QUICKLOGIC Corp Q3 FY2024 earnings call

Contract Delays

• A major contract was delayed due to expanded scope, pushing revenue recognition to Q1 2025.

eFPGA IP Opportunities

• Influx of inquiries from large companies for eFPGA Hard IP, especially targeting Intel 18A fabrication processes.

Strategic Contracts

• Awarded the third tranche of the Strategic Radiation Hardened FPGA government contract, with potential for a fourth tranche and expanded scope.

Product Shipments

• EOS S3 shipments expected to sequentially increase in Q4 2024 and Q1 2025, with new designs extending revenue into 2026.

Distribution Agreements

• Added Magenta to expand coverage in Turkey and UAE, generating ~$2.5 million in eFPGA IP design opportunities.

Software Tools

• Released Aurora V2.8, scheduled to release V2.9, and integrated Synopsys Synplify for eFPGA design flow.

In Q3 2024, new product revenue was $3.5 million, down 42% from Q3 2023 but up 16% from Q2 2024. Mature product revenue was $0.7 million, up from $0.6 million in Q3 2023 but down from $1.1 million in Q2 2024. New product revenue contributed a significant portion, while mature product revenue also had fluctuations.

Q4 2024 Revenue

• Guidance is $6 million (plus or minus 10%), with ~$5 million in new products and $1 million in mature products.

Non-GAAP Gross Margin

• Expected to be approximately 60% (plus or minus 5 percentage points).

Non-GAAP Operating Expenses

• Expected to be ~$3.3 million (plus or minus 10%).

Cash Flow

• Anticipate Q4 2024 to be the low point for net cash, with Q1 2025 expected to be cash flow positive.

• Contract Delays: Risks of delays in large contracts due to scope changes.
• Market Acceptance: Uncertainties in timing and market acceptance of customers' products.
• Competitive Landscape: Impact of Analog Devices acquiring Flex Logix and potential loss of IP licensing.
• Cash Usage: Higher cash usage due to investments in eFPGA Hard IP for Intel 18A and Synopsys software.

Q: Thoughts on Flex Logix acquisition and competitive landscape?

A: Brian discusses that Flex Logix acquisition leaves QuickLogic as sole Hard IP provider for eFPGA, creating opportunities for Intel 18A and other process nodes.

Q: Guidance change and revenue movement to 2025?

A: Brian explains a significant contract delay due to scope expansion, moving revenue to Q1 2025, with $4 million moved from Q4 2024 to 2025.

Q: Intel 18A foundry node confidence?

A: Brian is confident in Intel 18A opportunity due to US-based, leading fabrication tech and DIB's use of FPGA technology, positioning QuickLogic as first eFPGA Hard IP provider for 18A.

Q: IP business growth excluding Strategic Rad Hard?

A: Brian states non-Strategic Rad Hard component expected to grow over 50% from 2023, showing diversification and opportunity beyond the big Strategic Rad Hard contract.

Q: Cash flow vs non-GAAP profitability?

A: Elias explains that with 60% gross margin and flat OpEx, Q4 2024 can be profitable even with negative cash flow due to low cash burn.

Q: Synopsys deal details?

A: Brian explains integration of Synopsys Synplify into Aurora tool suite for customer-driven eFPGA design flow, enhancing usability for defense customers.

Q: 2025 growth outlook vs 2024?

A: Brian highlights diversification, absence of Flex Logix as competitor, and positive confluence of events leading to growth in 2025, unlike 2024's challenges.