Aehr Test Systems (NASDAQ: AEHR) Q4 2025 Earnings | 07/09/2025

Aehr Test Systems (Aehr) held its Q4 2025 and Full Year Conference Call. President and CEO Gane Erickson and CFO Chris Siu discussed the company's financial performance, significant market diversification, and strategic initiatives, particularly in the rapidly growing Artificial Intelligence (AI) processor market.

Fiscal 2025 Financial Highlights (Full Year):

• Revenue: Reported $59 million, an 11% decrease year-over-year, primarily due to delayed shipments of a Fox CP system for a hard disk drive customer because of tariff-related uncertainties.

• Bookings: Annual bookings were strong at $61.1 million, up over 24% from the prior fiscal year, mainly driven by sales of AI processor burn-in systems, wafer packs, and burn-in module boards.

• Backlog: As of year-end, the backlog stood at $15.2 million, with an effective backlog of $16.3 million after accounting for early Q1 2026 bookings.

• Non-GAAP Gross Margin: 44%, down from 49.6% in the prior year, attributed to lower revenue levels and a less favorable product mix.

• Non-GAAP Net Income: $4.6 million ($0.15 per diluted share), compared to $35.8 million ($1.21 per diluted share) in fiscal 2024, which included a one-time tax benefit.

• Cash Position: $26.5 million in cash, cash equivalents, and restricted cash, down from $49.3 million in Q4 fiscal 2024, due to the Incal acquisition ($11 million), CapEx for facility upgrades ($5 million), and working capital investments.

Strategic Progress and Market Diversification:

• AI Processor Market: This has become a significant growth area. AI processor burn-in accounted for over 35% of Aehr's revenue in fiscal 2025, up from 0% in fiscal 2024.

  • Wafer-Level Burn-in (WLBI): Aehr successfully developed and delivered the industry's first-ever wafer-level burn-in system for AI processors (Fox XP), capable of testing up to nine 300mm wafers simultaneously with high power and current. This is a major technological and commercial milestone, proving a viable solution for high-volume testing and significantly reducing manufacturing costs and yield losses by identifying failures before expensive packaging or system integration.

  • Package-Part Burn-in: Following the Incal acquisition (completed July 31, 2024), Aehr now offers high-volume production solutions for package-level burn-in with its Sonoma product line, achieving record-breaking sales in this segment. This provides a cost-effective alternative for customers and a "front-row seat" to future AI processor requirements.

  • New Customer Engagements: Aehr is actively engaging with multiple high-profile processor companies for WLBI, including one currently undergoing an evaluation that could lead to significant production orders.

• Gallium Nitride (GaN) Power Semiconductors: Secured an additional order for the Fox XP system for volume production of GaN devices from a leading automotive semiconductor supplier, expanding Aehr's power semiconductor market beyond silicon carbide. GaN is seen as a high-growth market for mid-power applications.

• Hard Disk Drive (HDD) Market: Received follow-on orders for Fox CP single-wafer systems for burn-in and stabilization of new devices in hard disk drives, marking a production ramp after years of qualification.

• Silicon Photonics ICs: Continued market adoption for optical chip-to-chip communication. Aehr offers a new higher-power system and upgrades, along with forecasts for new systems and wafer packs, for this significant market opportunity.

• Silicon Carbide (SiC): Remains a significant opportunity, despite a slowdown in EV shipments. Aehr shipped its first Fox XP configuration capable of testing 18 wafers at a time at high voltages (up to 2,000 volts), with proprietary arc suppression technology.

• Flash Memory: Progressing with a proof-of-concept project with a major flash memory leader to demonstrate WLBI capabilities for high-volume production, utilizing a new MEMS-based fine-pitch wafer-pack contactor that is also capable of testing DRAM HBM devices.

Operational and Company Updates:

• Incal Integration: Successfully completed the integration of Incal operations and personnel into Aehr's Fremont facility by Q4 fiscal 2025, ahead of schedule. This consolidation is expected to save over $800,000 annually in facility costs.

• Manufacturing Capacity: Aehr has established the infrastructure and capacity to support significant growth, including manufacturing facility upgrades to handle high volumes of both wafer-level and package-level systems and wafer pack contactors.

• Legal Updates: Class action and derivative lawsuits filed against Aehr were voluntarily dismissed or dismissed without prejudice, with no related proceedings currently pending.

• Guidance: Due to ongoing tariff-related uncertainty, particularly impacting Q1 2026 orders and supply chain, Aehr is temporarily withholding specific financial guidance for fiscal 2026. However, they anticipate order growth across all segments, with the possible exception of silicon carbide.

• R&D Investment: Planning to increase R&D investment in fiscal 2026 for product enhancements, expanding R&D resources, hiring talent for the AI customer base, and enhancing automation.