In the second quarter of fiscal 2025, GSI Technology, Inc. absorbed a net loss per share of 21 cents, a wider deficit compared to the 16 cents per share loss recorded in the previous year’s corresponding quarter.
Total revenues for the quarter summed up to $4.6 million, marking a decline from the $5.7 million seen in the second quarter of fiscal 2024. This dip was succinctly explained by the company’s management, attributing it to shifts in product variety and layoffs that had an impact on overall gross margins.
GSI Technology’s quarterly performance was riddled with falling revenues, contracting gross margins, and ongoing expense reduction strategies. Delving deeper, the company implemented strategic cost-saving actions during the fiscal second quarter, expecting to yield annual savings of $3.5 million—a step towards enhancing cash flow.
Management foresees a prospective uptick in demand within the SRAM segment as customer stockpiles normalize, potentially augmenting sales in forthcoming quarters.
Overview of Financial Indicators
Evaluating Revenue Streams
The decline in year-over-year revenues was predominantly propelled by reduced demand across pivotal product categories. In particular, sales to Nokia stood at $0.8 million, representing 17.8% of total revenues, down from $1.2 million or 20.3% in the previous-year quarter. Conversely, military and defense sales exhibited resilience, contributing 40.2% of total sales, an increase from 34.8% a year prior.
Amplified Operating Expenses
Operating expenses surged to $7.3 million, slightly surpassing the $7.2 million recorded in the analogous quarter of the preceding year. This elevation was primarily attributed to research and development (R&D), along with selling, general, and administrative (SG&A) expenditures. R&D costs clocked in at $4.8 million, up from $4.7 million year-over-year, while SG&A outlays accounted for $2.6 million. The company reported an expanded operating loss of $5.6 million from $4.1 million a year earlier, reflecting amplified costs amid revenue erosion.
Shifting Gross Margins
The gross margin experienced a significant contraction, dropping from 54.7% in the second quarter of fiscal 2024 to 38.6% in the second quarter of fiscal 2025. This decline was ascribed to transitions in product structure and added expenses from labor force reorganizations. The shift towards lower-margin products impacted the quality of margins, aggravated by severance costs that inflated manufacturing expenses.
Net Loss Perspective
GSI Technology reported a net loss of $5.5 million in the second quarter of fiscal 2025, exceeding the net loss of $4.1 million in the corresponding quarter from the prior year. Interest and other income provided a $0.1 million uplift to the outcomes, showcasing an improvement compared to the same period last year.
Financial Snapshot (As of Sept. 30, 2024)
GSI Technology’s cash and cash equivalents totaled $18.4 million, reflecting an upswing from $14.4 million as of March 31, 2024.
Total assets ascended to $47.4 million, climbing from $42.5 million at the conclusion of the previous fiscal year.
Current liabilities underwent a slight uptick to $5.5 million from $5.4 million as of March 31, 2024.
On the flip side, stockholders’ equity witnessed a decrease to $33.3 million from $36 million.
Management’s Forward Guidance
For the third quarter of fiscal 2025, GSI Technology envisions revenues in the range of $4.7 million to $5.5 million, along with an anticipated gross margin of approximately 50-52%.
Recent Initiatives and Milestones
During the quarter, GSI Technology propelled its Gemini-II benchmarking project, steadily advancing towards its Dec. 31, 2024, deadline. Furthermore, the company remains dedicated to fulfilling its Small Business Innovation Research contract with the U.S. Air Force Labs, aiming to deliver the requisite software algorithms by the first quarter of the calendar year 2025. These endeavours echo GSI Technology’s commitment to innovation and broadening its product portfolio beyond traditional memory products.