GCT Semiconductor Holding, Inc. Q4 FY2024 earnings call

• Q4 2024 was a transitional quarter on the way to 5G chipset commercial rollout, with net revenues at $1.8 million and net loss reduced by 51% from Q4 2023.
• 5G chipsets are at the sampling one-yard line, and the 2025 GCT Year of 5G Program is launched to focus on 5G chipset development and mass production.
• Efforts to accelerate partnerships with Globalstar, Aramco Digital, Samsung, Kyocera, etc. are underway.
• Debt was reduced by close to 50% in 2024, and progress is being made in aligning the balance sheet with expected 5G sales ramp.
• R&D expenses increased by $6.6 million in 2024 due to 5G development activities, sales and marketing expenses increased by $0.7 million, and general and administrative expenses increased by $3.4 million.

For the fourth quarter of 2024, net revenues were $1.8 million with a gross margin of 32.3%. For the full year 2024, net revenues decreased from $16 million in 2023 to $9.1 million in 2024. The decrease was due to a $6.2 million reduction in product sales and a $0.7 million decrease in service revenue. Cost of net revenues decreased by $5.2 million, leading to a gross margin increase to 56% for 2024 compared to 42% in 2023. Product sales in Q4 2024 were $660,000, primarily from 4G LTE chip sales with no platform sales.

• Expect the second half of 2025 and onward to be strongly shaped by 5G chipset sales.
• 5G chipset availability is expected in the first half of 2025 as previously guided, with acceleration of ongoing programs with partners.
• Progress made in reducing debt and extending debt maturities, and advanced discussions with potential investors to meet near-term capital funding needs.

Q: Can you provide a breakout of product revenues, products versus platform sales, and mix of services in Q4 2024?

A: In Q4 2024, there were no platform sales. All $660,000 in revenue for products primarily came from 4G LTE chip sales.

Q: How do you see 2025 playing out for 5G ramp, including partnerships like Aramco Digital, Kyocera, Globalstar?

A: Aramco Digital's contribution is expected more in 2026 as they work on infrastructure. In 2025, initial partners will launch FWA products, mobile hotspots, and convert existing 4G customers to 5G. Partnerships with Kyocera, Globalstar, etc. will contribute to 5G ramp.

Q: How do you expect cash burn to perform in the first quarter and beyond?

A: Q4 2024 had a net cash burn of about $2.3 million. Expect similar level in Q1 2025, with slight shipment of 5G chip samples in Q2 and ramp-up in second half of 2025.

Q: Is the adjusted EBITDA breakeven target of around $25 million in sales still relevant?

A: That remains the number being modeled at this point, considering gross margin targets.