GSI Technology(GSIT) - 2025 Q1 - Quarterly Report

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].