Q3 2025 QuickLogic Corp Earnings Call

As a reminder, today's call is being recorded for replay purposes through November 18th 2025.

Brian Faith: You may proceed with your question. Hey, everyone. It's Neil Young on for Quinn Bolton. Thank you for letting me ask a question. First question I wanted to ask, hey, that's Neil, like I said, on for Quinn. Sorry about that. What is the impact or what impact is the government shutdown having on your business? Based on the prepared remarks, it sounds like you've seen some delays of projects. Have you seen any cancellations? Given the ongoing shutdown, although it is allegedly supposed to end soon here, what gives you confidence in a rebound of the USG strategic radiation hard and FPGA program in Q4? I have a follow-up. Thanks. Yeah, I think first of all, let's zoom out. Programmable logic has been a big part of the defense industrial base for decades, and that's not changing.

I would now like to turn the conference over to MS. Alison Ziegler of Darrow Associates.

MS. Seigler. Please go ahead.

Thank you Bob 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 future profitability and cash flows expectations regarding our future business and statements regarding the timing milestones and payments related to a government contract.

Regarding the use of the Companys ATM program and statements regarding our ability to successfully exit Huntsville.

Brian Faith: It's pervasive across like 75% of defense systems and, as I mentioned earlier, a very large percentage of the total semiconductor spend by the DOD. That demand is not going away. The question is, as you get down to the nuts and bolts of these programs, is the funding going to be there based on the budgets and whatnot? I think that from the programs that we have today on contract, we're not seeing any delays with those. Elias did mention in his conversation about the cash usage for the quarter, or I should say net cash gain in the quarter. We did use the ATM in October, sort of as an anticipation in case there was something like this that happened as far as funding goes. If there's a delay in funding, then we have no issue with that.

Actual results may differ due to a variety of factors, including delays in the market acceptance of the companys new products the ability to convert design opportunities into customer revenue our ability to replace revenue from end of life product the level and timing of customer design activity the market acceptance of our customers' products the risks that <unk>.

New orders May not result in future revenue, our ability to introduce and produce new products based on advanced wafer technology on a timely basis.

Ability to adequately market the low power competitive pricing in short time to market of our new products.

Intense competition from competitors, our ability to hire and retain retain qualified personnel changes in demand or supply general economic conditions political events international trade disputes natural disasters and other business interrupt the interruptions that could disrupt supply or delivery of ore demand up.

Brian Faith: If there's no delay, then we'll have a good, positive cash flow for the quarter. Aside from that, if you look at other contracts coming down the pipe, I mean, you could find this all publicly that a lot of the new RFIs or RFPs that were coming out from the government for various development programs, some of those were actually paused. I think that's largely because some of those workers that were driving that were put on furlough. Again, I don't anticipate those going away permanently. It's more once the government's funded and people get back from furlough, these are going to be full steam ahead. You might see a delay in some of those new programs, but not the ones that we're fully executing on today. I just don't see that change because this is not an experimental technology.

Companies products and changes in tax rates and exposure to additional tax liabilities.

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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.

We've also posted an updated financial table on our IR webpage that provides current and historical non-GAAP data.

Brian Faith: There are actual programs of record that need this today and moving forward on that. Does that answer your first question? Yeah. Very helpful. Thank you. The second question I want to ask, it sounds like storefront revenue in 2026 is supposed to have a meaningful step up. If possible, I was wondering if you could maybe size the range of storefront revenue you think is possible. If not, maybe you could give us some idea of what could drive upside to your internal expectations or, on the other side, perhaps drive downside to those expectations. Thanks. Sure. I'll start with the what, and then I'll answer with the why. On the what side, I mean, I would say significant for us is going to be that it's 10% or thereabouts of total revenue.

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A copy of the prepared remarks made on today's call will be posted on our quick logic IR web page. Shortly after the conclusion of today's earnings call I would now like to turn the call over to Brian go ahead, Brian.

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

We have made very significant progress since our August conference call.

Brian Faith: Without giving the exact number because we haven't put numbers out for 2026 yet, we think that the storefront revenue associated with these developments that we've been talking about is going to be meaningful, meaning it'll be in that 10% range. Yes, I do think next year's revenue will be notably higher than this year's total revenue. As you get into why do I feel like that, I think if you go back to my opening remarks about the strategic radar initiative, I cannot tell you how many meetings I've had in the last quarter since the last conference call face-to-face with these DIBs that see what we're doing. They like the fact that we've done this tape out that we talked about. Even as of today, lots of calls and emails asking for when they can get their hands on this.

Last quarter I stated that we focused considerable engineering resources to accelerate storefront design wins for our strategic Radford FPGA and expand our served available market to include very high density E. FPGA heart IP designs targeting advanced fabrication notes.

I am proud to say our engineering team has executed beautifully and we are realizing these goals.

We expect to begin recognizing storefront revenue in early 2026.

And that it will provide a meaningful contribution to total 2026 revenue.

The interest from large defense industrial based entities are dibs.

<unk> test chip, we funded is notably higher than I anticipated.

Brian Faith: When you start to see people pulling for the technology and you know that the projects that are under development, public projects, right? The strategic defense system is going under a major modernization. That's all public knowledge. If you throw into that this notion of hypersonics and Golden Dome, a lot of these programs are going to need some level from strategic radar down to radiation tolerant. The part that we've got in the fab now is designed to address those needs. As we get it out, we start moving to these orders for dev kits. We start getting those out. Hopefully, by the end of Q1, I think we're going to be a real prime spot to monetize that and start turning talk that I've had for two and a half years into actual revenue and bottom line contribution.

We have significantly expanded our ability to address the lucrative market for very high density discrete FPGA and ASIC they require large blocks of the FPGA.

New contracts and engagements are for much larger blocks of the FPGA and on advanced fabrication processes.

The value contribution of Es, PGA and customer designs has grown substantially.

Yeah.

Our penetration and commercial market sectors is expanding.

And with this progress the rate of new contract closure is accelerating to the point that license revenue may surpass and RV revenue for the first time this quarter.

Brian Faith: It's not just one entity here. We're talking about all the major DIBs that we've been talking to. I think there's good demand for that, which is why we think it's going to be meaningful for next year. Does that answer your question? Thank you. Yes. Thank you very much. Great. You're welcome. Our next question comes from Richard Shannon with Craig-Hallum. You may proceed with your question. Great. Thanks, Brian and Elias, for taking my questions. Quality of the audio here is pretty poor on my end, so hopefully you can hear me. Apologize if you can't hear. We can hear you just fine. Okay. Well, that's good. I guess at least one of us can. A lot of detail on the call here, and some really interesting stuff going on here.

We have made very significant progress since our August conference call.

We believe these trends will accelerate going forward.

Before I get into the tangible data that support these points I wanted to take a moment and provide some color for the revenue guidance Elias will share in his presentation.

Based on our backlog and forecast provided to us by our customers. We are targeting total revenue of $6 million for Q4.

Last quarter, I stated that we focused considerable engineering resources to accelerate storefront design wins for our strategic record FPGA and expand our served available market to include very high-density, FPGA hard, IP designs targeting advanced fabrication nodes.

I am proud to say our engineering team has executed beautifully, and we are realizing these goals.

The majority of the contracts that support this outlook are already on the books or have been forecasted by customers to be awarded during the coming weeks.

We expect to begin recognizing sore front revenue in early 2026.

And that it will provide a meaningful contribution to Total 2026 Revenue.

However, a contract valued at nearly $3 million for a commercial application targeting an advanced fabrication node has been forecasted by the customer to be awarded late in the quarter.

Brian Faith: Let me ask kind of a big picture, high-level question here with your new initiative on the GF12LP process or initiative here. I guess, how do we think about the opportunity for FPGAs versus ASICs that would include your hard IP in here? Are the dynamics here for timing for each of these markedly different than the other? Well, I'd start by saying for 12LP, that is a very commonly used process by the defense industrial base. I think the heritage of that is that that was the most advanced process that GlobalFoundries had, and GlobalFoundries is US-owned and operated. If you wanted to have something that was manufactured onshore by a US company, that was sort of the most advanced you can get. GlobalFoundries has since come out with 12LP Plus, which is a more advanced version of 12LP.

Participated.

This contract is awarded on or very near the date forecasted we will be able to recognize a large portion of that revenue in Q4, and with that realize our $6 million of objectives.

We have significantly expanded our ability to address the lucrative markets for very high density, discrete FPGAs and A6 that require large blocks of eFPGA.

We have a very high level of confidence in winning this contract.

Note that it could push into Q1 2026 and that would result in lower Q4 2025 total revenue.

New contracts and engagements are for much larger blocks of EFPA and on advanced fabrication processes.

Due to this alliance will present, an unusually wide guidance range.

The value contribution of EFPA and customer designs has grown substantially.

And now let's walk through our accomplishments.

Our penetration in the commercial market sectors is expanding.

In early August we deliver design files to Globalfoundries to fabricate our SRA FPGA test chip using its 12 LP process.

And with this progress, the rate of new contract closures is accelerating to the point that licensed revenue may surpass NRE revenue for the first time this quarter.

This test chip was designed to meet the requirements of certain large dibs.

We believe these trends will accelerate going forward.

Programs in development today that are good candidates for this device.

We expect delivery of test chips in early Q1, 2026, and believe we will have our SRA itch Dev kit ready for shipment to customers shortly thereafter.

Before I get into the tangible data that support these points, I want to take a moment and provide some color for the revenue guidance that Elias will share in his presentation.

Brian Faith: If you think about what's involved in doing an ASIC or an SOC, you need lots of IP available, and you need lots of test data characterization on all that IP in order to feel comfortable to move forward with that on your ASIC. In terms of the defense community, it's a very risk-averse community, as they should be, as they're designing these systems. There's a wealth of IP on 1200P that there is today. It's known, it's understood, characterization data. The government, again, this is all publicly findable, the government has been helping people do ASICs on 1200P. A lot of IP is available. There's government-funded multi-project wafers and all those things to encourage development on that note. From that standpoint, I think you're going to see 1200P a lot. You've seen it in the past, you're going to see it in the future.

This initiative was financed by quick logic and is independent from our contract with the U S government.

Based on our backlog and forecasts provided to us by our customers, we are targeting total revenue of $6 million for Q4.

Our decision to invest the money and resources to develop this test chip was based on our belief that it is critical in our quest to secure strategic design wins and accelerate our storefront business model.

The majority of the contracts that support this outlook are already on the books or have been forecasted by customers to be awarded during the coming weeks.

Since our last earnings call Conference call.

However, a contract valued at nearly $1 million for a commercial application targeting an advanced fabrication note has been forecasted by the customer to be awarded late in the quarter.

I have personally met with a number of the dibs that worked with us through the development process.

And I cannot emphasize enough the potential of our SRA storefront initiative.

In prior meetings, all I had to show where Powerpoint presentations.

If this contract is awarded on or very near the date forecasted, we will be able to recognize a large portion of that revenue in Q4 and, with that, realize our $6 million objective.

And now with a test chip and fabrication the level of enthusiasm is palpably higher.

As a matter of fact, we already have commitments for SRT H Dev kit orders that we expect to receive by the end of this month.

Brian Faith: The question for us is, okay, we have our IP on 1200P. Now, we can build devices from that, or we could license that for people doing their own ASICs. I think we've already talked about IP licenses that we have on ASICs, and you've heard timing on that. People will start to be taping those and going to production, hopefully, in the next few years. There's a near-term license opportunity. There's a back-end royalty opportunity for us on that. We definitely plan to monetize that to several million dollars a year. On the device side, that gets interesting because we've obviously taken our commercial 1200P IP, and we've done a rad hard implementation of that. The goal behind that is to do this strategic rad hard FPGA and having to tape that out.

We have a very high level of confidence in winning this contract, but note that it could push into Q1 2026, and that would result in lower Q4 2025 total revenue.

Due to this, Elias will present an unusually wide guidance range.

I see this as our first tangible step towards the one hundreds of millions of dollars in potential storefront business, we can win in the coming years.

And now let's walk through our accomplishments.

The importance of demonstrating our <unk> FPGA test chip goes well beyond the storefront designs, we believe it will enable us to secure.

In early August, we delivered design files to Global Founders to fabricate our SRH FPGA test chip using its 12 LP process.

<unk> is the number one spend category for semiconductor devices by the defense industrial base and custom Asics are a close second.

This test ship was designed to meet the requirements of certain large DIP programs and developments today that are good candidates for this device.

Together, we believe these two categories make up roughly half of the dib semiconductor Tam.

We expect delivery of test ships in early Q1 2026 and believe we will have our SRH dev kit ready for shipment to customers shortly thereafter.

We expect many of the new strategic designs that require at various levels of radiation hardness will use either discrete FPGA devices that we can storefront or ESP G. A hard IP, we can license the new ASIC designs.

This initiative was financed by QuickLogic and is independent from our contract with the U.S. government.

Brian Faith: If you fast forward to when we could do that actual product dive for production on that, once that's out, that's going to be a significant step function increase in the revenue potential for us personally, because devices of that nature are always going to have a much higher ASP than what a royalty contribution would be. I think 1200P is critically important for us, and it's sort of a land and expand strategy on that now. We want to license it to as many people as we can. We want to have this strategic radar FPGA captured for revenue, and that's, I think, the basis of what could be hundreds of millions of dollars in revenue. I don't know if I answered your question in its entirety. If I didn't, just tell me. You did for the most part.

By delivering a discrete SRA FPGA test chip fabricated on the 12 O P process, we are demonstrating the broader capability of our FPGA heart IP for ASIC applications that will meet program requirements ranging from radiation tolerant to strategic Rad hard.

Our decision to invest the money and resources to develop this test ship was based on our belief that it is critical in our quest to secure strategic design wins and accelerate our storefront business model.

Since our last earnings call conference call, I have personally met with a number of the DIBs that worked with us through the development process.

There are three very important points I want to highlight here.

And I cannot emphasize enough the potential of our SRH storefront initiative.

First dibs or already using Globalfoundries total P fabrication process for radiation tolerant and SRA apex second government contracts require the use of onshore fabrication for strategic programs. When devices are available as it stands today, we will be the only source.

In prior meetings, all I had to show were PowerPoint presentations.

And now, with a test ship and Fabrication, the level of enthusiasm is palpably higher.

As a matter of fact, we already have commitments for SRH devkit orders that we expect to receive by the end of this month.

Brian Faith: I'm just trying to circle around this a bit here from a very high level. I'm going to ask another pretty high-level question here, Brian, which is comparing the opportunity you've now undergone with GF12LP, or how do you compare the opportunity to what you've been doing with rad hard with the other foundries you've announced with? I guess from a total perspective over, I'll let you pick a time frame, but how do you see the relative size of each of these opportunities for you? By the other foundries, you're referring to SkyWater and Honeywell or somebody else? Those are the ones, yes. Okay. I think without getting into programmatic details, I think the 12LP opportunity for us is a larger opportunity because it has the strategic rad hard FPGA. It also has IP licensing as an option.

First strategic router at FPGA and <unk> FPGA heart IP that is fabricated in the U S buyer U S company.

I see this as our first tangible step towards the hundreds of millions of dollars in potential storefront business we could win in the coming years.

Third in my meetings at large dibs engineering managers have clearly stated that being able to design with our Aurora FPGA user tools for both our SRA discrete FPGA is and our ERP J Hart IP and ASIC designs is a huge plus.

The importance of demonstrating our SRH FPGA test ship goes well beyond the storefront designs. We believe it will enable us to secure.

FPGA is the number one spend category for semiconductor devices by the defense industrial base, and custom A6s are a close second.

Yeah.

During our last conference call I stated that Q3 would mark the low point for revenue recognition for our U S government <unk> FPGA contract this year.

Together, we believe these two categories make up roughly half of the DIB semiconductor TAM.

Funded by the current tranche revenue recognition from the contract will rebound significantly in Q4.

We expect many of the new strategic designs that require various levels of radiation hardness will use either discrete FPGA devices that we can storefront or ESPP Heart IP, which we can license for new ASIC designs.

Beyond that we anticipate an increase in quarterly revenue recognition in 2026.

It will be funded by the next tranche.

Brian Faith: One of the nice things, and you know this, is that as you get smaller process technology, you get denser transistors, you get more capability, you can stuff in a die, and there's going to be higher value to that. We enumerate that as far as where we're taking our eFPGA architecture, but the same is true at 12 nanometer and 12LP. The more transistors and functionality we can stick on that die, the higher the value of the part's going to be. I think, again, the interesting part about 12LP here is that we can get a lot of capability running on our FPGA, 12LP, and maybe somebody doesn't even need to do an ASIC now for 12LP. That's huge.

During our last conference call I forecasted the award of a mid seven figure contract from Egypt during Q4 that targets Intel <unk>.

By delivering a discrete SRH FPGA test chip fabricated on the 12 O P process, we are demonstrating the broader capability of our EFPA heart IP for ASIC applications that will meet program requirements, ranging from radiation tolerant to strategic rad hard.

Unfortunately, there has been a delay in funding that pushes this contract into 2026.

There are three very important points I want to highlight here.

We are highly confident that we'll be awarded this contract but at this juncture our customer has limited visibility on the timing of funding.

First Dibs are already using Global Foundries' 12P fabrication process for radiation-tolerant and SRH AS6.

While we await funding for this seven figure deal. It is worth noting that we have already been awarded multiple contracts by this strategic customer during 2025.

Government contracts require the use of onshore fabrication for strategic programs when devices are available.

Brian Faith: If we can start helping people address the needs of a mission without having to go off and do a custom ASIC, you're talking about saving a customer or the government literally tens of millions of dollars in years of development cost and time. That's the real benefit, I think, to getting our FPGA on 12 nanometer, given that it's strategic rad hard and so capable of a node. As you talk about those other foundries, those are older process geometries that they've talked about, so there's going to be a difference in what you can do on the die. There's a difference in what you can do capability-wise. Not bad, just different. I think the bigger bucket of revenue for us is going to be what we're going to be able to do at 12 nanometer on these for the time being. Okay.

We delivered customer specific FPGA heart IP for this customer's first until 18, a test chip last April.

As it stands today, we will be the only source for strategic routers, FPGAs, and SR, EFPA heart IP that is fabricated in the U.S. by a U.S. company.

We expect to receive our allocation of test chips from this contract during Q1 2026 for our internal verification and characterization.

We were subsequently awarded a mid six figure contract for a second until 18, a test chip we.

Third, in my meetings at large DIBs, engineering managers have clearly stated that being able to design with our Aurora FPGA user tools for both our SRH discrete FPGAs and our EFJ hard IP in ASIC designs is a huge plus.

We delivered customer specific ESP GAA heart IP for this test chip during Q3.

In addition to these Intel ATCA test ship contracts during our last conference call.

During our last conference call, I stated that Q3 would mark the low point for revenue recognition for the U.S. government SRH FPGA contract this year.

This customer awarded US a contract for a $1 million less feasibility study that we are scheduled to deliver next week.

Funded by the current tranche, revenue recognition from the contract will rebound significantly in Q4.

We are anticipating a follow on order in the coming weeks associated with this feasibility study that will enable the customer to tape out a very high density until 18, a proof of concept device during the second half of 2026.

Beyond that, we anticipate an increase in quarterly revenue recognition in 2026.

Brian Faith: I don't want to get into more details on that just because that's a little too much programmatic information if I go further. Yep. I get that. Just that high level here is very helpful to think about. Brian, thanks for that. You mentioned expecting orders for your new dev kits here, I think by the end of this month and delivering those sometime next year. Can you give us a sense of how many dev kits and how many customers you expect to ship that to? What's kind of the design cycle once customers get that in hand in terms of their next steps? I'm not going to give numbers. Probably not surprised to hear that. It's going to be enough that it will be a significant revenue number, not just a rounding number on the income statement.

That will be funded by the next tranche.

During our last conference call, I forecasted the award of a mid-$7 million contract from a DIB during Q4 that targets Intel 18A.

The architectural changes we implemented in this feasibility study can be leveraged across all advanced fabrication nodes, which we define as 12 nanometers and below.

Unfortunately, there has been a delay in funding that pushes this contract into 2026.

With these changes we can now address the lucrative markets that require very high density FPGA blocks, and ASIC design and very high density discrete FPGA.

We are highly confident that we will be awarded this contract, but at this juncture, our customer has limited visibility on the timing of funding.

This significantly expands our Sam for FPGA hard IP and discrete devices, including our SRA FPGA chipsets and other store for an opportunities.

While we await funding for this seven-figure deal, it is worth noting that we have already been awarded multiple contracts by this strategic customer during 2025.

We delivered customer-specific eFPGA and heart IP for this customer's first Intel 18A test, which we shipped last April.

We initiated our digital proof of concept triplet program earlier this year as a strategy to accelerate our store friendship with initiatives internally, we refer to this as POC.

Brian Faith: Elias talked about the money that we spent in Q3 on that. We've intentionally bought enough die that we can provide enough for these customers that want to test these things out, both in terms of dev kit and on just raw devices themselves on their own boards. Now, the way this works from an evaluation perspective, again, this is a very cautious and risk-averse community that we're talking about. They're going to want to do their own testing on these things, and that generally takes a couple of quarters to go off and do all of your exercising of your design and the different environmental tests that need to be done on those devices. You've probably read the TRL levels, technology readiness level. We want to get customers as quickly as possible to TRL5.

We expect to receive our allocation of test ships from this contract during Q1 2026 for our internal verification and characterization.

With the support of our large strategic partners, we have leveraged our existing <unk> IP and readily available third party IP to move forward rapidly and with minimal investment.

We were subsequently awarded a mid-six-figure contract for a second Intel 18A test chip.

We delivered customer-specific EFPA heart IP for this test chip during Q3.

In line with our forecast I shared on our last conference call. We completed the initial phase of the digital FPGA chips with POC, where the ESP G. AIP is connected to UCI IP and the necessary interface logic for the Ips to communicate.

In addition to these Intel 18A test ship contracts, during our last conference call I announced that this customer awarded us a contract for a 1 million-unit feasibility study that we are scheduled to deliver next week.

This digital stimulation of the POC is available now and can be further developed to meet different customer requirements.

Together with our ecosystem partners, we are engaging with prospective customers in the defense aerospace industrial and commercial markets.

We are anticipating a follow-on order in the coming weeks associated with this feasibility study that will enable the customer to tape out a very high-density Intel 18A proof-of-concept device during the second half of 2026.

Brian Faith: TRL5 is where they can actually say that they've taken the part and they've run it through the rigorous testing that's representative of the environment that they're going to operate in. We hope to be able to support our customers to get through that at some point through the middle of next year, and then at that point, start intercepting actual programs of record with this and moving into pretty late stages of the design, hopefully, with them. Again, that's why time is so critical.

We plan to move forward with the next phases of the FPGA Shiplett POC once external funding is committed.

The architectural changes we implemented in this feasibility study can be leveraged across all advanced fabrication nodes, which we define as 12 nm and below.

This phase will include incorporating additional IP, such as programmable <unk> Axi bus Dsp's data converters and interfaces such as PCI express to meet specific customer requirements.

With these changes, we can now address the lucrative markets that require very high density: EFG blocks in ASIC design and very high density discrete FPGAs.

Brian Faith: That's why we took the leap of faith to do our own design and fund our own tape out, knowing that MPWs don't come along very often. We wanted to make sure that we're on one that still gave us enough time to have the part come out, verify it, and get it into the hands of the dev so that they can start playing with it in their own labs and not just trust our own data. Okay. Great perspective there, Brian. Last question. I'll jump out of line. A lot of irons in the fire that you have going on here, which is great to see here. In QuickLogic, obviously, it's a fairly small company here. Seems like it might need a bit more support to a broad range of customers coming your way here very soon.

We are optimistic that our POC initiative will lead to a storefront revenue in 2026.

This significantly expands our SAM for EFG, a heart IP and discrete devices, including our SRF PGA chiplets and other storefront opportunities.

On October 2nd we announced a new $1 million FPGA heart IP contract for a high performance data center ASIC that will be fabricated on Tsmc's 12 nanometer process.

We initiated our digital proof of concept chiplet program earlier this year as a strategy to accelerate our storefront chiplet initiative. Internally, we refer to this as PC.

And this <unk>, our FPGA heart IP will be the primary IP in the design.

This contract is a great illustration of our success in several of the points I mentioned earlier.

With the support of our large strategic partners, we have leveraged our existing efpa hard IP and readily available third-party IP to move forward rapidly and with minimal investment.

The need for larger blocks of the FPGA.

The increasing value contribution of FPGA and customer designs.

Brian Faith: How do we think about the spend levels we need to see next year, whether it comes through OpEx or the stuff that gets allocated to COGS here? How do we think about where this could go if things go really well and you get a lot of attention, a lot of activity with these dev kits you're sending out? I'll start answering, Elias, and chime on those. From the engineering perspective and the go-to-market team perspective, we obviously have identified certain critical hires. Some of them you can find on our website today. These are all about getting the right resources to get the devices out into the hands of the dev as soon as possible. You can find that on our website. Engineering, field application engineering, and so on. As we move from test chip to actual product chip, there will be more expenses.

Winning contracts for designs targeting advanced fabrication processes.

In line with the forecast I shared in our last conference call, we completed the initial phase of the digital FPGA chiplet POC, where the EFPA IP is connected to UCIE IP and the necessary interface logic for the IPS to communicate.

And our growing success and commercial market sectors.

We will soon announce the expansion of our involvement with the dib that specializes in cyber security for a strategic and tactical weapons systems.

This digital simulation of the PC is available now and can be further developed to meet different customer requirements.

This dip designed secure system on chip processors that leverage the enhanced security that only FPGA can provide.

Together with our ecosystem partners, we are engaging with prospective customers in the defense, aerospace, industrial, and commercial markets.

We plan to move forward with the next phases of the FPGA chiplet POC once external funding is committed.

Running these processes and hardware is inherently more secure than software solutions.

With FPGA at the heart of the designs the hardware can be altered to respond to new threats and updated algorithms we.

We are proud to have been chosen as a trusted supplier of FPGA heart IP for these designs.

This phase will include incorporating additional IP, such as programmable GPIOs, AXI bus DSPs, data converters, and interfaces, such as PCI Express, to meet specific customer requirements.

Brian Faith: There will be other things that need to be paid for. I think that we have a good line of sight on what those are going to be. It's not going to be outrageous for next year. I think it's going to be very mindful of where we are financially as a company, and tied in with getting these customers on board with test chips so that any investments we do make is coming from the perspective of knowing what our customer wants, knowing the problem that our solution solves, and in some cases, even perhaps getting funding from customers to co-invest in these things so that they have skin in the game, and it offsets the upfront cost for QuickLogic to get it to market. Yep, correct. In fact, Richard, if I may add, for example, we have three new hires we're looking for, all engineers.

Last April we announced an FPGA hard IP contract with a new defense industrial base customer.

We are optimistic that our PC initiative will lead to storefront revenue in 2026.

At $1 $1 billion that will be fabricated on the <unk> process.

This application utilizes a large block of our ESP Gi heart IP for critical functions, which is a trend we are seeing particularly in designs targeting advanced fabrication notes.

On October 2nd, we announced a new $1 million efpa hardip contract for a high-performance data center ASC that will be fabricated on TSMC's 12-nanometer process.

In this ASIC, our EFPA hard IP will be the primary IP in the design.

With the cooperation of this dip and its end customer.

We are leveraging the large <unk> core into a new seven figure contract, we expect to announce in the coming weeks.

This contract is a great illustration of our success in several of the points I mentioned earlier.

The need for larger blocks of E FPGA.

And the scope of this new contract we will be provided with test chips that we will incorporate in an evaluation kit.

The increase in value, contribution of EFPA, and customer designs.

The evaluation kit will be compatible with common third party development environments used by both <unk> and commercial customers.

Brian Faith: OPEX is definitely headcount moderating. I don't anticipate, even with all the additions that Brian is describing, probably we'll be looking at probably $3.5 million of OPEX per quarter, probably next year, but starting in Q2 or so. I think for now, we're okay with about under $3 million. Okay. That's great detail, guys. I will jump the line. Thank you. Thanks, Richard. Before our next question, as a reminder, if any analysts would like to ask a question, you may press star one on your telephone keypad to enter the queue. Our next question comes from Rick Neaton with Rivershore Investment Research. You may proceed with your question. Thank you. Hi, Brian, and hi, Elias. Hello, Rick. I'd like to understand your Q4 guidance.

Winning contracts for designs targeting advanced fabrication processes and our growing success in the commercial market sectors.

This enables these customers to accelerate system level evaluations and designs that can use either a storefront version of the <unk> test chip or our FPGA hard IP and an ASIC.

We will soon announce the expansion of our involvement with a DIB that specializes in cyber security for strategic and tactical weapons systems.

We anticipate having evaluation kits available in late 2026.

This division designs secure system-on-chip processors that leverage the enhanced security that only EFPA can provide.

With that I will turn the call over to Elias for his presentation of financial data.

Running these processes and hardware is inherently more secure than software solutions.

Thank you, Brian and good afternoon, everyone.

Total third quarter revenue was $2 million.

With EFPA at the heart of the designs, the hardware can be altered to respond to new threats and updated algorithms.

And aligned with the midpoint of our guidance.

Total revenue was down 52, 5% from Q3 2024.

We are proud to have been chosen as a trusted supplier of EFPA hard IP for these designs.

Down 45% compared to Q2 2025.

Okay.

Rounded to the nearest one 100000.

New product revenue in Q3 was $1 million.

Last April, we announced an EFPA hard IP contract with a new defense industrial base customer, valued at $1.1 million, that will be fabricated on the GF 12P process.

And mature product revenue was $1 1 million.

New product revenue was down 73, 1% from Q3, 2024, and down 67, 3% compared to Q2 2025.

Brian Faith: Are you proposing an either-or situation where we're either going to have $3.5 million ± or $6 million ±? Is that what you're saying? Yes, because there's an issue with timing, right? If the order comes in, for example, to complete it to $6 million, it would come in late in the quarter. We may be able to recognize certain portions of that revenue. If it comes in and we're not able to deliver in that quarter, let's just say it comes in on the day of our close, or the day after, it's definitely Q1 at that point. It's almost like a timing issue, Rick. That's why we went to great pains to identify the difference between a $3.5 million revenue and a $6 million revenue. Really, it's one order.

This application utilizes a large block of our EFPA hard IP for critical functions, which is a trend we are seeing particularly in designs targeting advanced fabrication nodes.

Mature product revenue was up from 0.7 million in the third quarter of 2024.

With the cooperation of this DIB and its end customer, we are leveraging the large EFP core into new seven contracts in the coming weeks.

On up from zero point $8 million in the second quarter of 2025.

And the scope of this new contract, we will be provided with test chips that we will incorporate into an evaluation kit.

non-GAAP gross margin in Q3.

Was a negative 11, 9%.

This compared with non-GAAP gross margin of 65, 3% in Q3 2024.

The evaluation kit will be compatible with common third-party development environments used by both DIBS and commercial customers.

31% in Q2 2025.

The primary reasons for the lower Q3 gross profit margin.

This enables these customers to accelerate system-level evaluations and designs. They can use either a storefront version of the 12P test ship or our EFP J Heart IP in an ASIC.

Unfavorable absorption of fixed costs due to lower revenue and the fact that $300000 of R&D costs were allocated to Cogs.

We anticipate having evaluation kits available in late 2026.

With that, I will turn the call over to Elias for his presentation of financial data.

non-GAAP operating expenses in Q3 were approximately $2 9 million.

Thank you, Brian, and good afternoon, everyone.

Total third quarter revenue was $2.

This was approximately 300000 below the midpoint of our outlook.

Brian Faith: It's all about timing. It's very difficult to answer a question now to someone saying, okay, would you be able to recognize 100% of it? The answer is clearly no if it comes in in Q4. That is why Brian and I agreed, if that's the case and we anticipate that order coming in, at least in Q4, let's just hope it does, we at least have the possibility of beating the high end of the range. Okay. Thank you for that explanation. Sure. What do you forecast as your share count for 2025? Well, 17,090,252 shares. That's outstanding right now. Okay. One final question. Yeah. Yeah, yeah. No, that's fine. So that's your ending share count would be 17 million. Yes, sir. Okay. Three months ago, you described your expected revenue decline for 2025 with the adjective modest.

Million and aligned with the midpoint of our guidance.

Due to the Cogs allocation I just mentioned.

Total revenue was down 52.5% from Q3 2024.

This compares with non-GAAP operating expenses of $3 3 million in the third quarter of 2024.

And down 45% compared to Q2 2025.

$2 5 million in the second quarter of 2025.

Rounded to the nearest 1,100,000.

non-GAAP net loss was $3 2 million or <unk> 19 per diluted share.

New product revenue in Q3 was $1 million.

And mature product revenue was $1.1 million.

This compares to a net to a non-GAAP net loss of <unk> 9 million.

<unk> per diluted share in Q3, 2024 on a non-GAAP net loss of $1 5 million.

New product revenue was down 73.1% from Q3 2024 and down 67.3% compared to Q2 2025.

<unk> per diluted share in the second quarter of fiscal 2025.

Mature product revenue was up from $0.7 million in the third quarter of 2024.

The difference between our GAAP and non-GAAP results is related to noncash.

And up from 0.8 million in the second quarter of 2025.

<unk> based compensation expenses.

Impairment charges and restructuring costs.

Non-GAAP gross margin in Q3 was a negative 11.9%.

Stock based compensation for Q3 was <unk> 8 million.

Stock based compensation was $1 2 million in Q3 2024.

This compared with non-GAAP gross margin of 65.3% in Q3 2025.

And 31% in Q2, 2025.

Zero point $8 million in Q2 2025.

Impairment charges were zero point $3 million in Q2 2025.

The primary reasons for the lower Q3 gross profit margin are unfavorable absorption of fixed costs.

For the third quarter, three customers accounted for 10% or more of total revenue.

Due to lower revenue and the fact that dollars of R&D costs were allocated to COGS.

At the close of Q3 total cash was $17 3 million.

Inclusive of utilization of $15 million from $20 million credit facility.

Non-GAAP operating expenses in Q3 were approximately $2.9 million.

Brian Faith: Now your Q4 guidance suggests a 20% to 30% decline in annual revenue from 2024. What changed since August to cause what I would describe as a significant double-digit percentage-wise revenue decline? Yeah, Rick, that's the challenge with having large IP contract values. When we're talking $3 million type ASPs for these, I think in the call, we mentioned one clearly is in 2026. That goes from this year into next year, and then some other smaller ones that contribute to that. Again, when you have $3 million IP contracts, if they don't happen in the year, the fiscal year, there's going to be a big change in percentage-wise from the revenue levels that we're at today.

This compares with $19 2 million inclusive up usage of $15 million from $20 million credit facility at the close of Q2 2025.

This was approximately 300,000 below the midpoint of our outlook due to the COGS allocation. I just mentioned.

This compares with non-GAAP operating expenses of $3.3 million in the third quarter of 2024.

Net of approximately $200000 raised with our ATM in July.

And $2.5 million in the second quarter of 2025.

Cash usage during Q3 was approximately $1 9 million.

Non-GAAP net loss was $3.2 million, or $0.19 per diluted share.

This was primarily driven by tape outs on wafer costs associated with our internally finance arm H FPGA test chip.

In addition to these one time costs there will also expenditures related to revenue contracts.

And repayments for finance tooling and equipment.

In Q3 2025, QuickLogic Corp reported a non-GAAP net loss of $1.5 million or $0.09 per diluted share in the second quarter of fiscal 2025.

Now moving to our guidance on the outlook for our fiscal fourth quarter, which will end on December 28 2025.

The difference between our GAAP and non-GAAP results is related to non-cash.

Stock based compensation expenses.

Impairment charges and restructuring costs.

Based on backlog and customer forecast, we are targeting total revenue of 6 million for Q4.

Stock-based compensation for Q3 was $0.8 million.

Brian Faith: Once that becomes more of the norm and we get more of these higher-value contracts like we're talking about now, that starts to smooth out some of that lumpiness. When we're at the stage where we are now, there's almost unavoidable if something goes out that's going to materially impact the percentage of that. Okay. Thanks for that explanation. Thanks for having me on this call. Thanks, Rick. Of course. This now concludes our question-and-answer session. I would like to turn the floor back over to Brian Faith for closing comments. Yeah. I want to thank everybody for joining us today.

Many of the contracts that support this outlook already on the books.

Have been forecasted by customers to be awarded during the coming weeks.

Stock-based compensation was $1.2 million in Q3 2025 and $0.8 million in Q2 2025.

However.

The customer for a contract valued at nearly $3 million for commercial application.

Impairment charges were $0.3 million in Q2 2025.

As forecasted the award late in the quarter.

For the third quarter, three customers accounted for 10% or more of total revenue.

This contract is awarded on a very near to date forecasted.

At the close of Q3, total cash was $17.3 million.

We will be able to recognize a large portion of that revenue in Q4.

Inclusive of the utilization of $15 million from our $20 million credit facility.

And would that realize a $6 billion objective.

We have a very high level of confidence in winning this contract.

Note that he could push into Q1 2026.

This compares with 19.2 million, inclusive of usage of 15 million from our $20 million credit facility at the close of Q2 2025.

Brian Faith: Hopefully, we'll connect with some of you at one of our upcoming events, including the Craig-Hallum Alpha Select 101 conference in New York on 18 November 2025, the semiconductor-focused annual New York Summit, also in New York, on 16 December 2025, or the annual Needham Growth Conference in early January 2026. Thank you, and have a good day. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.

And that would result in Q4 revenue of $3 5 million.

Net of approximately $200,000 raised with our ATM in July.

Due to this guidance range for total Q4 revenue is $3 $5 million to $6 million.

Cash usage during Q3 was approximately $1.9 million.

At $3 $5 million, we expect total revenue to be comprised of $2 5 million in new product revenue.

This was primarily driven by tip-outs and wiper costs.

Associated with an internally financed SRH FPGA, test chip.

And $1 million in mature product revenue.

At $6 million, we expect $5 million in new product revenue.

In addition to these one-time costs, there were also expenditures related to revenue contracts.

Based on the anticipated Q4 revenue mix non-GAAP gross margin for the fourth quarter is expected to be approximately.

And repayments for finance, tooling, and equipment.

45% at $3 $5 million of revenue and 68% at $6 million of revenue.

Now moving to a guy's outlook for a fiscal fourth quarter, which will end on December 28, 2025.

The low end of the range. The primary reason for lower gross profit margin.

Based on backlog and customer forecast, we're targeting a total revenue of $6 million for Q4.

Is that attributed to less favorable absorption of fixed costs.

Many of the contracts that support this outlook are already on the books.

Taking the range of our Q4 outlook into consideration.

Or have been forecasted by customers to be awarded during the coming weeks.

However,

Our full year 2025, non-GAAP gross profit margin is expected to be <unk>.

The customer for a contract valued at nearly $3 million for commercial application.

38% plus or minus 5%.

Has forecasted the award late in the quarter.

Q4, non-GAAP operating expenses are expected to be approximately $3 million plus or minus 5%.

If this contract is awarded on or very near the date forecasted,

With this we are modeling full year 2025 non-GAAP opex.

We will be able to recognize a large portion of that revenue in Q4.

Will be approximately $11 3 million.

And with that, we realized our $6 million objective.

Please note that given the nature of the industry, we may occasionally need to plus a phy certain expenses to Cogs.

We have a very high level of confidence in winning this contract.

But note that it could push into Q1 2026.

As opex capitalize certain costs.

And that would result in Q4 revenue of $3.5 million.

These classifications are related to labor on tooling for IP contracts with customers.

Due to this, a guidance range for total Q4 revenue is $3.5 million to $6 million.

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

We'll usually balance out on the operating line.

At $3.5 million, we expect revenue to be comprised of $2.5 million in new product revenue.

And $1 million in Metro product revenue.

After interest and other income.

The low end of the revenue range with forecast of Q4, non-GAAP net loss of approximately $1 9 million.

At $6 million, we expect $5 million in new product revenue.

<unk> 11 per share.

The high end of our revenue range, we are projecting a non-GAAP net profits of approximately 600000 or four cents per share.

Based on the anticipated Q4 revenue, the non-GAAP gross margin for the fourth quarter is expected to be approximately.

45% at $3.5 million of revenue and 68% at $6 million of revenue.

The main difference between our GAAP and non-GAAP results is related to noncash stock based compensation expenses.

At the low end of the range, the primary reason for lower gross profit margin,

is attributed to less favorable absorption of fixed costs.

In Q4, we expect this compensation will be approximately 800000.

Taking the range of our Q4 outlook into consideration.

This is the same as Q3 2025.

And down slightly from Q4 2024.

A full year 2025 non-GAAP gross profit margin is expected to be.

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

38% plus, or minus 5%?

Q4 non-GAAP operating expenses are expected to be approximately $3 million, plus or minus 5%.

Even at the low end of our revenue guidance range, we anticipate positive cash flow in Q4.

With this, we are modeling full-year 2025 non-GAAP Opex.

However, the timing of payments from our U S government contract.

Will be approximately 11.3 million.

Negatively impact this outlook.

Given the fact that we raised approximately.

Please note that given the nature of our industry, we may occasionally need to classify.

Certain expenses to cogs.

$2 million using our existing ATM in October we're well prepared for any delayed BMS associated with the U S government contract.

Process Opex or capitalize certain costs.

These classifications are related to labor and tooling for IP contracts with customers.

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

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

Thank you Elias.

That will usually balance out on the operating line.

Have logged considerable progress during the last few months and we are leveraging that progress to produce tangible results.

After interest another income.

Earlier, I talked about those results and now I would like to take the next few minutes to help you understand the industry trends that are driving these results without understanding I think you will appreciate what is driving the increased interest in FPGA technology and buy more companies are incorporating larger blocks of FPGA at the core of new ASIC designs.

At the low end of the revenue range, we forecast a Q4 non-GAAP net loss of approximately $1.9 million.

Or 11 cents per share.

The overarching trend in both commercial and Dib designs is smart systems.

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

Smart systems rely on algorithms for their intelligence.

In Q4, we expect this compensation will be approximately $800,000.

Rhythms can be processed much faster and with much lower power consumption and hardware than software <unk>.

This is the same as Q3 2025 and down slightly from Q4 2024.

Hardware processing is also inherently more secure against cyber threats and software the.

The challenge here is that algorithms must be updated over the lifecycle of the product. This means hardware must be programmable. So it can adapt to changing algorithms.

As a reminder, there will be movement in our stock-based compensation during the year, and it may vary each quarter based on the timing of grants.

Even at the low end of our revenue guidance range, we anticipate positive cash flow in Q4.

This has led to the need for larger blocks of FPGA at the heart of ASIC designs versus past use cases, where small blocks of the FPGA, where more commonly used as programmable connectivity bridges.

However, the timing of payments from a U.S. government contract could negatively impact this outlook.

Given the fact that we raised approximately.

This means both the need and the value proposition for FPGA are increasing.

Sophisticated smart systems designs typically targeted advanced fabrication notes.

$2 million using our existing ATM in October. We're well prepared for any delayed payments associated with the U.S. government contract.

This means higher fixed costs and longer design cycles for Asics.

Thank you for that. Let me now turn the call over to Brian for his closing remarks.

To favorably offset these higher fixed costs ASIC designs must deliver longer lifecycle than in the past.

Thank you, Elias.

Designs that employee FPGA can adapt to changing algorithms evolving functional requirements and external changes that are not evident during the design cycle.

We have logged considerable progress during the last few months, and we are leveraging that progress to produce tangible results.

Earlier, I talked about those results, and now I would like to take the next few minutes to help you understand the industry trends that are driving these results.

This flexibility lengthens the lifecycle of ASIC designs and provides program managers with the confidence to move Asics to production more quickly and with lower risk.

This shortens design cycles and lower development costs.

With that understanding, I think you will appreciate what is driving the increased interest in FPGA technology and why more companies are incorporating larger blocks of FPGA at the core of new ASIC designs.

Last but certainly not least there are many programs in development today that must be compliant with rigorous environmental requirements ranging from radiation tolerant to strategic Rad hard.

The overarching trend in both commercial and DIP designs is smart systems.

Smart systems rely on algorithms for their intelligence.

Algorithms can be processed much faster and with much lower power consumption in hardware than in software.

Our internally funded development of an SRA FPGA test chip is designed to address the full range of these requirements and accelerates our ability to pursue design wins.

Hardware processing is also inherently more secure against cyber threats than software.

The challenge here is that algorithms must be updated over the life cycle of the product.

By using the same onshore 12 O P fabrication process that dips have used for <unk> Asics, we are optimizing our chances of winning discrete FPGA designs, we can storefront and contracts for FPGA hard IP that customers can incorporate in ASIC designs.

This means hardware must be programmable so it can adapt to changing algorithms.

This has led to the need for larger blocks of EFG at the heart of ASIC designs versus past use cases, where small blocks of EFG were more commonly used as programmable connectivity bridges.

Further enhancing our position is the fact customers can execute designs with our Aurora user tools for both.

This means both the need and the value proposition for EFG are increasing.

The fact this investment by quick logic has been received very well by strategic Dibs is underscored by the commitment we have for <unk> Dev kit orders that we anticipate receiving by the end of this month.

Sophisticated smart systems designs typically target advanced fabrication notes.

This means higher fixed costs and longer design cycles for AS6.

To favorably offset these higher fixed costs, ASC designs must deliver longer life cycles than in the past.

Before I turn the call over for Q&A.

I want to take a moment to recognize the veterans day.

And express my heartfelt gratitude to all those who have served our country.

Designs that employ EFPA can adapt to changing algorithms, evolving functional requirements, and external changes that are not evident during the design cycle.

He has personal meeting for me.

Several members of my family have served and I have deep respect for the sacrifices made by veterans and their families.

This flexibility lengthens the life cycle of ASIC designs and provides program managers with the confidence to move A6 to production more quickly and with lower risk.

Something we honor it quick logic, especially as we develop technologies that contribute to our nation's defense and security.

This shortens design cycles and lowers development costs.

Operator, I would now like to open the call for questions.

Yes.

Thank you.

We will now be conducting a question and answer session were selected analysts will be invited for questions. If you'd like to ask a question. Please press star one on your telephone keypad.

Last but certainly not least, there are many programs and developments today that must be compliant with rigorous environmental requirements, ranging from radiation tolerant to strategic rat heart.

<unk> tone will indicate your line is in the question queue.

Our internally funded development of an SRH FPGA test chip is designed to address the full range of these requirements and accelerates our ability to pursue design wins.

You May press Star two 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 starkey.

Our first question comes from Quinn Bolton with Needham.

May proceed with your question.

By using the same onshore 12 OP fabrication process that DIBs have used for SRH AS6, we are optimizing our chances of winning discrete FPGA designs. We can storefront and contract for EFBA hard IP that customers can incorporate in ASIC designs.

Hey, everyone. It's Neil young on for Quinn Bolton. Thank you for letting me ask a question.

So the question I wanted to ask.

Further enhancing our position is the fact that customers can execute designs with our Aurora user tools for both.

Like I said on frequented sorry about that so what is the impact.

Impact is government shutdown, having on your business.

Based on our prepared remarks.

Sounds like you've seen some delays of projects have you seen any cancellations and then given the ongoing shutdown although it is.

The fact that this investment by QuickLogic has been received very well by strategic dibs is underscored by the commitment we have for SRH devkit orders that we anticipate receiving by the end of this month.

Are we supposed to end soon here what gives you confidence in a rebound of the USG strategic radiation or an FPGA program in <unk> and then I have a follow up thanks.

Before I turn the call over for Q&A, I want to take a moment to recognize Veterans Day.

And I express my heartfelt gratitude to all those who have served our country.

To stay has personal meaning for me.

Yes, I think firstly, let's zoom out programmable logic has been a big part of the defense industrial base for decades, and that's not changing it's pervasive across like.

As several members of my family have served, I have deep respect for the sacrifices made by veterans and their families.

Like 75% of defense systems, and as I mentioned earlier, a very large percentage of the total semiconductor spend by the Dod So that demand is not going away. The question is as you get down to the nuts and bolts of these programs is the funding going to be there based on the budgets.

It's something we honor at QuickLogic, especially as we develop technologies that contribute to our nation's defense and security.

Operator, I would now like to open the call for questions.

And whatnot, so I think that from the programs that we have today on contract we're not seeing any.

Question. Please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Delays with those.

Elias did mention in his.

Conversation about the cash usage for the quarter or I should say.

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.

Net cash gain in the quarter, we did use the ATM in October sort of as the anticipation in case there was something like this that happened as far as funding goes so if there's a delay in funding and we have no issue with that if there is no delay then we'll have a good positive cash flow for the quarter.

Our first question comes from Quinn, Bolton with Nem. You may proceed with your question.

Aside from that if you look at other contracts coming down the pipe.

You can find this all publicly there's a lot of the new RFID or RFS is our rfps that we're coming out from the government for various development programs. Some of those were actually paused and I think thats largely because some of those workers that were driving that were put on furlough.

Again, I don't anticipate those going away permanently it's more once the government funded and people will get back.

Hey, everyone. It's, uh, Neil Young on for Quinn, Bolton. Thank you for letting me ask a question. Um, so first question I wanted to ask, uh, hey, that's, you know, like I said, on for Quinn. Sorry about that. Um, so what is the in or what impact is the government shutdown having on your business? Um, based on the prepared remarks, I sounds like you've seen some delays of projects. Um, have you seen any cancellations? And then, you know, given the ongoing shutdown, although it is allegedly supposed to end soon here. What gives you confidence in a rebound of the, uh, USG strategic radiation? Hardened fpga program in 42 and then I have a follow-up. Thanks.

From furlough. These are going to be full steam ahead. So you might see a delay in some of those new programs.

But not the ones that we are fully executing on today I just don't see that change because business is not an experimental technology. There are actual programs of record that neither today and moving forward on that.

Yeah, I think, first of all, programmable logic has been a big part of the defense industrial base for decades, and that's not changing. It's pervasive across.

Does that answer your first question.

Yeah very helpful. Thank you.

And then second question I want to ask so it sounds like storefront revenue and <unk> 26 is supposed to have a meaningful step up.

Possible I was wondering if you could maybe size the range of store front runner or do you think is possible and then if not maybe you could give us some idea of what could drive upside to your internal expectations are on your side for apps drive downside to those expectations.

Sure I'll start with the what and then I'll answer with Hawaii. So on the <unk> side I mean.

I would say is significant for us is going to be 10%.

Or thereabouts of total revenue without giving the exact number because we haven't put numbers out for 2026, yet we think that the storefront revenue associated with these developments that we've been talking about is going to be meaningful meeting you'll be in that 10% range and yes, I do think next year's revenue will be notably higher than this year's total revenue.

Like 75% of Defense systems. And as I mentioned earlier, a very large percentage of the total semiconductor spend by the dod, so that demand is not going away. The question is, as you get down to the nuts and bolts of these programs is the funding going to be there based on the budgets. And, and, uh, and whatnot. So, I think that from the programs that we have today on contract, we're not seeing any, um, delays with those, uh, Elias did mention in his, uh, conversation about the cache usage for the quarter or I should say, uh, net cash gain in the quarter. Uh, we did use the ATM in October sort of as a anticipation in case there was something like this. That happened, as far as funding goes. So if there's a delay in funding, then we have no issue with that. If there's no delay, then we'll have a good positive cash flow for the quarter.

As you get into why do I feel like that I think if you go back to my my opening remarks about the strategic radar initiative I cannot tell you how many meetings I have had in the last quarter since the last conference call face to face with these dips that see what we're doing they like the fact that we've done this tape outs that we talked.

Aside from that, if you look at other contracts coming down the pipe, I mean, you could find this all publicly. A lot of the new RFIs, RFSs, or RFPs that were coming out from the government for various development programs.

Some of those were actually paused, and I think that's largely because some of those workers that were driving that were put on furlough. Again, I don't anticipate those going away permanently. It's more once the government's funded and people get back from furlough, these are going to be full steam ahead. So, you might see a delay in some of those new programs.

About and even as of today lots of calls and emails asking for when they can get their hands on this and so when you start to see people pulling for the technology and you know that the projects that are underdevelopment public projects right. The strategic defense system is going under a major modernization. That's all public knowledge and then if you throw in.

Uh, but not the ones that were fully executing on today. I just don't see that changing because this is not an experimental technology. There are actual programs of record that need this today and moving forward on that.

Does that answer your first question?

To that.

This notion of hypersonic Singleton down a lot of these programs are going to need some level from strategic strategic rather down to radiation tolerant and the part that we've got in the fab now is designed to address those needs. So as we get it out we started moving to these orders for Dev kits, we start getting those out.

Yeah, very helpful. Thank you. Um, and then the second question I want to ask is, it sounds like storefront revenue in 2026 is supposed to have a meaningful step up. If possible, I was wondering if you could maybe size the range of storefront revenue you think is possible. And then, you know, if not, maybe could give us some idea of what could drive upside to your internal expectations or, you know, on the other side, for apps, drive downside to those expectations. Thanks.

Hopefully by the end of Q1, I think we're going to be a prime real.

The real private spot to monetize that and start turning.

Sure, I'll start with the what and then I'll answer with the why. So on the what side, I mean...

Talk that I've had for two and a half years into actual revenue and Bottomline contribution, but it's not just one entity here, we're talking about all of the major dips.

I would say significant for us is going to be that it's 10%.

We've been talking to I think there is good demand for that so that's why we think it's going to be meaningful for next year.

Yeah.

Does that answer your question. Thank you.

Yes.

Youre welcome.

Or thereabouts of total revenue, and without giving any exact number because we haven't put numbers out for 2026 yet, we think that the storefront revenue associated with these developments that we've been talking about is going to be meaningful. Meaning you'll be in that 10% range. And yes, I do think next year's revenue will be notably higher than this year's total revenue.

Our next question comes from Richard Shannon with Craig Hallum. You May proceed with your question.

Great, Thanks, Bryan and Elias for taking my questions.

Quality of the audio here is pretty poor on land. So hopefully you can hear me apologize if you can't hear.

Right.

Um, as you get into why do I feel like that? I think if you go back to my opening remarks about the Strategic Router initiative, I cannot tell you how many meetings I've had in the last quarter since the last conference call, face to face with these DIBs, that see what we're doing. They like the fact that we've done this tape out that we talked about.

Okay, Let's go I guess at least one of us Ken.

Sure.

A lot of detail on the call here.

And some really interesting stuff going on here, let me ask kind of a big picture high level question here with your new initiative on the on the GF 12 LP process or initiative here.

I guess, how do we think about the opportunity.

For FPGA versus <unk>.

<unk> that would include your heart IP in here and are the dynamics here for timing for each of these markedly different than the other.

Well I'd start by saying.

About and, you know, even as of today, lots of calls and emails asking for when they can get their hands on this. And so when you start to see people pulling for the technology and you know the the projects that are under development public projects, right? The Strategic Defense System is going under a major modernization. That's all public knowledge. And then if you throw into that, um, this notion of hypersonics and golden dome, a lot of these programs are going to need some level from strategic, strategic radar, down to radiation tolerance. And the part that we've got in the Fab now is designed to address those needs. So as we get it out, we start moving to these orders for Dev kits. We start getting those out.

For <unk>.

That is a very commonly used process by the defense industrial base.

I think the heritage of that as debt.

That was the most advanced process. The Globalfoundries had in Globalfoundries is U S owned and operated and so if you wanted to have something that was manufactured onshore by a U S company that was sort of the most advanced you can get global has since come out with <unk>.

To monetize that and start turning um talk that I've had for 2 and a half years and talk so revenue and bottom line contribution but it's not just 1 entity here. We're talking about all the major dibs um that we've been talking to. I think there's good demand for that. So that's why we think it's going to be meaningful for next year.

Does that answer your question? Thank you.

<unk>, plus which is in a more advanced version of <unk>.

Yes, thank you very much. Great. You're welcome.

But if you think about what's involved in doing an ASIC or an SFC you need lots of IP available and you need lots of test data and characterization on all of that IP in order to feel comfortable to move forward with that on your ASIC.

Our next question comes from Richard Shannon with Craig Hallam. You may proceed with your question.

And in terms of the defense community is very <unk>.

Hi, great to thanks, Brian Elias, for taking my questions. Um, the quality of the audio here is pretty poor on my end, so hopefully you can hear me. I apologize if you can't hear. We can hear you fine.

Risk averse community as they should be.

As they're designing a system. So there is a wealth of IP onto MLP that there is.

Okay, let's go. I guess at least one of us can, um,

Today, it's known it's understood characterization data and the government again. This is all publicly findable the government has been.

Helping people do a six on total peak a lot of IP is available.

There is government funded multi project wafers and all of those things to encourage development on that note.

Lot of lot of detail on the call here um, and it's a really interesting stuff going on here. Let me ask you kind of a big picture high level question here with your new initiative on the on the gf12 lp process or or um initiative here. I guess how do we think about the opportunity? Um, for fpgas versus

So from that standpoint, I think youre going to see <unk> a lot.

You've seen it in the past, we're going to see it in the future. So then the question for US is okay. We have our IP on <unk> now we can build devices from that or we could build or we can license that for people doing their own asics and.

Basics. It would include your hard IP in here, and are the dynamics here for timing for each of these marketed different than the other?

Well, I had started by saying that

for 12 op.

And I think we've already talked about IPD licenses that we have on asics and you've heard timing on that so.

That is a very commonly used process by the defense industrial base.

Um, I think the heritage of that is that.

People will start to be taping up those and going to production hopefully in the next few years.

So theres a.

There is a near term license opportunity Theres, a backend royalty opportunity for us on that end.

And we definitely plan to monetize that to several million dollars a year.

Um, that was the most advanced process that GlobalFoundries had, and GlobalFoundries is U.S.-owned and operated. So, if you wanted to have something that was manufactured onshore by a U.S. company that was sort of the most advanced you could get. Global has since come out with...

On the device side.

It's interesting because we've obviously taken our commercial total CIP and we've done right.

<unk> implementation of that.

So the goal behind that is to do this strategic <unk> FPGA and having to take that out if you fast forward to when we could do that.

12 people plus, uh, which is a more advanced version of 12 LP. But if you think about what's involved in doing an ASIC or an SoC, you need lots of IP available and you need lots of test data characterization on all the IP in order to feel comfortable to move forward, um, with that on your ASIC.

And in terms of the defense community, it's very

Product I for production on that.

Once that's out that's going to be a significant step function increase in the revenue potential for us personally.

Risk-averse community, as they should be, um, as they're designing these systems. So, there's a wealth of IP onto an LP that there is.

As devices of that nature are always going to have a much higher asps than what are our royalty contribution would be.

So I think total if he is critically important for us and it's sort of a land and expand.

It's today; it's known. It's understood characterization data and the government. Again, this is all publicly fundable. The government has been, you know,

[noise] strategy on that now want to license it to as many people as we can we want to have the strategic other FPGA capture for revenue and thus I think the basis of what could be hundreds of millions of dollars in revenue.

Helping people do A6. There is a lot of IP available at 12p. Additionally, there are government-funded multi-pro wafers and other initiatives to encourage development on that note.

Okay.

I don't know if I answered your question as an entirety, if I didn't just tell me.

Okay.

You did for the most part time I'm just trying to circle around this a bit here from a very high level I might ask another pretty high level question here, Brian which is comparing the opportunity you're now undergone with with GFS 12 LP or how do you compare the opportunity to what <unk> been doing with Rad hard with.

So from that standpoint, I think you're going to see T2 a lot. Um, you've seen it in the past, you're going to see it in the future. So then the question for us is, okay, we have our IP on 12 LP. Now we can build devices from that, or we could build, um, or we could license that for people doing their own AS6.

And I think we've already talked about IP licenses that we have on AS6, and you've heard timing on that. So,

People will start to be taping out those and going to production, hopefully in the next few years.

The other foundries, you've you've announced with.

So there's an obvious near-term license opportunity. There's a back-end royalty opportunity for us on that.

But I guess from a total perspective over I'll, let you pick a timeframe, but how do you how do you see the relative sizes of each of these opportunities.

And we definitely plan to monetize that to several million dollars a year, um, on the device side.

Yeah.

By the other vendors, you're referring to Scott water and Honeywell or somebody else.

Those are the ones yes.

That gets interesting because we've obviously taken our commercial 12-pip, and we've done a red heart implementation of that.

Okay.

I think.

Without getting into programmatic details.

I think that the <unk> opportunity for us as a larger opportunity.

Because it has the strategic got hurt FPGA. It also has IP licensing as an option.

One of the nice things.

As you get smaller process technology, you get denser transistors, you get more capability you can stuff in a die and theres going to be higher value to that and we and you're very that as far as like where we're taking our <unk> architecture, but at the same is true with 12 nanometer and 12 O P.

So the goal behind that is to do this strategic Red Heart FBGA and having T taped that out. If you fast forward to when we could do that actual product for production on that, once that's out, that's going to be a significant step-function increase in the revenue potential for us personally because devices of that nature are always going to have a much higher ASP than what a royalty contribution would be.

So, I think 12 AP is critically important for us.

The more transistors and functionality, we can stick on that day, the higher the value of that part is going to be and I think again the interesting part about 12 O P. Here.

And it's sort of a land-and-expand strategy on that now where we want to license it to as many people as we can. We want to have this strategic better FPJ captured for revenue, and that's, I think, the basis of what could be hundreds of millions of dollars in revenue.

We can get a lot of capability running on our FPGA <unk> and maybe somebody doesn't even need to do in a sick now for <unk>. That's huge if we can start helping people address the needs of emission without having to go off and do a custom ASIC you are talking about saving our customer the government.

I don't know if I answered your question; it's an entirety. If I didn't, just tell me.

Literally tens of millions of dollars in years of development cost and time.

And that's the real benefit I think to getting our FPGA on 12 nanometer.

Given that its strategic got hurt and so.

Capable of note now as you've talked about the other foundries.

Each of these opportunities is important for you.

Those are older process geometries that they've talked about and so theres going to be a difference in what you can do on the di Theres a difference in what you can do capability wise.

By the other founders, are you referring to SkyWater? And how do you all—or somebody else? Yeah. Those are the ones. Yes.

Okay.

so, I think

Not bad it's just different.

without getting into programmatic details, um,

I think the bigger bucket of revenue for us is going to be.

What we're going to be able to do at 12 nanometer on these for the for the time being.

I think that the 12 LP opportunity for us is a larger opportunity.

Okay.

And then kind of on that just because that's a little too much programmatic information if I go further.

Yeah, I get that just at high level here. So it's very helpful to think about Bryan thanks for that.

You mentioned.

We're expecting orders for your new.

New Dev kits here I think by the end of the end of this month and delivering those sometime next year can you give us a sense of how many.

Because it has the strategic retard FPGA. It also has IP licensing, which is an option and one of the nice things. As you know, this is that as you get smaller process technology, you get denser transistors, which increases the capability; you can stuff more into a die, and there's going to be higher value to that. We are looking at where we're taking our EFG architecture, but the same is true at 12 nanometer and 12 volt P.

<unk> kits and how many customers do you expect to ship that to and then what's kind of the design cycle.

Once customers get that in hand in terms of their next steps.

So im not going to give numbers.

Probably not surprised to hear that.

But it's going to be enough that it's it will be.

It will be a significant revenue number so not just a rounding number on the income statement.

Um, the more transistors and functionality we can stick on that die, the higher the value of the part is going to be. And I think, again, the interesting part about 12P here is that we can get a lot of capability running on our FPGA, and maybe somebody doesn't even need to do an ASIC. Now, for 12P, that's huge. If we can start helping people address the needs of a mission without having to go off and do a custom ASIC, you're talking about saving a customer or the government.

And we've.

Literally tens of millions of dollars in years of development, uh, costs, and time.

<unk> talked about the money that we spent in Q3 on that we've intentionally.

And that's the real benefit, I think, to getting our FBJ on 12nm. Um,

Bought enough die that we can.

We can provide enough for these customers that want to test. These things out in terms of Dev kit and on just raw devices themselves on their own on their own boards.

Given that it's strategic about hard and so capable of without. Now, as you talk about those other foundries.

um,

Hey, this works from an evaluation perspective.

Again this is a very.

Those are older process geometries that they've talked about, and so there's going to be a difference in what you can do on the die. There's a difference in what you can do capability-wise.

Um,

Cautious and risk averse community that we're talking about.

They're going to want to do their own testing on these things and that generally takes a couple of quarters to go off and do.

Not bad, just different. But I think the bigger bucket of revenue for us is going to be, um, what we're going to be able to do at 12 NM on these for the time being.

All of your exercising of your design and the different environmental tests that need to.

It needs to be done on those devices.

Okay? And I don't want to get into more on that just because that's a little too much programmatic information. If I go further,

You've probably read the TRL levels technology readiness level, we want to get customers as quickly as possible too.

<unk> five <unk>.

Five is where they can actually say that they've taken apart and they run it through the rigorous testing thats representative of the environment that theyre going to operate them.

And so we hope to be able to support our customers to get through that at some point through.

Through the middle of next year, and then at that point started intercepting actual programs of record but this.

Yep. I get that, uh, just that high level here is is very helpful to think about, Brian, thanks for that. Um, you mentioned, um, expecting orders for your, um, new Dev kits here. I think by the end of the end of this month and, and delivering those sometime next year, can you give us a sense of how many, uh, Dev kits. And how many customers you expect to ship that to and then what's kind of the, uh, design cycle, uh, once customers get that in hand, in terms of of their next steps?

And moving into.

Pretty late stages of the design hopefully with them.

So, I'm not going to give numbers, um,

And again.

That's why time is so critical that's why we took the leap of faith to do the their own design and fund our own tape out.

Probably not surprised to hear that, uh, but it's going to be enough that it will be.

Knowing that MPW don't come along very often and we wanted to make sure that we're on one that still gave us enough time to have the part come out verify it and get into the hands of the dip so.

It will be a significant revenue number, so not just the rounding number on the income statement.

So they can start playing with it in their own labs, and not just trust their own data.

Um, and we've, you know, Elias talked about the money that we spent in Q3 on that. We've intentionally bought enough dye that we can.

Yeah.

Okay, Great Great perspective, there, Brian last question I'll jump out of line.

A lot of irons in the fire that you have going on here, which is which is great to see here.

We can provide enough for these customers and want to test these things out. Well, in terms of the dev kit and on just raw devices themselves, on their own boards. Now, the way this works from an evaluation perspective,

again, this is a very

um,

Quick logic, obviously is a fairly small company here it seems like might need to.

Cautious and risk-averse, the community that we’re talking about.

Bit more support to a broad range of customers coming your way here very soon how do we think about the spend levels, we need to see next year, whether it comes through.

They're going to want to do their own testing on these things, and that generally takes, you know, a couple of quarters to go off and do.

All of your exercising of your design and the different environmental tests that need to.

Opex or the stuff that gets allocated the Cogs here, how do we think about where this could go if things go really well and you get a lot of attention a lot of a lot of activity in these deb kit you're sending out.

need to be done in those devices.

Um, you've probably read the TRL levels, Technology Readiness Level. You know, we want to get customers as quickly as possible.

So I'll start answering the last can chime in on us so from a from.

Um, tr5.

From the engineering perspective in the go to market team perspective.

And TR5 is where they can actually say that they've taken the part and they've run it through rigorous testing that's representative of the environment in which they're going to operate.

We obviously have identified certain critical hires some of them you can find on our website today and these are all about getting the right resources to get the devices out into the hands of the data as soon as possible.

You can find on our web site engineering field application engineering and so on as we move from test chip to actual product chip there will be more expenses.

And so we hope to be able to support our customers to get through that at some point through the middle of next year. And then at that point, start intercepting actual programs of record with this, um, and moving into, you know, pretty late stages of the design, hopefully with them.

There will be other things that need to be paid for and I think that we have a good line of sight on what those are going to be.

And it's not going to be outrageous for next year I think it can be very mindful of where we are financially as a company and tied in with getting these customers onboard with test chips. So that any investments we do make is coming from the perspective of knowing what our customer wants knowing the problem that our solution solves and in some cases, even perhaps getting funding.

And again that's that's why time is so critical. That's why we took the the leap of faith to do the their own design and the fund, our own tape out. Um, knowing that mpw is now come along very often and we wanted to make sure that we're on 1 that still gave us enough time to have the part come out, verify it and get it into the hands of the dip so they can start playing with it in their own labs and not just trust our own data.

Okay, great. Uh, great perspective there. Brian, last question, I'll jump out of line. Um,

From customers to co invest in these things so that they have skin in the game and it offsets the upfront costs for quick logic to get it to market.

Yes, correct.

And in fact, Richard if I may add.

Like for example, we have three new hires we're looking for.

All engineers and <unk>.

Such.

Opex is definitely head count more than anything.

You know, the spend levels. We need to see next year, you know, whether it comes through uh um Opex or stuff that gets allocated to cogs here. How do we think about where this could go? If things go really well and you get a lot of attention, a lot of uh, lot of activity of these Dev kits. You're sending out.

So I don't anticipate even with all the additions that Brian.

Describing.

Probably we'll be looking at probably $3 5 million of Opex per quarter.

So, I'll start answering the last question. Can you chime in on us?

Probably next year, we're starting.

In Q2, or so I think for now we located with about under three.

Yeah.

Okay.

Great detail guys I will jump the line. Thank you.

Thanks Richard.

Before our next question as a reminder, if any analysts would like to ask a question you May press star one on your telephone keypad to enter the queue.

Our next question comes from Rick Nelson with River Shore Investment Research you May proceed with your question.

Thank you, Hi, Brian and Hi, Elias Alright.

Alright, alright.

I would like to understand.

Your Q4 guidance.

Tom.

Are you.

Proposing.

Either or situation, where we're either going to have $3 5 million, plus or minus or $6 million plus or minus.

From the engineering perspective and the go to market uh Team perspective. You know, we obviously have identified certain critical hires some of them you could find on our website today and these are all about getting the right resources to get the devices out into the hands of the as soon as possible. Um, and you can find that on our website engineering field application engineering and so on, as we move from test ship to actual product ship, there will be more expensive. Um, there will be other things that need to be paid for and I think that we have a good line of sight on what those are going to be. And it's not going to be outrageous for next year. I think it's going to be very mindful of where we are financially as a company and tied in with getting these customers on board with test ships. So that any Investments we do make is coming from the perspective of knowing what our customer wants knowing the problem that our solution solves and in some cases, even perhaps getting funding from customers to co-invest in these things so that they have skin in the game.

Game and its offsets. The upfront cost for QuickLogic to get it to market.

Is that what is that what youre, saying.

Yes, because there is a issue with timing right. So.

Yep, correct. And in fact, Richard, if I may add, um, like for example, we have 3 new hires. We're looking for.

If the if the.

Order comes in for example to <unk>.

Completed two 6 million.

Would come in late in the quarter.

We may be able to recognize certain portions of that revenue.

But if it comes in we're not able to deliver in that quarter, let's just see it comes in on the day of close.

The day after.

Currently Q1 at that point, so it's almost like a timing issue and that's why we we went in we went to great pains to identify the difference between $3 5 million revenue and 6 million in revenue and really each one order.

uh all engineers and as such, you know, um uh, Opex is definitely headcount moderating, so I don't anticipate even with all the additions that Brian is is, is describing uh probably will be looking at probably 3 and a half million of Opex per quarter, uh, probably next year, but starting in the, in Q2 or so, I think, for now we're okay with about under 3,

Okay, that's great detail, guys. I will jump on the line. Thank you.

Thanks Richard.

And as such it's all about timing, so it's very difficult to.

Before our next question, as a reminder, if any analysts would like to ask a question, you may press *1 on your telephone keypad to enter the queue.

Ask that question now to someone chain, Okay would you be able to recognize a 100% of it.

The answer is clearly no.

Our next question comes from Rick Newton with Rivershore Investment Research. You may proceed with your question.

If it comes in in Q4.

So that is why Brian and I agreed if that's the case and we anticipate that order coming in.

Thank you. Uh, hi, Brian. And hi, Elias.

Hello.

I'd like to understand.

At least in Q4, let's just hope it does.

We at least have the possibility of beating the high end of the range.

Your Q4 guidance. Um, are you um...

Okay.

Thank you for that explanation.

Sure.

proposing either a situation where we're either going to have $3.5 million plus or minus, or $6 million plus or minus.

What do you forecast is your share count for 2025.

Is that what you're saying?

Well 17, 17.090 million 252000 shares outstanding right now.

Yes because there's a there's a issue with timing, right? So um, if the if the

order comes in, for example, to

Yeah.

Okay.

complete it to 6 million.

One final question.

Yeah.

Yes, yes no.

It would come in late in the quarter, and we may be able to recognize certain portions of that revenue.

That's fine.

So.

You bet your ending share count would be 17 years sure.

Okay.

Three months ago.

You described.

Your expected revenue decline for 2025.

With the adjective modest.

And now your Q4 guidance.

Uh, but if it comes in and we're not able to deliver in that quarter, let's just see it comes in on the day of our clothes of the day after it's definitely q1 at that point. So it's it's almost like a timing issue Rick and that's why we we we were in we went to a great pain store. Identify the difference between a 3 and a half million revenue and a 6 million revenue and really it's 1 order.

Suggests.

20% to 30%.

Decline in annual revenue from 2024.

And as such, it's all about timing. So it's very difficult to answer a question. Now, to someone saying, "Okay, would you be able to recognize 100% of it?" And the answer is clearly no.

If it comes in Q4.

What changed since August.

To cause what I would describe as a significant.

So that is why, Brian? And I agreed. If that's the case and we anticipate that order coming in.

Double digit.

Percentage wise revenue decline.

Yeah.

Eric that's the challenge with having large IP contract values and when we're talking $3 million type Asp's for these so I think in the call. We mentioned one clearly is in 2026.

At least in Q4. Let's just hope it does. We at least have the possibility of beating the high end of the range.

Okay.

Um,

Thank you for that explanation. Uh, sure.

So that goes from this year into next year.

What do you forecast is your, uh, share count for 2025?

And then.

Some other smaller ones that contributed to that but again when you have $3 million IP contracts, if they don't happen in the year the fiscal year, there's going to be a big change in percentage wise from the revenue levels that we're at today.

Uh, well, 17, 17 million, 90,252,000 shares. That's all that’s outstanding right now.

Okay.

um, 1 question, we have

Once that becomes more of the norm and we get more of these higher value contracts like we were talking about now.

Yeah.

Yeah, yeah, yeah. No, that’s fine. I’m.

That starts to smooth out some of that lumpiness, but.

When we're at the stage, where we are now there is almost unavoidable if something moves out of that's going to materially impact the percentage of that.

That is that your ending share count would be 17. Yes, sir.

Okay.

Um,

3 months ago.

Okay.

Thanks for that explanation.

You described.

Thanks for having me on the.

Paul.

Your expected revenue decline for 2025.

Thanks, Rick.

This now concludes our question and answer session.

With the adjective modest. And now your key for guidance,

I would like to turn the floor back over to Brian faith for closing comments.

Uh suggests, uh, 20 to 30%.

I want to thank everybody for joining us today, hopefully, we'll connect with some of you at one of our upcoming events, including the Craig Hallum Alpha select one on one conference in New York on November 18th.

Uh, decline in annual revenue from 2024. Uh, what changed since August?

Semiconductor focused annual New York Summit also in New York on December 16th or the annual Needham growth Conference in early January 2026, Thank you and have a good day.

To, um, cause what I would describe as a significant...

double digit.

Percentage wise Revenue decline.

Eric, that's the challenge with having large IP contract values. And when we're talking,

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.

3 million dollars, uh, type ASPS for these. So, I think in the call we mentioned 1 clearly is in 2026.

So that goes from this year and into next year, um,

and then, uh,

Some other smaller ones that contribute to that. But again, when you have 3 million IP contracts, if they don't happen in the year, the fiscal year, there's going to be a big change in percentage wise from the revenue levels that we're at today.

Once that becomes more the norm, and we get more of these higher value contracts—like we're talking about now.

Um, that starts to smooth out some of that lumpiness, but

When we're at the stage where we are now, there's almost an unavoidable situation. If something moves out, it's going to materially impact the percentage of that.

Okay.

Uh, thanks for that explanation. And, uh, thanks for having me on the, uh, call.

Thanks Rick.

This now concludes our question-and-answer session. I would like to turn the floor back over to Brian Faith for closing comments.

Yeah, I want to thank everybody for joining us today. Hopefully, we'll connect with some of you at one of our upcoming events, including the Craig Hallum Alpha Select 101 conference in New York on November 18th.

The semiconductor focused, annual New York Summit. Also in New York on December 16th or the annual nem growth conference in early January 2026. Thank you and have a good day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.