Today AEHR preannounced some terrible numbers for Q3 and AGAIN lowered their FY guide. It is down -27% in reaction.
Revenue $7.6M
Net Loss $1.5-1.8M
Bookings $24.5M
Backlog $20M
That means a huge revenue drop from the $21M in revenue seen last Q, while bookings and backlog exploded from $2 and $3.3M last Q to $24.5M and $20M. So the orders finally showed up, but they aren’t delivering them yet.
The guide was lowered yet again.
In Q1 they guided for FY revenue $100M, net income $28M (28%), which were flat from the initial guide in Q4:
For the fiscal year ending May 31, 2024, Aehr is reiterating its previously provided guidance for total revenue to be at least $100 million, representing growth of over 50% year over year, and GAAP net income of at least $28 million, representing earnings growth of greater than 90% year over year.
In Q2 they lowered to FY revenue $85M, net income $17-21M (20-25%):
For the fiscal year ending May 31, 2024, Aehr is revising its expected full year total revenue to be between $75 million and $85 million, representing growth of 15% to 30% year over year, and GAAP net income of between 20% and 25% of revenue.
Now they are lowering it again to $65M and $11M (17%). This is projecting Q4 to hit $16.8M in rev, well under the over $20M seen each Q from Q4-Q2.
As was pointed out some months ago when aehr was all the rage here, their revenue is LUMPY. I didn’t take the warning seriously back then, and paid for it.
No EVs, not chips, no chips, no chip testing. Ford, GM, Bently and others finally got realistic and acknowledged that EVs face major headwinds. They have all cut back their plans and therefore Silcon Cabide chips face an uphill slog for sales increases. It will likely be a long time before that changes. Don’t invest on hope, watch the numbers.
Not that I disagree - But don’t overlook the 75+ EV makers in China. How many employ SiC inverters? I haven’t any idea. Probably a lot of those vehicles charge overnight on house voltage. Just the same, they are engaged in a brutal price war as the market shakes out.
OK - I’m not predicting a surge in orders for Aehr. Just reminding those who care that this is a worldwide market.
Or that those specific companies face major headwinds and not EVs as such?
Toyotas 4x4 aside, we are a big Subaru family as well, yet the Toyota/Subaru EV we tried felt like a bad joke when driven right after a Model Y–and this is before we even talk pricing.
Except for offroading or towing from Phoenix to Canada or Montana or Seattle, as we do in summer, I am not really sure what those headwinds are for the consumer.
As for the producer, being built around EVs is the key here. Ford or GM and EV is not very dissimilar from a fax machine maker deciding they want to compete with ZS or NET. Massive headwinds for sure. Blockbuster and Netflix. Etc.
I don’t remember AEHR doing business with TSLA and if they only served “pretenders” rather than “contenders,” then there is a lesson in that in and itself.
Aehr doesn’t do business with any end user of SiC chips. They sell test equipment to foundries. Even though Tesla design their own chips for Dojo, they don’t have fabrication facilities. Much the same as Nvidia they contract the fabrication to a foundry (I don’t know which). In any case, I don’t think any of Tesla’s semiconductors utilize SiC. Aehr would no sooner do business with Tesla than they would do business with Ford, GM, BMW, BYD, etc.
All of Tesla’s cars use SiC. In fact AEHR is basically the Tesla company through ON and SMT who are Tesla’s providers of SiC semiconductors.
The problem is that when Tesla stopped growing so did the need to buy more equipment to serve Tesla when what they had was enough. Meanwhile, other manufacturers have not caught up to offset slowing growth at Tesla.
Next generation EVs, all suppose to roll out from Ford and GM and the like, all use SiC. But their roll outs have been delayed a year or more. Thus, so to the need to test SiC that would go into them.
Further problem is Wolfspeed. World’s largest SiC wafer producer by far and now with the world’s largest SiC semiconductor fab just rolling out into high gear. No indication that Wolf is a customer. If Wolf can produce what is expected to be $2 billion of SiC semiconductors a year in this fab by 2026/2027, hitting $100 million by end of 2024 to early 2025, and not need AEHR then there is a hole in the narrative that there are no other options to do such high volume production.
I got out two earnings calls or so ago when AEHR’s CEO was basically begging his customers to buy product. He seemed legitimately shocked that they were not following through. In a year or two they may very well follow through, but delayed due to the current slow down. But I did not want to wait that long or be a holder. Moved that money into AI. Most prominently SMCI.
Anyways, that is the issue with AEHR. Their pre-announcement is so bad it is almost as if they have no business. $7 million next quarter!
The narrative indicates AEHR will eventually bounce back. However, at present the narrative and real world data are not in sync.
Yes Tinker, basically we are in agreement. None of the EV makers that use SiC inverters are direct customers of Aehr. Aehr would not even be considered a 2nd tier supplier in that they don’t directly provide value-add to the SiC semiconductors. They are an equipment provider to those companies that fab the semiconductors much the same as ASML.
I too sold my stock holdings in Aehr quite some time ago, but I do still hold a couple of options with a 2026 expiry date. At present they are deeply under water. But enough option-talk.
With 2026 expiry we can say keep hope alive! I do think AEHR’s CEO legitimately expected the orders and was quite surprised they fell through. That is as much as his honest expectation along with possibly incompetent reading of market decline.
It happens. Nvidia underestimated the crypto crash. But AEHR is no Nvidia of course, but with interest rate reductions and new models rolling out now (hopefully in 2025) there may be some value left in those options eventually. But this turnaround is not going to happen quickly.