Semiconductor testing company FormFactor (NASDAQ: FORM) reported Q2 CY2026 results exceeding the market’s revenue expectations, with sales up 31.9% year on year to $258.2 million. On top of that, next quarter’s revenue guidance ($270 million at the midpoint) was surprisingly good and 9.2% above what analysts were expecting. Its non-GAAP profit of $0.82 per share was 34.4% above analysts’ consensus estimates.
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FormFactor (FORM) Q2 CY2026 Highlights:
- Revenue: $258.2 million vs analyst estimates of $240 million (31.9% year-on-year growth, 7.6% beat)
- Adjusted EPS: $0.82 vs analyst estimates of $0.61 (34.4% beat)
- Adjusted Operating Income: $71.97 million vs analyst estimates of $53.75 million (27.9% margin, 33.9% beat)
- Revenue Guidance for Q3 CY2026 is $270 million at the midpoint, above analyst estimates of $247.3 million
- Adjusted EPS guidance for Q3 CY2026 is $0.86 at the midpoint, above analyst estimates of $0.62
- Operating Margin: 22.4%, up from 6.3% in the same quarter last year
- Free Cash Flow was $52.55 million, up from -$47.36 million in the same quarter last year
- Inventory Days Outstanding: 87, in line with the previous quarter
- Market Capitalization: $6.88 billion
“Over the past four quarters, FormFactor has grown revenue more than 30%, expanded Non-GAAP gross margin 1,500 basis points, and tripled earnings per share,” said Mike Slessor, CEO of FormFactor, Inc.
Company Overview
With customers across the foundry and fabless markets, FormFactor (NASDAQ: FORM) is a US-based provider of test and measurement technologies for semiconductors.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, FormFactor’s sales grew at a mediocre 3.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the semiconductor sector and is a rough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. FormFactor’s annualized revenue growth of 13.1% over the last two years is above its five-year trend, suggesting some bright spots. 
This quarter, FormFactor reported wonderful year-on-year revenue growth of 31.9%, and its $258.2 million of revenue exceeded Wall Street’s estimates by 7.6%. Beyond the beat, we believe the company is still in the early days of an upcycle as this was the third consecutive quarter of growth - a typical upcycle tends to last 8-10 quarters. Company management is currently guiding for a 33.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 14.1% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not catalyze better top-line performance yet.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, FormFactor’s DIO came in at 87, which is 8 days below its five-year average. Flat versus last quarter, there’s no indication of an excessive inventory buildup.
Key Takeaways from FormFactor’s Q2 Results
It was good to see FormFactor beat analysts’ revenue expectations this quarter. We were also excited its operating income and EPS both outperformed Wall Street’s estimates by wide margins. Looking ahead, guidance also came in ahead of expectations. Zooming out, we think this was a good print with many areas of upside and no major blemishes. The stock traded up 16.6% to $97.00 immediately after reporting.
FormFactor may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
