GSI Technology(US:GSIT)2020-01-31 02:38Financial Data and Key Metrics Changes - For Q3 fiscal 2020, the company reported a net loss of $4.6 million or $0.20 per diluted share, compared to a net income of $2.3 million or $0.10 per diluted share in Q3 fiscal 2019 and a net loss of $1.8 million or $0.08 per diluted share in Q2 fiscal 2020 [16] - Net revenues for Q3 fiscal 2020 were $10 million, down from $14.7 million in the same quarter last year and $11.7 million in the previous quarter [16] - Gross margin decreased to 60.2% from 68.3% in the prior year period and 55.9% in the prior quarter, primarily due to the mix of products sold [16][18] Business Line Data and Key Metrics Changes - Sales to Nokia were $2.6 million or 26.3% of revenue, down from $6.6 million or 45.2% of revenue a year ago and $5.3 million or 45.2% in the prior quarter [13] - Military and defense sales accounted for 18.9% of third-quarter shipments, up from 16.7% a year ago but down from 23.4% in the prior quarter [14] - SigmaQuad remained the best-performing product category, representing 62% of third-quarter shipments, down from 69.7% last year and up from 63.5% in the preceding quarter [14] Market Data and Key Metrics Changes - The total addressable market (TAM) for radiation-hardened products is estimated at $15 million to $20 million, with expectations for some sales in calendar 2020 [12][25] - The company anticipates that the TAM could grow with the introduction of the Gemini-1 product into the aerospace portfolio [25] Company Strategy and Development Direction - The company is focused on the development of the Gemini-1 chip, which is expected to be a game-changer in AI with its in-memory processing technology [10] - The strategy includes targeting applications such as signal and object identification, facial recognition, and drug discovery [8] - The company aims to complete the qualification for Gemini-1 in the second half of 2020 and plans to engage with e-commerce customers thereafter [5][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the design wins for Gemini-1 in 2020, despite current challenges in sales [8] - The company expects gross margins to return to the low 60% range in future quarters, contingent on product mix [24] - Management noted that the path to profitability hinges on successful shipments of RadHard and rad-tolerant products, which have high gross margins [28] Other Important Information - Total operating expenses for Q3 fiscal 2020 were $10.8 million, up from $7.8 million in the same quarter last year [17] - The company had $68.3 million in cash and short-term investments at the end of Q3 fiscal 2020, compared to $61.8 million a year ago [20] Q&A Session Summary Question: What are the gross margin expectations for the following quarters? - Management indicated that gross margins are impacted by product mix, with expectations to return to the low 60% range in future quarters [23][24] Question: What is the expected revenue from the RadHard market in 2020? - Management stated it is difficult to predict exact revenue but anticipates some sales in calendar 2020 [25] Question: What is the path to profitability? - Management noted that RadHard and rad-tolerant products have high gross margins, and successful shipments of these products should lead to profitability [28] Question: What is the potential demand from alpha customers in the defense area? - Management indicated that demand could range from tens to thousands of boards, depending on the application [32] Question: When will benchmarking results for Gemini-1 be published? - Management confirmed that results would be published shortly after testing is completed, expected in February [38]