GSI Technology(GSIT) - 2024 Q4 - Annual Results

Financial Highlights GSI Technology reported a decline in net revenues and gross margin for both the fourth quarter and the full fiscal year 2024 compared to the prior year, consequently widening the company's net loss for both periods, reflecting challenges in product mix and the impact of lower revenue on fixed costs Fourth Quarter Fiscal Year 2024 Results In Q4 FY2024, net revenues were $5.2 million, a slight decrease from $5.4 million in Q4 FY2023, with net loss widening to $4.3 million from $4.0 million year-over-year, and gross margin contracting to 51.6% from 55.9% due to product mix and lower revenue Q4 FY2024 Key Financial Metrics | Metric | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Net Revenues | $5.2M | $5.3M | $5.4M | | Gross Margin | 51.6% | 55.9% | 55.9% | | Operating Loss | $(4.5)M | $(6.7)M | $(3.9)M | | Net Loss | $(4.3)M | $(6.6)M | $(4.0)M | | Net Loss per Share | $(0.17) | $(0.26) | $(0.16) | - The decrease in gross margin was primarily attributed to product mix and the effect of lower revenue on the fixed costs within the cost of revenues[7] Q4 2024 Sales Mix | Category | Q4 2024 (% of Net Revenues) | Q4 2023 (% of Net Revenues) | Q3 2024 (% of Net Revenues) | | :--- | :--- | :--- | :--- | | Sales to Nokia | 13.5% ($0.7M) | 21.8% ($1.2M) | 15.2% ($0.8M) | | Military/Defense Sales | 35.5% | 44.2% | 28.2% | | SigmaQuad Sales | 42.4% | 46.3% | 46.9% | Fiscal Year 2024 Results For the full fiscal year 2024, net revenues decreased to $21.8 million from $29.7 million in FY2023, with net loss increasing significantly to $20.1 million from $16.0 million, and gross margin declining to 54.3% from 59.6% Fiscal Year 2024 Key Financial Metrics | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Revenues | $21.8M | $29.7M | | Gross Margin | 54.3% | 59.6% | | Operating Loss | $(20.4)M | $(15.8)M | | Net Loss | $(20.1)M | $(16.0)M | | Net Loss per Share | $(0.80) | $(0.65) | - Total operating expenses decreased slightly to $32.3 million in FY2024 from $33.5 million in FY2023, driven by a reduction in R&D expenses from $23.6 million to $21.7 million[5] Management Commentary and Outlook Management highlighted significant operational milestones, including the launch of new Gemini-I APU integrated servers and progress on the Gemini-II chip, while selling its Sunnyvale property to strengthen its financial position, with Q1 FY2025 revenues projected between $4.6 million and $5.2 million - Key achievements include: - Launched two high-capacity, low-power 1U and 2U servers integrated with the Gemini-I APU for SAR and Fast Vector Search applications - Made notable progress in testing and debugging the Gemini-II chip, aiming for a second spin in Q3 FY2025 and subsequent customer sampling[2] - The company entered an agreement to sell its Sunnyvale property for $11.9 million in cash to fortify its financial standing and extend its operational runway[2] Q1 Fiscal 2025 Outlook | Metric | Expected Range | | :--- | :--- | | Net Revenues | $4.6M - $5.2M | | Gross Margin | 52% - 54% | Strategic and Operational Developments The company initiated a broad strategic review, overseen by a special committee, to maximize stockholder value, exploring options like financing, asset sales, or a company sale, prompted by the board's belief that the market has not recognized the progress of its APU technology, into which it has invested approximately $150 million over eight years - The company has initiated a broad strategic review to maximize stockholder value, administered by a special committee of the board[3] - A wide range of options are being considered, including equity or debt financing, divestiture of assets, technology licensing, or other strategic arrangements, including the sale of the company[3] - The company has invested approximately $150 million of internally generated capital over the last eight years to develop its novel associated processor (APU) architecture[3] - Needham & Company, LLC has been hired as a strategic and financial advisor for this process, with no timetable set for the completion of the review[3] Financial Statements This section provides the detailed, unaudited condensed consolidated financial statements for the periods ended March 31, 2024, including Statements of Operations detailing revenue and expenses leading to net loss, and Balance Sheets showing significant year-over-year decreases in cash, total assets, and stockholders' equity Condensed Consolidated Statements of Operations The income statement details revenues of $21.8 million for fiscal year 2024, down from $29.7 million in the prior year, with total operating expenses of $32.3 million resulting in an operating loss of $20.4 million and a net loss of $20.1 million for the fiscal year, also providing a breakdown of stock-based compensation Detailed Statement of Operations (FY 2024 vs FY 2023, in thousands) | Line Item | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net revenues | $21,765 | $29,691 | | Gross profit | $11,823 | $17,681 | | Research & development | $21,689 | $23,550 | | Selling, general and administrative | $10,565 | $9,938 | | Total operating expenses | $32,254 | $33,488 | | Operating loss | $(20,431) | $(15,807) | | Net loss | $(20,087) | $(15,977) | Total Stock-Based Compensation (in thousands) | Period | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Total Expense | $2,838 | $2,469 | Condensed Consolidated Balance Sheets As of March 31, 2024, the company's balance sheet showed cash and cash equivalents of $14.4 million, a sharp decline from $27.2 million a year prior, with total assets decreasing to $42.5 million from $59.9 million, and stockholders' equity falling to $36.0 million from $51.4 million over the same period Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $14,429 | $27,212 | | Short-term investments | $0 | $3,363 | | Total Assets | $42,464 | $59,876 | | Total Liabilities | $6,494 | $8,504 | | Stockholders' Equity | $35,970 | $51,372 | - Working capital decreased to $19.1 million as of March 31, 2024, from $34.7 million at March 31, 2023[13]