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01/10 18:23
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Despite a promising Q4 revenue outlook and potential future contracts, Q3 shows concerning financial metrics: a sharp decline in gross margin, increased net losses, and reduced cash reserves. The Q&A highlights further risks, including government shutdown impacts and delayed IP contracts. Management's lack of clarity on key metrics adds uncertainty. While Q4 guidance is optimistic, the current negative financial performance and uncertainties suggest a negative stock price movement in the short term.
Total third-quarter revenue $2 million, down 52.5% from Q3 2024 and down 45% compared to Q2 2025. The decline was attributed to lower revenue recognition for U.S. government SRH FPGA contracts and delays in certain contract awards.
New product revenue in Q3 $1 million, down 73.1% from Q3 2024 and down 67.3% compared to Q2 2025. The decline was due to delays in contract awards and lower revenue recognition.
Mature product revenue in Q3 $1.1 million, up from $0.7 million in Q3 2024 and up from $0.8 million in Q2 2025. The increase was attributed to higher demand for mature products.
Non-GAAP gross margin in Q3 Negative 11.9%, compared to 65.3% in Q3 2024 and 31% in Q2 2025. The decline was due to unfavorable absorption of fixed costs and $300,000 of R&D costs allocated to COGS.
Non-GAAP operating expenses in Q3 Approximately $2.9 million, down from $3.3 million in Q3 2024 but up from $2.5 million in Q2 2025. The decrease year-over-year was due to cost management, while the quarter-over-quarter increase was due to COGS allocation.
Non-GAAP net loss in Q3 $3.2 million or $0.19 per diluted share, compared to a net loss of $0.9 million or $0.06 per diluted share in Q3 2024 and $1.5 million or $0.09 per diluted share in Q2 2025. The increase in net loss was due to lower revenue and gross margin.
Stock-based compensation in Q3 $0.8 million, down from $1.2 million in Q3 2024 and flat compared to Q2 2025. The decrease year-over-year was due to fewer stock-based grants.
Cash at the close of Q3 $17.3 million, compared to $19.2 million at the close of Q2 2025. The decrease was primarily driven by tape-outs, wafer costs, and expenditures related to revenue contracts.
SRH FPGA Test Chip: QuickLogic has developed an SRH FPGA test chip using GlobalFoundries' 12LP process, targeting large defense industrial-based entities (DIBs). The test chip is expected to be delivered in early Q1 2026, with dev kits ready shortly thereafter. This initiative is independent of U.S. government contracts and aims to secure strategic design wins.
eFPGA Hard IP: QuickLogic announced a $1 million eFPGA hard IP contract for a high-performance data center ASIC on TSMC's 12-nanometer process. The eFPGA hard IP will be the primary IP in the design, showcasing the increasing value of eFPGA in customer designs.
Digital FPGA Chiplet POC: QuickLogic completed the initial phase of its digital FPGA chiplet proof-of-concept (POC), which connects eFPGA IP to UCIe IP. This initiative is supported by strategic partners and targets defense, aerospace, industrial, and commercial markets.
Commercial Market Expansion: QuickLogic is expanding its penetration in commercial market sectors, with license revenue potentially surpassing NRE revenue for the first time this quarter.
Defense Industrial Base (DIB) Engagement: QuickLogic has significantly expanded its ability to address lucrative markets for high-density discrete FPGAs and ASICs requiring large blocks of eFPGA. The company is also leveraging its SRH FPGA test chip to secure storefront business opportunities.
Revenue Guidance: QuickLogic is targeting Q4 2025 revenue of $6 million, with a wide guidance range of $3.5 million to $6 million due to the timing of a $3 million contract. The company anticipates positive cash flow even at the low end of the range.
Cost Management: Non-GAAP operating expenses in Q3 2025 were approximately $2.9 million, below the midpoint of the outlook. Cash usage during Q3 was $1.9 million, primarily driven by tape-outs and wafer costs for the SRH FPGA test chip.
Onshore Fabrication Advantage: QuickLogic is the only U.S. company offering strategic rad-hard FPGAs and SRH eFPGA hard IP fabricated onshore, aligning with government requirements for strategic programs.
Smart Systems Trend: The increasing demand for smart systems is driving the need for larger blocks of eFPGA in ASIC designs, enhancing flexibility, security, and lifecycle adaptability.
Market Acceptance Delays: Delays in the market acceptance of the company's new products could impact revenue generation and overall business performance.
Revenue Replacement Challenges: The company's ability to replace revenue from end-of-life products is uncertain, posing a risk to financial stability.
Customer Design Activity: The level and timing of customer design activity may not align with the company's expectations, potentially affecting revenue.
New Orders Risk: There is a risk that new orders may not result in future revenue, impacting financial projections.
Advanced Wafer Technology: Challenges in introducing and producing new products based on advanced wafer technology on a timely basis could hinder growth.
Competitive Pressures: Intense competition from competitors may affect the company's market share and pricing strategies.
Talent Retention: The ability to hire and retain qualified personnel is critical and poses a risk if not managed effectively.
Supply Chain Disruptions: Changes in demand or supply, as well as general economic conditions, could disrupt operations.
External Disruptions: Political events, international trade disputes, natural disasters, and other business interruptions could disrupt the supply or delivery of or demand for the company's products.
Tax Liabilities: Changes in tax rates and exposure to additional tax liabilities could impact financial performance.
Revenue Recognition Timing: Delays in contract awards or funding, such as the $3 million commercial application contract and the mid-7-figure DIB contract, could push revenue recognition into future quarters, affecting short-term financial results.
Gross Margin Variability: Unfavorable absorption of fixed costs due to lower revenue and R&D cost allocations to COGS have led to negative gross margins, which could persist if revenue does not improve.
Government Contract Payments: The timing of payments from U.S. government contracts could negatively impact cash flow.
Revenue Guidance for Q4 2025: QuickLogic is targeting a total revenue of $6 million for Q4 2025. However, this is contingent on the timely award of a nearly $3 million contract for a commercial application. If the contract is delayed, Q4 revenue could drop to $3.5 million. The company has a high level of confidence in winning the contract, but timing remains uncertain.
Revenue Mix and Gross Margin Projections: At $3.5 million in revenue, the company expects $2.5 million in new product revenue and $1 million in mature product revenue, with a non-GAAP gross margin of approximately 45%. At $6 million in revenue, new product revenue is expected to be $5 million, with a gross margin of 68%.
Full-Year 2025 Non-GAAP Gross Profit Margin: The company projects a full-year 2025 non-GAAP gross profit margin of 38%, plus or minus 5%.
SRH FPGA Test Chip and Development Kits: QuickLogic expects delivery of SRH FPGA test chips in early Q1 2026, with development kits ready for shipment shortly thereafter. The initiative is aimed at securing strategic design wins and accelerating the storefront business model.
Intel 18A Contracts and Future Opportunities: A mid-7-figure contract targeting Intel 18A has been delayed to 2026 due to funding issues. However, QuickLogic has already delivered customer-specific eFPGA hard IP for Intel 18A test chips and expects further contracts, including a high-density proof-of-concept device in the second half of 2026.
Digital FPGA Chiplet Proof-of-Concept (POC): QuickLogic has completed the initial phase of its digital FPGA chiplet POC and plans to move forward with additional phases once external funding is secured. The initiative is expected to lead to storefront revenue in 2026.
eFPGA Hard IP Contract for Data Center ASIC: QuickLogic announced a $1 million eFPGA hard IP contract for a high-performance data center ASIC to be fabricated on TSMC's 12-nanometer process. This contract highlights the increasing value of eFPGA in customer designs.
Evaluation Kits for 12LP Test Chips: QuickLogic plans to offer evaluation kits for 12LP test chips by late 2026, enabling customers to accelerate system-level evaluations and designs.
The selected topic was not discussed during the call.
Despite a promising Q4 revenue outlook and potential future contracts, Q3 shows concerning financial metrics: a sharp decline in gross margin, increased net losses, and reduced cash reserves. The Q&A highlights further risks, including government shutdown impacts and delayed IP contracts. Management's lack of clarity on key metrics adds uncertainty. While Q4 guidance is optimistic, the current negative financial performance and uncertainties suggest a negative stock price movement in the short term.
The earnings call presents a mixed picture: strategic partnerships and government contracts suggest potential growth, but financial performance shows increased losses and less favorable cost absorption. The Q&A section highlights positive sentiment towards defense market opportunities but also reveals management's reluctance to provide specific future guidance, indicating uncertainty. With no market cap data, the net result is a neutral stock price outlook over the next two weeks.
The earnings call presents mixed signals. While the EPS beat expectations, indicating a positive surprise, there are several risks such as market acceptance delays and intense competition. The exit from SensiML is strategic but lacks immediate financial impact. The Q&A reveals potential revenue drivers and opportunities but also highlights management's vague responses, which may cause investor caution. Overall, the neutral sentiment reflects the balance of positive earnings surprise against potential risks and uncertainties in execution and market conditions.
The earnings call reveals significant challenges: a 28% revenue decline, reduced gross margins, and increased operating expenses. The Q&A section highlights uncertainties in key revenue streams and vague management responses, particularly regarding the Rad-Hard program. Despite some potential in new contracts and product development, the lack of a share repurchase program and substantial risks like market acceptance delays and competition further contribute to a negative outlook. The guidance for a net loss and absence of positive catalysts suggest a likely negative stock price reaction over the next two weeks.
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