GSI TECHNOLOGY INC Q3 FY2025 earnings call

• Financial highlights: Third quarter revenue was $5.4 million, with a 2% year-over-year increase and 19% sequential growth. Cost reduction initiatives reduced operating and net losses compared to fiscal 2024. - SRAM business: Continued momentum in the core SRAM segment, with revenue growth from existing customers' inventory normalization and growing demand for 144-meg SRAM for AI chip manufacturing, anticipating this customer to be the largest SRAM customer in fiscal 2025. - APU front: Gemini-II's first silicon progress, with software workaround enabling chip testing and development; preparing for second spin of Gemini-II for mass production. Plato chip in development for edge AI large language models, built on Gemini-II's architecture, seeking multiple funding pathways. Government business expansion, including a $250,000 Phase 1 contract with the U.S. Army to explore edge computing AI solutions with Gemini-II.

In the third quarter, GSI Technology generated revenue of $5.4 million, a 2% year-over-year increase and a 19% sequential growth from the previous quarter. The SRAM business showed continued momentum; revenue growth came from existing customers' inventory normalization and growing demand for the 144-meg SRAM for AI chip manufacturing. Net revenue for the third quarter of fiscal 2025 was $4 million or $0.16 per diluted share, compared to a net loss of $6.6 million or $0.26 per diluted share in the third quarter of fiscal 2024. Gross margin in the third quarter was 54%, up from 38.6% in the preceding second quarter. Total operating expenses in the third quarter were $7 million, down from $9.7 million in the third quarter of fiscal 2024.

• Gemini-II is on track for a February tape-out and availability in May, with a new leader board in June, and will deliver neural network models for the Air Force SBIR program in the March quarter based on the first silicon. - Plato is pursuing multiple funding pathways for its $50 million development program with a development timeline of 12 to 18 months. - The U.S. Army Phase 1 contract has the potential to lead to a Phase 2 contract worth up to $2 million focusing on edge computing AI solutions using Gemini-II.

• Uncertainties associated with the comprehensive strategic review and evaluation of various strategic alternatives, which could impact the company's future direction and growth.

Q: Is the company utilizing AI to do its algorithms and software? And are we going to get a white paper on the benchmarks for the Gemini-II?

A: The algorithms are written by the folks in the Israeli division. Yes, a white paper will be provided. The first algorithm on Gemini-II will be the YOLO model, specifically YOLOv3, and benchmarks will be published when done.

Q: When Needham was brought on or it was announced back last year in May, it was to enhance the company valuation. We're actually lower now than we were. Are they the right partner?

A: We've been working with them and they have brought opportunities we've been looking at. The intent was to find strategic alternatives to further grow the company and provide investment into the company. It's not fair to say they are not the right partner just because the valuation is lower now.