Core Viewpoint - GSI Technology, Inc. reported a slight increase in net revenues for the third fiscal quarter of 2025, driven by a rebound in customer orders and strengthening core SRAM sales, particularly from a key customer in the AI chip manufacturing sector [4][5]. Financial Performance - Net revenues for the third quarter of fiscal 2025 were $5.4 million, a 2% increase year-over-year and a 19% increase sequentially [4][5]. - Gross margin was 54.0%, down from 55.9% in the same quarter last year but up from 38.6% in the previous quarter [5]. - Operating expenses totaled $7.0 million, a decrease from $9.7 million in the prior-year period [7]. - The operating loss for the third quarter was $(4.1) million, an improvement from $(6.7) million in the same quarter last year [8]. - Net loss was $(4.0) million, or $(0.16) per diluted share, compared to a net loss of $(6.6) million, or $(0.26) per diluted share, for the same period last year [9]. Sales and Customer Insights - Sales to Nokia accounted for $239,000, or 4.4% of net revenues, a significant decrease from $807,000, or 15.2% of net revenues, in the same period a year ago [6]. - Military/defense sales represented 30.0% of third-quarter shipments, up from 28.2% year-over-year [6]. Research and Development - The development of APU technology is progressing, with the Gemini-II chip on track for a February tape-out and expected availability in May [4]. - The latest version of Gemini-II aims to enhance AI capabilities by integrating advanced neural networks with radar imaging technology [4]. Outlook - The company anticipates fourth-quarter net revenues to be in the range of $5.4 million to $6.2 million, with a gross margin of approximately 55% to 57% [4]. Balance Sheet Highlights - As of December 31, 2024, the company had $15.1 million in cash and cash equivalents, an increase from $14.4 million at the end of March 2024 [10]. - Stockholders' equity decreased to $29.9 million from $36.0 million at the end of the previous fiscal year [10][22].

Core Insights - GSI Technology has been selected by the U.S. Army for a potential contract worth up to $250,000 under the DoD Small Business Innovation Research (SBIR) program, aimed at developing advanced edge computing AI solutions using its Gemini-II technology [1][4]. Group 1: Project Objectives - The project will focus on integrating Gemini-II with AI models tailored for the Army's edge computing needs, involving a comprehensive assessment of operational challenges and establishing key performance metrics [2]. - The second objective is to identify and validate suitable AI algorithms for the Gemini-II platform, emphasizing low-latency and high-throughput applications relevant to military environments [3]. Group 2: Technology and Innovation - The Gemini-II platform is a second-generation APU technology that processes data directly in memory, significantly reducing power consumption and bottleneck transfer latency while enhancing overall processing capacity [4]. - The project aims to develop 1-bit Large Language Models (LLMs) for the U.S. Army, which promise high accuracy with low power consumption and minimal latency, with potential applications in various dual-use markets [5]. Group 3: Strategic Positioning - The SBIR contract highlights GSI Technology's commitment to advancing edge computing and AI technologies, positioning the company at the forefront of innovation in both defense and commercial computing sectors [6].

Core Viewpoint - GSI Technology, Inc. will announce its financial results for the fiscal third quarter of 2025 on January 30, 2025, and will provide an outlook for the fourth quarter during a conference call [1]. Group 1: Financial Results Announcement - The financial results for the fiscal third quarter 2025, which ended on December 31, 2024, will be released after market close on January 30, 2025 [1]. - A conference call to discuss the third quarter results and the fourth quarter outlook will take place at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on the same day [1]. Group 2: Participation Details - Participants can join the call by dialing 1-877-407-3982 in the U.S. or 1-201-493-6780 internationally, approximately 10 minutes before the start time, using Conference ID 13751185 [2]. - The call will also be available for live streaming on the company's investor relations website [2]. Group 3: Replay Information - A replay of the conference call will be accessible from January 30, 2025, at 7:30 p.m. Eastern Time until February 6, 2025, at 11:59 p.m. Eastern Time [3]. - The replay can be accessed by dialing 1-844-512-2921 for the U.S. or 1-412-317-6671 internationally, entering pin number 13751185 [3]. Group 4: Company Overview - GSI Technology is a leader in AI and high-performance parallel computing, known for its Gemini® Associative Processing Unit (APU) [4]. - The company provides high-performance memory solutions for various markets, including networking, telecommunications, and military [4]. - GSI's innovations, Gemini-I® and Gemini-II®, are designed for scalable, low-power, high-capacity computing, enhancing edge computing capabilities [4].

Financial Performance - Net revenues decreased by 20.3% from $5.7 million in Q3 2023 to $4.6 million in Q3 2024, and by 18.4% from $11.3 million in the first half of 2023 to $9.2 million in the first half of 2024[106]. - Gross profit decreased by 43.7% from $3.1 million in Q3 2023 to $1.8 million in Q3 2024, with gross margin dropping from 54.7% to 38.6%[112]. - Net loss was $5.5 million in Q3 2024 compared to $4.1 million in Q3 2023, and $4.4 million in the first half of 2024 compared to $9.2 million in the first half of 2023[120]. - The average selling price of units shipped decreased by 12.0% in Q3 2024 compared to Q3 2023, with the number of units shipped decreasing by 10.5%[106]. - Direct and indirect sales to Nokia decreased from $1.2 million in Q3 2023 to $812,000 in Q3 2024, and from $3.0 million in the first half of 2023 to $1.8 million in the first half of 2024[110]. Cash and Liquidity - Cash and cash equivalents of $18.4 million as of September 30, 2024, with no debt[90]. - Cash and cash equivalents increased to $18.4 million as of September 30, 2024, up from $14.4 million as of March 31, 2024[121]. - Net cash used in operating activities was $7.7 million for the first half of 2024, compared to $6.3 million for the first half of 2023[122]. - Net cash provided by investing activities was $11.3 million in the first half of 2024, primarily from the sale and leaseback transaction[125]. - Net cash provided by financing activities for the six months ended September 30, 2024, was $373,000, compared to $1.5 million for the same period in 2023[126]. - The company believes its existing cash balances and future cash flow will be sufficient for working capital and capital expenditures for at least the next 12 months[127]. - The company sold 133,000 shares at an average price of $4.20 for proceeds of $542,000 during the quarter ended September 30, 2023[127]. Operational Changes - The company initiated measures to reduce operating expenses by approximately $3.5 million annually, resulting in a 16% decrease in the global workforce[91]. - The company has experienced a decline in revenues due to changes in customer buying patterns and communication limitations related to COVID-19, with a decrease in revenues expected in the second half of fiscal 2023 and into fiscal 2025[87]. - Research and development expenses are expected to remain substantial as the company invests in new in-place associative computing products, potentially leading to operating losses in some periods[102]. - Research and development expenses increased by 2.1% from $4.7 million in Q3 2023 to $4.8 million in Q3 2024, primarily due to outside consulting expenses for the next generation APU product[113]. - Selling, general and administrative expenses increased by 1.2% from $2.5 million in Q3 2023 to $2.6 million in Q3 2024, while decreasing by 6.7% from $5.5 million in the first half of 2023 to $5.2 million in the first half of 2024[116]. Market Conditions - The company expects continued inflationary pressures and high interest rates to negatively impact general economic activity and demand in its end markets over the next 12 months[90]. - The company has been impacted by increased costs due to inflation and supply chain constraints, particularly in wafer fabrication and outsourced manufacturing[98]. - The company anticipates fluctuations in quarterly net revenues due to the cyclical nature of the semiconductor industry and reliance on obtaining and shipping orders within the same quarter[94]. Goodwill and Obligations - The company completed its annual goodwill impairment test with no impairment noted, maintaining a goodwill balance of $8.0 million as of September 30, 2024[104]. - As of September 30, 2024, the company had $14.9 million in purchase obligations, with $1.6 million due in the next twelve months[128]. - The accrual for potential contingent consideration related to the acquisition of MikaMonu was $51,000 as of September 30, 2024, payable through December 31, 2025[129]. Financial Instruments and Risk Management - The company does not currently enter into forward exchange contracts to hedge foreign currency exposure, which is minimal[134]. - A hypothetical 100 basis point change in interest rates is not expected to materially affect the fair value of the company's interest-sensitive financial instruments[135]. - The company may require additional capital for potential acquisitions of businesses, products, or technologies in the future[127].

Financial Data and Key Metrics Changes - The company reported net revenues of $4.6 million for Q2 fiscal 2025, down from $5.7 million in Q2 fiscal 2024 and $4.7 million in Q1 fiscal 2025 [17] - Gross margin decreased to 38.6% in Q2 fiscal 2025 from 54.7% in Q2 fiscal 2024 and 46.3% in Q1 fiscal 2025, primarily due to a shift in product mix and non-recurring severance costs [17] - Operating loss for Q2 fiscal 2025 was $5.6 million, compared to an operating loss of $4.1 million in the prior year and operating income of $1.1 million in the prior quarter [19] - Net loss was $5.4 million or $0.21 per diluted share, compared to a net loss of $4.1 million or $0.60 per diluted share in Q2 fiscal 2024 and net income of $1.1 million or $0.04 per diluted share in Q1 fiscal 2025 [20] - Cash and cash equivalents increased to $18.4 million as of September 30, 2024, from $14.4 million at March 31, 2024 [21] Business Line Data and Key Metrics Changes - The SRAM business is experiencing a turnaround, with existing customers depleting channel inventories and a new SRAM design secured with significant growth potential [3] - Sales to Nokia were $812,000, representing 17.8% of net revenues, down from $1.2 million or 20.3% in the same period a year ago [13] - Military/defense sales accounted for 40.2% of shipments in Q2 fiscal 2025, up from 34.8% in the comparable period a year ago [13] Market Data and Key Metrics Changes - Demand for SRAM chips is expected to rise due to the growth in high-performance computing hardware and the introduction of a new AI chip by a leading tech company [9] - The company is engaged with two customers on SAR edge applications, transitioning from evaluating Gemini-I to Gemini-II [12] Company Strategy and Development Direction - The company is implementing strategic cost-cutting measures to extend its financial runway and capitalize on immediate and long-term opportunities, aiming for annualized savings of about $3.5 million [6] - The company is on track to meet milestones for the Gemini-II benchmarking projects and is excited about software fixes for the Gemini-II development [4] Management's Comments on Operating Environment and Future Outlook - Management anticipates a significant increase in SRAM orders in upcoming quarters as customers work through excessive inventory [10] - The company is optimistic about the collaboration with a new customer in the AI chip sector, which is expected to drive substantial demand for SRAM chips [10] Other Important Information - The company is working with Needham & Company as a strategic and financial advisor to evaluate specific strategic alternatives [21] Q&A Session Summary Question: Is the SRAM opportunity associated with semi equipment wafer fabrication or semi test equipment? - The company confirmed it is associated with manufacturing but did not disclose the specific customer details at this time [22][23] Question: What is the difference between Plato and Gemini-II L? - Plato is a new design targeting the LLM market specifically on the edge, while Gemini-II L is a derivative of Gemini-II configured for lower power usage [24]

Financial Performance - GSI Technology reported net revenues of $4.6 million for Q2 FY2025, down from $5.7 million in Q2 FY2024 and $4.7 million in Q1 FY2025[2] - Gross margin decreased to 38.6% in Q2 FY2025 from 54.7% in Q2 FY2024 and 46.3% in Q1 FY2025, primarily due to product mix and severance costs[2] - Operating loss for Q2 FY2025 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[5] - Net loss for Q2 FY2025 was $(5.5) million, or $(0.21) per diluted share, compared to a net loss of $(4.1) million, or $(0.16) per diluted share, in Q2 FY2024[5] - Total operating expenses in Q2 FY2025 were $7.3 million, compared to $7.2 million in Q2 FY2024 and $1.1 million in the prior quarter, which included a one-time gain of $5.7 million[4] Revenue Sources - Sales to Nokia accounted for $812,000, or 17.8% of net revenues in Q2 FY2025, down from $1.2 million, or 20.3% in the same period a year ago[3] - Military/defense sales represented 40.2% of second quarter shipments, up from 34.8% in the comparable period a year ago[3] Future Outlook - GSI Technology anticipates Q3 FY2025 net revenues in the range of $4.7 million to $5.5 million, with gross margin expected to be approximately 50% to 52%[1] - The company expects to achieve annual savings of $3.5 million from strategic cost-cutting measures implemented in Q2 FY2025[1] Cash Position - GSI Technology had $18.4 million in cash and cash equivalents as of September 30, 2024, compared to $14.4 million at March 31, 2024[6]

Core Viewpoint - GSI Technology, Inc. will announce its financial results for the fiscal second quarter 2025 on October 24, 2024, and will provide an outlook for the third quarter during a conference call [1]. Financial Results Announcement - The financial results for the fiscal second quarter 2025, which ended on September 30, 2024, will be released after market close on October 24, 2024 [1]. - A conference call to discuss the results and the outlook for the third quarter will take place at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) on the same day [1]. Participation Details - Participants can join the call by dialing 1-877-407-3982 in the U.S. or 1-201-493-6780 internationally, approximately 10 minutes before the start time, using Conference ID 13749240 [2]. - The call will also be streamed live on the internet [2]. Replay Information - A replay of the call will be available from October 24, 2024, at 7:30 p.m. Eastern Time until October 31, 2024, at 11:59 p.m. Eastern Time [3]. - The replay can be accessed by dialing 1-844-512-2921 in the U.S. or 1-412-317-6671 internationally, entering pin number 13749240 [3]. - A webcast of the call will be archived on the company's investor relations website [3]. Company Overview - GSI Technology is a leader in AI and high-performance parallel computing, known for its Gemini® Associative Processing Unit (APU) [4]. - The company provides high-performance memory solutions for various markets, including networking, telecommunications, and military [4]. - GSI's innovations, Gemini-I® and Gemini-II®, offer scalable, low-power, high-capacity computing solutions, enhancing edge computing capabilities [4].

Company Overview - GSI Technology, Inc. is a leading provider of semiconductor memory solutions, founded in 1995 [4] - The company has recently launched radiation-hardened memory products designed for extreme environments in space [4] - GSI Technology is known for its Gemini® Associative Processing Unit (APU), which offers significant performance advantages for various AI applications [4] Product Innovation - The Gemini APU architecture eliminates the I/O bottleneck between processors and memory arrays by enabling massive parallel searches directly in the memory array [4] - This novel architecture provides improved performance-over-power ratios compared to traditional CPU, GPU, and DRAM solutions [4] - The Gemini APU is particularly suitable for edge applications due to its scalable format, small footprint, and low power consumption, making it ideal for rapid and accurate responses [4] Upcoming Events - GSI Technology management is scheduled to participate in the 5th Annual Needham Semiconductor & SemiCap 1x1 Conference on August 21, 2024 [1] - Didier Lasserre, Vice President of Sales and Investor Relations, will host one-on-one meetings during the conference [1] - A webcast of GSI Technology's presentation will be available on the company's website under the Events and Presentations tab [3]

Financial Performance - Net revenues decreased by 16.4% from $5.6 million in Q2 2023 to $4.7 million in Q2 2024, attributed to cautious customer spending and supply chain constraints[92]. - Gross profit fell by 29.6% from $3.1 million in Q2 2023 to $2.2 million in Q2 2024, with gross margin decreasing from 54.9% to 46.3%[93]. - Net income improved from a loss of $5.1 million in Q2 2023 to a profit of $1.1 million in Q2 2024, driven by changes in revenues and operating expenses[98]. Cash and Liquidity - Company reported cash and cash equivalents of $21.8 million as of June 30, 2024, with no debt[78]. - Cash and cash equivalents increased to $21.8 million as of June 30, 2024, up from $14.4 million as of March 31, 2024[99]. - Net cash used in operating activities was $4.3 million in Q2 2024, compared to $3.7 million in Q2 2023, with primary sources being net income and decreases in inventories and accounts receivable[99]. - Net cash provided by investing activities was $11.3 million in Q2 2024, primarily from the sale and leaseback transaction[102]. - The company believes existing cash balances and expected cash flow will be sufficient for working capital and capital expenditures for at least the next 12 months[103]. Customer and Market Dynamics - Sales to networking and telecommunications OEMs accounted for 32% to 49% of net revenues over the last three fiscal years[79]. - Nokia was the largest customer, representing approximately 21% of net revenues in the three months ended June 30, 2024[84]. - Company expects continued fluctuations in sales to Nokia, which may significantly affect future operating results[84]. - The company anticipates that inflationary pressures and higher interest rates will negatively impact demand in end markets over the next 12 months[78]. Research and Development - Research and development expenses are expected to remain substantial as the company invests in new in-place associative computing products[87]. - Research and development expenses decreased by 19.0% from $5.2 million in Q2 2023 to $4.2 million in Q2 2024, primarily due to reduced payroll and consulting expenses[94]. Operating Expenses - Selling, general and administrative expenses decreased by 13.3% from $3.0 million in Q2 2023 to $2.6 million in Q2 2024, with notable reductions in accounting fees and payroll expenses[95]. Contracts and Awards - The company received a prototype agreement award from the Space Development Agency for $1.25 million to develop the APU2[75]. - A contract with AFWERX was awarded for $1.1 million to demonstrate high-data computation use cases leveraging the APU-2 architecture[76]. Pricing and Revenue Trends - The average selling prices of products are expected to increase in the coming quarters due to a shift towards higher price, higher density products[80]. - Company experienced a decrease in revenues in the second half of fiscal 2023 due to easing supply chain shortages and prior buffer stock purchases[74].

Financial Data and Key Metrics Changes - The company reported first quarter revenue of $4.7 million, down from $5.6 million in the same period last year and $5.2 million in the previous quarter, attributed to lower SigmaQuad sales and military contractor sales [30][47] - Gross margin decreased to 46.3% in the first quarter of fiscal 2025 from 54.9% a year ago and 51.6% in the previous quarter, primarily due to product mix and lower revenue affecting fixed costs [71] - Total operating expenses were $6.8 million, down from $8.2 million in the first quarter of fiscal 2024 [48] - The company achieved a net income of $1.1 million, reflecting a one-time gain of $5.7 million from a sale and leaseback transaction, compared to a net loss of $5.1 million a year ago [73] Business Line Data and Key Metrics Changes - Military/defense sales accounted for 31.9% of first quarter shipments, down from 33.8% a year ago and 35.5% in the previous quarter [46] - SigmaQuad sales represented 36.3% of first quarter shipments, a significant drop from 58.6% in the first quarter of fiscal 2024 [46] Market Data and Key Metrics Changes - Sales to Nokia were $998,000, representing 21.4% of net revenues, compared to $1.9 million or 33.5% in the same period last year [69] - The company is targeting the HAI processing market, which is projected to be a mid-$20 billion market in 2024, growing at mid-20% to mid-30% annually [20] Company Strategy and Development Direction - The company aims to launch the GXL platform for Fast Vector Search, which will be available as cloud-based or on-premises solutions, targeting the growing demand in AI and e-commerce [36][62] - The focus is on securing more SBIR contracts to reverse revenue decline and achieve financial stability, with a pipeline totaling $6 million [59][67] - The company is preparing to demonstrate significant improvements in processing capabilities with Gemini-II, aiming for validation by the December quarter [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ongoing discussions with Needham regarding strategic alternatives, indicating encouraging preliminary discussions [74] - The company is actively seeking strategic partnerships to scale resources and funding for future development [61] Other Important Information - The company has initiated a Phase II SBIR contract with the Air Force valued at $1.1 million, with over 25% completion [66] - The company has $21.8 million in cash and cash equivalents as of June 30, 2024, up from $14.4 million at the end of the previous quarter [50] Q&A Session Summary Question: Update on cost-benefit considerations regarding potential leasing or sale - Management is in discussions regarding Gemini-III with hyperscalers and HBM vendors, focusing on demonstrating GPU APU capabilities [78] Question: Validation of benchmarks for outside clients - Management is working on completing the necessary algorithms and libraries to run benchmarks and demonstrate capabilities to potential clients [86] Question: Market potential and gross margin expectations - Management indicated that achieving benchmarks is crucial for demonstrating market potential and attracting interest from hyperscalers [84]