Aehr Test Balances Weak Quarter With Record Bookings

Aehr Test ((AEHR)) has held its Q3 earnings call. Read on for the main highlights of the call.

Aehr Test’s latest earnings call balanced near‑term financial weakness with strong commercial traction and growing strategic wins. Management acknowledged a sharp drop in quarterly revenue and margins, yet emphasized a surge in bookings, a record backlog, and rising demand from AI, silicon photonics, and power semiconductor customers that could support a return to growth and profitability.

Record Bookings and Backlog

Aehr Test reported Q3 bookings of $37.2 million, a nearly sixfold jump from $6.2 million in Q2 and a book‑to‑bill ratio above 3.5 times. The company ended the quarter with $38.7 million in backlog and a record $50.9 million effective backlog after adding $12.2 million of orders in the first five weeks of Q4.

Major Wafer-Level AI Production Order

A key highlight was a $14 million follow‑on production order from its lead wafer‑level AI accelerator customer for multiple FOX‑XP systems configured to process nine 300mm wafers in parallel. The deal also includes WaferPak contactors and auto‑aligners, expanding the installed base and automation and reinforcing Aehr’s role in AI chip burn‑in and reliability testing.

Silicon Photonics Customer Win and Ramp

The company secured a major new silicon photonics customer with an initial order for multiple high‑power FOX‑XP and FOX‑NP wafer‑level systems spanning engineering qualification and high‑volume production. These tools are scheduled to ship in fiscal Q4, and the customer has forecast additional production systems over the next year, pointing to a meaningful ramp.

Hyperscaler Package-Level Production Win

Aehr also announced a significant production win with a leading hyperscale customer at the package level for its next‑generation higher‑power AI processor, using Sonoma systems. The initial production order is in place, and the customer forecasts substantial expansion of Sonoma purchases beginning in the second half of calendar 2026 and continuing into 2027.

New Silicon Carbide and GaN Momentum

In power semiconductors, Aehr highlighted a new silicon carbide customer in Taiwan that ordered a FOX‑XP system, supporting future growth in electric vehicle and industrial markets. The company also cited continued progress with its lead GaN production customer on wafer‑level burn‑in across multiple device types aimed at automotive, data center, and infrastructure applications.

Capacity Expansion for Growth

To support these ramps, Aehr has begun shipping Sonoma systems from contract manufacturers, adding capacity for more than 20 Sonoma tools per month. Management framed this expanded manufacturing footprint as critical to meeting anticipated demand from hyperscalers and other high‑power device customers as orders move from pilot to volume production.

Improved Cash Position and Financing Moves

Aehr ended Q3 with $37.1 million in cash, up from $31.0 million in the prior quarter, helped by equity issuance under its at‑the‑market program. The company raised gross proceeds of $10.5 million during Q3 and another $19.5 million since quarter‑end, utilizing $40 million in total across about 1.13 million shares at an average price of $35.38.

Long-Term Consumables Upside

Management reiterated the long‑term potential of consumables such as WaferPaks and burn‑in boards as the installed base grows, targeting these items to reach roughly 30% or more of revenue over time. Because consumables typically carry higher margins, this mix shift could act as a structural tailwind to profitability once system placements scale.

Sharp Year-over-Year Revenue Decline

Despite the strong order momentum, Q3 revenue fell to $10.3 million, down 44% from $18.3 million a year earlier and coming in slightly below market expectations. Management attributed the decline largely to delayed orders and the inherent lumpiness of large wafer‑level and package‑level system sales.

Gross Margin Pressure

Non‑GAAP gross margin contracted to 36.5% in Q3 from 42.7% in the prior‑year period, a drop of 6.2 percentage points. The company pointed to lower overall volume and a less favorable product mix, with fewer high‑margin consumables such as WaferPaks sold during the quarter.

Shift to Non-GAAP Net Loss

The weaker revenue and margins pushed Aehr to a non‑GAAP net loss of $1.5 million, or a loss of $0.05 per diluted share, compared with non‑GAAP net income of $2.0 million and $0.07 per share a year ago. The year‑over‑year swing of $3.5 million underscores the earnings volatility tied to large system orders and timing.

Lumpy Business and Order Delays

Executives stressed that revenue can be volatile because both wafer‑level and package‑level orders are large and their timing is unpredictable, leading to periods of underperformance. Delayed shipments and the shifting cadence of customer spend contributed to the soft Q3 results even as longer‑term demand indicators strengthened.

Technical Setbacks in AI Benchmarking

Aehr acknowledged that a benchmark evaluation with a top‑tier AI processor supplier has taken longer than expected due to a technical misunderstanding involving clock configurations in WaferPaks. The company is reworking the design and gathering additional data, extending the evaluation timeline by several months but maintaining confidence in the underlying opportunity.

Weaker Consumables Sales This Year

Contactor and consumables revenue came in at $3.0 million in Q3, or 29% of total revenue, down from $5.9 million and 32% in the prior‑year quarter. Management described this year as an outlier for consumables sales and expects a recovery over time, albeit with a conservative stance in the near term.

Operating Cash Use and Equity Dependence

The company used $3.7 million of operating cash during Q3, highlighting ongoing cash burn amid investments in growth and uneven revenue. While the ATM equity raises have strengthened the balance sheet, they also introduce dilution concerns for shareholders as Aehr leans on stock issuance to fund operations and capacity.

Conservative View on Some Segments

Although Aehr is making technical and commercial progress in areas such as silicon carbide, management is cautious about near‑term revenue contributions from these segments. They are not counting on material revenue from certain newer programs in the immediate quarters, preferring to reflect these opportunities only once volume ramps become more visible.

Fiscal Year Change and Transition Period

The company plans to shift its fiscal year‑end from the last Friday of May to the last Friday of June, which will create a one‑month transition period from May 30 to June 26, 2026. This adjustment adds temporary complexity to financial reporting and comparisons but is not expected to affect the underlying trajectory of the business.

Forward Guidance and Path to Profitability

Looking ahead, management expects full‑year fiscal 2026 revenue to land on the high side of the previously guided $45 million to $50 million range and second‑half bookings to be on the high side of $60 million to $80 million. The company anticipates improving gross margins and a return to non‑GAAP profitability in Q4, while guiding a full‑year non‑GAAP net loss per diluted share between negative $0.13 and negative $0.09.

Aehr Test’s call painted a picture of a company in transition, with near‑term financial softness overshadowed by robust bookings and strategic wins in AI, silicon photonics, and power devices. For investors, the key questions will be whether the record backlog converts smoothly into revenue and whether margin recovery and consumables growth can deliver the promised return to profitability.