QUIK - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to QuickLogic Corporation's First Quarter Fiscal Year 2020 Earnings Results Conference Call.

As a reminder, today's call is being recorded for replay purposes through May 18, 2020.

I would now like to turn the conference over to Mr. Jim Fanucchi of Darrow Associates. Mr. ahead. go please Fanucchi,

Jim Fanucchi

and all operator joining you us. thanks you, of to for Thank

are and line Faith, and speakers this Brian Our today locations different President practices, is Cheung, today. Financial call from distancing Dr. Chief Chief Officer. social In with management doing Sue Officer, Executive

pertaining evaluation and timing broadening are our to mature including of reminder, limited partners; that but shipments; and changes some today to comments QuickLogic's revenue impact involve and that margin, the and and its to stated production ecosystem QuickLogic the and financial profitability expenses, a statements expected performance, statements convert risks and market gross production relating cash. from stock not future products; new customers' ability revenue, As its could makes into products; new shipments; schedule expectations expectations design systems; acceptance of forward-looking of operating of future for the and number uncertainties, dates opportunities design start activity timing results projected company’s to the

that be These warnings the cautionary filings. in QuickLogic's conjunction SEC with should considered in statements appear

For website. forward-looking on that are the please and its that filings SEC’s may differ and events additional future statements SEC call posted website refer the to the all involve this made. statements information, and in cautioned risks Investors company's uncertainties from materially

new conference to and the or statements the risks, we future publicly XX-K, Forms Report assumptions, forward-looking Factors any on revise refer management please and statements XX-Q, revisions and to the of X-K the Form day are events. undertakes SEC. of Quarterly the under on of uncertainties with any obligation most light in the Risk recent other file today, details the recent discussed most in documents made forward-looking of heading, For release information of Annual more or those no Report These call, periodically recent the as Form

non-GAAP with These to be as financial will accordance reporting considered or we be call, measures today’s a GAAP. should substitute non-GAAP measures. in In superior prepared for not financials

the to non-GAAP for refer and reconciliation today may release to statements. other GAAP of financial earnings issued results we detailed You a our

also non-GAAP current financial updated our that historical an and have table IR web data. provides page We posted on

website, other FD. QuickLogic note, upcoming comply its corporate channels page and announcements, at industry information, these and and and blog, Such may its channels use uses disclosure of about QuickLogic investor matters. its Facebook information the with of Twitter its company attendance to conferences, be deemed planned Please LinkedIn account, distribution and financial products, as information may under Regulation its other obligations material page,

of the copy shortly prepared posted call A of page after today’s on conclusion web at today’s be earnings the remarks QuickLogic’s IR call. will made

like to Brian. turn call the now would over I to

Brian Faith

first for our quarter you, you Thank XXXX everyone, call. thank results and Good all joining conference afternoon, fiscal financial Jim.

These all environment are about brought us. a is uncertainty. times significantly business increased extraordinary that There has challenging well for as of as COVID-XX no more question

many frontlines. with are affected those the the people the thoughts on fighting pandemic and Our by it directly

to weeks to during are return to we in will operations Silicon Based working been limited continue government team as designation going Our market, we agencies. continue remainder, under the the essential areas remotely to we went one. majority, Military office, human initial do Valley, has by the an have we since serve now. Since allowed business that been our the company orders. QuickLogic the until this one And crisis so, facing The head-on and nine vast were do health has us U.S. crisis. various of the on, cleared day of shelter-in-place

more them are last restrictive, initiatives, introductions, customers’ shelter-in-place push impacts many seeing call, under as to I in discussed product to the are continue our the we related we While orders. of some our ahead with also COVID-XX working

been the from to with projects their onsite, has in place take hardware our weeks to developments, typically in has to customers’ a engineering This few ability months. own some a push-out need lab ranging of many Without delayed. work of that resulted the

related be from impacted will February. currently COVID-XX we approximately believe expectations fiscal in changes, our when XXXX these what talked With revenue XX% we were by

path of is as the there as we a uncertainty to While still global we maintain soon everything great can are possible. deal economy, in doing profitability, a to

But despite also not remainder the revenue only through revenue the for QX, this forecasting we are a still of year. stair-step impact, And sequential increase increases, XXXX.

Another call. discussed, that changed we from want important revenue also our this has to stress is I point, February during year scenario the our mix for

just While result we some may not in were challenges by seen our that previous year revenue forecast. brought the of on engagements see new part the - also which this of I do discussed, have we pandemic

I and company, that, potential, exiting the call, want growth, last are believe, XXXX. our stronger we current remain our I in we COVID-related With turn much will I the to backdrop, that an as were update to why why in emerge discussed a on than the business pillars confident future foundations for from I share storm serving

will platform several eFPGA see year. growth, continued revenue initiative. growth include and continue products SoC user mature this our AI OEMs, our We to IP base our our These segment, three specific multinational of drive areas SaaS continued in with SensiML strength expansion product that annual in and

Within a at are largely have sales stable track. built on saw resolved been segment, we end fiscal push the business. and military XXXX mostly back healthy The and our we have of mature outs

reasons to certainty flow, objective. This which profitability in of confident, continue to generally our not achieving order monthly movement, quarterly is in feel or the one subject is we

half will our believe year. account of revenue sales this about mature product for now total currently We

products, licensing, product impacted SensiML which primarily includes new outbreak. revenue, eFPGA SoC been AI COVID our For SX, EOS segment, the by our have IP SaaS and we

months a brought the guidelines, our abroad, expectations challenges of ago. growth and on our from home home couple The our regions will locally by from customer’s, in both work dampen outlook just

supply geographically been biggest know the bottlenecks chain, global of is as One around diverse. the you has which

depending a impact had has varying on location. pandemic The

to capacity are certain we to made have demand mature our goods customer products satisfy with June orders, facility, using for it finished certain our the quarter. in up able with keep assembly limitations inventory difficult in own While

The capacity, our from amazing own world, chain challenges good news printed on different an the circuit board their these back at R&D reduced partners have track. And done introduced in Logistics to job supply to delays. facilities is that around shipping get have also companies. delays

product cases have and two receiving control were be fast-growing program to an bundled for we smart always-on build that customer streaming in we streaming weekly include this These talked to in year. have well-known we player And some provider. in remote When weeks February, directly later voice-enabled impacted and and our as effects back TV forecasts year. the with later a pushed launches would as be that ago, their launched recently with the

meet remote Due device. recognition ability always-on control reduction shipping be our will milestones, include reason for and to in This the COVID-related technology, voice the primary outlook. change annual own their now without therefore issues to product engineering our is the that impacted any not will revenue

adoption to opening for developing this controls Despite this of the revenue greater opportunities generate change, is trend accelerating, wireless market. and in more the door remote hands-free for

customers developed with SX, same have moving provider. leveraging already for forward we now the We the initially remote-control prototype content with building solution engagements additional devices streaming EOS

ODMs wireless deploy earbuds. are the to next generation We also of OEMs several and engaging with

dominate their continues customized they Surface entered release player to While recently Microsoft product. announced the solution. part own their Earbuds market, will their refreshed also the Amazon, delayed Surface as with recently that largest of

for devices. These additional driving alternatives, demand along with earbud-type several others, are

XXXX ODMs for white box are Amazon dev acceptance webpage. contribute gaining we kit publication after to their AVS market this wireless and later several in with revenue certification, We on and formal expect achieve earbuds AVS meaningful

market. Let’s the now move to smartphone

as with ever. business Our as is Kyocera strong

in SX several related working QuickLogic’s yet to impact. bringing of we XXXX, number have and four, phone. seen Later year. fourth as six using designs total new technology, the closely still A our one was COVID-XX believe the up including on launched platform not at three as many the in are beginning We I phones see phone from EOS using QX, any could feature

with Flextronics on our Industrial market, remains and and to is companies. IoT us these for foundation Infineon In build the important and deepening collaboration Consumer with multi-national an both

Development we EOS processor, a along SX sensor the with our board, Fusion host the that sensors. Infineon Flextronics, as mentioned featuring from SoC which are fusion in includes previously FLEXino Sensor I Kit

collective While working typical the pandemic with both the once our and has Flextronics more efforts everyone Infineon delayed resume will activities, marketing some a of to situation. returns

initiative Moving a with March, the to source this hardware, open platform called our new company, mega-cap strategic deliverable QuickFeather. initiative with IoT kit first from development we in the announced

system It or technology source next supports real-time conjunction and open and generation an FPGA SymbiFlow enable learning European the capable Zephyr, operating source tool. in QuickFeather the designed IoT low-power machine of with XXX% company, a development EOS devices. the to SX, Developed is includes open RTOS, Antmicro,

will being are accelerate that and to at hundreds our deployed we development March amazing QuickFeather believe Machine expect from QuickFeather Based an during the ship board we rate further applications interest on initial release, QX. learning systems of the press trend. new

the will this for in available with is sheer for of market the QuickFeather initiative iceberg QuickLogic to and is just terms game-changing the respect tip engineers of while of the company. engage And number mega-cap with the we it our total solutions,

a this We to very reach development user XXX base and the will our believe nearly ready times that company than of this open scope the excited Antmicro is company We mega-cap could massive share current own. up live. are its go on with of mega-cap full joint larger to channel the

to correspondingly more initiative and and provide could We in plan the SensiML weeks. higher coming effort revenue posts EOS formally AI via a such, the for a announce this press software. this release SX and drive blog detail As opportunity

eFPGA eFPGA signed QX, IP low a we volume, during hardened application. agreement are we license announce for use for radiation happy our to our Moving business, a to technology in licensing

agreements, I any on can’t beyond to Due non-disclosure that. detail elaborate

say with the a that future quarters. expect amount I from coming However, agreement, revenue modest of to royalties quarter in generate license current can we that in

well Moreover, our forward. groundwork IP our I moving as this as growth license, soon-to-be-announced company, stronger are the initiative licensing mega-cap in lay the believe strategy for eFPGA helping with

SensiML Let’s going with SaaS to back just QX dozens now from three customers, business discuss year. of AI our initiative. of QX SensiML up last closed

product. As are version of in last most our customers call, I out pointed of the using the these evaluation

from the our they to AI limited a are software with working that home, their tools necessary for we have in evaluation. general, access market perform tool during and of a to own customers ramp-up many this period, new full finding is hardware and

convert time the to customers lengthening platform. to full-service is the This

direct While work our pipeline. of party engagements, further and several phase third customers our our in reach building MCU evaluation convert from to continuing our we we partners, are expanding also more customer add the to

NXP SensiML Analytics the support using crossover February, for i.MX In announced Semiconductor's Toolkit. microcontrollers portfolio of we RT

supported. already RT SensiML, For existing application segment i.MX NXP’s line an and important platforms between ultra-low the fills processors power

leverage easily platform and can process recognition algorithms such structural applications for SensiML customers to predictive the complex NXP advanced and health rapidly monitoring. as multi-sensor maintenance, build control

Micro, and announced addition From as have perspective, relationship with This are Nordic ST of with a two is relationships Semiconductor. broader already with NXP, partnership such the we working means now the in top SensiML microcontroller firms. we firms with to

to proud the small use of also invited AI of are tackle technology. to is part goal of pandemic whose to become SensiML We consortium has through share the a COVID-XX companies that been head-on

a substantial COVID-XX now and through is someone sensors to if amount the power taking There is of application research AI of better software. of place low symptomatic predict,

technology exploring area. SensiML’s AutoML can are in actively how be applied this We

targeting to crowdsource build the of be used if and in this social see To can interested the media for analysis. we SensiML AI in cough QuickLogic to that channels crowdsourcing data. a publishing you are both website assist data effort, initially be in will models, sets participating Please

by our solution. easy crisis, of part In enabling it be important we that to that to can technology global is to a it used access do times contribute so our

platform As special AI launching version the research pandemic, the including during the such, for trial to we this our of those $XX toolkit available community. and impacted power make will academic be a of SensiML

place to to the day confident period it the I by in forward I have evolve where turning am Sue, of Before drive over day, profitability. foundation the want call to circumstances company spite we this seems to in that reiterate

around gross XXXX COVID, to million non-GAAP While improve where proactive by is puts in margins reduce impacted position current of will took a we for year, aggressive, costs being before that revenue us us actions pandemic, the profitability. outlook to the and through get should anticipation revenue our $X the the

recent now a the financial Sue would turn and QX to outlook. call over to full of like our for I Sue? discussion performance

Sue Cheung

Good afternoon and you, Thank joining everyone us. to thanks Brian. for

first with For revenue we revenue quarter the of first in of which compares XXXX, was the million, of quarter was million fiscal XXXX. $X.X the This $X.X guidance provided. within range

was lower sales. Within due first $XXX,XXX of This The our $XXX,XXX. decline of prior year to new QX 'XX new from products quarter the the product continued XXXX. revenue revenue, with were in bridge sales in the compares display primarily

million, selected each aerospace In million sales. from the revenue last The $X.X accounted of year. Our year our decline of changes to in mature primarily product demand five was from for due compared we greater was $X.X of and who QX quarter XXXX, with or first customers avionics customers. XX% in had last

Non-GAAP in primarily compared gross with mature moving some due last margin revenue lower and same margin in product QX margin mix QX. XX.X%, was year. the XX.X% higher QX The in to was quarter product gross into

low to our rebound the to second in expect margin gross range quarter. We XX% the

several The last $X.X containment down year. of are were QX Non-GAAP million operating enacted last result measures expenses the over year. million, of the $X.X from cost the approximately in quarter first changes for

mentioned to decline the of operating XXXX, January. to approximately announced million restructuring I second our effort in we in call, $X.X the expense last see resulting in to starting As expect quarter from

$X.X first Within respectively, income, net $XXX,XXX our compares QX million $X.X of quarter operating expenses, and a and with taxes and the The in $X.X year. a million, was other SG&A compared year. of in last in This million. and expenses, QX charge for million R&D $XXX,XXX, was last credit SG&A total with QX R&D $X.X was

of one-time acquisition reminder, intangibles As last a the we QX related tax in SensiML. the recorded to year, a benefit of from $XXX,XXX

$X.XX $X.X was December. last or a compares both first per stock Non-GAAP split periods $X.XX The net quarter of share $X.X loss million, This with per of or effective one-for-fourteen share. share loss the QX net year. last the in calculation million, in for per that reverse was reflects

the approximately charges. QX cash restructuring was at compared the in cash-based quarter. at $XXX,XXX Finally, usage of of million, last QX the the million was with total end end $XX.X Included cash in $XX.X

$XX also cash million balance Our includes credit. from revolving the draw the line of

the which on for forecast our second quarter XXXX, June to of fiscal moving Now, XX. will end

license, revenue is margin XX%. new $X.X revenue. IP a product $X.X revenue for be revenue the second to radiation hardened mature million including of eFPGA of Due minus We we will favorable million Our guidance plus comprised product quarter the gross plus see approximately of or minus total improve X%. mix, product to approximately to should million, or believe more XX%, non-GAAP and $X.X

the plus to to non-GAAP or decline approximately forecasting are the At million. We to our we expect total million will approximately that range, operating expenses minus be $XXX,XXX. approximately $X.X R&D of $X.X midpoint million, be SG&A and $X.X

income ranges, and million X.X a After at million, share the $X.X per other of $X.XX net shares of net forecast loss interest based midpoint loss will approximately improve to expense, currently taxes, we outstanding. these non-GAAP or approximately on our

were $X.X expense. Most is of that which cancelled, quarter, the compensation. $XXX,XXX our difference credit RSUs results in and between stock-based for compensation first non-GAAP stock-based had resulted our In we approximately GAAP total of the a performance-based million

future. thousand $XXX the to return to range compensation for stock-based expect We the foreseeable

of includes this inventory restructuring-related meet QX, for to The cash be cash roughly for assembly customers. a and starts EOS usage quarter, increasing approximately million. inventory Starting and $XXX,XXX expect demand our range the $X.X Finally have purchase. for in wafer $XXX,XXX to the we usage SX $X.X forecasted we ensure to from EOS to an in our SX-related we are payment

SBA. secured successfully a Paycheck received last approximately or Also and from terms. we related loan so-called Xth, million, week is cash on our $X.X favorable The position, May has Program, PPP loan, to the amount Protection

six The of deferred this first for is months. payment loan

of we benefits. this the loan primarily the this call. funds details and employee X-K prior full We the will to filed with use included are start SEC The the for in payroll of

let Brian turn that, over me the for closing back call his to With remarks. now

Brian Faith

Thank you, Sue.

reach the the through advancements our extending work COVID-XX we we of and created, executing While pandemic challenges customer market and has are opportunities. product all on our

created QuickLogic have nimble to focused ensuring on sustainable organization We to a lean profitability. path and moves a

customers, products including we continuing future. my in protecting employees of all and their execute and to in product to and highest our ensure ensuring do closing, our both success their programs to can of would our on the like for After help of shareholders In partnership. to everything thank is and priority supply I our stakeholders, support both today families, customers, we new suppliers,

prepared our to for remarks. like now the Operator, questions. I'd completes call That open

Operator

Thank you.

Instructions] a first We session. will now be question [Operator conducting of The question-and-answer go from Sujeeva ahead. Desilva is Capital. Please ROTH

Sujeeva Desilva

Hi, Brian. Hi, Sue.

Is talk of So guidance, mostly from can the million, that guidance you there? recovering to drivers there about X.X are other are large the the buckets new helping products is segment key there revenue them are XXX,XXX recover? that what

Brian Faith

that majority, not we driver smaller more of some of the about definitely that. licensing that Kyocera product new IP items but is of -- majority some talked the is other around Kyocera and with we half the deals have, than the volume, The that along big then

Sujeeva Desilva

Okay. the And believe just limited And there's then the impact. What's post linearity expectation forecast the there because to you changes year? looking was you really no linearly close? ramped the ahead even throughout COVID Kyocera for quarter for Kyocera, said the I

Brian Faith

haven't we in around fall. typically manufacturers I point and forecast. that think smartphone so in from their change a -- spring the of seen Yes, late real view, launch Japanese any And linearity

the I not were so, fall first about last launched three year. And talked effectively that phones

then fourth they we us for summer can as probably one would are in fall like in timeframe. additional phones that spring come those the categorized be launch of launch timeframe ship year. later The anticipating a this to And the online, to so those

seen any is shipping, for we strong we'll with think we their revenue downside But this by COVID-XX to haven't be effects have several from that point, shipping respect the continue to pattern. So, for going to currently can that's why phones yes, which year.

Sujeeva Desilva

believe design older control, an they to where fell redesign know. could and hoping they you and you you Brian, helpful the make how there would on you and a was on -- what did they Okay. unlikely SmartTV if said designing, clarify some could switch? back think or able That to find color be that weren't I just I were remote

Brian Faith

having this appropriate are so place tests the an to the way so world back as push go get that the before in fact window quality shipped Yeah, such, the support them All big and get to all residential that to testing things caused year, out basically, over always user do in They're watch that holiday to have delayed experience these and that ship going out. in they're they And were that product boards sort those to voice they include to to and test products, boards version them. they the to bundle their they for of basically always into, environments for to miss of, to that. not to level be were the season a the that different to box launch. going those do on doesn't on-voice going test

we're means enabling XXXX that going engineering work from because impacting we're into disappointing are to going in us. that we're There unfortunately, that the to the working So obviously, now. customers that reuse that. But, remote very us, so be with that included that not feature, it's we put revenue

Sujeeva Desilva

back understand they of just older absolutely. Yeah, the an I’m trying fall Brian, version with to on? remote,

Brian Faith

does always on-voice. Yes, not it's version a previous have that

Sujeeva Desilva

certification? Okay. is achieving lastly, And the I the on a understood dynamic. that question timing Amazon, quick then what

Brian Faith

advancements certification. that get But now the in gets I think We've of like it we're time, pretty scheduling mature this, to area. them in milestone say some this pushed process national time that submitted documentation I with time estimate we've lab Every out. some and something

that a that. the hopeful going that by be of making lab quarter. the So actually we of get quarter, done the on. can in end just depends this slot some it there's distancing And I'm on you sure do as social imagine, to But that will

and do do testing, of to and sure reduce tests make and an number lab, the in working in to here we're we're going however but So replicated so of those just allocated solution and of to getting closely get pass, resources lab done. to with our it's into a the on we really test criteria added now them the And spot to get getting really trying with right have paperwork we site. lab because the the we've pass, matter a all

Sujeeva Desilva

back in I'll guys. execution jump very Nice queue. the tough Okay. environment a in

Brian Faith

you. Thank

Operator

Rivershore. The Please next Rick of from go question ahead. is Neaton

Rick Neaton

ship? you global pretty Hi, Brian. Hi, execution could some order that good that fab enough issues ability and impact times any are like at having your to COVID-related to Sue. Congratulations on Are your foundries have tough in here. products

Brian Faith

Not from view. of a fab point wafer

And basically keep very think demand. I I wafer forecasted the with to we're they’ve starts up think starting with now execute well.

to assemble be to assembly. where the up our ESF-X the The that. script issues fine but I reduced for our put Philippines in transportation have on to We were of on to so on on wouldn't very operating to I they're had they to policy transportation, there a think part temporary site, people they very packages assembly dormitories take was we'll one my strict capacity. of do point related basically and have alluding the partner went still in

think the as I getting and said an normal. amazing done back in I are they've to script, job,

so for it's an to assembly a crunch that. way been really through not get -- And

Rick Neaton

shipments your in that point of volume for color. Thanks through QuickFeather time? expectations were consistent with The what this

Brian Faith

press that just very a make getting people limited we to with ready We've ship on part did shipped far. March have yet We those. it. boards wanting release the so got people marketing Well, to not in we lot launch are of of aware our

this of weeks a coming orders. do the lot going think interesting to in launch see actually once we we're to I do influx here, start few of

chance of couple boards get or the months. in that out thousand in hundred script that, several closer like a the that so this getting we'd that few a got think exceeding a and to hundred to -- think of quarter, I or I said I coming exceed there we've good chance the to

Rick Neaton

next ready different will something few or quarter that is boards is think kind words when product happen the is of announcement product a that weeks to coming that this for were that that in And and -- -- additional I or that half? the will happen in you is second go live your said second the weeks, and in an the

Brian Faith

asked the so Yeah, section. QA probably I we're in that more question, I'm clarity that glad can now have you the

with there that started are point in this tools whole So talked release. QuickFeather just starting one this the company. is we some mega-cap of has It's the about where – board initiative press

the All cases that the large little of along become with see going certain second this that of you a potentially also between we board and is announced out haven't the yet, initiative coming or to the this in that in a be is of company very address future. that and weeks we strategic will come different in very clear out users one. a announce coming mega-cap future use us and that'll first the that additional set tools than this, That'll bit a

cause again, clear strategic thing it's is that terms just one initiatives a of is than announced finally this So further development whole major when in undertaking that going much pretty to kit. be this

Rick Neaton

talked that in are later those effected partnerships year, the of like early partnerships or by past SiFive or on that strategic Some like your next remaining year? this other being other you've about COVID, those track for are

Brian Faith

those and now that as IoT series on Flextronics basically those put being was are I these take done ones, because impactful person are and really as of seminars place going through ZOOM marketing a shows the everything's road types the is of with outbound to going whole and go and meetings. to be pause think of far Infineon were in some there

the So started getting message impacted that's out definitely designed with getting and people.

with point large companies. go face impacted those start we'll we can start once think biggest are Those where go I and plan getting that, meetings back to and of to we to year. face reinvigorate actually relaxing of this to that the this market both probably to ones

Rick Neaton

cocktail your year about, at teens mid-teens One effect, impacted you view seems much how should Okay. terms in quick through here, of how I to do play talked be last full calculations still when original outlook your all If in revenue mid-to-high Is the revenue. some might of of look was I your napkin question, that here. be it? COVID

Brian Faith

Yeah.

lower from revenue ceiling the view, at more from mid-teens year. of think that. it's sort teens that the I for where point And appropriate mid-teens, look way of to a like an would of a be to the are

Rick Neaton

Okay. Thanks, information. your Brian. Appreciate

Brian Faith

Thank you.

Operator

The next of question ahead. go is Craig-Hallum. Shannon Please from Richard

Richard Shannon

Thanks, Sue as Brian well. and questions my for taking

the military Brian? been market on one fears where about you talked hasn't Just of expectations the there, like the affected sounded it that's have actually Is Is the, your COVID. about that last, that by since question opportunity the something Rick’s improved it?

Brian Faith

teams Yeah. your not former affected budgets because the design a They military any to situation are We've lot already basically pretty seen have get steady we done. some the seem this, are a don't that designs today customers. of we're where available by revenue aren't have to having Previously, on hardware.

well. So yeah, on from that standpoint, really going it's

some online, on They work secure work – like And a military thing VPN embedded it's from can is Those hopefully that on IP they normally should around be which and they're when back to some pushed longer plan progressing revenue two, the year. those engagement. for weren't in part, would part next hardened. of customers go application, that's through the conversations we a hopefully in What they're of have military seeing, of to home a that once start I because access the this again. have be the I were month able imagine licensing. and out will can good you And for radiation those the systems of are will projects term those that are lead access to some point eFPGA think now. have most But our which We premises view that license, others. they think of so for – those or

Richard Shannon

to Okay. COVID there, those you of largely one that. still notes – Brian, comments podcast? a than was FPGA a of what from and characterize impact FPGA, through my second it your the one of regarding Maybe mentioned embedded your off going how would embedded see I'm those with intact? in or lower for Is outlook

Brian Faith

company a changes Specifically, to product categories more the rate but the is – line related the unchanged now. forecast by the pre-COVID within That's products, part to say overall, The largely of that with bigger COVID. to eFPGA the from changes other of It I can of was run

Richard Shannon

Right.

Okay. many predict about many you something how the question. dozen, the something or answer year, to know have should a licenses a this maybe expected If I range, but they'll the characterize, number, announce or can to how just embedded that identity signed let here we is think you're at least half FPGA that get you've and can't I that we that's exact find you

Brian Faith

think we if the If say, be ones with thumb for and going up fingers to got a I'd good think do happy. this we to to count can be I I year. I that's on it's – us I end a can one that I'd good, and going half place hand. for that, probably of was be

Richard Shannon

you Okay. That's They're very helpful. with coming kind you large Opportunity it's large, the or to you lower also potentially you interesting. of your might large in in of consider as to Tier fair company being are companies. by type dominated in to serving your you've to do those think who bases opportunity? of market. But of comments have Is a ODM with market one opportunities a potential and can alluded a it get market an Earbud company sounds customer X Tier what X a and couple identified

Brian Faith

these Tier Tier are Most to as X. want classified of be X. engagement don't that would We a

interesting directly or over-the-head -- because more the and have the on is, think, from right would I so and of by Polycom. Some been not want and this think, brought earbud use pandemic an The that's connect which driving now, whole telecommuting working are that's doing thing many to I have to people home they through ODM. speaker or be done actually not sales,

see of interest for majority do we Tier So X. we're demand. and an talking increased Tier But the funnel, about guys. There's one X our

Richard Shannon

you. Thank

That's here. for question Okay. One kind of maybe, helpful. quick last two-parter a Sue,

What On that, missed guidance quarter, for the was margin your the please? gross I'd number.

Sue Cheung

Hi, Richard.

Richard Shannon

Hi, Sue.

Sue Cheung

Thanks for the question. Hi.

margin our minus be set plus non-GAAP XX% QX, For we've X%. or to gross at

Richard Shannon

gross at or low it to margins or kind breakeven changed? the I more, the kind to Okay. $X follow up still does that think, the And that look said of of has the you million mid XXs model,

Sue Cheung

It's to XX. mid rather low Yeah.

million $X revenue. it's a So

Okay. That’s goal. breakeven profit the

Richard Shannon

Okay. Perfect.

all the Thank I guys. me. for think you, that's questions

Sue Cheung

just, I saw And moving dice, When for rolling those for tier I to the X,XXX per the is playing you're that today -- I was just Richard, while going unlike hey, forward, come that. comments. gain So, you're say I'm believe, to there. QX. I $XXX,XXX day

Richard Shannon

thanks think But reiterating. for I did get I that.

Sue Cheung

you. Thank Sure.

Operator

Your Yang next Please question Oppenheimer. from is of go ahead. Martin

Martin Yang

Can Sue. Hi, all you Brian. right? me Hi, hear

Brian Faith

can, Yes, Martin. we

Martin Yang

Perfect.

related to AVS wireless you -- and regarding how expose think space? label So space white business much do wireless business -- in other those Amazon are How headset opportunities? to much business potential your

Brian Faith

AVS. breakdown connect or do our or They local have the of in us the of lot in have U.S. more Tier to like opportunities majority are tend number that probably for not the opportunity for That’s AVS services the by non-AVS, X So not Asia of specifically, of still they to are those headset would these funnel Amazon. European in they China a – because By related like they'd there's local to Amazon be today. for that way sort volume, do headsets because companies. it other or

Martin Yang

revenues no Today you showing AVS time difference the market; have do your think up distinct a on distinct two. that be start rest? the Or the there's in to will sooner difference than between you

Brian Faith

second us. will the for some ramp earbuds do We're forecasting for the higher, The the these revenue steepness have products. or a they will half Chinese more volume because of type of both of just in ones stick the

the the would their the I the processes. methodical little test in an just becomes a like bit once be through market, a little it to to Western certainly type probably ones, ODM, because do if that slower U.S. for certification more But the it product. AVS we think get tend they bit For ODM was an basically be countries, even and

word whereas go software basically AVS to and provider or no we partners need certification. on be our more still a wake should There's essentially creation how was For custom us do. validation that because us, of China They and at efficient the go point. do help lot process, pilot, get done can revenue in is ready just it's to done we that engagements through passed a product they Whereas once changing. that it in the more have these to

Martin Yang

there COVID-XX, And on impact is next impacts an in question, generation next on so -- that? regarding your regarding design product

Brian Faith

of largely work remote. our We're do most Not able really. to

an to engineering our things. think and done getting team at set continuing promoting I on job has amazing up work

initiatives. all on progressing they're those So

having And alluded worked that in The need what is one to is a I per to COVID-XX things related about asked office that's get of is, that on enable the that can se do that people. values the to haven't and been section business call of on software to the don't really we the was yet in we SensiML. be Q&A

cost point the working models, So either remote comfortable those teams models of those though where to everybody's data, getting was of with mentioning a call. way together even we least on is at SensiML doing crowdsourcing this baseline it put

and solution. And to anybody and of we're can part come we start this that, evening for that going public to site put to contributing all that so everybody in be

types being just without And we our will driving office. on bear do of in part came those in think last wasn't from So fact, I scope is of new the fruit. that to things the we're so even that can call on this, I think that up opportunity fine

Martin Yang

back for in I'll question the queue. then me, Last jump Okay.

name when So broader when is be the a mega-cap look better developer name. quick well? I to to will at Are opportunity marketed frame highlight your community? company's catchy can you solution the company, talk as and QuickFeather how going that very And the us -- help with they think you we

Brian Faith

of they're I referring They're in and taking to and what community going helping to several spilling QuickFeather. they Yeah, be That's both those ecosystem. going think their to all going name without our be focus right do. internal out company that are those in beans the get their to now, to units to

What we do are development parallel, is not an in exclusive kit. to going this because

currently going seeding we're these guys, out communities that gals, it channel have. to that partners hardware, to going also our be be source are to There's getting folks, several open we We boards with.

very I marketing positive level some viral experience and with think we’ll hopefully of that. start then have a

mega-cap three channels marketing sort approach a distribution And so to really looking company, viral people big those we're that our Board word on out more that the to traditional are avenues and that this about the then get at hardware. open of source are

Martin Yang

you. Thank

Brian Faith

Okay.

Operator

question-and-answer session. back the the turn for like floor to comments. would concludes Brian I Faith closing to This

Brian Faith

Yes, speaking forward Thank and thank results participation -- for support. goodbye. your you excuse We again in in fiscal quarter we me, to you August. quarter when today's you our with call report and results second first look continued

Operator

This concludes teleconference. today's

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

QuickLogic (QUIK) 12 May 202020 Q1 Earnings call transcript