0001654954-26-000266
SEC filingAehr Test Systems reported a challenging fiscal Q2 2026 with revenue down 27% YoY to $9.9M and a net loss of $3.2M, driven by continued EV-related contactor softness despite AI-driven systems growth.
Aehr Test Systems reported fiscal Q2 2026 results that were significantly below the prior-year quarter. Revenue declined 27% year-over-year to $9.884 million from $13.453 million. Management attributed the drop primarily to lower shipments of contactors due to ongoing softness in electric vehicle demand, partially offset by a $1.6 million increase in package-level burn-in systems revenue driven by AI-related applications.
Gross profit fell 53% to $2.545 million, with gross margin compressing to 25.7% from 40.1%. The MD&A cites lower overhead absorption from reduced manufacturing production, a change in product mix, higher assembly and warranty costs, increased freight expenses, and higher tariffs on imported parts following recent government policy changes.
Operating expenses totaled $7.193 million versus $6.913 million in the prior-year quarter. Research and development expenses increased 31% to $2.972 million on higher employment-related costs, including stock-based compensation and project expenses. Selling, general and administrative expenses decreased 4% to $4.434 million, as higher stock-based compensation was offset by lower professional fees and bonus accruals. Restructuring charges were a credit of $0.213 million, primarily related to the early termination of the Incal lease.
The company reported a loss from operations of $4.648 million, compared with a loss of $1.513 million in the same quarter last year. Net loss widened to $3.230 million from $1.028 million, with diluted loss per share of $0.11 versus $0.03. Interest income, net declined to $0.194 million from $0.228 million due to lower average cash balances and yields on money market funds.
As of November 28, 2025, Aehr held cash and cash equivalents of $30.835 million, up from $24.529 million at May 30, 2025, reflecting proceeds from an ATM offering partially offset by operating and investing outflows. Total assets remained essentially flat at $148.734 million versus $148.508 million.
Accounts receivable decreased to $10.282 million from $14.191 million, driven by lower revenue and better collections. Inventories increased modestly to $42.723 million from $41.997 million, led by higher raw materials and work-in-process. Prepaid expenses and other current assets fell to $4.349 million from $8.061 million, partly due to lower unbilled receivables.
Current liabilities declined sharply to $8.305 million from $15.638 million, primarily from a decrease in accounts payable and customer deposits. Deferred revenue, short-term dropped to $0.443 million from $1.981 million. Total shareholders' equity rose to $130.776 million from $122.871 million, driven by the ATM issuance and stock-based compensation, partially offset by the net loss.
For the six months ended November 28, 2025, net cash used in operating activities was $1.453 million, an improvement of $2.040 million compared with $3.493 million used in the prior-year period. The improvement was driven by decreases in prepayments to vendors and unbilled receivables, lower inventory outflows, and higher non-cash charges including stock-based compensation, partially offset by a larger pre-tax loss.
Investing activities used $3.659 million in the current six months, compared with $11.133 million in the prior-year period. The reduction reflects a $1.801 million escrow release related to the Incal acquisition versus the $10.615 million cash payment for Incal in the prior-year period. This was partially offset by a $1.340 million increase in property and equipment purchases, primarily for an office renovation.
Financing activities provided $9.619 million in the current six months, driven by net proceeds of $9.371 million from the ATM issuance and $1.067 million from employee stock plans, partially offset by $0.819 million in shares repurchased for tax withholdings. The company ended the period with cash, cash equivalents, and restricted cash of $30.985 million.
Management emphasized that the rapid advancement of generative AI and electrification of transportation are macro trends increasing the need for comprehensive test and burn-in. The company's FOX-P family and Incal's Sonoma/Tahoe/Echo systems are positioned for AI accelerators, GPUs, and high-performance computing devices. However, the near-term results were hampered by EV-related weakness, which specifically reduced demand for WaferPak contactors.
No formal guidance was provided in the filing. Management stated that existing cash resources and anticipated funds from operations will satisfy cash requirements for the next twelve months.
The company continued its restructuring plan announced in the quarter ended May 30, 2025. In the current quarter, it entered into a lease termination agreement for the Incal facility and paid a $0.2 million termination fee, and recognized a credit to restructuring charges because it was released from the remaining lease obligation. Separately, a workforce reduction charge of $0.2 million was recorded in the quarter ended August 29, 2025; no further charges were recognized in the current quarter.
The company also received a $1.3 million Employee Retention Credit refund during the quarter ended August 29, 2025, which was recognized as other income, offset by a $0.3 million service fee to a third-party provider. There was no ERC-related activity in the current quarter.
Revenue by geography: Asia accounted for 77.1% of total revenue, United States 19.6%, and Europe and Middle East 3.3%. On a product basis, systems revenue was $4.974 million, contactors $3.444 million, and services $1.466 million. The company recognized $9.148 million of revenue at a point in time and $0.736 million over time.
Contract balances: unbilled receivables were $1.9 million at November 28, 2025 (down from $3.6 million at May 30, 2025), and contract liabilities (customer deposits and deferred revenue) were $0.5 million. During the six months, the company recognized $1.8 million of revenue that was included in contract liabilities at May 30, 2025. Remaining performance obligations excluding customer deposits were not material.
Intangible amortization expense was $0.3 million in the quarter and $0.6 million in the six-month period. Estimated future amortization over the next five years averages roughly $1.0 million annually. Goodwill of $10.719 million remained unchanged with no impairment.
Stock-based compensation expense was $1.841 million in the quarter, with $0.215 million in cost of sales, $0.380 million in R&D, and $1.246 million in SG&A. The company also capitalized $0.4 million of stock-based compensation into inventory.
The company sold 384,380 shares under its ATM program in November 2025 at an average price of $25.89 per share, raising gross proceeds of approximately $10.0 million before commissions and offering expenses. Remaining ATM availability was approximately $30.0 million as of November 28, 2025.