Q4 2020 Earnings Call
You are currently on hold for today's conference call. At this time they are assembling today its audience substantially Andrea Sharkey. We appreciate your patience I'm pleased to remain on the line.
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Ladies and gentlemen, thank you for standing by welcome to the G.S., sorry technologies fourth quarter fiscal years Twentytwenty results conference call.
At this time, all participants are in listen only mode.
Hey, sharply boat conduct a question I'm on the session.
That's fine we will provide instructions for those who are interested in entering the queue for Q1 night.
Before we begin todays call. The company has requested stuff I read the following cities Harper.
Statements.
The matters discussed in this conference call May include forward looking statements regarding future events and the future performance G.S. <unk> technology that involves risks and uncertainties that could cause actual results could differ materially from Dallas anticipation.
Risks and uncertainties I described in the company's form 10-Q on 10-K filings with the Securities Exchange Commission.
Many of these risks are currently fight boy I will continue to be amplifies boy or in the future maybe amplified by the cold with 19 global pandemic.
Additionally, I have also been asked to advise you that this conference call is being recorded today may seven trying to teach right Gee I request as G.S. like technology.
Hosting the call today is the lean shoe the company's chairman President and Chief Executive Officer with him are Douglas Shirley.
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Vice President of sales I would now like to turn the conference over to Mr. shoe.
Please go ahead Sir.
Good afternoon. Thank you for joining the cool.
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Despite the unique circumstance <unk> Oh, the coldest cost.
And our team globally.
We remained focus on executing more people over to when you see.
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Thank you really.
I'm pleased to report that we are actively marketing Gemini our marketing team has created sales collateral to educate and users on all the unique performance characteristics and capabilities of Gemini ones.
Each is no ongoing for fixture recognition and drug discovery.
We are preparing to commence engaging with military and government customers for signal classification object detection and cryptography.
Due to current covert 19 shelter in place and work from home restrictions, we are building remote cloud based workshops.
We plan to use these remote workshops for demonstrations of Gemini ones functionality and conduct training with customers on our algorithms and software libraries.
Let me share in couple of specific examples of Gemini ones performance in two applications. We are currently pursuing.
Hi, I'm very excited about humanized performance and fixture recognition search.
Our performance data shows perspective customers that the Gemini one facial recognition search engine can process databases of up to 200 million faces a single Aipu Board.
These searches Gemini one is delivering highly accurate results, while reducing the query times for many minutes to fractions of a second.
Oh, it's much lower power consumption and edge processing.
Another exciting market. We're currently developing is drug discovery.
You may recall that in the late 2018, we announced a collaboration with the Weisman Institute.
And is in Israel on Cheminformatics research.
They weren't early user of the beta Gemini ATP solution.
All markedly improved productivity.
Use parallel processing technology with the ability to run multiple multiple queries that speeds of far exceed the CPQ search capabilities.
No researchers at the wasn't institute are using newly installed boards, continuing to Jim and I want to you.
Based on the premise that structurally similar molecules exhibit similar biological activities scientist or researching for the structurally similar compounds to existing drugs that have been successfully I'm sort of have been successful in treating diseases and finding viruses.
Boards containing Gemini one.
Institute researchers perform quicker searches using more queries to their database to find molecules with similar properties to their curry molecules.
Ultimate goal, it's a decrease the time needed to go from research into clinical trials.
Shifting to our sales breakdown for the fourth quarter.
Fiscal 2020.
Sales to Nokia were 2.4 million for 28.3% of net revenues compared to 5.2 million or 41.1% of revenues in the same period, a year ago add two point sixmillion or 26.3% I've never been news in the prior quarter.
Nokia sales have been slower in recent quarters, which we expected <unk>, which we expect to continue through the end of June.
The situation is somewhat fluid and assumptions change, but at this time Nokia's preliminary forecast shows an improvement in sales in the second half of calendar 2020.
Military and defense sales were 30.9%, a fourth quarter shipments compared to 22.1% a year ago, an 18.9% in the prior quarter.
Taking a clock continues to be our best performing product category with sales of 44.7% a fourth quarter shipments compared to 57.4% into fourth quarter of last year and 62% in the proceeding third quarter.
I'd now like to hand, the call over to Doug.
Please go ahead Doug.
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For the fiscal year ended March 31st <unk>.
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We reported net loss of $10.3 million for 45 cents per diluted share.
Net revenues of 43 point Threemillion.
Fair to net income of $163000 for one cent per diluted share.
Net revenues of 51.5 millions into fiscal year ended March 31st 20 munching.
Gross margin for fiscal 2000, <unk> was 15.5%.
Scripts, 61.4% in the prior year.
Total operating expenses were $36.1 billion in fiscal 2020 <unk>.
An increase of 13.6% 31.8 million.
20 might shape.
Research and development expenses were $25.2 million.
Compared to $21.4 million.
Carved exposure.
Selling general and administration expenses were $10.9 billion Kurt.
Finally, the fiscal 2000 might change.
The increase in research and development expenses was primarily due to the develops but if you could probably say I'd processor.
I think a charge of $2.7 billion took a third quarter fiscal 2020 for purchase intellectual property.
But as being incorporated into the next generation would jeopardize ships.
Fiscal 2020 operating loss was $10.8 million.
Your character and operating loss of $182000 per year.
The increase in operating loss is primarily due to the decrease in revenue.
Gross profit and higher research and development expenses.
Fiscal 2020 net loss included interest and other income of $712000.
Tax provision of $247000.
Compared to $450000 interest and other income.
Tax provision of $105000 a year ago.
The company reported a net loss of $3.8 million or 16 cents per diluted share.
Our net revenues of 8.5 billion.
Fourth quarter fiscal 2014.
Compared to net loss of $102000.
Your second quarter literature.
And their brokers and corporate separately for the fourth quarter fiscal 2019.
Net loss of 4.6, $20 or 20 cents per diluted share.
I never owners of $10 billion, the third quarter fiscal 2020.
Gross margin was 52.5%.
Compared to 61.3% prior year period.
60.2% to the preceding third quarter.
The change in gross margin was primarily due to changes in the mix of products sold in the negative impact of manufacturing overhead reduced revenues.
Total operating expenses during the fourth quarter fiscal 2000 $23.4 billion coverage, they put 1 billion.
Fourth quarter fiscal pretty hard team and 10.8 million per quarter.
Research and development expenses were true for 5.6 billion.
5.6 billion, but part of your period, they put to win the per quarter.
The decrease of R&D expenses from the prior quarter reflects a charge of $3.7 billion for third quarter.
As for 2020.
Purchased intellectual properties.
Incorporating into the next shipment to the next generation for jumping on ships.
Selling general and administrative expenses for $2.8 million for the quarter at March 31st <unk>.
Compared to 2.6 million in the prior year.
6 million previous quarter.
Fourth quarter fiscal 2020 operating loss was $3.9 billion.
Reported an operating loss of $365000 part of your period.
Operating loss of $4.7 billion per quarter.
Fourth quarter fiscal 2020 net loss.
Could it interest and other income of $140000.
At attached versus $65000.
Compared to $186000 interest and other income.
The tax benefit $77000, let's say period a year ago.
For the preceding third quarter net loss accrued interest and other income of $207000 attached provision of $84000.
Total fourth quarter pretax stock based compensation expense for $644000 compared to $580000 to the comparable quarter year ago.
$629000 per quarter.
At March 31st 20 to 40 66.6 million in cash.
Cash equivalents in short term investments at 4.1 billion long term investments.
Compared to 61.8 billion cash cash equivalents constructor investments.
Finally, the long term investments at March 31st 20 my team.
Working capital was $70.9 billion as of March 31st 2020.
68.6 billion at March 31st 20 machines with no debt.
Stockholders' equity as of March 31st 2020 per Se didn't I'd put 6 million compared to 93.2 or whatever.
The best friend right at March 31st pretty much it.
Fourth quarter results for what's on the range of cards provided or last earnings release for net revenues and the rigs of 8.5 billion to 9.5 million.
Gross margin of approximately 50% 52%.
Our current expectations for the upcoming quarter.
Net revenues at a range of separately.
It really.
Gross margin of approximately 48% to 52%.
We've expanded our guidance range for the upcoming quarter correct to reflect the impact of possible changes in customer buying patterns.
Communication limitations related to shelter place restrictions.
Require significant number of our customer contacts to work from home.
Disruption to the marketplace. They were currently experiencing.
Like anything we've ever had to deal with.
While we continue to monitor this metrics that we have historically used to predict or financial performance.
We're uncertain as to whether these metrics will.
Great consistently.
Historical experience.
Operator at this point, we'll open the call <unk>.
Thank you if he would like to ask your question. Please take note by pressing star one on your telephone keypad.
If you are using a speaker phone. Please make sure your mute function, it's turned off to allow you're sick buttery Jack White men again, that's down I wanted to ask a question well pause for just a moment to allow everyone an opportunity to seek no question.
Well now take their first question from correct Conmen Dennis. Please go ahead your line is.
Hi, guys scare me.
Declare victory Oh, great Okay.
Wiseman are they getting just some free or chips and boards as the collaborator Harvey planning, our meeting to order or any or how is that kind of going are they are they being your guinea pig could be able to sell to other places.
Oh, yes to both accounts. So we have loved them in the past and we have given them the upgraded or you know the new system recently, as we mentioned and they plan on paying for that system.
Okay, or they are more modest prospect compared to some other larger what companies or how to hold it because it seems like right now that area is as hot as it's ever going to be and I'm wondering how you're able to get the window or get some first.
Patients to some of these two companies.
So we but as I mentioned in the.
This discussion earlier, we have the marketing collateral that we recently put together.
Within the last month and day consists of a sales brief which is a one page front and back high level explanation and we've broken it down by market segment. So we have one currently for facial recognition and we have one for the drug discovery.
And we put that out to the world and as a backup we have.
More in depth cars are more in depth presentations and in more depth technical write ups almost like white papers, along with a presentation for each of these market segments.
And then so we've been doing some of the demos and some of the presentations based off of the initial outreach with the the one page sales brief.
How do you already a feeling early on about those conversations are presentations.
Good I mean, certainly if youve seen some of the results.
No we put out some of the benchmarking everything looks it's really good I mean, we're certainly early in the process as I mentioned, we just received these documents within the last few weeks.
So it's early in the process, but certainly the results are or what we expected and a and so we're we're.
Communicate that to the marketplace now so I mean, so far it's been good feedback.
Okay and facial recognition I would agree the results of what you're doing are extremely impressive so I'm trying to gemalto.
We might start getting some orders of some sort the fisher recognition looks extremely positive do you have some type of a partner there and then how was that sales process said some of them already been aware.
Are you starting from scratch how's that looking.
So yeah, we had two partners, which we saw one one of them was having some some financial difficulties.
But the other one is still there there were doing up you'll see with them right now based off of their algorithms on that so that's going to take some time and then beyond them beside beyond the initial partners were now as I mentioned, reaching out to other folks in that space.
To be able to give them presentations and and then more detailed white papers.
Government part of that.
Government as part of that yes.
One other thing and then I'll, let somebody else is in but either dog or.
Last November.
Oh I thought you you didn't have anything at the office at the office in your training facility. There this year.
Something was in general.
The people that you've contacted before do you see any chance of indications of interest some type of orders through the summer too hard to tell what's kind of your your gut on that.
You know, it's too difficult to predict and I'll tell you what I you know I was having a conversation sometime back when somebody asked me. So when when do you expect in order and that because I was talking about a red color and opportunity and that's what I expect you ordered last third quarter.
Because that's when it was supposed to come in and so that for me to make a prediction I'm sorry, I'm much money P.U. I apologize I switch gears Oh on A.P.
But yeah, sorry about that so you'd I thought you had a training free B.U. in January.
Headquarters or some kind of training thing. So my question is more about D.P.U.U.C. getting any indication of inference or possible P.O.'s of some sort this summer and some of these people have baby then tracking along the way or what's kind of your field feeling about their apologize I meant to keep you know.
Yeah. It doesn't seem to you that is correct. The training was done in the first quarter. It was I can't remember if it was an a january beginning of February and that you're you're correct. So we we went out and did the training.
It'd be for a government entity, who actually purchased aboard from us back in in December and so that that those conversations are still occurring and we've also done something additional for that for the A.P. you in that market spaces.
I'm, a member of something called track.
As as H.R.E.C.
And and so we're in part of that member and so what we have is we have some some active P.H.D.'s and also other people within the the Shrek organization or or I since the organization, but.
Group that we'll be doing some work with us on adding additional resources for the P. you specifically in areas, where they can right.
<unk> libraries for algorithms or they can make changes to the F.P.G. that is currently honor A.P.U. board to be able to utilize more of the resources within the F.P.G.A. that's on the board.
That's that's happening now and those are all geared towards.
The military government type of application so that that's a recent within the last quarter update.
Well do you think this summer it's possible to get.
Some initial orders or how are you thinking.
Thinking about that.
<unk> I mean, I I can say I could say that yes, and it doesn't happen I, just really hard to predict when it's going to happen, but certainly you know as we mentioned you know in the <unk> at the beginning between signal classification between the object detection cartography there's.
A massive amount of interest for this type of a technology and in that government space.
Okay, and congratulations I mean, I I was on sure how the performance is gonna look but to somewhat of a lay person I mean, certainly it looks salable. It just depends on you know getting around the environment, when but certainly the performance metrics.
Very impressive no. One question, leaving was talking about overall costs. So you were talking about the price of these so Apple place you were thinking of the appeal board, it's still would be cost effective when you're looking at speed power performance you know footprint.
Or do you or would you have to have a lower price and which are originally thinking.
No no. There's there's no reason for us to have any lower prices.
Any of our initial assessments.
Okay.
Guys, it's been along the road and now we got.
Pandemic, so [laughter] work through that and look forward to how this all Pam don't thanks a lot.
And you make your car.
There are no further questions in the queue at this time.
[laughter].
<unk>, we look forward to speaking with you how can we do for office quota physical 2021, but.
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