GSI TECHNOLOGY INC Q1 FY2026 earnings call

• Fiscal 2026 first quarter net revenue was $6.3 million, up 7% sequentially and 35% Y/Y, driven by rising demand for SRAM chip. • Profitability improved with gross margin up 200 basis points sequentially and over 1,100 basis points Y/Y. • Operating expenses declined by 15% Y/Y excluding gain from HQ sale. • Concluded evaluation of Gemini-II chip's second spin, loans resolved, Silicon functional and ready for production. • Delivered Leda-2 board to defense contractor for proof-of-concept with Gemini-II. • Evaluating options to expand software and application teams, working on strategic scaling options. • ATM raised $11 million, ending Q1 with $22.7 million cash.

In the first quarter of fiscal 2026, net revenue was $6.3 million. Sales to KYEC were $267,000 or 4.3% of net revenues. Sales to Nokia were $536,000 or 8.5% of revenues. Sales to Cadence Design Systems were $1.5 million or 23.9% of net revenues. Defense and military sales were 19.1% of first quarter shipments, while SigmaQuad sales were 62.5% of first quarter shipments.

• Expect second quarter fiscal 2026 net revenues to range between $5.9 million and $6.7 million. • Gross margin for second quarter expected to be in the range of 56% to 58%.

• Supply chain issues due to U.S. tariffs affecting assembly in China, leading to extended lead times, causing some backlog to be delayed.

Q: Provide more color on the supply chain issues?

A: Tariffs directed at China causing assembly in China to move to Taiwan, affecting back end in Taiwan and extending lead times overnight.

Q: Will that end up making the customers possibly order earlier?

A: Customers need to adjust backlog coverage as they were used to previous lead times, and future orders may not be late but current quarter and possibly next may have delayed backlog.

Q: Sales to KYEC seemed a little weak this quarter. Can you comment on that a little bit?

A: Inventory levels have stabilized but orders couldn't be fulfilled this past quarter within lead time.

Q: And like with Cadence, those orders were pretty strong this quarter. What type of product are you shipping to them?

A: Emulation systems for front-end design of AI chips, supporting manufacturing of AI chips.

Q: As far as the ATM is concerned, what are the trading windows for the company for that?

A: Typically starts 2 days after earnings call, in this case opens on Tuesday and closes on the 15th of the quarter's last month.

Q: How are you incentivizing your sales force?

A: Independent sales reps paid on commission, distributors paid on margin, with independent reps having no competing lines and being paid on shipment of product, distributors on margin with GSI paying above corporate average.