GSIT earnings call analysis

NASDAQ:GSIT Q2 2026 Earnings Call Transcript Generated on 10/9/2026 Conference Operator | Operator: Ladies and gentlemen, thank you for standing by. Welcome to GSI Technologies' second quarter fiscal 2026 results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, we will provide instructions for those interested in entering the queue for Q&A. Before we begin today's call, the company has requested that I read the following Safe Harbor statement. The matters discussed in this conference may include forward-looking statements regarding future events and the future performance of GSI technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-K filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this conference is being recorded today, October 30th, 2025, as the request of GSI Technology. Hosting the call today is Lee Leon Hsu, the company's chairman, president, and chief executive officer. With him are Douglas Shuro, chief financial officer, and DDA Lasser, vice president of sales. I would now like to turn the call over to Mr. Hsu. Please go ahead, sir.

Lee Leon Hsu | Chairman, President & Chief Executive Officer

Good afternoon, everyone, and thank you for joining us today. Let me start by highlighting two recent and important events for GSI. First, we announced the research paper published by Cornell University in mid-October. The paper verified that all Gemini 1 chips performed on par with NVIDIA's A6000 on certain AI tasks. while consuming roughly 98% less energy. This paper validates the disruptive potential of our compute-in-memory design, particularly for the real-time commercialization of Gemini 2. With 8 times the memory and 10 times the performance of Gemini 1, Gemini 2 is positioned to deliver superior processing at a fraction of the power when compared to existing solutions. This brings me to my second point. The market quickly recognized the significance of our compute-in-memory validation with the Cornell paper. Building on the momentum from the paper's funding, we closed the $50 million equity financing We are now deploying the capital to accelerate execution across our hardware and software build-offs, making this a pivotal period for GSS growth. Post-funding, we are working on the initiative in parallel. First, we have begun the work to acquire the necessary IP for Plato, which will allow us to start hardware development. This IP provides a crucial connection to support broader system interface and the prototyping for future customer applications. To accelerate Plato's time to market and capture market opportunities sooner, we are building additional software teams to support Plato. Second, to exercise the build-out of our Gemini 2 software solutions and applications We are investing in all the layers that make the platform more accessible and accessible for developers. These software tools are essential for customers integrating Gemini 2 hardware into AI and signal processing workflows, particularly in edge and the defense applications where efficiency and the low power provide a competitive advantage. Looking ahead, our initiative for calendar year 2026 are centered on converting proof-of-concept projects into commercial customers and changing those relationships into large production programs. EDA will provide an update on where those efforts stand today. To sum up, our post-funding The initiative was targeted and disciplined, will be targeted and disciplined. We are rapidly moving forward with the private hardware design and the software development, ramping up our Gemini software ecosystem, and strengthening ties with key defense and government partners in our POG and small business innovation research or SBIR programs. These actions position GSI to turn technical progress into commercial success in the high-value edge and the defense applications, such as the drone, military vehicles, satellites, and other use cases, and right away for AI compute innovation. Now I hand the call over to Didi, who will provide more details on this topic and discuss our business development and the sales activities. Please go ahead, Didi.

DDA Lasser | Vice President of Sales

Thank you, Lilien. Let me expand on the topics that Lilien just highlighted. We continue to advance our ongoing projects, including our SBIR and POC engagements with potential customers. Recently, Gemini 2 has been approved for prototyping by the offshore defense contractor to whom we shipped a board and software to a few months back. This POC focuses on synthetic aperture radar or SAR, applications for drones and other edge systems. What's exciting here is that our solution delivers the required performance while maintaining an extremely low power profile, around 15 watts, making it ideal for compact, energy-constrained environments. For added context on just how competitive the solution is, an incandescent light bulb uses about four times more wattage than our solution. We are also involved in a joint POC involving two defense organizations and a drone integration partner. This Gemini 2 project combines YOLO model we developed with multimodal large language model processing at the edge, specifically targeting time to first token, a key performance metric for drones. Along with our partner, we successfully demonstrated the end-to-end application to one of the potential end customers. Gemini 2 outperformed the competing solution, particularly in how quickly the model produces its first response. We are now optimizing the algorithm and expect to publish initial benchmark results before year end with a fully optimized version available in the first half of calendar 2026. This algorithm would be for defense applications such as drones, satellites, and other military vehicles. Gemini 2 is a central part of the near-term commercialization roadmap, and we are encouraged by the customer engagement and technical validation that is being received. Turning to our PLATO program, we are embarking on the journey towards a major milestone, the tape-out of PLATO chip in early calendar 2027. Over the next year or so, we plan to actively engage several strategic partners for PLATO who could provide funding and collaborate on testing and prototyping early versions of the chip. Their involvement would also support the development of software libraries and APIs, ensuring that PLATO becomes a versatile, scalable solution across multiple markets, starting with defense. In military and defense applications, the APU's high performance and low power capabilities provide unique advantages. and PLATO will further enhance critical functions such as SAR imaging, object recognition, GPS-denied navigation, and data fusion for drones and military vehicles, delivering real-time tactical capabilities in compact mobile systems. PLATO's design builds directly on the foundation of Gemini 2. To accelerate time to market, we are acquiring building block IP that allows us to focus on differentiation rather than reinventing core components. Strategic partners would play a critical role not just in meeting our ambitious timeline, but in shaping the chip's capabilities, validating its performance in real-world applications, and guiding future enhancements. Their technical collaboration and early adoption would position us to deliver a highly optimized, field-tested solution, strengthening our long-term leadership in specialized AI compute architectures well beyond the immediate financial support. And lastly, a comment on our SBIR work. We recently received a $751,000 extension of one of our space development agency contracts, which includes additional funding for radiation-hardened beam testing of Gemini 2. The goal of this testing is to evaluate the robustness of the current Gemini 2 commercial chip for possible use in satellite and other aerospace applications. While it's too early to confirm, confirm specific designations, we see this as a significant opportunity. Let me now switch to the second quarter's commercial, I'm sorry, customer and product breakdown. By revenue, I am referring to net revenue in the following comments. In the second quarter of fiscal 2026, sales to KYEC were 802,000 or 12.5% of revenues compared to 650,000 or 14.3% of revenues in the same period a year ago and 267,000 or 4.3 percent of revenues in the prior quarter. Sales to Nokia were 200,000 or 3.1 percent of revenues compared to 812,000 or 17.8 percent in the same period a year ago and 536,000 or 8.5 percent of revenues in the prior quarter. Sales to Cadence Design Systems were 1.4 million or 21.6 percent of net revenues compared to zero in the same period last year and 1.5 million or 23.9 percent of revenues in the prior quarter. Military defense sales were 28.9 percent of second quarter shipments compared to 40.2 percent of shipments in the comparable period a year ago and 19.1 percent of shipments in the prior quarter. Single-quad sales were 50.1 percent of second quarter shipments in fiscal 2026 compared to 38.6% in second quarter fiscal 2025 and 62.5% in the prior quarter. And now I'd like to hand the call over to Doug. Please go ahead, Doug.

Douglas Shuro | Chief Financial Officer

Thank you, DDA. The company reported debt revenues of $6.4 million for the second quarter of fiscal 2026 compared to $4.6 million for the second quarter of fiscal 2025 and $6.3 million for the first quarter of fiscal 2026. Revenue growth in the quarter was driven by strong market momentum for leading SRAM solutions. Gross margin was 54.8% in the second quarter of fiscal 2026 compared to 38.6% in the year-ago quarter and 58.1% in the preceding first quarter of fiscal 2026. The decrease in gross margin for the second quarter of 2026 was primarily due to a change in the product mix. Total operating expenses in the second quarter of fiscal 2026 were $6.7 million compared to $7.3 million in the second quarter of fiscal 2025 and $5.8 million in the prior quarter. Research and development expenses were $3.8 million compared to $4.8 million in the prior year period and $3.1 million in the prior quarter. The increase in research and development spending compared to the prior quarter is primarily due to changes in the level of stock-based compensation expense and amounts of government funding received under SBIRs in each quarter recorded as an offset to research and development expense. Selling general and administrative expenses were $3 million in the quarter ended September 30, 2025, compared to $2.6 million in the prior year quarter and $2.7 million in the previous quarter. Second quarter fiscal 2026 operating loss was $3.2 million compared to an operating loss of $5.6 million in the prior year period and an operating loss of $2.2 million in the prior quarter. Second quarter fiscal 2026 net loss included interest and other income of $43,000 and a tax provision of $41,000 compared to $149,000 in interest and other income and a tax provision of $23,000 for the same period a year ago. In the preceding first quarter, net loss included interest and other income of $13,000 and a tax provision of $54,000. Net loss in the second quarter of fiscal 2026 was $3.2 million, or 11 cents per diluted share, compared to a net loss of $2.2 million, or 8 cents per diluted share, for the first quarter of fiscal 2026. For the prior year second fiscal quarter of 2025, net loss was $5.5 million or 21 cents per diluted share. Total second quarter pre-tax stock-based compensation expense was $856,000 compared to $663,000 in the comparable quarter a year ago and $341,000 in the prior quarter. At September 30th, 2025, The company had $25.3 million in cash and cash equivalents compared to $13.4 million at March 31, 2025. Working capital was $26.8 million as of September 30, 2025 versus $16.4 million at March 31, 2025. Stockholders' equity as of September 30, 2025 was $38.6 million compared to $28.2 million as of the fiscal year ended March 31st, 2025. Lastly, for the third quarter of fiscal 2026, we expect net revenues in the range of $6.0 million to $6.8 million, with gross margin of approximately 54% to 56%. We remain focused on disciplined execution to bring Gemini 2 to market, advance our roadmap for Play-Doh, and drive long-term shareholder value. Operator, at this point, we'll open the call to Q&A.

Conference Operator | Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Conference Operator | Operator

Our first question comes from Robert Christian, private investor.

Conference Operator | Operator

You may proceed with your question.

Robert Christian | Private Investor

First of all, I'd like to congratulate you on the Cornell verification. But I'd also like to know, have you done any work with the auto industry on autonomous vehicles?

DDA Lasser | Vice President of Sales

We have not yet. So as we've talked about in past calls, We certainly have limited resources, and that takes tremendous effort for that market space. So we're currently starting in the military defense arena, but we certainly believe our technology will adapt well in those areas, and so that's certainly a focus for us in the future, but not yet.

Conference Operator | Operator

Okay, thank you. Our next question comes from Mark Badner, private investor.

Conference Operator | Operator

You may proceed with your question.

Mark Badner | Private Investor

Hey, guys. Good afternoon. I had a question on the $50 million placement you recently did. Was that with a strategic investor? What sort of investor? And was there a holding period to that stock?

Douglas Shuro | Chief Financial Officer

No, it was just... someone that was interested in the company, uh, wasn't, wasn't strategic in any way. And, uh, there is, there is no required holding period for the shares.

Mark Badner | Private Investor

Got it. Okay. Um, and I just followed to that, were there, have there been any strategic circling at all now post the Cornell report?

Douglas Shuro | Chief Financial Officer

Can you repeat the question please?

Mark Badner | Private Investor

Have there been any increase from more strategic investors, uh, you know, since the report came out from Cornell?

Douglas Shuro | Chief Financial Officer

There are things that we're looking at and parties that we're talking to, but I wouldn't say that there's anything that anyone that we haven't already considered working with at this time. As DBA said, we have limited resources, and I think we have some very significant opportunities that he's already mentioned.

Conference Operator | Operator

Gotcha.

Thank you. Conference Operator | Operator

Our next question comes from David Zelkowicz with ISQ.

Conference Operator | Operator

You may proceed with your question.

David Zelkowicz | ISQ

Yeah, is there any plan to have Cornell or another third party validate the Gemini 2 information, you know, technology? I know the Cornell report was Gemini 1, so is there a plan to do that similar type of analysis for Gemini 2?

DDA Lasser | Vice President of Sales

Yeah, so you're absolutely correct. So Cornell actually received this Gemini 1 board many years ago, and they've actually written a few other papers. And so this was a continuation of that original board. And we are talking to them about getting a Gemini 2 board to them and also other researchers as well.

David Zelkowicz | ISQ

Okay. And then I guess you're talking and you're working with the military, I guess – I didn't see anybody on the board or senior management team that has real military defense experience. Is there any plans to beef up that area of the management or the board of directors in order to target those applications?

Douglas Shuro | Chief Financial Officer

Yeah, no, that hasn't come up as a discussion or topic on the board. At this point, there are no plans to – revise the board. It doesn't mean that we won't in the future if it makes sense, though.

David Zelkowicz | ISQ

Okay. And then I saw you're developing your own large language model, which you're going to release some information on at the end of the year. Just curious of why you wouldn't just use the plethora of large language models that are already out in the market, and why spend resources developing your own?

Lee Leon Hsu | Chairman, President & Chief Executive Officer

No, we are not developing our own large language model. We are working on the open source large language model, like, you know, Gamma 3.

David Zelkowicz | ISQ

I'm just reading your press release. Your press release says, currently developing a multi-model LLM that targets edge applications.

DDA Lasser | Vice President of Sales

Correct. Yeah, for Gemma, so 12B, so Gemma 3 12B, that's the model, and we're developing our algorithms to work with that model.

David Zelkowicz | ISQ

Okay. Why would you do that as opposed to utilizing other LLMs already developed?

DDA Lasser | Vice President of Sales

In this case, it was the definition from the POC that we're working on. So, as we talked about, there are two government entities. that have approached us and a partner to do a POC, and that is the model that they requested.

Lee Leon Hsu | Chairman, President & Chief Executive Officer

Yeah. Also, there are certain aspects of the model which support multi-model well. Okay. So, you know, they can support the image very well in addition to the text. Okay. So that's why they picked on this one.

David Zelkowicz | ISQ

Okay.

Conference Operator | Operator

Thank you.

Appreciate it. Conference Operator | Operator

Our next question comes from Christian Rugg from CER Holdings. You may proceed with your question.

Christian Rugg | CER Holdings

Hi. I was wondering, how are you differentiating your APU versus GPU competitors in terms of power, latency, and cost efficiency?

DDA Lasser | Vice President of Sales

That's a pretty broad question. And so if you look at the The Cornell paper, that certainly hits it on the power. The comparison was to an NVIDIA GPU and the use case they used, the performances were on par, but we were 98% less power. So that certainly shows that. With the SAR algorithm that we've been talking about, certainly our image creation time is faster at a lower power footprint as well. So what we've done is we've done benchmarking on certain use cases based off of input from customers on what they'd like to see. So there are times where we beat them strictly on power. There's times we beat them strictly on performance. Well, I shouldn't say that. We've never lost to them on power. But there certainly are times that we have the advantage on both performance and lower power.

Christian Rugg | CER Holdings

Okay, and then my second question is, given the performance claims and potential of Gemini 2 APU, have you had any engagement or partnership discussions with larger semiconductor or AI-focused companies?

DDA Lasser | Vice President of Sales

So right now, you know, we're focused on the customers at this point. We haven't had any discussions at least recently, with other semiconductor companies.

Christian Rugg | CER Holdings

Okay. And then my last question is, how does the power factor play into building AI data centers at a large scale?

DDA Lasser | Vice President of Sales

So we're focused on the edge right now. And so everything we've talked about right now is the edge. And so certainly the data centers have a real power issue as well. There's no secret there. But what we've been focused on right now with Gemini 2 and certainly with the next generation chip, PLATO, will be at the edge. And so if you look at, as we discussed with Gemini 2, this project we did with this offshore defense contractor, we limited our chip to one of the four cores that are there to get it down to 15 watts. If you look at PLATO, depending on how it's used, can be as little as 4 watts and maximum 12 to 15 watts. So we're really focused at the edge, not in the data center.

Christian Rugg | CER Holdings

All right.

Conference Operator | Operator

Thank you. Our next question comes from Michael Roberts from Roberts Capital.

Conference Operator | Operator

You may proceed with your question. Okay, it seems Michael has gone silent. We'll move on to the next questioner. Michael Cooper, private investor. You may proceed with your question.

Michael Cooper | Private Investor

Good afternoon. Can you talk about the total addressable market that you're looking at over the next five years and then how you expect that to ramp? I'm guessing you have a number of different scenarios, maybe a range of scenarios. You could give us a sense for how large this market is or these markets. I'm sure you're looking at various markets. And then what kind of price points your boards or chips go into products?

DDA Lasser | Vice President of Sales

Sure. It's a good question. So, Michael, I don't have the numbers in front of me, but certainly – There was a report very recently that was issued by one of the researcher analysts at Needham and Company that discussed the drone market specifically. And I don't have it in front of me, but I want to say it was tens of billions at least market size. I want to say it might be larger than that. And so certainly it's a very, very large market. And as we've discussed, we certainly feel with the power of you know, the power profile of our chips along with some of the algorithm work that we're doing for, you know, like Leline mentioned, the multimodal inputs, whether we take an image or text or voice in the future, along with the time to first token advantage that we have, we certainly think that we're well positioned to address that market. That was question one. The second question was, I think it was a two-part question you had. Pricing, that's what it was. Yeah, so pricing, I mean, we'll give you generalities, but certainly it's going to be priced differently by market, but it could be a few thousand dollars a board to $10,000 a board that contains the chip. And then the chip will sell, again, based on the market, but the chip could be you know, $1,000 or more, depending on the market and the volume.

Michael Cooper | Private Investor

And you're working in gross margins in the 80-ish percent range?

DDA Lasser | Vice President of Sales

What were your gross margins? Yeah, it'll be above where we are corporately today. And again, it really depends on the market and how it's sold. It could be You know, it could be 60% to 80%. It really depends on how it's sold, whether it's in a board, in a server, whether it comes with software or not. I mean, there's a lot of different aspects that would move that margin needle.

Great. Conference Operator | Operator

Thank you.

Conference Operator | Operator

Our next question comes from Michael Roberts with Roberts Capital, who is rejoining us. You may proceed with your question.

Michael Roberts | Roberts Capital

Thank you. On capital deployment on the 50 million raise, can you give an idea of how that plans to be allocated, whether it's percentage or dollar amount, amongst the Gemini 2 completion, software development, and the new Plato chip that you referenced?

Lee Leon Hsu | Chairman, President & Chief Executive Officer

Yeah, on the Plato, because there's some fixed costs that we have to spend, like IP costs and the mass table costs. So those are you know, $15, $16, $17 million kind of range. Okay. And the rest of them are single. They're probably pretty even between the Gemini 2 and the Plato. That's mostly engineering cost, you know, the internal cost. And it will be, you know, distributed even inside the company.

Michael Roberts | Roberts Capital

Evenly across. Okay. Thank you. And in terms of then based on your cash runway now, you know, What revenue or gross margin level do you expect to reach operating break-even then?

Douglas Shuro | Chief Financial Officer

You know, if you can assume, I don't know, 65% or 70% gross margin once we get into this.

Michael Roberts | Roberts Capital

Right.

Douglas Shuro | Chief Financial Officer

It's something that I need to take a look at. You know, we're still putting our plans together in terms of hiring levels and so on. You know, associate teams or whoever we need for – the chip development, the additional software teams that we need for the software development. I don't have all those numbers yet to do a calculation.

Michael Roberts | Roberts Capital

Understood. But are there concrete milestones and dates then for the Gemini 2 in terms of the expectation of pilot shipments or expected initial production orders?

DDA Lasser | Vice President of Sales

We will be doing some pilot shipments. We've done a couple already. We plan on doing more in the first half of 2026 calendar. This POC that hopefully we'll be able to discuss a lot more in the upcoming months, depending on the schedules on that, could give more substantial revenues in the back half of calendar 2026.

Michael Roberts | Roberts Capital

Noted. And from the current evaluation customers now, has any purchase orders or letters of intent been provided yet?

Conference Operator | Operator

I'm sorry, could you repeat the question?

Michael Roberts | Roberts Capital

Yeah, have any of the evaluation customers provided any purchase orders or letters of intent yet against that production?

DDA Lasser | Vice President of Sales

They're still in their evaluation at this point. So as we talked about, you know, the board that we sent along with the software, to this offshore defense contractor. They have done a review and they've put us as what's called good acceptance in their system, which means it's passed and been accepted. And so now we're going through the possible use cases. They have a couple different divisions. Two of them we think will be a good fit. One obviously is a SAR division. The other one is what they call their AI division. And so we're looking for you know, for practical applications that can then, like you say, turn into design win and revenue. So we're doing that with the customer today.

Michael Roberts | Roberts Capital

All right, very helpful. And one last question, then I'll let others proceed. Can you elaborate on that software stack maturity then, the compiler SDK, model porting tools, and when developers outside of GSI will have access? I'm going towards an ecosystem adoption of what we have.

Yeah. Lee Leon Hsu | Chairman, President & Chief Executive Officer

No, for the Gemini tool, right now we are developing the library and algorithm. Now, after that, we will move on to the tool and the compiler work. And we are developing this with the customer, you know, the partner and the customer we have.

Michael Roberts | Roberts Capital

All right. Understood.

Thank you very much. Conference Operator | Operator

Thanks, Michael.

Conference Operator | Operator

Our next question comes from Robert Christian, private investor.

Conference Operator | Operator

You may proceed with your question.

Robert Christian | Private Investor

Yeah, can you help me understand why the company is not going after data centers and view of the environment impact with energy consumption and cooling? It seems like we're leaving a lot of money on the table, even if it was just licensed so others could use the technology.

DDA Lasser | Vice President of Sales

So I'm not sure how long you've been following the company, but we have talked about another potential roadmap product. At the time, we were calling it Gemini 3. And that was going to be geared towards the data center. And that one needed a different kind of partner, and it needed a lot more funding. It would have required a very aggressive process node and would have been much more expensive. And so we were going down that road, and again, it was targeted for the data center. In the meantime, we were getting way too much positive feedback and interest on the edge, and we were getting SBIR dollars, and there are other dollars, you know, research dollars that we've submitted for to try and get, and it's all for the edge. And so, you know, the decision was made. We couldn't do both. It was one or the other at this point, and so we decided remain focused on the edge. Not to say with more influx of cash we can't beef up the team and go after the data center, but it strategically made sense for us to remain at the edge for now.

Robert Christian | Private Investor

Okay, but there's not a possibility, say, of NVIDIA or Micron to come in and develop the chip and we get a percentage of it?

DDA Lasser | Vice President of Sales

Oh, yeah, I mean, that's certainly very possible. I can't say those discussions are happening, but, you know, we had some discussions in the past where that was kind of the model we were looking at. So the answer is yes, we could do that. It's just there's nothing in the hopper right now.

Robert Christian | Private Investor

Okay, thank you very much.

Conference Operator | Operator

Our next question comes from Marco Petroni with MG Capital.

Conference Operator | Operator

You may proceed with your question.

Marco Petroni | MG Capital

Yes. You guys just recently raised 47 million nets and you had 13 million last quarter. And the balance sheet shows only 25 million now. So I was wondering where that money went, number one. And number two, going forward, what type of capital allocations do you need to build out the software team to do all this other stuff that we've been talking about?

Douglas Shuro | Chief Financial Officer

Well, the first answer is that that transaction closed after the balance sheet date. It was an October transaction, and the $27 million that you see is as of September 30th. And in terms of the capital allocation, I think we answered a previous question where we're looking at some IP and other stuff that we need to purchase for Plato, and then we expect to split funding between software development and Plato development.

Marco Petroni | MG Capital

So how much cash do you have on hand currently?

Douglas Shuro | Chief Financial Officer

Well, take $27 million, or $23 million, I'm sorry, $25 million balance sheet date, plus we got another $47 million in, so that should give you a reasonable estimate.

Conference Operator | Operator

All right. Thank you. Our next question comes from Mohamed Alsosi from Scale. You can proceed with your question. Hello? Hello? Yes. Hello?

Mohamed Alsosi | Scale

We can hear you. I want to know if... Yes. I just want to know if you have attracted any interest from any potential new customers after the Cornell study on APU performance?

DDA Lasser | Vice President of Sales

I'm sorry. Just to be clear, you're asking if we've gotten any more... customer traction because of the Cornell paper? Is that the question?

Mohamed Alsosi | Scale

No, I want to know if you attract more interest or potential new customers after the new Cornell study on APU performance.

DDA Lasser | Vice President of Sales

Okay, I think that's what I just said. Okay, so the answer is the customers we've been talking to, we've been talking about this low power advantage for some time, and we've done benchmarks. on several applications with some of our customers. And so they're aware of that. And so in that respect, you know, it's not a surprise to our customers we've been talking to that we have this low power advantage. You know, this just illustrated it for the, you know, for the rest of the public as a third party validation of what we've been saying.

Okay. Conference Operator | Operator

This now concludes our question and answer session. I would like to turn the floor back over to Mr. Li-Lin Hsu for closing comments.

Lee Leon Hsu | Chairman, President & Chief Executive Officer

We look forward to seeing you at this event and your participation in the third quarter of the fiscal 2026 earning call.

Thank you. Conference Operator | Operator

Ladies and gentlemen, this concludes our conference for today. Thank you for your participation. You may disconnect your lines and have a wonderful day. jsPDF 3.0.3 D:20261009125514-00'00'

NASDAQ:GSIT Q1 2026 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Call Operator: Ladies and gentlemen, thank you for standing by. Welcome to GSI Technologies' first quarter fiscal 2026 results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, we will provide instructions for those interested in entering the queue for the Q&A. Before we begin today's call, the company has requested that I read the following Safe Harbor statement. The matters discussed in this conference call may include forward-looking statements regarding future events and future performance of GSI technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-K, filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this conference call is being recorded today, July 31, 2025, at the request of GSI Technology. Hosting the call today is Li-Lin Xu, the company's chairman, president, and chief executive officer. With him are Douglas Shirley, chief financial officer, and Didier Lacerre, vice president of sales. I would now like to turn the conference over to Mr. Xu. Please go ahead, sir.

Li-Lin Xu | Chairman, President and Chief Executive Officer

Good afternoon, everyone, and thank you for joining us today. Let me begin with a few key highlights from this quarter's financial results. Fiscal 2026 is off to a strong start. In the first quarter, we achieved net revenue of $6.3 million, up 7% sequentially, and 35% year-over-year. This growth was fueled by rising demand for our S-RAN chips. driven by strong market momentum for leading AI processors. Our profitability nature also improved this quarter with a 200 basis points sequential increase in growth margin and over 1100 basis points compared to the prior year. We have also made meaningful progress on cost control over the last year with operating expenses declining by 15% year-over-year, including the gain from the sale of our recorder in Q1 2025. Now I would like to provide an update on our product roadmap and customer milestones. We have completed the evaluation of the second spring of our Gemini 2 chip. I am pleased to report that all loan bugs have been resolved, the silicon is fully functional, and ready for production. This week, the LiDAR 2 board and associated algorithms were delivered to a key offshore defense contractor for proof of contract work with Gemini 2 for satellites and drones. This delivery keeps us firmly on track with our roadmap and customer commitment. And while this is a major milestone, we also believe it represents an opportunity to play in both markets with Gemini 2. Didier will provide more details on this subject in a few minutes. CSI is at a pivotal point in its development. We plan to target high growth opportunities for Gemini 2 in the satellite, zone, and edge computing sectors. These are markets that are increasingly defined by AI-driven capabilities. We are evaluating options to access funds to expand our software and application teams to then develop the platform necessary for future customer fulfillment and support. Management is actively working with the board and our advisor to evaluate strategic options that will enable us to scale efficiently. Our real-time priorities include include funding the extension of our software and application teams, and advancing the development of the platform required to support future customer development deployment of Gemini 2. Accelerating the launch of Gemini 2 is key to laying the groundwork for our next generation APU, platform, and advancing companies' long-term product romance. In the meantime, the ATN has provided variable flexibility, allowing us to raise $11 million today, let alone fee. As a result, we ended the first quarter with a spending cash partition of $22.7 million. Now I hand the call over to Didier, who will discuss our business development and sales activities. Please go ahead, Didier.

Didier Lacerre | Vice President of Sales

Thank you, Lillian. Starting with our SRAM business, we had another strong quarter of sales to KYEC and Canis Design Systems, a leading provider of AI chip emulation systems. We have experienced our third consecutive quarter of rising SRAM sales, driven by the growth with the enterprise adoption of AI and also in the generative AI by hyperscalers who are training ever larger models. Despite continued strong demand for high-performance SRAM chips, Extended lead times are impacting our second quarter of fiscal 26 sales. While customers have maintained typical ordering patterns, a portion of our backlog is not shippable this quarter due to these supply constraints. We've proactively informed all of our distributors and sales representatives of the situation. It may take some time for customers to adjust to the increased lead time accordingly. In the interim, we anticipate instances where orders cannot be fulfilled within the request timeframe. Although forecasts from our largest customers remain solid, we expect SRAM revenue for the remainder of the fiscal 2026 to be stable compared to first quarter as we navigate these supply chain challenges. Switching to deliverables for our SBIRs, as Leland mentioned, we also have completed the development of our SAR and YOLO3 and YOLO5 algorithms optimized for Edge AI applications. In parallel, we also shipped a LIDA2 board with a low power version of our Gemini 2 chip to an offshore defense contractor with whom we have been working with for over a year. Both of these are now available for POC opportunities with other partners. Our defense work with the low power version of Gemini 2 has highlighted the chip's capability to address large models at the edge in varying capacity versions, depending on the latency and power sensitivity of the application. This makes Gemini 2, in conjunction with the SAR and YOLO 3 and YOLO 5 algorithms, very well positioned for the broader market potential of applications moving to the edge, and particularly for high demand, high volume, and high mixed processing needs of drones operating in GPS-denied environments, as well as next-generation satellite applications. Gemini 2 is also well-suited for large language models, or LLMs for short, for edge applications. LLMs require a high density, high performance memory path from external DRAM to the internal SRAM next to the processor. Gemini 2's compute and memory architecture provides high density, high performance internal SRAM to allow a high efficiency memory path for high speed and lower power, I'm sorry, low power operations required by LLMs. Gemini 2 is also a bit processor that is flexible to do one bit to 32 bit or larger operations in the same circuit efficiently, which further enhances the capability for LLM processing. We are developing a multimodal LLM charting edge applications and will have benchmark results available next quarter. To ease the adoption of the technology, we will continue to improve the AI compiler for Gemini 2, which is currently in its initial release phase. In parallel, we continue to develop ready-to-use vision, multimodal, and recognition apps and libraries. Our software team is also developing dynamic, low-precision software libraries that support larger models, enabling high accuracy at low powers in edge devices. This is a major enabler for efficient edge AI. As a bit engine, we are uniquely capable of addressing these edge needs where compute, memory, and power resources are far limited. As Leline mentioned, we are eager to advance our software development team to pursue drone and satellite AI chip applications with Gemini 2. Let me switch now to our first quarter customer and product breakdown. In the first quarter of fiscal 2026, sales to KYEC were $267,000 or 4.3% of net revenues compared to $1 million or 21.9% of net revenues in the same period a year ago and $1.7 million or 29.5% of net revenues in its prior quarter. Sales to Nokia were $536,000 or 8.5% of revenues compared to $998,000 or 21.4% of net revenues in the same period a year ago and $444,000 or 7.5% of net revenues in the prior quarter. Sales to cadence design systems were 1.5 million or 23.9% of net revenues compared to zero in the same period a year ago and 642,000 or 10.9% of net revenues in the prior quarter. Defense and military sales were 19.1% of first quarter shipments compared to 31.9% of shipments in the comparable quarter a year ago and 30.7% of shipments in the prior quarter. SigmaQuad sales were 62.5% of first quarter shipments compared to 36.3% in the first quarter of fiscal 2025 and 39.3% in the prior quarter. Regarding our SRAM business outlook, our largest customer is currently navigating supply chain constraints. However, we expect their order volume to remain stable for the rest of this fiscal year. Meanwhile, other SRAM customers have largely normalized their inventory levels, and we anticipate continued order activity from them as well. I'd like to hand the call over to Doug. Go ahead, Doug.

Douglas Shirley | Chief Financial Officer

Thank you, DDA. We reported net revenues of $6.3 million for the first quarter fiscal 2026, compared to $4.7 million for the first quarter fiscal 2025, and $5.9 million for the fourth quarter fiscal 2025. Gross margin was 58.1% in the first quarter fiscal 2026, compared to 46.3% in the first quarter fiscal 2025, and 56.1% in the preceding fourth quarter of fiscal 2025. The increase in gross margin in the first quarter of 2026 was primarily due to product mix and benefits of scale from higher revenue on the fixed cost of revenues. Total operating expenses in the first quarter of fiscal 2026 were $5.8 million compared to $6.8 million in the year-ago quarter, excluding a one-time gain of $5.7 million on the sale and lease back to the company's corporate headquarters and $5.6 million in the prior quarter. Research and development expenses were $3.1 million compared to $4.2 million in the prior year period and $3 million in the prior quarter. Selling, general, and administrative expenses were $2.7 million compared to $2.6 million in both the prior year and previous quarter. First quarter fiscal 2026 operating loss was $2.2 million compared to an operating loss of $4.7 million in the year-ago quarter, excluding the $5.7 million one-time gain previously mentioned related to the company's corporate headquarters and an operating loss of $2.3 million in the prior quarter. The first quarter fiscal 2026 net loss included interest and other income of $13,000 and a tax provision of $54,000. compared to $55,000 in interest and other income and a tax provision of $57,000 for the same period a year ago. In the preceding fourth quarter, net loss included interest and other income of $52,000 and a tax provision of $6,000. Net loss in the first quarter of fiscal 2026 was $2.1 million or $0.08 per diluted share compared to net income of $1.1 million or $0.04 per diluted share for the first quarter fiscal 2025. Net income for the year-ago period reflects the $5.7 million one-time gain on the sale and leaseback transaction at the company's headquarters. For the prior fourth fiscal quarter of 2025, net loss was $2.2 million compared to a $0.09 loss per share. Total first quarter pre-tax stock-based compensation expense was $341,000, compared to $658,000 in the comparable quarter a year ago, and $512,000 in the prior quarter. At June 30, 2025, the company had $22.7 million in cash and cash equivalents, compared to $13.4 million at March 31, 2025. Working capital was $25.7 million at June 30, 2025, compared to $16.4 million at March 31, 2025. Stockholders' equity as of June 30, 2025 was $37.4 million, compared to $28.2 million as of the fiscal year ended March 31, 2025. On an earnings conference call in May 2024, we announced that the company had initiated a comprehensive strategic view, established a special committee of the board to evaluate strategic alternatives, and engaged Needham & Company as our strategic and financial advisor to assist in the process. As Leland mentioned, we are actively evaluating potential strategic opportunities to secure the necessary capital to advance the development of our APU products. In the interim, we may choose to draw on the remaining balance of the ATM during upcoming trading windows to support near-term funding needs related to Gemini II development, depending on market conditions and other factors. Finishing with the outlook for the second quarter of fiscal 2026, we expect net revenues the second fiscal quarter to range between $5.9 million and $6.7 million, with gross margin in the range of 56% to 58%. We remain focused on disciplined execution to bring Gemini 2 to market, advancing our roadmap for PLATO while developing long-term shareholder value. Operator, at this point, we will open the call to Q&A.

Operator | Conference Call Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator | Conference Call Operator

One moment, please, while we poll for questions. The first question is from Tony Reno from a private investor.

Please go ahead. Unidentified Participant

Hi, how are you guys?

Good. Thank you. Tony Reno | Private Investor

So, um, can you provide a little more color on the supply chain issues?

Didier Lacerre | Vice President of Sales

Sure. Yeah. So I'm sure you're aware of all the tariffs that are being thrown around by the U S government. And a lot of these are directed at China. And so a lot of the folks who have been doing, assembly in China are moving some of their assembly to Taiwan. And so it's really affecting the capacity in Taiwan. And as you know, we do all of our back end in Taiwan. So it's thrown out the lead times pretty much overnight to us because of that transition.

Tony Reno | Private Investor

Will that end up making the customers possibly order earlier?

Didier Lacerre | Vice President of Sales

Correct. Yeah. So that's something I mentioned a little earlier, which is, you know, this came about very quickly, and then customers have been used to their ordering patterns based off of lead times we've quoted. So we have gone back to them via our reps and our distributors to make sure they understand they need to get more backlog coverage in place so that their future orders will not be late or delayed. And so in the future, we anticipate this won't be a problem, but for the current quarter end and possibly into next, there will be some backlog that would have been shippable that will be delayed a bit just because of these lead times.

Tony Reno | Private Investor

Yes, and it'll just make the further quarters probably even stronger then once we get out of that. Possibly. Yes. So sales to KYEC seem a little weak this quarter. Can you comment on that a little bit?

Didier Lacerre | Vice President of Sales

Sure. Yeah. So part of that was the inventory levels that I mentioned in mind, which have seemed to stabilize along with the with the lead time as well. Yeah, they unfortunately those orders come in within lead time and we've been able to react in the past and we weren't able to this past quarter.

Tony Reno | Private Investor

And like with cadence, those orders are pretty, pretty strong this quarter. What type of product are you shipping to them?

Didier Lacerre | Vice President of Sales

Yeah, so there are emulation systems. This is kind of what we've talked about. Even though we don't sell our SRAMs directly into AI applications, we do a lot of support. KYC is supporting the manufacturing of AI chips. The cadence systems are emulations to emulate the design of some of these GPUs and other devices. So it's It's emulation systems in the front end design.

Tony Reno | Private Investor

Okay, thank you. And last question, as far as the ATM is concerned, what are the trading windows for the company for that?

Douglas Shirley | Chief Financial Officer

Well, typically our trading window starts two days after our earnings call. So in the case of this quarter, the trading window will open on Tuesday and it closes on the 15th of the last month of the quarter. So that would mean... In this case, September 15th for the last trading day up to the 15th of the month.

Okay. Tony Reno | Private Investor

All right. Well, thank you very much, guys, and good luck in the future.

Unidentified Participant

Thank you. Thank you. Thank you, Tony.

Operator | Conference Call Operator

There are no further questions at this time. I would like to turn the floor back over to Li-Lin Xu for closing comments.

Li-Lin Xu | Chairman, President and Chief Executive Officer

Thank you all for joining us. Please join us on August 20th. at upcoming need in virtual semiconductor comfort.

Didier Lacerre | Vice President of Sales

Actually, operator, there is one more question that just popped up.

Operator | Conference Call Operator

I see that now. Yep. Okay. We have a question now from Anna Chapman from 2 Chron 5 Productions.

Please go ahead. Anna Chapman | 2 Chron 5 Productions

Yes. My background has always been in sales and capital equipment. I want to know how you're incentivizing your sales force because, to me, you make one of the best products out there. It has an excellent portfolio. How are you incentivizing these people?

Unidentified Participant

It seems like your sales should be more in the pipeline.

That's my question. Didier Lacerre | Vice President of Sales

I'm sorry, was that an advertising or was that a question? I'm not sure I got the question.

Anna Chapman | 2 Chron 5 Productions

I'm asking how to the distributors, to your sales force, are they incentivizing? Is your product one of their number one things in their bag? Or is it like number 12 or maybe an afterthought?

Unidentified Participant

How are you incentivizing these people to go out there and tell your story?

And get sales. Unidentified Participant

Yeah.

Didier Lacerre | Vice President of Sales

So our independent sales reps are paid on commission. So they're paid on shipment of product. And distributors are paid on margin. And so... With our independent sales reps, there's no competing lines, and they understand that our products are door openers, and so certainly they're important lines for them. And, again, with distributors, we do have large distributors. As you know, we have Avnet, which carries most of the lines. And so with them, the incentivization is in the margin, and GSI generally pays them above corporate average for the margins.

Unidentified Participant

Okay. All right. I think they need to do better, quite frankly. Just my opinion. All right. Operator?

Operator | Conference Call Operator

Great. There are no further questions at this time.

Operator | Conference Call Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090140-00'00'

NASDAQ:GSIT Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Conference Call Operator | Call Moderator: Welcome to GSI Technologies fourth quarter and fiscal year 2025 results conference call. At this time, all participants are on a listen-only mode. Later, we will conduct a question and answer session. At that time, we will provide instructions for those interested in entering the queue for the Q&A. Before we begin today's call, the company has requested that I read the following safe harbor statement. The matters discussed in this conference call may include forward-looking statements regarding future events and the future performance of GSI technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-K filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this conference call is being recorded today, May 1st, 2025, at the request of GSI Technology. Li-Lin Xu, the company's chairman, president, and chief executive officer, will be hosting the call today. With him are Douglas Shirley, chief financial officer, and D.G.L. Assay, vice president of sales. I would now like to turn the conference over to Mr. Xu. Please go ahead, sir.

Li-Lin Xu | Chairman, President & Chief Executive Officer

Good afternoon, and thank you for joining us to review our fourth quarter and the fiscal year 2025 financial results. Let's start with a few highlights from fiscal year 2025. We closed the fourth quarter with solid revenue growth, significantly reduced debt loss, and a meaningful improvement in cash burn, finish the year with $13.4 million in cash, and a more disciplined operating structure. Revenue for the fourth quarter increased by 14% year over year, and a 9% sequentially to $5.9 million, driven by strong demand for our essence chip, as we exit this year. This revenue growth and the low operating expense result in a sharp reduction in quantity rate loss and a material decrease in cash usage. For fiscal year 2025, quite annual revenue declined 6% compared to the prior year. we meaningfully reduced our debt loss by 47% from $20.1 million in 2024 to $10.6 million, driven by the 35% reduction in operating expenses. This structural cost improvement is central to our goal of preserving cash and extending our runway. We expect to maintain our quality operating expenses at current levels to minimize our cash burn until we secure new funding sources. In the fourth quarter, we made good progress across multiple funds to advance our technology roadmap and the commercial strategy. Notably, we secured an initial order for radiation hub and X-ray from a North American prime contractor, a key validation of our product. We anticipate follow all orders this fiscal year. This trip carries a significant higher gross margin than all traditional X-rays. EDA is the point person with this customer and will intend further on the opportunities. Our ongoing SBIR programs with government agencies are progressing well, and we are successfully meeting our milestones. Today, our SBIRs have generated a payment total of $1.6 million, and we anticipate receiving an additional $1 million once we complete the program. This quarter, $870,000 was booked as a reduction to RMD expense, further helping to lower operating expenses. We are especially excited about recent enhancement to Prato, adding the integration of a camera interface directly into the chip. This new feature paired with other connectivity enhancements allow the chip to interface with a wide range of sensors. This makes PRATO particularly well-suited for AI agents requiring object recognition. The new capability has increased strategic interest in PRATO, and we are currently in preliminary discussion with multiple parties to scale partnerships and access funds for the next phases of development. Delia will provide more detail on this exciting development. As we look ahead to fiscal year 2026, we plan to build on the progress of our APU development, drive continued growth in excellence sales, and advance execution of our strategic initiatives. across both commercial and the government markets. At the same time, we remain committed to maintain operational efficiency. In parallel, we continue to explore strategic alternatives with a primary focus on securing funding to support the next phase of operator development. We are also working with our banking team to explore other options. that could provide new sources of cash to execute our AS strategy. With that, I will now hand it over to you.

D.G.L. Assay | Vice President of Sales

Thank you, Leline. As Leline mentioned, this quarter's primary revenue driver was the continued strong demand for our high-density SRAM. Our SRAM has been deployed in critical systems used in chip manufacturing and the recent uptick in business with KYEC is being driven by surging demand for next generation AI chip from a leading GPU provider. Despite the ongoing tariff negotiations between the US and its trading partners, we currently anticipate the demand from this customer to continue in fiscal year 2026 at a similar level to what we experienced in 2025. With that said, we may have some variability in the timing of the shipments, but importantly, the demand is still anticipated to remain consistent. The big news this quarter is an initial order for our radiation hardened SRAM. While waiting for the forecast from the prime contractor, we anticipate follow-on orders in fiscal 2026. In addition, we are actively working with this customer to secure heritage status. Gaining this status would enhance the market acceptance of our radiation hardened SRAM and unlock access to new high-value sales channels. It is worth noting that radiation-hardened SRAMs carry a gross margin well above those of our traditional SRAM chips, providing a strong financial lever as we work to reduce our net loss and cash burn. Let me switch to Plato and elaborate on Lillian's earlier comments. By integrating a camera interface directly into the chip alongside enhanced connectivity features, Plato significantly broadens its addressable market. Able to process data locally without relying on cloud infrastructure, it's now optimized for edge devices and ideal for agents performing object recognition. To clarify what an agent is, it's helpful to look at how the approach to AI is shifting to agentic AI. These AI systems don't just analyze data, but they also act independently, for example, generating motor commands for a robot or a drone. This involves multiple capabilities that a single-purpose GPU is not well-suited for. Plato, on the other hand, can manage a combination of computing tasks that involve more than just a single number of crunching or graphic workloads. Put another way, agentic AI goes beyond basic data analysis. It must make decisions, process inputs from sensors like cameras and microphones, respond in real time, and take actions in the physical world. In this context, Plato's capabilities position it at the forefront of sectors preparing for significant growth driven by the increasing demand for intelligent, autonomous systems or agents across various industries at the edge. Thus, interest in PLATO has grown among the strategic partners we've engaged with over the past year. Pivoting to our ongoing SBIRs, as Leland stated, these projects are on track and we are meeting the milestones. As a reminder, we are currently working on a Phase II contract from both the Space Development Agency and the Air Force Research Labs, along with our most recently announced Phase I contract with the U.S. Army. As planned, we delivered a server with a LITA-2 board to the Air Force Research Labs and will shortly deliver another LITA-2 board to the Space Development Agency. The Phase 1 SBIR for the U.S. Army contract is evaluating the use of Gemini 2 in edge computing AI solutions, and we are on track to meet all expectations with this partner. This quarter, we also delivered a YOLO algorithm for the Air Force features labs, including the benchmarks for real-time object detection application. We continue to increase the performance of the YOLO algorithms, which can immediately determine the exact placement and identify the type of objects. We plan to deliver the improved YOLO3 and YOLO5 algorithms this summer. Lastly, an update on our STAR projects. We made further progress with an offshore defense R&D customer, which ordered a Gemini 2 system to evaluate the chip's capabilities for low-power in-flight application. We will be shipping this system this quarter. This organization is also a potential funding partner for PLATO. In addition, a U.S. aerospace company continues to evaluate our Gemini for onboard satellite applications. Taken together, these activities support the use of Gemini 2 for integrated edge applications such as SAR generation and drones with subsequent object detection and actionable decisions. Now I will move on to the customer and product breakdowns for the fourth quarter. In the fourth quarter of fiscal 2025, sales to KYEC were 1.7 million, or 29.5% of net revenues. compared to 544,000 or 10.6% of net revenues in the same period a year ago and 1.2 million or 22.7% of net revenues in the prior quarter. In the fourth quarter of fiscal 2025, sales to Nokia were 444,000 or 7.5% of revenues compared to 694,000 or 13.5% of net revenues in the same period a year ago and 239,000 or 4.4% of net revenues in the prior quarter. Military defense sales were 30.7% of fourth quarter shipments compared to 35.5% of shipments in the comparable period a year ago and 30.0% of shipments in the prior quarter. Sigma Quad sales were 39.3% of fourth quarter shipments compared to 42.4% in the fourth quarter of fiscal 2024 and 39.1% in the prior quarter. I'd now like to hand the call over to Doug. Go ahead, Doug.

Douglas Shirley | Chief Financial Officer

Beginning with the results for the quarter, we reported net revenues of $5.9 million for the fourth quarter of fiscal 2025 compared to $5.2 million for the fourth quarter of fiscal 2024. and $5.4 million for the third quarter of fiscal 2025. Gross margin was 56.1% in the fourth quarter of fiscal 2025 compared to 51.6% in the fourth quarter of fiscal 2024 and 54% in the preceding third quarter of fiscal 2025. The year-over-year and sequential increase in gross margins was primarily due to higher revenue and product mix. Total operating expenses in the fourth quarter of fiscal 2025 were $5.6 million compared to $7.2 million in the fourth quarter of fiscal 2024 and $7 million in the prior quarter. Research and development expenses were $3 million compared to $4.8 million in the prior year period and $4 million in the prior quarter. Research and development expenses in the fourth quarter of fiscal 2025 were reduced by $870,000, reflecting government funding under the SBIR programs. Selling general and administrative expenses were $2.6 million in the quarter ended March 31st, 2025 compared to $2.4 million in the prior year quarter and $3 million in the previous quarter. Fourth quarter fiscal 2025 operating loss was $2.3 million compared to an operating loss of $4.5 million in the prior year period and $4.1 million in the prior quarter. Fourth quarter fiscal 2025 results included interest and other income of $52,000 and a tax provision of $6,000, compared to $108,000 in interest and other income and a tax benefit of $85,000 for the same period a year ago. In the preceding third quarter, net loss included interest and other income of $70,000 and a tax provision of $44,000. Net loss in the fourth quarter fiscal 2025 was $2.2 million, or $0.09 per diluted share, compared to a net loss of $4.3 million, or $0.17 per diluted share in the fourth quarter fiscal 2024, and a net loss of $4 million, or $0.16 per diluted share in the third quarter fiscal 2025. Fourth quarter pre-tax stock-based compensation expense was $512,000, compared to $693,000 in the comparable quarter a year ago, and $429,000 in the prior quarter. Turning now to the full year results for fiscal 2025, we reported net revenues of $20.5 million for fiscal 2025 compared to $21.8 million for fiscal 2024. Gross margin for fiscal 2025 was 49.4% compared to 54.3% in the prior year. The decrease in gross margin was primarily due to product mix and the effect of lower revenue on a fixed cost on our cost of revenues. Total operating expenses were $21 million in fiscal 25 compared to $32.3 million in fiscal 2024. Research and development expenses of $16 million compared to $21.7 million in the prior fiscal year. Selling general and administrative expenses were $10.8 million compared to $10.6 million in fiscal 2024. The decline in research and development expenses was primarily due to cost reductions announced in August 2024. Research and development expense in fiscal 2024 included pre-production mass costs of $2.4 million related to our APU2 product. Research and development expenses in 2025 and fiscal 2024 were reduced by $1.2 million and $440,000 respectively. reflecting government funding under the SPIR programs. Operating expenses in fiscal 2025 include a gain on the sale of assets of $5.8 million from the sales of the company's headquarters building in Sunnyvale, California in a sales and leaseback transaction. The operating loss for fiscal 2025 was $10.8 million compared to an operating loss of $20.4 million in the prior year. The fiscal 2025 net loss included interest and other income of $326,000 and a tax provision of $130,000 compared to $414,000 in interest and other income and a tax provision of $70,000 in the prior year. For the fiscal year ended March 31st, 2025, we reported net loss of $10.6 million or 42 cents per diluted share compared to net loss of $20.1 million or 80 cents per diluted share. in the prior fiscal year. On March 31, 2025, we had $13.4 million in cash and cash equivalents compared to $14.4 million on March 31, 2024. Working capital was $16.4 million as of March 31, 2025 versus $24.7 million at March 31, 2024. Stockholders' equity as of March 31, 2025 was $28.2 million compared to $36 million as of the fiscal year ended March 31, 2024. Unidentified\ Operator, at this point, we'll open the call to Q&A.

Conference Call Operator | Call Moderator

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions.

Conference Call Moderator | Question Facilitator

Our first question comes from the line of Michael Cooper, private investor.

Conference Call Operator | Call Moderator

Please go ahead.

Michael Cooper | Private Investor

Good evening. Can you talk a little bit about the market for the Plato chip and the Gemini 2 chip? How large are these markets? How do they scale over what time period? Just give us a sense for that.

Robert Christian | Investor, Acoustic Technologies

the market conditions here?

Michael Cooper | Private Investor

Thank you.

D.G.L. Assay | Vice President of Sales

Sure. So we haven't actually put out the TAM numbers yet, but just to talk about the markets. For the Gemini 2, think of it as an extension of Gemini 1, but for the edge. And so Gemini 1 was really to illustrate our capabilities in search and also some high-performance computing applications like SAR. And so what Gemini 2 will do, we'll take that but take it to the edge. Gemini 1 was not built to be a low-power solution with the accompanying FPGA that we've talked about in the past. With the Gemini 2, we can get closer to the edge. So we're looking for, while Gemini 1 would do SAR applications on ground level in a building, we are now looking at Gemini 2 to do a SAR application actually on a drone or on a satellite at the edge. And so we're looking at search and high-performance computing at the edge for Gemini 2. For Plato, this is going to be, it's not going to be for the search market. It's going to be for the LLM market. And so when most folks think about, you know, large language models and Gen AI, they think of it in the data center. We're taking that capability to the edge. And so this, think of Gen AI and LLM models more at the edge.

Conference Call Moderator | Question Facilitator

Thank you. Thanks, Michael. Michael, does that answer your question?

Michael Cooper | Private Investor

Yes, it does. Thank you. Yeah, that's it. Thank you very much.

Conference Call Operator | Call Moderator

Thank you. The next question comes from the line of Robert Christian with Acoustic Technologies.

Please go ahead. Robert Christian | Investor, Acoustic Technologies

Yeah, thanks for taking my call. I was wondering, is the company experiencing any interest in the Gemini 2 standalone chip from commercial companies other than, say, the military? And is the company still working with the hyperscalers?

Thank you. Conference Call Moderator | Question Facilitator

So, good question.

D.G.L. Assay | Vice President of Sales

Honestly, the majority of the early interest have come from more of the middle defense type of applications. and they are looking at it on a component level as well. So we do have what we call the LIDA2 board, which I discussed a little earlier, that we have delivered and will be delivering to some of our partners. And so with the board, we're delivering it with a SOAR algorithm or some kind of a YOLO algorithm that's been developed, which is why they're getting a card. but some of the folks that we have been having discussions with, they are looking for a chip only because they will be mounting it on a drone or in a satellite. One of our other integrating partners that we've discussed in the past, they're actually going to be developing their own miniaturized board, and so they will be procuring just the Gemini 2 chips from us. to put on their proprietary board. So the answer is yes, we are seeing interest on the chip level, but there's also some board level interest as well.

Robert Christian | Investor, Acoustic Technologies

Okay, how about the hyperscalers?

D.G.L. Assay | Vice President of Sales

Yeah, the hyperscalers, we're really focusing more on the edge right now, and so we have bad discussions with them. It's just that's a longer process with those folks. We find that with the military folks, it's just a much quicker path to revenue.

Robert Christian | Investor, Acoustic Technologies

Okay. Can you share with the shareholders a little more detail, if you can, on what Needham is bringing to the table? Unidentified\ Well, you know, really nothing is off the table at this point.

Douglas Shirley | Chief Financial Officer

You know, it could be sale of assets. It could be, you know, funding into the company, you know, It could be helping us with opportunities for R&D funding, help us with development of products. Unidentified\ It really could be just about anything.

Robert Christian | Investor, Acoustic Technologies

Okay, but you can't share any specifics at this time, then? Unidentified\ There's nothing specific to talk about at this time yet. Okay, thank you.

Conference Call Operator | Call Moderator

Thank you. Our next question comes from the line of Michael Cooper, who's an investor.

Please go ahead. Michael Cooper | Private Investor

Actually, I'm sorry. The last part of that last question answered my question, which was what has Needham actually presented as options or opportunities for you? And it doesn't sound like they've done an awful lot there. Unidentified\ There have been things that we've looked at, but nothing's resulted in anything yet or nothing to talk about.

Conference Call Moderator | Question Facilitator

Great. Thank you.

Thank you. Conference Call Operator | Call Moderator

A reminder to all the participants, if you wish to ask a question, please press star and 1 on your telephone keypad. The next question comes from the line of Jeff Bernstein with Silver Bernstein Capital.

Please go ahead. Robert Christian | Investor, Acoustic Technologies

Yeah, just a quick one. Could you give us what cash flow from operations was in the quarter and what your capex was? Unidentified\ I don't have it for the quarter, but I have cash flow for the year.

Douglas Shirley | Chief Financial Officer

For the year, cash used in operating operations Unidentified\ Activities would be about $12.9 million.

Okay. Conference Call Moderator | Question Facilitator

And what was CapEx for the year? Unidentified\ Very little.

Douglas Shirley | Chief Financial Officer

Fixed asset additions during the year were, you know, like $45,000. Very little. Very minor. We're not looking at fixed asset acquisitions right now.

Conference Call Operator | Call Moderator

Okay. That's great. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to Mr.

Hsu for closing remarks. Li-Lin Xu | Chairman, President & Chief Executive Officer

Thank you all for joining us. We look forward to speaking with you again when we report our first quarter physical 2026.

Thank you. Conference Call Operator | Call Moderator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090142-00'00'