Aehr Reports Q1 2024 results

Fiscal First Quarter Financial Results:

  • Net revenue was $20.6 million, up 93.3% from $10.7 million in the first quarter of fiscal 2023. Beats by $1.37M
  • GAAP net income was $4.7 million, or $0.16 per diluted share, up from GAAP net income of $589,000, or $0.02 per diluted share, in the first quarter of fiscal 2023.
  • Non-GAAP net income, which excludes the impact of stock-based compensation, was $5.2 million, or $0.18 per diluted share (beats by $.02), compared to non-GAAP net income of $1.3 million, or $0.05 per diluted share, in the first quarter of fiscal 2023.
  • Bookings were $18.4 million for the quarter.
  • Backlog as of August 31, 2023 was $22.3 million. Effective backlog, which includes all orders received since the end of the first quarter, is $24.0 million.
  • Cash provided by operations was $3.9 million.
  • Total cash, cash equivalents, and short-term investments as of August 31, 2023 were $51.0 million, up from $47.9 million at May 31, 2023.

Fiscal 2024 Financial Guidance:

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.

-I was disappointed not to see a bump in the $100M FY24 Guide

-Bookings increase looked positive, up from $15.2M to $18.4M

-Looks like some good progress on new customers: “ . . . we announced last month our sixth customer for silicon carbide wafer level burn-in. . . Including this newest customer, our last two announced customers have selected our systems primarily for applications other than electric vehicles including industrial, solar, and commuter electric trains. This further extends our application space beyond the opportunity we see in silicon carbide for traction inverters and onboard and offboard chargers for electric vehicles. These applications expand our market opportunity to include what William Blair forecasts will be an additional 2.8 million 6” equivalent wafers needed per year by 2030 for applications beyond the 4.5 million 6” equivalent wafers per year it forecasts will be needed just for electric vehicles."

-Solid progress on GaN:

“We are also in extensive engagements with multiple gallium nitride suppliers, including companies that also supply silicon carbide devices. Gallium nitride is similar to silicon carbide in that both of these semiconductor compounds are considered wide bandgap semiconductors that are able to withstand high-voltage applications more directly than silicon. Gallium nitride semiconductor material has characteristics that make it optimal for lower power converter applications such as consumer power converters, solar micro inverters, and industrial motor controllers, compared with silicon carbide that is optimal for higher power / higher voltage applications such as traction inverters in electric vehicles, trucks, trains, and converters used in charging infrastructure and storage. The gallium nitride market is another potential growth driver for our wafer level solutions, particularly for automotive and photovoltaic applications where burn-in appears to be critical for meeting the initial quality and reliability needs of those markets. This fiscal year, while we do expect to recognize some revenue for systems, WaferPaks and Aligners for gallium nitride applications, we continue to expect a significant majority of our revenue to come from silicon carbide."

Full Press Release:

Aehr Reports Continued Strong Revenue and Earnings for the First Quarter of Fiscal 2024 on Strength of Production Wafer Level Burn-in Products for Silicon Carbide Semiconductors | Seeking Alpha


I also thought this was a strong set of results.

Revenue declined much less sequentially than prior Q1’s and at $20.2m, up 93% yoy it was a new Q1 record and almost on par with Q4 last year, which was their highest on record.

Gross margin was a Q1 record at 48% vs 42% and 41% in the prior two years.

Operating margin was a Q1 record at 20% vs 5%, -18% and -110% in the prior 3 years.

Net profit margin was a Q1 record at 23% vs 6%, 13% and 5% in the prior 3 years.

Backlog was a record Q1 at $22.3m.

There was only one thing that I found somewhat disappointing, and that was bookings:

Bookings Q1 Q2 Q3 Q4
2021 0.7 1.6 8 5.4
2022 20.7 29.1 6 4.4
2023 19.1 10.8 33.3 16.1
2024 18.4

→ So Q1 bookings was historically relatively weak.

If one were to look at a trialing 2 quarter view of bookings, it looks like this:

T6m Bookings Q1 Q2 Q3 Q4
2021 2.3 9.6 13.4
2022 26.1 49.8 35.1 10.4
2023 23.5 29.9 44.1 49.4
2024 34.5

→ On this view trialing 6 months bookings looks ok for a Q1, but it still declined from Q4’s number, whereas in the two prior years there was an acceleration.

In addition, $16m, or 88% of the $18.2m Q1 bookings came from their largest customer - OnSemi, which was in addition to the 88% revenue concentration from the same customer which the CFO highlighted in the Q&A.

This leads me to the conclusion that the CEO was a little disappointed (If he isn’t then I am) about the lack of substantial bookings from new customers in the quarter. He was again extremely skittish about anything to do with the plans of his customers, but he did have this to say in the Q&A about orders:

“So my message, I guess, to my customers listening , I mean we are able to ship more than anybody else. We literally can ship up to, call it, 50, 80, 100 testers, call it, wafers or blades of capacity a month, we are shipping more per month than the combined number of installed base of every other competing alternative has ever shipped.
But there’s still a scenario where…please get your orders in… so that we can continue to make sure that we can address everybody’s needs. But I’d just reiterate, obviously, we’re expecting significant amounts of orders in the fiscal year to be able to turn to make $100 million and then without zero backlog, and we’re sticking to our guns there.”

My interpretation: customers, please give us your firm orders. We are ramping to be able to fulfil them, but if you don’t put them in soon, we will put you last in the queue. And I’m feeling a bit peeved that you’re not committing yet.




It seems that the bookings can be extremely variable so I wouldn’t read too much into it unless they keep trending poorly. Looking at '22 Q3 & Q4 they had just $6m & $4.4m bookings respectively after some huge bookings Q’s and they are just all over the place in your chart (lumpy :joy:). The T6m is a better view of it. Would be more concerning if they didn’t reiterate their guide.



There was a good deal of information shared during the call. I’ll mention two that stood out.

  1. A twist to the razor-blade business model.

I had previously thought that the WaferPak (blade part of the business model) would provide recurring income when they had to be replaced every 3-4 years. Turns out it may not necessarily be so. Moreover, each AEHR razor may need more than one blade, driven by new designs that their customers are coming with.

"During the quarter, we had record shipments of our FOX WaferPak Contactors in both revenue and units with revenues reaching well over 50% of total revenues for the quarter. We’re also very pleased with the continued stream of new designs for WaferPaks we’re seeing.”

“Our new design volume has tripled over the last nine months as we’re seeing more and more electric vehicles coming online with their own specific device designs for inverters and onboard chargers. As a result, our customers are buying additional WaferPak Contactors for these new designs, highlighting the recurring revenue part of our business.”

“With each new design, our customers will need enough new WaferPaks to meet the volume production capacity need for those new devices.”

Me speaking: It seems like I wasn’t the only one realizing this for the first time. One of the analysts spent some time clarifying the exact same point.

Dylan Patel

That’s great. And then I kind of wanted to clue in on a question or a statement that you had in the sort of the prepared remarks, which was you’re seeing more electric vehicles with their own specific design for inverters. Are you saying that like XYZ, major auto OEM will want a specific inverter design from their supplier and then that’s going to require a different chip design or different device design than someone else? Or I assume that everyone would have pretty similar designs for the inverters. Would that mean that there’s more WaferPak because of this?

Gayn Erickson

Yes. And I know more than I can share, but I still don’t think I know everything in this space around this. But yes, people with seemingly the same power are dictating specific requirements of the chip size. It gets into thermal trade-offs, voltage trade-offs, power trade-offs, acceleration trade-offs, how much power you have on hand, what kind of efficiency you have.

And so I’m actually kind of surprised that even the same automotive supplier will dictate multiple different flavors. And then the next automotive guy won’t buy the same ones. So I’m sure it drives our customers crazy because I’m sure they way rather everybody buy one.

[T]he net is, for us, there is more and more WaferPak designs. And I know I said a specific call automotive, but candidly, a lot of the new industrial designs, there’s a much broader array of those two, and those designs have been increasing, too.

Dylan Patel

So in the past, I think it might have even been like a year ago, you mentioned that sort of you’d expect people to change WaferPak maybe every two to three years or designs every two to three years. Do you think that still remains the case? Or do you think that people will have to have more WaferPaks relative to, say, an XP can fit 18 or 9 of them, they might have more than that 18 or 9 because there’s three or four different designs across their third of major customers, and then they might have to switch them out more often. I’m just trying to get a sense of that.

Gayn Erickson

So I’m pretty sure I would have said because I remember I probably was pricing three or four years. I think two to three might be aggressive, but we weren’t sure. We know like in memory, for example, every like 18 months to 24 months, the probe cards are all swapped out. But that’s probably the most extreme. Generally speaking, automotive lasts longer. But the issue with silicon carbide is it’s in the sort of infant phase where people are going Gen 2, Gen 3, Gen 4, Gen 5, they’re going from 150 to 200 millimeter.

And as those happen, there is more evolution. To me, if you can look at it over 15 years, my guess is there’s more activity in the next five to seven years than there will be in the back half of seven years. But for sure, we’re going to see customers with more than one WaferPak per blade, like an 18-blade or 18 tester XP. If you ask me in three years to what do I think? I bet you, for every WaferPak that’s in the system, there’s a couple on the shelf that wouldn’t shock me for just how they will do it to meet customer demand.

Me speaking: This changes somewhat the original assumption that recurring revenue will be driven by the WaferPaks’ 3-4 year replacement cycle.

Given how fast designs are changing right now (according to Erickson), we may be on new designs by the time replacements are due. Hence, the recurring portion of revenues may be smaller than originally thought. However there is an upside.

Given that we expect multiple wafer designs used on the FOX machines (for e.g. more than 18 WaferPaks used on a 18-tester machine), the revenue contribution from the WaferPak ‘blade’ in the AEHR razor-blade business model may likely be higher than what most people would expect.

  1. AEHR’s competitive advantage in testing 800-volt batteries (i.e. no arcing issues) will benefit the company in the coming 2-3 years.

“The [UBS] report also focuses on the progression of electric vehicle batteries from 400 volts to 800 volts, which is the level generally recognized by the industry at which silicon carbide is mandatory to get the range and recharging speed consumers are demanding. Devices used in the traction inverters for 800 volt DC battery systems actually operate up to almost 1,200 volts AC.

At this voltage, the devices will experience electrical arcing when tested at 1,200 volts under normal testing environments, which creates a very real problem for conventional testers on wafer probers and probe cards. At such high voltages, the 1,200 volt bias to the device will actually create an electrical arc through the air or on a wafer even if surrounded by 100% nitrogen.

This is basically how a spark plug works. However, this spark actually damages the devices permanently. Aehr’s proprietary WaferPaks have individual chambers that encapsule each wafer and allow us to control the temperature, gas makeup and pressure within this chamber on each wafer. Our proprietary gas and pressure control option allows us to test and burn-in an entire wafer up to 2,000 volts without arcing or damaging the wafer.

By contrast, other competitive systems using standard wafer progress see arcing in as little as 900 volts, which makes it impossible to do high-voltage reverse bias test and burn-in at the wafer level for devices aimed at these new 800-volt battery vehicles.

Me speaking: While the advantage may not yet be apparent because most batteries are still on 400 volts, it will become more apparent.

“Per UBS in 2023, 91% of the batteries sold in electric vehicles are forecasted to be 400 volts and only 9% are 800 volts. But by 2026, UBS expects a percentage of 800-volt battery cars to be above 30%, which is why it appears so many silicon carbide suppliers are timing their major ramps to be in the 2025 to 2026 time frame.”

“So in the next couple of years, we expect Aehr to benefit from both an increased number of electric vehicles being sold as well as a significant increase in silicon carbide needing our solution for those electric vehicles.”

– Cedric


This is a small company with very high customer concentration and very lumpy revenue. Lots of customers engaging but hard to tell when they will actually book orders. In the earnings call, we learned that the sales cycle can be incredibly long, even years. The big sell-off is surprising - I guess the market must have had some unrealistic expectations or cannot handle the lumpiness.

With Aehr being down ~14% today, it looks quite cheap. Forward PE is 36 which is a bargain for a company expected to grow sales over 50% this year and net income over 90%.

-Long Aehr (13% position)