Product Development and Sales - The company anticipates the introduction of its 5G products in Q2 2025, with expected average sales prices for 5G chipsets being approximately four times that of 4G chipsets, leading to a significant increase in revenue and gross margins [148]. - The current product portfolio includes RF and modem chipsets differentiated by speed and functionality, including 4G LTE, 4.5G LTE Advanced, and 4.75G LTE Advanced-Pro chipsets [147]. - The company expects continued demand for its existing 4G LTE product lineup due to the coexistence of 4G and 5G products in the market [148]. - The commercial deployment of 4G and 5G wireless communications equipment is critical for the company’s revenue, with potential delays in deployment negatively impacting sales [151]. Financial Performance - Net revenues decreased by $2.8 million, or 85%, from $3.3 million for the three months ended March 31, 2024 to $0.5 million for the three months ended March 31, 2025 [178]. - Product sales decreased by $2.3 million, or 96%, from $2.4 million for the three months ended March 31, 2024 to $0.1 million for the three months ended March 31, 2025 [179]. - Service revenues decreased by $0.5 million, or 54%, from $0.9 million for the three months ended March 31, 2024 to $0.4 million for the three months ended March 31, 2025 [180]. - Gross profit decreased to $0.088 million for the three months ended March 31, 2025 from $1.953 million for the three months ended March 31, 2024, representing a decrease of 95% [178]. - Net loss for the three months ended March 31, 2025 was $7.0 million, compared to a net income of $0.757 million for the same period in 2024, representing a change of 1020% [195]. Expenses and Operating Costs - Research and development expenses decreased by $1.4 million, or 26%, from $5.5 million for the three months ended March 31, 2024 to $4.1 million for the three months ended March 31, 2025 [185]. - Sales and marketing expenses increased by $0.1 million, or 12%, from $1.0 million for the three months ended March 31, 2024 to $1.1 million for the three months ended March 31, 2025 [186]. - General and administrative expenses decreased by $0.2 million, or 8%, from $2.8 million for the three months ended March 31, 2024 to $2.6 million for the three months ended March 31, 2025 [187]. - The company anticipates an increase in general and administrative expenses due to growth and the costs associated with operating as a public company [170]. Cash Flow and Financing - As of March 31, 2025, the company had cash and cash equivalents of $1.0 million and outstanding convertible promissory notes and borrowings totaling $50.2 million [201]. - Cash used in operating activities for Q1 2025 was $7.951 million, a decrease from $14.413 million in Q1 2024 [206]. - Net cash provided by financing activities in Q1 2025 was $7.697 million, compared to $30.274 million in Q1 2024 [206]. - Cash and cash equivalents decreased by $396,000 in Q1 2025, contrasting with an increase of $15.864 million in Q1 2024 [206]. - The company has filed a universal shelf registration statement allowing it to raise up to $200.0 million from the issuance of securities, including $75.0 million for the ATM Offering [204]. - The company plans to finance activities including mass production costs for 5G products and hiring additional personnel in engineering, sales, and marketing [208]. Industry and Market Risks - The semiconductor industry has historically exhibited cyclicality, with downturns potentially leading to declines in demand, production overcapacity, and price erosion [156]. - The company relies on third-party foundries for manufacturing, with no formal agreements guaranteeing minimum manufacturing capacity, which poses risks during periods of high demand [158]. - The provision for credit losses increased to $1.5 million as of March 31, 2025, up from $1.2 million as of December 31, 2024 [222]. - The company has material commitments and contractual obligations related to leases and research and development agreements [213]. - The company has historically raised capital through equity and equity-linked instruments, but future success in this area is uncertain [204].
GCT Semiconductor Holding, Inc.(GCTS) - 2025 Q1 - Quarterly Report