Earnings call transcript Q3 2023

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Operator

Greetings, and welcome to GSI Technology Inc.

Third Quarter Fiscal Year 2023 Results. [Operator Instructions] As a reminder this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Lee-Lean Shu, Chairman, President and Chief Executive Officer. Mr. you, Thank Shu.

begin. You may

Lee-Lean Shu

and our thank us afternoon, for you third quarter review fiscal to XXXX Good joining financial results.

of end. a our radiation impacted to see Third at interest global economy. uncertain in revenue $X.X for we within the products. was tolerant quarter continue this, guidance outlook the for lower and quarter our Revenue radiation this was demand hardened Despite growth by the million but SRAM products,

are are requirements higher-margin variable the economy right range. Despite While related customer XX.X% fluctuations changes market to sales products, external these the the order of guidance margin for exceeding not factors, of patents gross quarter, increased in and high-end now, the our products. resulting lower in revenue our of

declined the saw selling, we to and expense While level an primarily difference costs and research and recent general quarterly in development consideration severance in of contingent related the expense, administrative related layoffs. to increase adjustments sequentially,

and and a with the end our success and and of included at XXXX. executive The a measures, To resources November reduction operational approach process expenses as thorough goals, took to expense team the we several all implement identify initiatives of was ensure which align streamline comprehensive announced cost-reduction our improve review Company's efficiency.

objectives developing APU. the to We reduce to around resources our with one two this strategy, two, have our cash burn; align and

target basis proprietary to our and track focus on reductions. operation technology. increase advancing to annualized are to measures We cost on the and an aim in achieve resources efficiency million spending rightsize on These $X manage precisely our APU to savings

to the on take this fix hardware the team a chip hardware in we the first table win out you is which to everything on where case, to on of are we Let APU The year. to could ['XX]. today In schedule development last that by second accordingly, calendar could year, us half early and summer. by Gemini-X Gemini-X have the puts back we late track calendar software. first If me see with test update goes

once we [indiscernible] API and for forth and team the the software mind it the to took use, Gemini-X start parallel, library In that increase Gemini-X. and speed. they have Keep developing that will in achieved in the the can EU

memory while APU can Gemini-X HPC has technology savings Xx cost Gemini-X push workloads. and has density market power enabling and over further search real-time of provide improvements. enhance large-scale and XXx server and in footprint performance mono our greatly Gemini-X substantial

is Software for intense currently. Gemini-X an focus area of

and full MAU] by to build customers deployed a for only research has institute and [TV library up used library rely projects. one have their able We on based been

the with is against SAR is solution proven for favorable. a also to library and [indiscernible]. benchmark a could The once completed APU see some is we We IAI/Elta GRA initial sales developed POC GPU have Our applications, evaluating project the Elta APU. performance

meantime, the customers. to we are In marketing solution SAR other the

We improved have search our GSI applications. for similarity library recently

latency. for application. for The are library engaging search perfectly the similarity large low and a requires our project very project own accuracy improved corporation suited POC We with for that this a high print GSI is

the completed have to using customers On competitor APU with program front, C competitor we that [CPU]. are

released of and the in in internal are completing competitor allow for run use is person. application use process in Currently, to customers and July. still general [indiscernible] We library to API [indiscernible] their be in will

to performance. the discuss ahead, call will hand our Please over who will Didier, go I Didi. Now business

Didier Lasserre

Lee-Lean Thank you, Shu.

quarter. or same third revenues $X.X ago, to quarter. in XX.X% switch $X.X XX.X% prior fiscal In sales now or and for year of to of breakdown period were quarter net the the revenues compared net me third to XX.X% of product Nokia the customer or Let million $X.X million of XXXX, and in million a the revenues

of were XX.X% XX.X% compared of prior XX.X% the of were SigmaQuad to XX.X% of in fiscal shipments third in comparable sales ago year sales the third and quarter. quarter. shipments the and XX.X% defense in to XXXX of prior period quarter quarter third shipments quarter a in Military compared the XX.X% shipments

costs, can production last prices increased we Regarding evaluating which are year. announced this is effective of pass the now hardware on January year, we TSMC market-ready. that where wafer increased became starting Gemini-X

In to leading form the and for in We a is factor have and being SSD E customer, Board finalized production quarter, two encryption applications. will board and shipped institute that potential S, SAR we one research an we Gemini-X one explore LiDAboard [LiDA-e] configurations, today. which the server is the leader third is to which shipped

over like Doug. now please. go ahead, to I'd to hand Doug, call the

Douglas Schirle

Thank you, Didier.

$X.X product the on and compared quarter share was million reported per net diluted Gross quarter. The second margin preceding loss share periods. share net $X and the in XX.X% a were of and for XX.X% million diluted on We $X.X to or of prior of fiscal net in third XXXX the quarter fiscal second to per of loss million due the million mix per a for $X.XX a million revenues $X.XX of XXXX XX.X% the revenues net gross $X.XX XXXX. of for third revenues or diluted to of sold $X.X the margin $X.X quarter compared fiscal or $X.X million net changes changes of three primarily in of year loss in net in period

compared operating year $X.X expenses in to $X.X XXXX the million the fiscal the in of XXXX $X.X period expenses prior third quarter. of to quarter. the million $X.X $X and million prior million and were $X.X Total prior the in and million in Research fiscal compared quarter were third million in quarter development

XXXX, year million million compared were the quarter $X quarter. Selling, million the XX, $X.X to previous administrative general December ended in the in and and expenses prior $X.X in quarter

quarter. fiscal loss compared the and the quarter of million XXXX in $X.X million year Third loss period an $X.X operating million prior in to was operating $X.X prior

compared net interest included and year net income and a provision other $XX,XXX same interest ago. loss tax a other the for to income XXXX of in and $XX,XXX fiscal Third net provision of period $XX,XXX of and quarter $XX,XXX a tax

of net $XXX,XXX provision of included to and quarter loss $XX,XXX third net other pretax the tax income quarter, second in quarter stock-based a $XXX,XXX interest compared ago year $XXX,XXX the prior a preceding and in the was $XX,XXX. Total comparable and expense compensation In quarter.

million million At and XX, March December at as investments the of million equivalents and XXXX, million million $XX.X long-term in XXXX. cash, March Stockholders' $XX.X investments with in in compared investments to at $X cash, XX, and no versus million XXXX, $XX.X to March $XX.X XX, short-term we was of was year XXXX. XX, capital long-term had ended $XX investments cash million $XX.X equity and debt. XX, cash December equivalents $X.X fiscal as Working in short-term of December XXXX, XXXX, XX, as compared

of for million, outlook million upcoming margin with $X gross fourth XX%. to of XX% our Regarding quarter, fiscal we the range $X.X net to the anticipate in approximately revenues

this to Operator, we open Q&A. like at point, to would the call

Operator

question [Operator [Kurt Instructions] Inc.] And Heing, your will first Carl Dennis Please question. with come with from proceed Terriman our

Unidentified Analyst

lower, looking What guys. the maybe being thinking now like Hi, this a of you quite be? are looking revenues cash quarter out may per bit looks out with year burn kind

Douglas Schirle

$X and year us were we million about million looking somewhere cost a a at Well, will cutting year. the $XX over around save

were be we'll I than a we off year ago better So believe.

Unidentified Analyst

$X or mean $X million million a I is quarter? be to like it going

Douglas Schirle

no. no, no, Oh

less $XX million something that I previously $XX probably $XX year. we million than the seeing we'll be million over think or were for

Unidentified Analyst

been the Is and Okay. for you that the leaseback or building sale other as option - is into looked measures?

Douglas Schirle

the and future. It's that we can consider at, something that for something it's we looked

Unidentified Analyst

hopefully one. luck, the good Well, something APU through for good. sounds number comes here in Okay, with quarters few the next

Douglas Schirle

you, Great, Kurt. thank

Operator

And our from next Bowen, Luke question question. Please who's your proceed a Private is Investor. with

Unidentified Analyst

Hi, which and applications in you this across wondering context? kind of excited about if most any and new application just you have generally, are come APU ideas been

Lee-Lean Shu

So up. we're set

Unidentified Analyst

go Yes ahead.

Didier Lasserre

sorry, I'm your you rephrase question. can

Unidentified Analyst

all exploring channels yes Sorry as been the was anything clarify to your and Conference, or yes. brighter? new the wondering of, like Yes, bulbs getting going I Buzzwords that arisen context maybe light in exploring conferences if marketing to technology has just going you've

Didier Lasserre

POC, so very we've we've now, the as and nice our Right, we're mentioned hardware. some with obtained algorithm go so on right Lee-Lean - done focused along that's a SAR, to

So level of level, both a are is they the factor which where level, CPUs against on very promising benchmarking power on these form performance GPUs systems. some deploy a we've and depending done a and important for us,

so contacting all And been commercial level area level. that's SAR the we've one that - well, both we've but started, not players, a a on on government started and

put far as I'm we there vector Since As and had customers are come - we've plug to we've that applications the with. the few other a search is in something past. market fast talked us other in is already about have then, a sorry, that the

application. it say, few which script, little I'm the last - for we is But chip. to for I quarter early talk our mentioned up. because there them the of we should that was that of recently there systems, have advantage I my come about the haven't them boards are of certainly And a a One was encryption was different shipped through applications or Gemini what are, one server we in lack gone yet. seeing process of no a others just

Unidentified Analyst

confidently you That's to able move can off to more good be it's yes excellent. really forward boxes. hear Yes, checking

not could a drones, [indiscernible] test that not think small because there wonder vehicles, personal a the that. know it just Yes, Okay, original program? for question, first for for curious their I'll but near-term, commercial program, I I the and if I of is transportation guess, that vehicles term - autonomous transportation. that at field looking you're yes Air managing - delivery drone for data and of potential seeing coordinate like discharge one as Amazon other that of still I that if you're launched kind the data throw so sites mobile leader well, like vehicles, the mobile I adviser their out as Prime near flying was just yes prospect, necessarily saw general be

Didier Lasserre

for FPGA it that we are, in certain take as Gemini-X Gemini-X is a there on for Gemini-X, mentioned. for the functionality that has that Gemini-X leaderboard critical say on we FPGA, chip. has our the chip. With but on And an goes I put chip is, Gemini-X that's and And more solution, the reason solution. we you're that if - familiar the leaderboard, our I our the the functionality with with So

we large can ourselves that And so now FPGA. of rid

you're smaller applications being the of power more and factor some form is about talking important. so And

those that of And so challenging for were allow bit being to FPGA chip. a Gemini-X will too ourselves our really rid us to that able pursue markets

Unidentified Analyst

something thinking making requiring the that programs. engender my commitment might holding two-year rather all kind system a even to that these like kind one lot sensitivity development are hardware fields about advanced directly if terms developed especially the of say, are Yes, as on yes all not think have step of a next develop or a chips of in are Yes, programs and relationship that to their for of of on to like to how seeing relationships, mind adopt clients? the requiring with these - place of and that's wondering I'm They is kind terms the lot business talk about and you approach them companies large and to just able customized are developing they're timing R&D being on right. and development and a kind you your compete might how to that kind But trying and chips of inefficiently investment? potential approach these of back Yes component systems that plan because and they for to to as that prospects something thinking software your of companies you and how in and from there's of having hope they in about that future these anticipate and get toe-to-toe? highly

Didier Lasserre

sure question. training there want - out And I geared everything on silicon applications the market. - solution, that's But as past, focused custom there we've as that towards your chips lends well. I to application make far So not obviously has and the everything most I'm and our in understood system the or sure of the focused we're And on We're similar been fully really discussed on. are not intensive research. other and computation portion itself as

haven't opposed because place search seen data. we've our - of We where we way data we the have that as this rewrite do we effective at technology the PAM protected, having the is and point. to do part architected that And try in and processing to actually anybody and

And similarity so, we out in have carved search. niche the a

been of really, said, And faster. around the geared solutions most have the so other other training silicon in I we've as seen far coming really or SoCs, make trying as it's like to

Unidentified Analyst

and just Yes right, answering you All after yes understand have keep I all rolling. for confirmation confirmation gotten excited it. thanks

Didier Lasserre

Luke. Thanks

Operator

Gaspar, who's is Our question. next Private your with from Investor. Please question George a proceed

Unidentified Analyst

you about have bit day Good relate? now your when were how - everyone number us could have here, how how What you there. a people versus - stack could employment the many little And left? disengage shares by employees total helped does of to to what give many of the that an the many that how left how George started relate you've Gasper idea - you And now? more employment? is detail stock much of employees And go? you

Lee-Lean Shu

So XXX we over had total. in approximately a little

but them don't right or around the I down left, we we're maybe so. of option wasn't shares want that a still to paper canceled leaving, about, number. significant have options mean, upon X.X that I say exact so like recall about million number or I Now to XXX outstanding. it The were

Unidentified Analyst

are say are again, there outstanding shares to And many - that how employees?

Lee-Lean Shu

to X.X that I cars of about it's shares have want million grounded. say been

Unidentified Analyst

X.X employees up terms in $XXX,XXX million, and for cash? then of expense and then the quarter. non-cash base issuance of in recent this tax-based that How stock - does - stack total the

Douglas Schirle

it Gasper, information running get be we've can get similar you will I It to expenses compensation offline. it. you for don't I that -- for years, been it need don't probably all a back several number. stock-based is if now, significantly. level front that up I right I me and of can the around have But but going see in

Unidentified Analyst

But Okay. last would stock we say the your to you -- to total of this expense $XXX,XXX. issuance important that stabilize structure. to stay that's that, have the obviously, -- that stock-based is range quarter, And is assume going in

Douglas Schirle

I would say so.

Unidentified Analyst

Okay.

Douglas Schirle

us then that expense The And assumed we've options employees. shares accounting time. them place that the granted over option the period to a on not value require the just issued. isn't -- and to value That's of that that's of we've rules grants

Unidentified Analyst

Right.

correct? Okay. this operation And an expense basis, terms your other -- on $XXX,XXX words In rated is of as then quarterly in a

Douglas Schirle

We It's noncash record every quarter. the record expense. we income that in -- a in that statement the

Unidentified Analyst

Okay. a Yes. It's All right. noncash expense?

of you're you've expressed for sales cost release are the the other easily you're going done have on comparison something to things at in you've cost at the less of gross some going and And the on, decline have -- Okay. how margin in in decline. But quarter. that terms gross effect it associated what's you're with so associated that the doing left margin there -- is recently further quarters. could structure now what cost terms that else employees looking on relative Gemini-X. to in that structure development of current structure Is today that Gemini-X other relative there your of What with what on Gemini-X does looking obviously an or that in terms

Douglas Schirle

margin, other impact all it the of couple much. of the in of Lee-Lean gross layoffs The the overhead not Most goods Well, than -- talk lower we really gross are $XXX,XXX of operating still your margin sales. a layoffs by that question, but about expenses terms be last covered sold. need in revenue can have expenses, to is margin is the lower, the because that cost on fixed didn't and

with mix each mix good margin number So the gross is down. still good product product a is shipment. with associated that's The why margins

Unidentified Analyst

I see.

Okay.

of for or what of very in to on starting of be thinking an give they forward to taken current really orders last -- into September company in expanding actually or now really going time the orders customers time would use terms envision giving here? being the do able the quarter, you're generate more have question in you're end us progress June March, that spin you that in and to -- Do of you Gemini-X. you'll kind about to Gemini the the by the revenue some Gemini-X say, This Can it end stream going back close feel in like the that are of the or Now long for a going be you still idea has out is what for. to quarter made you quarter. take it's

Douglas Schirle

Yes.

point, we're market still this the the and pipeline. seeding at building So

As pipeline anticipating quarter. systems few of couple I that mentioned, ship it's now. last more, We're shipped a we a building to and

And we so don't that any orders this have at still pipeline. production point. building It's

Unidentified Analyst

I see.

middle any Has Okay. of up. with? And have that negatively of been tremendous affected the you California from for conditions the created to you in the kind problem state on storm deal

Douglas Schirle

at not No, all.

Unidentified Analyst

All right. Okay.

long into of here with that business, generally seen this terms mean, in speaking, general something's a think thing on taken would track get to with interesting accomplish what last a and advantage the of to to it I has to action like this in mean when of has seem been that decline that year. really getting in with forward And that? your Can got say, business to take Well, in I up what going Okay. happen of developed I years you been for time I if start getting on terms you've be you really the put is to in some being this X. happening and say is your couple generally chips, from really the that -- would about trying business, associated anything Gemini-X the industry, quarters say position would three the last in, the business going and

Douglas Schirle

followed thought we of we not continuing general slowdown the thought I'm we're legacy that of your pursue new our we've in products, sure certainly, the there. business, follow there. had to and trend not but sure the trend I'm mean, I

Unidentified Analyst

that you're into that But something that Gemini-X you that off of taking a to starting into got trying forward move see market experiencing. as be base having it the has come in you've been and to of that fact decline to fallen a I'm you're saying working the this possible the would of the shareholders having because is industry looking with on broader forward out advantage downward what business company close stream quarter. revenue that really Gemini-X, beyond area be think would now with innovations for current the should advantage moving turnaround Well, some new be -- quarter customer to introducing going getting to take may in just this that in industry ways certainly the that momentum we if what's and -- happened Okay. I GSI your to maybe to of to the of the it's beyond of first really bring

Douglas Schirle

Exactly, the bounce -- based the middle Yes, by a year anticipate do APU, in again, with the to we continue input It's customers. process. the legacy, need revenues it's as researchers as we just process yes. we're And just back the government even with the go from far the applications anticipate and continue a of off we development with the continue to forward. doing of move

Unidentified Analyst

okay. see, I

Lee-Lean Shu

the create in Gemini-X the see for better has pretty all the -- will area than a the we the is and And bounds the the We And market than solution are in. better leader that marketplace, we the the are least In confident Gemini-X. in. we are Gemini-X products. competing

Unidentified Analyst

see. I

Thank very much. Okay. you

Douglas Schirle

George. Thanks

Didier Lasserre

Thanks George.

Operator

floor over would for further closing like to to time, comments. [Operator the at Instructions] this turn management are back I As questions there no

Lee-Lean Shu

again speaking Thank us. year when we results. our fourth XXXX you. you report Thank and with We full you forward quarter to all look fiscal for joining

Operator

This concludes teleconference. today's

time. lines Thank participation. your You your for at may disconnect you this

GSI Technology (GSIT) 26 Jan 232023 Q3 Earnings call transcript