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DATE
Thursday, May 7, 2026 at 4:30 p.m. ET
CALL PARTICIPANTS
- Chairman, President, and Chief Executive Officer — Lee-Lean Shu
- Vice President of Sales and Marketing — Didier Lasserre
- Chief Financial Officer — Douglas M. Schirle
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TAKEAWAYS
- Total Revenue -- $25.1 million, representing a 22.4% increase driven by SRAM business growth in fiscal 2026.
- SRAM Segment Revenue Growth -- 22% increase with cited demand from customers supporting high-performance AI chip development.
- Gross Margin -- 54.5% for the full fiscal year, up from 49.4%, attributed to higher revenue and favorable product mix.
- Operating Expenses -- $31.2 million, up from $21 million, primarily reflecting higher R&D spending on PLATO development.
- Operating Loss -- $17.5 million, compared to $10.8 million previous year, due to increased R&D investment and absence of prior-year asset sale gain.
- Net Loss Details -- Fiscal 2026 net loss included $4.1 million interest and other income, $6.2 million non-cash gain from warrant revaluation, and $2.8 million in offering costs.
- R&D Offsets -- $1 million in fiscal 2026 and $1.2 million in fiscal 2025 covered by non-dilutive contract funding (SBIR, POC projects).
- Q4 Revenue -- $6.3 million with a 52.4% gross margin, described as impacted by mix shifts and quarterly shipment variability.
- Defense-Related Sales -- Comprised approximately 46% of Q4 total shipments, reflecting sector demand.
- Cash Position -- Ended quarter with $67.2 million in cash, up from $13.4 million prior year, driven by $46.9 million capital raise proceeds (October 2025), and reported no debt.
- Quarterly Cash Usage -- $5.5 million used in operations during Q4; guidance targets about $4 million per quarter, or $16 million annually, subject to development cycles.
- Guidance -- Next quarter revenue projected at $5.9 million to $6.7 million, with an expected gross margin of 54% to 56%.
- Strategic Review Outcome -- Management determined to continue as a standalone business, citing a stronger balance sheet and ability to fund APU development via non-dilutive sources.
- Gemini II Technical Milestone -- Achieved a roughly three-second "time to first token" at 30 watts system power during a Sentinel drone surveillance proof of concept bake-off, directly contributing to contract win.
- Defense Program Progress -- U.S. Army SBIR Gemini II project advanced from Phase One into Phase Two, targeting field-deployed, ruggedized, low-power AI nodes in mission-critical environments.
- Smart City Deployment -- Awarded Phase One of a smart city program leveraging Gemini II for near real-time distributed event detection, with further details anticipated at an upcoming municipal event.
- PLATO Tape-Out Schedule -- Project remains on track for design completion in early calendar 2027, with production wafers expected during summer 2027.
SUMMARY
Management reported notable growth in the SRAM segment, which funded APU development, while a major increase in cash reserves was associated with a $46.9 million capital raise. Investment in Gemini II and PLATO development led to both a rise in operating expenses and expanded technical engagement opportunities, including defense, drone, and smart city markets. The conclusion of the strategic review established a long-term independent strategy, backed by non-dilutive government funding and capital from recent offerings. Backlog in defense applications and successful performance demonstrations positioned Gemini II for future commercialization in low-latency, power-constrained AI environments.
- Didier Lasserre said that the smart city and drone-related markets targeted by Gemini II are "multibillion-dollar markets."
- Fourth quarter defense sector shipments accounted for a significant portion of overall product mix, suggesting an evolving customer base.
- PLATO software development will benefit from prior Gemini II investments to reduce commercialization lag.
- There was clear guidance that present cash reserves will "support the initial commercialization of Gemini II and the completion of the PLATO tape-out, both expected late fiscal 2027."
INDUSTRY GLOSSARY
- APU (Associative Processing Unit): A custom GSI Technology chip architecture optimized for rapid, low-power similarity search and AI inference workloads at the edge.
- POC (Proof of Concept): Deployment or demonstration phase in which new products like Gemini II are tested in real-world customer environments or pilot projects before commercial contracts.
- SBIR (Small Business Innovation Research): U.S. government-funded program supporting early-stage research and prototyping for innovative technology companies; often provides non-dilutive R&D funding that does not require giving up equity.
- Tape-Out: Final milestone in semiconductor chip design when circuits are completed and sent to manufacturing for mask fabrication and initial wafer production.
Full Conference Call Transcript
Lee-Lean Shu: Good afternoon, and thank you for joining us. To review our fourth quarter and fiscal year 2026 financial results. Fiscal 2026 was a year of meaningful progress for GSI Technology, Inc., marked by strong performance in our SRAM business, continued advancement of Gemini II to commercialization, and the initiation of the PLATO design. While I am pleased with the progress we have made on several fronts, significant work remains. Our team is executing our key milestones and advancing business development for the APU, and I have had several encouraging conversations on numerous fronts in these amounts. We end fiscal 2027 with continuous momentum, promoting the APU and building our customer traction.
With that, I will now hand the call over to Didier.
Didier Lasserre: Thank you, Didier. Let me start by stepping back and framing where we are today. Because I think the context is important. Our SRAM business performed well in fiscal 2026 and remains the revenue foundation of the company, providing cash for APU development. For the full year, the SRAM business grew 22% year-over-year and gross margins rose to 55% from 49%. The SRAM business has benefited from increased demand from our customers that support high-performance AI chip development and manufacturing. We recently announced that we concluded our strategic review and determined that continuing to execute our standalone strategy is the best path forward for delivering long-term shareholder value.
The stronger SRAM business and a strengthened balance sheet, along with non-dilutive R&D funding, are providing the resources to support our go-forward plan. With this financial foundation in place, we are now seeing real progress with Gemini II and PLATO. Over the past several months, we have reached a point where we are seeing both technical validation and early program-level engagement of Gemini II, including the Sentinel drone surveillance POC, the U.S. Army SBIR award, and a new Phase One smart city project I will discuss in a minute.
On the technical side, in a bake-off for the Sentinel POC, Gemini II’s performance contributed to winning the contract award by achieving a time to first token of roughly three seconds at 30 watts of system power on Gemma 312B multimodal workloads at the edge. In this use case, time to first token is a critical metric for drone surveillance systems because it reflects how quickly the system can respond in real-world applications where response time directly affects critical decision making. We are working closely with the G2 Tech team on the Sentinel program. We have completed the software deliverables and continue to target a June demonstration of the Gemini II powered drone.
This demonstration is planned for the Department of Defense and an international defense agency. In mid-April, we were notified that we had been awarded Phase One of a smart city project. The project leverages our work done for the drone-based surveillance POC and marks an important step forward towards commercial deployment. In this application, Gemini II will process inputs from distributed camera systems to provide near real-time detection of events such as fires and other public safety risks. This project demonstrates how our platform can scale across real-world infrastructure. We expect to share additional details on the smart city program around the time of a planned media event in late May hosted by the municipality.
Currently, we are working on several projects in tandem. What matters most for GSI Technology, Inc. at this time is not just the number of early-stage trials and demonstrations we have, but also how these early-stage engagements are helping us identify where our APU architecture provides a clear advantage, particularly in delivering low-latency performance within a constrained power envelope. We are also leveraging our deployment work in two ways. First, we are applying what we have developed for the drone security application to a smart city application. While the end markets are different, the underlying development carries over, giving us a meaningful head start in a new use case rather than starting from scratch.
Secondly, as we complete the Sentinel POC and Phase One of the smart city program, we can build on those results to pursue additional opportunities with new customers in those markets. We view this as a repeatable model where each engagement helps accelerate the next. What is exciting for us is that we see the end markets for low-latency, low-power AI at the edge expanding as AI workloads continue to move closer to where the data is generated. These applications favor the APU architecture that can deliver higher compute per watt. Gemini II is ideal for these power- and latency-constrained edge deployments, where real-time response and energy efficiency are critical.
Where we are winning is where Gemini II is tested against conventional architectures requiring significantly higher system power for similar or slower responsiveness. We believe Gemini II best addresses this gap and positions us well to win as more AI loads shift towards distributed, power-constrained environments. Consistent with this, we are encouraged by our progress within defense agency programs, as evidenced by our recent U.S. Army SBIR progressing from Phase One into Phase Two. This project is about enabling real-time in-field AI deployment on small, low-power systems typically operating in challenging conditions. As part of this program, we will build and test a ruggedized node containing the Gemini II for real-world mission-critical environments.
This SBIR positions us within a broader shift in defense spending, with approximately $13 billion proposed in fiscal 2026 budgeted for AI and autonomous systems, and creates a potential pathway to follow-on programs and future opportunities to supply Gemini II-based systems. So how do we move from where we are today to design wins and ultimately revenue? From a commercial standpoint, we are still in the early stages. Our focus is on advancing our current engagements and working closely with partners to integrate Gemini II into their systems, with the goal of moving into design-level discussions.
Given the complexity of these deployments, we are focusing our resources on a small number of high-value opportunities where we believe we have a clear advantage. Although the number of engagements remains limited, we are seeing a meaningful increase in the depth of these engagements and our ability to leverage our prior Gemini II deployment work for new related applications. Looking ahead, our priorities are to advance current POCs and awarded programs and to leverage what we have learned from each of these engagements to drive additional design opportunities. At the edge, performance matters most when it can be delivered within real-world power and latency constraints. That is where we believe Gemini II’s advantage lies.
With that, I would like to hand the call over to Doug. Go ahead, Doug. In the earnings release issued today after the close of the market, you will find a detailed summary of our financial results for the fourth quarter and full fiscal year 2026.
Douglas M. Schirle: Rather than walking through the numbers again, I will focus my comments on the key drivers behind the results and provide more context and explanation to help you better understand the business. Let me start with the results for fiscal year 2026, ended 03/31/2026. As Didier mentioned, fiscal 2026 revenue increased 22.4% to $25.1 million, reflecting continued strength in our SRAM business, particularly with customers supporting chip design and simulation for AI applications. We experienced solid growth in this customer segment throughout fiscal year 2026. We do see variability in customer orders, and sales can fluctuate from quarter to quarter.
However, barring any significant change in underlying AI chip demand that would affect SRAM orders from these customers, we expect this business to remain relatively stable in fiscal year 2027. The higher level of revenue and product mix helped to lift fiscal year 2026 gross margin to 54.5%, a notable gain from the prior year gross margin of 49.4%. Operating expenses in fiscal 2026 rose to $31.2 million compared to $21 million in fiscal 2025. Operating expenses increased year-over-year primarily driven by higher R&D spending on the PLATO chip design. It is also important to note that the prior year included a $5.8 million gain from the sale of assets, which makes year-over-year comparisons appear more pronounced.
We also continue to offset a portion of our R&D expenses through non-dilutive funding, SBIR contract funds, and POC-related funding. The majority of our R&D is dedicated to APU. The R&D offset in fiscal 2026 and fiscal 2025 was $1 million and $1.2 million, respectively. Higher operating expenses increased the total operating loss for fiscal 2026 to $17.5 million compared to an operating loss of $10.8 million in the prior year.
The fiscal 2026 net loss included interest and other income of $4.1 million, primarily from interest payments on the increased cash balance from the capital raise completed in October 2025, and $3.4 million of other income consisting of a $6.2 million non-cash gain from the change in the fair value of prefunded warrants, partially offset by $2.8 million in issuance costs associated with the registered direct offering in October 2025. Switching now to the fourth quarter. Revenue was $6.3 million with a gross margin of 52.4%. As we have seen in prior periods, quarterly gross margin can fluctuate with the product mix and revenue levels.
The fourth quarter gross margin reflects slightly lower semiconductor sales sequentially compared with the prior-year quarter. From a customer perspective, we did see some variability across accounts during the quarter, including lower shipments to certain customers and higher shipments to others. At the same time, defense-related sales increased to approximately 46% of total shipments, reflecting continued demand in that segment. Again, you will find a full breakdown of sales in today’s earnings release. Operating expenses increased from the prior year primarily due to continued investment in our Gemini II and PLATO development programs. These investments align with our strategy to advance our APU roadmap while maintaining discipline in cost management.
Last quarter, we expanded quarterly earnings disclosures to help investors better understand the company’s cash consumption and cash generation. This information will complement the condensed consolidated statement of cash flows included in our Forms 10-K and 10-Q. Cash flows for the quarter ended 03/31/2026 were as follows: cash and cash equivalents as of December 31 were $70.7 million; net cash used in operating activities in the quarter was $5.5 million; net cash used in investing activities was approximately $100,000; and net cash provided by financing activities was $2.1 million. Cash and cash equivalents as of 03/31/2026 were $6.2672 billion. From a cash flow standpoint, spending in the quarter continued to reflect our investment in Gemini II and PLATO development.
We expect cash usage to remain elevated as we progress through this development phase. As a general reference point, we expect the cash usage to be approximately $4 million per quarter, or about $16 million annually, although this may vary depending on development timing and program activity. We ended the quarter with $67.2 million in cash and no debt. This is a notable improvement from the prior-year cash balance of $13.4 million and is associated with $46.9 million, net of fees, registered direct offering proceeds that closed in October 2025. The absence of debt and the improved cash balance provide us with the flexibility to continue investing in APU while maintaining a disciplined approach to capital allocation.
We believe our current cash position provides sufficient runway to support the initial commercialization of Gemini II and the completion of the PLATO tape-out, both expected late fiscal 2027. Before I hand the call over to the operator for Q&A, I would like to provide the first quarter fiscal 2027 outlook. For the upcoming quarter, we expect net revenues in the range of $5.9 million to $6.7 million with gross margin of approximately 54% to 56%. Overall, our strong cash position and continued support from non-dilutive funding give us a runway to advance Gemini II into early commercialization and the PLATO chip design. Operator, at this point, we will open the call for questions.
Operator: Thank you. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Once again, it is star 1 to ask a question. The first question is from Tony Brainard, retail investor.
Analyst: Hello, gentlemen. How are you?
Lee-Lean Shu: Good. Thank you.
Analyst: Yes. Can you share some color on the size—like, if you do get the design wins—the size of the market we are looking at?
Lee-Lean Shu: On which market?
Analyst: On the Gemini II.
Didier Lasserre: Okay. That is a pretty broad question. So the markets we are going after initially, you know, some of them are government, military-based, specifically these drone programs. And as we talked about, we are limited in detail now. We will give you more detail on the smart city at the end of May. But both of those markets are multibillion-dollar markets.
Lee-Lean Shu: Okay.
Analyst: Yep.
Analyst: That is fair enough. And that is my only question for today. Thank you very much.
Douglas M. Schirle: Alright. Thanks, Tony.
Analyst: Thank you.
Operator: The next question comes from Robert Christian, Private Investor.
Robert Christian: Yes. I would like to know why the PLATO project has moved up from 2027 to late fiscal 2027.
Didier Lasserre: Actually, it has not been pushed out. It might have been a mixture of calendars and fiscal quarters. When we had first talked about it, we were targeting the beginning of calendar 2027 to have the part taped out, and we are still on schedule for that. Tape-out means that the design will be done in the first quarter, and that would give us silicon because we have to make the mask sets that are used for the wafer fabs at TSMC. So we will see our first wafers in hand in summertime of calendar 2027, and I believe that has always been our schedule.
Lee-Lean Shu: Yeah. I think we mentioned fiscal year 2027. That is the beginning of the 2027 calendar year.
Didier Lasserre: That is a good point. So the end of fiscal 2027 is March of calendar 2027. Okay. That would be great. And the second question I have is, Gemini II taped out over two and a half years ago. Is it going to take that long to see expected sales, say, of PLATO?
Didier Lasserre: So that is a great question. You have two components to sales. You have the hardware component, which is the chip and any kind of board, and you have the software side. The software side actually lagged the hardware on Gemini II. With PLATO, we are trying to align the two more closely. The good news is some of the software work that is being done for Gemini II can be used for PLATO, while with Gemini I it was a completely new effort. In that respect, we can leverage some of the work from Gemini II for PLATO, and then we are also lining up the resources to be able to bring in the software with PLATO.
Robert Christian: Well, the chip is genius, and I wish you guys godspeed.
Lee-Lean Shu: Thank you.
Didier Lasserre: Thank you.
Operator: At this time, we show no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Lee-Lean Shu for closing statements.
Lee-Lean Shu: Thank you again for joining today’s call. As a reminder, Didier will be at the LD Micro Conference on May 19. Contact LD Micro if you would like to attend this presentation or take a one-on-one meeting. We are encouraged by the progress we are making with Gemini II, and we remain focused on successfully executing against the opportunities in front of us. We look forward to speaking with you again on our fiscal 2027 first quarter earnings call. Thank you.
Operator: This concludes today’s conference. Thank you for attending. You may now disconnect.
