GSIT earnings call analysis

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'

NASDAQ:GSIT Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Host: Welcome to GSI Technologies' third quarter fiscal 2025 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 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, followed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this conference call is being recorded today, January 30, 2025, at the request of GSI Technologies. 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 Didier Le Serre, Vice President of Sales. I would now like to turn the conference over to Mr. Hsu. Please go ahead, sir. Li-Lin Xu | Chairman, President and Chief Executive Officer: Good afternoon, and thank you for joining us to review our third quarter, fiscal 2025 financial results. And I am pleased to report that our third quarter demonstrated meaningful progress in our financial performance and the ongoing initiative with the APU. Let me start with our financial highlights before diving into our product development. In the third quarter, we generated revenue of $5.4 million, representing a 2% increase year-over-year and a 19% sequential growth from the previous quarter. More importantly, our cost reduction initiative has begun to bear fruit, resulting in a reduction in operating and debt losses compared to the third quarter of fiscal 2024. Looking at our excellent business, I am encouraged by the continued momentum in our core excellent segment. Revenue growth this quarter in excellent came from existing customers, resuming over at their inventory level overnight, and the growing demand from the customer for our 144-meg S1, whose systems are equal to manufacturing-leading AI chips. We anticipate this customer becoming our largest S1 customer in fiscal year 2025. Let me share a few key developments on the APU front. So far, our APU technology is progressing steadily. We made good progress using the Gemini 2 first silicon, which had a manual bug. Fortunately, software work-along made the chip sufficiently functional to put on the board for testing and software and library development. We will be able to deliver new known network models for our Gemini 2 SBIR program with the Air Force in the March quarter based on this first silicon. We are now preparing for a second spin of Gemini 2 for mass production. EDL will provide additional details on Gemini 2 in his prepared comments. In parallel, we have begun work on a new chip, PLATO will be designed to address the growing market for large language models in AI applications as a solution with its low-power features. The chip architecture will be built on Gemini 2's architecture. We are pursuing multiple funding pathways to support this $50 million development program, including discussions with strategic and financial partners. Our government business continues to expand to multiple SBIR programs. We recently announced a phase one contract with the U.S. Army, securing $250,000. In this phase, we will explore and identify best fit applications to develop specialized edge computing AI solutions with Gemini 2. This will strengthen our relationship with agencies within the Department of Defense. GDL will share more details on this new win and the status of our sub-projects. In summary, while we are encouraged by our progress, we remain dedicated to disciplined execution across all areas. Our improved operating efficiency, growing S&S sales, and strategic initiatives in commercial and government market positions as well for sustainable growth as we continue to create strategic alternatives. With that, I'll hand it over to Didier to provide more details on our APU business opportunities and cover the third quarter sales breakdown. Didier Le Serre | Vice President of Sales: Thank you, Lilien. As Leline mentioned, Gemini 2 is on track for a February tapeout and availability in May and will have a new leaderboard in June. This aligns with the milestone for the Air Force's SBIR. Gemini 2 enhances AI capabilities with neural network models together with SAR imaging capability to target high-value applications in the defense and aerospace markets. Meeting these milestones should put us in a good shape to complete algorithm development and library building for delivery by third quarter of calendar 2025. Leveraging Gemini 2's architecture, we can accelerate the development of our next generation chip, PLATO, with a cost-effective, faster-to-market strategy. PLATO's ultra-low power design will target rapidly growing markets for the edge and large language model solutions. PLATO is a strategic pivot from our previous plan for developing a new next generation version of Gemini with a more economical and faster development path than the previously proposed 3D Gemini 3. The distinguishing feature of PLATO targeted for LLM market is that it can deliver data center performance levels using very low power, making it suitable for use at the edge. As Eileen mentioned, we are in discussions with potential customers who could be initial users and may also be funding sources with an expected development timeline of 12 to 18 months. I am pleased to say that our ongoing SBIR projects are on track and meeting our milestones. As a reminder, we are currently working on Phase II contracts with Space Development Agency and Air Force Research Labs and most recently announced a Phase I contract with the U.S. Army. We are preparing to deliver a YOLO algorithm for the Air Force Research Labs in the current quarter, including the benchmarks for a real-time object detection application. As a reminder, YOLO, which stands for You Only Look Once, are algorithms that immediately determine the exact placement of objects in an image by drawing boxes around them and identifying the types of object. Our second SBIR with the Space Development Agency is waiting for the delivery of a Gemini 2 board. As I mentioned earlier, we are on track to deliver this within the required timeframe. Today, we have received 45% of the $1.25 million contract and will receive the balance upon the board's delivery. We are now executing the phase one for our latest win, the U.S. Army contract. to determine which of their ongoing projects would benefit from Gemini 2's capabilities. After phase one, we will have the opportunity to compete for phase two, which could be worth up to $2 million. The focus will be on edge computing AI solutions using Gemini 2. Our key objectives are integration, feasibility assessment, and AI algorithm validation for military applications. The Army is the largest of the five branches of the Department of Defense, and with this SBIR, we are gaining exposure to this branch. Lastly, regarding our SAR projects, there has been ongoing progress in fiscal Q3. The Asian Defense and R&D organization that we have mentioned in the past is evaluating Gemini 2 for low power in-flight applications. We are advancing with a few more deliverables to prepare them to purchase a Gemini 2 board. This organization is also a potential funding partner for PLATO. Also, two other aerospace companies are evaluating our technology for image creation and onboard satellite applications for SAR. Now I'll move to the customer and product breakdowns for the third quarter. In the third quarter of fiscal 2025, sales to Nokia were 239,000, or 4.4% of net revenues, compared to 807,000 or 15.2% of net revenues in the same period a year ago and 812,000 or 17.8% of net revenues in the prior quarter. Military defense sales were 25% of our third quarter shipments compared to 28.2% of shipments in the comparable period a year ago and 40.2% of shipments in the prior quarter. Sigma quad sales were 39.1% of third quarter shipments compared to 46.9% in the third quarter of fiscal 2024 and 38.6% in the prior quarter. Now I'd like to hand the call over to Doug. Go ahead, Doug. Douglas Shirley | Chief Financial Officer: We reported net revenues of $5.4 million for the third quarter of fiscal 2025 compared to $5.3 million for the third quarter of fiscal 2024 and $4.6 million for the second quarter of fiscal 2025. Gross margin was 54% in the third quarter of fiscal 2025 compared to 55.9% in the third quarter of fiscal 2024 and 38.6% in the preceding second quarter of fiscal 2025. The sequential increase in gross margin in the third quarter of fiscal 2025 was primarily due to higher revenue, products mix, and severance costs associated with manufacturing workforce reductions in the prior quarter. Total operating expenses in the third quarter of fiscal 2025 were $7 million compared to $9.7 million in the third quarter of fiscal 2024 and $7.3 million in the prior quarter. Research and development expenses were $4 million compared to $7 million in the prior year period and $4.8 million in the prior quarter. Selling general and administrative expenses were $3 million in the quarter ended December 31, 2024 compared to $2.7 million in the prior year quarter and $2.6 million in the previous quarter. Third quarter fiscal 2025 operating loss was $4.1 million compared to an operating loss of $6.7 million in the prior year period and $5.6 million in the prior quarter. Third quarter fiscal 2025 net loss included interest and other income of $70,000 and a tax provision of $44,000 compared to $155,000 in interest and other income and a tax provision of $71,000 for the same period a year ago. In the preceding second quarter, net loss included interest and other income of $149,000 and a tax provision of $23,000. Net loss in the third quarter of fiscal 2025 was $4 million, or 16 cents per diluted share, compared to a net loss of $6.6 million, or 26 cents per diluted share, for the third quarter fiscal 2024, and a net loss of $5.5 million, or 21 cents per diluted share, for the second quarter fiscal 2025. Total third quarter pre-tax stock-based compensation expense was $429,000, compared to $649,000 in the comparable quarter a year ago, and $663,000 in the prior quarter. December 31st, 2024, the company had $15.1 million in cash and cash equivalents compared to $14.4 million at March 31st, 2024. Working capital was $17.9 million as of December 31st, 2024 versus $19.1 million at March 31st, 2024. Stockholders' equity as of December 31st, 2024 was $29.9 million compared to $36 million as as of the fiscal year ended March 31, 2024. Previously, we announced that the company had initiated a comprehensive strategic review and established a special committee of the Board to evaluate various strategic alternatives. We continue to work with Needham & Company as our strategic and financial advisor to assist in this process. Operator, at this point, we will open the call to Q&A. Operator | Conference Host: 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 a line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, Nicole, for a question. Our first question comes from the line of Robert Christian, a private investor. Please proceed with your question. Robert Christian | Private Investor: Yes, I'd like to know, is the company utilizing AI to do its algorithms and software? And are we going to get a white paper on the benchmarks for the Gemini 2? Didier Le Serre | Vice President of Sales: So the algorithms, we're actually writing ourselves with the folks that we have in our Israeli division. As far as a white paper, yes. So as we mentioned, the first algorithm on Gemini 2 will be the YOLO model, specifically YOLO 3. We will also be following that up with the YOLO 5, but we will be publishing benchmarks when that's done, correct. Robert Christian | Private Investor: Okay, and a second question I have was when Needham was brought on or was announced back last year in May, it was to enhance the company valuation system. We're actually lower now than we were. Are they the right partner? Douglas Shirley | Chief Financial Officer: Well, you know, we've been working with them, and they have brought us opportunities that we've been looking at, and we continue to look at opportunities. I don't know that it's fair to say that they were brought in to increase the company's valuation. The intent was to find strategic alternatives to further grow the company and provide investment into the company. Robert Christian | Private Investor: Well, I was almost positive that's what was stated in May. I could be wrong, but anyway, thank you very much. Didier Le Serre | Vice President of Sales: Thank you, Christian. Operator | Conference Host: Thank you. Again, as a reminder, if anyone has any questions, you may press star 1 to join the Q&A. And it looks like there are no further questions. Therefore, I will turn the call back over to Lili and Shu for closing remarks. Li-Lin Xu | Chairman, President and Chief Executive Officer: Thank you all for joining us. We look forward to speaking with you again when we report our fourth quarter and the full year of fiscal 2025 in town. Thank you. Operator | Conference Host: Thank you, ladies and gentlemen. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090143-00'00'

NASDAQ:GSIT Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Call Operator: Ladies and gentlemen, thank you for standing by. Welcome to GSI Technology's second quarter fiscal 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 statements. 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've also been asked to advise you that this conference call is being recorded today, October 24, 2024, Li-Lin Xu | Chairman, President, and Chief Executive Officer: at the request of GSI Technology. Li-Lin Xu, the company's Chairman, President, and Chief Executive Officer, will be hosting the call today. Operator | Conference Call Operator: With him are Douglas Shirley, Chief Financial Officer, and Didier Le Serre, 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. and thank you for joining us to review our second quarter physical 2025 financial results. We are starting to see a significant turnaround in our excellent business this quarter, driven by two key factors. First, existing customers are actively depleting their channel inventories, and we anticipate They will resume orders in the upcoming quarters. Second, we have secured a new SM design with significant growth potential. Our longstanding partnership with the provider in the semiconductor manufacturing process is yielding significant demand related to a new AI chip. Didier will cover this exciting development in more detail in his comments. I want to update you on our Phase 1 and 2 SBIR contracts. We are on track to meet the deadline for the Gemini 2 benchmarking project and fulfill our SBIR contract with the U.S. Air Force Research Lab by December 31, 2024, followed by the delivery of the software algorithm in the first quarter of calendar 2025. Didier will turn further on our SBIR opportunities in his comments. Switching now to the APU development, we remain on track to meet our milestones on Gemini 2, including the benchmarking, which will be completed by the end of this year. We are excited that we have software fixes for the bugs in the first game of Gemini 2. This means we are much further ahead on the Gemini 2 software development and the library building at this stage than we were with Gemini 1. Lastly, on the APU roadmap, we are in the early stage of hardware development of a potential APU for use with LLM, which we named Plato. On our third quarter earning conference call, I will provide more detailed plans for this product and its potential applications. However, I want to ensure stakeholders, now that we have a roadmap beyond Gemini 1 and 2 for the APU, that we can execute given the company's resources. In previous calls, I discussed our external opportunities, extra opportunities, Two companies are currently using the APU for SAR applications, and both projects are progressing well. This year will give an update on the current status of this engagement. For the fiscal second quarter, we reported revenue of $4.6 million, in line with our guidance. Our gross margin was under pressure this quarter due to the mix of products and non-recurring surveillance costs related to workforce reduction in manufacturing. During the quarter, we introduced strategic cost-cutting measures to extend our financial runway and capitalize on our immediate and long-term opportunities. This action, including workforce reduction across all departments and enhanced operational efficiency, our project to generate annualized savings of about $3.5 million. We take this restructuring initiative and improve as an revenue outlook to reduce our cash burn significantly. Now, I will hand the call over to Didier, who will discuss our business performance further. Please go ahead, Didier. Didier Le Serre | Vice President of Sales: Thank you, Lillian. Let me start with the new SRAM opportunity that Leline mentioned earlier. Our customer system is used to manufacture our leading AI chip developers' top-selling chip and their newly released chip. Volumes, shipments of our 144 megabit SRAM to this customer began at the start of calendar 2024, coinciding with an increase in the forecast for its product used in AI chip that is coming online. Demand for their product has been rising along the rapidly growing need for the top-selling and newly launched chips for the leading AI chip maker, fueled by the growth in high-performance computing hardware. Looking ahead, we anticipate even greater demand due to indications for a newly released chip requiring a higher capacity of this manufacturing product for this next-generation chip production needs. Interest in this new AI chip has been exceptional as leading tech companies compete to deliver the best hardware for their large language model platforms. We expect our collaboration with this customer to drive substantial demand for our SRAM chips. This customer is now positioned to become our number one customer in the near future. In addition, we have two other large existing customers that have worked through excessive inventory and we anticipate this will increase SRAM orders in the future quarters. Let me switch to recap our SBIR work. We are still working through the milestones of the two SBIRs that we previously were granted. As a reminder, these were the 1.25 million and the 1.1 million, respectively. For the 1.1 million grant, we aim to deliver a YOLO3 and YOLO5 model within four months that can be used for any real-time object detection application. If you are unfamiliar with the acronym YOLO, it stands for You Only Look Once. YOLO models are real-time object detection algorithms that immediately determine where objects are by drawing boxes around them and what those objects are by identifying their types in any image. We are still in contract negotiations on the SBIR. We were awarded last quarter by a new large division of the DOD for an edge board application. We hope to finalize that contract within the next month and begin working on the project deliverables before calendar year end. Before I move on to customer and product breakdown, I want to expand on the SAR opportunities that Leline mentioned. GSI is engaged with two customers on SAR Edge applications that have completed evaluations with Gemini One. Recently, they both began evaluating Gemini Two. Our ongoing SAR engagement with an Asian defense research and development organization is transitioning from evaluating Gemini One to a Gemini Two L. which is a low power version of our Gemini 2. This is intended for an in-flight application using SAR image generation. The project using Gemini 2L has specific applications that better align with the lower power profile needed for this flight application. Another customer, a US aerospace company specializing in SAR technology, is investigating the possibility of using Gemini 2 on a satellite for SAR applications. The company recently requested new benchmarks for a more complex application, which we are in the process of executing now. As Leneen mentioned, we are using the lessons learned from that experience to advance our timeline for Gemini 2. In both cases, we successfully used Gemini 1 to demonstrate the sar capabilities which paved the way for gemini 2 to be evaluated for use as a real-time edge application i'm sorry edge device for these applications we are also leveraging sbir opportunities including ones that we have won to help fund the further development of gemini 2 and plato let me switch now to customer and product breakdowns for the second quarter in the second Quarter of fiscal 2025, sales to Nokia were $812,000 or 17.8% of net revenues compared to $1.2 million or 20.3% of net revenues in the same period a year ago and $998,000 or 21.4% of net revenues in the prior quarter. Military defense sales were 40.2% of second quarter shipments compared to 34.8% of shipments in the comparable period a year ago. and 31.9% of shipments in the prior quarter. Sigma Quad sales were 38.6% of second quarter shipments, compared to 55.8 in the second quarter of fiscal 24, and 36.3% in the prior quarter. I'd now like to hand the call over to Doug. Douglas Shirley | Chief Financial Officer: Go ahead, please. We reported net revenues of $4.6 million for the second quarter of fiscal 2025. compared to $5.7 million for the second quarter of fiscal 2024 and $4.7 million for the first quarter of fiscal 2025. Gross margin was 38.6% in the second quarter of fiscal 2025 compared to 54.7% in the second quarter of fiscal 2024 and 46.3% in the preceding first quarter of fiscal 2025. The decrease in gross margin in the second quarter of 2025 was primarily due to a shift to product mix and non-recurring severance costs associated with manufacturing workforce reductions. Total operating expenses in the second quarter of fiscal 2025 were $7.3 million compared to $7.2 million in the second quarter of fiscal 2024 and $1.1 million in the prior quarter. Prior quarter operating expenses included a gain of $5.7 million related to the sale and leaseback of the company's headquarters. Research and development expenses were $4.8 million compared to $4.7 million in the prior year period and $4.2 million in the prior quarter. Selling general and administrative expenses were $2.6 million in the quarter ended September 30th, 2024, compared to $2.5 million in the prior year quarter and $2.6 million in the previous quarter. Second quarter fiscal 2025 operating loss was $5.6 million compared to an operating loss of $4.1 million in the prior year period and operating income of $1.1 million in the prior quarter. Second quarter fiscal 2025 net income included interest and other income of $149,000 and a tax provision of $23,000 compared to $71,000 in interest and other income and a tax provision of $33,000 for the same period a year ago. In the preceding first quarter, net loss included interest and under income of $55,000 and a tax provision of $57,000. Net loss in the second quarter fiscal 2025 was $5.4 million, or 21 cents per diluted share, compared to net loss of $4.1 million, or 16 cents per diluted share, for the second quarter fiscal 2024. And net income of 1.1 million, or 4 cents per diluted share, inclusive of a one-time gain of $5.7 million on the sale and leaseback transaction related to the sale of the company's headquarters for the first quarter of fiscal 2025. Total second quarter pre-tax stock-based compensation expense was $663,000 compared to $676,000 in the comparable quarter a year ago and $658,000 in the prior quarter. September 30th, 2024, The company had $18.4 million in cash and cash equivalents compared to $14.4 million on March 31st, 2024. Working capital was $21.1 million as of September 30th, 2024 versus $19.1 million on March 31st, 2024. Stockholders' equity as of September 30th, 2024 was $33.3 million compared to $36 million as of the fiscal year ended March 31st, 2024. On a prior earnings call this year, we announced that the company had initiated comprehensive strategic review and established a special committee of the board to evaluate specific strategic alternatives. We continue to work with Needham & Company as our strategic and financial advisor to assist in this process. Operator, at this point, we will open the call to Q&A. Operator | Conference Call Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd 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'd 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. Li-Lin Xu | Chairman, President, and Chief Executive Officer: One moment, please, while we poll for questions. My first question comes from Jeff Bernstein with Silverberg Bernstein. Operator | Conference Call Operator: Please proceed with your question. Jeff Bernstein | Analyst, Silverberg Bernstein: Hi, good afternoon. Question on the S-RAM opportunity. So are you saying that's for a semi-equipment, wasteful fabrication equipment customer or is it a semi-test equipment customer? Didier Le Serre | Vice President of Sales: Along those lines. Yeah, we don't want to give too much detail because right now we don't want to name our customer. I mean, it's been a customer we've had for, many years, but they've never been a 10% customer, so we haven't identified them specifically. You know, that will certainly change in the quarters coming up because they'll exceed that. Jeff Bernstein | Analyst, Silverberg Bernstein: Gotcha. Gotcha. Okay. But it's associated with manufacturing. Okay. And then just on the – various APUs now. So there was mention of something called Cradle. Is that like a low-power version of Gemini 2, or what's Cradle, and what's the L that you referred to, the low-power Gemini 2? Didier Le Serre | Vice President of Sales: Sure. So we have Gemini, as you know. Gemini 2L is a derivative of Gemini 2. It's not a new design. It's just a way that we can configure the die to make it work with one core or two core. If you recall, our Gemini 2, in fact Gemini 1 for that matter, have four cores. And so it's a way for us to limit what's working inside the chip. And so people can use kind of a a smaller variable of the device, which in turn gives them a very low power part. And so that's the Gemini 2L is just a derivative of our existing Gemini 2. PLATO, however, is a new design. And it's going after, you know, a different market. It's going after the LLM market specifically on the edge. And so it'll be very low power as well. You know, if you're familiar with the LLM market today, you know, some of the, folks going after it or going after it with very, very large GPUs that require water cooling, what have you. And so in this case, this is more for edge LLMs, and it would be a low-power solution. Jeff Bernstein | Analyst, Silverberg Bernstein: Gotcha. And that's for inference? Li-Lin Xu | Chairman, President, and Chief Executive Officer: Correct. Gotcha. Okay, that's great. Thanks. I'll let somebody else ask. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. There are no further questions. At this time, I'd like to turn the call back over to management for any closing comments. Li-Lin Xu | Chairman, President, and Chief Executive Officer: Thank you all for joining us. We look forward to speaking with you again when we report our third quarter physical 2025 results. Thank you. Operator | Conference Call Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090144-00'00'