0001654954-26-003348
SEC filingRevenue declined 31% due to EV demand softness, partially offset by AI-related package-level product growth; gross margin compressed.
In the third quarter of fiscal 2026, Aehr Test Systems reported revenue of $10.3 million, a 44% decline from $18.3 million in the same quarter last year. Gross profit fell 53% to $3.4 million, with gross margin contracting 6.5 percentage points to 32.7%. The margin compression was primarily due to a product mix shift toward package-level burn-in products (which carry lower margins), higher assembly and warranty costs, and increased freight and tariff expenses. Research and development expenses remained flat at $3.2 million, while selling, general and administrative expenses decreased 14% to $4.4 million, aided by lower professional service fees. Interest and other income was $0.2 million, down modestly, and the company recognized an income tax benefit of $0.8 million due to U.S. losses.
Geographically, revenue in Asia was roughly flat at $5.6 million, while United States revenue plunged 74% to $2.7 million due to sharply lower sales of wafer-level burn-in systems and contactors to a customer serving AI applications. Europe and Middle East revenue decreased 11% to $2.0 million. Product-wise, the quarter saw a $5.9 million decline in wafer-level burn-in systems revenue and a $4.3 million drop in wafer-level contactors revenue, partially offset by a $1.4 million increase in package-level burn-in boards and modules and a $0.9 million increase in package-level systems. These trends reflect ongoing weakness in electric vehicle demand (affecting wafer-level products) and continued strength in AI-related applications (boosting package-level products).
Management highlighted that the company's operating performance in fiscal 2025 and the first nine months of fiscal 2026 was negatively affected by continued softness in electric vehicle power semiconductors. They noted that changes in customer investment cycles and adoption rates of new technologies may continue to affect results. No specific quantitative guidance was provided. The company is evaluating the impact of recent U.S. tariff policy changes on costs and supply chain. Despite current headwinds, Aehr remains focused on expanding its package-level burn-in solutions for AI and high-performance computing, as evidenced by the integration of Incal Technology's product lines. Cash and equivalents stood at $37.1 million, and management believes existing resources are sufficient for the next twelve months.
Cash and cash equivalents increased to $36.9M at February 27, 2026, from $24.5M at May 30, 2025, primarily driven by $19.6M in net proceeds from an ATM offering. Total assets were $157.0M, with goodwill and intangible assets of $20.6M net. Shareholders' equity rose to $138.8M from $122.9M, reflecting the equity issuance offset by a $8.5M net loss and $1.3M in share repurchases for tax withholding. The company has no debt, and its deferred revenue (short- and long-term) totaled $1.9M.
The notes disclose purchase obligations to certain suppliers, some with cancellation penalties, but no specific dollar amounts are provided. The company has standard warranty liabilities of $0.5M and operating lease liabilities of $10.0M (short- and long-term). A shareholder class action was voluntarily dismissed, and a separate derivative suit was dismissed without prejudice. Legal proceedings in China regarding patent infringement are ongoing, with no estimated financial impact disclosed.
Capital allocation is limited: share repurchases were solely for tax withholdings on RSU vesting ($1.3M for 58K shares in the nine months). No dividend or debt issuance is reported. Capital expenditures were $1.9M for the nine months, primarily for property and equipment. The company raised $19.6M net through an ATM offering, with an additional $19.5M raised subsequent to period end, fully utilizing the program. The board authorized a $100M shelf registration.
The company operates as a single segment, providing semiconductor test and burn-in equipment. Geographic revenue breakdown shows Asia at $15.6M, United States $9.5M, and Europe/Middle East $6.0M for the nine months. Product category revenue: systems $17.5M, contactors $9.1M, services $4.6M. Revenue recognition is point-in-time for products and over time for services.