QUIK - Earnings call 3 2023 | QuickLogic Corporation

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Operator

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to QuickLogic Corporation's Third Quarter Fiscal 2023 Earnings Results Conference Call.

As a reminder, today's call is being recorded for replay purposes through November 21, 2023.

I would now like to turn the conference over to Ms. Alison Ziegler of Darrow Associates. Ms. ahead. go please Ziegler,

Alison Ziegler

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

are and Financial Faith, and speakers Brian Our today President Senior President Elias Vice Chief and Chief Officer. Nader, Officer; Executive

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

materially today. or trends those from may Actual results differ discussed

more factors For differences, the with the to SEC. assumptions and most refer please in uncertainties risk could the risks, result in filed that periodic those QuickLogic's recently reports discussions discussed detailed of

no of information or forward-looking update to which speak any information, as assumes any or QuickLogic the of obligation dates events. respective statements new future

call, today's non-GAAP financial measures. be In we reporting will

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

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

of its blog, LinkedIn as Facebook and note, QuickLogic page about corporate the uses business. distribution Twitter of Please its account, company website, channels page information

on to with made earnings copy the QuickLogic under disclosure today's after may may its posted call information QuickLogic's be remarks information, Regulation Such deemed IR web FD. use shortly these of the today's prepared page be and conclusion channels call. comply will A on of obligations material

ahead, Brian. the I Go Brian. over call turn would to to now like

Brian C. Faith

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

guidance, QX was year-over-year revenue which of and increasing $X.X year-over-year. million driven our sequentially sequentially. increased product by growth both exceeded XXX% by new sales, midpoint nearly doubling of XXX% over and the This

XX%, drive midpoint non-GAAP gross the earnings million net another minutes QuickLogic profit outlook net gross achieving we a of $X.X all-time few set for exceeded quarter. an Driven strong the record shared for non-GAAP income for will our margin our profit of will inherent in the that which was Elias model, share business profit last set XXXX. of by scalability non-GAAP record outlook fiscal year in positive projects full which will record QuickLogic. QX, and a

execute transformation us is assets we IP delivering in X% XXX%. grow model. highly XXX%, best and profitable by come. to the that and yet over XXXX our profit line business strategic by The leverage last the the strong a dollars a gross believe over our results, improve bottom XX here revenue The initiated transformation is leverage full years we XXXX, operating over and and in year fully reduction with scalable proprietary non-GAAP XXX% nearly compared When has to by OpEx, is I non-GAAP to developed expect have strategic enabled we XXXX to

driving I'll minutes growth our that initiatives Now the contracts highlight success. are take a few and and to

in deals both numerous IP. funnel customer-specific for incorporates device These are sales First, we this million. deals the and record well have eFPGA continued to to Included development our eFPGA span as IP as number process a technologies end foundries, that $XXX grow markets. our

foundry value potential the a second partner. to FPGA to to to in our current to scope of a contract so $XX provided the we the of The efforts our and potential foundry $XX second with XXXX has our QX the of addition that contract was strategic the This expanded include initiated significant phase rebound awarded a million. far in contract million million. in with total $XX the phase In contribution continuing total development August, bringing were XXXX, rad-hard second extend awarded through

In a specific win. taped our customer I more on shared our that strict IP. that device new November for I had can't incorporates share XXXX, details we design to requirements, eFPGA Due out the confidentiality

quarter. We We with represent couple of of dollars are this potential of customer customer, we could years. design this are from to and do revenue tens millions believe in revenues development work of continuing generating a this device starting each

call, previous opportunities eFPGA on growth Furthermore, for new Initial XXLP the funnel and dollars. million IP, multiple QX. our contract in revenue we began this eFPGA announced node. now process several includes have sales of targeting availability X a As on contributing GLOBALFOUNDRIES IP new XX-nanometer to government-focused our the our we technology, process mentioned opportunities, IP-based totaling from

aerospace wide electronics, automotive acceleration defense, is range IoT XG applications, solution The infrastructure, of new and including a XX-nanometer ideal and devices. AI/ML for eFPGA

In announced technology XXFDX September, leading that a chose for eFPGA our late GLOBALFOUNDRIES platform. IP we company

deliver initial this year. program to on expect We this

In signing. versions during IP within different through us X technologies X proprietary the of only this X create process IP which development quarter, in automation customized contract of spanning be from different generator, the foundries. our is Australis possible total, we expect to quarter This with lets

competitive path Customers a a risk point the lowering lowest time not-so-subtle here our is that The we development to target advantage. to QuickLogic and technical seeing costs. risk and shortening that us save increasingly and as by meets customers' requirements, money, are market, with schedule meaningful solution their provides

With IP, of QuickLogic's evolving the in demands designers of market partnership a towards resilience. for meet of Xiphera's step quantum to cost-effectively one eFPGA path assets their threat, enabling them solutions a Xiphera, with stay securing with security architects can against We to cryptographic provide the evolving cyber threats. design the landscape hardware-based ahead the a flexibility provider platform, combined announced PQC quantum solution standards-based rapidly with

low-power, announced AI/ML to for optimized and with IoT range chiplets FPGA We low-cost wide Moving recently to for possibilities new chiplets. This a opens UCIe of develop applications. edge YorChip partnership applications. a

early could XXXX. chiplets first be in available The

has phone a our business, have EOS used digested of rebound lead inventory, that smartphone be customer EOS SX mobile our XXXX. we ship been SX their we will slight Furthermore, Concerning new informed in quarter. models starting our expect into this and will most that

we improvements and for our segments in for fiscal forecasting Finally, are slight product XXXX. display mature QX bridge and

of revenue provides because installed semiconductor potential its This company's sales the base of powered officially that private SensiML. to demand integrated sensible launched. broad a label customer microcontrollers a Moving the to top-tier private address has solution large version its labeling of across customers' company of The line significant and SensiML toolkit has force.

to have not this engage As the noted we in with is and other exclusive relationship, companies. microcontroller I will past, continue an

has turning and our IP Elias, I'd QuickLogic the XX our over profitability. share FPGA-based wins, Before differentiators and developing high-volume call like for proprietary my are to driving the FPGA growth delivering years. perspective to on that been key devices commercial

Together, managing at growth market We and unique level generator even competition With fabrication customers' fully from can node, that us now providing target efforts rapid with these also our license set to and customers risk any to and allows finished our from have and lower shorten addition our quickly to to supporting chosen time simple we the proprietary providing customer a apart and goods in from IP IP. Australis this can engage foundry benefits development fabrication everything both storefront enabled to IP through us to and program. our profitability. and

please of a that, the for over review me the financial ahead. for go to Elias call now remarks. I Elias, will rejoin closing turn let results and With our

Elias Nader

Thank everyone. and afternoon, you, good Brian,

Our the performance solidly from exceptional, more QX quarter, into last revenue business black. in the than was with doubling driving

services as large results the eFPGA in license next and eFPGA started professional the benefited current As revenue contracts the phase expected, higher our quarter. up IP from of

quarter $XXX,XXX XXX% quarter $XXX,XXX revenue Specifically, and compared the from million, revenue Within $X.X revenue, This up XXXX, in were $X.X up million third XX% was XXX% quarter approximately sales compares to the new XXXX. in million quarter, from XXX%. second quarter $X.X last and last last million up million. up of product year. in QX approximately nearly products and our to $X.X QX was QX Mature of the third $X.X of

was the a controls. resulted to from services XX.X% well of mix XXXX a XX% quarter second the revenue of higher compared percentage quarter level revenue higher continued from change and third as XXXX. in QX the the with quarter of professional in XX.X% cost The Non-GAAP in within margins eFPGA-related and gross the as second in margin gross in increase of deliverables

in the last forecast of operating activity the a QX million. $X.X above quarter approximately This were Non-GAAP expenses with given on compares XXXX third to slightly QX and $X.X the expenses million timing for million contracts due ago. The was large quarter revenue year later OpEx operating of executing our higher R&D somewhat in the non-GAAP period. $X.X in

a million third $X.X a Non-GAAP and in net per non-GAAP a net a This loss or or income was $X.XX last of share per of loss or $X.X compares million share quarter to quarter net non-GAAP record. XXXX. $X.XX $XXX,XXX share, $X.XX of the fiscal

compared In cash million more of at of XX% accounted that QX was $XX.X the million, $XX.X our QX X we with for customer revenue. year-end. Total at XXXX, end or had

to minus QX of approximately mature December for XXXX, the the and lead products. revenue $X.X and revenue be on end Now of guidance guidance fourth plus expected Revenue or XX% $XXX,XXX comprised our for is moving XX%. This $X.X quarter will for is quarter to full year million, new fiscal products of approximately Fourth XXXX. approximately will growth of of million to which XXXX. XX,

this non-GAAP is XX%, to minus approximately X expected or for Based points. revenue percentage margin on quarter the be plus gross mix,

due see to sold. of each mix margin continue volatility variances will cost We goods in quarter and to product

programs. labor goods $X.X at Our will gross XX%. COGS, expenses revenue operating mind keep reduce industry, and certain that our customers. the for variability will our approximately results. believe related the be Capitalization contracts is The certain recognizing will support OpEx expenses we or capitalize in given in sold, with costs margins tooling the cost may in for million or and operating cause with expenses are required to increases timing times. $X.X OpEx million, in also primarily to of reclassifications to This which COGS. occasional plus change remain Please and may to corresponding be reclassify We new non-GAAP minus range

shares. and million profitability non-GAAP our $X.X shares. year per we allow net $X.XX $X or to us income with $X After share interest expense, on to million currently This $X.X based XX.X share per $X.XX for roughly million full of million million the $X.XX will million be $X.XX or approximately income income to to on will non-GAAP approximately that report forecast taxes, to other based net XX.X

results non-GAAP stock-based compensation compensation expect and related will GAAP this The our difference approximately is QX, to we between be expenses. $XXX,XXX. In noncash

a As on stock-based in and employees. reminder, each there the of grants be vary compensation the timing during based movements to our will we quarter year

to cash midpoint, roles, at design the expect signing sheet. Moving design discussed, of new we $X continued growth making with received wins and including to in engineering to hiring below strong QX. sales timed balance in new support in critical XXXX have contracts that These of for we the are investments the Even million investment anticipation our the wins. and be we are with

flow also to cash year are for We of positive XXXX. track full the be on

you I'll for his remarks. the call thank that, With to Brian over And now closing turn much. very

Brian C. Faith

Elias. you, Thank

X% stage dollars XXX% historic new quarter the X years quarter. in business OpEx, XXXX. over yet With grow our record profit a gross over core Since ago QuickLogic, reduction for profit, to expect total and in IP non-GAAP by a by operating clearly this set non-GAAP grow transitioning another leverage a over and net over XXXX, by with XXX%, model to was record is QX revenue for XXX%, we in

of what me the far, for lies we've our last excites what drivers X what primary growth proud so have been While development ahead. I contracts. accomplished am is over very The years

and these million. beyond new opportunities sales to $XXX devices funnel we will even of lead our believe production forward, Looking

our sites growth in and fuel in these our continued opportunities beyond. We will believe others and XXXX

XX% our contributing XXXX the for very year-end over outlook per with to we While year report each I call, in earnings grow profitability and XXXX. positioned full our share provide by quarter non-GAAP conference total believe are to solid will well we during revenue

for XXXX the Following of growth we generate half year XXXX, to XXXX. second to the flow are in expect cash anticipated support investments we during full making positive the

work my to have that With with is that, shareholders that and the enabled all. you to our thrill these I to appreciation supported want to a the vision accomplishments. extend It has team

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

Operator

And with Craig-Hallum. the first of [Operator from Shannon Richard our Instructions] question comes line

Richard Shannon

congratulations work takes sure all to profitable Congratulations welcome this it's get hard a point. quarter. the I'm on to on relief, a and it

to I question more technical guess here. off of start a

the at other sense that. pretty before, that which to see you looking close dynamics get a this sales I Just here. here, which fourth is about government growth talked great what here the driving new large to quarter product some just contract to is are the degree or driving to to within guidance the wanted

Brian C. Faith

Obviously, the the percent large revenue. that are revenue this contract quarter. a to there is of other in are of But growth a couple big that materially ones contributing

to quarter, process most compared on of I remarks, doing of think quarter. us prepared different would to in are the contributing this several which and design different those I last new be in to and fabs, alluded some technologies several revenue

the to again last to our sensor And mature and are back products compared products quarter. smartphone then customers up the kicking

the guess be government I all couple contracts compared alluded last of that the contributing things being this noteworthy then to number the net quarter. contract And revenue quarter. forecasted the are of is to this revenue one. biggest to up IP are other we So that quarter, quarter that contributors clearly, in a But up the to

Richard Shannon

Okay. And Brian, part couple contracts. of a newer up on that maybe follow last the to there,

can't those of you've this one the that this with a tape-out customer us of year, times a ago an dollars. called an some in seeing driving of ones to you to year can of here? for tell you so Is all millions opportunity allude contributors? referred any And tens example, the a that of since increase other couple than that about As of the out last are what really other you

Brian C. Faith

That's we earlier referred was definitely contributing, taped out product is for. the the one to that

other that during have last definitely though even well quarter. XXXX, contributing contributing ones quarter. an some the quarter more some we in quarter work. we're some win then was contributing XXFDX core doing work We as those is that this development are think contribute announced for in we will that a the for smaller that of the in meaningfully So IP the on in had IP And

Richard Shannon

nice Maybe increase let's to jump into pipeline the a XXX here. from Obviously, XXX.

question I and comments one the from last think got quarter the -- asked here. of was same I interesting one

at So want of quarter-on-quarter. pipeline into are here bookings that of any the the parts there adds the gross So of pipeline went here? kind I to look

Brian C. Faith

$XX funnel defense Yes. which in net in Gross last to let's contracts, government grew, that in then when business XX% the about say, coming the $XX majority funnel fact adds are the that part the new we now million that that of add from from that quarter. pipeline, get large of booked the the flowed And funnel. the to factoring of increase, is nondefense from of booked million, some net out contract into that opportunities August. just is over The

about are the net large a the from decreases of again, business. XX% primarily coming that, So nondefense increase side defense and

coming me for our of in. FPGAs, have aware only some companies opportunity more that there. some device of bit are for business. those antifuse color are one which a one those Most just we side on that, of some for IP-based from add there is defense We're are new opportunity and coming that that opportunity, seeing two I'm the Sorry, of but coming antifuse opportunities of let in

optimism year to products the So gives us what for some that. and mature beyond. it's of will next see rebound good back us That's the that

Richard Shannon

I some to Brian. to manner gave with related on want with us exact helpful, language contract, the the government foundry. probably there? sounds going second engaged up you the but you have in you like That's One Can and missed to what's it large thing follow here, Okay. I understand is, help

Brian C. Faith

issue added foundry the little we'll to then one, I'm the one reasons, foundries. designing government not that that million for press as we in so those, other new they really now, X clear executing approved, able releases where that hopefully, from a a we're currently to mix is is. become about are second we have $XX first this different say second approve, what on and much the take obvious one we to can for contract exactly, are more And bit once than time

Richard Shannon

of look I'll that. enough. forward here. conference give specific out Understanding to guidance Okay. the Fair in We'll jump to line next question, XXXX into view call. you're Last your going some more us for

atypical being somewhat so to comment year-on-year well make some a a each coming you anymore. little that visibility comment, that's about XX% is think, love far helps growth of and as that But well, where not as you're quarter talking Maybe You're Brian? here. sense get confidence much I'd and a as that bit company you maybe of, for to visibility if -- I I can the you profitable let make guess, talk hardware that from

Brian C. Faith

Yes.

I think in see between inventory our smartphone the and saying up and if device business device with on starting those bookings long-standing divide and are recovering we're IP services, improvement people the the back on the side, of visibility some business, relationships business we mature digestion to from on customers. those the

a be so visibility think up, So contribute. some that think to will from year will we and I getting them make comment decent next that we're

share tend contracts. to longer sometimes a IP On the the be mix of And that and side, IP even I multi-quarter, development multi-month, think there's these licenses. contracts contracts

what contract And visibility beyond think the so contracts, XXXX. operating current well to we better more have follows I we're the the under these into

more have need decisions. on with to We they think we with side, the how more more make customer, easier gets, how I the in, and I make the their think, that they customers it goes see it data come say the necessarily more flow we the on I then that And engage wouldn't with, decisions. but to understanding IP

And the it of it's funnel day, more increases grow And right? we're into the at that us. a just funnel game, just confidence understandable, many we're making the that the sales layering going process just be to so so numbers by because able XX% more is of to forecastable these end in our sales a

the More booked flow to have it's businesses. and the going more opportunities, into out more qualified you numbers bottom

where need you business a And getting now about years handle this things says, Not we're "I can I I X give so X to we're directionally nonrevenue." through. point new think generate that into how think those we I that But we that on move in model, Y years a will number think to line the year to growth X another top enough next from here the funnel for us. can say XX% be

Operator

Our the Rick Investment comes next line of with Rivershore question from Neaton Research.

Richard Neaton

a Elias, coming. It's a Congratulations, quarter. been Brian and on record long time

of second the I bit to little the rad-hard you ask contract. wanted about aspect a

XXXX. several flow Does about million flow revenue For number the from quarters, you've having that $XX by foundry? the contract include the second talked possible revenue

Brian C. Faith

XX in flow Does the revenue through the million?

Richard Neaton

the your than the $XX just million SkyWater, include partner? Does Or foundry? include second more does foundry who's SkyWater, it

Brian C. Faith

more of include would than that which SkyWater year. last was we announced foundry, August the back foundry in just It first the .

Richard Neaton

Okay. whether $XX I million part just of a wanted was only that, the to understanding of better get possibility. SkyWater

said dovetails conference And has whatever into Okay. call. at that its been

extra of is you're you're smartphone visibility you smartphone saying products into Is with that into saying? family. so that design-ins company's Secondly, customer what QuickLogic year of what of year have one more now your an

Brian C. Faith

We do.

and about EOS purposes. them to visibility see And the management quarter that horizon when now with ship like were and is, earlier, for level pushing we'll aspect seeing And on SX of I at backlog a XXXX over net point for once yes, meetings devices. have we we of planning continuing the the the be that quarter quarter. for that to We into inventory year we're increased I just digested took seeing the their being this earlier where shipments in other said think that, last they is the

us So project turned bigger their digestion, year into can to for a XXXX corner the than be I so of think for we inventory on sort revenue smartphones XXXX. perspective-wise we

Richard Neaton

Okay.

expected your terms product million, In storefront just talking quantification that of IP in and operations? the Or the royalties the and that you in sales funnel include from sales eFPGA future storefronts are basically from any funnel? of license does the $XXX

Brian C. Faith

X-year So opportunities this funnel, there on of would say not it's on within that include have that frankly, not some funnel. device sort -- be defense but there be to sales would perspective like horizon $XXX crazy, And would say share the your funnels you you still the probably added would that in it, million commercial now. does we the it's anything lion's under that Brian, storefront we a of It you're because of from storefront, I are say, I the can't the that. side if number

commercial that can things those more for keeping device and of for couple the of of And of we device any we the have related out on the inventory defense a or just immediately than not that the included reasons that's off any we're it antifuse some now. storefront EOS to is So in of I business sell either that's stuff storefront mature is out number years stated. devices

Richard Neaton

Okay.

shouldn't you're we based then revenues storefront -- not XXXX, I defense assume on... So would before expect

Brian C. Faith

no. Yes and

from standard So have if it. defense going onward. different then we contract task XXXX could today contract, today the defense have yes, are We're done the products I not storefront we which devices, we storefront not like that said them it's is or that, sell designing just it a those this a devices, and happen you, that If types getting we're with customer. development again, government until it's very we're devices devices perspective, like for, before then already is agree that's in, to designed designing of that for because for

Operator

like to the closing back I'd management and concludes question-and-answer Ladies turn this remarks. you. to our Thank for gentlemen, call session.

Brian C. Faith

late forward held is report thank few speaking next XXXX Select or at over and all on November today's and XXXX. at for XX, We some in of our in we to to attending which when the quarter Alpha being for months, look participating person are fourth the Conference, the XX including Craig-Hallum support. continued want conferences we call in results you I your February fiscal

On the Needham in day. Thanks we XX, again, have Oppenheimer December Conference the and XG a Conference will be and XXXX. January XXXX, Thank at virtual you. early great

Operator

This concludes today's conference.

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

QuickLogic (QUIK) 14 Nov 232023 Q3 Earnings call transcript