InTest (INTT) Q3 2026 earnings review
InTest's chip orders tripled, but its outlook has profit slipping
InTest, a maker of chip-testing equipment, took record orders, but its outlook has profit shrinking again next quarter. Chipmakers ordered three times as much as a year ago, lifting the backlog to a record. Revenue rose 34% and gross margin reached 47.7% on that mix, chief executive Richard Rogoff said. By our math the plan then halves operating profit next quarter.
| Orders | $49.4M +31% from a year ago |
|---|---|
| Revenue | $35.1M +34% from a year ago |
| Backlog of unfilled orders | $59.7M +32% from June |
| Fourth-quarter revenue outlook | $34–36M middle of the range: up 7% from a year ago |
⚖️ Verdict: 🟢 Bullish
The story got better because orders came back: the shrinking backlog and the margin stuck in the low 40s both got a reading against them, and the new plan sits above what August left for the second half. The bad news: that plan has profit falling back toward last year's fourth-quarter level, and cash went out as receivables rose on flat sales.
The question now is whether this quarter's margin was a one-off mix or the level semiconductor work will hold into 2027. Either semiconductor orders ship at their usual higher margin and next year stays near this level, or auto projects return and margin slides toward 40%. The fourth-quarter margin, against a 45% plan, will tell.
🐂 Bull Case
Chipmakers Ordered Three Times as Much Test Gear
InTest sells the manipulators, docking hardware and chillers that sit beside a semiconductor tester, so its orders follow chipmakers' spending on test capacity. That spending ran below what the New Jersey company shipped for two quarters, and its backlog of unfilled orders shrank.
This quarter it arrived. Semiconductor orders reached $25.1 million, more than three times a year ago, as makers of power, analog and mixed-signal chips added test capacity. Chief executive Richard Rogoff said that for customers "the constraint has moved from building wafers to packaging and testing finished devices fast enough".
- Total orders: $49.4 million, a record and 31% above a year ago
- Backlog: $59.7 million, up 32% from June
- Backlog due to ship in 2027: about 60%, Rogoff said
- Auto/EV (car and electric-vehicle makers) orders: $9.4 million, more than double the second quarter
- Defense/Aerospace orders: up 43% from the second quarter, with new customers added
This matters because orders fell short of revenue in each of the previous two quarters, so 2027 risked running short of work. Record orders answer that for now, but Rogoff warned order levels "will vary from quarter to quarter with the timing of our customers’ capital investments".
What to watch: fourth-quarter orders against this quarter's $49.4 million. Rogoff said the funnel entering the fourth quarter roughly matched the start of the third. A second quarter of orders above revenue would show the cycle has more than one quarter in it.
Gross Margin Beat Its Plan as Auto Projects Faded
Gross margin, what is left of revenue after the cost of making the products, had become InTest's weak spot. It missed the company's own target in three of the previous four quarters, mostly on large low-margin projects at Alfamation, its Italian automotive test unit.
This quarter it delivered 47.7%, and the release says all three operating segments improved. The cost of making its products fell to 52.3% of revenue from 58.1% a year ago, because semiconductor work took a larger share of sales while the Auto/EV projects, large jobs for car and electric-vehicle makers, faded.
- Plan for the quarter: about 44%
- Semiconductor share of revenue: 33%, from 26% in the second quarter
- Electronic Test operating margin: 20%, from 9% a year ago
- Process Technologies operating margin: 12%, from a small loss
One quarter would only soften the concern, because finance chief Duncan Gilmour said "Q3's product mix was particularly favorable". The next plan moves it further: Gilmour set the fourth quarter at about 45%. By our math that puts the full year near 44%, above the 43% the test-equipment maker gave in August.
What to watch: fourth-quarter gross margin against the 45% plan. A reading near it would confirm the margin trouble was a project-mix phase at Alfamation rather than the business's normal level.
Costs Grew Half as Fast as Sales
Rogoff took over in the first quarter promising to make more of each sales dollar reach profit. This quarter gave a first reading: operating expenses rose 15% while revenue grew 34%, so every cost line fell as a share of sales. That is a fixed cost base meeting more volume, not cuts.
- Operating expenses: 39.9% of revenue, from 46.4% a year ago
- Selling: 12.8% of revenue, down 1.6 points
- Engineering: 7.2%, down 1.7 points
- General and administrative: 18.2%, down 1.4 points
- Amortization of acquired assets: 1.6%, down 1.6 points
The fourth quarter gives some back. Gilmour plans higher operating expenses "as we fill open leadership positions and start planning for 2027", and the cost review Rogoff began has no dollar target yet, so the gain so far is volume rather than a leaner organisation.
What to watch: operating expenses as a share of revenue in the fourth quarter; by our math the plan implies about 41%. Holding near 40% on flat revenue would show the leverage is structural rather than one quarter's timing.
🐻 Bear Case
Fourth-Quarter Plan Has Profit Falling Back
"The third quarter demonstrated the earnings power of our business model when demand, mix, and execution line up," Rogoff said. Operating income reached $2.7 million, a 7.8% margin. The test of that claim is the plan Gilmour gave for the next quarter on the same call.
- Revenue plan: $34–36 million, level with this quarter at the middle
- Gross margin plan: down 2.7 points from this quarter
- Operating expense plan: $14.2–14.7 million, from $14.0 million
- Operating income implied, by our math: about $1.3 million, half this quarter's
At the middle of the range revenue equals this quarter's, so the profit decline is all mix and cost: Gilmour said this quarter's mix was unusually good, and spending rises as InTest fills open leadership jobs. That would put operating income back where it was a year earlier.
Rogoff's claim therefore holds only in quarters when the three line up, and the test-equipment maker's own plan says they will not in the fourth. Most of the record backlog ships in 2027, Rogoff said. By our math the quarter therefore needs roughly $11 million of orders InTest still has to win and ship.
What to watch: fourth-quarter operating income against the roughly $1.3 million the plan implies. A result near this quarter's level would show the plan, like the revenue plans before it, had room to spare.
Cash Went Out as Customers Paid Later
InTest reported a profit, yet its operations used cash. The reason is working capital: receivables, the money customers owe for goods already shipped, rose $3.6 million from June while revenue was flat. Customer deposits fell $1.0 million even as the backlog grew by a third.
- Net earnings: $1.9 million
- Cash from operations: minus $0.3 million
- Free cash flow: minus $0.6 million, against $3.1 million a year ago
- Receivables: 87% of quarterly revenue, from 76% in June
- Customer deposits and deferred revenue: $4.9 million, down 17% from June
Receivables rising on flat sales means shipments bunched late in the quarter or customers paid more slowly; the materials do not say which. The deposit decline is the odder signal, because customers placed record orders yet paid less upfront than on the smaller orders of the spring.
What to watch: cash from operations and the receivables balance in the fourth quarter. Orders booked now would normally bring deposits in, so another decline alongside a rising backlog would mean InTest is financing its customers' capacity build.
Risks This Quarter Didn't Answer
Four standing concerns got no new numbers in the release or on the call, and three of them live in the quarterly filing InTest said it would file after the market closed, which was not available for this article.
- Customer concentration: one customer was 24% of second-quarter revenue; the release does not name it or update the share, so the filing's major-customer note will show it.
- Control weakness at Alfamation: the release still lists it as a risk; management said in August the fix would be proven by year-end, so the fourth-quarter report settles it.
- Length of the semiconductor upturn: Rogoff sees demand running "into the early part of 2027, at least" and does not expect the front end to "come back to what it did 3 or 4 years ago"; first-half 2027 orders will show whether it extends.
- Supply chain: the release says lead times are expanding and Gilmour called it "nothing that we can't manage"; a shipment slip, which has hit four of the last nine quarters, would show otherwise.
👓 Other Themes
Newer Products Won a Share of Semi Orders
Rogoff said InTest's "high-powered chillers and other advanced test products" captured "a meaningful portion of our new orders", because advanced chips run hotter and need more cooling during test. Its flying probe systems, built to check circuit boards, now also run battery tests, and a chiller that meets Europe's new refrigerant rules launches next week. None of these carries a revenue figure yet.
Rogoff's Operating Plan Has a Leader but No Target
Rogoff said InTest's next phase is to "operate our business as a coordinated platform, capturing commercial opportunities, cost synergies and the sharing of ideas", after years in which acquired units ran separately. Scott Taylor joined on October 1 as general manager of ITS, the thermal unit inside Environmental Technologies, to execute it. The plan still has no savings figure or facility decision; the 2027 outlook in February is the next chance to hear one.
AI Data Centers Are Pulling Test Orders Forward
InTest ties the semiconductor capacity build to power and communications chips, "fueled in part by AI-driven data center demand". Because "lead times for test equipment lengthened and customers placed orders earlier", Rogoff said visibility is better than usual, though lead times are stretching at InTest's own suppliers too. Outside chips, Auto/EV (car and electric-vehicle) orders recovered as model launches returned to a normal schedule after the 2024–2025 electric-vehicle slowdown.
💲 Other KPIs
Up 3.3% from a year ago, because employees exercised options for $3.5 million in the first nine months. Each percentage point of extra shares takes about a point off profit per share, with no buybacks to offset it. The count has grown for five straight quarters.
Down $1.0 million in the quarter as InTest kept paying off its term loan from cash. It holds $20.9 million of cash and can borrow $40 million more. The draw period on the term facility now runs to August 2028, two years longer than before. Leverage is 0.5 times trailing adjusted EBITDA, from 0.8 in June.
Flat from June and down 11% since December, while quarterly revenue rose 7% over the same period. It now equals about 81% of a quarter's sales, the lowest of the year. At year-end the figure was 96%, before the Alfamation stock overstatement was corrected. Gilmour said longer lead times may need a little more working capital.
🔮 Guidance
Raised, by our math: the range sits above what the August full-year plan left for the fourth quarter. The middle is 6.6% above a year ago and level with this quarter. The year-ago quarter carried about $2 million of shipments that slipped from the third, so the comparison is hard. InTest has beaten the top of its quarterly range four quarters running; if the pattern holds, revenue lands near $36.9 million.
Raised against what the August plan implied, which needed about 44% for the second half. The new 45% is 2.7 points below this quarter, because Gilmour said the mix was unusually favorable and the fourth quarter will shift a little away from it. By our math the full year lands near 44%, above the 43% InTest set in August. It missed its margin plan in three of the previous four quarters, so this one still needs delivering.
Raised: by our math the full-year total now comes to $56.6–57.1 million, at or just above the top of the $55–57 million plan InTest held all year. The middle of the range is 3.3% above this quarter, to pay for new leadership hires and next year's planning, Gilmour said. Set against the revenue and margin plans, it leaves operating income of roughly $1.3 million at the middle, about half this quarter's.
Unchanged in effect: $0.5 million for the quarter puts the year near $2.5 million. That is a touch under the full-year plan, as older acquired assets finish amortizing. It is a non-cash charge on assets from past acquisitions, so it lowers reported profit but not cash.
Unchanged, and now pointed at the top. By our math the fourth-quarter range puts the year at $138–140 million, about 22% above 2025. The plan has moved three times, each step smaller than the last. It rose $5 million in May and again in August, and now moves to its high end.
Raised. Gilmour now expects about 20% for the year, from 18%, because of "a higher proportion of profitability being generated in our higher tax jurisdictions". This quarter's rate alone was 30%. At the old rate, profit per share would have been about $0.03 higher by our math. The year-to-date figure still includes a one-off benefit booked in the second quarter.
❓ Key Questions
Who is the customer that was 24% of revenue?
One customer took 24% of second-quarter revenue. The release does not name it or update the share, and with Auto/EV revenue halving, whether that customer's orders sit in the record backlog decides how lumpy 2027 will be.
What margin does the semiconductor backlog carry into 2027?
Roughly 60% of the $59.7 million backlog ships next year, much of it semiconductor work, which Gilmour calls InTest's highest-margin lines. A market split of the backlog would show whether 2027 margin starts nearer 45% or 40%.
Is the $200–250 million 2027 revenue target withdrawn?
The previous chief executive reaffirmed that target in early 2025; no call since has mentioned it. From roughly $139 million this year it would need growth above 40% next year, so management should say whether VISION 2030 replaced it.
Why did customer deposits fall while orders set a record?
Deposits and deferred revenue fell 17% from June as the backlog grew 32%. Either payment terms changed on the large semiconductor orders or shipments ran ahead of billing; the answer sets how much cash the 2027 build will tie up.
Has the Alfamation control weakness been fixed?
Management committed in August to show the controls working by year-end. The release still lists the weakness as a risk and the call did not mention it, so the fourth-quarter report is the deadline.