Q3 2024 Earnings Summary
- QuickLogic is now the sole provider of eFPGA Hard IP, following the acquisition of its main competitor Flex Logix by Analog Devices, which is discontinuing external licensing of eFPGA IP. This positions QuickLogic to capture increased market share in the growing demand for eFPGA technology.
- Investments in Intel 18A process technology position QuickLogic to be the first and possibly only provider of eFPGA Hard IP optimized for Intel 18A, attracting significant contracts from the Defense Industrial Base and other sectors, expected to drive revenue growth in 2025.
- Non-Strategic Rad Hard eFPGA IP revenues are up over 50% compared to last year, showing strong diversification and growth in various sectors, indicating a broadening customer base and reduced dependence on a single revenue source.
- QuickLogic lowered its Q4 2024 revenue guidance from $10 million to $6 million due to delays in contract awards, pushing approximately $4 million of expected revenue into 2025, indicating challenges in revenue realization and forecasting.
- The company acknowledged that 2024 is not a growth year despite previous expectations, admitting difficulties in meeting targets and forecasting due to reliance on large contracts, leading to uneven and unpredictable revenue streams.
- Despite expecting non-GAAP profitability, QuickLogic anticipates negative cash flow in Q4 2024, indicating that operations may not be generating positive cash, which could raise concerns about the sustainability of its profitability.
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Revenue Guidance and Growth Outlook
Q: What's the outlook for revenue growth and OpEx next year?
A: Management is cautious about providing detailed revenue guidance for 2025 at this point. They admitted getting "ahead of their skis" this year and will offer guidance in February. Nonetheless, they are confident that 2025 will be a growth year due to increased customer diversification and opportunities from competitors exiting the market. Operating expenses are expected to remain flat, leveraging prior investments in IP and engineering. -
Delay of Large Contract
Q: Why was the large contract delayed, and what's the impact?
A: The contract was delayed due to expanded technical scope and the adoption of new process technology, extending development time. Approximately $4 million of revenue is shifted from Q4 2024 into 2025 due to this delay. Management believes the expanded scope will enhance capabilities applicable to future contracts. -
Confidence in Intel 18A Node
Q: Why is the company confident about Intel's 18A node?
A: They view Intel 18A as a critical, advanced, U.S.-based technology aligning with Defense Industrial Base needs. Being first to offer eFPGA IP on Intel 18A positions them advantageously, especially after their primary competitor's exit. They anticipate significant demand from defense customers. -
Non-Strategic Rad Hard IP Growth
Q: Did non-Strategic Rad Hard IP business grow in 2024?
A: Yes, the non-Strategic Rad Hard IP revenue is expected to be up over 50% from last year. This reflects increased customer diversification and reduces dependency on the Strategic Rad Hard contract. -
OpEx and Cash Flow
Q: How can there be non-GAAP profit with negative cash flow?
A: Despite negative cash flow estimated at under $500,000, they expect non-GAAP profitability due to controlled expenses. With 60% gross margin on $6 million revenue, they anticipate about $0.03 EPS for Q4. -
Synopsys Deal Details
Q: Is the Synopsys deal tool integration or includes core designs?
A: It's a tool integration; they are incorporating Synopsys' Synplify FPGA synthesis software into their Aurora tool suite. No Synopsys IP cores are involved. This caters to defense customers using Synplify, facilitating familiar workflows. -
Strategic Rad Hard Contract Increase
Q: Will the Strategic Rad Hard FPGA contract funding increase?
A: An increase is expected if future options are exercised, potentially starting in 2025. Specific amounts can't be disclosed until contracts are finalized.
Research analysts covering QUICKLOGIC.