Overview

We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices. Decarbonization and digitalization are driving increased quality, reliability, safety, and security needs of semiconductors used across multiple applications, creating additional test requirements and new opportunities for our products and solutions.

We have developed several innovative products, including the FOX-P family of test and burn-in systems, FOX WaferPak Aligner, FOX WaferPak Contactor, FOX DiePak Carrier, and FOX DiePak Loader. These systems can test, burn-in, and stabilize a wide range of devices, such as power semiconductors, sensors, memory, processors, and photonic devices.

Our net revenue consists primarily of sales of these systems, contactors, carriers, test fixtures, upgrades, spare parts, service contracts, and non-recurring engineering charges. Our selling arrangements may include 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.

Critical Accounting Estimates

Our financial reporting relies on several critical accounting estimates, including those related to business combinations, impairment of goodwill, and impairment of long-lived assets. These estimates involve significant judgment and assumptions, and actual results may differ from our estimates under different conditions or assumptions.

Results of Operations

Fiscal Year We have changed our fiscal year to the 52- or 53-week period ending on the Friday nearest May 31, with the first fiscal quarter in fiscal 2025 ending on August 30, 2024.

Impact of Acquisition We completed the acquisition of Incal Technology, Inc. on July 31, 2024. Revenue from the acquired products and services was not material to our results for the three months ended August 30, 2024.

Revenues Revenue decreased by 36% to $13.1 million for the three months ended August 30, 2024, compared to the same period in the prior year. This was driven by a decrease in shipments of our systems and services due to softness in the demand for electric vehicles. Revenue decreased across all geographic regions, primarily in Asia, which accounted for 95.9% of total revenue.

Gross Margin Gross profit decreased by 29% to $7.1 million, but gross margin increased from 48.4% to 54.0%. The increase in gross margin was primarily due to a product mix shift toward more contactor sales, which have a higher gross margin, partially offset by lower manufacturing efficiencies from the decrease in system shipments.

Research and Development Research and development expenses remained relatively flat at $2.4 million, or 18.0% of total revenue.

Selling, General and Administrative Selling, general and administrative expenses increased by 34% to $4.6 million, or 34.7% of total revenue. This was primarily driven by $0.5 million in acquisition-related costs and $0.4 million in additional expenses from the newly acquired business.

Interest and Other Income (Expense), Net Interest and other income (expense), net, increased by 14% to $0.7 million, primarily due to higher interest income from our investments.

Provision for Income Taxes Income tax expense increased significantly due to the release of a valuation allowance in the fourth quarter of fiscal 2024, resulting in the recognition of U.S. federal and state income tax expense in the current period.

Liquidity and Capital Resources Cash, cash equivalents, and restricted cash decreased from $51.1 million to $40.8 million, primarily due to the acquisition of Incal and lower cash flows from operating activities. We believe our existing cash resources and anticipated funds from operations will satisfy our cash requirements for the next twelve months.