EPS of $-0.02 increased by 57.7% from previous year
Gross margin of 39.2%
Net income of -643.00K
""The potential for a solution that can do test and burn-in screening of devices, while still in wafer form is remarkable, and Aehr is the first and only company in the world to demonstrate and successfully achieve this for production burn-in at the wafer level."" - Gayn Erickson
Aehr Test Systems (AEHR) Q3 2025 Financial Results: Strong Revenue Growth Amid Market Diversification
Executive Summary
Aehr Test Systems achieved outstanding results in Q3 2025, with revenues reaching $18.3 million, representing a remarkable 142% increase year-over-year. This surge was primarily driven by the introduction and successful sales of the high-power FOX-XP systems for AI processor testing, which marks a significant diversification from the company’s traditional focus on silicon carbide. Management emphasized the importance of expanding into high-growth markets, notably AI processors and gallium nitride semiconductors, where recent wins have reduced revenue dependency on silicon carbide from 90% to less than 40%. Although the company is facing headwinds from potential tariffs that could affect supply chain and customer orders, management remains optimistic about navigating these challenges and exceeding current financial forecasts.
Key Performance Indicators
Revenue
18.31M
QoQ: 36.08% | YoY:142.06%
Gross Profit
7.18M
39.24% margin
QoQ: 33.02% | YoY:127.60%
Operating Income
-1.12M
QoQ: 26.04% | YoY:45.31%
Net Income
-643.00K
QoQ: 37.45% | YoY:56.29%
EPS
-0.02
QoQ: 37.75% | YoY:57.65%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $18.3 million (YoY: +142%, QoQ: +36%)
**Gross Profit:** $7.18 million (Gross Margin: 39.2%)
**Operating Income:** -$1.12 million
**Net Income:** -$0.64 million (EPS: -$0.0216)
**Cash Position:** $31.4 million
Financial Highlights
Q3 2025 Key Financial Metrics:
- Revenue: $18.3 million (YoY: +142%, QoQ: +36%)
- Gross Profit: $7.18 million (Gross Margin: 39.2%)
- Operating Income: -$1.12 million
- Net Income: -$0.64 million (EPS: -$0.0216)
- Cash Position: $31.4 million
- Current Ratio: 5.71
- Total Assets: $145.6 million
- Total Equity: $124.2 million
The significant revenue growth reflects a strategic shift into higher-margin, high-growth markets and successful product offerings. However, the operating loss indicates ongoing investment needs to support growth initiatives and market expansion.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
18.31M
142.06%
36.08%
Gross Profit
7.18M
127.60%
33.02%
Operating Income
-1.12M
45.31%
26.04%
Net Income
-643.00K
56.29%
37.45%
EPS
-0.02
57.65%
37.75%
Key Financial Ratios
currentRatio
5.71
grossProfitMargin
39.2%
operatingProfitMargin
-6.11%
netProfitMargin
-3.51%
returnOnAssets
-0.44%
returnOnEquity
-0.52%
debtEquityRatio
0.05
operatingCashFlowPerShare
$-0.05
freeCashFlowPerShare
$-0.11
priceToBookRatio
2.31
priceEarningsRatio
-111.44
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategic Insights from Management:
- Gayn Erickson (CEO): "We exceeded financial forecast consensus for both revenue and the bottom line for the quarter. We're particularly excited by the significant progress we've made... diversifying beyond silicon carbide and into high growth markets like AI processors."
- Chris Siu (CFO): "Our Q3 results exceeded the analyst consensus on both the top and bottom-lines. We faced a challenging environment marked by continued softness in the silicon carbide power semiconductor market..."
Management highlighted ongoing market expansion as a priority, focusing on AI processing solutions, where they now expect over 35% of revenue to be derived.
"The potential for a solution that can do test and burn-in screening of devices, while still in wafer form is remarkable, and Aehr is the first and only company in the world to demonstrate and successfully achieve this for production burn-in at the wafer level."
— Gayn Erickson
"We're confident that we're not only years ahead in this technology, but we also hold critical IP and patents around the world to safeguard our wafer level burn-in technology and solutions."
— Gayn Erickson
Forward Guidance
Management is optimistic about growth potential across its diversified target markets, highlighting potential revenue generation from AI processors and a robust backorder of $21.8 million. However, uncertainty from tariffs prompted the temporary withdrawal of guidance for the current fiscal year ending May 30. The focus will be on ensuring timely shipments and maintaining customer engagements to drive future sales.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AEHR Focus
39.24%
-6.11%
-0.52%
-111.44%
PLAB
35.60%
24.70%
3.22%
11.32%
LRCX
49.00%
33.10%
14.00%
17.53%
KLAC
61.60%
42.50%
27.20%
20.71%
KLIC
46.60%
4.56%
1.26%
55.43%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Aehr Test Systems presents a compelling investment opportunity given its significant revenue growth and strategic market diversification. As the demand for semiconductor testing escalates, particularly in AI and compound semiconductors, Aehr is well-positioned to capture a larger market share. Investors should watch for how effectively management mitigates tariff-related risks and responds to changing market dynamics in the semiconductor industry. With competitive technology advantages and a sound financial position, Aehr could provide substantial returns as it capitalizes on emerging growth areas.
Key Investment Factors
Growth Potential
Aehr has effectively diversified its revenue streams, decreasing reliance on silicon carbide while capitalizing on the surging demand for AI processors. The anticipated growth in the semiconductor testing market presents substantial opportunities, particularly with a total addressable market (TAM) valued at $1 billion by 2027 across various applications.
Profitability Risk
Potential risks include tariff implications on supply chains affecting production schedules, weakening margins, and integration challenges following the acquisition of InCal Technology. Additionally, competition from established players in the semiconductor testing market poses a threat to maintaining market share.
Financial Position
Aehr maintains a strong balance sheet with no debt and $31.4 million in cash, underscoring resilience in the face of market fluctuations. The current ratio of 5.71 indicates substantial liquidity to cover short-term obligations, although operating losses remain a concern.
SWOT Analysis
Strengths
Diverse product offerings targeting high-growth markets like AI and gallium nitride.
Strong cash position of $31.4 million allowing for flexibility in operations and investments.
Innovative technology with patents providing competitive advantage.
Weaknesses
Ongoing operational losses indicative of high investment needs.
Dependency on specific markets like AI processors for growth may introduce volatility.
Opportunities
Expanding addressable market of over $1 billion in semiconductor testing and consumables by 2027.
Increased demand for advanced wafer-level burn-in solutions as technology evolves.
Threats
Uncertain tariff impacts affecting revenue and supply chains.
Competitive pressure from well-established players in the semiconductor testing market.