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GSI Technology (GSIT) Q1 EPS Up Y/Y on Sale-Leaseback Deal
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GSI Technology, Inc. (GSIT - Free Report) reported earnings per share (EPS) of $0.04 for the first quarter of fiscal 2025, a significant improvement from the loss of $0.21 per share in the same quarter last year.
The company’s net revenues for the quarter were $4.7 million, down from $5.6 million in the first quarter of fiscal 2024.
The strategic sale and leaseback transaction provided a significant one-time boost to net income and improved the company’s liquidity position. The decline in revenues can be attributed to lower sales of the company’s SigmaQuad SRAM and other SRAM products, particularly to military prime contractors. Management’s focus on new product lines and expanding the Small Business Innovation Research (SBIR) proposal pipeline demonstrates a commitment to reversing the revenue decline and achieving long-term growth.
GSI Technology, Inc. Price, Consensus and EPS Surprise
Sales to Nokia amounted to $1 million, or 21.4% of net revenues compared with $1.9 million, or 33.5% of net revenues, in the same period last year. Military and defense sales represented 31.9% of total shipments for the quarter compared with 33.8% in the same period last year. SigmaQuad sales were 36.3% of total shipments, down from 58.6% in the same period last year.
Gross profit for the quarter was $2.2 million, down from $3.1 million in the first quarter of fiscal 2024. The gross margin was 46.3%, a decrease from 54.9% in the same period last year. This decline in gross margin was primarily due to a less favorable product mix and the impact of lower revenue on fixed costs.
Operating expenses for the quarter totaled $6.8 million, down from $8.2 million in the same quarter last year. Research and development (R&D) expenses were $4.2 million, a decrease from $5.2 million in the first quarter of fiscal 2024. Selling, general, and administrative (SG&A) expenses amounted to $2.6 million, down from $3 million in the prior-year period. The reduction in R&D and SG&A expenses demonstrates effective cost-control measures.
The operating loss for the quarter was $4.7 million, narrowed from $5.1 million in the year-ago quarter.
Net income for the first quarter of fiscal 2025 was $1.1 million, reflecting a one-time gain of $5.7 million from the sale and leaseback transaction of the company’s headquarters. This compares to a net loss of $5.1 million for the same period last year.
Balance Sheet Update (As of Jun 30, 2024)
GSI Technology’s cash and cash equivalents stood at $21.8 million, up from $14.4 million at the end of the previous quarter. Total assets were $52.3 million, compared to $42.5 million at the end of the previous quarter.
The company's long-term liabilities stood at $8.9 million as of Jun 30, 2024, a significant increase from $1.1 million as of Mar 31, 2024.
Working capital improved to $25.7 million from $19.1 million at the end of fourth-quarter fiscal 2024. Stockholders’ equity increased to $38 million from $36 million at the end of fourth-quarter fiscal 2024.
Management Guidance
For the second quarter of fiscal 2025, GSI Technology expects net revenues to be in the range of $4.2 million to $4.8 million, with a gross margin of approximately 44% to 46%. This guidance reflects ongoing challenges in the company’s core markets but also highlights management’s cautious optimism about stabilizing revenue streams.
Other Developments
The most notable development during the quarter was the completion of the sale and leaseback of the company’s headquarters, resulting in a $5.7 million gain. This move was part of a broader strategy to enhance liquidity and financial flexibility.
GSI Technology is focused on launching new business lines with its Gemini-I and Gemini-II platforms. The GXL platform for Fast Vector Search, based on Gemini-I, is expected to be available as a cloud-based or on-premise solution. This innovative solution is aimed at speeding up the indexing process in fast vector search, thereby allowing quicker database updates.
GSI Technology is expanding its SBIR proposal pipeline, targeting contracts totaling $6 million. The company has been successful in meeting milestones for Phase I and Phase II SBIRs, which are on track for completion in calendar 2025. Additionally, the company recently secured a third SBIR contract with a large division of the Department of Defense.
The company is on track to begin customer sampling of Gemini-II software in early calendar 2025, with the goal of finalizing its firmware and software library development by December 2024.
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GSI Technology (GSIT) Q1 EPS Up Y/Y on Sale-Leaseback Deal
GSI Technology, Inc. (GSIT - Free Report) reported earnings per share (EPS) of $0.04 for the first quarter of fiscal 2025, a significant improvement from the loss of $0.21 per share in the same quarter last year.
The company’s net revenues for the quarter were $4.7 million, down from $5.6 million in the first quarter of fiscal 2024.
The strategic sale and leaseback transaction provided a significant one-time boost to net income and improved the company’s liquidity position. The decline in revenues can be attributed to lower sales of the company’s SigmaQuad SRAM and other SRAM products, particularly to military prime contractors. Management’s focus on new product lines and expanding the Small Business Innovation Research (SBIR) proposal pipeline demonstrates a commitment to reversing the revenue decline and achieving long-term growth.
GSI Technology, Inc. Price, Consensus and EPS Surprise
GSI Technology, Inc. price-consensus-eps-surprise-chart | GSI Technology, Inc. Quote
Key Business Metrics
Sales to Nokia amounted to $1 million, or 21.4% of net revenues compared with $1.9 million, or 33.5% of net revenues, in the same period last year. Military and defense sales represented 31.9% of total shipments for the quarter compared with 33.8% in the same period last year. SigmaQuad sales were 36.3% of total shipments, down from 58.6% in the same period last year.
Gross profit for the quarter was $2.2 million, down from $3.1 million in the first quarter of fiscal 2024. The gross margin was 46.3%, a decrease from 54.9% in the same period last year. This decline in gross margin was primarily due to a less favorable product mix and the impact of lower revenue on fixed costs.
Operating expenses for the quarter totaled $6.8 million, down from $8.2 million in the same quarter last year. Research and development (R&D) expenses were $4.2 million, a decrease from $5.2 million in the first quarter of fiscal 2024. Selling, general, and administrative (SG&A) expenses amounted to $2.6 million, down from $3 million in the prior-year period. The reduction in R&D and SG&A expenses demonstrates effective cost-control measures.
The operating loss for the quarter was $4.7 million, narrowed from $5.1 million in the year-ago quarter.
Net income for the first quarter of fiscal 2025 was $1.1 million, reflecting a one-time gain of $5.7 million from the sale and leaseback transaction of the company’s headquarters. This compares to a net loss of $5.1 million for the same period last year.
Balance Sheet Update (As of Jun 30, 2024)
GSI Technology’s cash and cash equivalents stood at $21.8 million, up from $14.4 million at the end of the previous quarter. Total assets were $52.3 million, compared to $42.5 million at the end of the previous quarter.
The company's long-term liabilities stood at $8.9 million as of Jun 30, 2024, a significant increase from $1.1 million as of Mar 31, 2024.
Working capital improved to $25.7 million from $19.1 million at the end of fourth-quarter fiscal 2024. Stockholders’ equity increased to $38 million from $36 million at the end of fourth-quarter fiscal 2024.
Management Guidance
For the second quarter of fiscal 2025, GSI Technology expects net revenues to be in the range of $4.2 million to $4.8 million, with a gross margin of approximately 44% to 46%. This guidance reflects ongoing challenges in the company’s core markets but also highlights management’s cautious optimism about stabilizing revenue streams.
Other Developments
The most notable development during the quarter was the completion of the sale and leaseback of the company’s headquarters, resulting in a $5.7 million gain. This move was part of a broader strategy to enhance liquidity and financial flexibility.
GSI Technology is focused on launching new business lines with its Gemini-I and Gemini-II platforms. The GXL platform for Fast Vector Search, based on Gemini-I, is expected to be available as a cloud-based or on-premise solution. This innovative solution is aimed at speeding up the indexing process in fast vector search, thereby allowing quicker database updates.
GSI Technology is expanding its SBIR proposal pipeline, targeting contracts totaling $6 million. The company has been successful in meeting milestones for Phase I and Phase II SBIRs, which are on track for completion in calendar 2025. Additionally, the company recently secured a third SBIR contract with a large division of the Department of Defense.
The company is on track to begin customer sampling of Gemini-II software in early calendar 2025, with the goal of finalizing its firmware and software library development by December 2024.