Overview

We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices. Decarbonization, generative AI, 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.

We have developed innovative products like the FOX-P family of test and burn-in systems, FOX WaferPak Aligner, Contactor, DiePak Carrier and Loader, and acquired Incal Technology, expanding our portfolio to include packaged parts burn-in solutions.

Our net revenue consists primarily of sales of these systems, contactors, test fixtures, upgrades, spare parts, service contracts, and non-recurring engineering charges. Our selling arrangements may include customer acceptance provisions, with installation occurring after shipment, transfer of title and risk of loss.

Critical Accounting Estimates

Our financial reporting relies on critical accounting estimates, including for business combinations, goodwill impairment, and long-lived asset impairment. Accounting for business combinations requires estimating fair values of acquired assets and liabilities, including intangible assets. We assess goodwill for impairment annually or when events indicate the carrying value may not be recoverable. We also monitor long-lived assets for impairment based on projected cash flows. No impairment charges were recorded in the periods presented.

Results of Operations

Fiscal Year Beginning June 1, 2024, our fiscal year ends on the Friday nearest May 31.

Impact of Acquisition We completed the acquisition of Incal Technology on July 31, 2024, which expanded our packaged parts burn-in solutions portfolio.

Revenues

Revenue decreased 37% in the three and six months ended November 29, 2024 compared to the prior year periods, driven by lower shipments of our FOX-P systems, partially offset by increased package parts burn-in systems revenue from the Incal acquisition. Services revenue also declined. Geographically, revenue decreased in Asia and Europe, but increased in the United States.

Gross Margin

Gross profit and gross margin decreased in the three and six months ended November 29, 2024 compared to the prior year periods. This was primarily due to amortization of acquired intangible assets, the fair value adjustment to acquired inventory, lower manufacturing efficiencies from reduced system shipments, and a change in product mix.

Research and Development

R&D expenses increased 15% and 5% in the three and six months ended November 29, 2024, respectively, due to higher employment costs and increased license subscription fees.

Selling, General and Administrative

SG&A expenses increased 32% and 33% in the three and six months ended November 29, 2024, respectively, driven by additional expenses from the Incal acquisition, higher stock-based compensation, and increased professional fees.

Interest and Other Income, Net

Interest and other income, net, decreased in the three and six months ended November 29, 2024 compared to the prior year periods, primarily due to lower interest income from reduced cash balances and investment yields.

Income Tax Expense (Benefit)

The Company recognized an income tax benefit in the three and six months ended November 29, 2024 due to quarter-to-date and year-to-date losses in the U.S., compared to income tax expense in the prior year periods related to foreign operations.

Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash decreased to $35.2 million as of November 29, 2024 from $50.7 million as of November 30, 2023. Cash used in operating activities increased by $6.8 million, primarily due to a net loss and lower accounts receivable collections, partially offset by reduced inventory purchases and vendor payments. Cash used in investing activities increased by $28.7 million, mainly due to the Incal acquisition and the absence of short-term investment maturities. Cash provided by financing activities increased by $0.9 million, driven by reduced share repurchases.

Overall, the Company believes its existing cash resources and anticipated funds from operations will satisfy its cash requirements for the next twelve months.