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Aehr Test Systems (NASDAQ: AEHR) Q2 revenue drops 27% as margins compress

Filing Impact
(Moderate)
Filing Sentiment
(Neutral)
Form Type
10-Q

Rhea-AI Filing Summary

Aehr Test Systems reported weaker results for the quarter ended November 28, 2025. Revenue fell to $9.9 million from $13.5 million, a 27% decline, mainly from lower contactor shipments tied to softness in electric vehicle demand. Six‑month revenue dropped 22% to $20.9 million.

Gross margin compressed to 25.7% from 40.1% as lower production, mix shifts, higher assembly and warranty costs, freight, and tariffs weighed on profitability. Aehr posted a quarterly net loss of $3.2 million, or $0.11 per share, versus a $1.0 million loss a year earlier; six‑month net loss widened to $5.3 million or $0.18 per share.

The company continues to invest in development, with research and development expenses up 31% in the quarter, and is seeing growth in package‑level burn‑in systems and AI‑related applications. Aehr strengthened liquidity by selling 384,380 shares via its ATM program for roughly $10 million of gross proceeds, ending the period with $31.0 million in cash, cash equivalents, and restricted cash and no off‑balance‑sheet debt arrangements disclosed.

Positive

  • None.

Negative

  • Revenue and margin contraction: Quarterly revenue fell 27% year over year to $9.9 million and six‑month revenue declined 22%, while gross margin dropped from 40.1% to 25.7%, leading to a significantly larger net loss.

Insights

Revenue and margins deteriorated sharply as EV-driven contactor demand softened.

Aehr Test Systems saw quarterly revenue drop from $13.5M to $9.9M, a 27% decline, with six‑month revenue down 22% to $20.9M. Management attributes most of this to lower contactor shipments amid ongoing softness in electric vehicle demand, partially offset by higher systems sales into AI‑related and other applications.

Profitability compressed significantly. Gross margin fell from 40.1% to 25.7% in the quarter and from 47.0% to 30.0% for the six‑month period, driven by lower manufacturing overhead absorption, product mix, higher assembly and warranty costs, freight, and tariffs. Operating expenses stayed elevated, with research and development up 31% in the quarter to $3.0M, pushing the company to a quarterly net loss of $3.2M versus a $1.0M loss a year earlier.

On the balance sheet, cash, cash equivalents and restricted cash were $31.0M as of November 28, 2025, slightly below $35.2M a year earlier, aided by $9.4M of net proceeds from an at‑the‑market equity program and an $1.3M Employee Retention Credit refund. The filing emphasizes continued demand for package‑level burn‑in systems tied to AI and other markets, but near‑term results remain heavily exposed to EV‑related contactor demand trends.

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

 

 

For the quarterly period ended November 28, 2025

 

or

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

 

 

For the transition period from _______________ to ______________   

 

Commission File Number 000-22893

 

AEHR TEST SYSTEMS

(Exact name of Registrant as Specified in its Charter)

 

California

 

94-2424084

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

400 Kato Terrace, Fremont, CA

 

94539 

(Address of Principal Executive Offices)

 

(Zip Code)

 

(510) 623-9400

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock par value of $0.01 per share

AEHR

The NASDAQ Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

 

 

Emerging growth company

☐

 

If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

 

There were 30,627,342 shares of the Registrant’s Common Stock outstanding as of January 2, 2026.

 

 

 

 

TABLE OF CONTENTS

 

 

 

Page

 

PART I FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (Unaudited)

 

3

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

25

 

Item 4. Controls and Procedures

 

25

 

PART II OTHER INFORMATION

 

 

 

Item 1. Legal Proceedings

 

26

 

Item 1A. Risk Factors

 

26

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

26

 

Item 3. Defaults Upon Senior Securities

 

26

 

Item 4. Mine Safety Disclosures

 

26

 

Item 5. Other Information

 

26

 

Item 6. Exhibits

 

27

 

SIGNATURES

 

28

 

 

 
2

Table of Contents

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

November 28,

 

 

May 30,

 

(In thousands, except par value)

 

2025

 

 

2025

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$30,835

 

 

$24,529

 

Accounts receivable

 

 

10,282

 

 

 

14,191

 

Inventories

 

 

42,723

 

 

 

41,997

 

Prepaid expenses and other current assets

 

 

4,349

 

 

 

8,061

 

Total current assets

 

 

88,189

 

 

 

88,778

 

Property and equipment, net

 

 

8,987

 

 

 

8,969

 

Goodwill

 

 

10,719

 

 

 

10,719

 

Intangible assets, net

 

 

10,143

 

 

 

10,781

 

Deferred tax assets, net

 

 

21,076

 

 

 

19,114

 

Operating lease right-of-use assets, net

 

 

9,272

 

 

 

9,601

 

Other non-current assets

 

 

348

 

 

 

546

 

Total assets

 

$148,734

 

 

$148,508

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$3,548

 

 

$6,728

 

Accrued expenses and other current liabilities

 

 

3,729

 

 

 

6,020

 

Operating lease liabilities, short-term

 

 

585

 

 

 

909

 

Deferred revenue, short-term

 

 

443

 

 

 

1,981

 

Total current liabilities

 

 

8,305

 

 

 

15,638

 

Operating lease liabilities, long-term

 

 

9,578

 

 

 

9,921

 

Deferred revenue, long-term

 

 

35

 

 

 

36

 

Other long-term liabilities

 

 

40

 

 

 

42

 

Total liabilities

 

 

17,958

 

 

 

25,637

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value: Authorized: 10,000 shares;

 

 

 

 

 

 

 

 

Issued and outstanding: none

 

 

-

 

 

 

-

 

Common stock, $0.01 par value: Authorized: 75,000 shares;

 

 

 

 

 

 

 

 

Issued and outstanding: 30,624 shares and 29,877 shares at November 28, 2025 and May 30, 2025, respectively

 

 

306

 

 

 

299

 

Additional paid-in capital

 

 

158,954

 

 

 

145,758

 

Accumulated other comprehensive loss

 

 

(110)

 

 

(126)

Accumulated deficit

 

 

(28,374)

 

 

(23,060)

Total shareholders' equity

 

 

130,776

 

 

 

122,871

 

Total liabilities and shareholders’ equity

 

$148,734

 

 

$148,508

 

  

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
3

Table of Contents

  

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands, except per share data)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Revenue

 

$9,884

 

 

$13,453

 

 

$20,853

 

 

$26,572

 

Cost of revenue

 

 

7,339

 

 

 

8,053

 

 

 

14,589

 

 

 

14,094

 

Gross profit

 

 

2,545

 

 

 

5,400

 

 

 

6,264

 

 

 

12,478

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,972

 

 

 

2,276

 

 

 

5,821

 

 

 

4,637

 

Selling, general and administrative

 

 

4,434

 

 

 

4,637

 

 

 

9,151

 

 

 

9,195

 

Restructuring charges

 

 

(213)

 

 

-

 

 

 

6

 

 

 

-

 

Total operating expenses

 

 

7,193

 

 

 

6,913

 

 

 

14,978

 

 

 

13,832

 

Loss from operations

 

 

(4,648)

 

 

(1,513)

 

 

(8,714)

 

 

(1,354)

Interest income, net

 

 

194

 

 

 

228

 

 

 

373

 

 

 

909

 

Other income, net

 

 

10

 

 

 

40

 

 

 

1,061

 

 

 

14

 

Loss before income tax benefit

 

 

(4,444)

 

 

(1,245)

 

 

(7,280)

 

 

(431)

Income tax benefit

 

 

(1,214)

 

 

(217)

 

 

(1,966)

 

 

(63)

Net loss

 

$(3,230)

 

$(1,028)

 

$(5,314)

 

$(368)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$(0.11)

 

$(0.03)

 

$(0.18)

 

$(0.01)

Diluted

 

$(0.11)

 

$(0.03)

 

$(0.18)

 

$(0.01)

Shares used in per share calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,177

 

 

 

29,659

 

 

 

30,050

 

 

 

29,383

 

Diluted

 

 

30,177

 

 

 

29,659

 

 

 

30,050

 

 

 

29,383

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
4

Table of Contents

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net loss

 

$(3,230)

 

$(1,028)

 

$(5,314)

 

$(368)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in cumulative translation adjustment

 

 

(15)

 

 

(57)

 

 

16

 

 

 

(33)

Comprehensive loss

 

$(3,245)

 

$(1,085)

 

$(5,298)

 

$(401)

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
5

Table of Contents

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Three Months Ended November 28, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, August 29, 2025

 

 

29,973

 

 

$300

 

 

$147,333

 

 

$(95)

 

$(25,144)

 

 

122,394

 

Issuance of common stock in public offering

 

 

384

 

 

 

3

 

 

 

9,368

 

 

 

-

 

 

 

-

 

 

 

9,371

 

Issuance of common stock under employee plans

 

 

285

 

 

 

3

 

 

 

894

 

 

 

-

 

 

 

-

 

 

 

897

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(18)

 

 

-

 

 

 

(491)

 

 

-

 

 

 

-

 

 

 

(491)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1,850

 

 

 

-

 

 

 

-

 

 

 

1,850

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,230)

 

 

(3,230)

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(15)

 

 

-

 

 

 

(15)

Balances, November 28, 2025

 

 

30,624

 

 

$306

 

 

$158,954

 

 

$(110)

 

$(28,374)

 

$130,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

Shareholders'

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Six Months Ended November 28, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, May 30, 2025

 

 

29,877

 

 

$299

 

 

$145,758

 

 

$(126)

 

$(23,060)

 

$122,871

 

Issuance of common stock in public offering

 

 

384

 

 

 

3

 

 

 

9,368

 

 

 

-

 

 

 

-

 

 

 

9,371

 

Issuance of common stock under employee plans

 

 

403

 

 

 

4

 

 

 

1,063

 

 

 

-

 

 

 

-

 

 

 

1,067

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(40)

 

 

-

 

 

 

(819)

 

 

-

 

 

 

-

 

 

 

(819)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

3,584

 

 

 

-

 

 

 

-

 

 

 

3,584

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,314)

 

 

(5,314)

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16

 

 

 

-

 

 

 

16

 

Balances, November 28, 2025

 

 

30,624

 

 

$306

 

 

$158,954

 

 

$(110)

 

$(28,374)

 

$130,776

 

  

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
6

Table of Contents

 

AEHR TEST SYSTEMS

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Three Months Ended November 29, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, August 30, 2024

 

 

29,584

 

 

$295

 

 

$140,812

 

 

$(134)

 

$(18,490)

 

$122,483

 

Issuance of common stock under employee plans

 

 

137

 

 

 

2

 

 

 

773

 

 

 

-

 

 

 

-

 

 

 

775

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(12)

 

 

-

 

 

 

(181)

 

 

-

 

 

 

-

 

 

 

(181)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1,189

 

 

 

-

 

 

 

-

 

 

 

1,189

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,028)

 

 

(1,028)

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(57)

 

 

-

 

 

 

(57)

Balances, November 29, 2024

 

 

29,709

 

 

$297

 

 

$142,593

 

 

$(191)

 

$(19,518)

 

$123,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

Shareholders'

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Six Months Ended November 29, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, May 31, 2024

 

 

28,995

 

 

$289

 

 

$130,612

 

 

$(158)

 

$(19,150)

 

$111,593

 

Issuance of common stock for business acqusition

 

 

552

 

 

 

6

 

 

 

9,375

 

 

 

-

 

 

 

-

 

 

 

9,381

 

Issuance of common stock under employee plans

 

 

184

 

 

 

2

 

 

 

829

 

 

 

-

 

 

 

-

 

 

 

831

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(22)

 

 

-

 

 

 

(343)

 

 

-

 

 

 

-

 

 

 

(343)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

2,120

 

 

 

-

 

 

 

-

 

 

 

2,120

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(368)

 

 

(368)

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(33)

 

 

 

 

 

 

(33)

Balances, November 29, 2024

 

 

29,709

 

 

$297

 

 

$142,593

 

 

$(191)

 

$(19,518)

 

$123,181

 

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
7

Table of Contents

 

AEHR TEST SYSTEMS

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(5,314)

 

$(368)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

3,512

 

 

 

1,945

 

Depreciation and amortization

 

 

1,433

 

 

 

953

 

Deferred income taxes

 

 

(1,962)

 

 

(90)

Amortization of operating lease right-of-use assets

 

 

360

 

 

 

506

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

3,891

 

 

 

3,718

 

Inventories

 

 

(654)

 

 

(3,638)

Prepaid expenses and other current assets

 

 

2,108

 

 

 

(2,940)

Accounts payable

 

 

(2,114)

 

 

(1,880)

Accrued expenses

 

 

(483)

 

 

5

 

Deferred revenue

 

 

(1,539)

 

 

(1,209)

Operating lease liabilities

 

 

(697)

 

 

(478)

Income taxes payable

 

 

6

 

 

 

(17)

Net cash used in operating activities

 

 

(1,453)

 

 

(3,493)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,858)

 

 

(518)

Payments for business acquisition, net of cash and cash equivalents acquired

 

 

(1,801)

 

 

(10,615)

Net cash used in investing activities

 

 

(3,659)

 

 

(11,133)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock from public offering, net of issuance costs

 

 

9,371

 

 

 

-

 

Proceeds from issuance of common stock under employee plans

 

 

1,067

 

 

 

831

 

Shares repurchased for tax withholdings on vesting of restricted stock units

 

 

(819)

 

 

(343)

Net cash provided by financing activities

 

 

9,619

 

 

 

488

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(2)

 

 

(3)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

4,505

 

 

 

(14,141)

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, beginning of period(1)

 

 

26,480

 

 

 

49,309

 

Cash, cash equivalents and restricted cash, end of period (1)

 

$30,985

 

 

$35,168

 

 

(1)      Includes restricted cash within prepaid expenses and other current assets and other non-current assets.

 

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

 

 
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Table of Contents

 

 

AEHR TEST SYSTEMS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Aehr Test Systems (the “Company”) was incorporated in California in May 1977 and develops and manufactures test and burn-in equipment used in the semiconductor industry.  The Company’s principal products are the FOX-XP, FOX-NP, and FOX-CP wafer contact and singulated die/module parallel test and burn-in systems, the Sonoma, Tahoe and Echo packaged parts burn-in products, the WaferPak full wafer contactor, the DiePak carrier, the WaferPak aligner, the DiePak autoloader, and test fixtures.

 

Basis of Presentation

 

The unaudited Condensed Consolidated Financial Statements included in this quarterly report on Form 10-Q include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting. Accordingly, the unaudited Condensed Consolidated Financial Statements do not include certain information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements for the interim periods presented have been prepared on a basis consistent with the May 30, 2025 audited Consolidated Financial Statements and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the condensed consolidated financial position and results of operations as of and for such periods indicated. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended May 30, 2025.

 

Principles of Consolidation

 

The Company’s Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries and all significant intercompany accounts and transactions have been eliminated upon consolidation.

 

Critical Accounting Policies and use of Estimates

 

The Company’s significant accounting policies are disclosed in the Company’s Annual Report on Form 10-K for the year ended May 30, 2025. There have been no significant changes to the Company’s critical accounting policies during the six months ended November 28, 2025. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates in these Condensed Consolidated Financial Statements include valuation of inventory at the lower of cost or net realizable value, valuation of intangible assets and impairment of long-lived assets and goodwill. Actual results could differ from those estimates.

 

Concentration of Credit Risk

 

Financial instruments which subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral. The Company had revenues from individual customers in excess of 10% of total revenues as follows: 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer A

 

 

58.8%

 

*

 

 

 

28.0%

 

*

 

Customer C

 

*

 

 

*

 

 

 

22.4%

 

*

 

Customer D

 

*

 

 

*

 

 

 

13.5%

 

*

 

Customer E

 

*

 

 

 

46.5%

 

*

 

 

 

68.4%
Customer F

 

*

 

 

 

12.1%

 

*

 

 

*

 

 

* Amount was less than 10% of total revenues

 

 
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The Company had gross accounts receivable from individual customers in excess of 10% of gross accounts receivable as follows: 

 

 

 

November 28,

 

 

May 30,

 

 

 

2025

 

 

2025

 

 

 

 

 

 

 

 

Customer A

 

 

56.8%

 

 

17.1%

Customer B

 

 

11.8%

 

 

26.2%

Customer E

 

*

 

 

 

12.0%

Customer G

 

*

 

 

 

17.2%

 

* Amount was less than 10% of total gross accounts receivable

 

Recent Accounting Pronouncements Not Yet Adopted

 

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the United States and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, an accounting standard update to improve income statement expenses disclosures. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets. The new guidance allows companies to apply a practical expedient when estimating credit losses on current accounts receivable and contract assets. This ASU is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted for periods in which financial statements have not yet been issued or made ready for issuance on a prospective basis. The Company is currently evaluating the impact of adopting this guidance on its Consolidated Financial Statements.

 

2. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company measures its cash equivalents and money market funds at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

 

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

 

Level 3 — Unobservable inputs that are supported by little or no market activities.

 

 
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Table of Contents

 

The following table represents the Company’s assets measured at fair value on a recurring basis as of November 28, 2025, and the basis for that measurement:

 

 

 

Balance as of

 

 

 

 

 

 

 

(In thousands)

 

November 28, 2025

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Money market funds

 

$28,673

 

 

$28,673

 

 

$-

 

 

$-

 

Total

 

$28,673

 

 

$28,673

 

 

$-

 

 

$-

 

 

The following table represents the Company’s assets measured at fair value on a recurring basis as of May 30, 2025, and the basis for that measurement:

 

 

 

Balance as of

 

 

 

 

 

 

 

(In thousands)

 

May 30, 2025

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Money market funds

 

$21,461

 

 

$21,461

 

 

$-

 

 

$-

 

Total

 

$21,461

 

 

$21,461

 

 

$-

 

 

$-

 

 

As of November 28, 2025 and May 30, 2025, restricted cash of $0.2 million representing a security deposit for the Company’s United States manufacturing and office space lease was included in money market funds. There were no financial liabilities measured at fair value as of November 28, 2025 and May 30, 2025. There were no transfers between Level 1 and Level 2 fair value measurements during the six months ended November 28, 2025. The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturity.

 

3. BALANCE SHEET INFORMATION

 

Inventories

 

Inventories consisted of the following:

 

 

 

November 28,

 

 

May 30,

 

(In thousands)

 

2025

 

 

2025

 

Raw materials and sub-assemblies

 

$32,781

 

 

$30,644

 

Work in process

 

 

9,404

 

 

 

9,263

 

Finished goods

 

 

538

 

 

 

2,090

 

 

 

$42,723

 

 

$41,997

 

 

Property and equipment

 

Property and equipment, net consisted of the following:

 

 

 

Useful life

 

November 28,

 

 

May 30,

 

(In thousands)

 

(in years)

 

2025

 

 

2025

 

Leasehold improvements

 

 *

 

$6,101

 

 

$5,999

 

Machinery and equipment

 

 3 - 5

 

 

3,850

 

 

 

3,846

 

Test equipment

 

 4 - 5

 

 

2,883

 

 

 

2,898

 

Furniture and fixtures

 

 2 - 5

 

 

1,475

 

 

 

1,331

 

Construction-in-process

 

 

 

 

888

 

 

 

362

 

 

 

 

 

 

15,197

 

 

 

14,436

 

Less: accumulated depreciation

 

 

 

 

(6,210)

 

 

(5,467)

 

 

 

 

$8,987

 

 

$8,969

 

 

* Lesser of estimated useful life or lease term.

 

Depreciation expense was $0.4 million and $0.8 million for the three and six months ended November 28, 2025, respectively. Depreciation expense was $0.2 million and $0.4 million for the three and six months ended November 29, 2024, respectively.

 

Product warranties

 

The Company provides for the estimated cost of product warranties at the time revenues are recognized on the products shipped. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s estimates, revisions to the estimated warranty liability would be required. The standard warranty period is one year for systems and ninety days for parts and service.

 

 
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Table of Contents

 

The following is a summary of changes in the Company's liability for product warranties during the three and six months ended November 28, 2025 and November 29, 2024:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Balance at the beginning of the period

 

$510

 

 

$219

 

 

$428

 

 

$234

 

Accruals for warranties issued during the period

 

 

145

 

 

 

130

 

 

 

314

 

 

 

308

 

Warranties acquired through business combination

 

 

-

 

 

 

144

 

 

 

-

 

 

 

144

 

Consumption of reserves

 

 

(310)

 

 

(135)

 

 

(601)

 

 

(328)
Adjustments to previously existing warranty accruals

 

 

204

 

 

 

-

 

 

 

408

 

 

 

-

 

Balance at the end of the period

 

$549

 

 

$358

 

 

$549

 

 

$358

 

 

Adjustments to previously existing warranty accruals represent changes in estimates based on updated information regarding historical warranty experience and expected future claims. The accrued warranty balance is included in accrued expenses on the accompanying Condensed Consolidated Balance Sheets.

 

Deferred revenue

 

Deferred revenue, short-term consisted of the following:

 

 

 

November 28,

 

 

May 30,

 

(In thousands)

 

2025

 

 

2025

 

Customer deposits

 

$214

 

 

$1,802

 

Deferred revenue

 

 

229

 

 

 

179

 

 

 

$443

 

 

$1,981

 

 

4. GOODWILL AND PURCHASED INTANGIBLE ASSETS

 

Goodwill

 

There were no impairments to goodwill during the three and six months ended November 28, 2025 and November 29, 2024, respectively.

 

Purchased Intangible Assets

 

The Company’s purchased intangible assets, net, were as follows:

 

 

 

November 28, 2025

 

 

May 30, 2025

 

(In thousands)

 

 

 

Accumulated

 

 

 

 

 

 

Accumulated

 

 

 

Finite-lived intangible assets:

 

Gross

 

 

Amortization

 

 

Net

 

 

Gross

 

 

Amortization

 

 

Net

 

Developed technology

 

$9,130

 

 

$(1,015)

 

$8,115

 

 

$9,130

 

 

$(634)

 

$8,496

 

Trade names

 

 

1,050

 

 

 

(140)

 

 

910

 

 

 

1,050

 

 

 

(88)

 

 

962

 

Customer relationships

 

 

810

 

 

 

(98)

 

 

712

 

 

 

810

 

 

 

(61)

 

 

749

 

Non-compete agreements and others

 

 

1,010

 

 

 

(604)

 

 

406

 

 

 

1,010

 

 

 

(436)

 

 

574

 

Total

 

$12,000

 

 

$(1,857)

 

$10,143

 

 

$12,000

 

 

$(1,219)

 

$10,781

 

 

Amortization expense related to purchased intangible assets with finite lives was $0.3 million and $0.6 million for the three and six months ended November 28, 2025, respectively.  Amortization expense was $0.3 million and $0.5 million for the three and six months ended November 29, 2024, respectively. There were no impairments to purchased intangible assets during the three and six months ended November 28, 2025 and November 29, 2024, respectively.

 

 
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As of November 28, 2025, the estimated future amortization expense of purchased intangible assets with finite lives is as follows:

 

(In thousands)

 

Amount

 

Remainder of 2026

 

 

591

 

2027

 

 

1,183

 

2028

 

 

981

 

2029

 

 

939

 

2030

 

 

939

 

2031

 

 

939

 

Thereafter

 

 

4,571

 

Total

 

 

10,143

 

 

5. INCOME TAXES  

 

The following table provides details of income taxes:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Loss before income tax benefit

 

$(4,444)

 

$(1,245)

 

$(7,280)

 

$(431)

Income tax benefit

 

$(1,214)

 

$(217)

 

$(1,966)

 

$(63)

Effective tax rate

 

 

27.3%

 

 

17.4%

 

 

27.0%

 

 

14.6%

 

The Company’s effective tax rate varies from the U.S. federal statutory rate of 21% primarily due to the tax deduction from stock-based compensation. During interim periods, tax expenses are recorded for jurisdictions that are anticipated to be profitable for fiscal 2026.

 

In accordance with ASC 740-270, Interim Reporting, the provision for income taxes for interim periods is based on the Company’s estimated annual effective tax rate. For the three and six months ended November 28, 2025 and November 29, 2024, the Company recognized income tax benefits primarily related to quarter-to-date and year-to-date losses in the United States.    

 

The Company accounts for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes.

 

6. COMMITMENTS AND CONTINGENCIES

 

Purchase Obligations

 

The Company has purchase obligations to certain suppliers. In some cases, the products the Company purchases are unique and have provisions against cancellation of the order.

 

Contingencies

 

The Company may, from time to time, be involved in legal proceedings arising in the ordinary course of business. While there can be no assurances as to the ultimate outcome of any litigation involving the Company, management does not believe any pending legal proceedings will result in judgment or settlement that will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

 

 
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Table of Contents

 

On December 3, 2024, a putative shareholder class action lawsuit captioned Lucid Alternative Fund, LP v. Aehr Test Systems, Inc. was filed in the United States District Court for the Northern District of California against the Company. The lawsuit alleged, in part, that the Company and certain of its executives made materially false and misleading statements regarding the Company’s earnings guidance and other financial projections for 2024. The lawsuit sought unspecified monetary damages and purported to represent purchasers of the Company’s securities between January 9, 2024 and March 24, 2024. On February 3, 2025, Lucid and individual investor Yue Guo each filed motions requesting appointment as lead plaintiff. On March 19, 2025, the court appointed Yue Guo, who was represented by Rosen Law, as lead plaintiff in the shareholder class action. On April 4, 2025, the court ordered lead plaintiff to file an amended complaint or designate the existing complaint as operative by May 16, 2025; defendants to file their anticipated motion to dismiss by June 6, 2025; lead plaintiff to respond to the motion by June 27, 2025; and defendants to reply by July 11, 2025.  The court scheduled a hearing on defendants’ motion to dismiss for August 8, 2025. On May 16, 2025, the court-appointed lead plaintiff elected to dismiss the case voluntarily, with all parties to bear their own fees and costs. The Court subsequently closed the case. Additionally, two shareholder derivative complaints were filed, alleging breaches of fiduciary duties and other misconduct by certain directors and officers of the Company. The derivative complaints were consolidated before the same judge as the putative shareholder class action lawsuit under the caption In re Aehr Test Systems, Inc. Stockholder Derivative Litigation, No. 3:24-cv-09236-SI. On April 28, 2025, the court entered an order staying the consolidated action pending resolution of any motion(s) to dismiss, including any related appeal(s), in the Lucid litigation. On June 9, 2025, the court dismissed the derivative action without prejudice pursuant to the parties’ stipulation. The Company believes the claims in all three lawsuits were without merit. Following the voluntary dismissal of the shareholder class action and the court’s dismissal of the consolidated derivative action, no related proceedings are currently pending.

 

On October 16, 2024, the Company filed a complaint with the China Suzhou Intermediate Court to protect its intellectual property rights in China against Suzhou Semight Instruments Co., Ltd. (“Semight”) and its related entities and/or distributors, alleging infringement of the Company’s two patents related to wafer burn-in systems and wafer reliability test systems. The Company is seeking injunctive relief and damage compensation, claiming that Semight’s actions have infringed upon its intellectual property rights and caused substantial harm to its business. The Company believes its claims are valid and is vigorously pursuing its legal remedies. At this stage, the outcome of the litigation is uncertain, and the Company is unable to predict the likelihood of success or estimate the potential financial impact, if any, on its condensed consolidated financial statements. The Company has also incurred and expects to continue to incur legal expenses related to this matter. On November 15 and December 6, 2024, Semight filed a petition for invalidation to the two aforementioned Chinese patents with the Department of National Intellectual Properties in Beijing, respectively. The oral hearings for both of the patents have been held, and the decision has been issued for both patents that upholds part of the claims. In addition, the Company received a suspension ruling from Suzhou Intermediate People’s Court on the infringement proceedings, pending the outcome of the validity rulings. With both patents having been upheld, the suspended infringement proceedings have resumed. The hearing for the divisional patent was held on August 28, 2025, and the hearing for the parent patent was held on October 17, 2025. In December 2025, the Company received a first-instance judgment from the Suzhou Intermediate People’s Court with respect to the infringement cases, which dismissed the Company’s claims based on the court’s opinion that there was insufficient evidence to establish infringement. The Company filed the appeals for both cases on January 4, 2026.

 

In the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, with respect to certain matters, for example, including against losses arising from a breach of representations or covenants, or from intellectual property infringement or other claims. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws contain similar indemnification obligations to the Company’s agents.

 

It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, payments made by the Company under these agreements have not had a material impact on the Company’s operating results, financial position or cash flow.

 

7. SHAREHOLDERS’ EQUITY

 

On October 15, 2024, the Board of Directors authorized management to execute a $100 million shelf registration, and a Registration Statement on Form S-3 was filed with the SEC. Additionally, a Prospectus Supplement for sales of $40 million of common stock pursuant to an ATM offering program was subsequently filed on October 29, 2024. In November 2025, the Company sold 384,380 shares of common stock at an average selling price of $25.89 per share. The gross proceeds to the Company were approximately $10.0 million, before commission fees of $0.3 million and offering expenses of $0.3 million. As of November 28, 2025, the remaining amount of the ATM offering program was approximately $30.0 million.

 

8. REVENUE

 

Revenue recognition

 

The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.

 

 
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Performance obligations include sales of systems, contactors, spare parts, as well as installation and training services included in customer contracts. A contract’s transaction price is allocated to each distinct performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company generally does not grant return privileges, except for defective products during the warranty period.

 

For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies. Revenue for systems and spares is recognized at a point in time, which is generally upon shipment or delivery and evidenced by transfer of title and risk of loss to the customer. Revenue from services is recognized over time as the customer receives the benefit over the contractual period of generally one year or less.

 

The Company has elected the practical expedient to not assess whether a contract has a significant financing component as the Company’s standard payment terms are less than one year.

 

The Company sells its products primarily through a direct sales force. In certain international markets, the Company sells its products through independent distributors.

 

Disaggregation of revenue

 

The following presents information about the Company’s net revenues in different geographic areas, which are based upon ship-to locations, and by product category:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Asia

 

$7,617

 

 

$9,825

 

 

$10,093

 

 

$22,403

 

United States

 

 

1,942

 

 

 

3,462

 

 

 

6,754

 

 

 

3,984

 

Europe and Middle East

 

 

325

 

 

 

166

 

 

 

4,006

 

 

 

185

 

 

 

$9,884

 

 

$13,453

 

 

$20,853

 

 

$26,572

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Systems

 

$4,974

 

 

$3,410

 

 

$11,739

 

 

$3,470

 

Contactors

 

 

3,444

 

 

 

8,575

 

 

 

6,057

 

 

 

20,669

 

Services

 

 

1,466

 

 

 

1,468

 

 

 

3,057

 

 

 

2,433

 

 

 

$9,884

 

 

$13,453

 

 

$20,853

 

 

$26,572

 

 

 
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With the exception of the amount of service contracts and extended warranties, the Company’s product net revenues are recognized at a point in time when control transfers to the customer. The following presents net revenues based on timing of recognition:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

 

 

 

 

Products and services transferred at a point in time

 

$9,148

 

 

$13,231

 

 

$19,373

 

 

$26,148

 

Services transferred over time

 

 

736

 

 

 

222

 

 

 

1,480

 

 

 

424

 

 

 

$9,884

 

 

$13,453

 

 

$20,853

 

 

$26,572

 

 

Contract balances   

 

Accounts receivable is recognized in the period the Company delivers goods or provides services and when the Company’s right to payment is unconditional.  Contract assets include unbilled receivables which represent revenues that are earned in advance of scheduled billings to customers. These amounts are primarily related to product sales where transfer of control has occurred but the Company has not yet invoiced. As of November 28, 2025 and May 30, 2025, unbilled receivables were $1.9 million and $3.6 million, respectively, and were included in prepaid expenses and other current assets on the accompanying Condensed Consolidated Balance Sheets.

 

Contract liabilities include payments received in advance of performance under a contract and are satisfied as the associated revenue is recognized. Contract liabilities as of November 28, 2025 and May 30, 2025 were $0.5 million and $2.0 million, respectively, and were included in deferred revenue, short-term and deferred revenue, long-term on the accompanying Condensed Consolidated Balance Sheets. During the three and six months ended November 28, 2025, the Company recognized $0.1 million and $1.8 million in revenue, respectively, which were included in contract liabilities as of May 30, 2025. 

 

Remaining performance obligations

 

As of November 28, 2025, the remaining performance obligations, exclusive of customer deposits, which were comprised of deferred service contracts and extended warranty contracts not yet delivered, are not material. The foregoing excludes the value of other remaining performance obligations as they have original durations of one year or less and excludes information about variable consideration allocated entirely to a wholly unsatisfied performance obligation.

 

Costs to obtain or fulfill a contract

 

The Company generally expenses sales commissions when incurred as a component of selling, general and administrative expenses as the amortization period is typically less than one year. Additionally, the majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory and fixed assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing process.

 

 
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9. STOCK-BASED COMPENSATION

 

Stock-based compensation expense consists of expenses for stock options, restricted stock units (“RSUs”), performance RSUs (“PRSUs”), restricted shares, performance restricted shares and employee stock purchase plan (“ESPP”) purchase rights. Stock-based compensation expense for stock options and ESPP purchase rights is measured at each grant date, based on the fair value of the award using the Black-Scholes option valuation model, and is recognized as expense over the employee’s requisite service period. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of publicly traded options. For RSUs, PRSUs, restricted shares and performance restricted shares, stock-based compensation expense is based on the fair value of the Company’s common stock at the grant date and is recognized as expense over the employee’s requisite service period. All of the Company’s stock-based compensation is accounted for as equity instruments. See Note 12 in the Company’s Annual Report on Form 10-K for fiscal 2025 filed on July 28, 2025 for further information regarding the equity incentive plans and the ESPP.

 

The following table summarizes the stock-based compensation expense for the three and six months ended November 28, 2025 and November 29, 2024:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Cost of sales

 

$215

 

 

$69

 

 

$374

 

 

$162

 

Research and development

 

 

380

 

 

 

278

 

 

 

745

 

 

 

486

 

Selling, general and administrative

 

 

1,246

 

 

 

728

 

 

 

2,393

 

 

 

1,297

 

 

 

$1,841

 

 

$1,075

 

 

$3,512

 

 

$1,945

 

 

Stock-based compensation expense totaling $0.4 million and $0.3 million was capitalized as part of inventory as of November 28, 2025 and May 30, 2025, respectively.

 

The Company’s nonvested RSU, PRSU and restricted shares activities during the six months ended November 28, 2025 were as follows:

 

 

 

 

 

 

Weighted

 

 

 

 

 

Average Grant

 

 

 

 

 

Date Fair

 

 

 

Shares

 

 

Value

 

 

 

(in thousands)

 

 

Per Share

 

Unvested, May 30, 2025

 

 

664

 

 

$16.89

 

Granted (1)

 

 

529

 

 

 

15.13

 

Vested

 

 

(61)

 

 

14.81

 

Forfeited

 

 

(4)

 

 

17.54

 

Unvested, August 29, 2025

 

 

1,128

 

 

 

16.18

 

Granted

 

 

1

 

 

 

27.42

 

Vested

 

 

(76)

 

 

15.59

 

Forfeited

 

 

(1)

 

 

16.45

 

Unvested, November 28, 2025

 

 

1,052

 

 

$16.24

 

 

(1)

Includes 241,000 shares of performance-based awards, of which approximately 70,000 shares of performance-based awards have target achievement goals whereby the grantee can earn up to 200% of the original award (up to 141,000 shares) if the maximum target goals are met. The remaining awards are earned at 100% if the target goals are achieved

 

 
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There were no options granted during the three and six months ended November 28, 2025 and November 29, 2024.

 

During the six months ended November 28, 2025 and November 29, 2024, the Company issued 67,000 and 41,000 shares, respectively, under the ESPP. As of November 28, 2025 and November 29, 2024, there were 443,000 and 285,000 shares, respectively, available for issuance under the ESPP.

 

On October 20, 2025, the Company’s shareholders approved amendments to the 2023 Equity Incentive Plan and the Amended and Restated 2006 Employee Stock Purchase Plan to increase the share reserves by 2,500,000 shares and 300,000 shares, respectively. The additional shares became available for future issuance upon shareholder approval.

 

10. RESTRUCTURING CHARGES

 

During the three months ended May 30, 2025, the Company initiated a restructuring plan to consolidate facilities and optimize cost structure in order to more effectively support the Company’s long-term strategic objectives. Restructuring charges relate to impairment of long-lived assets that will no longer be used in operations, including right-of-use assets and facility-related property, contract termination costs and facility exit-related costs. During the three months ended November 28, 2025, the Company entered into a lease termination agreement with the landlord and paid a termination fee of $0.2 million and was released from its remaining lease obligation. Consequently, the Company recognized a credit to the restructuring charge of $0.2 million during the period. There was no restructuring liability outstanding as of November 28, 2025.

 

Separately, the Company implemented a workforce reduction to align resources with its business needs in the three months ended August 29, 2025. The Company recorded $0.2 million of restructuring charges in the Condensed Consolidated Statements of Operations during the three months ended August 29, 2025, primarily related to employee termination benefits. There were no additional charges incurred related to this reduction during the three months ended November 28, 2025. No restructuring liability remained as of November 28, 2025, related to this initiative.

 

There were no restructuring charges during the three and six months ended November 29, 2024.

 

11. EMPLOYEE RETENTION CREDIT

 

The Company filed claims for the Employee Retention Credit (“ERC”) with the Internal Revenue Service in February 2024 under the provisions of the Coronavirus Aid, Relief, and Economic Security Act, as amended. During the three months ended August 29, 2025, the Company received a refund of approximately $1.3 million, which was recognized as other income in the Condensed Consolidated Statements of Operations.

 

In connection with filing the ERC claims, the Company engaged a third-party service provider under a contingent-fee arrangement. As a result, the Company incurred a service fee of approximately $0.3 million, which was recorded in other expense in the Condensed Consolidated Statements of Operations during the three months ended August 29, 2025.

 

There was no additional ERC-related activity during the three months ended November 28, 2025.

 

12. NET LOSS PER SHARE

 

Basic net loss per share is determined using the weighted average number of common shares outstanding during the period. Diluted net loss per share is determined using the weighted average number of common shares and potential common shares (representing the hypothetical number of incremental shares issuable under the assumed exercise of outstanding stock options, and vesting of outstanding RSUs and ESPP shares) during the period using the treasury stock method. The calculation of dilutive shares outstanding excludes securities that would have an antidilutive effect on net loss per share.

 

 
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The following table presents the computation of basic and diluted net loss per share: 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 28,

 

 

November 29,

 

 

November 28,

 

 

November 29,

 

(In thousands, except per share data)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$(3,230)

 

$(1,028)

 

$(5,314)

 

$(368)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

30,177

 

 

 

29,659

 

 

 

30,050

 

 

 

29,383

 

Dilutive effect of common equivalent shares outstanding

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Diluted weighted average shares outstanding

 

 

30,177

 

 

 

29,659

 

 

 

30,050

 

 

 

29,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - Basic

 

$(0.11)

 

$(0.03)

 

$(0.18)

 

$(0.01)

Net loss per share - Diluted

 

$(0.11)

 

$(0.03)

 

$(0.18)

 

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Antidilutive employee share-based awards, excluded

 

 

1,883

 

 

 

1,747

 

 

 

1,904

 

 

 

1,622

 

 

13. SEGMENT AND CONCENTRATION INFORMATION

 

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in deciding how to allocate resources and in assessing performance.

 

The Company’s chief operating decision maker, the chief executive officer, reviews discrete financial information presented on a consolidated basis for purposes of regularly making operating decisions and assessing financial performance. Accordingly, the Company considers itself to be in one operating segment.

 

Property and equipment, net by geographic area are as follows:

 

 

 

November 28,

 

 

May 30,

 

(In thousands)

 

2025

 

 

2025

 

United States

 

$8,937

 

 

$8,892

 

International

 

 

50

 

 

 

77

 

Total property and equipment, net

 

$8,987

 

 

$8,969

 

  

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion of our financial condition and results of operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact may be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential”, “target” or “continue,” the negative effect of terms like these or other similar expressions. Any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries, which may be provided by us are also forward-looking statements. These forward-looking statements are only predictions. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those anticipated or projected. All forward-looking statements included in this document are based on information available to us on the date of filing and we further caution investors that our business and financial performance are subject to substantial risks and uncertainties. We assume no obligation to update any such forward-looking statements. In evaluating these statements, you should specifically consider various factors, including the risk factors set forth in Item 1. “Business” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended May 30, 2025, filed with the Securities and Exchange Commission on July 28, 2025. All references to “we”, “us”, “our”, “Aehr Test”, “Aehr Test Systems” or the “Company” refer to Aehr Test Systems.  

 

Overview

 

We are a leading provider of test solutions for testing, burning-in, and stabilizing semiconductor devices in wafer level, singulated die, and package part form, and have installed thousands of systems worldwide.  The rapid advancement of generative artificial intelligence (AI) and the accelerating electrification of transportation and global infrastructure represent two of the most significant macro-trends impacting the semiconductor industry today. These transformative forces are driving enormous growth in semiconductor demand while fundamentally increasing the performance, reliability, safety, and security requirements of the devices used across computing and data infrastructure, telecommunications networks, hard disk drive and solid-state storage solutions, electric vehicles, charging systems, and renewable energy generation. As these applications operate at ever-higher power levels and in increasingly mission-critical environments, the need for comprehensive test and burn-in has become more essential than ever. Semiconductor manufacturers are turning to advanced wafer-level and package-level burn-in systems to screen for early-life failures, validate long-term reliability, and ensure consistent performance under extreme electrical and thermal stress. This growing emphasis on reliability testing reflects a fundamental shift in the industry—from simply achieving functionality to guaranteeing dependable operation throughout a product’s lifetime, a requirement that continues to expand alongside the scale and complexity of next-generation semiconductor devices.

 

We have developed and introduced several innovative products including the FOX-P family of test and burn-in systems and FOX WaferPak Aligner, FOX WaferPak Contactor, FOX DiePak Carrier and FOX DiePak Loader. The FOX-XP and FOX-NP systems are full wafer contact and singulated die/module test and burn-in systems that can test, burn-in, and stabilize a wide range of devices such as leading-edge silicon carbide-based and other power semiconductors, 2D and 3D sensors used in mobile phones, tablets, and other computing devices, memory semiconductors, processors, microcontrollers, systems-on-a-chip, and photonics and integrated optical devices used in artificial intelligence. The FOX-CP system is a low-cost single-wafer compact test solution for logic, memory and photonic devices and the newest addition to the FOX-P product family. The FOX WaferPak Contactor contains a unique full wafer contactor capable of testing wafers up to 300mm that enables Integrated Circuit manufacturers to perform test, burn-in, and stabilization of full wafers on the FOX-P systems. The FOX DiePak Carrier allows testing, burning in, and stabilization of singulated bare die and modules up to 1,024 devices in parallel per DiePak on the FOX-NP and FOX-XP systems up to nine DiePaks at a time.

 

In connection with the acquisition of Incal Technology, Inc. (“Incal”), our product portfolio further expanded to include packaged parts burn-in solutions for the full range of power and complexity of integrated circuits. Incal’s product lines feature the Sonoma series for ultra-high-power burn-in testing, the Tahoe series for medium-power reliability burn-in, and the Echo series for low-power and high parallelism testing. The Sonoma line, with its ultra-high-power capabilities, is specifically designed to address the reliability and burn-in needs of the burgeoning demand for AI accelerators, graphics processing units (“GPUs”), high-performance computing (“HPC”) processors, and devices that can reach over a thousand watts of power per device. The Tahoe and Echo lines for medium-power and low-power burn-in solutions, respectively, target logic, system on a chip (“SoC”), and mixed-signal devices employed in mobile communications, mobility, medical, military, aerospace, and data center applications. These systems are frequently used by independent test and burn-in labs, as well as semiconductor manufacturers.  

 

Our net revenue consists primarily of sales of FOX-P systems, WaferPak Aligners and DiePak Loaders, WaferPak contactors, DiePak carriers, Sonoma systems, Tahoe systems, Echo systems, test fixtures, upgrades and spare parts, service contracts revenues, and non-recurring engineering charges. Our selling arrangements may include contractual customer acceptance provisions, which are mostly deemed perfunctory or inconsequential, and installation of the product occurs after shipment, transfer of title and risk of loss.

 

 
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Table of Contents

 

Critical Accounting Estimates

 

Our discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, assumptions and judgments, including those related to customer programs and incentives, inventories, and income taxes. Our estimates are derived from historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Those results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a discussion of the critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 30, 2025.

 

There have been no material changes to our critical accounting policies and estimates during the six months ended November 28, 2025 compared to those discussed in our Annual Report on Form 10-K for the fiscal year ended May 30, 2025. 

 

Results of Operations

 

Discussion of Results of Operations for the Three and Six Months Ended November 28, 2025 compared to the Three and Six Months Ended November 29, 2024

 

Revenues

 

 

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Revenues

 

$9,884

 

 

$13,453

 

 

 

(27)%

 

$20,853

 

 

$26,572

 

 

 

(22)%

 

For the three months ended November 28, 2025, revenue decreased by $3.6 million, compared to the same period in the prior year, primarily driven by lower shipments of contactors due to the ongoing softness in demand for electric vehicles. Contactors revenue decreased by $5.1 million, partially offset by an increase in package-level burn-in systems revenue of $1.6 million, driven by increased demand from customers in AI-related applications.

 

For the six months ended November 28, 2025, revenue decreased by $5.7 million, compared to the same period in the prior year, primarily driven by lower shipments of contactors due to the ongoing softness in demand for electric vehicles. Contactors revenue decreased by $14.6 million, partially offset by an increase in systems revenue of $8.3 million, reflecting increased demand from customers in AI–related applications and other markets, and an increase in service revenue of $0.6 million.

 

Revenue by Geography

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Asia

 

$7,617

 

 

$9,825

 

 

 

(22)%

 

$10,093

 

 

$22,403

 

 

 

(55)%

United States

 

 

1,942

 

 

 

3,462

 

 

 

(44)%

 

 

6,754

 

 

 

3,984

 

 

 

70%

Europe and Middle East

 

 

325

 

 

 

166

 

 

 

96%

 

 

4,006

 

 

 

185

 

 

N.M.

 

Total revenues

 

$9,884

 

 

$13,453

 

 

 

(27)%

 

$20,853

 

 

$26,572

 

 

 

(22)%

Asia as a percentage of total revenues

 

 

77.1%

 

 

73.0%

 

 

 

 

 

 

48.4%

 

 

84.3%

 

 

 

 

United States as a percentage of total revenues

 

 

19.6%

 

 

25.7%

 

 

 

 

 

 

32.4%

 

 

15.0%

 

 

 

 

Europe and Middle East as a percentage of total revenues

 

 

3.3%

 

 

1.3%

 

 

 

 

 

 

19.2%

 

 

0.7%

 

 

 

 

 

N.M.-Not meaningful

 

On a geographic basis, revenues represent products that were shipped to or services that were performed at our customer locations. For the three months ended November 28, 2025, compared to the same period in the prior year, revenue decreased in both Asia and the United States primarily due to the ongoing softness in demand for electric vehicles.  

 

For the six months ended November 28, 2025, compared to the same period in the prior year, revenue decreased in Asia primarily due to the ongoing softness in demand for electric vehicles, which was partially offset by increases in FOX-P systems sold in the United States, Europe and Middle East, driven by customer demand outside of the electric vehicle market.

 

 
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Table of Contents

 

Gross Margin

 

 

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Gross profit

 

$2,545

 

 

$5,400

 

 

 

(53)%

 

$6,264

 

 

$12,478

 

 

 

(50)%

Gross margin

 

 

25.7%

 

 

40.1%

 

 

 

 

 

 

30.0%

 

 

47.0%

 

 

 

 

 

Gross profit decreased by $2.9 million for the three months ended November 28, 2025, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 14.4 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix, higher assembly and warranty costs, and increased freight expenses.

 

Gross profit decreased by $6.2 million for the six months ended November 28, 2025, compared to the same period in the prior year, primarily due to lower revenue levels. Gross margin decreased by 17.0 percentage points primarily due to lower overhead absorption as a result of lower manufacturing production, a change in product mix, higher assembly and warranty costs, increased freight expenses, and higher tariffs on imported parts following recent government policy changes.

 

Research and Development

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Research and development

 

$2,972

 

 

$2,276

 

 

 

31%

 

$5,821

 

 

$4,637

 

 

 

26%

As a percentage of total revenues

 

 

30.1%

 

 

16.9%

 

 

 

 

 

 

27.9%

 

 

17.5%

 

 

 

 

  

Research and development expenses consist primarily of compensation and benefits for product development personnel, outside development service costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Research and development expenses increased by $0.7 million and $1.2 million, respectively, for the three and six months ended November 28, 2025, compared to the same periods in the prior year. The increase was primarily driven by higher employment-related costs, including stock-based compensation, resulting from increased headcount and higher project-related expenses.

 

Selling, General and Administrative

 

 

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Selling, general and administrative

 

$4,434

 

 

$4,637

 

 

 

(4)%

 

$9,151

 

 

$9,195

 

 

 

(0)%

As a percentage of total revenues

 

 

44.9%

 

 

34.5%

 

 

 

 

 

 

43.9%

 

 

34.6%

 

 

 

 

 

Selling, general and administrative expenses consist primarily of compensation and benefits for sales, marketing and general and administrative personnel, legal and accounting service costs, marketing communications costs, travel expenses, facilities cost allocations, and stock-based compensation charges. Selling, general and administrative expenses remained consistent for the three months and six months ended November 28, 2025, compared to the same periods in the prior year, as higher stock-based compensation was partially offset by lower professional service fees and lower accrual for bonuses.

 

Restructuring Charges

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

2025

 

 

2024

 

 

Change

 

Restructuring charges

 

$(213)

 

$-

 

 

N.M.

 

$6

 

 

$-

 

 

N.M.

 

As a percentage of total revenues

 

 

(2)%

 

 

0.0%

 

 

 

 

0.0%

 

 

0.0%

 

 

 

 

N.M.-Not meaningful

 

There was a recovery of previously expensed restructuring charges for the three months ended November 28, 2025 primarily related to the early termination of the Incal lease, which resulted in a net credit of $0.2 million. 

 

 
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Table of Contents

 

For the six months ended November 28, 2025, restructuring costs associated with a workforce reduction implemented during the three months ended August 29, 2025 to better align our resources with our business needs were partially offset by a credit recognized during the three months ended November 28, 2025 resulting from the early termination of the Incal lease.

 

For further explanation of our restructuring charges, see Note 10, Restructuring Charges, in Notes to Condensed Consolidated Financial Statements.

 

Interest and Other Income, Net

 

 

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Interest income, net

 

$194

 

 

$228

 

 

 

(15)%

 

$373

 

 

$909

 

 

 

(59)%

Other income, net

 

 

10

 

 

 

40

 

 

 

(75)%

 

 

1,061

 

 

 

14

 

 

N.M.

 

Interest and other income, net

 

$204

 

 

$268

 

 

 

(24)%

 

$1,434

 

 

$923

 

 

 

55%

 

N.M.-Not meaningful

 

Interest and other income, net, primarily consists of interest income, foreign currency transaction exchange gains and losses and other non-operating income and expense. Interest income, net, decreased by $34,000 and $0.5 million for the three and six months ended November 28, 2025, respectively, compared to the same periods in the prior year, primarily driven by lower interest income earned on a lower average cash balances and lower yields from our investments in money market funds.  For the six months ended November 28, 2025, other income, net, increased by $1.0 million, compared to the same period in the prior year, primarily attributable to the Employee Retention Credit (“ERC”) refund of $1.3 million received, net of a $0.3 million third-party service fee incurred in connection with the filing of the ERC claims during the six months ended November 28, 2025.

 

For further explanation of the ERC, see Note 11, Employee Retention Credit, in Notes to Condensed Consolidated Financial Statements.

 

Income Tax Benefit

 

 

 

Three Months Ended

 

 

 

 

Six Months Ended

 

 

 

 

 

November 28,

 

 

November 29,

 

 

Percent

 

 

November 28,

 

 

November 29,

 

 

Percent

 

(Dollars in thousands)

 

2025

 

 

2024

 

 

Change

 

 

2025

 

 

2024

 

 

Change

 

Income tax benefit

 

$(1,214)

 

$(217)

 

 

459%

 

$(1,966)

 

$(63)

 

N.M.

 

 

N.M.-Not meaningful

 

For the three and six months ended November 28, 2025, the Company recognized an income tax benefits of $1.2 million and $2.0 million, respectively, primarily driven by quarter-to-date and year-to-date losses in the United States. For the three and six months ended November 29, 2024, the income tax benefit was also primarily related to quarter-to-date and year-to-date losses in the United States.

 

Liquidity and Capital Resources

 

Cash, cash equivalents, and restricted cash were $31.0 million as of November 28, 2025, compared to $35.2 million as of November 29, 2024. We believe that our existing cash resources and anticipated funds from operations will satisfy our cash requirements to fund our operating activities, capital expenditures and other obligations for the next twelve months.

 

 

 

Six Months Ended

 

 

 

 

 

November 28,

 

 

November 29,

 

 

 

(In thousands)

 

2025

 

 

2024

 

 

Change

 

Operating activities

 

$(1,453)

 

$(3,493)

 

$2,040

 

Investing activities

 

 

(3,659)

 

 

(11,133)

 

 

7,474

 

Financing activities

 

 

9,619

 

 

 

488

 

 

 

9,131

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(2)

 

 

(3)

 

 

1

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

$4,505

 

 

$(14,141)

 

$18,646

 

  

 
23

Table of Contents

 

Net Cash Flows Used in Operating Activities

 

The $2.0 million increase in cash flows from operating activities for the  six months ended November 28, 2025, compared to the same period in the prior year, was driven primarily by decreases in prepayments to vendor and in unbilled receivables, lower cash outflows for inventory purchases, and higher non-cash charges including stock-based compensation expense, partially offset by a higher loss before income tax benefit.

 

Net Cash Flows Used in Investing Activities

 

Net cash used in investing activities decreased by $7.5 million for the six months ended November 28, 2025, compared to the same period in the prior year. The decrease was primarily due to the $10.6 million payment to acquire Incal during the six months ended November 29, 2024, compared to a $1.8 million escrow release related to the acquisition during the current period. This decrease was partially offset by a $1.3 million increase in cash spending on property and equipment, primarily related to an office renovation.

 

Net Cash Flows Provided by Financing Activities

 

Net cash provided by financing activities increased by $9.1 million for the six months ended November 28, 2025, compared to the same period in the prior year, primarily driven by net proceeds of $9.4 million from the issuance of common stock under the Company’s ATM offering program.  

 

Off-Balance Sheet Agreements 

 

We do not have any off-balance sheet arrangements, investments in special purpose entities or undisclosed borrowings or debt. There have been no material changes in the composition, magnitude or other key characteristics of our contractual obligations or other commitments as disclosed in the Company's Annual Report on Form 10-K for the year ended May 30, 2025.  

 

 
24

Table of Contents

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As a smaller reporting company, we are not required to provide the information under this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our chief executive officer, or CEO, and chief financial officer, or CFO, evaluated the effectiveness of our "disclosure controls and procedures" as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of November 28, 2025, in connection with the filing of this Quarterly Report on Form 10-Q. Based on that evaluation as of November 28, 2025, our CEO and CFO concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosures.    

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company's internal control over financial reporting during the three months ended November 28, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 

 

 
25

Table of Contents

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we are subject to various claims and legal proceedings that arise in the ordinary course of business. We accrue for losses related to litigation when a potential loss is probable and the loss can be reasonably estimated in accordance with FASB requirements. For additional information regarding legal proceedings, refer to Note 6 – Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements.

 

Item 1A. Risk Factors

 

Item 1A, “Risk Factors,” on pages 12 through 20 of the Company’s Annual Report on Form 10-K for the year ended May 30, 2025, provides information on the significant risks associated with our business. There have been no subsequent material changes to these risks.  

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

 

None. 

 

Item 3. Defaults Upon Senior Securities

 

None.  

 

Item 4. Mine Safety Disclosures

 

Not Applicable. 

 

Item 5. Other Information

 

During the three months ended November 28, 2025, none of our directors or officers informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408(a).

 

 
26

Table of Contents

 

Item 6. Exhibits

 

Exhibit

Number 

 

Description 

 

 

 

3.1(1)

 

Restated Article of Incorporation of Registrant

 

 

 

3.2(2)

 

Amended and Restated Bylaws of the Registrant

 

 

 

4.1(3)

 

Form of Common Stock certificate

 

 

 

10.1(4)

 

Amendment to the Amended and Restated 2006 Employee Stock Purchase Plan

 

 

 

10.2(5)

 

Amendment to the 2023 Equity Incentive Plan

 

 

 

31. 1

 

Certification of the principal executive officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †

 

 

 

31. 2

 

Certification of the principal financial and accounting officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †

 

 

 

32. 1

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

 

 

 

32. 2

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

 

 

 

101.INS 

 

XBRL Instance Document †

 

 

 

101.SCH    

 

XBRL Taxonomy Extension Schema Document †

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document †

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document †

 

 

 

101.LAB 

 

XBRL Taxonomy Extension Label Linkbase Document †

 

 

 

101.PRE 

 

XBRL Taxonomy Extension Presentation Linkbase Document † 

 

1

Incorporated by reference to the same-numbered exhibit previously filed with the Company’s Registration Statement on Form S-1 filed June 11, 1997 (File No. 333-28987)

2

Incorporated by reference to Exhibit 3.1 previously filed with the Company’s Current Report on Form 10-K filed July 28, 2025 (File No. 000-22893)

3

Incorporated by reference to the same-numbered exhibit previously filed with Amendment No.1 to the Company’s Registration Statement on Form S-1 filed July 17, 1997 (File No. 333-28987)

4

Incorporated by reference to Exhibit 10.1 previously filed with the Company’s Current Report on Form 8-K filed November 7, 2025 (File No. 000-22893)

5

Incorporated by reference to Exhibit 10.2 previously filed with the Company’s Current Report on Form 8-K filed November 7, 2025 (File No. 000-22893)

 

 

†

Filed herewith.

 **

Furnished, and not filed.

 

 
27

Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

AEHR TEST SYSTEMS 

 

 

 

 

 

Date: January 12, 2026

By:

/s/ GAYN ERICKSON

 

 

 

Gayn Erickson

 

 

 

President and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

Date: January 12, 2026

By:

/s/ CHRIS P. SIU

 

 

 

Chris P. Siu

 

 

 

Executive Vice President of Finance,

and Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

 

 
28

 

Source: View Original Filing on SEC EDGAR

FAQ

How did Aehr Test Systems (AEHR) perform financially in the latest quarter?

Aehr Test Systems reported quarterly revenue of $9.9 million, down from $13.5 million a year earlier. Gross margin declined to 25.7% from 40.1%, and the company posted a net loss of $3.2 million, or $0.11 per share, compared with a $1.0 million loss in the prior‑year quarter.

What drove the revenue decline for Aehr Test Systems (AEHR)?

The filing states that revenue for both the quarter and six‑month period fell primarily due to lower shipments of contactors, which the company links to ongoing softness in demand for electric vehicles. This was partially offset by higher systems revenue, especially package‑level burn‑in systems for AI‑related applications and other markets.

How is Aehr Test Systems (AEHR) positioned in AI and non-EV markets?

The company highlights increased demand for its package-level burn-in systems and FOX‑P systems from customers in AI‑related applications and other markets. Systems revenue rose by $8.3 million over six months year over year, and the Incal Sonoma, Tahoe, and Echo product lines target high‑power AI accelerators and a range of logic and mixed‑signal devices.

What is Aehr Test Systems’ (AEHR) liquidity and cash position?

As of November 28, 2025, Aehr held $31.0 million in cash, cash equivalents, and restricted cash, compared with $35.2 million at the same point a year earlier. Operating activities used $1.5 million of cash over six months, while investing used $3.7 million and financing activities provided $9.6 million, largely from equity issuance.

Did Aehr Test Systems (AEHR) raise capital during the period?

Yes. Under its at‑the‑market offering program, Aehr sold 384,380 shares of common stock in November 2025 at an average price of $25.89 per share. This generated approximately $10.0 million in gross proceeds, with about $0.6 million in commissions and offering expenses, and left roughly $30.0 million remaining under the ATM program.

What legal matters affecting Aehr Test Systems (AEHR) are discussed?

The filing notes that a putative shareholder class action and related derivative suits filed in 2024–2025 were voluntarily dismissed or dismissed by the court, and no related proceedings are pending. It also describes ongoing patent litigation in China against Suzhou Semight Instruments Co., Ltd., where first‑instance judgments dismissed Aehr’s infringement claims and Aehr filed appeals on January 4, 2026.

How much is Aehr Test Systems (AEHR) spending on research and development?

Research and development expenses were $3.0 million for the quarter and $5.8 million for the six months ended November 28, 2025, up 31% and 26% year over year, respectively. The increase is attributed mainly to higher employment‑related costs, including stock‑based compensation, and higher project‑related expenses.

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Aehr Test Sys

NASDAQ:AEHR

AEHR Rankings

#2941 Ranked by Market Cap
N/A Ranked by Dividends

AEHR Latest News

Jan 8, 2026
Aehr Announces Over $5.5 Million in Sonoma Ultra-High-Power System Orders to Test and Burn-in AI Processors; Introduces New Fully-Automated Sonoma for Next-Generation AI Applications
Jan 8, 2026
Aehr Test Systems Reports Fiscal 2026 Second Quarter Financial Results and Reinstates Guidance Driven by Improved Visibility for AI Processor and Data Center Semiconductor Test and Burn-In Systems
Jan 6, 2026
Aehr Test Systems to Present at the 28th Annual Needham Growth Conference on January 13
Dec 30, 2025
Aehr Test Systems to Announce Second Quarter Fiscal 2026 Financial Results on January 8, 2026
Dec 3, 2025
Aehr Test Systems to Participate in 14th Annual NYC Summit

AEHR Latest SEC Filings

Jan 14, 2026
[Form 4] AEHR TEST SYSTEMS Insider Trading Activity
Jan 8, 2026
[8-K] AEHR TEST SYSTEMS Reports Material Event
Jan 12, 2026
[Form 4] AEHR TEST SYSTEMS Insider Trading Activity
Jan 12, 2026
[Form 4] AEHR TEST SYSTEMS Insider Trading Activity
Jan 12, 2026
[Form 4] AEHR TEST SYSTEMS Insider Trading Activity

AEHR Stock Data

890.03M
28.74M
5.31%
60.66%
18.86%
Semiconductor Equipment & Materials
Instruments for Meas & Testing of Electricity & Elec Signals
Link
United States
FREMONT