Earnings call transcript: GSI Technology Q1 2025 sees revenue growth, stock stable

GSI Technology Inc. reported its first-quarter results for fiscal year 2026, showcasing a 35% year-over-year revenue increase, reaching $6.3 million. The company’s earnings per share (EPS) stood at a loss of $0.08, aligning with market expectations. Despite the net loss, the stock price remained stable, closing at $4.35, with a slight aftermarket increase of 2.53% to $4.46. According to InvestingPro data, while the stock has seen a -10.49% decline over the past week, it maintains an impressive 55.36% return over the last six months. The company continues to focus on its strategic initiatives in the edge AI and satellite markets.

Key Takeaways

• Revenue grew 35% year-over-year to $6.3 million.
• Gross margin improved significantly to 58.1%.
• Operating expenses were reduced by 15% year-over-year.
• The company is advancing its Gemini II chip and AI algorithms.
• Stock price saw a minor increase in aftermarket trading.

Company Performance

GSI Technology delivered a robust performance in Q1 FY2026, driven by strong demand for its high-performance SRAM chips and advancements in edge AI technologies. The company’s strategic focus on satellite and edge computing markets is positioning it well against competitors. Despite the net loss, the financial results reflect operational efficiency with reduced expenses and improved margins.

Financial Highlights

• Revenue: $6.3 million, up 35% year-over-year
• Gross margin: 58.1%, improved by 1,100 basis points YoY
• Net loss: $2.1 million or $0.08 per diluted share
• Cash position: $22.7 million as of June 30, 2025

Earnings vs. Forecast

The actual EPS of -$0.08 met market expectations, with no significant surprise in revenue figures. The company’s performance aligns with its historical trends of focusing on innovation and market expansion, mitigating potential investor concerns despite the ongoing net loss.

Market Reaction

Post-earnings, GSI Technology’s stock remained stable, closing at $4.35 with a slight aftermarket rise to $4.46, marking a 2.53% increase. This movement reflects investor confidence in the company’s strategic direction and financial health, despite the challenging macroeconomic environment.

Outlook & Guidance

Looking forward, GSI Technology projects Q2 FY2026 revenue between $5.9 million and $6.7 million, with expected gross margins of 56% to 58%. The company remains focused on launching the Gemini II chip and expanding its software and application teams, indicating a continued commitment to innovation and market growth.

Executive Commentary

CEO Leland Shu emphasized, "Fiscal twenty twenty six is off to a strong start," highlighting the company’s solid footing. VP of Sales Didier Lacerre noted, "We are uniquely capable of addressing these edge needs where compute, memory, and power resources are far limited," underscoring their competitive advantage. CFO Douglas Shirley added, "We remain focused on disciplined execution to bring GEMINI-two to market," indicating a clear strategic focus.

Risks and Challenges

• Supply chain constraints could impact lead times and order fulfillment.
• Market saturation in the SRAM chip segment poses a competitive challenge.
• Macroeconomic pressures, including US-China tariffs, may affect manufacturing costs.
• The ongoing net loss requires careful financial management to sustain growth.

Q&A

During the earnings call, analysts inquired about the impact of supply chain constraints on future orders, sales incentive structures, and the strategic focus on reducing lead times. The management addressed these concerns, emphasizing proactive measures and strategic partnerships to navigate these challenges effectively.

Full transcript - GSI Technology Inc (GSIT) Q1 2026:

Conference Operator: Ladies and gentlemen, thank you for standing by. Welcome to GSI Technologies First Quarter Fiscal twenty twenty six Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. At that time, we will provide instructions for those interested in entering the queue for the Q and A.

Before we begin today’s call, the company has requested that I read the following Safe Harbor statement. The matters discussed in this conference call may include forward looking statements regarding future events and future performance of GSI technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company’s Form 10 ks filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this conference call is being recorded today, 07/31/2025 at the request of GSI Technology. Hosting the call today is Lili Shun, Liling Shu, the company’s chairman, president, and chief executive officer.

With him are Douglas Shirley, chief financial officer and Didier Lacerre, Vice President of Sales. I would now like to turn the conference over to Mr. Xu. Please go ahead, sir.

Leland Shu, Chairman, President, and CEO, GSI Technologies: Good afternoon, everyone, and thank you for joining us today. Let me begin with a few key highlights from this quarter’s financial results. Fiscal twenty twenty six is off to a strong start. In the first quarter, we achieved net revenue of $6,300,000 up 7% sequentially and 35% year over year. This growth was fueled by rising demand for our SRAM chip, driven by strong market momentum for leading AI processors.

Our profitability metrics also improved this quarter, with a 200 basis point sequential increase in gross margin and over 1,100 basis points compared to the prior year. We have also made meaningful progress on cost control over the last year, with operating expenses declining by 15% year over year, including the gain from the sale of our headquarter in Q1 twenty twenty five. Now I would like to provide an update on our product roadmap and customer milestones. We have completed the evaluation of the second spin of our Gemini II chip. I’m pleased to report that all long paths have been resolved.

The silicon is fully functional and ready for production. This week, the LIDAR TUBO and associated algorithms were delivered to a key offshore defense contractor for approval of contact work with Gemini II for satellites and drones. This delivery keeps us firmly on track with our roadmap and customer commitment. And while this is a major milestone, we also believe it represents an opportunity to play in broader market with GEMINI-two. Didier will provide more details on this subject in a few minutes.

CSI is at a pivotal point in its development. We plan to target high growth opportunity for Gemini II in the satellite zone and edge computing sectors. These are markets that are increasingly defined by AI driven capabilities. We are evaluating options to access funds to expand our software and application teams to then develop the platform necessary for future customer fulfillment and support. Management is actively working with the Board and our advisors to evaluate strategic options that will enable us to scale efficiently.

Our near term priorities include funding the extension of our software and application team and advancing the development of the platform required to support future customer deployment of Gemini II. Accelerating the launch of Gemini II is key to laying the groundwork for our next generation APU, Plateau, and other companies’ long term product roadmap. In the meantime, the ATM has provided variable flexibility, allowing us to raise $11,000,000 today, let off fee. As a result, we ended the first quarter with a certain cash position of $22,700,000 Now I hand the call over to who will discuss our business development and the sales activities.

Didier Lacerre, Vice President of Sales, GSI Technologies: Please go ahead, Thank you, Leland. Starting with our SRAM business, we had another strong quarter of sales to KYEC and Cadence Design Systems, a leading provider of AI chip emulation systems. We have experienced our third consecutive quarter of rising SRAM sales, driven by the growth with the enterprise adoption of AI and also in the generative AI by hyperscalers who are training ever larger models. Despite continued strong demand for high performance SRAM chips, extended lead times are impacting our 2026 sales. While customers have maintained typical ordering patterns, a portion of our backlog is not shippable this quarter due to these supply constraints.

We proactively informed all of our distributors and sales representatives of the situation. It may take some time for customers to adjust to the increased lead time accordingly. In the interim, we anticipate instances where orders cannot be fulfilled within the request timeframe. Although forecasts from our largest customers remain solid, we expect SRAM revenue for the remainder of the fiscal twenty twenty six to be stable compared to first quarter as we navigate these supply chain challenges. Switching to deliverables for our SBIRs, as Leland mentioned, we also have completed the development of our SAR and YOLO3 and YOLO5 algorithms optimized for edge AI applications.

In parallel, we also shipped a LEDA-two board with a low power version of our Gemini-two chip to an offshore defense contractor with whom we have been working with for over a year. Both of these are now available for POC opportunities with other partners. Our defense work with the low power version of Gemini two has highlighted the chip’s capability to address large models at the edge in varying capacity versions, depending on the latency and power sensitivity of the application. This makes Gemini II, in conjunction with the SAR and YOLO3 and YOLO5 algorithms, very well positioned for the broader market potential of applications moving to the edge, and particularly for high demand, high volume, and high mixed processing needs of drones operating in GPS denied environments, as well as next generation satellite applications. Gemini two is also well suited for large language models, or LLMs for short, for edge applications.

LLMs require a high density, high performance memory path from external DRAM to the internal SRAM next to the processor. Gemini II’s compute memory architecture provides high density, high performance internal SRAM to allow a high efficiency memory path for high speed and low power operations required by LLMs. Gemini II is also a bit processor that is flexible to do one bit to 32 bit or larger operations in the same circuit efficiently, which further enhances the capability for LLM processing. We are developing a multimodal LLM targeting edge applications and we’ll have benchmark results available next quarter. To ease the adoption of the technology, we will continue to improve the AI compiler for Gemini two, which is currently in its initial release phase.

In parallel, we continue to develop ready to use vision, multimodal, and recognition apps and libraries. Our software team is also developing dynamic, low precision software libraries that support larger models, enabling high accuracy at low powers in edge devices. This is a major enabler for efficient edge AI, As a bit engine, we are uniquely capable of addressing these edge needs where compute, memory, and power resources are far limited. As Leline mentioned, we are eager to advance our software development team to pursue drone and satellite AI chip applications with Gemini II. Let me switch now to our first quarter customer and product breakdown.

In the 2026, sales to KYEC were $267,000 or 4.3 of net revenues, compared to $1,000,000 or 21.9% of net revenues in the same period a year ago, and $1,700,000 or 29.5% of net revenues in its prior quarter. Sales to Nokia were 536,000 or 8.5% of revenues, compared to $998,000 or 21.4% of net revenues in the same period a year ago, and $444,000 or 7.5 of net revenues in the prior quarter. Sales to Cadence Design Systems were $1,500,000 or 23.9% of net revenues, compared to zero in the same period a year ago, and $642,000 or 10.9 of net revenues in the prior quarter. Defense and military sales were 19.1% of first quarter shipments compared to 31.9% of shipments in the comparable quarter a year ago, and 30.7% of shipments in the prior quarter. SigmaQuad sales were 62.5% of first quarter shipments compared to 36.3% in the 2025 and thirty nine point three percent in the prior quarter.

Regarding our SRAM business outlook, our largest customer is currently navigating supply chain constraints. However, we expect their order volume to remain stable for the rest of this fiscal year. Meanwhile, other SRAM customers have largely normalized their inventory levels and we anticipate continued order activity from them as well. I’d like to hand the call over to Doug. Go ahead,

Douglas Shirley, Chief Financial Officer, GSI Technologies: Thank you, DDA. We reported net revenues of $6,300,000 for the first quarter fiscal twenty twenty six compared to $4,700,000 for the first quarter fiscal twenty twenty five and $5,900,000 for the 2025. Gross margin was 58.1% in the 2026 compared to 46.3% in the 2025 and fifty six point one percent in the preceding 2025. The increase in gross margin in the 2026 was primarily due to product mix and benefits of scale from higher revenue on the fixed cost of revenues. Total operating expenses in the 2026 were $5,800,000 compared to 6,800,000 in the year ago quarter, excluding a one time gain of $5,700,000 on the sale and leaseback of the company’s corporate headquarters and $5,600,000 in the prior quarter.

Research and development expenses were $3,100,000 compared to $4,200,000 in the prior year period and $3,000,000 in the prior quarter. Selling, general and administrative expenses were $2,700,000 compared to $2,600,000 in both the prior year and previous quarter. First quarter fiscal twenty twenty six operating loss was $2,200,000 compared to an operating loss of $4,700,000 in the year ago quarter, excluding the $5,700,000 one time gain previously mentioned related to the company’s corporate headquarters and an operating loss of $2,300,000 in the prior quarter. First quarter fiscal twenty twenty six net loss included interest and other income of $13,000 and a tax provision of $54,000 compared to $55,000 in interest and other income and a tax provision of $57,000 for the same period a year ago. In the preceding fourth quarter, net loss included interest and other income of $52,000 and a tax provision of $6,000 Net loss in the 2026 was 2,100,000 or $08 per diluted share compared to net income of $1,100,000 or $04 per diluted share for the 2025.

Net income for the year ago period reflects the $5,700,000 one time gain on the sale and leaseback transaction of the company’s headquarters. For the prior 2025, net loss was $2,200,000 compared to $09 loss per share. Total first quarter pre tax stock based compensation expense was $341,000 compared to $658,000 in the comparable quarter a year ago, and $512,000 in the prior quarter. At 06/30/2025, the company had $22,700,000 in cash and cash equivalents compared to $13,400,000 at 03/31/2025. Working capital was $25,700,000 at 06/30/2025 compared to $16,400,000 at 03/31/2025.

Stockholders’ equity as of 06/30/2025 was $37,400,000 compared to $28,200,000 as of the fiscal year ended 03/31/2025. On an earnings conference call on May 2024, we announced that the company had initiated a comprehensive strategic view, established a special committee of the board to evaluate strategic alternatives, engaged Needham and Company as our strategic and financial advisor to assist in the process. As Leland mentioned, we are actively evaluating potential strategic opportunities to secure the necessary capital to advance the development of our APU products. In the interim, we may choose to draw on the remaining balance of the ATM during upcoming trading windows to support near term funding needs related to GEMINI-two development, depending on market conditions and other factors. Finishing with the outlook for the 2026, we expect net revenues in the second fiscal quarter to range between $5,900,000 and $6,700,000 with gross margin in the range of 56% to 58%.

We remain focused on disciplined execution to bring GEMINI-two to market, advancing our roadmap for PLATO while developing long term shareholder value. Operator, at this point, we will open the call to Q and A.

Conference Operator: Thank you. We will now be conducting a question and answer One moment please while we poll for questions. The first question is from Tony Reynaud, a private investor. Please go ahead.

Tony Reynaud, Private Investor: Hi, how are you guys?

Didier Lacerre, Vice President of Sales, GSI Technologies: Good, thank you.

Tony Reynaud, Private Investor: So can you provide a little more color on the supply chain issues?

Didier Lacerre, Vice President of Sales, GSI Technologies: Sure, yeah. So I’m sure you’re aware of all the tariffs that are being thrown around by the US government, and a lot of these are directed at China. And so a lot of the folks who have been doing assembly in China are moving some of their assembly to Taiwan. And so it’s really affecting the capacity in Taiwan. And as you know, we do all of our back end in Taiwan.

So it’s thrown out the lead times pretty much overnight to us because of that transition.

Tony Reynaud, Private Investor: Will that end up making the customers possibly order earlier?

Didier Lacerre, Vice President of Sales, GSI Technologies: Correct. Yeah. So that’s something I mentioned a little earlier, which is this came about very quickly and then customers have been used to their ordering patterns based off of lead times we’ve quoted. So we have gone back to them via our reps and our distributors to make sure they understand they need to get more backlog coverage in place, so that their future orders will not be late, or delayed. And so in the future, we anticipate this won’t be a problem.

But for the current quarter end and possibly into next, there will be some backlog that would have been shippable that will be delayed a bit just because of these lead times.

Tony Reynaud, Private Investor: Yes, and it’ll just make the further quarters probably even stronger then once we get out of that.

Didier Lacerre, Vice President of Sales, GSI Technologies: Possibly.

Tony Reynaud, Private Investor: Yes. So sales to KYEC seemed a little weak this quarter. Can you comment on that a little bit?

Didier Lacerre, Vice President of Sales, GSI Technologies: Sure. Yeah, so part of that was the inventory levels that I mentioned in mine, which have seemed to stabilize along with the lead time as well. Yeah, unfortunately, those orders come in within lead time and we’ve been able to react in the past and we weren’t able to this past quarter.

Tony Reynaud, Private Investor: And like with Cadence, those orders are pretty strong this quarter. What type of product are you shipping to them?

Didier Lacerre, Vice President of Sales, GSI Technologies: Yeah, so they’re emulation systems. And this is kind of what we’ve talked about that are even though we don’t sell our SRAMs directly into AI applications, we do a lot of support. KYC is supporting the manufacturing of AI chips, cadence systems or emulations to emulate the design of some of these GPUs and other devices. It’s emulation systems in the front end design.

Tony Reynaud, Private Investor: Okay, thank you. And last question, as far as the ATM is concerned, what are the trading windows for the company for that?

Douglas Shirley, Chief Financial Officer, GSI Technologies: Well, our trading window starts two days after our earnings call. So in the case of this quarter, the trading window will open on Tuesday and it closes on the fifteenth of the last month of the quarter. So that would mean, in this case, September 15 for the last trading day up till

Leland Shu, Chairman, President, and CEO, GSI Technologies: the fifteenth Okay. Of the

Tony Reynaud, Private Investor: Alright. Well, thank you very much, guys, and good luck in the future. Thank you.

Douglas Shirley, Chief Financial Officer, GSI Technologies: Thank you. Thank you, Tony.

Conference Operator: There are no further questions at this time. I would like to turn the floor back over to Leland Shu for closing comments.

Leland Shu, Chairman, President, and CEO, GSI Technologies: Thank you all for joining us. Please join us on August 20 at upcoming Leedon Virtual Semiconductor Conference.

Didier Lacerre, Vice President of Sales, GSI Technologies: Actually, there is one more question that just popped up.

Conference Operator: I see that now. Yep. Okay. We have a question now from Anna Chapman from two Cron five Productions. Please go ahead.

Anna Chapman, Investor, Two Cron Five Productions: Yes. My background has always been in sales and capital equipment. I want to know how you’re incentivizing your sales force. Because to me, you make one of the best products out there. It has an excellent portfolio.

How are you incentivizing these people? Seems like your sales should be more in the pipeline. That’s my question.

Didier Lacerre, Vice President of Sales, GSI Technologies: I’m sorry, was that an advertising or was that a question? I’m not sure I got the question. The I’m asking

Anna Chapman, Investor, Two Cron Five Productions: To your sales, to distributors, to your sales force? Are they are they is your product in their are one of their number one things in their bag? Or is it, like, number 12 or maybe an afterthought? How are you incentivizing these people to go out in there and tell your story and get sales?

Didier Lacerre, Vice President of Sales, GSI Technologies: Yeah, our independent sales reps are paid on commission. They’re paid on shipment of product. And distributors are paid on margin. And so with our independent sales reps, there’s no competing lines, and they understand that our products are door openers. And so certainly, they’re important lines for them.

And again, with distributors, we do have large distributors. As you know, we have Avnet, which carries most of the lines. And so with them, the incentivization is in the margin and GSI generally pays them above corporate average for the margins.

Anna Chapman, Investor, Two Cron Five Productions: Okay. All right. I think they need to do better, quite frankly. Just my opinion.

Douglas Shirley, Chief Financial Officer, GSI Technologies: Yep. All right, operator.

Conference Operator: Great. There are no further questions at this time. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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