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DATE
Thursday, July 31, 2025 at 8:30 p.m. ET
CALL PARTICIPANTS
Chairman, President, and Chief Executive Officer — Lee-Lean Shu
Vice President, Sales and Marketing — Didier Lasserre
Chief Financial Officer — Douglas Schirle
Operator
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TAKEAWAYS
Revenue: $6.3 million for the first quarter of fiscal 2026 (period ended June 30, 2025), up 7% sequentially and 35% year over year, primarily due to increased SRAM demand for AI processing applications.
Gross margin: 58.1% for the first quarter of fiscal 2026, up 200 basis points sequentially and over 1,100 basis points year over year, driven by favorable product mix and operating leverage.
Operating expenses: $5.8 million for the first quarter of fiscal 2026, down 15% year over year, excluding the prior-year one-time $5.7 million gain from the corporate headquarters’ sale and leaseback.
Operating loss: $2.2 million for the first quarter of fiscal 2026, narrowing from $4.7 million in the first quarter of fiscal 2025 (excluding the $5.7 million gain) and flat compared to $2.3 million in the prior quarter.
Net loss: $2.1 million, or $0.08 per diluted share for the first quarter of fiscal 2026, compared to net income of $1.1 million ($0.04 per diluted share) in the first quarter of fiscal 2025, which included a one-time gain.
Cash and cash equivalents: $22.7 million at June 30, 2025, boosted by a total $11 million raised under the at-the-market (ATM) program to date.
Working capital: $25.7 million at June 30, 2025, up from $16.4 million as of March 31, 2025.
Stockholders’ equity: $37.4 million as of June 30, 2025, up from $28.2 million as of March 31, 2025 (GAAP).
SRAM sales to major customers:Cadence Design Systems(NASDAQ:CDNS) at $1.5 million (23.9% of revenue, up from zero a year ago),KYECat $267,000 (4.3% of revenue, down from $1 million prior year and $1.7 million prior quarter), andNokia(NYSE:NOK) at $536,000 (8.5% of revenue, down from $998,000 prior year, up from $444,000 prior quarter).
Defense and military sales: Accounted for 19.1% of shipments in the first quarter of fiscal 2026, down from 31.9% in the first quarter of fiscal 2025 and 30.7% in the prior quarter.
SigmaQuad product shipments: Represented 62.5% of shipments in the first quarter of fiscal 2026, up from 36.3% in the first quarter of fiscal 2025 and 39.3% in the prior quarter.
Supply chain update: Extended lead times for back-end assembly in Taiwan are causing temporary delays in SRAM order fulfillment; management anticipates stable SRAM revenue for the remainder of fiscal 2026 as customers adjust.
Product milestone — Gemini-II: Completion of second spin evaluation, silicon fully functional and production-ready; delivery of LiDAR tool and algorithm to an offshore defense contractor sets stage for satellite and drone contract work.
Strategic initiatives: Ongoing evaluation of funding options to expand software and application teams supporting Gemini-II; active engagement with Needham and Company to pursue strategic alternatives and efficient capital scaling.
Guidance: Second quarter of fiscal 2026 net revenues projected between $5.9 million and $6.7 million; gross margin expected in the 56%-58% range.
SUMMARY
GSI Technology(GSIT 5.60%) reported significant top-line growth in the first quarter of fiscal 2026, driven by AI-related SRAM demand, which contributed to a higher gross margin and reduced operating expenses. The company achieved a production-ready milestone for Gemini-II, delivering a LiDAR tool and algorithm to a defense contractor, and is targeting expansion in satellite and edge computing markets. Management provided guidance for stable SRAM revenue despite near-term supply chain disruptions and highlighted a strong liquidity position with $22.7 million in cash and ongoing access to ATM funding.
Management described the delivery of Gemini-II’s LiDAR tool and algorithms as a "major milestone" and an entry point into broader AI-driven satellite and edge computing markets.
Didier Lasserre stated, "Extended lead times are impacting our [fiscal 2026] sales," linking these supply chain disruptions to Taiwan assembly constraints following shifts from China-based operations.
SRAM revenue for the remainder of fiscal 2026 is expected to be stable compared to the first quarter, according to Lasserre, as customers adapt to new lead times.
SigmaQuad’s share of shipment mix rose sharply to 62.5% in the first quarter of fiscal 2026, while sales concentration from customers like KYEC dropped, affected by shifting inventory levels and delayed order fulfillment.
The company is developing dynamic low-precision software libraries and AI compiler enhancements to support Gemini-II's position in edge and defense AI markets.
The special committee and engagement with Needham and Company remain active asGSI Technologyreviews strategic alternatives to finance future growth and capitalize on operating leverage.
INDUSTRY GLOSSARY
APU (Associative Processing Unit): A specialized processor designed for high-speed similarity search and data-intensive AI applications by combining compute and memory functions.
SRAM (Static Random-Access Memory): A form of semiconductor memory used for high-speed, low-latency applications, distinct from standard DRAM.
SigmaQuad: A family of high-bandwidth, low-latency SRAM products optimized for networking and telecom uses.
ATM (At-the-market) program: A financing mechanism allowing companies to raise capital by selling shares directly into the open market over time.
KYEC: Key customer and contract semiconductor tester/assembler referenced for significant sales and shipment performance.
DRAM (Dynamic Random-Access Memory): Memory technology used alongside high-performance processors and referenced in context with large language model architectures.
LLM (Large Language Model): Advanced, AI-driven neural network models requiring substantial compute and memory bandwidth, now targeted for edge device applications using Gemini-II.
SBIR (Small Business Innovation Research): U.S. government program supporting R&D for technology commercialization, contextually linked to AI algorithm development for edge computing.
POC (Proof of Concept): Prototype or demonstration used to validate capabilities for customer or partner evaluation and further adoption.
YOLO-3 / YOLO-5: Versions of the "You Only Look Once" algorithm, used in real-time object detection and edge AI applications.
SAR (Synthetic Aperture Radar): Imaging technology utilized in defense and remote sensing, with algorithms developed for edge AI deployment on Gemini-II.
Full Conference Call Transcript
Lee-Lean Shu: And thank you for joining us today. Let me begin with a few key highlights from this quarter's financial results. Fiscal 2026 is off to a strong start. In the first quarter, we achieved net revenue of $6.3 million, 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 processes. Our profitability metrics also improved this quarter, with a 200 basis points 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 on the sale of our headquarters in Q1 2025. 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 and are pleased to report that all known bugs have been resolved. The silicon is fully functional and ready for production. This week, the LiDAR tool and associated algorithm were delivered to a key offshore defense contractor for approval of contract work with Gemini-II for satellites and drones.
This delivery keeps us firmly on track with our roadmap and customer commitments. While this is a major milestone, we also believe it represents an opportunity to play in broader markets with Gemini-II. Didier will provide more details on this subject in a few minutes. GSI Technology, Inc. is at a pivotal point in its development. We plan to target high-growth opportunities for Gemini-II in the satellite and edge computing sectors, markets that are increasingly defined by AI-driven capabilities. We are evaluating options to access funds to extend our software and application teams to 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 teams and financing 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 product and other components of our long-term product roadmap. In the meantime, the ATM has provided valuable flexibility, allowing us to raise $11 million to date. As a result, we ended the first quarter with a strong cash position of $22.7 million.
Now I hand the call over to Didier, who will discuss our previous developments and sales activities. Please go ahead, Didier.
Didier Lasserre: Thank you, Lee-Lean. 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 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 have 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 requested timeframe. Although forecasts from our largest customers remain solid, we expect SRAM revenue for the remainder of fiscal 2026 to be stable compared to the first quarter as we navigate these supply chain challenges. Switching to deliverables for our SBIRs, as Lee-Lean mentioned, we have also completed the development of our SAR and YOLO-3 and YOLO-5 algorithms, optimized for edge AI applications.
In parallel, we also shipped a LiDAR-II board with a low-power version of our Gemini-II chip to an offshore defense contractor with whom we have been working 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-II 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 YOLO-3 and YOLO-5 algorithms, very well positioned for the broader market potential of applications moving to the edge, particularly for high-demand, high-volume, and high-mix processing needs of drones operating in GPS-denied environments as well as next-generation satellite applications. Gemini-II 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 and 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 will have benchmark results available next quarter. To ease the adoption of the technology, we will continue to improve the AI compiler for Gemini-II, 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 team is also developing dynamic low-precision software libraries that support larger models, enabling high accuracy at low power 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 more limited. As Lee-Lean 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 2026, sales to KYEC were $267,000 or 4.3% of net revenues compared to $1 million or 21.9% of net revenue in the same period a year ago and $1.7 million or 29.5% of net revenues in the 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 $1.5 million 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 2025 and 39.3% 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 would like to hand the call over to Doug. Go ahead, Doug.
Douglas Schirle: Thank you, Didier. We reported net revenues of $6.3 million for the first quarter of fiscal 2026 compared to $4.7 million for the first quarter of fiscal 2025 and $5.9 million for 2025. Gross margin was 58.1% in 2026 compared to 46.3% in 2025 and 56.1% in the preceding 2025. The increase in gross margin in 2026 was primarily due to product mix benefits of scale from higher revenue on the fixed cost of revenues. Total operating expenses in 2026 were $5.8 million compared to $6.8 million in the year-ago quarter, excluding a one-time gain of $5.7 million on the sale and leaseback of the company's corporate headquarters, and $5.6 million in the prior quarter.
Research and development expenses were $3.1 million compared to $4.2 million in the prior year period and $3 million in the prior quarter. Selling, general, and administrative expenses were $2.7 million compared to $2.6 million in both the prior year and previous quarter. First-quarter fiscal 2026 operating loss was $2.2 million compared to an operating loss of $4.7 million in the year-ago quarter, excluding the $5.7 million one-time gain previously mentioned related to the company's corporate headquarters, and an operating loss of $2.3 million in the prior quarter.
First-quarter fiscal 2026 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 2026 was $2.1 million or $0.08 per diluted share compared to net income of $1.1 million or $0.04 per diluted share for the first quarter of fiscal 2025. Net income for the year-ago period reflects a $5.7 million one-time gain on the sale and leaseback transaction of the company's headquarters.
For the prior 2025, net loss was $2.2 million compared to a $0.09 loss per share. Total first-quarter pretax stock-based compensation expense was $341,000 compared to $158,000 in the comparable quarter a year ago and $512,000 in the prior quarter. At June 30, 2025, the company had $22.7 million in cash and cash equivalents compared to $13.4 million at March 31, 2025. Working capital was $25.7 million at June 30, 2025, compared to $16.4 million at March 31, 2025. Stockholders' equity as of June 30, 2025, was $37.4 million compared to $28.2 million as of the fiscal year ended March 31, 2025.
On an earnings conference call in May 2024, we announced that the company has initiated a comprehensive strategic review, established a special committee of the board to evaluate strategic alternatives, and engaged Needham and Company as our strategic and financial adviser to assist in the process. As Lee-Lean 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-II development, depending on market conditions and other factors.
Finishing with the outlook for 2026, we expect net revenues in the second fiscal quarter to range between $5.9 million and $6.7 million, with gross margin in the range of 56% to 58%. We remain focused on disciplined execution to bring Gemini-II to market, advancing our roadmap for PLATO while developing long-term shareholder value. Operator, at this point, we will open the call to Q&A.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question is from Tony Reynold, a private investor. Please go ahead.
Tony Reynold: Hi. How are you guys?
Lee-Lean Shu: Doing good. Thank you.
Tony Reynold: So can you provide a little more color on the supply chain issues?
Didier Lasserre: Sure. Yeah. So I am sure you are 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 is really affecting the capacity in Taiwan. And as you know, we do all of our back end in Taiwan. So it is thrown out the lead times pretty much overnight to us because of that transition.
Tony Reynold: Will that end up making the customers possibly order earlier?
Didier Lasserre: Correct. Yeah. So that is something I mentioned a little earlier, which is, you know, this came about very quickly, and then customers have been used to their ordering patterns based off of lead times we 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 will not be a problem, but for the current quarter end and possibly into next, you know, there will be some backlog that would have been shippable that will be delayed a bit just because of these lead times.
Tony Reynold: Yes. And it will just make the further quarters probably even stronger then. Once we get out of that.
Didier Lasserre: Possibly.
Tony Reynold: Yes. So sales to KYEC seemed a little weak this quarter. You know, can you comment on that a little bit?
Didier Lasserre: Sure. Yes. So part of that was the inventory levels that I mentioned. Have seemed to stabilize along with the lead time as well. Yeah. They unfortunately, those orders come in within lead time, and we have been able to react in the past, and we were not able to this past quarter. And, like, with Cadence, though, those orders are pretty strong this quarter.
Tony Reynold: You know, what type of product are you shipping to them?
Didier Lasserre: Yeah. So they are emulation systems. And this is kind of what we have talked about that even though we do not sell our SRAMs directly into AI applications, we do a lot of support. You know, KYEC is supporting the manufacturing of AI chips, you know, the Cadence systems or emulations to emulate the design of some of these GPUs and other devices. So it is emulation systems in the front-end design.
Tony Reynold: Okay. Thank you. And last question. As far as the ATM is concerned, what are the trading windows for the company for that?
Douglas Schirle: Well, typically, 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 the fifteenth of the month.
Tony Reynold: Okay. Alright. Well, thank you very much, guys, and good luck in the future.
Lee-Lean Shu: Thank you. Thank you, Tony.
Operator: There are no further questions at this time. I would like to turn the floor back over to Lee-Lean Shu for closing comments.
Lee-Lean Shu: Thank you all for joining us. Please join us on August 20 at the upcoming Needham Virtual Semiconductor Conference.
Didier Lasserre: Actually, actually, operator, there is one more question that just popped up.
Operator: See that now. Yep. Okay. Yeah. We have a question now from Anna Chapman from Two Cron Five Productions. Please go ahead.
Anna Chapman: Yes. My background has always been in sales and capital equipment. I want to know how you are incentivizing your salesforce because, to me, you make one of the best products out there. That has an excellent portfolio. How are you selling these people? Seems like your sales should be more in the pipeline. That is my question.
Didier Lasserre: I am sorry. Was that an advertising, or was that a question? I am not sure I got the question. The incentivization.
Anna Chapman: To your sales to the distributors. To your sales force, are they are they are 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 Lasserre: It is a very yeah. So our independent sales reps are paid on commission. So they are paid on shipment of product. And distributors are paid on margin. And so with our independent sales reps, there are no competing lines. And they understand that our products are door openers. And so certainly, they are important lines for them. And, again, with distributors, we do have large distributors. As you know, we have Avnet. Carries most of the lines. And so with them, the incentivization is in the margin, and GSI Technology, Inc. generally pays them above corporate average for the margins.
Anna Chapman: Okay. Alright. I think they need to do better, quite frankly. Just my opinion.
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.