GSI Technology (GSIT) Q1 2026 Earnings Transcript

Core Insights - GSI Technology reported significant revenue growth in Q1 of fiscal 2026, driven by increased demand for SRAM in AI applications, achieving $6.3 million in revenue, a 7% sequential increase and a 35% year-over-year increase [10][18] - The company achieved a gross margin of 58.1%, up 200 basis points sequentially and over 1,100 basis points year-over-year, attributed to a favorable product mix and operating leverage [3][32] - Operating expenses decreased by 15% year-over-year to $5.8 million, excluding a prior-year one-time gain [3][33] Financial Performance - Operating loss narrowed to $2.2 million in Q1 2026 from $4.7 million in Q1 2025, while net loss was $2.1 million or $0.08 per diluted share, compared to net income of $1.1 million in the same period last year [4][34] - Cash and cash equivalents stood at $22.7 million as of June 30, 2025, bolstered by $11 million raised under the ATM program [5][35] - Working capital increased to $25.7 million from $16.4 million as of March 31, 2025, and stockholders' equity rose to $37.4 million from $28.2 million [5][35] Customer and Product Insights - SRAM sales to major customers included Cadence Design Systems at $1.5 million (23.9% of revenue), KYEC at $267,000 (4.3% of revenue), and Nokia at $536,000 (8.5% of revenue) [6][29] - Defense and military sales accounted for 19.1% of shipments, down from 31.9% year-over-year, while SigmaQuad product shipments represented 62.5% of shipments, up from 36.3% in the prior year [7][30] Strategic Developments - The company completed the second spin evaluation of the Gemini-II chip, which is now production-ready, and delivered a LiDAR tool to a defense contractor, marking a significant milestone [8][19] - Management is evaluating funding options to expand software and application teams supporting Gemini-II and is actively engaging with Needham and Company for strategic alternatives [9][13] - Guidance for Q2 of fiscal 2026 projects net revenues between $5.9 million and $6.7 million, with gross margin expected in the 56%-58% range [9][37] Supply Chain and Market Outlook - Extended lead times for back-end assembly in Taiwan are causing temporary delays in SRAM order fulfillment, but stable SRAM revenue is anticipated for the remainder of fiscal 2026 as customers adjust [8][12] - The company is developing dynamic low-precision software libraries and AI compiler enhancements to support Gemini-II's position in edge and defense AI markets [13][27]