Q2 FY27 · the quarter AEHR reports
Sales
PricedIn$37.0M$31.0M – $44.0M
$31.0M$34.0M$37.0M$40.0M$44.0M
adjusted EPS
PricedIn$0.27$0.16 – $0.38
$0.16$0.22$0.27$0.32$0.38
Middlethe forecast50% range1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside.80% range1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.
All seven AI analysts expect existing orders to support a stronger sales quarter, with Sonoma mix restraining margin. Analyst B allows slightly fewer deliveries but a richer margin; Analyst D combines restrained sales, a softer margin and a positive tax charge, producing the lowest adjusted earnings estimate.
The analysts expect second-quarter fiscal 2027 sales of about $37,000,000.00, as ordered Sonoma systems ship.
Sales$37.0M+274% on Q2 FY26 ($9.9M)50% range$34.0M – $40.0M80% range$31.0M – $44.0M
Adjusted EPS$0.27−775% on Q2 FY26 (−$0.04)50% range$0.22 – $0.3280% range$0.16 – $0.38
Investment and cash generation
Base case
Capital spending$0.20M
Free cash flow$5.30M
Free cash flow: operating cash flow less capital spending.
Small equipment purchases support current test-floor and assembly work; contract manufacturing supplies much of the shipment capacity. Receivables and component stocks absorb cash as sales rise. Free cash flow means operating cash flow less capital spending, not adjusted earnings or a company-adjusted cash measure. The displayed walk is one analyst's estimate; any category allocations are estimates, and unallocated spending remains unallocated.1 of 7
- Analyst FNo company split of capital spending exists; the manufacturing expansion is mainly at contract manufacturers, so capex stays small and unallocated.
The quarter tests delivery execution, not an unproven new market. The analysts expect existing orders for Sonoma systems, which test packaged chips, to drive sales as the lead cloud customer's processor production expands.
Management now describes a gradual rise through the remaining quarters, rather than a second-quarter sales peak. Analyst D reads the strong first quarter as including some earlier-than-expected deliveries, reducing the spike previously expected here.
More sales need not mean higher earnings per share than the first quarter. Sonoma systems carry lower margins than wafer-level equipment and proprietary contactors, and management specifically warned that this quarter's product mix would weigh on profitability.
The analysts are tightly grouped on sales but differ on taxes, spending and cash collections. A shipment near the December 25 quarter end can change both sales recognition and the amount still awaiting payment; the new Taiwan evaluation is not a production-volume driver this quarter.
Adjusted earnings per share are expected at $0.27. Lower-margin Sonoma deliveries and rising engineering costs offset some volume gains; the first quarter's unusual tax benefit is not treated as a dependable repeat.
Sales by quarter
Q3 FY25$18.3M+142%
Q4 FY25$14.1M−15%
Q1 FY26$11.0M−16%
Q2 FY26$9.9M−27%
Q3 FY26$10.3M−44%
Q4 FY26$18.8M+34%
Q2 FY27$37.0M+274%
Each percent is on the same quarter a year earlier. The last row is the PricedIn forecast.
The quarter forecast, line by line
The lines as the company's statement shows them. The forecast columns are the tab's PricedIn forecast, one analyst's whole plan, the analyst nearest the middle of the seven on both sales and earnings per share, so the lines add up to the numbers above. Sales growth is the change on the same quarter a year earlier. Earnings per share is the headline's: the company's own for the reported quarter, and for a forecast quarter that analyst's own, worked from its lines with the company's adjustments. GAAP EPS is net income over diluted shares; under it, each adjustment is its effect on net income after tax, to adjusted net income and the adjusted figure: for a forecast as that analyst states it, for a reported period from the company's own table where we hold it, and — where we do not.
What it rests on
- Delivery pattern
- Management expects sales to rise gradually through the remaining quarters.
But it feels, you know, this quarter will be a little bit more than last. And we think the following quarter higher than that. And then the fourth quarter, maybe the highest of the year, we'll see.
November earnings call - Lower-margin mix
- Sonoma shipments weigh on this quarter's gross margin.
especially Q2, we're going to ship a lot of Sonoma systems to our hyperscale customers. So Q2 would probably be lower than what we're presenting or what we presented in Q1.
November earnings call - Quarter-end risk
- Sales concentrate near quarter end.
A substantial portion of net sales typically is realized near the end of each quarter.
Annual report
Scenarios Explained: Base, Low, and High
Basethe middle forecast
Q2-FY2027
Sales$37.0M
Adjusted EPS$0.27
Capital spending$0.20M
Free cash flow$5.30M
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| GAAP net income | $6.71M |
|---|
| Stock-based compensation expense | $1.96M |
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| Depreciation and amortization | $0.71M |
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| Amortization of operating lease right-of-use assets | $0.20M |
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| Deferred income taxes | −$0.35M |
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| Accounts receivable | −$3.00M |
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| Inventories | −$2.35M |
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| Prepaid expenses and other current assets | −$0.40M |
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| Accounts payable | $1.40M |
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| Accrued expenses | $0.30M |
|---|
| Deferred revenue | $0.50M |
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| Operating lease liabilities | −$0.18M |
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| Operating cash flow | $5.50M |
|---|
| Less capital spending | −$0.20M |
|---|
| Free cash flow | $5.30M |
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- GAAP net income
- Forecast $37.0 million of revenue at a 44.5% gross margin, $10.4 million of operating expenses, $0.9 million of net interest income and a $0.25 million tax provision.
- Stock-based compensation expense
- Stock-based compensation was $1.88 million in the first quarter and $1.87 million in the fourth quarter of fiscal 2026, after $1.38 to $1.84 million in the earlier quarters; I assume a little more than the latest quarter as headcount and share price rise.
- Depreciation and amortization
- About $0.7 million a quarter including amortization of acquired intangibles.
- Amortization of operating lease right-of-use assets
- About $0.2 million a quarter, as reported in the first quarter.
- Deferred income taxes
- About $0.35 million a quarter of deferred tax benefit, in line with the first quarter.
- Accounts receivable
- Receivables grow with sequential revenue and long payment terms at overseas assembly and test customers.
- Inventories
- Inventory and long-lead components build ahead of the Sonoma systems scheduled to ship.
- Prepaid expenses and other current assets
- Continued build of prepaids and other current assets.
- Accounts payable
- Payables rise with the component and inventory build.
- Accrued expenses
- Accruals grow with headcount and activity.
- Deferred revenue
- Customer deposits grow with bookings.
- Operating lease liabilities
- Lease payments exceed new lease accruals.
Capital spending
The company reports capital spending as a single line, purchases of property and equipment, and discloses no project-level split. Forecast spending for the December quarter is about $0.2 million of test-floor and computing equipment, which I cannot responsibly allocate to named projects, so the whole amount is shown as unallocated rather than split into invented categories.
| Unallocated capital spending | $0.20M |
|---|
| Total capital spending | $0.20M |
|---|
Cash, cash equivalents and restricted cash totaled $105.1 million as of September 25, 2026, compared to $116.5 million as of May 29, 2026.
Operating cash flow reflected working capital investments, including purchases of long lead item, long lead time components to support anticipated AI-related production demand and customer delivery schedules.
Three ways the base case happens
These levers explain the outcome together.
- **Ordered systems ship.** The lead cloud customer's Sonoma deliveries are already in backlog. Timely shipment supports this quarter's sales and spreads production costs across more units. Collections can follow later, so receivables absorb cash.
WatchConfirmation that scheduled Sonoma deliveries were completed by December 25.
Analyst reasoning
- Analyst AAbout $50 million of already-ordered Sonoma package-level systems, with the bulk delivered in the December quarter
- **Product mix stays manageable.** Management warned that Sonoma would dilute this quarter's margin. The base allows a lower gross margin rather than repeating first-quarter profitability. Contactors and wafer-level sales limit the earnings drag.
WatchThe split between Sonoma systems and higher-margin contactors in the next results.
Analyst reasoning
- Analyst CQ2-FY2027 carries the year's heaviest lower-margin Sonoma mix
- **Spending and tax remain contained.** Engineering and customer support expand alongside shipments. Adjusted earnings retain the company's expense exclusions, but hiring and a positive tax provision limit per-share gains. Small capital purchases leave working capital as the larger cash demand.
WatchOperating expense and tax lines in the next release.
Analyst reasoning
- Analyst EI use a lower second-quarter gross margin and roughly 48% adjusted gross margin for the year, with operating expenses rising for engineering and customer support.
Sales of $37,000,000.00 and adjusted earnings per share of $0.27 require ordered systems to ship, the expected Sonoma margin dip to remain contained, and operating costs and taxes to stay near plan. Inventory and receivables still need funding; positive earnings do not all become cash.
Highabout 1 chance in 10 of better
Q2-FY2027
Sales$44.0M+19% vs base
Adjusted EPS$0.38+41% vs base
Capital spending$0.30M
Free cash flow$6.84M
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| GAAP net income | $10.3M |
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| Stock-based compensation expense | $2.00M |
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| Depreciation and amortization | $0.72M |
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| Amortization of operating lease right-of-use assets | $0.20M |
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| Deferred income taxes | −$0.35M |
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| Accounts receivable | −$4.50M |
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| Inventories | −$4.00M |
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| Prepaid expenses and other current assets | −$0.60M |
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| Accounts payable | $2.30M |
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| Accrued expenses | $0.40M |
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| Deferred revenue | $0.90M |
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| Operating lease liabilities | −$0.18M |
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| Operating cash flow | $7.14M |
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| Less capital spending | −$0.30M |
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| Free cash flow | $6.84M |
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- GAAP net income
- Revenue of $41.5 million at a 47.5% gross margin in the upside case.
- Stock-based compensation expense
- Non-cash compensation at the recent run rate.
- Depreciation and amortization
- Recent quarterly run rate.
- Amortization of operating lease right-of-use assets
- Recent quarterly run rate.
- Deferred income taxes
- Recent quarterly run rate of deferred tax benefit.
- Accounts receivable
- Faster sequential growth means a larger receivable build.
- Inventories
- More systems in build at quarter end.
- Prepaid expenses and other current assets
- Larger prepaid build with higher activity.
- Accounts payable
- Payables rise with the inventory build.
- Accrued expenses
- Accruals rise with activity.
- Deferred revenue
- Customer deposits rise with the larger order book.
- Operating lease liabilities
- Lease payments exceed new accruals.
Capital spending
In the high case revenue is higher and inventory and receivables absorb more cash; capital spending stays small because manufacturing is outsourced. The company discloses no project split, so the whole amount is unallocated.
| Unallocated capital spending | $0.30M |
|---|
| Total capital spending | $0.30M |
|---|
Operating cash flow reflected working capital investments, including purchases of long lead item, long lead time components to support anticipated AI-related production demand and customer delivery schedules.
Three ways the high case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- **Customers take systems earlier.** Existing customers can pull forward high-value deliveries. More accepted systems before December 25 raise sales and profit without waiting for a new customer qualification.
WatchAdditional systems receive delivery dates within this quarter.
Analyst reasoning
- Analyst GFaster system deliveries and larger follow-on orders
- **Contactors enrich the mix.** Proprietary contactors and wafer-level systems carry better margins. More of these products alongside Sonoma lifts gross profit and adjusted earnings beyond the base's system-heavy mix.
WatchContactors and wafer-level sales outperform the planned mix.
Analyst reasoning
- Analyst GHigher-margin contactors and wafer-level systems
- **Capacity absorbs extra volume.** Contract manufacturing limits the need for new owned plant. More shipments spread costs, but faster procurement and unpaid invoices can still consume cash. Analyst F increases equipment spending modestly and funds a larger stock build.
WatchHigher throughput without a matching jump in operating costs; cash collections remain visible.
Analyst reasoning
- Analyst Ffaster growth ties up more receivables and long-lead parts
Together, earlier shipments, richer mix and controlled costs support sales of $44,000,000.00 and adjusted earnings per share of $0.38. Analyst G shares the upper sales endpoint but takes adjusted earnings per share furthest, to $0.40, on stronger proprietary-product mix and cost absorption. Cash is tied to these sales cases, not a separate percentile: Analyst F's faster growth funds more inventory and receivables, leaving its high-case free cash flow below its base.
The opportunity is to deliver existing programs faster, not to book a full production ramp from an evaluation scheduled for the following quarter.
The seven highs run from $41.0M (Analyst B) to $44.0M (Analyst G).
First signBefore December 25, customer pull-ins and stronger contactor orders; the next release confirms shipment recognition.
Lowabout 1 chance in 10 of worse
Q2-FY2027
Sales$31.0M−16% vs base
Adjusted EPS$0.16−41% vs base
Capital spending$0.30M
Free cash flow−$0.11M
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| Generally accepted accounting principles net income | $2.79M |
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| Equity compensation, depreciation and amortization | $2.70M |
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| Receivables, inventory, payables and customer advances | −$5.50M |
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| Lease, deferred-tax and other operating movements | $0.20M |
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| Operating cash flow | $0.19M |
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| Less capital spending | −$0.30M |
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| Free cash flow | −$0.11M |
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- Generally accepted accounting principles net income
- Generally accepted accounting principles net income of $2.789 million plus the $2.296 million of forecast non-GAAP add-backs gives $5.085 million of adjusted net income, or $0.15 per share on 33.9 million diluted shares.
- Equity compensation, depreciation and amortization
- Forecast non-cash compensation and depreciation continue near recent levels.
- Receivables, inventory, payables and customer advances
- Slower shipments still require working capital, although less than in the base case.
- Lease, deferred-tax and other operating movements
- Small net forecast contribution from other operating items.
Capital spending
All forecast capital spending is assigned to the company's disclosed property-and-equipment purchase category; no more detailed split is assumed.
| Purchases of property and equipment | $0.30M |
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| Unallocated capital spending | $0 |
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| Total capital spending | $0.30M |
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Purchases of property and equipment Analyst forecast of limited equipment purchases in the low case, not company guidance.
Purchases of property and equipment
This asset-light manufacturing approach allowed us to increase production capacity and responsiveness without a comparable increase in infrastructure or capital spending.
Three ways the low case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- **Shipments cross the cutoff.** Sales are concentrated near quarter end. A Sonoma or wafer-level shipment pushed beyond December 25 removes sales and associated profit from this quarter, even if demand survives.
WatchCustomers revise delivery or acceptance dates before the quarter closes.
Analyst reasoning
- Analyst FA slip near quarter end can push revenue into the next quarter, which sets the next-quarter low at 30 million.
- **Systems dominate the weaker mix.** Sonoma already carries a lower margin than the richer product lines. If contactor sales do not offset delayed systems, lower volume and a poorer mix reduce earnings faster than sales.
WatchGross margin weakens alongside the shipment shortfall.
Analyst reasoning
- Analyst GProduction deliveries slip, the new wafer-level customer's validation takes longer, and consumable purchases do not replace delayed system revenue.
- **Committed costs and stock remain.** The ramp requires long-lead components and continuing staff expense. Inventory remains tied up while fixed operating costs continue. Analyst C also keeps capacity work going, worsening free cash flow rather than treating lower sales as automatic cash relief.
WatchInventory rises despite missed deliveries, with little reduction in operating spending.
Analyst reasoning
- Analyst CIn the low case, shipments slip but the inventory and capacity work already committed continues, so the quarter burns cash.
The three changes together describe sales of $31,000,000.00 and adjusted earnings per share of $0.16. Analyst F goes further on delayed quarter-end deliveries, taking its sales to $30,000,000.00 and adjusted earnings per share to $0.15. Its inventory bought for slipping shipments remains on hand, so cash can turn negative despite positive earnings.
High-value systems and concentrated customers make a few delayed acceptances consequential. Backlog is not a guarantee of this quarter's revenue.
The seven lows run from $30.0M (Analyst E) to $33.0M (Analyst A).
First signBy December 25, delayed Sonoma deliveries; the next release confirms any sales and inventory shortfall.
Surfaced outlier views
For Q2-FY2027 the seven analysts sit within 2.7% of the PricedIn number on sales and within 7.4% on adjusted EPS. The furthest, and why:
Analyst B · Q2-FY2027: sales $36.0M, the lowest of the seven (PricedIn $37.0M)
WhyAnalyst B follows the gradual delivery schedule rather than assuming a large Sonoma spike. Its lower sales estimate is partly offset by a richer gross margin, while a positive tax charge limits adjusted earnings; its base gross margin is +46%.
Management also indicated that revenue should grow sequentially each quarter through the fourth quarter, that second quarter gross margin will dip slightly due to heavy package-level system shipments to its lead hyperscale customer while full-year adjusted gross margin remains near 48.5 percent, and that a major artificial intelligence processor supplier is installing a wafer-level test cell in Taiwan in early calendar 2027 ahead of a high-volume production decision.
Analyst D · Q2-FY2027: adjusted EPS $0.25, the lowest of the seven (PricedIn $0.27)
WhyAnalyst D does not expect the shipment spike implied by the earlier outlook. Its softer gross margin and positive tax charge leave less profit available for adjusted earnings; Analyst D's operating profit is $5,992,000.00 and Analyst D's tax expense is $678,000.00.
By November some of that had been pulled into the first quarter, so I do not make the second quarter a spike.
Watch
Watch deliveries and acceptance through December 25, then the next release's sales, Sonoma mix, tax and inventory. No report day has been supplied. Shipment slippage points lower; completed pull-ins and strong contactor orders point higher.
Q3 FY27 · the quarter after
Sales
PricedIn$40.0M$32.0M – $48.0M
$32.0M$36.0M$40.0M$43.5M$48.0M
adjusted EPS
PricedIn$0.31$0.16 – $0.44
$0.16$0.24$0.31$0.37$0.44
Middlethe forecast50% range1 in 4 chance the result comes in below this bar, 1 in 4 above it. Half the time it lands inside.80% range1 in 10 chance below this line, 1 in 10 above it. These are the low and high printed by each number.
The analysts agree on a modest sequential sales increase and stronger adjusted earnings as mix recovers. Analyst B is slightly lower on both; Analyst G's much wider upside requires faster deliveries and richer mix, not merely completion of the Taiwan installation.
The analysts expect third-quarter fiscal 2027 sales of about $40,000,000.00, with existing production programs continuing to expand.
Sales$40.0M+288% on Q3 FY26 ($10.3M)50% range$36.0M – $43.5M80% range$32.0M – $48.0M
Adjusted EPS$0.31−720% on Q3 FY26 (−$0.05)50% range$0.24 – $0.3780% range$0.16 – $0.44
Investment and cash generation
Base case
Capital spending$0.50M
Free cash flow$6.21M
Free cash flow: operating cash flow less capital spending.
Machinery and test equipment support growing wafer-level production and customer evaluations during this quarter. Collections on earlier Sonoma shipments can help, but new receivables and components still use cash. Free cash flow is operating cash flow less capital spending, not adjusted earnings. The displayed spending split is the selected analyst's estimate in disclosed categories, not a company budget; any unallocated remainder stays unassigned.1 of 7
- Analyst BThird-quarter fiscal 2027 capital spending is forecast at 450 thousand dollars to support the Taiwan pilot installation and growing wafer-level production, with 40 thousand dollars unallocated.
The third quarter is another step up, rather than a pause after a second-quarter peak. That follows management's revised description of customer delivery schedules and the analysts' expectation that wafer-level orders keep converting into shipments.
The product mix matters as much as the sales increase. After the heavier Sonoma delivery quarter, the analysts generally allow more profitable wafer-level systems and contactors to restore margin and lift adjusted earnings.
The Taiwan evaluation system is scheduled for installation in early calendar 2027. Installation is not the same as a production order: the company expects a volume decision only after several months of validation, so a full new-customer ramp is not a shared base assumption.
Cash depends partly on collecting earlier shipments. Analyst B expects a relatively small additional working-capital burden, while Analyst C still sees substantial receivables and inventory funding. Both can expect higher earnings without expecting the same cash conversion.
Adjusted earnings per share of $0.31 rely on higher sales and recovering product mix, while engineering and support expenses continue. Tax and employee-award dilution prevent all of the operating improvement reaching each share.
What it rests on
- Rising delivery schedule
- Management expects this quarter to exceed the preceding quarter.
But it feels, you know, this quarter will be a little bit more than last. And we think the following quarter higher than that. And then the fourth quarter, maybe the highest of the year, we'll see.
November earnings call - Validation comes first
- Early-calendar-2027 installation precedes a volume decision by several months.
Installation is planned for early calendar 2027, with a decision regarding high-volume production anticipated within several months following installation and validation.
November earnings release - Working-capital demands
- Long-lead components support production schedules but absorb cash.
Operating cash flow reflected working capital investments, including purchases of long lead item, long lead time components to support anticipated AI-related production demand and customer delivery schedules.
November earnings call
Scenarios Explained: Base, Low, and High
Basethe middle forecast
Q3-FY2027
Sales$40.0M
Adjusted EPS$0.31
Capital spending$0.50M
Free cash flow$6.21M
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| Net income | $8.18M |
|---|
| Stock-based compensation | $2.10M |
|---|
| Depreciation and amortization | $0.73M |
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| Deferred income taxes | $0.70M |
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| Receivables, inventory and payables | −$5.00M |
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| Operating cash flow | $6.71M |
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| Less capital spending | −$0.50M |
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| Free cash flow | $6.21M |
|---|
- Net income
- Base-case third-quarter profit.
- Stock-based compensation
- Matches the adjusted-earnings add-back.
- Depreciation and amortization
- Slightly above the first-quarter run rate.
- Deferred income taxes
- Most of the tax expense is a reduction of deferred tax assets, not cash.
- Receivables, inventory and payables
- Receivables grow with sales; inventory growth slows after the first-quarter long-lead buy.
Capital spending
Still asset-light. Two disclosed equipment categories plus a small unallocated remainder.
| Machinery and equipment | $0.25M |
|---|
| Test equipment | $0.20M |
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| Unallocated capital spending | $0.05M |
|---|
| Total capital spending | $0.50M |
|---|
Machinery and equipment My allocation, not a company plan.
Machinery and equipment 3 to 5 years
Test equipment My allocation for test gear.
Furniture and fixtures, machinery and equipment, and test equipment are depreciated on a straight-line basis over their estimated useful lives.
This asset-light manufacturing approach allowed us to increase production capacity and responsiveness without a comparable increase in infrastructure or capital spending.
Three ways the base case happens
These levers explain the outcome together.
- **Existing programs keep shipping.** Management expects a further sequential sales increase. Wafer-level and package-level deliveries provide this quarter's sales rather than relying on a new evaluation customer. More volume improves cost absorption.
WatchDelivery schedules remain intact through March 26.
Analyst reasoning
- Analyst GExisting wafer-level and package-level programs support gradual quarterly sales increases.
- **Mix recovers after Sonoma.** The preceding quarter contains particularly heavy package-system deliveries. More wafer-level equipment and contactors improve the gross profit earned on this quarter's sales, supporting the rise in adjusted earnings.
WatchGross margin recovers as the share of package systems eases.
Analyst reasoning
- Analyst FThe fiscal year then averages about 48% non-GAAP.
- **Support spending stays proportionate.** Engineering and local service expand with customer programs. Operating costs continue to rise but less than sales. Equipment supports evaluation and production; collections from earlier sales help fund the new receivable build.
WatchOperating expenses stay controlled while older customer invoices are collected.
Analyst reasoning
- Analyst GEngineering and support spending rises slower than sales
Sales of $40,000,000.00 and adjusted earnings per share of $0.31 require the next step in existing customer shipments, a recovery from the Sonoma-heavy mix, and spending that grows less quickly than gross profit. Evaluation work progresses without needing an immediate full-scale production conversion. Earlier collections partly offset cash committed to the continuing ramp.
Highabout 1 chance in 10 of better
Q3-FY2027
Sales$48.0M+20% vs base
Adjusted EPS$0.44+42% vs base
Capital spending$1.20M
Free cash flow$10.9M
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| Reported-basis net income | $16.1M |
|---|
| Compensation, depreciation and deferred taxes | $2.70M |
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| Accounts receivable | −$5.00M |
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| Inventories | −$7.00M |
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| Accounts payable | $4.00M |
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| Deferred revenue and deposits | $2.00M |
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| Prepayments and net lease timing | −$0.75M |
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| Operating cash flow | $12.1M |
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| Less capital spending | −$1.20M |
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| Free cash flow | $10.9M |
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- Reported-basis net income
- Forecast $0.55 adjusted earnings on 34 million shares less $2.596 million of adjustments.
- Compensation, depreciation and deferred taxes
- $2.3 million share compensation plus $900,000 depreciation and amortization less $500,000 deferred tax benefit.
- Accounts receivable
- Sales ramp creates further receivables before collection.
- Inventories
- Advance builds for new production wins.
- Accounts payable
- More purchases carry supplier financing.
- Deferred revenue and deposits
- Additional advance receipts with strong orders.
- Prepayments and net lease timing
- $700,000 prepayments and $50,000 net lease use.
Capital spending
Investment accelerates with successful programs, not independently of the sales scenario. $100,000 remains unallocated because no detailed project list is provided.
| Test equipment | $0.60M |
|---|
| Machinery and equipment | $0.30M |
|---|
| Leasehold improvements | $0.20M |
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| Unallocated capital spending | $0.10M |
|---|
| Total capital spending | $1.20M |
|---|
Test equipment Faster validation-capacity deployment; analyst estimate.
Test equipment
Machinery and equipment Production equipment for more programs; analyst estimate.
Machinery and equipment
Leasehold improvements Accelerated facility preparation; analyst estimate.
Leasehold improvements
Our liquidity and cash flows may also be affected by the timing of large system shipments, investments in inventory and working capital, capital expenditures, acquisition-related cash uses, and investments in product development and market expansion.
Three ways the high case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- **Existing customers accelerate deliveries.** Installed programs already have production requirements. More systems and follow-on orders ship by March 26, lifting sales and spreading operating costs across greater output.
WatchCustomers bring scheduled shipments forward into the quarter.
Analyst reasoning
- Analyst GCurrent customers pull deliveries forward, the second package-level processor ramps strongly and the new wafer-level production evaluation converts promptly into multi-system orders.
- **Validation advances unusually quickly.** The company envisages a decision within months of installation. Early successful validation allows initial production commitments sooner than the base. It strengthens the wafer-level sales opportunity without assuming every product line switches at once.
WatchA successful Taiwan validation and dated production purchase order.
Analyst reasoning
- Analyst GSuccessful new wafer-level production validation
- **Richer mix funds faster expansion.** Contactors and wafer-level systems carry stronger margins. A richer mix raises adjusted earnings, while stronger bookings bring deposits. Additional test equipment and inventory support the accelerated programs and absorb part of the cash gain.
WatchHigher contactor sales, customer advances and test-equipment deployment.
Analyst reasoning
- Analyst GInvestment accelerates with successful programs, not independently of the sales scenario.
Together, faster existing deliveries, early progress toward production and richer mix support sales of $48,000,000.00 and adjusted earnings per share of $0.44. Analyst G goes furthest, with sales of $53,000,000.00 and adjusted earnings per share of $0.55, allowing a faster combination of follow-on demand and higher-margin products. Its stronger case also accelerates test equipment investment and component buying; the cash result belongs to that same sales case.
Successful validation can open a large opportunity, but a prompt decision is an upside condition, not a scheduled certainty. Existing customer pull-ins can contribute sooner.
The seven highs run from $46.0M (Analyst A) to $53.0M (Analyst G).
First signEarly calendar 2027 validation progress and customer pull-ins; orders must carry shipment dates before March 26 to affect this quarter.
Lowabout 1 chance in 10 of worse
Q3-FY2027
Sales$32.0M−20% vs base
Adjusted EPS$0.16−48% vs base
Capital spending$0.40M
Free cash flow$2.73M
FCF walk and spending detail
Forecast dollars. Free cash flow is operating cash flow less capital spending.
| GAAP net income | $2.50M |
|---|
| stock-based compensation | $1.90M |
|---|
| depreciation and amortization | $0.73M |
|---|
| receivables and inventory | −$2.00M |
|---|
| Operating cash flow | $3.13M |
|---|
| Less capital spending | −$0.40M |
|---|
| Free cash flow | $2.73M |
|---|
- GAAP net income
- low case on about 30 million of revenue
- stock-based compensation
- run rate
- depreciation and amortization
- run rate
- receivables and inventory
- partial collection of earlier receivables offsets inventory held
Capital spending
No disclosed categories; small spending left unallocated.
| Unallocated capital spending | $0.40M |
|---|
| Total capital spending | $0.40M |
|---|
This asset-light manufacturing approach allowed us to increase production capacity and responsiveness without a comparable increase in infrastructure or capital spending.
Three ways the low case happens
These levers explain the outcome together; each is not a separate one-in-ten event.
- **A delivery gap opens.** The previous quarter's system surge may not be replenished promptly. Slower repeat orders and shifted acceptance dates reduce sales through March 26, leaving less volume to cover production costs.
WatchCustomers defer deliveries or bookings fall behind shipments.
Analyst reasoning
- Analyst CIn the low case the second-quarter surge leaves a delivery gap and working capital stays trapped, so the quarter burns cash.
- **Wafer-level conversion takes longer.** The production decision follows installation and validation, not installation alone. The evaluation stays a limited program rather than supplying replacement production sales. Earnings lose the benefit of a richer wafer-level mix.
WatchInstallation or validation milestones slip during early calendar 2027.
Analyst reasoning
- Analyst EDelayed production conversion at the benchmark customer
- **Costs and inventory do not adjust.** Components and support resources were committed for growth. Continued operating spending squeezes earnings on weaker sales. Receivables and unsold stock absorb cash while essential equipment spending continues.
WatchInventory remains high and customer payments lag in the third-quarter results.
Analyst reasoning
- Analyst EWorking capital remains a use of cash in the slower case.
The combined downside is sales of $32,000,000.00 and adjusted earnings per share of $0.16. Analyst E goes further, with sales of $30,000,000.00 and adjusted earnings per share of $0.14, as delayed acceptance, weaker mix and continued operating investment overlap. Its cash case retains a working-capital outflow despite the slower sales, so earnings do not prevent cash burn.
Technical validation has slipped before. Existing orders also remain subject to rescheduling, so the new evaluation cannot be assumed to fill a delivery gap.
The seven lows run from $30.0M (Analyst E) to $34.5M (Analyst A).
First signDuring early calendar 2027, delayed installation or revised delivery dates; by March 26, a gap in shipments or collections.
Surfaced outlier views
For Q3-FY2027 the seven analysts sit within 2.5% of the PricedIn number on sales and within 3.2% on adjusted EPS. The furthest, and why:
Analyst B · Q3-FY2027: sales $39.0M, the lowest of the seven (PricedIn $40.0M) and adjusted EPS $0.30, the lowest of the seven (PricedIn $0.31)
WhyAnalyst B carries forward a measured shipment increase rather than an immediate large benchmark-customer ramp. Its positive tax provision also holds back adjusted earnings despite a recovering product mix; Analyst B's tax expense is $1,226,000.00.
Quarterly bookings and customer conversion of the early calendar 2027 Taiwan wafer-level test cell evaluation into multi-system production purchase orders would move our base trajectory higher or lower.
Watch
Watch early-calendar-2027 installation and validation, then delivery dates through March 26. Higher sales with recovering margin support the base; installation alone does not prove production revenue. Collections on the preceding quarter's shipments will test whether earnings become cash.