Earnings call transcript: GSI Technology Q4 2025 earnings show mixed results

GSI Technology, Inc. (GSIT) reported a mixed set of results for the fourth quarter of fiscal year 2025. The company posted a revenue of $5.88 million, reflecting a 14% year-over-year increase, but the earnings per share (EPS) stood at a negative $0.09. The stock saw a slight decline in aftermarket trading, dropping by 0.32% to $3.13. According to InvestingPro analysis, GSIT currently appears overvalued relative to its Fair Value, with a concerning 5-year revenue CAGR of -16%. Despite a reduction in net loss and improved gross margins, the full-year revenue experienced a 6% decline, contributing to cautious investor sentiment.

Key Takeaways

• Revenue increased by 14% year-over-year in Q4.
• Net loss reduced by 47% for the full fiscal year.
• Stock price fell by 0.32% in aftermarket trading.
• Gross margin improved to 56.1% in Q4.
• Full-year revenue declined by 6%.

Company Performance

GSI Technology demonstrated a mixed performance in Q4 FY2025, with revenue growth of 14% year-over-year and a sequential increase of 9%. However, the full-year revenue declined by 6% compared to the previous year. The company made significant strides in reducing its net loss by 47%, highlighting its focus on cost efficiency. InvestingPro data reveals a weak overall financial health score of 1.69, though the company maintains a strong current ratio of 4.04, indicating solid short-term liquidity.

Financial Highlights

• Revenue: $5.9 million (14% YoY increase, 9% sequential increase)
• Net loss: Reduced by 47% from $20.1 million in 2024 to $10.6 million in 2025
• Gross margin: 56.1% in Q4, up from 51.6% the previous year
• Operating expenses: Reduced by 35%

Market Reaction

Following the earnings announcement, GSI Technology’s stock experienced a modest decline of 0.32% in aftermarket trading, closing at $3.13. This movement is relatively stable within its 52-week range of $1.62 to $4.90, suggesting a muted response from investors. InvestingPro subscribers have access to 6 additional key insights about GSIT’s financial health and market position through exclusive ProTips.

Outlook & Guidance

GSI Technology plans to continue its focus on AI strategy execution and operational efficiency. The company is exploring strategic funding alternatives and aims to build on its APU development. However, the lack of detailed forward guidance leaves some uncertainty regarding future financial performance.

Executive Commentary

"We are taking Gen AI and LLM models to the edge," stated D.G.A. Lasser, VP of Sales, highlighting the company’s strategic focus. CEO Lillian Xu emphasized, "We meaningfully reduced our net loss by 47%," reflecting on the company’s cost management efforts.

Risks and Challenges

• Continued net losses, despite reductions, could impact financial stability.
• The decline in full-year revenue poses a challenge to sustained growth.
• Uncertainty around strategic funding alternatives may affect future operations.
• Market saturation in key segments could limit growth potential.
• Macroeconomic pressures and supply chain issues remain potential risks.

Q&A

During the earnings call, analysts inquired about the market potential for the Gemini II and PLATO products. The company is exploring chip and board-level interests and is in discussions with potential partners to expand its market reach.

Full transcript - GSI Technology Inc (GSIT) Q4 2025:

Conference Operator: Welcome to GSI Technologies Fourth Quarter and Fiscal Year twenty twenty five Results Conference Call. At this time, all participants are on 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 the future performance of GSI Technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company’s Form 10 k filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this conference call is being recorded today, 05/01/2025 at the request of GSI Technology. Lillian Xu, the company’s chairman, president, and chief executive officer, will be hosting the call today. With him are Douglas Shirley, Chief Financial Officer and D.

G. A. Lasser, Vice President of Sales. I would now like to turn the conference over to Mr. Shu.

Please go ahead, sir.

Lillian Xu, Chairman, President, and Chief Executive Officer, GSI Technologies: Good afternoon, and thank you for joining us to review our fourth quarter and the fiscal year twenty twenty five financial results. Let’s start with a few highlights from fiscal year twenty twenty five. We closed the fourth quarter with solid revenue growth, significantly reduced net loss, and a meaningful improvement in cash burn, finished the year with $13,400,000 in cash and a more disciplined operating structure. Revenue for the fourth quarter increased by 14% year over year and 9% sequentially to $5,900,000 driven by strong demand for our SRAM chip as we exited this year. This revenue growth and the lower operating expense result in a sharp reduction in cost of delay loss and a material decrease in cash usage.

For fiscal year twenty twenty five, while annual revenue declined 6% compared to the prior year, we meaningfully reduced our net loss by 47% from $20,100,000 in 2024 to $10,600,000 driven by the 35% reduction in operating expenses. This structural cost improvement is central to our goal of preserving cash and extending our long way. We expect to maintain our quality operating expenses at the current levels to minimize our cash burn until we secure new funding sources. In the fourth quarter, we made good progress across multiple fronts to defend our technology roadmap and the commercial strategy. Those of all, we still have initial order for radiation from a North American prime contractor.

A key validation for our product. We anticipate follow on over this fiscal year. This trip carries a significant higher gross margin than our traditional SRAM. EDA is the point person with this customer and will expand further on the opportunity. Our ongoing SBIR program with government agencies are progressing well and we are successfully meeting all milestones.

Today, our SBIRs have generally payment totaling $1,600,000 and we anticipate receiving an additional $1,000,000 once we complete the program. This quarter, 870,000 was booked as a reduction to R and D expense, further helping to lower operating expenses. We are especially excited about recent enhancement to PRAETO, adding the integration of a camera interface directly into the chip. This new feature paired with other connectivity enhancements allow the chip to interface with a wide range of sensors. This makes Predator particularly well suited for AI agents requiring object recognition.

The new capability has increased strategic interest in Pareto, and we are currently in preliminary discussion with multiple parties to scale partnership and as the fund for the next phases of development. Didier will provide more detail on this exciting development. As we look ahead to fiscal year twenty twenty six, we plan to build on the progress of our APU development, drives continued growth in excellent sales and advanced execution of our strategic initiatives across both commercial and the government markets. At the same time, we remain committed to maintain operational efficiency. In parallel, we continue to explore strategic alternatives with the primary focus on securing funding to support the next phase of the appraisal development.

We are also working with our operating team to explore other options that could provide new sources of cash to execute our AI strategy. With that, I will now hand the call over to Steve.

D.G.A. Lasser, Vice President of Sales, GSI Technologies: Thank you, Leline. As Leline mentioned, this quarter’s primary revenue driver was the continued strong demand for our high density SRAM. Our SRAM has been deployed in critical systems used in chip manufacturing and the recent uptick in business with KYEC is being driven by surging demand for our next generation AI chip from a leading GPU provider. Despite the ongoing tariff negotiations between The US and its trading partners, we currently anticipate the demand from this customer to continue in fiscal year twenty twenty six at a similar level to what we experienced in 2025. With that said, we may have some variability in the timing of the shipments, but importantly, the demand is still anticipated to remain consistent.

The big news this quarter is an initial order for our radiation hardened SRAM. While waiting for the forecast from the prime contractor, we anticipate follow on orders in fiscal twenty twenty six. In addition, we are actively working with this customer to secure heritage status. Gaining this status would enhance the market acceptance of our radiation hardened SRAM and unlock access to new high value sales channels. It is worth noting that radiation hardened SRAMs carry a gross margin well above those of our traditional SRAM chips, providing a strong financial lever as we work to reduce our net loss and cash burn.

Let me switch to PLATO and elaborate on Leline’s earlier comments. By integrating a camera interface directly into the chip alongside enhanced connectivity features, PLATO significantly broadens its addressable market. Able to process data locally without relying on cloud infrastructure, it’s now optimized for edge devices and ideal for agents performing object recognition. To clarify what an agent is, it’s helpful to look at how the approach to AI is shifting to agentic AI. These AI systems don’t just analyze data, but they also act independently, for example, generating motor commands for a robot or a drone.

This involves multiple capabilities that a single purpose GPU is not well suited for. PLATO, on the other hand, can manage a combination of computing tasks that involve more than just a single number of crunching or graphic workloads. Put another way, AgenTeq AI goes beyond basic data analysis. It must make decisions, process inputs from sensors like cameras and microphones, respond in real time, and take actions in the physical world. In this context, PLATO’s capabilities position it at the forefront of sectors preparing for significant growth, driven by the increasing demand for intelligent autonomous systems or agents across various industries at the edge.

Thus, in PLATO has grown among the strategic partners we’ve engaged with over the past year. Pivoting to our ongoing SBIRs, as Leland stated, these projects are on track and we are meeting the milestones. As a reminder, we are currently working on a phase two contracts from both the Space Development Agency and the Air Force Research Labs, along with our most recently announced phase one contract with the US Army. As planned, we delivered a server with a LEDA-two board to the Air Force Research Labs and will shortly deliver another LEDA-two board to the Space Development Agency. The Phase one SBIR for the US Army contract is evaluating the use of Gemini II in edge computing AI solutions, and we are on track to meet all expectations with this partner.

This quarter, we also delivered a YOLO algorithm for the Air Force Features Labs, including the benchmarks for a real time object detection application. We continue to increase the performance of the YOLO algorithms, which can immediately determine the exact placement and identify the type of objects. We plan to deliver the improved YOLO-three and YOLO-five algorithms this summer. Lastly, an update on our STAR projects. We made further progress with an offshore defense R and D customer, which ordered a Gemini II system to evaluate the chip’s capabilities for low power in flight application.

We will be shipping this system this quarter. This organization is also a potential funding partner for PLATO. In addition, a U. S. Aerospace company continues to evaluate our Gemini for onboard satellite applications.

Taken together, these activities support the use of Gemini II for integrated edge applications such as SAR generation and drones with subsequent object detection and actionable decisions. Now I will move on to the customer and product breakdowns for the fourth quarter. In the fourth quarter of fiscal twenty twenty five, sales to KYEC were $1,700,000 or 29.5% of net revenues, compared to $544,000 or 10.6% of net revenues in the same period a year ago, and $1,200,000 or 22.7% of net revenues in the prior quarter. In the fourth quarter of fiscal twenty twenty five, sales to Nokia were $444,000 or 7.5 percent of revenues, compared to 694,000 or 13.5% of net revenues in the same period a year ago and $239,000 or 4.4% of net revenues in the prior quarter. Military defense sales were 30.7% of fourth quarter shipments compared to 35.5% of shipments in the comparable period a year ago and 30% of shipments in the prior quarter.

SigmaQuad sales were 39.3% of fourth quarter shipments compared to 42.4% in the fourth quarter of fiscal twenty twenty four and thirty nine point one percent in the prior quarter. I’d now like to hand the call

Douglas Shirley, Chief Financial Officer, GSI Technologies: over to Doug. Go ahead, Doug. Beginning with results for the quarter, we reported net revenues of 5,900,000 for the fourth quarter of fiscal twenty twenty five compared to $5,200,000 for the fourth quarter of fiscal twenty twenty four and $5,400,000 for the third quarter of fiscal twenty twenty five. Gross margin was 56.1 in the fourth quarter of fiscal twenty twenty five compared to 51.6% in the fourth quarter of fiscal twenty twenty four and fifty four percent in the preceding third quarter of fiscal twenty twenty five. The year over year and sequential increase in gross margins was primarily due to higher revenue and product mix.

Total operating expenses in the fourth quarter fiscal twenty twenty five were $5,600,000 compared to $7,200,000 in the fourth quarter of fiscal twenty twenty four and $7,000,000 in the prior quarter. Research and development expenses were $3,000,000 compared to $4,800,000 in the prior year period and $4,000,000 in the prior quarter. Research and development expenses in the fourth quarter of fiscal twenty twenty five were reduced by $870,000 reflecting government funding under the SBIR programs. Selling, general and administrative expenses were $2,600,000 in the quarter ended 03/31/2025, compared to $2,400,000 in the prior year quarter and $3,000,000 in the previous quarter. Fourth quarter fiscal twenty twenty five operating loss was $2,300,000 compared to an operating loss of $4,500,000 in the prior year period and $4,100,000 in the prior quarter.

Fourth quarter fiscal twenty twenty five results included interest and other income of $52,000 and a tax provision of $6,000 compared to $108,000 in interest and other income and a tax benefit of $85,000 for the same period a year ago. In the preceding third quarter, net loss included interest and other income of $70,000 and a tax provision of $44,000 Net loss in the fourth quarter of fiscal twenty twenty five was $2,200,000 or $09 per diluted share compared to a net loss of $4,300,000 or $0.17 per diluted share in the fourth quarter of fiscal twenty twenty four and a net loss of $4,000,000 or $0.16 per diluted share in the third quarter of fiscal twenty twenty five. Fourth quarter pre tax stock based compensation expense was $512,000 compared to $693,000 in the comparable quarter a year ago and $429,000 in the prior quarter. Turning now to the full year results for fiscal twenty twenty five, we reported net revenues of $20,500,000 for fiscal twenty twenty five compared to $21,800,000 for fiscal twenty twenty four. Gross margin for fiscal twenty twenty five was 49.4% compared to 54.3% in the prior year.

The decrease in gross margin was primarily due to product mix and the effect of lower revenue on the fixed costs and our cost of revenues. Total operating expenses were $21,000,000 in fiscal twenty twenty five compared to $32,300,000 in fiscal twenty twenty four. Research and development expenses of $16,000,000 compared to $21,700,000 in the prior fiscal year. Selling, general and administrative expenses were $10,800,000 compared to $10,600,000 in fiscal twenty twenty four. The decline in research and development expenses was primarily due to cost reductions announced in August 2024.

Research and development expense in fiscal twenty twenty four included pre production mass cost of $2,400,000 related to our APU2 product. Research and development expenses in 2025 and fiscal twenty twenty four were reduced by $1,200,000 and $440,000 respectively, reflecting government funding under the SPIR programs. Operating expenses in fiscal twenty twenty five include a gain on the sale of assets of $5,800,000 from the sales of the company’s headquarters building in Sunnyvale, California in the sales and leaseback transaction. The operating loss for fiscal twenty twenty five was $10,800,000 compared to an operating loss of $20,400,000 in the prior year. The fiscal twenty twenty five net loss included interest and other income of $326,000 and a tax provision of $130,000 compared to $414,000 in interest and other income with a tax provision of $70,000 in the prior year.

For the fiscal year ended 03/31/2025, we reported net loss of $10,600,000 or $0.42 per diluted share compared to net loss of $20,100,000 or $0.80 per diluted share in the prior fiscal year. On 03/31/2025, we had $13,400,000 in cash and cash equivalents compared to $14,400,000 at 03/31/2024. Working capital was $16,400,000 as of 03/31/2025 versus $24,700,000 at 03/31/2024. Stockholders equity as of 03/31/2025 was $28,200,000 compared to $36,000,000 as of the fiscal year ended 03/31/2024. Operator, at this point, we’ll open the call to Q and A.

Conference Operator: Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. You may press and 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 key. First question comes from the line of Michael Cooper, Private Investor.

Please go ahead.

Michael Cooper, Private Investor: Good evening. Can you talk a little bit about the market for the PLATO chip and the GEMINI two chip? How large are these markets? How do they scale over what time period? Just give us a sense for the market conditions here.

Thank you.

D.G.A. Lasser, Vice President of Sales, GSI Technologies: Sure. So we haven’t actually put out the TAM numbers yet, but just to talk about the markets. For the Gemini two, think of it as an extension of Gemini one, but for the edge. And so Gemini one was really, to illustrate our capabilities in search, and also some high performance computing applications like SAR. And so what Gemini two will do, we’ll take that, but take it to the edge.

Gemini one was not built to be a low power solution with the accompanying FPGA that we’ve talked about in the past. With the Gemini II, we can get closer to the edge. We’re looking for, while Gemini I would do SAR applications on ground level in a building, we are now looking at Gemini two to do a SOAR application actually on a drone or on a satellite at the edge. And so we’re looking at search and high performance computing at the edge for Gemini two. For PLATO, it’s not going to be for the search market.

It’s going to be for the LLM market. And so when most folks think about large language models and Gen AI, they think of it in the data center. We’re taking that capability to the edge. And so think of Gen AI and LLM models more at the edge.

Conference Operator: Thank you.

D.G.A. Lasser, Vice President of Sales, GSI Technologies: Thanks, Michael.

Conference Operator: Michael, does that answer your question?

Michael Cooper, Private Investor: Yes, it does. Thank you. Yeah, that’s it. Thank you very much.

Conference Operator: Thank you. The next question comes from the line of Robert Christian with AcuSTIVE Technologies. Please go ahead.

Robert Christian, Investor, AcuSTIVE Technologies: Yes. Thanks for taking my call. I was wondering, is the company experiencing any interest in the Gemini two stand alone chip from commercial companies other than, say, the military? And is the company still working with the hyperscalers? Thank you.

D.G.A. Lasser, Vice President of Sales, GSI Technologies: So good question. Honestly, the majority of the early interest have come from more of the mill defense type of applications. And they are looking at it on a component level as well. So we do have what we call the Lead to Two board, which I discussed a little earlier, that we have delivered and will be delivering to some of our partners. And so with the board, we’re delivering it with a SOAR algorithm or some kind of a YOLO algorithm that’s been developed, which is why they’re getting a card.

But some of the folks that we have been having discussions with, they are looking for a chip only, because they will be mounting it, on a drone or in a satellite. One of our other integrating partners that we’ve discussed in the past, they’re actually going to be developing their own miniaturized board. And so they will be procuring just the Gemini II chips from us to put on their proprietary board. So the answer is yes, we are seeing interest on the chip level, but there’s also some board level interest as well.

Robert Christian, Investor, AcuSTIVE Technologies: Okay, and how about the hyperscalers?

D.G.A. Lasser, Vice President of Sales, GSI Technologies: Yeah, the hyperscalers, we’re really focusing more on the edge right now. And so we have bad discussions with them. It’s just that’s a longer process with those folks. We find that with military folks, it’s just a much quicker path to revenue.

Robert Christian, Investor, AcuSTIVE Technologies: Okay. Can you share with the shareholders a little more detail, if you can, on what Needham is bringing to the table?

Douglas Shirley, Chief Financial Officer, GSI Technologies: Well, nothing is off the table at this point. It could be sale of assets. It could be funding into the company, it could be helping us with opportunities for R and D funding, help us with development of products that we’re looking at. It really could be just about anything.

Robert Christian, Investor, AcuSTIVE Technologies: Okay, but you can’t share any specifics at this time then?

Douglas Shirley, Chief Financial Officer, GSI Technologies: There’s nothing specific to talk about at this point or at this time yet.

Robert Christian, Investor, AcuSTIVE Technologies: Okay, thank you.

Conference Operator: Thank you. Our next question comes from the line of Michael Cooper, who is an investor. Please go ahead.

Michael Cooper, Private Investor: Actually, I’m sorry, the last part of that last question answered my question, which was what has Needham actually presented as options or opportunities for you and it doesn’t sound like they’ve done an awful lot there.

Douglas Shirley, Chief Financial Officer, GSI Technologies: There have been things that we’ve looked at, nothing’s resulted in anything yet or nothing to talk about.

Michael Cooper, Private Investor: Great, thank you.

Conference Operator: Thank you. The next question comes from the line of Jeff Bernstein with Silver Bernstein Capital. Please go ahead.

Jeff Bernstein, Investor, Silver Bernstein Capital: Yes. Just a quick one. Could you give us what cash flow from operations was in the quarter and what your CapEx was?

Douglas Shirley, Chief Financial Officer, GSI Technologies: I don’t have it for the quarter, but I have have cash flow for the year. For the year, cash used in operating activities will be about $12,900,000

Jeff Bernstein, Investor, Silver Bernstein Capital: Okay. And what was CapEx for the year?

Douglas Shirley, Chief Financial Officer, GSI Technologies: Very little. Fixed asset additions during the year were like $45,000 very little, very minor. I’m looking at fixed asset acquisition right now.

Jeff Bernstein, Investor, Silver Bernstein Capital: Yep. Okay, that’s great. Thank you.

Conference Operator: Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Shu for closing remarks.

Lillian Xu, Chairman, President, and Chief Executive Officer, GSI Technologies: Thank you all for joining us. We look forward to speaking with you again when we review our first quarter fiscal twenty twenty six results. Thank you.

Conference Operator: Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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