GSI Technology(US:GSIT)2022-10-30 03:15Financial Data and Key Metrics Changes - Revenue for Q2 2023 increased by nearly 15% year-over-year to $9.0 million, aligning with the midpoint of guidance [3] - Gross margin rose by 900 basis points year-over-year to 62.6%, attributed to a favorable product mix [4][23] - Net loss narrowed to $3.2 million, compared to a net loss of $4.6 million in Q2 2022 [22][24] - Cash balance as of September 30, 2022, was $38.9 million, down from $44 million in March 2022 [26][27] Business Line Data and Key Metrics Changes - Sales to Nokia were $1.2 million, representing 13.6% of net revenues, down from 23.8% a year ago [19] - Military defense sales accounted for 22.4% of shipments, a decrease from 27.4% year-over-year [19] - SigmaQuad sales increased to 58.1% of shipments, up from 52.4% in the same period last year [19] Market Data and Key Metrics Changes - The company is focusing on two near-term markets: Synthetic Aperture Radar (SAR) and fast vector/neural search optimized for big data applications [5][10] - The SAR market is seen as attractive, with existing relationships with prospective targets [9] - The fast vector search product is currently being explored by about 12 users, primarily data scientists [10] Company Strategy and Development Direction - The company is prioritizing the development of SAR image processing acceleration systems and fast vector search products [5][10] - A successful proof of concept (POC) for SAR with Elta, a subsidiary of Israeli Aerospace Industries, has been completed, leading to potential future opportunities [6][18] - The company is also working on a compiler stack for APU applications, with a beta release expected by the end of the year [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in fulfilling existing orders and meeting demand for SRAM customers [20] - The company anticipates net revenues in the range of $6.3 million to $7.3 million for the upcoming third quarter, with a gross margin of approximately 53% to 55% [27] - Management acknowledged the challenges of transitioning from design to revenue generation for new products, emphasizing the need for time to establish market presence [60] Other Important Information - The company has no debt and reported stockholders' equity of $58.7 million as of September 30, 2022 [27] - Total operating expenses for Q2 2023 were $8.8 million, slightly up from $8.7 million in the prior year [23] Q&A Session Summary Question: Concerns about high R&D spending - Management is reviewing R&D costs and will provide updates in the next quarter [31][33] Question: Breakeven timeline - Management estimates breakeven could occur in a couple of years, depending on Rad-Hard and APU revenues [34] Question: Elta deal and revenue timeline - Initial revenue from Elta is expected in the first half of 2023, with ongoing outreach to other SAR clients [38][41] Question: SAR market potential - Management is optimistic about addressing a significant portion of the SAR market but will have more data in the next call [44] Question: Gemini-II performance improvements - Gemini-II is expected to drastically improve performance and reduce costs compared to Gemini-I [45] Question: Cash balance and share dilution - Management does not anticipate issuing more shares at this time [78]