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GCT Semiconductor Holding, Inc. (GCTS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $1.182M and diluted EPS was $(0.26), with gross margin at 32.0%; revenue declined 19% YoY and improved sequentially vs Q1, while EPS deteriorated QoQ given negative product margins at low volume .
  • Results missed S&P Global consensus: revenue $2.260M* vs actual $1.182M and EPS $(0.14)* vs $(0.26); only one covering estimate on both metrics, highlighting limited Street coverage and high uncertainty around the 5G ramp (values retrieved from S&P Global).
  • Execution milestones advanced: initial 5G chipset samples delivered to lead customers (including Orbic and Airspan), production expected to commence in Q3 2025 with volume shipments beginning in Q4 2025, positioning Q4 as the potential inflection .
  • Liquidity augmented via an $11M registered direct offering; quarter-end cash was $1.266M, A/R $3.826M, inventory $2.995M; stockholders’ deficit remains sizable at $(69.976)M and borrowings rose to $46.675M, underscoring financing risk as the company transitions to 5G commercialization .
  • Near-term stock reaction catalysts: verified 5G customer sampling, Q3 production start, Q4 volume shipments, and any additional customer announcements or financing updates .

What Went Well and What Went Wrong

What Went Well

  • Delivered initial 5G chipset samples to lead customers (Orbic North America, Airspan Networks), with Airspan noting successful milestone testing; management: “we have officially delivered the initial samples of our 5G chipset to lead customers...with successful testing already underway” .
  • Strategic ecosystem expansion: partnership with Iridium to integrate NTN Direct into the GDM7243SL chipset (broadening satellite/non-terrestrial reach) and collaboration with Giesecke+Devrient on eSIM solutions for IoT .
  • Financing progress: completed $11M registered direct offering under the $200M shelf (including $75M ATM), supporting sampling, debt retirement, and operational flexibility; management emphasized aligning capital resources with 5G launch .

What Went Wrong

  • Miss vs consensus: revenue at $1.182M vs $2.260M* and EPS at $(0.26) vs $(0.14)*; service revenue fell YoY and product margins were negative at low volume, compressing profitability (values retrieved from S&P Global) .
  • Gross margin fell sharply YoY to 32.0% (from 62.7%), driven by mix and low-volume product economics; CFO highlighted product GM of negative 42.6% in Q2, with service GM at 71.3% .
  • Balance sheet strain persists: stockholders’ deficit of $(69.976)M and current borrowings of $46.675M, while cash remains limited ($1.266M), leaving execution dependent on financing and timely 5G commercialization .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1.468 $0.496 $1.182
Gross Margin %63.0% 17.7% 32.0%
Total Operating Expenses ($USD Millions)$8.000 $7.828 $7.970
Diluted EPS ($USD)$(0.02) $(0.15) $(0.26)

Consensus vs Actual (Q2 2025):

MetricConsensusActual
Revenue ($USD Millions)$2.260*$1.182
Primary EPS ($USD)$(0.14)*$(0.26)
# of Estimates (Revenue / EPS)1 / 1*—

Estimates values retrieved from S&P Global.

Segment Revenues:

SegmentQ2 2024 ($M)Q1 2025 ($M)Q2 2025 ($M)
Product Revenue$0.499 $0.091 $0.408
Service Revenue$1.450 $0.405 $0.774

Segment Margins:

SegmentQ1 2025Q2 2025
Product Gross Margin %-120.0% -42.6%
Service Gross Margin %50.4% 71.3%

Liquidity and Balance Sheet KPIs:

KPIQ4 2024Q1 2025Q2 2025
Cash & Equivalents ($M)$1.435 $1.039 $1.266
Accounts Receivable, net ($M)$5.740 $4.541 $3.826
Inventory ($M)$2.977 $3.124 $2.995
Borrowings, current ($M)$37.626 $45.216 $46.675
Stockholders’ Deficit ($M)$(59.315) $(65.626) $(69.976)

Notes: Management commentary disclosed an ASP expectation for the 5G chipset of ~4x 4G, implying future margin uplift as scale improves .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
5G Chipset SamplingH1 2025Sampling to commence end of May 2025 Initial samples delivered; additional samples in coming weeks Raised/Executed
5G Chipset Production StartQ3 2025Commence shipments in H1 2025 (broad timing) Production to commence in Q3 2025 Updated/Shifted later
5G Volume ShipmentsQ4 2025Volume shipments to increase through Q3–Q4 2025 Volume shipments to begin in Q4 2025 Clarified/More conservative
5G ASP vs 4GOngoing~4x 4G ASP ~4x 4G ASP reiterated Maintained
OpEx ScalingH2 2025Tight cost control; no proportional OpEx ramp Expect efficiencies as revenue scales; OpEx discipline continues Maintained
Capital Markets CapacityOngoingShelf up to $200M (incl. $75M ATM) filed $11M offering completed; $114M shelf capacity remaining and $75M ATM available Strengthened Liquidity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
5G commercialization timeline“One-yard line” for sampling; availability in H1’25 Samples delivered; production Q3’25; volume shipments Q4’25 Advancing; timeline clarified
Customer ecosystemGlobalstar, Aramco Digital, Samsung, Kyocera; Orbic LOI Lead customers include Orbic and Airspan; additional samples pending Broadening
Supply chain readiness4G supply chain in place; ramp prep Coordinating mass production operations Ready-to-ramp
Revenue/margin mixTransitional 4G; low product volume negative GM; service margins supportive GM 32%; product GM -42.6%; service GM 71.3%; improving with scale Mix headwind easing with scale
Liquidity and financingDebt reduction in 2024; shelf filed $11M raise; shelf/ATM available; cash still tight Liquidity improved but constrained
Satellite/NTN initiativesGlobalstar partnership; 4G GDM7243SL use cases Iridium NTN Direct integration on GDM7243SL Expanding into NTN

Management Commentary

  • CEO: “The delivery of our initial five g chipsets to lead customers, the validation successes we’re seeing, and now the preparation for volume shipments all point to one thing, GCT is on the verge of a meaningful inflection.”
  • CEO: “We expect to commence production of the finalized inaugural 5G chipsets during the third quarter of 2025 with volume shipments to begin in the fourth quarter of 2025.”
  • CFO: “The average selling price of this five gs chipset is expected to be roughly four times that of our traditional four gs products.”
  • CFO: “Our current gross margin…particularly for product sales, are still distorted by the lower product revenue…We expect operational efficiencies to kick in as revenue increase, which will begin when five gs product sales start contributing…particularly in Q4 this year.”

Q&A Highlights

  • Q2 call concluded without audience Q&A; operator noted no questions in the queue .
  • Prior-quarter context: analyst questions focused on Orbic partnership breadth, sampling cadence, supply chain readiness, and OpEx scaling; management reiterated multi-product, multi-region opportunities and disciplined OpEx as ramp begins .

Estimates Context

  • Q2 2025 results missed consensus on both revenue ($1.182M vs $2.260M*) and EPS ($(0.26) vs $(0.14)*), with only one estimate on each metric (values retrieved from S&P Global).
  • Near-term estimate revisions likely need to reflect: continued transitional mix (negative product GM at low volume), stronger service margins, and the clarified timeline (production in Q3; volume shipments in Q4). Model assumptions should incorporate the ~4x 5G ASP vs 4G and expected efficiency gains as scale ramps .

Estimates values retrieved from S&P Global.

Key Takeaways for Investors

  • Q2 was a transitional quarter with a notable miss vs consensus; watch for confirmation of Q3 production start and Q4 volume shipments to catalyze revenue inflection .
  • Margin trajectory should improve as 5G scales: service margins are strong, product margins negative at low volume but expected to normalize with ASPs ~4x 4G and operational efficiencies .
  • Liquidity improved via $11M raise, but balance sheet remains stretched (cash $1.266M; borrowings $46.675M; stockholders’ deficit $(69.976)M) — execution risk remains tied to financing and timely commercialization .
  • Customer traction is real: samples delivered to Orbic and Airspan; additional samples imminent; satellite/NTN and eSIM initiatives broaden TAM and use cases .
  • Trading setup: stock likely sensitive to incremental customer announcements, production/shipments confirmations, and any additional financing updates; absence of numeric guidance keeps near-term estimates fragile .
  • Modeling cues: incorporate Q4 start of volume shipments, 5G ASP uplift, disciplined OpEx, and potential service-related NRE as customers integrate 5G products .
  • Cross-check data points: rely on 8-K financials for accuracy; note the call’s narrative and any minor transcript inconsistencies (e.g., cost of net revenues figures) should defer to filed numbers .

Additional Notes:

  • Minor discrepancy: the Q2 call transcript includes an apparent cost of net revenues figure inconsistency; the 8-K shows Q2 cost of net revenues at $0.804M vs $0.547M in Q2 2024 – use 8-K for financial accuracy .
  • Non-recurring item context: Q1 2024 included a one-time $14.6M gain on extinguishment of liability, which affected YoY comparisons highlighted in Q1 2025 disclosure .