Q1 2026 GSI Technology Inc Earnings Call
I told you, what?
Ladies and gentlemen, thank you for standing by. Welcome to GSI Technologies' first quarter fiscal 2026 results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.
At that time, we will provide instructions for those interested in entering the queue for the Q&A.
Before we begin today's call the company has requested that. I read the following Safe Harbor statement.
The matters discussed in the conference call may include forward-looking statements regarding future events and future performance of GSI Technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-K filed with the Securities and Exchange Commission. Additionally, I have been asked to advise you that this conference call is being recorded today, July 31, 2025, at the request of GSI Technology.
Hosting the call today is Li Li shun leelin, Shu. The company's chairman president, and chief executive officer with him. Are Douglas Shirley Chief Financial Officer and DDA Lair, Vice President of Sales. I would now like to turn the conference over to Mr. Shu, please go ahead sir.
Good afternoon, everyone, and thank you for joining us today.
Let me begin with a few key highlights from this quarter's financial results.
Physical 2026 is off to a strong start.
In the first quarter, we achieved revenue of 6.2 million.
Up 7% sequentially.
And 35% year-over-year.
Growth was fueled by Rising demand for our entry.
Driven by some marketing momentum for leading AI processes.
Our profitability measures also improved this quarter.
With a 200 basis point sequential increase in gross margin and over 1,100 basis points compared to the prior year.
We have also made meaningful progress.
On cost control over the last year.
with the operating expenses, becoming by 15% year-over-year,
21, 2025
Now, I would like to provide an update on our product road map and customer milestone.
We have completed evaluation of the second spring of our Gemini 2 chip.
I am pleased to report that all low boxes have been resolved. The silicon is fully functional and ready for production.
This week, the leader to end the associated algorithm. What did you give to a key option defense? Contact for proof of concept work with Gemini 2.
For satellites and Zone.
This delivery keep us a free on track with our road map and customer commitment.
And why this is a major milestone. We also believe it will be a better opportunity.
To pray important market with Gemini to.
Video will provide more details on this subject in a few minutes.
TSI is at a pivotal point. It is development.
We plan to talk about the high growth opportunity for Gemini 2 in the Starter I Zone: NH Computing Sectors.
These are markets, they are increasingly defined by areas even capabilities.
We are evaluating options to access funds to extend our software.
And application teams to then develop the 5 for necessary for future customers for humans and support.
Management is actively working with the board.
And our advisor to evaluate strategic option that will enable us to scale efficiently.
Our real-time priority, including include funding, the extension of our software and application team and of everything. The development of the platform requires to support future customer development.
Deployment of Gemini 2.
Accelerating the launch of January, 2 is key to learning the groundwork for our next Generation. If you
Title and the advanced companies longtime product Romance.
In the meantime, the ATM has provided valuable flexibility.
Allowing us to raise $11 million today, that is fee.
Of 22.7 million.
Now, I hand the call over to this year, who will discuss our previous development and the sales activities.
Please call, thank you, lean starting with our srant business. We had another strong quarter sales to kyc and kenis Design Systems, a leading provider of AI chip emulation systems. We have experienced our third consecutive quarter of rising yesterday. Ram sales driven by the growth with the Enterprise adoption of AI and also in the generative AI by hyperscalers who are training ever larger models.
Despite continued strong, demand for high performance. S RAM chips, extended lead. Times are impacting our second quarter of fiscal 26 sales. While customers have maintained typical ordering patterns, a portion of our backlog is not shippable this quarter due to these Supply constraints.
We proactively informed all of our Distributors and sales representatives of the situation. It may take some time for customers to adjust to the increased lead time accordingly in the interim, we anticipate instances where orders cannot be fulfilled within the request time frame.
Although forecasts from our largest customers remain solid, we expect SRAM revenue for the remainder of fiscal 2026 to be stable compared to the first quarter, as we navigate the supply chain challenges.
Switching to deliverables of our, for our sbirs, as we've been mentioned, we also have completed the de development of our SAR and YOLO 3 and YOLO 5, algorithms optimized for Edge, AI applications in parallel. We also shipped a lead to 2 board with a low power version of our Gemini 2 chip to an offshore defense contractor with whom. We have been working with for over a year.
Both of these are now available for PC opportunities with other partners.
Our defense work with the low-power version of Gemini 2 has highlighted the chip's capability to address large models at the edge in varying capacity versions, depending on the latency and power sensitivity of the application.
Us tonight, environments, as well as next-generation satellite applications.
Human. Right 2 is also well-suited for large language models, or LLMs for short.
For Edge applications llms require a high density, high performance memory path from external dram to the internal SRAM next to the processor. Jim. And I 2's Computing memory architecture provides high density. High performance, internal SRAM to allow a high efficiency memory path for high speed and lower power. I'm sorry low power operations required by llms.
Gemini 2 is a bit processor that is flexible enough to handle operations ranging from 1-bit to 32-bit or larger efficiently within the same circuit. This further enhances the capability for LLM processing.
We are developing a multimodal, llm charting Edge applications. And we'll have Benchmark results available in next quarter.
To ease the adoption of the technology, we will continue to improve the AI compiler for Gemini 2 which is currently in its initial release phase in parallel we continue to develop ready to use vision multimodal and recognition apps and libraries.
Our software team is developing dynamic, low-precision software and libraries that support larger models, enabling high accuracy at low power in edge devices. This is a major enabler for efficient Edge AI. As a bit engine, we are uniquely capable of addressing these edge needs, where compute, memory, and power resources are far limited.
As we lean mentioned, we are eager to advance our software development team to pursue drone fee, AI chip applications, with Gemini 2.
Let me switch now to our first quarter customer and product breakdown. In the first quarter of fiscal 2026, sales to KYC were $267,000, or 4.3% of net revenues, compared to $1 million, or 21.9% of net revenues, in the same period a year ago, and $1.7 million, or 29.5% of net revenues, in the prior quarter.
Sales to Nokia were 536,000, or 8.5% of revenues, compared to 99,980, or 21.4% of net revenues in the same period a year ago, and 444,000, or 7.5% of net revenues in the prior quarter.
Sales to Cadence Design Systems were 1.5 million or 23.9% of net revenues compared to zero and the same period a year ago and 642,000 or 10.9% of net revenues in the prior quarter.
Defense and Military sales were 19.1% of first quarter shipments compared to 31.9% of shipments in the comparable quarter a year ago and 30.7% of shipments in the prior quarter.
Sales were 62.5% of first quarter shipments compared to 36.3% in the first quarter of fiscal 2025 and 39.3% in the prior quarter.
Regarding our sround business Outlook, our largest customers currently navigating supply chain constraints, however, we expect their order volume to remain stable for the rest of this fiscal year. Meanwhile, other SRM customers have largely normalized, their inventory levels, and we anticipate continued to order activity from them as well.
I'd like to hand the call over to Doug. Go ahead, Doug.
Thank you, DDA.
We reported net reference to 6.3 million for the first quarter of fiscal 2026 compared to 4.7 million dollars for the first quarter of fiscal 2025 and 5.9 million for the fourth quarter of fiscal 2025.
Gross margin was 58.1% in the first quarter of fiscal 2026.
Compared to 46.3% in the first quarter of fiscal 2025 and 56.1% in the preceding fourth quarter of fiscal 2025.
The increase in gross margin in the first quarter of 2026 was primarily due to product mix and the benefits of scale from higher revenue on the fixed cost of revenues.
Total operating expenses in the first quarter of fiscal 2026.
For $5.8 million compared to $6.8 million in the year ago quarter, excluding a one-time gain of $5.7 million on the sale and leaseback of the company's corporate headquarters and $5.6 million in the prior quarter.
Research and development expenses were $3.1 million.
Compared to $4.2 million in the prior year period and $3 million in the prior quarter.
Selling General and administrative expenses were 2.7 million.
In the first quarter of fiscal 2026, the operating loss was $2.2 million compared to an operating loss of $4.7 million in the year-ago quarter, excluding the $5.7 million one-time gain, previously mentioned, related to the corporate companies.
headquarters and an operating loss of 2.3 million in the prior quarter.
First quarter, fiscal 2026, net loss, included interest, and other income of 13,000 and a tax provision of 54,000.
Compared to 55% in interest and other income, and a tax provision of $57,000 for the same period a year ago.
In the preceding fourth quarter.
Net loss, including interest and other income of $52,000, and tax provision of $6,000.
Net loss in the first quarter of fiscal 2026 was $2 million.
Or 8 cents per diluted share.
Compared to net income of 1.1 million dollars or 4 cents per diluted share for the first quarter of fiscal 2025.
Net income for the year-ago period. We flexed the $5.7 million one-time gain on the sale and leaseback transaction of the company's headquarters.
For the prior 4, fiscal quarter of 2025 net loss was 2.2 million compared to 9 cents.
And the ninth cent's loss per share.
Total first quarter pre-tax stock-based compensation expense was $341,000.
In Q1 2026, we reported $658,000 in the comparable quarter a year ago and $512,000 in the prior quarter.
In June 30th 2025.
The company had $22.7 million in cash and cash equivalents compared to $13.4 million at March 31, 2025.
Working capital was $25.7 million at June 30, 2025, compared to $16.4 million at March 31, 2025.
stockholders Equity as June 30th, 2025 was 37.4 million compared to 28.2 million as of the fiscal year. Ended March 31st 2025
And an earnings conference call on May 2024, we announced that the company had initiated a comprehensive strategic View.
Established a special committee of the board to evaluate strategic alternatives. Engaged Needham & Company as our strategic and financial adviser to assist in the process.
As Leland mentioned, we are actively evaluating potential strategic opportunities to secure the necessary capital to advance the development of our Apu products.
In the interim, we choose to draw on the remaining balance of the ATM during upcoming trading windows to support near-term funding needs related to Gemini development, depending on market conditions and other factors.
Finishing with the outlook for the second quarter of fiscal 2026.
We expect net revenues in the second fiscal quarter to range between $5.9 million and $6.7 million, with gross margin in the range of 56% to 58%.
We remain focused on disciplined execution to bring Gemini to to Market advancing. Our road map for Plato while developing long-term, shareholder value.
Operator. At this point, we will open the call to Q&A.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
1 moment, please while we pull for questions.
The first question is from Tony Reno, a private investor. Please go ahead.
Hi, how are you guys?
Doing good. Thank you.
So um, can you provide a little more color on the supply chain issues?
Sure, yeah. So I'm sure you're aware of all the tariffs that are being thrown around by the US government. And a lot of these are directed at China. And so, a lot of the folks who have been doing assembly and China are moving some of their assembly to Taiwan. And so it's really, um, affecting the capacity in Taiwan. And as you know, we do all of our, uh, back-end in Taiwan. So it's it's thrown out, uh, the lead times pretty much overnight to us, uh, because of that, um, transition
Will that end up making the customers possibly order earlier?
You know, this this came about very quickly, and then customers have been used to their ordering patterns based off of lead times we've quoted. So we have gone back to them via our reps and our Distributors to make sure they understand. They need to get more backlog coverage in place. Uh, so that their future orders will not be late, uh, or delayed. And so, so, in the future, we anticipate this won't be a problem, but
For the the current quarter in and possibly into next, you know there will be some backlog that would have been shippable um that will be delayed a bit just because of these lead times.
And it'll just make the further quarter probably even stronger, then.
once we get out of that,
Um, possibly.
Yes.
So um sales to kyec seemed a little weak this quarter. Um,
you know, can you comment on that a little bit?
Sure. Yeah, so part of that was, uh, the inventory levels that I mentioned in mine, which have, uh, seemed to stabilize along with the, um, with the lead time as well.
Yeah, they unfortunately, those orders come in.
Within lead time and we've been able to react in the past and we weren't able to this past quarter.
And like, with cadence, though, those orders were pretty, pretty strong this quarter. Um,
What, what type of product are you shipping to them?
Yeah, so they're emulation systems. I mean, this is kind of what we've talked about that are even though we don't sell our sram's directly into AI applications, we do a lot of support. Uh, you know, the kyc is supporting the manufacturing of AI chips. Um, you know, the, the Cadence systems are emulations to emulate the design of some of these gpus and, and other devices. So it's it's uh, emulation systems in in the front end design.
And uh, last last question as far as the ATM.
For the company for that.
Well, typically, our trading window, starts 2 days after our earnings call. So, in the case of this quarter, the trading window will open on Tuesday and the closest on the 15th of the, uh, last month of the quarter. So that would mean, uh, this case September 15th for the last trading, day up until
The 15th of the month. Okay, all right. Well thank you very much guys. And um good luck in the future. Thank you.
Thank you, Tony.
There are no further questions at this time. I would like to turn the floor back over to leline Shu for a closing comments.
Thank you all for joining us. Please join us for the August 2000 conference.
Operator. There is 1 more question that just popped up.
I see that now. Yep. Okay. Uh, yeah, we have a question now from Anna. Chapman. From 2. Crown. 5 Productions. Please go ahead.
Yes. Uh, my background has always been in sales. In Capital Equipment, I want to
You incentivize your sales force, because to me, you make one of the best products out there. It has an excellent portfolio. How are you supervising these people? It seems like your sales would be more in the pipeline.
That's my question.
I'm sorry. Was that an advertisement, or was that a question? I'm not sure. I got the question, so I'm asking.
To your sales to the distributors, to your sales force.
Are they are they are is your product in there. Are 1 of their number 1, things in their bag, or is it like number 12 or maybe an afterthought.
Otherwise in these people to go out there and tell your story.
And get sales. That's a very
Yeah, so our independent sales reps are paid on commission, so they're paid on shipment of product.
And Distributors are paid on margin. And so with our independent sales reps, there is no competing lines and they understand that our products are door openers. And so certainly, they're important lines for them. And again with uh, Distributors we do have large Distributors as you know, we have abnett which carries most of the lines. And so with them, the incentivization is in the margin and GSI, generally pays them above corporate average for the margins.
All right, I think they need to do better quite frankly.
Just my opinion.
Yep.
All right, operator.
Great. There are no further questions at this time.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.