GSI Technology Reports Earnings: A Closer Look at Financials and Future Prospects
Shares of GSI Technology, Inc. (GSIT) have dropped 0.4% following the company’s earnings announcement for the quarter ending December 31, 2024. In contrast, the S&P 500 index experienced a slight increase of 0.2% during the same period. Over the last month, GSIT stock has decreased by 19.6%, while the S&P 500 has risen by 1.3%.
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Financial Overview
In the third quarter of fiscal 2025, GSI Technology recorded a net loss of 16 cents per share, an improvement from the 26-cent loss reported in the prior-year quarter.
The company reported net revenues of $5.4 million, a slight increase of 2% from $5.3 million during the same period last year. However, gross margin decreased to 54%, down from 55.9% a year ago.
Operating expenses also showed a decline, dropping to $7 million from $9.7 million in the previous year. Notably, research and development (R&D) costs fell to $4 million, down from $7 million the previous year. Meanwhile, selling, general, and administrative (SG&A) expenses rose to $3 million from $2.7 million last year.
Ultimately, GSI’s operating loss narrowed to $4.1 million, down from $6.7 million in the prior-year quarter, while the net loss improved to $4 million compared to a loss of $6.6 million a year earlier.
GSI Technology Performance Metrics
GSI Technology, Inc. price-consensus-eps-surprise-chart | GSI Technology, Inc. Quote
Key Business Metrics
Military and defense sales constituted 30% of total shipments, up from 28.2% the previous year. However, sales to Nokia dwindled to $0.2 million (4.4% of total revenues) compared to $0.8 million (15.2%) from the prior year. Meanwhile, SigmaQuad sales accounted for 39.1% of total shipments, a decrease from 46.9% a year prior.
As of December 31, 2024, GSI Technology held cash and cash equivalents of $15.1 million, an increase from $14.4 million at the end of fiscal 2024. However, working capital decreased to $17.9 million from $19.1 million as of March 31, 2024. Stockholders’ equity dipped to $29.9 million from $36 million at the fiscal year-end.
Management’s Insights
Chairman and CEO Lee-Lean Shu reported progress in both revenue growth and cost-cutting measures. He emphasized that a key customer in the AI semiconductor industry is significantly increasing orders, which could position GSIT as a leading revenue source in fiscal 2025.
GSI’s APU (Associative Processing Unit) program is advancing with the Gemini-II chip set to be tape-out in February and available by May, as part of commitments made under the Space Development Agency’s Small Business Innovation Research (SBIR) initiative. Additionally, a new chip, Plato, will build on the Gemini-II architecture, targeting edge AI and large language model applications.
Challenges and Opportunities Ahead
The latest increase in gross margin can be attributed to higher revenues and a favorable product mix, enhanced by the absence of severance costs from the previous quarter. Management noted that ongoing cost-cutting strategies have helped reduce net losses.
Despite concerns over lower sales to Nokia and changes in revenue sources from the defense sector, increasing demand for SRAM and pending government contracts may provide a buffer against revenue fluctuations.
Future Projections
For the fourth quarter of fiscal 2025, GSI Technology forecasts net revenues between $5.4 million and $6.2 million, with anticipated gross margins ranging from 55% to 57%.
Continued Strategic Reviews
GSI Technology is undergoing a strategic review with Needham & Company to explore options for enhancing shareholder value. The company recently secured a $0.3 million Phase 1 SBIR contract with the U.S. Army for exploring AI-driven edge computing applications. Additionally, existing SBIR initiatives with the Space Development Agency and Air Force Research Labs are progressing on schedule, with significant deliverables expected soon.
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GSI Technology, Inc. (GSIT): Free Stock Analysis Report
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