acceleration. The company also announced an expanded partnership with Keystone Micro in Taiwan to improve local assembly and service capabilities.
Management raised Q3 revenue guidance to $270M ± $10M, implying continued record performance and a ~$1.1B annualized run rate. Non-GAAP gross margin is guided to 54% ± 150 bps, with ~300 bps of non-recurring IEPA tariff refunds; the underlying baseline is expected to remain around 51% at current volumes and mix. The Farmers Branch site remains on track to begin ramping in Q4 2026, and is expected to be accretive to gross margins by early 2028. Management reiterated the 2030 target model of doubling revenue to $1.6B, 55% non-GAAP gross margin, and more than doubling non-GAAP EPS to $5.00. They also raised 2026 CPO revenue expectations to significantly exceed $20M, up from the prior $10M–$20M range, and noted that GPU production shipments are now underway in Q3.
“We surpassed $1 billion annual revenue run rate. And second, we exceeded a 50% gross margin.”
on Milestones
“The recurring or sustainable element of gross margins, we believe, is more like 51% at the current volumes and mix.”
on Gross margin baseline
“We are qualified as we have shared with you. And our shipping production units for revenue here in the third quarter.”
on GPU qualification
Did you say that 51% or 53% gross margin is the new baseline? And as Farmers Branch comes online, it is going to be more accretive, so should we assume as these revenue levels go higher, the gross margins will be better than 53%?
Aric clarified that the 53.3% actual gross margin included non-recurring items like tariff refunds and precious metal reclaim, so the sustainable baseline is ~51% at current volumes and mix. He confirmed that Farmers Branch is expected to be accretive to gross margins once it ramps.
On foundry logic, can you provide some more color on the breadth of the strength you are seeing there today? And how are you thinking about that as a potential upside source versus your target model?
Mike noted that Q2 strength was primarily from CPU demand at a historically strong customer, but the longer-term opportunity spans multiple customers including the leader in high-performance compute and a large fabless CPU manufacturer. He emphasized that diversification positions FormFactor to participate regardless of how CPU market share evolves.
For CPO, is it increasingly higher quarter over quarter? And ultimately, how much revenue can you do for this year in CPO?
Mike said CPO revenue is expected to exceed $20M by the end of Q3, with the full-year total likely above $20M but the exact magnitude uncertain due to the newness of the technology. He reiterated the 2030 served market opportunity of ~$400M.