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01/12 06:11
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: strong revenue growth and gross margin improvements are positive, but significant declines in sales to key customers and supply chain issues are concerning. The Q&A section reveals ongoing challenges with supply chain constraints and customer order patterns, which could impact future performance. Although there are advancements in product development and partnerships, the lack of clarity in some management responses raises uncertainties. Given these factors, the stock price is likely to remain stable, resulting in a neutral sentiment.
Net Revenue $6.3 million, up 35% year-over-year. This growth was fueled by rising demand for SRAM chips, driven by strong market momentum for leading AI processors.
Gross Margin 58.1% in Q1 fiscal 2026, compared to 46.3% in Q1 fiscal 2025, an increase of 1,100 basis points year-over-year. The increase was primarily due to product mix and benefits of scale from higher revenue on the fixed cost of revenues.
Operating Expenses $5.8 million in Q1 fiscal 2026, down 15% year-over-year (excluding a one-time gain from the sale of headquarters in Q1 fiscal 2025). This decline reflects meaningful progress on cost control.
Net Loss $2 million or $0.08 per diluted share in Q1 fiscal 2026, compared to net income of $1.1 million or $0.04 per diluted share in Q1 fiscal 2025. The year-over-year change reflects the absence of a $5.7 million one-time gain from the sale and leaseback of the company's headquarters in the prior year.
Cash Position $22.7 million as of June 30, 2025, compared to $13.4 million as of March 31, 2025. This improvement was supported by raising $11 million through the ATM.
Stock-Based Compensation Expense $341,000 in Q1 fiscal 2026, compared to $658,000 in Q1 fiscal 2025, reflecting a reduction in stock-based compensation expenses.
Sales to KYEC $267,000 or 4.3% of net revenues in Q1 fiscal 2026, compared to $1 million or 21.9% of net revenues in Q1 fiscal 2025. This represents a significant decline year-over-year.
Sales to Nokia $536,000 or 8.5% of net revenues in Q1 fiscal 2026, compared to $998,000 or 21.4% of net revenues in Q1 fiscal 2025. This represents a decline year-over-year.
Sales to Cadence Design Systems $1.5 million or 23.9% of net revenues in Q1 fiscal 2026, compared to $0 in Q1 fiscal 2025. This represents a significant increase year-over-year.
Defense and Military Sales 19.1% of Q1 fiscal 2026 shipments, compared to 31.9% in Q1 fiscal 2025. This represents a decline year-over-year.
SigmaQuad Sales 62.5% of Q1 fiscal 2026 shipments, compared to 36.3% in Q1 fiscal 2025. This represents a significant increase year-over-year.
Gemini-II chip: Evaluation of the second spin of Gemini-II chip concluded successfully. The silicon is fully functional and ready for production. Delivered Leda-2 board and associated algorithm to an offshore defense contractor for proof-of-concept work with Gemini-II for satellites and drones.
SAR and YOLO algorithms: Completed development of SAR and YOLO 3 and YOLO 5 algorithms optimized for edge AI applications. These are now available for proof-of-concept opportunities with other partners.
AI compiler for Gemini-II: Initial release phase of AI compiler for Gemini-II completed. Development of dynamic, low-precision software libraries to support larger models is ongoing.
Satellite and edge computing sectors: Targeting high-growth opportunities in satellite and edge computing sectors, driven by AI capabilities.
Defense applications: Gemini-II chip positioned for broader market potential, including drones in GPS-denied environments and next-generation satellite applications.
Revenue growth: Net revenue of $6.3 million in Q1 2026, up 7% sequentially and 35% year-over-year. Gross margin improved to 58.1%.
Cost control: Operating expenses declined by 15% year-over-year, excluding a one-time gain from the sale of headquarters in Q1 2025.
Cash position: Ended Q1 2026 with $22.7 million in cash and cash equivalents, up from $13.4 million at the end of Q4 2025.
Strategic review: Actively evaluating strategic opportunities to secure capital for advancing APU product development. Engaged Needham & Company as strategic and financial adviser.
Funding priorities: Near-term priorities include expanding software and application teams and advancing platform development for Gemini-II.
Supply Chain Constraints: Extended lead times are impacting the company's ability to fulfill orders in the second quarter of fiscal 2026. This has resulted in a portion of the backlog being unshippable within the requested time frame, potentially affecting revenue stability.
Funding and Resource Allocation: The company is actively seeking additional funding to expand its software and application teams and to support the development of the Gemini-II platform. This indicates potential financial strain or resource limitations that could hinder strategic execution.
Customer Dependency: The largest customer is navigating supply chain constraints, which could impact order volumes and revenue stability. Additionally, other customers have normalized inventory levels, which may affect future order activity.
Market Competition and Technological Advancement: The company is targeting high-growth markets like edge computing and AI-driven applications, which are highly competitive and require continuous innovation. Failure to keep pace with technological advancements could impact market share.
Operational Risks in Product Development: The company is in the process of advancing its Gemini-II chip and related software. Delays or inefficiencies in product development could impact the launch timeline and customer adoption.
Revenue Expectations: Net revenues for the second fiscal quarter of 2026 are expected to range between $5.9 million and $6.7 million.
Gross Margin Projections: Gross margin for the second fiscal quarter of 2026 is projected to be in the range of 56% to 58%.
SRAM Business Outlook: SRAM revenue for the remainder of fiscal 2026 is expected to remain stable compared to the first quarter, despite supply chain challenges.
Gemini-II Development and Launch: The company is accelerating the launch of Gemini-II, targeting high-growth opportunities in satellite and edge computing sectors. Near-term priorities include expanding the software and application team and advancing platform development for customer deployment.
Strategic Alternatives: The company is actively evaluating strategic opportunities to secure capital for advancing APU product development and may draw on the remaining balance of the ATM for near-term funding needs.
AI and Edge Applications: The company is developing a multimodal LLM targeting edge applications, with benchmark results expected next quarter. Efforts are ongoing to improve the AI compiler for Gemini-II and develop dynamic, low-precision software libraries for efficient edge AI.
The selected topic was not discussed during the call.
The earnings call summary reflects a mixed outlook. While the company has strong financial metrics and optimistic guidance, the lack of strategic partnerships and specifics on breakeven points and production timelines raises concerns. The focus on edge applications over data centers and the lack of new strategic investor interest further tempers the outlook. The Q&A revealed no major risks but highlighted uncertainties. Overall, without market cap data, the sentiment is neutral, as positive elements are balanced by uncertainties and lack of immediate catalysts.
The earnings call presents mixed signals: strong revenue growth and gross margin improvements are positive, but significant declines in sales to key customers and supply chain issues are concerning. The Q&A section reveals ongoing challenges with supply chain constraints and customer order patterns, which could impact future performance. Although there are advancements in product development and partnerships, the lack of clarity in some management responses raises uncertainties. Given these factors, the stock price is likely to remain stable, resulting in a neutral sentiment.
The earnings call presented mixed signals. Financial performance showed improvements in operating losses and gross margins, but the annual revenue declined. Product development is promising with new chips targeting emerging markets, yet market acceptance remains uncertain. The Q&A revealed management's lack of clarity on market size and strategic alternatives, raising concerns. The absence of a share repurchase plan and the need for new funding sources further add to the uncertainty. Overall, the sentiment is neutral due to balanced positive and negative factors, with no strong catalyst for significant stock movement.
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