SemiLEDs(LEDS) - 2026 Q1 - Quarterly Report

Revenue and Financial Performance - In the first quarter of fiscal 2026, the company reported revenue of $1.3 million from buy-sell purchase orders, with a cost of revenue of $1.2 million[112]. - Revenues increased by 104% from $1.3 million for the three months ended November 30, 2024, to $2.6 million for the same period in 2025, driven primarily by a $1.3 million increase in other revenues from buy-sell purchase orders of equipment[129]. - The cost of revenues surged by 155% from $1.0 million in Q4 2024 to $2.5 million in Q4 2025, attributed to the costs associated with buy-sell purchase orders of equipment[135]. - Gross profit margin decreased to 1% for the three months ended November 30, 2025, down from 21% in the same period of 2024, primarily due to lower margins on buy-sell purchase orders[136]. - The company incurred a net loss attributable to stockholders of $742 thousand for the three months ended November 30, 2025, compared to a net loss of $547 thousand for the same period in 2024[166]. Product Development and Strategy - The company has developed advanced capabilities in LED manufacturing, including optimizing epitaxial growth processes and employing copper alloy base technology to improve chip performance[114]. - The company is focusing on expanding its product offerings in high-margin areas, such as LED modules and UV LED products, to improve gross margins and operating results[116]. - The company is adjusting its product mix by emphasizing sales of LED components over LED chips to respond to market trends and improve profitability[116]. - The company plans to enhance its product innovation strategy by focusing on technologically advanced and lower-cost products, particularly in the LED components market[120]. Market and Operational Challenges - The average selling price of the company's products is expected to decline due to competitive pressures, impacting revenues and gross margins[116]. - The company faces risks related to its reliance on chip suppliers, which could affect delivery schedules, quality assurance, and production costs[116]. - Inventory write-downs were recorded at $152 thousand for Q4 2025, compared to $96 thousand for Q4 2024, indicating increased challenges in inventory management[125]. Financial Position and Cash Flow - Cash and cash equivalents rose to $2.9 million as of November 30, 2025, up from $1.2 million as of November 30, 2024, indicating improved liquidity[120]. - Net cash provided by operating activities for the three months ended November 30, 2025, was $361 thousand, compared to net cash used in operating activities of $158 thousand for the same period in 2024[170]. - The company expects cash requirements to service debt and contractual obligations in fiscal 2026 to be approximately $1.9 million, which is anticipated to be funded through the issuance of additional equity[167]. - Net cash used in financing activities for the three months ended November 30, 2025, was $116 thousand, a decrease from $244 thousand for the same period in 2024[172]. Customer and Market Diversification - Sales to the three largest customers accounted for 69% of total revenues in Q4 2025, down from 78% in Q4 2024, highlighting a diversification in the customer base[120]. - The company is exploring opportunities in the China and India markets as part of its new strategy to drive growth[106]. Cost Management and Expenditures - The company is committed to reducing production costs to offset lower average selling prices, although current cost savings have limited impact on gross profit due to underutilization of manufacturing capacity[117]. - Selling, general and administrative expenses increased from $696 thousand for the three months ended November 30, 2024, to $703 thousand for the three months ended November 30, 2025, primarily due to a $28 thousand increase in shipping expense and a $22 thousand increase in cleaning expense[139]. - Capital expenditures for the three months ended November 30, 2025, were $30 thousand, a decrease from $118 thousand in the same period of 2024[173]. - The company plans to continue investing in capital expenditures to expand business operations and production capacity based on market conditions and customer demand[173]. Compliance and Risk Management - The company is focused on maintaining compliance with Nasdaq listing requirements to avoid potential delisting risks[116]. - Management is focused on controlling capital costs and maintaining financial flexibility, which may lead to a decrease in activity levels and capital expenditures as appropriate[173].