0001654954-25-011582
SEC filingRevenue fell 16% to $10.97M on soft EV demand and weak contactors, while gross margin contracted sharply to 33.9% on mix and costs.
Revenue for the three months ended August 29, 2025 decreased 16% to $10.97M from $13.12M in the same period of the prior year. The decline was primarily driven by a $9.5M reduction in contactor revenue due to continued softness in electric vehicle demand, partially offset by a $6.7M increase in systems revenue and a $0.6M increase in service revenue. Gross profit declined 47% to $3.72M, with gross margin contracting 20.1 percentage points to 33.9%. The margin compression was attributed to a change in product mix, higher assembly and warranty costs, increased tariffs on imported parts following recent government policy changes, and amortization of acquired intangible assets. Research and development expenses rose 21% to $2.85M, reflecting higher employment-related costs and stock-based compensation from increased headcount. Selling, general and administrative expenses were roughly flat at $4.72M, as higher stock-based compensation was offset by lower legal fees. Restructuring charges of $219k were incurred for a workforce reduction. Interest and other income, net, increased 88% to $1.23M, including a $1.0M net benefit from the Employee Retention Credit refund. The company recognized an income tax benefit of $752k versus an expense of $154k in the prior year, primarily driven by U.S. losses.
Geographic revenue shifted dramatically. Asia revenue declined 80% to $2.48M due to ongoing EV demand softness, while United States revenue surged 820% to $4.81M and Europe and Middle East revenue grew from $18k to $3.68M, both benefiting from FOX-P system shipments. This mix shift, while reducing total revenue, also altered the margin profile due to the higher proportion of systems revenue and lower contactor revenue.
Management did not provide quantitative guidance but emphasized that generative AI and global electrification are key macro trends driving semiconductor reliability testing demand. The expanded product portfolio, including Incal's Sonoma, Tahoe, and Echo burn-in systems, positions the company to address AI accelerators, GPUs, and high-performance computing processors. Management believes existing cash resources of $24.7M and anticipated funds from operations will satisfy cash requirements for the next twelve months. The restructuring actions are intended to better align resources with business needs.