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QuickLogic: Q2 Conundrum, Quick To Rise, Slow To Deliver
QuickLogicQuickLogic(US:QUIK) Seeking Alphaยท2024-08-30 15:00

Revenue Performance - QuickLogic Corporation reported a revenue increase of 41.29% year-over-year to $4.13 million for Q2 2024, although it fell short of expectations by $373,000 [3][9] - The company experienced a significant revenue boost from new products, contributing $3.1 million, and mature products saw a 56% growth, reaching $1.1 million [9] - Despite the revenue growth, QuickLogic's earnings per share (EPS) of $0.05 missed expectations by $0.06, raising concerns about future profitability [3][9] Market Position and Growth Metrics - QuickLogic's stock has declined from $15.82 in 2016 to $8.16 as of August 28, 2024, with an annual return of -7.36%, contrasting with the S&P 500's 12.34% return [6] - The company has a sales funnel valued at $189 million, with over half linked to storefront deals, indicating potential future revenue growth [9] - QuickLogic's revenue growth stands out with a year-over-year increase of 66.32%, significantly higher than the sector's median of 3.26% [9] Strategic Initiatives - QuickLogic secured a Strategic Radiation Hardened FPGA government deal worth $5.26 million, with a total contract value that could reach $72 million [10] - The company is set to be the first eFPGA firm to offer Hard eFPGA IP on Intel's new 18A node, expected for mass production late next year [10] - QuickLogic anticipates strong revenue growth in 2025 and 2026, particularly from the Strategic Rad Hard program and chip developments [10] Financial Health and Valuation - QuickLogic's high blended P/E ratio of 32.34x raises concerns, especially given its earnings growth rate of only 7.89% [11] - The fair value ratio of 15.00x compared to a normal P/E of 81.53x suggests potential overvaluation of the stock [12] - The company's market cap stands at $118.04 million, placing it in the small-cap category, which typically carries higher volatility [12] Recent Challenges - QuickLogic cut its full-year growth forecast to 15% due to scheduling delays, and Q2 2024 revenue dropped 31% from Q1 2024 [13] - The gross margin fell to 53.1% in Q2 from 70.3% in Q1, attributed to lower IP revenue and increased R&D costs [13] - The company's cash balance decreased to $23.3 million at the end of Q2, down from $27.4 million at the end of Q1, indicating financial strain [13]