Executive Summary
In the second quarter of fiscal 2025, Aehr Test Systems (NASDAQ: AEHR) reported revenues of $13.5 million, a 37% decline compared to $21.4 million in the same period last year. The decline is attributed to challenges in the silicon carbide market and a push towards diversification in AI and gallium nitride testing. Despite the decrease in revenue, significant operational advancements and customer engagement led to a notable increase in demand for their high-margin WaferPaks, accounting for 64% of total revenue this quarter.
Management is optimistic about future growth driven by the rapidly expanding AI semiconductor sector and successful market penetration efforts for new product lines, particularly AI processors, which they expect could comprise 40% of total revenue this fiscal year. The company remains cautious about the ongoing geopolitical and trade risks in the market, particularly in its dealings with China, where competitive pressures are escalating.
Key Performance Indicators
QoQ: -23.71% | YoY:-50.72%
QoQ: -1 051.57% | YoY:-127.67%
QoQ: -255.76% | YoY:-116.88%
QoQ: -252.86% | YoY:-116.52%
Key Insights
Aehr Test Systems reported significant financial metrics for Q2 2025, with a revenue of $13.5 million, cost of revenue at $8.053 million, resulting in a gross profit of $5.447 million and a gross profit margin of 40.4%. The net income for the quarter stood at a loss of $1.028 million with an EPS of -$0.0347. Operationally, the company faced a gross margin contraction from 51.6% in Q2 2024 to 45.3% in Q2 2025, influenced by a product mix shift post-Incal acquisition. Despite a strong balance shee...
Financial Highlights
Aehr Test Systems reported significant financial metrics for Q2 2025, with a revenue of $13.5 million, cost of revenue at $8.053 million, resulting in a gross profit of $5.447 million and a gross profit margin of 40.4%. The net income for the quarter stood at a loss of $1.028 million with an EPS of -$0.0347. Operationally, the company faced a gross margin contraction from 51.6% in Q2 2024 to 45.3% in Q2 2025, influenced by a product mix shift post-Incal acquisition. Despite a strong balance sheet, with cash and equivalents of $35.2 million at quarter-end, operational cash flow remains negative at -$5.9 million as the company invests in growth opportunities.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
13.45M |
-37.23% |
2.55% |
| Gross Profit |
5.40M |
-50.72% |
-23.71% |
| Operating Income |
-1.51M |
-127.67% |
-1 051.57% |
| Net Income |
-1.03M |
-116.88% |
-255.76% |
| EPS |
-0.03 |
-116.52% |
-252.86% |
Key Financial Ratios
operatingProfitMargin
-11.2%
operatingCashFlowPerShare
$-0.2
freeCashFlowPerShare
$-0.21
priceEarningsRatio
-85.76
Management Commentary
Key themes emerging from the management discussion include:
1. Market Diversification: Gayn Erickson emphasized the expansion into AI and gallium nitride applications, stating, "Our market diversification into sectors such as artificial intelligence... is driving new opportunities to attract customers and drive revenue growth."
2. Acquisition Success: The integration of Incal Technology is seen as a pivotal moment that has accelerated Aehr's market expansion into new products.
3. AI Market Potential: Erickson noted the AI semiconductor processor market could surpass $100 million annually, asserting, "We're pleased to report meaningful progress in our efforts to penetrate the high power processors market, including AI processors and accelerators."
"We see significant potential to expand our packaged part test and burn-in business in the rapidly growing AI semiconductor market with our ultra-high power Sonoma product line."
— Gayn Erickson
"AI processors, including wafer level and packaged parts, could comprise as much as 40% of our total revenue this fiscal year, up from effectively zero revenue last year."
— Gayn Erickson
Forward Guidance
Management maintained its revenue expectations for the fiscal year, projecting total revenue of at least $70 million and a non-GAAP net profit margin of at least 10%. The visibility of upcoming contracts, especially in the AI space, indicates strong future growth potential. However, management warned about the quarterly revenue volatility, as CEO Gayn Erickson stated, "...our quarterly revenue can experience significant variability if system orders anticipated by the quarter end are delayed by even a few days."