Q1 2025 QuickLogic Corp Earnings Call

25.

Speaker Change: I'd like to turn the conference over to MS. Alison Ziegler of Darrow Associates. Thank you you may begin.

Speaker Change: Thank you operator, and thanks to all of you for joining us our speakers today are Brian Faith, President and Chief Executive Officer, and Elias Nader Senior Vice President and Chief Financial Officer. As a reminder, some of the comments quick logic makes today are forward looking statements that involve risks and uncertainties, including but not limited to statements regarding our.

Speaker Change: Future profitability and cash flows expectations regarding their future business and statements regarding the timing milestones and payments related to our government contracts and statements regarding our ability to successfully exit sensible and actual results may differ due to a variety of factors, including delays in the market acceptance of the companys new products the ability.

Brian Faith: If you review the Faraday website, you'll see this pairing of a discrete FPGA with an ASIC or SOC is also more common than you might think in commercial design. We believe the Faraday FlashKit development platform that integrates our EFPGA hard IP in its SoC will lead to a number of contracts in commercial markets. Also intriguing to note about Faraday's success is its very tight focus on storefronts. Faraday manages storefront services for the vast majority of its contracts and with that reported nearly half a billion dollars in revenue over the trailing 12 months. To be clear, our sales through Faraday to its customers will be EFPGA hard IP contracts.

Aaron: Associate Professor for Environment and Moral Science at Chicken Spring. Welcome to Aaron's Bar.

Speaker Change: To convert design opportunities into customer revenue, our ability to replace revenue from end of life products, the level and timing of customer design activity the market acceptance of our customers' products the risk that new orders may not result in future revenue, our ability to introduce and produce new products based on advanced wafer technology on a timely.

Speaker Change: Basis, our ability to adequately market, the low power competitive pricing and short time to market of our new products intense competition by competitors, our ability to hire and retain qualified personnel changes in product demand or supply general economic conditions political events International trade disputes natural.

Speaker Change: Asters and other business interruptions that could disrupt supply or delivery of or demand for the company's products and changes in tax rates and exposure to traditional tax liabilities.

Brian Faith: However, we believe a growing number of our direct IP customers will have interesting QuickLogic handling storefront services. As a matter of fact, we booked our first direct-to-storefront contract earlier this year, and we have several contracts we believe will end up being storefront. We see this as a trend for QuickLogic.

Speaker Change: Actual results or trends may differ materially from those discussed today for more detailed discussions of the risks uncertainties and assumptions that could result in those differences. Please refer to the risk factors discussed in quick logics. Most recent filed periodic reports with the SEC quick logic assumes no obligation to update any forward looking statements or information.

Brian Faith: As we have tried to outline for you in this call, 2025 has started out more slowly than we anticipated. However, beneath the numbers, momentum is building rapidly, and we are confident that we will post solid revenue growth, non-gap profitability, and positive cash flow for a full year 2025. Not only that, we also believe we will build momentum throughout the year to set us up for solid growth for years to come.

Speaker Change: Which speak as of their respective dates of any new information or future events.

Speaker Change: Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to Quick Logic Corporation's fiscal first quarter 2025 earnings conference call. As a reminder, today's call is being recorded for relay purposes through May 20th, 2025. I'd like to turn the conference over to Ms. Alison Ziegler of Darrow's Associates. Thank you. You may begin.

Speaker Change: In today's call, we will be reporting non-GAAP financial measures you may refer to the earnings release, we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements.

Speaker Change: We have also posted an updated financial table on our IR webpage that provides current and historical non-GAAP data.

Brian Faith: Thank you. I'd now like to open the call.

Speaker Change: Please note quick logic uses its website the company blog corporate Twitter account Facebook page and Linkedin page as channels of distribution of information about its business such information may be deemed material information and quick logic may use these channels to comply with its disclosure obligations under regulation FD.

Alison Ziegler: Great, thank you.

Alison Ziegler: We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone.

Alison Ziegler: confirmations on what indicate your line isn't the question. You may press star 2 to remove yourself.

Alison Ziegler: For assistance using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we hold for questions.

Speaker Change: A copy of the prepared remarks made on today's call will be posted on quick logics IR web page. Shortly after the conclusion of today's earnings call.

Brian Faith: I would now like to turn the call over to Brian go ahead, Brian.

Quinn Bolen: First questioner is from Quinn Bolen from Needham & Company, please go ahead. Hey guys, thanks for taking my question. Brian, maybe just pop us through the ramp of Intel 18a. You guys have done a couple of test chips. Now, you know, as that starts to move to a production, you know, is your revenue stream mostly just royalties on the customer solution? And can you also just address if this customer is starting in commercial markets, is it more of a defense or risk based application? And then I've got a follow up there. Hey, Quinn, the audio is a little garbled, but I think if I repeat the question, you're asking about sort of the progress of Intel 1888 in general and our timing of different IP that we've done for that leading up into revenue and royalties in the future.

Thank you Alison and good afternoon, everyone and thank you all for joining our first quarter 2025 conference call.

Brian Faith: Last quarter, I said that we expected to be awarded the first of two <unk> P. G. I heard IP contracts for until a teenage designs within weeks.

Brian Faith: And the second one very shortly after that.

Forecasted the combined value would be mid seven figures and if awarded in the expected timeframe that the revenue would be recognized in Q2.

Brian Faith: The first of these contracts was awarded a few weeks ago. After our last conference call on and on April 28, we announced that we deliver design specific FPGA hard IP for the customers Intel <unk> test chip.

Brian Faith: The second contract is with the same customer but for a different program.

Brian Faith: The customer has advised us that it has been awarded funding for the program, but funding for the production of <unk>, which is a sub component of the program will not be awarded until Q4.

Brian Faith: Is that right? Yeah, that's right. Sorry for the background noise. Okay. Yeah, that's it, I guess. If we rewind a year when we first got access to the PDK version 1.0, this was definitely the first time that we've designed something on this modern of a process technology that's sort of state-of-the-art. Definitely took a lot from our team to get that going, a lot of EDA tools, a lot of focus on that. But once we had it ported to that technology, we started to appreciate some of the capabilities of it, like the power via backside power that I mentioned earlier.

Due to this delay our revenue guidance for Q2 is $4 million.

Brian Faith: While disappointing it does not change our full year outlook for solid revenue growth non-GAAP profitability and positive cash flow.

Brian Faith: Let's take a moment to discuss the test chip program.

Given the fact until 18 day is a new process and incorporate some state of the art features such as power via backside power delivery network that we are using in our FPGA heart IP.

Brian Faith: We determined having a test strip would be a good investment.

Brian Faith: That was one of the basis of our presentation at the Intel Direct Connect last week or two weeks ago. And we realized that you could actually, we got a really good IP core out of this in terms of power and die size because of those capabilities that we took advantage of. And I think that as we started engaging more primarily with the defense industrial base, They're looking for things that are... I would say further down the TRL curve than just paper Tigers or PowerPoint. And when I say TRL curve, I'm talking about technology readiness level.

Brian Faith: To do a test chip on our own would have cost millions of dollars. So we contributed our FPGA hard IP license in kind for access to the customers test chips.

Brian Faith: These test chips will enable us to fully characterize the power consumption and performance, which enables lead prospective customers to lower their risk assessment of our FPGA heart IP on the until 18 as silicon.

Brian Faith: As it just turned out just the delivery of our design specific FPGA heart, IP and having a test chip heading into fabrication of the summer has given some prospective customers confidence to accelerate their engagements.

Brian Faith: It's from one to nine. One is through your paper simulations, and nine is your in-flight on-time. So by us participating in this test ship that we've talked about, this actually helps accelerate further down the TRL curve in the eyes of prospective customers, especially defense industrial based ones. And I think that that was sort of the tipping point where we're able to carry these additional customer conversations forward into. you know, more timing-related discussions, commercial-related discussions, and understanding when they're planning to tape out their own test. So, I think that's all to say that we do have 18A license revenue forecasted this year, this fiscal year, not just that one that we mentioned that's shifted to Q4, but even before that from some other customers, including commercial ones that I think are viewing 18A as far enough along that it's worth pursuing from them for the ASIC that they might be developing because it's de-risked in their mind.

Brian Faith: Our rapid delivery of the design specific FPGA heart IP for the test Chip has also brought us closer to this key customer as a matter of fact during a high level meeting with the customer in early May a third design for its shiplett fabricated using Intel <unk>. It was outlined that we hope to secure later this year.

Brian Faith: We have invested heavily to gain our unique position as the first available source for FPGA heart IP for until <unk>.

Brian Faith: And Intel foundry as acknowledged our work in progress.

Brian Faith: Last summer, we announced that we joined the Intel foundry accelerator IP and U S. Mega alliances and we have recently been named a partner in the Intel foundry accelerator chip lit alliance.

Brian Faith: Some of you are aware I was invited by Intel foundry to present from the main stage at until foundry direct connect 2025.

Brian Faith: And then I think the last part, just how does that map out to revenue and royalties for QuickLogic? That would be second half of this year, not just that Q4 one that we talked about specifically, but other ones that we have not talked about in so much detail on these calls, perhaps even coming in before that now in terms of licensing, which would be IP license revenue in this fiscal year and then royalties probably next year when they would actually get test chips out and then convert it over to production chips. And they're not waiting at this point for Intel to be further along with the process.

Brian Faith: This was a quite a unique honor and that quick logic was one of only four companies to present in the ecosystem spotlight to an audience of more than 1000 people.

Brian Faith: The other three were cadence <unk> memory and Synopsys.

Brian Faith: Until foundry has published a video of the quick logic presentation on the until Youtube channel, We will post the link to the video in our blog following this call.

My presentation was very well received and the news that quick logic has delivered design specific FPGA heart IP for our customers Intel <unk> test chip was recognized as a significant milestone.

Brian Faith: I think the fact that Intel last week at the conference said they're in risk production, even on their own Panther Lake processor, kind of shows that it's good enough for production, in many cases. So. I'm glad we started a year ago. I think a lot of people were skeptical about starting so early in a process such as that, but I'm glad we did it, and we're the only one with that eFPGA hard IP now. So the more people see eFPGA and they start looking at their own ASICs and they're wondering, like, you know, this is a huge development cost and a huge development effort.

The excitement and anticipation for <unk> was palpable.

Brian Faith: Intel foundry confirmed until today is in risk production with Panther Lake scheduled for mass production by year's end.

Brian Faith: Intel Foundry also provided a clear road map forward for mental <unk> its strategy to address both U S Mag and commercial markets and it's rapidly developing initiatives for advanced packaging and <unk>.

Brian Faith: How do we de-risk this ASIC embedded FPGA? As you know, Quinn, it's a great way to de-risk system design because you're building in flexibility for that own product. It also builds in a lot of flexibility for N plus one, N plus two, N plus three products that you can address with that same die because of that inherent flexibility. So we're excited, as you can tell from my answer here. Yeah, yeah, no, definitely. And the value of the test chip, my guess is it's a certain size fabric that you're testing out on the test chip. The fact that you're just testing out a sort of given-size fabric is enough to convince other customers that says, hey, this is real, it's working.

In addition to Intel foundry painting, a very optimistic picture about its progress and future outlook. There was increased participation by alliance partners, demonstrating IP EDA and services for <unk> as there were at Intel direction at 2024.

Brian Faith: In short <unk> is ready for Prime time, and there is significant interest in the unique value proposition our technology enables.

Brian Faith: Our value proposition is integration.

Brian Faith: Which is what has driven the growth of the semiconductor industry since the invention of the integrated circuit 65 years ago.

Brian Faith: By using our unique FPGA heart IP design engineers can integrate the benefits of the discrete FPGA by embedding it in their ASIC and Soc designs or with the triplet solution.

Brian Faith: And if we, you know, change the size or the configuration, it's still enough in terms of their eyes to sort of give them the confidence to move forward on a new design. It absolutely is, because once you prove out a common denominator for the logic and the routing and the memory and the DSP blocks, most customers believe that if you can do that for that size, if you need to stamp and repeat a bigger array size for them, that we can do that. And they know that that's sort of our model with Astralis. We're sort of making almost like a memory compiler out of it for FPGA technology.

Brian Faith: As it stands today, we are the only company offering FPGA heart IP for until the <unk> technology that enables this integration.

Brian Faith: Pairing a discrete FPGA with an ASIC or Soc is very common and U S. Mag designs, where the total market for discrete FPGA devices is approximately one 5 billion.

The defense industrial base as intently interested in using <unk> for new designs and there are frequent use of FPGA technology bodes very well for our unique position.

Brian Faith: So once we prove out the first one for power and timing, that's all stamp and repeat for bigger array sizes. And the beauty of our model is we can do that in a matter of weeks, which is well within the cycle of what they need to do for an 18A type AC. Got it.

While capitalizing on this interest is a strong focus we are also rapidly building momentum and various commercial markets, including several new until <unk> opportunities.

Brian Faith: And then the second question I had, Jesse, you guys are looking for profitability for the full year, obviously a strong revenue ramp. Just wondering if you could kind of, what are the two or three maybe biggest drivers of that revenue ramp through the year? Obviously, you've talked about Intel 18.8 revenue, you've talked about the Red Heart contract. What are the key programs that drive that nice revenue growth into the second half? Thank you. Yeah, I can take that. So, our base business that's, you know, here every quarter is our ongoing NFU's FPGA business, what we call mature products, and then the strategic Red Heart contract.

Brian Faith: Yeah.

Brian Faith: On April 24th we announced the inclusion of our FPGA heart IP and the new Faraday Flash Kit 22, our Ram Soc development platform.

Brian Faith: This is the Umc's 22 nanometer design win we announced in November of 2023 and have been tracking the progress in our quarterly conference calls.

Brian Faith: Fair day, as a Taiwan based semiconductor company with a market capitalization of approximately $1 $5 billion. It's.

Elias Nader: And with that contract that we signed for the Red Heart contract last December, and then the in-curl funding modification that was added on top of that in the last few months, we have good visibility of that program for the rest of this year. So, the new revenue, the new wins driving the strong second half growth, we are forecasting to come from these IP contracts, some of which are just IP and some of which are storefront. And I think this, again, if you look back in history last five years, you go, well, that's going to be a lot of designs you need to close to get to that number.

Brian Faith: Its core business model is to help its customers develop ASIC and Soc designs and then storefront those designs.

Brian Faith: In the course of its business Fair day has seen a number of its customers pair a discrete FPGA with the ASIC or Soc.

Speaker Change: There was increased participation by alliance partners, demonstrating I P E D E and services for until 18, a as there were at Intel direction at 'twenty 'twenty four.

Brian Faith: That's fair day designs for them.

Brian Faith: The important point to embrace here is the primary purpose of an ASIC or SFC is to integrate as many discreet chip functions as possible into a single device and our IP enables that integration to include discrete FPGA devices.

Speaker Change: In short <unk>.

Speaker Change: Until a tenet is ready for prime time, and there is significant interest in our unique value proposition our technology enables.

Speaker Change: Our value proposition is integration.

Elias Nader: But then if you drill into, okay, in the last year, you've come out with two 12 nanometer process ports, and now you've got this one for Intel 18a, all of those have substantially higher average selling prices than the stuff that we were doing years ago on 22 and more mature nodes. And so, you don't have to close a lot of designs to get strong revenue growth. And like I was just answering on your first question, we are seeing a lot of strong interest on Intel 18a now, now that people realize that we're done with the first port, and those have, you know, substantial price increases or price, the value of those is much higher.

Speaker Change: Which is what has driven the growth of the semiconductor industry since the invention of the integrated circuit 65 years ago.

Brian Faith: To enable its customers to realize the many benefits of FPGA integration.

Speaker Change: By using our unique E. S. P. G. A hard IP design engineers can integrate the benefits of a discrete FPGA by embedding it in their ASIC and Soc designs or with a triplet solution.

Brian Faith: <unk> introduced its new <unk> Soc development platform, which includes our FPGA hard IP.

This enables faraday's customers to easily transition from a two chip solution and ASIC, our Soc paired with a discrete FPGA to a single chip solution of embedded FPGA inside the ASIC or Soc.

Speaker Change: As it stands today, we are the only company offering E. F. P. J Hart IP for until 18, a technology that enables this integration.

Brian Faith: We believe this platform will generate production FPGA heart IP license revenue beginning in the second half of 2025 and royalty revenue in future years.

Speaker Change: Yeah.

Speaker Change: Carrying a discrete FPGA with an AC or S. O C is very common in U S. Mag designs, where the total market for discrete FPGA devices is approximately $1 $5 billion.

Elias Nader: And so, we're seeing a handful of designs, again, both on 12 nanometer and 18a driving that second half revenue growth. and very well manageable within the team size that we have. Again, because we have this whole notion of Astralis being a very automated way of taking the port that we've done and then adapting it for customer and design-specific IPs that we need to come out with. Thanks. Thank you, Brian. Thank you, Elias.

Brian Faith: We believe there will be opportunities to expand our involvement with ferity going forward, notably Faraday was one of three companies that was prominently displayed at Intel direct connect as a value chain Alliance partner.

Speaker Change: The defense industrial base as intently interested in using until 18 day for new designs and there are frequent use of FPGA technology bodes very well for our unique position.

Brian Faith: There are four important takeaways from these data.

Speaker Change: While capitalizing on this interest is a strong focus we are also rapidly building momentum and various commercial markets, including several new Intel 18, a opportunities.

One fair days focus on commercial applications will help accelerate our expansion into new end markets too.

Elias Nader: Thanks, Quinn.

Rick Mead: Next question is from Rick Mead from River Shore Investment Research. Please go ahead. Hi, Brian. Hi, Elias. Thanks for taking my questions tonight. My first question is, you mentioned in your closing remarks, Brian, about several storefront opportunities. We know about one, which is the direct-to-storefront you announced, and you've also mentioned that the strategic red-hard contract could lead to storefront.

Brian Faith: <unk> fair day's success underscores the industry demand for and value of a storefront business model.

Speaker Change: Yeah.

Speaker Change: On April 24th we announced the inclusion of R. E. S. P. G. A hard IP and the new Faraday Flash kit twenty-two R. M. S O C development platform.

Brian Faith: Three our IP enables the integration of discrete FPGA that are often paired with ASIC and Soc devices.

Speaker Change: This is the U M. C 22 nanometer design win we announced in November of 2023 and have been tracking the progress in our quarterly conference calls.

Brian Faith: We believe this is a meaningful subset of the $12 billion discrete FPGA market.

Brian Faith: And for the Fair day development platform is likely to win many unique customer designs that will generate IP license and royalty revenue for quick logic that will scale very favorably.

Speaker Change: Fair day, as a Taiwan based semiconductor company with a market capitalization of approximately $1.5 billion. It's.

Speaker Change: Its core business model is to help its customers develop ASIC and Soc designs and then storefront those designs.

Brian Faith: Can you provide any color on what other opportunities you have for storefronts percolating in your funnel or in the itemized list of projects you've already provided. Sure. So, just to add one more to that list that you gave there, Rick, we have the November 2022 tape-out customer. So, between that and this more recent one that we just announced on the last call, the director's storefront, and then, of course, the biggest of which is the strategic grad art opportunity, those are contracted funds. And if we move to things in the funnel, we have a handful of ones that we've either proposed through The government RFP process, where people are looking at seeding different technologies to help build a chiplet ecosystem.

Brian Faith: We announced the fourth.

Brian Faith: Award of this strategic radiation hardened FPGA government contract valued at approximately $6 $6 million last December.

Speaker Change: And of course of its business Ferity has seen a number of its customers per a discrete FPGA with the ASIC or S. O C. That's fair day designs for them.

Brian Faith: Following that about six weeks ago, we announced an additional $1 4 million incremental funding modification, which extends the fourth tranche.

Speaker Change: An important point to embrace here is the primary purpose of an ASIC or SFC is to integrate as many discreet chip functions as possible into a single device and our IP enables that integration to include discrete FPGA devices.

Brian Faith: We have requested permission to share some details about the expanded scope of this contract with our investors, but so far that permission has not been granted.

Brian Faith: That said I can tell you. The device we are developing addresses a number of strategic and space applications, where total dose and single event radiation hardness is critical.

Speaker Change: To enable its customers to realize the many benefits of FPGA integration.

Speaker Change: They introduced its new <unk> development platform, which includes our E. S. P. G a hard IP.

Brian Faith: The designs must include the flexibility only FPGA technology can provide.

Speaker Change: This enables faraday's customers to easily transition from a two chip solution and ASIC or S. O C paired with a discrete FPGA to a single chip solution of embedded FPGA inside the ASIC or S O C.

Brian Faith: As a matter of fact, several customers have already expressed interest in using the resulting design via quick logics storefront once it is completed.

Brian Faith: We have that. There's ones that have come about now since at the Intel Conference, they launched their own chiplet alliance or ecosystem, and we're one of the founding members of that. And there's been a lot of interest coming out of that for chiplets that are now part of our funnel. I think because, again, we have IP ready now on 12 and 22 and now 18a, we can actually help people with their chiplet designs without having to do a portfolio. And if you think about the economics here, the further, more advanced you get in the process technology, substantially higher investment is required to do these designs and tape-outs, right, between IP and EDA tools and mass costs.

Brian Faith: Now, let me take a moment to update our progress on existing contracts that are scheduled to contribute to our FPGA hard IP revenue in 2025 and beyond.

We believe this platform will generate production E. S. P. G. A hard IP license revenue beginning in the second half of 2025 and royalty revenue in future years.

Brian Faith: A number of these contracts have achieved significant milestones during the last several months. These.

Speaker Change: We believe there will be opportunities to expand our involvement with parity going forward.

Brian Faith: These include tape out and in several cases test chips that have been completed and are in validation.

Speaker Change: Notably Fair day was one of three companies that was prominently displayed at Intel direct connect as a value chain Alliance partner.

Brian Faith: This is important because in some cases test chip validation will lead to an IP production license and in a few cases, new FPGA hard IP contracts.

Speaker Change: There are four important takeaways from these data.

Speaker Change: One fair days focus on commercial applications will help accelerate our expansion into new end markets.

Brian Faith: These are also good illustrations that a long tail of revenue is commonly attached to our FPGA heart IP contracts and following that a stream of royalty is our storefront revenue that can extend for years and in some cases more than a decade.

Brian Faith: And so there's a much higher bar now to do a chiplet or do a chip. And so if there's reuse that you can design into it, it's really perking people's ears up on how to do that. And that's where I think the EFPJ has a lot of value. And so, yeah, like I said, there's several opportunities that we're tracking now, some of which are new, coming out of the Intel Direct Connect conference around that, that we can be good participants in, either as IP or doing the full design ourselves. Okay, thanks for that explanation. That's helpful.

Speaker Change: <unk> fair day's success underscores the industry demand for and value of a storefront business model.

Speaker Change: Three our IP enables the integration of discrete FPGA that are often paired with ASIC and Soc devices.

Brian Faith: Let's start with the IP contracts, our first contract targeting the Globalfoundries, our GFS 12 O P. Fabrication node is with the defense industrial base customer and includes two cores.

Speaker Change: We believe this is a meaningful subset of the $12 billion discrete FPGA market.

Brian Faith: We completed our initial deliverables for the first quarter during Q3 and the second core during Q4 of 2024.

Speaker Change: And for the Ferret a development platform is likely to win many unique customer designs that will generate IP license and royalty revenue for quick logic that will scale very favorably.

Brian Faith: In accordance with the forecast I shared last quarter, we had nominal revenue recognition in Q1 and anticipate similar revenue recognition in Q2 in support of the customers test chip development.

Speaker Change: Yeah.

Speaker Change: We announced the fourth.

Brian Faith: You talked about the $1.5 billion. FPGA market in U.S. MAG, and your unique value proposition is enabling integration. Is the catalyst that you think you will be, that will enable you to make a dent into that addressable market? on the ability to lower the cost of verification of a product. I think you mentioned that each military use case has to be verified. and yet... It sounds like you can reduce the cost of verification to a per-chip verification. Is that where you're going with that? Yes. So if we step back for a moment, that $1.5 billion Obviously, it's a big number, and I'll give some foreshadowing if you want to go watch the video that we post later, but I give some more statistics in that presentation.

Speaker Change: The award of this strategic radiation hardened FPGA government contract valued at approximately $6 $6 million last December.

Brian Faith: Last quarter, we announced an FPGA heart IP contract with a new defense industrial base customer valued at $1 $1 million that will also be fabricated on the GF 12 O P node.

Speaker Change: Following that about six weeks ago, we announced an additional one 4 million dollar incremental funding modification, which extends the fourth tranche.

Brian Faith: Due to the fact, we already had FPGA heart IP established for that node, we will recognize revenue and record cash flow in Q2 and Q3 2025.

Speaker Change: We have requested permission to share some details about the expanded scope of this contract with our investors, but so far that permission has not been granted.

Brian Faith: Yes.

Brian Faith: Our first contract for Tsmc's 12 nanometer fabrication node is with a large well known international company. This design is for a new ultra low power Soc targeting a variety of commercial and industrial Iot AI applications.

Speaker Change: That said I can tell you. The device we are developing addresses a number of strategic and space applications, where total dose and single event radiation hardness is critical.

Brian Faith: The customer is currently evaluating test chips, and we expect a decision about a second Soc design during Q2.

The designs must include the flexibility only FPGA technology can provide.

Speaker Change: As a matter of fact, several customers have already expressed interest in using the resulting design via quick logics storefront once it is completed.

Brian Faith: In September 2023, we announced a leading technology company chose our FPGA heart IP for a design that will be fabricated using GFS 22 ft X platform.

Speaker Change: Now, let me take a moment to update our progress on existing contracts that are scheduled to contribute to our E. S. P. G. A hard IP revenue in 2025 and beyond.

Brian Faith: Test chips have been received and are in evaluation.

Brian Faith: If all goes as planned we anticipate revenue recognition of a production license during the second half of 2025.

Speaker Change: A number of these contracts have achieved significant milestones during the last several months. These.

Brian Faith: So following our IP services contracts that we believe will be supplied via our storefront program.

Brian Faith: but the Almost 75% of DOD systems use FPGAs today, so it's not a lot of money in a few systems, it's a lot of money in a lot of systems. And almost all of these systems are also doing ASICs, custom ASICs or SOCs by the Defense Industrial Base. Then why are they doing ASICs? A lot of times they're doing ASICs because they can't quite get functionality out of standard products that they need for the mission. It could be that they need to have something that's of the critical nature that's designed and manufactured onshore, whereas I think almost all, if not all, FPGAs today are manufactured overseas.

Speaker Change: These include tape out and in several cases test chips that have been completed and are in validation.

Brian Faith: In November 2022, I shared that we taped out a new device for a customer that incorporates our FPGA heart IP.

Speaker Change: This is important because in some cases test chip validation will lead to an IP production license and then a few cases, new FPGA hard IP contracts.

Brian Faith: While we remain in a holding pattern due to a delay with one of the customers subcontractors. We continue to believe we will resume work during the second half of 2025 and at this design has very substantial storefront potential starting in a couple of years.

Speaker Change: These are also good illustrations that a long tail of revenue is commonly attached to our E. F. P. G. A hard IP contracts and following that a stream of royalty is our storefront revenue that can extend for years and in some cases more than a decade.

Brian Faith: In addition to this initial contract we have engaged with this customer on multiple new ASIC and triplet design opportunities that incorporate our FPGA heart IP.

Speaker Change: Let's start with your IP contracts, our first contract targeting the Globalfoundries, our GFS 12 O P. Fabrication node is with the defense industrial base customer and includes two course.

Brian Faith: So there's a national security aspect to this. It could just be that they need to obfuscate their IP and they can't do that in standard products that have well-documented backdoors into the bits. It could also be that they're looking to lower swap. I mentioned that here today. I also talked about it in the presentation. Swap is an abbreviation for size, weight, and power. And sometimes people add cost to that to make it swap C. So those are all legitimate reasons why the Defense Industrial Base is looking at doing ASICs. And again, Why would you do $150 million ASIC?

Brian Faith: Last quarter, we also announced the award of the first phase of what we expect will be a seven figure direct to storefront FPGA heart IP contract with another new defense industrial based customer.

Speaker Change: We completed our initial deliverables for the first quarter during Q3 and the second core during Q4 of 2024.

Brian Faith: This application, which enables low power processing of changing algorithms is perfectly suited for our FPGA solution.

Speaker Change: In accordance with the forecast I shared last quarter, we had nominal revenue recognition in Q1 and anticipate similar revenue recognition in Q2 in support of the customers test chip development.

Brian Faith: We completed our deliverables for their first phase of this contract and expect to be awarded the next phase in the second half of 2025.

Speaker Change: Last quarter, we announced an E. S. P. G. A heart IP contract with a new defense industrial base customer valued at $1 $1 million that will also be fabricated on the GF 12 O P node.

Brian Faith: We anticipate design services and IP revenue recognition could begin in Q3 and carry into 2026.

Brian Faith: and then go buy a lot of FPGAs and stick it right next to that same ASIC. If you have the opportunity to integrate that into that same chip, not only are you going to get lower swap speed by having it all integrated together, yes, to your point, Rick, you can also reduce your qualification costs and your verification costs of multi-chips in one. Because a lot of the cost of verifying, it's the people time that you have to go through all this elaborate testing and environmental testing, and if you can just do that on one chip, you're saving a heck of a lot of time.

Brian Faith: Following that we expect storefront revenue could begin as early as 2027.

Speaker Change: Due to the fact, we already have E. S. P. G. A hard IP established for that node, we will recognize revenue and record cash flow in Q2 and Q3 2025.

Brian Faith: While some of our existing contracts have good storefront potential that may materialize earlier. This is our first direct to storefront contract.

Speaker Change: Our first contract for Tsmc's 12 nanometer fabrication node is with a large well known international company.

Brian Faith: Turning now to chip, let's there are two distinctly different shipment markets. The vertical market is where you see activity today, and where we have some chip with contracts with others pending.

Speaker Change: This design is for a new ultra low power Soc targeting a variety of commercial and industrial Iot AI applications.

Brian Faith: In most cases, a single company controls all of the devices in vertical markets. These include processors, so by AMD, Intel Nvidia and others.

The customer is currently evaluating test chips, and we expect a decision about a second Soc design during Q2.

Brian Faith: But in order to get to that step of integration, you have to feel comfortable that the technology itself is far enough along that TRL curve I mentioned earlier. And that's why test chips are incredibly important and impactful for defense industrial base. They use the term burn down risk. do a test ship, it burns down risk of these components so that you can justify why you need to integrate that together. And those are the trends that we're seeing, and again, those are the, I think, the drivers for why people are doing this integration of eFPGA into the ACIP.

Speaker Change: In September 2023, we announced a leading technology company chose our E. S. P. G. A hard IP for a design that will be fabricated using GFS 22 ft X platform.

Brian Faith: And customers that use triplets in conjunction with an ASIC or SFC.

Brian Faith: We have done well in the ASIC and Soc markets and believe we will continue to win new contracts for vertical market chip designs.

Speaker Change: Test chips had been received and are in evaluation.

Speaker Change: If all goes as planned we anticipate revenue recognition of a production license during the second half of 2025.

Brian Faith: The other chip with market as the commercial off the shelf or cots market.

Brian Faith: And this market semiconductor companies will develop and sell triplets that comply with industry standards as mostly catalog devices.

Speaker Change: So following our IP services contracts that we believe will be supplied via our storefront program.

Brian Faith: These standards are in development and are forecasted to begin rolling out in 2026.

In November 2022, I shared that we taped out a new device for a customer that incorporates our FPGA hard IP.

Brian Faith: And by the way, if you go look at that Intel presentation I gave, you'll see roughly the size of the ASIC market as well for the U.S. MAG market, and you can see why, again, this makes economic sense for people to do that. But I'll leave that for another time when you go look at the YouTube video.

Brian Faith: This is the market your chip will address with a variety of devices, including parts that incorporate our FPGA heart IP.

Speaker Change: While we remain in a holding pattern due to a delay with one of the customers subcontractors. We continue to believe we will resume work during the second half of 2025 and at this design has very substantial storefront potential starting in a couple of years.

Companies that want to participate in the cots market are anxious to develop devices, but most see the risks of doing that ahead of standards as being too high.

Brian Faith: Okay, one final question. Faraday was originally part of UMC, right? Or came from UMC? Are your opportunities with Faraday limited to the node that the part... that was announced works on, or are you looking at maybe going smaller, like at the 12 nanometer node? UMC is working with Intel on. I would love to go smaller. Obviously, we have a big focus on selling what's available today. And so, there's a big focus on doing what we can do and helping them with the 22 nanometer. It's probably like they're doing something on 12 with UMC. And I think that the more comfortable that they get, they being Faraday, with this notion of embedded FPGA and an SOC, the more amenable it is to jump to that next node.

Speaker Change: In addition to this initial contract we have engaged with this customer on multiple new ASIC and chip design opportunities that incorporate our FPGA heart IP.

Brian Faith: We are in early discussions with some potential customers regarding a digital proof of concept that would mitigate the risks of a physical design and give them a head start when standards are solidified.

Speaker Change: Last quarter, we also announced the award of the first phase of what we expect will be a seven figure director storefront FPGA hard IP contract with another new defense industrial based customer.

Brian Faith: Here, we are leveraging the power of our proprietary software tools and an innovative way that we believe will generate revenue ahead of standards gives us a foot in the door and help our customers get a jump on the market.

Speaker Change: This application, which enables low power processing of changing algorithms is perfectly suited for our FPGA solution.

Brian Faith: Our distributors continue to perform very well during the quarter. We saw an increase in both device and IP engagements and even though design cycles are generally long. We believe some deals will close in the second half and generate revenue this year.

Speaker Change: We completed our deliverables for their first phase of this contract and expect to be awarded the next phase in the second half of 2025.

Speaker Change: We anticipate design services and IP revenue recognition could begin in Q3 and carry into 2026.

Brian Faith: Last quarter, we announced that our board of directors is actively exploring options for sensible and there were preliminary discussions regarding the possible sale of the subsidiary or its assets.

Speaker Change: Following that we expect storefront revenue could begin as early as 2027.

Speaker Change: While some of our existing contracts have good storefront potential that may materialize earlier. This is our first direct to storefront contract.

Brian Faith: Due diligence is ongoing so I can't comment other than saying that our full year outlook for solid growth and profitability does not include any contributions from sensible.

Brian Faith: And the next node is probably not just for cost reasons. It's going to be for use case and applications and end markets. So, whereas 22 nanometer is great for low-power edge computing, 12 nanometer is probably going to be a little bit better at some other applications, more compute-intensive. And so, every engagement, every partnership we enter into, we think about, yeah, there's this first step, like in the case of this 22 nanometer one, but what could it lead to? There's a huge investment by both companies to get this thing working. And so, we want to see that it's portable to the next thing.

Speaker Change: Turning now to chip, let's there are two distinctly different shiflett markets. The vertical market is where you see activity today, and where we have some chip with contracts with others pending.

Brian Faith: With that let me now turn the call over to Elias for a review of the financial results and I will rejoin for our closing remarks. Please go ahead.

Okay.

Speaker Change: In most cases, a single company controls all of the devices in vertical markets. These include processors, so by AMD, Intel Nvidia and others.

Elias Nader: Thank you, Brian and good afternoon, everyone.

Brian Faith: Okay.

Brian Faith: Total first quarter revenue was $4 3 million.

Brian Faith: And approximately 300000 above the midpoint of our guidance range.

Speaker Change: And customers that use triplets in conjunction with any sick or S. O C.

This upside was driven by a customer that pull the new product shipments to Q1.

Speaker Change: We have done well in the ASIC and SLC markets and believe we will continue to win new contracts for vertical market chip designs.

Brian Faith: And 12 is clearly one of those. And then, I was pleasantly surprised to see them at the Intel Direct Connect as one of the folks doing 18A stuff. So, everything that we're doing now with 22, architecturally, software-wise, business model-wise, that all leads to what we could possibly do on the Intel 18A node, which I think is a very pleasant surprise. Thanks, Brian. Thanks, Elias.

Brian Faith: We have previously scheduled for Q2.

Speaker Change: The other chip market is the commercial off the shelf or cots market.

Brian Faith: Total revenue was down 28% from Q1 2024.

Speaker Change: This market semiconductor companies will develop and sell chipsets that comply with industry standards as mostly catalog devices.

Brian Faith: Down 24% compared to Q4 2024.

Brian Faith: New product revenue in Q1 was $3 8 million.

Speaker Change: Standards are in development and are forecasted to begin rolling out in 2026.

Brian Faith: Down 23% from Q1 2024.

Richard Shannon: Thanks, Richard. Next question is from Richard Shannon from Craig Hallam. Please go ahead. Thanks Brian and Elias for taking my questions. Brett, I guess the first question is, hi. So the $1.5 billion of FPGA revenues for US MAG, I think the way that you referred to it made it sound like it was just for Intel 18A related stuff here. But it seems like the strategic Red Hard would also kind of cover the same thing. So I just want to clarify, what does that exactly cover? So those are, that's an estimate of total FPGA usage by the US MAG on an annual basis, not specific to 18-H.

Speaker Change: This is the market your chip will address with a variety of devices, including parts that incorporate our FPGA hard IP.

Brian Faith: And down 19% compared to Q4 2024.

Brian Faith: Mature product revenue was zero point $6 million.

Speaker Change: Companies that want to participate in the cotton market are anxious to develop devices, but most see the risks of doing that ahead of standards as being too high we are in early discussions with some potential customers regarding a digital proof of concept that would mitigate the risks of a physical design and give them a head start one Stan.

Brian Faith: Down from $1 1 million in the first quarter of 2024.

Brian Faith: $1 million in the fourth quarter of 2024.

Brian Faith: The decreases in total revenue on new product revenue from prior periods were mostly due to the timing of certain large <unk> contracts.

Speaker Change: <unk> are solidified.

Brian Faith: non-GAAP gross margin in Q1 was.

Speaker Change: Here, we are leveraging the power of our proprietary software tools and an innovative way that we believe will generate revenue ahead of standards give us a foot in the door and help our customers get a jump on the market.

Brian Faith: It was 45, 7%.

Brian Faith: This was below the midpoint of our outlook due to the fact approx.

Brian Faith: Approximately 300000 of R&D.

Brian Faith: Costs that we projected would be allocated to opex were allocated to Cogs.

Speaker Change: Our distributors continue to perform very well during the quarter. We saw an increase in both device and IP engagements and even though design cycles are generally long. We believe some deals will close in the second half and generate revenue this year.

Brian Faith: So my apologies if I if I gave that impression. That's the annual programmable logic. market today in Revenue. Now, the strategic Red Heart one would obviously fall under discrete FPGA, but the market that that is also trying to go into is not just limited to the FPGA market today because that part is actually doing something that's not available today from FPGAs. To get to some of the capability that we're designing into that, you would actually have to go to your own ASIC.

Brian Faith: This compared with non-GAAP gross margin of 71, 3% in Q1 2024 and.

Brian Faith: 62, 9% in Q4.

Brian Faith: non-GAAP operating expenses in Q1.

Speaker Change: Last quarter, we announced that our board of directors is actively exploring options for sensible and there were preliminary discussions regarding the possible sale of the subsidiary or its assets due.

Brian Faith: We have approximately $3 million.

Brian Faith: This was approximately 200000 below the midpoint of our outlook.

Brian Faith: Due to the Cogs allocation I just mentioned doubled.

Speaker Change: Due diligence is ongoing so I can't comment other than saying that our full year outlook for solid growth and profitability does not include any contributions from sensible.

Brian Faith: This compares with non-GAAP operating expenses of $2 5 million in the first quarter of 2024 and.

Brian Faith: So from a total market perspective, it would actually be the FPGA plus the ASIC market or some percentage thereof that would be the served available market for that specific Okay, if that makes sense, that's helpful. Okay, now I understand a little better. Thanks for clarifying. Let's step over to the to the Red Heart program here and I was typing so fast here I may have mistyped or something here.

Brian Faith: $2 9 million in the fourth quarter of 2024.

Speaker Change: With that let me now turn the call over to Elias for a review of the financial results and I will rejoin for closing remarks last please go ahead.

Brian Faith: non-GAAP net loss was $1 1 million or <unk> <unk> per diluted share.

Speaker Change: Okay.

Brian Faith: This compares to a non-GAAP net income of $1 7 million.

Elias: Thank you, Brian and good afternoon, everyone.

Brian Faith: Oh 12 cents per diluted share in Q1 2024.

Elias: Total first quarter revenue was $4 3 million.

Brian Faith: non-GAAP net income of <unk> 6 million or <unk> <unk> per share in the fourth quarter of fiscal 2024.

Approximately 300000 above the midpoint of our guidance range.

Brian Faith: I guess my core question here is trying to get a sense of when you think we're going to start to see storefront revenues pop up. I get the sense that it could have been, you know, maybe talking one or two years ago, could have been like counter 26 or 27. Does that still fit your general time frame? Or how do we think? So we're wading into areas that I have asked for permission to share, and I've been denied that request, so I can't give hard years as dates, as much as I would like to. But let me try to give some contextual information, and you can draw your own conclusions.

Elias: This upside was driven by a customer that pull the new product shipments to Q1.

Brian Faith: The difference between our GAAP and non-GAAP results is related to noncash stock based compensation expenses and restructuring costs.

Elias: That's where previously scheduled for Q2.

Elias: Total revenue was down 28% from Q1 2024.

Brian Faith: Stock based compensation for Q1 was zero point $9 million.

Elias: Down 24% compared to Q4 2024.

Brian Faith: On restructuring costs for Q1 was <unk> 1 million.

Elias: New product revenue in Q1 was $3 8 million.

Brian Faith: Stock based compensation was $1 6 million in Q1 2024.

Elias: Down 23% from Q1, 2020 four.

Elias: And down 19% compared to Q4 2024.

Brian Faith: Zero $9 million in Q4 2024.

Brian Faith: For the fourth quarter.

Elias: But sir products revenue was 0.6 million down from $1 1 million in the first quarter of 2024.

Brian Faith: So I think that we've been doing this development since August of 2022, and when we signed that first contract, it was outlined as a four-year development. And at the time, I was also allowed to say that there's two chips contemplated in this contract, a test chip and a final chip, much like you would normally do in any development. And in more recent calls, I have talked about, I think, a lot more engagement with the defense industrial base, which means the end customers. getting closer and closer in milestones to being able to get them something that they can actually start evaluating with their own designs.

Brian Faith: One customer one distributor accounted for 10% or more of total revenue.

Brian Faith: At the close of Q1 total cash was $17 6 million.

Elias: 1 million in the fourth quarter of 2024.

Elias: The decreases in total revenue, our new product revenue from prior periods were mostly due to the timing of certain large FPGA IP contracts.

Brian Faith: Inclusive of the $15 million credit facility.

Brian Faith: This compares with 12 $21 $9 million inclusive of an $18 million.

Elias: Okay.

Elias: non-GAAP gross margin in Q1.

Brian Faith: <unk> facility at the close of Q4 2024.

Elias: It was 45, 7%.

Brian Faith: The primary driver for cash use during Q1.

Elias: This was below the midpoint of our outlook due to the fact approx.

Speaker Change: Was the timing of payments to subcontractors for the strategic Rod FPGA.

Elias: Approximately 300000 of R&D.

Elias: Costs that we projected would be allocated to opex were allocated to Cogs.

Brian Faith: Contract. Additionally, changes in accounts receivable.

Elias: This compared with non-GAAP gross margin of 71, 3% in Q1 2024.

Brian Faith: Contract assets on accounts payable resulted in a little more than $1 1 million daus and cash usage.

Brian Faith: So I'll just reiterate that like I just did from a programmatic perspective. You can draw some conclusions from that, but I'm definitely spending more time now than I was a year ago, directly with defense industrial base folks around this program. Doing that in a way that we can make sure that we have folks lined up for when devices are available, test chips are available, for them to start exercising with their own designs, which would include devices and our users. Okay, I'll look forward to the time when you actually get permission to talk about that a little bit.

Elias: 62, 9% in Q4.

Brian Faith: Also contributing to cash usage was where continued investments to develop FPGA hard IP for Intel <unk>.

Elias: non-GAAP operating expenses in Q1.

Elias: Approximately $3 million.

Elias: This was approximately 200000 below the midpoint of our outlook.

Brian Faith: Head of orders and the integration of Synopsys simplify and Aurora pool.

Due to the Cogs allocation I just mentioned doubled.

Brian Faith: We've completed the integration of simplify its over accrual on <unk>.

Elias: This compares with non-GAAP operating expenses up $2 5 million in the first quarter 'twenty 'twenty four.

Brian Faith: Setting aside some modest cost for further refinements completed our development of Intel <unk> hard IP during Q1.

Elias: $2 9 million in the fourth quarter of 2024.

Elias: Okay.

Elias: non-GAAP net loss was $1 1 million or seven cents per diluted share.

Brian Faith: While these were significant investments we believe they will produce very impressive ROI going forward.

Elias: This compares to a non-GAAP net income of $1 7 million.

Brian Faith: me too, believe me. I'll bet.

Brian Faith: Yeah.

Brian Faith: Maybe touching quickly on Faraday, probably more of a clarification. I was just re-reading your four takeaways from this, and I just guess I just want to make sure the revenues, you're not expecting any storefront revenues from Faraday directly, but you're using it to underscore the storefront business model. Is that okay? That's what I thought, but I just toot my horn. Faraday will be licensed and royalty, because they're the ones ultimately selling a storefront device to customers. Our point in bringing them up is I think it's a very good exemplar for the storefront model, where you start as services and IP, but ultimately are providing the supply chain services to the customers so that what you sell them or ship them is a finished good, and they don't have to invest in the supply chain resources and packaging relationships to get that done.

Brian Faith: As Brian noted.

Elias: 12 cents per diluted share in Q1 2024.

Brian Faith: Currently the only source for <unk> IP for Intel <unk>.

Elias: On a non-GAAP net income of zero point $6 million.

Brian Faith: I would have delivered design specific IP for customers test chip.

Elias: <unk> per share in the fourth quarter of fiscal 2020 four.

Brian Faith: With this unique position, we anticipate winning production construction in 2025 and beyond.

Elias: The difference between our GAAP and non-GAAP results is related to noncash stock based compensation expenses and restructuring costs.

Going forward, we do not anticipate developing FPGA hot IP for new fabrication processes.

Elias: Stock based compensation for Q1 was zero point $9 million.

Brian Faith: Ahead of contracts that fully fund the development costs.

Elias: On restructuring costs.

Brian Faith: During the first quarter, we raised approximately $1 $5 million from institutional investors in a registered direct offering.

Elias: Q1 was 0.1 million.

Elias: Stock based compensation was $1 6 million in Q1 2024.

Elias: 0.9 million in Q4 2024.

Brian Faith: As well as $1 $2 million net from the ATM, We announced last March.

Elias: For the fourth quarter, one customer on one distributor accounted for 10% or more of total revenue.

Brian Faith: While the ATM remains in place we have not utilized it since it was paused ahead of the registered direct offering.

Elias: At the close of Q1 total cash was $17 6 million.

Brian Faith: Now moving to our guidance and outlook for the second quarter of fiscal 2025.

Elias: Clusium, roughly $15 million credit facility.

Elias Nader: All right, maybe my last question here, and maybe it's from either of you. I think you've talked about, from a yearly perspective here, getting to Profits and Gross Margins, I think it's 60% or something like that. But you talk about solid revenue growth, I think was a term at least you've used last quarter. Any way you'd want to give us a sense of what that. quantifying. I mean is it something similar to what you were you were hoping for last year which I think was 30% just any way you want to help us level. Well, it's not 30 percent.

Elias: This compares with 12 $21 $9 million inclusive of an $18 million credit facility at the close of Q4 2024.

Brian Faith: Which will end on June 30th.

Brian Faith: Revenue guidance for Q2, 2025 is approximately $4 million plus or minus 10%.

Elias: The primary driver for cash use during Q1 was the timing of payments sub contractors for the strategic Rad hard.

Brian Faith: Second quarter revenues are expected to be comprised of approximately $3 $4 million in new products.

Zero point $6 million in mature products.

Elias: <unk>.

Elias: Contract. Additionally, changes in accounts receivable.

Brian Faith: As Brian stated in his remarks.

Brian Faith: The lower than anticipated Q2 revenue guidance is attributable to the delay of a large IP contract that we currently anticipate will be awarded in Q4 2025.

Elias: Tracked assets and accounts payable resulted in a little more than $1 1 million daus and cash usage.

Elias Nader: It's Elias, by the way, Richard. It's not 30 percent for sure. But since we don't give a yearly outlook, I'll tell you, we're expecting a decent rebound in the second half. Let's put it this way. That gives us that confidence to be profitable and to end the year with a cash flow positive.

Elias: Also contributing to cash usage was where continued investments to develop E FPGA hard IP for Intel ETE.

Brian Faith: Based on the anticipated Q2 revenue mix.

Brian Faith: non-GAAP gross margin for the second quarter is expected to be approximately 50%.

Elias: I had the orders and the integration of Synopsys simplify and Aurora Peru.

Brian Faith: Plus or minus five percentage points.

Elias: We've completed the integration of simplify it's Oracle.

Brian Faith: The lower gross margin is attributable to the unfavorable absorption of fixed costs due to lower revenue.

Elias: Setting aside some modest cost for further refinements.

Elias Nader: Okay, I think that is going to be all from you guys. Thanks for taking my questions. Thank you. Thanks.

Brian Faith: With the significant revenue rebound.

Elias: The development of Intel <unk> hard IP during Q1.

Brian Faith: We anticipate beginning in Q3.

Elias: While these were significant investments.

Brian Faith: We are modeling our full year non-GAAP gross profit margin will be in the low 60% range.

Martin Yang: Our next question is from Martin Yang from Oppenheimer, please go ahead. Hi, thank you for taking my question. My first question is a follow-up on Faraday. So in this partnership, do you expect Faraday to take on the majority of the go-to market to sell the chip? Are you taking on any sales responsibility? They will be the primary interface to their customer as they're talking to system companies that are wanting to do ASIC design. because Embedded FPGA is not just a. as an example. And there are software tools involved in a customer using the embedded FPGA.

Elias: We believe they would produce very impressive ROI going forward.

Brian Faith: Q2, non-GAAP operating expenses are expected to be approximately $3 million.

Elias: Okay.

Brian: As Brian noted.

Speaker Change: Currently the only source for E. S. P. G a hard IP for until 18 eight.

Brian Faith: So minus 5%.

Brian Faith: We are modeling.

Speaker Change: And have delivered design specific IP for customers test chip.

Brian Faith: non-GAAP opex to be approximately $3 million per quarter during the second half of 2025.

Speaker Change: With this unique position, we anticipate winning production construction in 'twenty to 'twenty five and beyond.

Brian Faith: Yeah.

Brian Faith: Please note that given the nature of our industry, we may occasionally need to classify certain expenses to Cogs.

Speaker Change: Going forward, we do not anticipate developing E FPGA HUD IP for new fabrication processes.

Brian Faith: Versus opex capitalized costs.

Brian Faith: The classifications are mainly related to labor and tooling for our IP contracts with customers.

Speaker Change: The contracts that fully fund the development costs.

Speaker Change: During the first quarter, we raised approximately $1 $5 million from institutional investors in a registered direct offering.

Brian Faith: This may cause variability in our quarterly gross margins and operating results.

Brian Faith: We are definitely right behind Faraday, enabling their sales force with different use cases and documentation and training so that it is a cohesive sell to the end customer. But they will be the point person, if you will, for those customer engagements directly. Got it. And can you give us a sense of the most applicable end markets or devices that those shippers will go into? Yeah, their, their focus is around low power, industrial and IoT applications. If you look at what they've said publicly about this development kit, and we actually had this at our booth at the Intel conference last week, it runs an operating system, it's got a display, and it has memory on the board, and the level of processing is definitely more than just a basic microcontroller.

Brian Faith: We usually balance out on the operating line.

Speaker Change: As well as $1 $2 million net from the ATM, We announced last March.

Brian Faith: After interest and other income we currently forecast on our Q2 non-GAAP net loss will be approximately $1 1 million daus.

Speaker Change: While the ATM remains in place we have not utilized it since it was paused ahead of their graduates that direct offering.

Brian Faith: The $1 2 million or seven to eight cents per share.

Speaker Change: Now moving to our guidance and outlook for the second quarter of fiscal 2025, which will end on June 30th.

Brian Faith: The difference between our GAAP and non-GAAP results is related to non cash stock based compensation expenses.

Speaker Change: Revenue guidance for Q2, 2025 is approximately 4 million daus, plus or minus 10%.

Brian Faith: In Q2, we expect the composition will be approximately zero point $9 million.

Brian Faith: This is the same as Q1 2025.

Speaker Change: Second quarter revenues are expected to be comprised of approximately $3 $4 million in new products.

Brian Faith: And up $100000 from Q2 2024.

Speaker Change: Zero point $6 million in mature products.

Brian Faith: As a reminder, there will be movement in our stock based compensation during the year I may vary each quarter based on the timing of grants.

Brian: As Brian stated in his remarks.

Brian: The lower than anticipated Q2 revenue guidance is attributable to the delay of a large IP contract that we currently anticipate will be awarded in Q4 2025.

Brian Faith: We anticipate in Q2 cash flow from operations will be relatively flat.

Brian Faith: So you could run some pretty good applications, including running a full operating system with user interface and GUI. So I think it would be applicable for low-power edge applications. And just for further clarification, one of the use cases that we actually had discussed prior with them was what we had talked about previously when we did our Arnold chip on 22FCX where we were able to reduce the energy consumption of edge AI applications like human presence detection. And that I think will be one of the demos that's actually provided to customers as a use case using that platform.

Brian Faith: On a scheduled and ask.

Brian Faith: Scheduled payments to subcontractors for our H contract approximately 50% lower than they were during Q1.

Brian: Based on the anticipated Q2 revenue mix.

Brian: non-GAAP gross margin for the second quarter is expected to be approximately 50%.

Brian Faith: While having the aforementioned on the ATM in place provides us with flexibility.

Brian: Plus or minus five percentage points.

Brian: The lower gross margin is attributable to the unfavorable absorption of fixed costs due to lower revenue.

Brian Faith: We are not currently planning to access it during Q2.

Brian Faith: As Brian noted earlier for the full year 2025.

With this significant revenue rebound.

Brian Faith: Anticipating solid revenue growth non-GAAP profitability and positive cash flow.

Brian: We anticipate beginning in Q3.

Brian: We are modeling our full year non-GAAP gross profit margin will be in the low 60% range.

Brian Faith: Thank you with that let me now turn the call back over to Brian for his closing remarks. Thank.

Brian: Q2, non-GAAP operating expenses are expected to be approximately $3 million.

Brian Faith: It was actually architected to do things like that very well.

Elias Nader: Thank you Elias.

Elias Nader: As I mentioned earlier I was selected by Intel to present, the quick logic story from the main stage of direct connect 2025. My presentation was very well received and based on the feedback we were given gave our core value proposition of huge shot of credibility.

Brian: So minus 5%.

Martin Yang: Thanks, Brian. That's it for me.

Brian: We are modeling.

Alison Ziegler: Okay, thanks, Martin. This concludes the question and answer session.

Brian: non-GAAP opex to be approximately $3 million per quarter during the second half of 2025.

Brian Faith: I'd like to turn it back over to Brian Faith for any questions. Yeah, thank you. Thank you for joining today's call. Before we conclude, I'd like to highlight a few upcoming events where QuickLogic will be participating. May 21st, the Ladenburg Technology Innovation Expo in New York. If you are interested in meeting with us there, please contact Alison for details on how to register. June 23rd, we'll be at the Chips and Systems Conference, formerly known as DAC, in San Francisco. And on July 14th, we will be in Tennessee at NESREC, N-S-R-E-C. That's the Government Radiation Effects Focus Show.

Brian: Okay.

Brian: Please note that given the nature of our industry, we may occasionally need to classify certain expenses to Cogs.

Elias Nader: You boil down our value proposition to just one thing.

That thing would be enabling integration and that is what has driven the semiconductor industry. Since the IC was invented 65 years ago.

Brian: Versus opex capitalized costs.

Brian: The classifications are mainly related to labor and tooling for our IP contracts with customers.

Elias Nader: Our primary target markets or designs that would typically have a discrete FPGA sitting next to an ASIC or a soc.

Brian: This may cause variability in our quarterly gross margins and operating results.

Elias Nader: That is a very common practice in U S. Mac designs were discrete FPGA revenue was approximately $1 5 billion in 2024.

Brian: We usually balance out on the operating line.

Brian: After interest and other income we currently forecast on our Q2 non-GAAP net loss will be approximately $1 1 million daus.

Elias Nader: This market opportunity the very high qualification cost dibs have for every discrete device and their intense focus on swap C size weight area power and cost are the reasons, we prioritized use mag as we built our foundation for FPGA Heart IP.

We hope to see you at these events. As always, we appreciate your time, interest, and continued support, and we look forward to sharing our continued progress with you in August. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.

Brian: So $1.2 million or seven cents to eight cents per share.

Brian: The difference between our GAAP and non-GAAP results is related to non cash stock based compensation expenses.

Brian: In Q2, we expect the compensation will be approximately 0.9 million.

Elias Nader: If you review that fair day website Youll see this pairing of a discrete FPGA with an ASIC or Soc is also more common than you might think in commercial designs. We.

Brian: This is the same as Q1 2025.

Brian: $100000 from Q2 2024.

Elias Nader: We believe the fair to flash kit development platform that integrates our FPGA heart IP and its Soc.

Brian: Yes.

Brian: As a reminder, there will be movement in our stock based compensation during the year I may vary each quarter.

Elias Nader: We will lead to a number of contracts in commercial markets.

Elias Nader: Also intriguing to note about <unk> success is its very tight focus on storefront.

Brian: Just on the timing of grants.

Brian: We anticipate in Q2 cash flow from operations to be relatively flat.

Elias Nader: <unk> manages storefront services for the vast majority of its contracts and with that reported nearly half a billion dollars in revenue over the trailing 12 months.

Brian: Scheduled.

Brian: Scheduled payments to sub con trucks for S. R H contract.

Brian: At least 50% lower than they were during Q1.

To be clear our sales through Faraday to its customers will be ESP GAA heart IP contracts.

Brian: While having the aforementioned on the ATM in place provides us with flexibility.

Elias Nader: However, we believe a growing number of our direct IP customers will have interest in quick logic handling storefront services.

Brian: Not currently planning to access it during Q2.

Brian: As Brian noted earlier for the full year 2025.

Elias Nader: As a matter of fact, we booked our first director storefront contract earlier this year and we have several contracts. We believe we will end up being storefront, we see this as a trend for quick logic.

Brian: We're anticipating solid revenue growth non-GAAP profitability and positive cash flow.

Speaker Change: Thank you with that let me now turn the call back over to Brian for his closing remarks.

Brian: Elias.

Elias Nader: As we have tried to outline for you in this call 2025 has started out more slowly than we anticipated. However beneath the numbers momentum is building rapidly and we are confident that we will post solid revenue growth non-GAAP profitability and positive cash flow for full year 2025.

Elias: As I mentioned earlier I was selected by Intel to present, a quick logic story from the main stage of direct connect 2025 presentation was very well received and based on the feedback we were given gave our core value proposition of huge shot of credibility.

Elias: If you boil down our value proposition to just one thing.

Elias Nader: Not only that we also believe we will build momentum throughout the year to set us up for solid growth for years to come.

Elias: That thing would be enabling integration and that is what has driven the semiconductor industry. Since the IC was invented 65 years ago.

Elias Nader: Thank you I'd now like to open the call for questions.

Elias: Our primary target markets are designs that would typically have a discrete FPGA sitting next to an ASIC or a soc.

Elias Nader: Great. Thank you.

Elias Nader: Be conducting a question and answer session if you'd like to ask a question. Please press star one on your telephone keypad.

Elias: That is a very common practice in U S. Mac designs were discrete FPGA revenue was approximately $1 $5 billion in 2024.

Elias Nader: Confirmation tone will indicate your line is in the question queue.

Elias Nader: If I start to remove yourself from the queue.

Elias: This market opportunity.

Speaker Change: Participants using speaker equipment may be necessary to pick up your handset before pressing the star.

Elias: The very high qualification costs dibs half for every discrete device and their intense focus on swap C size weight power and cost are the reasons, we prioritized U S. Mag as we built our foundation for FPGA hard IP.

Speaker Change: One moment please.

Elias Nader: Yeah.

Speaker Change: First question here is from Quinn Bolton from Needham and company. Please go ahead.

Quinn Bolton: Hey, guys. Thanks for taking my question just.

Elias: If you review the fair day website Youll see this pairing of a discrete FPGA with an ASIC or S. O. C is also more common than you might think in commercial designs.

Speaker Change: Thank you guys.

Speaker Change: Three the ramp in <unk> you guys have done a couple of test chips.

Speaker Change: Now.

Speaker Change: As that starts to move to a production revenue.

Elias: I'll leave that fared a flash cut development platform that integrates our FPGA heart IP and it's S OS.

Speaker Change: Revenue freeing more LTE download.

Elias: We will lead to a number of contracts in commercial markets.

Speaker Change: Customer solution.

Speaker Change: Also just the aggressiveness.

Elias: Also intriguing to note about <unk> success is its very tight focus on storefront fair.

Speaker Change: Started being worked for more features to get more of a defense aerospace application and then I've got a follow up thanks.

Elias: <unk> manages storefront services for the vast majority of its contracts and with that reported nearly half a billion dollars in revenue over the trailing 12 months.

Speaker Change: Hey, Colin the audio is a little <unk>.

Speaker Change: <unk>, but I think if I repeat the question Youre asking about.

Speaker Change: The progress of <unk> in general and our timing of different IP that we've done for that leading up into revenue revenue and royalties in the future is that right.

Elias: To be clear our sales through Faraday to its customers will be FPGA hard IP contracts.

Elias: However, we believe a growing number of our direct IP customers will have interest in quick logic handling storefront services.

Speaker Change: Alright.

Speaker Change: Yes, that's right sorry for any background noise.

Speaker Change: Okay.

Speaker Change: Yes, so I guess if.

Speaker Change: If we rewind a year when we first got access to the PDK.

Elias: As a matter of fact, we booked our first direct to storefront contract earlier this year and we have several contracts. We believe will end up being sort front, we see this as a trend for quick logic.

Speaker Change: Version 1.0.

Speaker Change: This was definitely the first time that we've designed something on this modern of a process technology. This is sort of state of the art.

Elias: As we have tried to outline for you in this call 2025 has started out more slowly than we anticipated. However.

Speaker Change: Definitely took a lot.

Speaker Change: From our team to get that going.

Speaker Change: A lot of EDA tools, a lot of focus on that but once we had it accorded to that technology.

Elias: However, beneath the numbers momentum is building rapidly and we are confident that we will post solid revenue growth non-GAAP profitability and positive cash flow for full year 2025.

Speaker Change: Started to appreciate some of the capabilities of it like the power of your backside power that I mentioned earlier that was one of the basis of our presentation at the Intel direct connect last week or two weeks ago.

Elias: Not only that we also believe we will build momentum throughout the year to set us up for solid growth for years to come.

Speaker Change: And we realize that you could actually.

Speaker Change: Got a really good IP core out of this in terms of power and die size because of those capabilities that we took advantage of and I think that as we started engaging more primarily with the defense industrial base.

Elias: Thank you I'd now like to open the call for questions.

Elias: Great. Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: We're looking for things that are.

Speaker Change: I would say further down the TRL curve.

Elias: Let me first start to remove yourself from the queue.

Speaker Change: And then just paper paper Tigers a powerpoint.

Elias: We're just going to using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Speaker Change: What I say TRL curve I'm talking about technology readiness level.

Elias: One moment please poll for questions.

Speaker Change: From one to nine.

Speaker Change: One is through your papers simulations and nine as Youre in flight on things so by US participating in this test chip that we've talked about this actually helps accelerate further down the tier all curve in the eyes of prospective customers, especially defense industrial base ones and I think that that was sort of the tipping point, where we're able to carry these additional.

Elias: First question here is from Quinn Bolton from Needham <unk> Company. Please go ahead.

Quinn Bolton: Hey, guys. Thanks for taking my question just.

Elias: Maybe just.

Elias: Three the ramp of <unk> you guys have been a couple of test chips.

Elias: <unk> now.

Speaker Change: Customer conversations forward into.

Elias: As that starts to move to a production revenue.

More timing related discussions commercial related discussions and understanding when they are planning to.

Elias: Revenue for Ya Li royalties on that.

Elias: Pressure solution.

Speaker Change: Tape out their own test chips alright.

Also just congrats and fifth customer targeting smartphone market. So you get more of a defense aerospace application and then I've got a follow up thanks.

Speaker Change: I think that's all to say that we do have.

Speaker Change: 18, a license revenue forecasted this year this fiscal year not just that one that we mentioned that's shifted.

Speaker Change: Hey, Colin the audio is a little <unk>.

Speaker Change: <unk>, but I think if I repeat the question you're asking about.

Speaker Change: Shifted to Q4, but even before that.

Speaker Change: From some other customers, including commercial ones that are I think are viewing <unk> as far enough along that they're it's worth.

Speaker Change: The progress of Intel 18, EDA in general and our timing of different IP that we've done for that leading up into.

Speaker Change: Revenue and royalties in the future.

Speaker Change: It's worth pursuing from them for the ASIC that there might be developing.

Speaker Change: Great.

Speaker Change: Yes, that's right sorry for any background noise.

Speaker Change: It's derisked in their mind.

Speaker Change: Hey.

Speaker Change: And then I think the last part just how does that map out to revenue and royalties for quick logic that would be second half of this year not just at Q4, one that we talked about specifically, but other ones that we have not talked about in so much detail on these calls.

Yes, so I guess, if we rewind a year when we first got access to the PDK.

Speaker Change: Version 1.0.

Speaker Change: This was definitely the first time that we've designed something on this modern of a process technology to sort of state of the art.

Speaker Change: Perhaps even coming in before that now in terms of licensing.

Speaker Change: Definitely took a lot.

Speaker Change: From our team to get that going.

Speaker Change: Which would be IP license revenue in this fiscal year and then royalties.

Speaker Change: A lot of EDA tools, a lot of focus on that but once we had it accorded to that technology.

Speaker Change: Probably next year when they would actually get test ships out and then convert it over to production chips.

Speaker Change: Started to appreciate some of the capabilities of it like the power of your backside power that I mentioned earlier that was one of the basis of our presentation at the Intel direct connect last week or two weeks ago.

Speaker Change: And they're not waiting at this point for Intel to be further along with the process I think the fact that Intel last week at the conference said they are in risk production, even on their own Panther Lake.

And we realize that you could actually we got a really good IP core out of this in terms of power and die size because of those capabilities that we took advantage of and I think that as we started to engage them more primarily with the defense industrial base.

Speaker Change: Processor kind of shows that it's good enough for production in many cases so.

Speaker Change: I am glad we started a year ago.

Speaker Change: A lot of people were skeptical about starting so early in our process such as that but I'm glad we did it and we're the only one without <unk>. So the more people see the FPGA and they start looking at their own Asics and they're wondering like.

Speaker Change: We're looking for things that are.

I would say further down the TRL curve.

Speaker Change: And then just paper paper Tigers of Powerpoint, and what I say to euro curve I'm talking about technology readiness level, it's from one to nine.

Speaker Change: This is a huge development costs and a huge development effort, how do we derisk. This async.

Speaker Change: Embedded FPGA as you know when is a great way to de risk system designed because youre building in flexibility for that.

Speaker Change: One is through your papers simulations and nine as Youre in flight on things so by US participating in this test chip that we've talked about this actually helps accelerate further down the curve in the eyes of prospective customers, especially defense industrial base ones and I think that that was sort of the tipping point, where we're able to carry these additional.

Speaker Change: That one product. It also builds on a lot of flexibility for N plus one N plus two and plus three products that you can address with that same die because of that inherent flexibility now. So we're excited as you can tell from my answer here.

Speaker Change: Customer conversations forward into <unk>.

Speaker Change: No definitely.

Speaker Change: The value of the test chip.

Speaker Change: More timing related discussions commercial related discussions and understanding when they are planning to.

Speaker Change: Is it a certain size fabric that you're testing out in the test chip. The fact that you're just testing out a sort of given a fabric is enough to convince other customers that says hey, this is real it's working and if we changed it as is or the configuration.

Speaker Change: Tape out their own test chips, sorry, I think that's all to say that we do have.

Speaker Change: 18, a license revenue forecasted this year this fiscal year not just that one that we mentioned that's.

Speaker Change: It's still enough in terms of their eyes to just sort of.

Speaker Change: Shifting to Q4, but even before that.

Speaker Change: Give them the confidence to move forward on new designs.

Speaker Change: From some other customers, including commercial ones that are I think are viewing <unk> as far enough along that they're it's worth.

Speaker Change: It absolutely is because once you prove out a common denominator for the logic and the routing and the memory and the DSP blocks most customers I believe that if you can do that for that size.

Speaker Change: It's worth pursuing from them for the ASIC that there might be developing.

Speaker Change: Because it's derisked in their mind.

Speaker Change: You need a stamping and repeat a bigger array size for them that we can do that and they know that that's sort of our model with a strong us we're sort of making almost like a memory compilers out of it for FPGA technology. So once we prove out the first one for power and timing, that's all staffing repeat for bigger array sizes and the beauty of our models. We can we can do.

Speaker Change: And then I think the last part just how does that map out to revenue and royalties for quick logic that would be second half of this year not just that Q4, one that we talked about specifically, but other ones that we have not talked about in so much detail on these calls.

Speaker Change: Perhaps even coming in before that now.

Speaker Change: In terms of licensing.

Speaker Change: In a matter of weeks, which is well within the cycle of what they need to do for <unk> basic.

Speaker Change: Which would be IP license revenue in this fiscal year and then royalties.

Speaker Change: Probably next year when they would actually get test ships out and then convert it over to production chips.

Speaker Change: Got it and then the second question I had just you guys are looking for profitability for the full year, obviously strong revenue ramp just wondering if you could kind of what are the two or three biggest drivers of that revenue ramp through the year, obviously, you've talked about infill ATCA revenue you've talked about the Rad hard contract.

Speaker Change: And they're not waiting at this point for Intel to be further along with that process I think the fact that until last week at the conference said therein risk production, even on their own Panther Lake.

Speaker Change: Processor kind of shows that it's good enough for production in many cases so.

What are the key.

Speaker Change: Key programs that drive that nice revenue growth into the second half. Thank you.

Speaker Change: I'm glad we started a year ago.

Speaker Change: A lot of people were skeptical about starting so early in our process such as that but I'm glad we did it and we're the only one with that E&P Jarrett IP now so the more people see the FPGA and they start looking at their own Asics and they're wondering like.

Speaker Change: Yes, I can take that so our base business. That's here every quarter as our ongoing <unk> FPGA business, what we call mature products and then the strategic Rad hard contract and with that.

Speaker Change: This is a huge development costs and a huge development effort, how do we derisk that basic embedded that P. J as you know when is a great way to de risk system design, because youre building in flexibility for.

Speaker Change: Contract that we signed for the radar contract last December and then they in co funding modification that was added on top of that.

Speaker Change: In the last few months, we have good visibility of that program for the rest of this year. So the new revenue the new wins driving the strong second half growth.

Speaker Change: That one product. It also builds on a lot of flexibility for N plus one N plus two and plus three products that you can address with that same die because of that inherent flexibility now. So we're excited as you can tell from my answer here.

Speaker Change: We are forecasting that come from these IP contracts some of which are just IP and some of which are storefront and I think this again, if you look back in history last five years ago, that's going to be a lot of designs you need to close to get to that number but then if you drill into okay and the last year, you've come out with 212 nanometer process.

Speaker Change: No definitely.

Speaker Change: The value of the test chip.

Speaker Change: Is it a certain size fabric that you're testing out in the test chip. The fact that you are just testing out a given size fabric is that enough to convince other customers that says hey, this is real it's working and if we change the size or the configuration.

Speaker Change: <unk> and now you've got this one for <unk> all of those have substantially higher average selling prices than the stuff that we're doing years ago on 22, and more mature nodes and so you don't have to close a lot of designs to get strong revenue growth and <unk>.

Speaker Change: It's still enough in terms of there is that just sort of.

Speaker Change: Give them the confidence to move forward on new designs.

Speaker Change: I was just answering on your first question, we are seeing a lot of strong interest audit until they now know that people realize that are done we're done with the first port.

Speaker Change: Yes, it absolutely is because once you prove out a common denominator for the logic and the routing and the memory and the DSP blocks most customers I believe that if you can do that for that size.

Speaker Change: And those have substantial price increases or price to the value of those is much higher.

Speaker Change: You need a stamping and repeat a bigger array size for them that we can do that and they know that that's sort of our model with astellas, we are sort of making almost like a memory compilers out of it for FPGA technology. So once we prove out the first one for power and timing, that's all staffing repeat for bigger array sizes and the beauty of our model as we can we can do there.

Speaker Change: And so we're sort of seeing a handful of designs again, both on 12 nanometer and <unk> driving that second half revenue growth.

Speaker Change: And very well manageable within the team size that we have again, because we have this whole notion of Australia as being a very automated way of taking the part that we've done and then adapting it for customer and design specific Ips that we need to come out with.

Speaker Change: In a matter of weeks, which is well within the cycle of what they need to do for <unk> basic.

Thank you Brian Thank you very much.

Speaker Change: Thanks Glenn.

Speaker Change: Got it and then the second question is just you guys are looking for profitability for the full year, obviously strong revenue ramp just wondering if you could kind of what are the two or three maybe biggest drivers of that revenue ramp through the year, obviously, you've talked about infill ATCA revenue you've talked about the Rad hard contract.

Speaker Change: Next question is from redeem from River Shore investment Research. Please go ahead.

Speaker Change: Hi, Brian Hi, Elias.

redeem: Thanks for taking.

Speaker Change: Taking my questions Tonight.

Speaker Change: <unk>.

Quinn Bolton: My first question is you mentioned in your closing remarks, Brian about <unk>.

Speaker Change: What are the key.

Speaker Change: Key programs that drive that nice revenue growth into the second half. Thank you.

Speaker Change: Several storefront opportunities.

Speaker Change: Yeah, I can take that so our base business. That's here every quarter as our ongoing <unk> FPGA business, what we call mature products and then the strategic radar contract and with that.

Quinn Bolton: No about one which is the.

Quinn Bolton: The direct to storefront, you announced and you've also mentioned that the strategic Rad hard contract could lead to storefront.

Speaker Change: Can you provide any color on what other.

Speaker Change: Jack that we signed for the radar contract last December and then they in co funding of modification that was added on top of that.

Quinn Bolton: Opportunities you have for store fronts percolating in your funnel or in the.

Speaker Change: In the last few months, we have good visibility of that program for the rest of this year. So the new revenue the new wins driving the strong second half growth. We are forecasting that come from these IP contracts some of which are just IP and some of which are storefront and I think this again.

Quinn Bolton: Itemized.

Quinn Bolton: A list of projects you've already provided.

Quinn Bolton: Sure so.

Just to add one more to that list that you gave there Rick we have the November 2020 to tape out customer so between that and.

Speaker Change: You look back in history last five years ago, that's going to be a lot of designs you need to close to get to that number but then if you drill into okay and the last year, you've come out with 212 nanometer process ports and now you've got this one for <unk> all of those have substantially higher average selling prices than the stuff that we're doing years ago on 'twenty.

Quinn Bolton: In this more recent one that we just announced on the last call. The director of storefront and then of course, the biggest of which is the strategic router.

Quinn Bolton: Fertility those are contracted ones and if we move to things in the funnel.

Quinn Bolton: We have a handful of ones that we've either proposed through.

Speaker Change: Two in more mature nodes. So you don't have to close a lot of designs to get strong revenue growth and like I was just answering on your first question. We are seeing a lot of strong interest order until they now know that people realize that are done we're done with the first port <unk>.

Quinn Bolton: The government RFP process, where the people are looking at seating different technology to help build a triplet ecosystem.

Quinn Bolton: That there's ones that have come about now since at the end teleconference. They launched their own chip led alliance or ecosystem and we're one of the founding members of that and Theres been a lot of interest coming out of that for chip.

Speaker Change: And those have substantial price increases or price the value of those is much higher.

Speaker Change: And so we're sort of seeing a handful of designs again bolt on 12 nanometer and <unk> driving that second half revenue growth.

Quinn Bolton: That are now part of our funnel that I think because again, we have IP ready now and 12 in 'twenty two and now <unk>, we can actually help people with their chip designs without having to do a port first and if you think about the economics here.

Speaker Change: And very well manageable within the team size that we have again, because we have this whole notion of this trial is being a very automated way of taking the port that we've done and then adapting it for customer and design specific Ips that we need to come out with.

Quinn Bolton: The further more advance you get in the process technology substantially higher investment is required to do these designs and tape outs right between IP and EDA tools and.

Brian: Thank you Brian Thank you very much.

Thanks Glenn.

Speaker Change: Okay.

Speaker Change: Next question is from Rick mean from River Shore investment Research. Please go ahead.

Quinn Bolton: And mass costs, and so that there's a much higher bar now.

Quinn Bolton: To do a triplet or do a chip and so if there's reuse that you can design into it. It's it's really perking People's ears up on how to do that and that's where I think the U P. J has a lot of value.

Rick mean: Hi, Brian Hi, Elias.

Speaker Change: Thanks for taking.

Rick mean: Taking my questions Tonight.

Rick mean: <unk>.

Brian: My first question is you mentioned in your closing remarks, Brian about <unk>.

Quinn Bolton: And so yes like I said there are several opportunities that we're tracking now some of which are new coming out of the Intel direct connect conference around that that we can be a good participants in either.

Rick mean: Several storefront opportunities.

Brian: No about one which is the.

Brian: The direct to storefront, you announced and you've also mentioned that the strategic Rad hard contract could lead to storefront.

Quinn Bolton: As IP or doing the full design ourself.

Speaker Change: Okay. Thanks for that explanation that is helpful.

Speaker Change: Can you provide any color on what other.

You talked about the $1 5 billion.

Brian: Uh huh.

Speaker Change: FPGA market in U S Mag.

Brian: Opportunities you have for storefronts percolating in your funnel or in the.

Speaker Change: And unique.

Brian: Yes.

Speaker Change: Our unique value proposition is enabling integration.

Brian: Itemized.

Brian: A list of projects you've already provided.

Speaker Change: Is the.

Brian: Sure so.

Speaker Change: Catalyst that you think you will be.

Brian: Just to add one more to that list that you gave there Rick we have to November 'twenty, turning to tape out customer so between that and.

Speaker Change: That will enable you to make a dent into that addressable market.

Brian: In this more recent one that we just announced on the last call to direct us to refine and then of course, the biggest of which is the strategic rather odd.

Speaker Change: The ability the ability to lower the cost the verification of a product I think you mentioned.

Brian: <unk>.

Speaker Change: That each military use case has to be verified.

Brian: Those are contracted funds and if we move to things in the funnel.

We have a handful of ones that we've either proposed through.

Speaker Change: And yet.

Speaker Change: It sounds like.

Speaker Change: You can reduce the cost of verification to per chip verification is that where youre going with that.

Brian: The government RFP process, where the people are looking at seating different technologies to help build a triplet ecosystem.

Speaker Change: Okay.

Brian: Have that there is ones that have come about now since at the end teleconference. They launched their own chip led alliance or ecosystem.

Speaker Change: Yes, so if we step back for a moment.

Speaker Change: That $1 5 billion.

Speaker Change: Obviously is a big number.

Brian: <unk> one of the founding members of that and Theres been a lot of interest coming out of that for chip.

Speaker Change: And I'll give some.

Foreshadow if you want to watch the video that we posted later, but I give some more statistics in that presentation.

Brian: That are now part of our funnel that I think because again, we have IP ready now and 12 in 'twenty, two and now <unk>.

Speaker Change: But the <unk>.

Speaker Change: Almost 75% of <unk> systems use FPGA is today. So it is not a lot of money in a few systems. It's a lot of money and a lot of systems and almost all of these systems are also doing a six custom asics rso's seized by the defense industrial base.

Brian: We can actually help people with their chip designs without having to do a port first.

Brian: If you think about the economics here.

Brian: The further more advance you get in the process technology substantially higher investment is required to do these designs and tape outs right between IP and EDA tools.

Speaker Change: And why are they doing a six a lot of times, we're doing a six because they can't quite get functionality out of standard products that they need for the mission it could be that they need to have something thats. The critical nature Thats designed and manufactured onshore, whereas I think almost all if not all FPGA is to there are manufactured overseas. So there is a national security.

Brian: And mass costs, and so that there's a much higher bar now.

Brian: To do a triplet or do a chip and so if there's reuse that you can design into it. It's it's really perking People's ears up on how to do that and Thats, where I think the E. P. J has a lot of value.

Speaker Change: Aspect to this it could just be that they need to obfuscate there their IP and they can't do that and standard products that have <unk>.

Brian: And so yeah like I said there are several opportunities that we're tracking now some of which are new coming out of the Intel direct connect conference around that that we can be a good participants in either.

Speaker Change: All documented back doors into the midstream it could also be that theyre looking to lower swap I mentioned that here today I also talked about it in the presentation swap.

Brian: Or doing the full design ourself.

Speaker Change: Okay. Thanks for that explanation that is helpful.

The abbreviation for size weight power and sometimes people add cost to that to make a swap C. So those are all legitimate reasons why the defense industrial base is looking at doing Asics and again.

Speaker Change: You talked about the $1 5 billion.

Speaker Change: FPGA.

Speaker Change: Market in U S Mag.

Speaker Change: And your unique value proposition is enabling integration.

Speaker Change: Why would you do a $150 million ASIC.

Speaker Change: Then go buy a lot of FHA and stick around next to that same as if you have the opportunity to integrate that into that same chip.

Speaker Change: Is the.

Speaker Change: Catalyst that you think you will be.

Speaker Change: Not only are you going to get lower swap C by having it all integrated together, yes to your point Rick you can also reduce your qualification costs and your verification cost of multi chips in one because a lot of the cost of verifying. It's the people time that you have to go through all of us elaborate testing and environmental testing and if you can.

Speaker Change: That will enable you to make a dent into that addressable market.

Speaker Change: The ability.

Speaker Change: The ability to lower the cost the verification of a product I think you mentioned that.

Speaker Change: That each military use case has to be verified.

Speaker Change: You could add on one chip you're saving a heck of a lot of time.

Speaker Change: And yet.

Speaker Change: It sounds like.

Speaker Change: But in order to get to that step of integration you have to feel comfortable that the technology itself is far enough along that TRL curve I mentioned earlier.

You can reduce the cost to verification to per chip verification is that where youre going with that.

Speaker Change: Yeah.

My test chips are incredibly important and impactful for defense industrial base. They use the term burn down risk you do a test ship it burns down risk of these components. So that you can justify why you need to integrate that.

Speaker Change: Yes, so if.

Speaker Change: If we step back for a moment.

Speaker Change: That $1 5 billion.

Speaker Change: Obviously is a big number.

Speaker Change: And I'll give some.

Speaker Change: For Shadow if you want to watch the video that we posted later, but I gave some more statistics in that presentation.

Speaker Change: Together.

And those are the trends that we're seeing and again those are the I think the drivers for why people are doing this integration.

Speaker Change: Let's see.

Speaker Change: Most 75% of the Ot systems use FPGA is today. So it's not a lot of money in a few systems, it's a lot of money and a lot of systems.

Speaker Change: PGA into AAC.

Speaker Change: Okay.

Speaker Change: And by the way.

Speaker Change: Until the presentation I gave youll see roughly the size of the hesik market as well for the U S. Mag market and you can see why again this makes economic sense for people to do that but I'll leave that for another time. When you can go look at the utility.

Speaker Change: And almost all of these systems are also doing asics custom Asics rso's seized by the defense industrial base.

Speaker Change: And why are they doing a six a lot of times. They are doing a six because they can't quite get functionality out of standard products that they need for the mission it could be that they need to have something thats. The critical nature Thats designed and manufactured onshore, whereas I think almost all if not all fpga's today are manufactured overseas. So there's a national security.

Speaker Change: Okay. One final question Fair day was originally part of UMC right or came from UMC.

Speaker Change: There was no other.

Speaker Change: Are.

Speaker Change: Your opportunities.

Speaker Change: Aspect to this it could just be that they need to obfuscate there their IP and they can't do that and standard products that have.

With fairly limited to the node that part.

Speaker Change: Uh huh.

Speaker Change: That was announced.

Speaker Change: Well documented back doors into the bloodstream. It could also be that theyre looking to lower swap I mentioned that here today I also talked about it in the presentation swap.

Speaker Change: Works on or are you looking at maybe going smaller like if the 12 nanometer node.

Speaker Change: Umc's working with Intel on.

Speaker Change: Abbreviation for size weight and power.

Speaker Change: I would love to go smaller obviously, we have a big focus on selling what's available today.

Speaker Change: Sometimes people add cost to that to make it swap C. So those are all legitimate reasons why the defense industrial base is looking at doing a six and again.

Speaker Change: And so there is a big focus on doing what we can do in helping them with with the 22 nanometer, it's public they're doing something on 12.

Speaker Change: Why would you do $150 million ASIC.

Speaker Change: And then go buy a lot of FC Jason's ticket right next to that same ASIC. If you have the opportunity to integrate that into that same chip not only are you going to get lower swap C by having it all integrated together, yes to your point Rick you can also reduce your qualification costs and your verification costs of multi chips in one.

Speaker Change: With UMC and I think that the more comfortable that they get they being fair day.

Speaker Change: With this notion of embedded FPGA and an SFC more meaningful it is to jump to that next node and the next node is probably not just for cost reasons, it's going to be for use cases and applications and end markets. So, whereas 22 nanometer is great for low power edge computing 12 nanometer is probably going to be a little bit better at some other applications more.

Speaker Change: Because a lot of the cost of verifying the people time that you have to go through all of this elaborate testing and environmental testing and if you can just do that on one chip you're saving a heck of a lot of time, but in order to get to that step of integration you have to feel comfortable that the technology itself is far enough along that TRL curve I mentioned earlier that's why.

Speaker Change: Intensive.

Speaker Change: And so we do every every engagement every partnership we entered into we think about.

Speaker Change: Yes. There is this first step like in the case of this 22 nanometer one, but what could it lead to Theres a huge investment by both companies to get this thing working and so we wanted to see that it's portable to the next thing in 12 is clearly one of those and then I was pleasantly surprised to see them at the end sell direct connect is one of the folks doing a DNA stuff. So everything that we're doing now with 20.

Speaker Change: Test chips are incredibly important and impactful for defense industrial base. They use the term burn down risk attached ship. It burns down risk of these components. So that you can justify why you need to integrate that.

Speaker Change: Together.

Speaker Change: Two architecturally software WAAS business model wise it all leads to what we could possibly do it at.

Speaker Change: And those are the trends that we're seeing any Ken.

Speaker Change: The I think the drivers for why people are doing this integration of <unk> into <unk>.

Speaker Change: On the until 18 Asia, which I think is a very pleasant surprise.

Speaker Change: <unk>.

Speaker Change: Yeah.

Speaker Change: Thanks, Brian Thanks Elias.

Speaker Change: And by the way.

Speaker Change: The presentation I gave you'll see roughly the size of the hesik market as well for the U S. Mag market and you can see why again this makes economic sense for people to do that but I'll leave that for another time. When you can go look at the Youtube video.

Speaker Change: Thanks Ricky.

Speaker Change: Okay.

Speaker Change: Next question is from Richard Shannon from Craig Hallum. Please go ahead.

Speaker Change: Okay.

Richard Shannon: Thanks, Brian lives for taking my questions.

Speaker Change: Okay. One final question Fair day was originally part of UMC right.

Richard Shannon: Brian I guess your question is yes.

Richard Shannon: Hi.

Richard Shannon: So the billion dollars of FPGA revenues for U S. Meg I think the way that you referred to it made it sound like it was just four.

Speaker Change: It came from UMC.

Speaker Change: It was our other.

Speaker Change: Our year.

Your opportunities.

Speaker Change: Intel <unk> related stuff here, but it seems like the strategic Rad hard would also kind of cover the same thing. So I just wanted to clarify.

Speaker Change: With fairly limited to the node that part.

Speaker Change: That was announced.

Speaker Change: What does that what does that exactly covering.

Speaker Change: Works on or are you looking at maybe going smaller like at the 12 nanometer node.

Speaker Change: So those are that's an estimate of total FPGA usage by the U S. Meg on an annual basis not specific to <unk>. So my apologies if I.

Umc's working with Intel on.

Speaker Change: I would love to go smaller obviously, we have a big focus on selling what's available today.

Speaker Change: If I gave that impression that's the annual programmable logic.

Speaker Change: And so there is a big focus on doing what we can do in helping them with with the 22 nanometer. It's public they are doing something on 12.

Speaker Change: Market today and revenue now.

Speaker Change: Now the strategic Rad hard one would obviously fall under discrete FPGA, but the market that is also trying to go into is not just limited to the FPGA market today, because that part is actually doing something that's not available today from Etsy Jays tickets if some of the capability that we're designing answer that you would actually have to go to your own ASIC.

Speaker Change: With UMC and I think that the more comfortable that they get they being fair day.

Speaker Change: With this notion of embedded FPGA and then SSC more meaningful it is to jump to that next node and the next node is probably not just for cost reasons, it's going to be for use cases and applications and end markets. So, whereas 22 nanometer is great for low power edge computing 12 nanometer is probably going to be a little bit better at some other applications more.

Speaker Change: So from a total market perspective, it would actually be the FPGA plus da sick market or some percentage thereof that would be the served available market for that specific device.

Speaker Change: Okay.

Speaker Change: Compute intensive and so we do every every engagement every partnership we entered into we think about yes. There is this first step like in the case of this 22 nanometer one, but what could it lead to Theres a huge investment by both companies to get this thing working and so we wanted to see that.

Speaker Change: That makes sense that's helpful.

Speaker Change: Okay, now I understand a little better thanks for clarifying that one.

Let's jump over to the to the Rad hard program here and I was typing. So fast here I may have missed typed or something here, but.

Speaker Change: I guess my my core question here, just trying to get a sense of when you think we're going to start to see storefront revenues pop up here I get the sense that it could've been a.

Speaker Change: It's affordable to the next thing in 12 is clearly one of those and then I was pleasantly surprised to see them at the NFL direct connect I was one of the folks doing atma style. So everything that we're doing now with 22 architecturally software wise business model wise that all leads to what we could possibly do it at a.

Speaker Change: Talking one or two years ago could have been like counter 'twenty six 'twenty seven does that still fit your general timeframe or how do we think about this.

Speaker Change: So we're waiting into areas that I have asked.

Speaker Change: On the Intel <unk>, which I think is a very pleasant surprise.

Speaker Change: For permission to share and I have been denied the request.

Speaker Change: Thanks, Brian Thanks Elias.

Ricky: Thanks Ricky.

Speaker Change: Can't give hard years.

Speaker Change: Okay.

Speaker Change: As dates as much as I would like to but let me try to give some contextual information and you can draw your own conclusions. So I think that we've been doing this development for.

Speaker Change: Next question is from Richard Shannon from Craig Hallum. Please go ahead.

Richard Shannon: Thanks, Brian for taking my questions.

Speaker Change: Brian I guess your question is.

Since August of 2022, and when we find that first contract it was outlined as a four year <unk>.

Richard Shannon: Hi.

Richard Shannon: Okay.

Richard Shannon: So the billion dollars of FPGA revenues for U S. Meg I think the way that you referred to it made it sound like it was just four.

Speaker Change: Elements and at the time I was also allowed to say that there's two chips contemplated in this contract a test chip and a final chip.

Richard Shannon: Intel <unk> related stuff here, but it seems like the strategic Rad hard, but also kind of cover the same thing. So I just wanted to clarify.

Speaker Change: Much like you would normally do on any developments and in more recent calls I have talked about I think a lot more engagement with the defense industrial base, which means the end customers and.

Richard Shannon: What does that what does that exactly covered.

Richard Shannon: Okay.

Richard Shannon: So those are that's an estimate of total FPGA usage by the U S. Meg on an annual basis not specific to <unk>. So my apologies if I.

Speaker Change: Getting closer and closer and milestones to being able to get them something that they can actually start evaluating.

Richard Shannon: If I gave that impression that's the annual programmable logic.

Speaker Change: With their own designs. So I'll, just reiterate that like I just did from a programmatic perspective.

Richard Shannon: Market today in revenue.

Speaker Change: <unk>.

Richard Shannon: Now.

Speaker Change: You can draw some conclusions from that.

Richard Shannon: The strategic Rad hard one would obviously fall under discrete FPGA, but the market that is also trying to go into is not just limited to the FPGA market today, because that part is actually doing something that's not available today from Etsy Jays tickets as some of the capability that were designed to answer that you would actually have to go to your own ASIC. So from a toll.

Speaker Change: I am definitely spending.

Speaker Change: More time now than I was a year ago directly with defense industrial base folks around this program.

Speaker Change: And.

Speaker Change: Doing that in a way that we can make sure that we have.

Speaker Change: Folks lined up for when devices are available test chips are available for them to start exercising with their own designs, which would include devices and our user tools.

Richard Shannon: Market perspective, it would actually be the FPGA plus da sick market or some percentage thereof that would be the served available market for that specific device.

Speaker Change: Okay I'll look forward to the time when you actually get permission to talk about that there'll be a very interesting conversation to good evening.

Richard Shannon: Okay.

Richard Shannon: That makes sense that's helpful.

Richard Shannon: Okay, now I understand a little better thanks for clarifying that one.

Speaker Change: I'll bet.

Speaker Change: Maybe touching quickly on her today.

Let's step over to the to the Rad hard program here and.

Speaker Change: Probably more of a clarification.

Richard Shannon: I was typing so fast here.

Speaker Change: I was just rereading.

Richard Shannon: Ms typed or something here, but.

Speaker Change: Your four takeaways from this and I, just I guess I just wanted to make sure the revenues youre not expecting a storefront revenues from ferity directly, but you're you're using it to undecided underscore the storefront business model is that okay alright.

Richard Shannon: I guess my my core question here, just trying to get a sense of when you think we're going to start to see storefront revenues pop up here.

Richard Shannon: You get the sense that it could have been.

Richard Shannon: Let me talk to you one or two years ago could have been like counter 'twenty six 'twenty seven is that still fit your general timeframe or how do we think about this.

Speaker Change: What I thought, but I just to refer to it will be license and royalty because they're the ones ultimately selling a storefront device to customers our point in bringing them up as I think it is a very good exemplar for the storefront model where.

Richard Shannon: So we're waiting into areas that have asked.

Richard Shannon: For permission to share and I've been denied that request.

Richard Shannon: Can't give hard years.

Speaker Change: Are you starting to services and IP, but ultimately are providing the supply chain services.

Speaker Change: As states as much as I would like to but let me try to give some contextual information and you can draw your own conclusions. So I think that we've been doing this development for.

Speaker Change: To the customers so that what you sell them or a ship them as a finished good and they don't have to invest in the supply chain resources in foundry.

Speaker Change: Since August of 2022, and when we sign that first contract it was outlined as a four year <unk>.

Speaker Change: And packaging relationships to get that done.

Speaker Change: And at the time that was also allowed to say that there's two chips contemplated in this contract a test chip and a final chip.

Speaker Change: Alright, maybe my last question here and then they just from either of you.

Speaker Change: I think you've talked about from a yearly perspective here getting to know them.

Speaker Change: Much like you would normally do on any developments and in more recent calls I have talked about I think a lot more engagement with the defense industrial base, which means the end customers and.

Speaker Change: Profits and gross margins I think it's 60% or something like that when you talk about.

Speaker Change: Solid revenue growth I think it was a turn at least you use last quarter any way you'd want to give us a sense of what that means.

Speaker Change: Getting closer and closer and milestones to being able to get them something that they can actually start evaluating.

Speaker Change: Quantifying it I mean is it something similar to what you were you were hoping for last year, which I think was 30% just any way you want to help us level set a little bit.

Speaker Change: With their own designs. So I'll, just reiterate that like I just did from a programmatic perspective.

Speaker Change: Well theres not 30%.

Elias Nader: It's Elias by the way, it's not 30% for sure but.

Speaker Change: <unk>.

Speaker Change: You can draw some conclusions from that.

Speaker Change: Since we don't give a yearly outlook I'll tell you we.

Speaker Change: I am definitely spending more.

Speaker Change: More time now than it was a year ago directly with defense industrial base folks around this program.

Speaker Change: We're expecting a decent rebound in <unk>.

Speaker Change: Second half, let's put it this way.

Speaker Change: It gives us that confidence to be profitable to end the year with a cash flow positive.

Speaker Change: And.

Doing that in a way that we can make sure that we have.

Speaker Change: Folks lined up for when devices are available test chips are available for them to start exercising with their own designs, which would include devices and our user tools.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: I think that is going to be all for me guys. Thanks for taking my questions. Thank you.

Thanks Richard.

Speaker Change: Okay I'll look forward to the time when you actually get permission to talk about that there'll be a very interesting conversation.

Speaker Change: Our next question is from Martin Yang from Oppenheimer. Please go ahead.

Speaker Change: Yes.

Speaker Change: I'll bet.

Martin Yang: Alright. Thank you for taking my question. My first question is a follow up on <unk> can.

Speaker Change: Maybe touching quickly on her today.

Speaker Change: Probably more of a clarification.

Martin Yang: So you can just partnership do you expect to take on the majority of the go to market.

Speaker Change: I was just rereading your four takeaways from this and I just guess I guess I just want to make sure the ROI.

Martin Yang: To sell the chip are you taking out any sales responsibilities.

Speaker Change: Revenues youre not expecting any storefront revenues from fared a directly but youre using it to understand it as underscore the storefront business model is that okay alright.

Martin Yang: They will be the primary interface to their customer is theyre talking to system companies that are wanting to do a slick design.

Speaker Change: Thanks, Scott, but I just to refer to it will be license and royalty because they're the ones ultimately selling a storefront device to customers our point in bringing them up as I think it is a very good exemplar for the storefront model.

Martin Yang: Because embedded FPGA is not just a.

Martin Yang: The USB core as an example, and there are software tools involved in a customer using the embedded FPGA. We are definitely right behind fair day, enabling their sales force with different use cases, and documentation and training. So that it is a cohesive so to the end customer.

Where you started services and IP, but ultimately are providing the supply chain services.

Speaker Change: And to the customers so that what you sell them or ship them as a finished good and they don't have to invest in the supply chain resources in foundry.

Martin Yang: They will be the point person if you will for those customer engagements directly.

Speaker Change: And packaging relationships to get that done.

Speaker Change: Got it and can you give us a sense of all the most applicable in markets or devices that shipper will collyn Joe.

Speaker Change: Okay.

Speaker Change: Alright, maybe my last question here and it may just from either of you.

Speaker Change: I think you've talked about from a yearly perspective here getting to.

Yes.

Speaker Change: Their focus is around low power.

Speaker Change: Profits and gross margins I think at 60% or something like that when you talk about.

Speaker Change: Industrial and Iot applications.

Speaker Change: Solid revenue growth I think it was a turn at least you to use last quarter any way you'd want to give us a sense of what that means.

Speaker Change: If you look at what they've said publicly about this development kit and we actually had this at our at our booth at the <unk> and teleconference last week.

Speaker Change: Quantifying it I mean is it something similar to what you were you were hoping for last year, which I think it was 30% just any way you want to help us level set a little bit.

Speaker Change: It runs in operating system has got a display and it has memory on the board and the level of processing is definitely more than just the basic microcontroller.

Speaker Change: Well, it's not 30%.

Elias: It's Elias by the way, it's not 30% for sure but.

Speaker Change: So you could run some pretty good applications, including running a full operating system with a user interface and gooey.

Elias: Since we don't give a yearly outlook I'll tell you.

Elias: We expect a decent rebound in <unk>.

Speaker Change: Alright, I think it would be applicable for low power edge applications and just for further clarification. One of the use cases that we actually had discussed prior with them was what we had talked about previously when we did our Arnold chip on 22 F. T X, where we're able to reduce the energy consumption of edge AI.

Elias: Second half, let's put it this way.

Elias: It gives us that confidence to be profitable.

Elias: You will be cash flow positive.

Elias: Okay.

Speaker Change: I think that is going to be all for me guys. Thanks for taking my questions Alright. Thank you.

Speaker Change: Thanks Richard.

Speaker Change: Locations like human presence detection.

Speaker Change: Our next question is from Martin Yang from Oppenheimer. Please go ahead.

Speaker Change: And that I think will be one of the demos that's actually provided to.

Speaker Change: Yeah.

Speaker Change: Customers as a use case using that platform. It was actually architected to do things like that very well.

Martin Yang: Alright. Thank you for taking my question. My first question is a follow up on <unk>.

Speaker Change: Thanks, Brian that's it for me.

Martin Yang: So in this partnership do you expect Cerro de to take hold the majority of the go to market.

Brian Faith: Okay. Thanks Martin.

Speaker Change: This concludes the question and answer session I would like to turn the floor back to Brian faith for any closing comments.

Speaker Change: To sell to check are you taking out any sales responsibilities.

Speaker Change: There will be the primary interface to their customer as they are talking to system companies that are wanting to do is design.

Brian Faith: Yes. Thank you. Thank you for joining today's call before we conclude I'd like to highlight a few upcoming events, where quick logic will be participating may 'twenty, one the Ladenburg technology innovation Expo in New York. If you are interested in meeting with US there. Please contact Allison for details on how to Register June.

Because embedded FPGA is not just a.

Speaker Change: The USP core as an example, and there are software tools involved in a customer using the embedded FPGA. We are definitely right behind fair day, enabling their salesforce with different use cases, and documentation and training. So that it is a cohesive sell to the end customer.

Brian Faith: 23rd will be at the chips and systems conference, formerly known as DAC in San Francisco and on July 14th we will be in Tennessee at NASDAQ and S. RUC, that's the government radiation effects focused show.

They will be the point person if you will for those those customer engagements directly.

Brian Faith: We hope to see you at these events as always we appreciate your time interest and continued support and we look forward to sharing our continued progress with you in August Thank you and goodbye.

Speaker Change: Got it and can you give us a sense of all the most applicable in markets where devices that don't shift will collyn Joe.

Brian Faith: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.

Speaker Change: Yeah, there their focus is around low power.

Speaker Change: Industrial and Iot applications.

Speaker Change: If you look at what they've said publicly about this development and we actually had this at our at our booth at the teleconference last week.

Speaker Change: It runs on operating system, it's got a display and it has memory on the board and the level of processing is definitely more than just a basic microcontroller.

Speaker Change: So you could run some pretty good applications, including running a full operating system with the user interface and gooey.

Speaker Change: Sorry, I think it would be applicable for low power edge applications and just for further clarification. One of the use cases that we actually had discussed prior with them was what we had talked about previously when we did our Arnold chip on 22 F. T X, where we're able to reduce the energy consumption of edge AI.

Speaker Change: Obligations like human presence detection.

Speaker Change: And that I think it will be one of the demos that's actually provided to.

Speaker Change: Customers does it use case using that platform.

Speaker Change: Architected to do things like that very well.

Speaker Change: Thanks, Brian that's it for me.

Okay. Thanks Martin.

Speaker Change: This concludes the question and answer session I would like to turn the floor back to Brian faith for any closing comments.

Brian Faith: Yes. Thank you. Thank you for joining today's call before we conclude I'd like to highlight a few upcoming events, where quick logic will be participating made.

Brian Faith: May 'twenty, one the Ladenburg technology innovation Expo in New York. If you are interested in meeting with US there. Please contact Allison for details on how to register.

Brian Faith: June 23rd will be at the chips and systems conference, formerly known as <unk> in San Francisco and on July 14th we will be in Tennessee at NASDAQ and S. RUC, that's the government radiation effects focus show.

Brian Faith: We hope to see you at these events as always we appreciate your time interest and continued support and we look forward to sharing our continued progress with you in August Thank you and goodbye.

Brian Faith: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.

Brian Faith: Okay.

Brian Faith: Hum.

Brian Faith: [music].

Brian Faith: Hum.

Brian Faith: Hum.

Brian Faith: Uh-huh.

Brian Faith: [music].

Brian Faith: Okay.