Aehr Test Systems Reports 37% Revenue Decline in Q2 Fiscal 2025

Aehr Test Systems reported a significant decline in financial performance for the second quarter of fiscal 2025, ending November 29, 2024. Total revenue decreased to $13.5 million, down from $21.4 million in the same period last year, reflecting a 37% drop. The company's product revenue fell to $12.0 million from $19.8 million, while service revenue also saw a slight decline to $1.5 million from $1.6 million. For the first half of the fiscal year, total revenue was $26.6 million, compared to $42.1 million in the prior year, marking a 37% decrease. The net loss for the quarter was $1.0 million, or $(0.03) per share, contrasting sharply with a net income of $6.1 million, or $0.21 per share, in the previous year.

The decline in revenue was attributed to reduced demand for power semiconductors, particularly in the electric vehicle sector, which impacted shipments of the company's systems and services. Despite this downturn, the acquisition of Incal Technology, completed on July 31, 2024, contributed $5.0 million in revenue during the quarter, partially offsetting losses from other product lines. The acquisition, valued at approximately $22.2 million, included the addition of packaged parts burn-in solutions, which are expected to enhance the company's product offerings in the semiconductor testing market.

Operationally, Aehr Test Systems reported a decrease in gross profit to $5.4 million for the quarter, down from $11.0 million, resulting in a gross margin of 40.1%, compared to 51.1% in the prior year. The decline in gross margin was primarily due to amortization of acquired intangible assets and lower manufacturing efficiencies linked to reduced system shipments. Research and development expenses increased to $2.3 million, reflecting higher employment costs and increased licensing fees, while selling, general, and administrative expenses rose to $4.6 million, driven by costs associated with the newly acquired business and higher stock-based compensation.

As of November 29, 2024, the company reported total assets of $142.3 million, up from $127.9 million at the end of the previous fiscal year, largely due to the acquisition of Incal. Cash and cash equivalents decreased to $32.2 million from $49.2 million, reflecting the cash outflow related to the acquisition and operational losses. The company’s outlook remains cautious, with management indicating that the semiconductor market's softness may continue to impact performance in the near term. However, they anticipate that the integration of Incal's product lines will provide new growth opportunities as demand for semiconductor testing solutions evolves.