QuickLogic Corporation (QUIK) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Despite a promising Q4 revenue outlook and potential future contracts, Q3 shows concerning financial metrics: a sharp decline in gross margin, increased net losses, and reduced cash reserves. The Q&A highlights further risks, including government shutdown impacts and delayed IP contracts. Management's lack of clarity on key metrics adds uncertainty. While Q4 guidance is optimistic, the current negative financial performance and uncertainties suggest a negative stock price movement in the short term.
Key Financial Performance
Total third-quarter revenue $2 million, down 52.5% from Q3 2024 and down 45% compared to Q2 2025. The decline was attributed to lower revenue recognition for U.S. government SRH FPGA contracts and delays in certain contract awards.
New product revenue in Q3 $1 million, down 73.1% from Q3 2024 and down 67.3% compared to Q2 2025. The decline was due to delays in contract awards and lower revenue recognition.
Mature product revenue in Q3 $1.1 million, up from $0.7 million in Q3 2024 and up from $0.8 million in Q2 2025. The increase was attributed to higher demand for mature products.
Non-GAAP gross margin in Q3 Negative 11.9%, compared to 65.3% in Q3 2024 and 31% in Q2 2025. The decline was due to unfavorable absorption of fixed costs and $300,000 of R&D costs allocated to COGS.
Non-GAAP operating expenses in Q3 Approximately $2.9 million, down from $3.3 million in Q3 2024 but up from $2.5 million in Q2 2025. The decrease year-over-year was due to cost management, while the quarter-over-quarter increase was due to COGS allocation.
Non-GAAP net loss in Q3 $3.2 million or $0.19 per diluted share, compared to a net loss of $0.9 million or $0.06 per diluted share in Q3 2024 and $1.5 million or $0.09 per diluted share in Q2 2025. The increase in net loss was due to lower revenue and gross margin.
Stock-based compensation in Q3 $0.8 million, down from $1.2 million in Q3 2024 and flat compared to Q2 2025. The decrease year-over-year was due to fewer stock-based grants.
Cash at the close of Q3 $17.3 million, compared to $19.2 million at the close of Q2 2025. The decrease was primarily driven by tape-outs, wafer costs, and expenditures related to revenue contracts.
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Operating Highlights
SRH FPGA Test Chip: QuickLogic has developed an SRH FPGA test chip using GlobalFoundries' 12LP process, targeting large defense industrial-based entities (DIBs). The test chip is expected to be delivered in early Q1 2026, with dev kits ready shortly thereafter. This initiative is independent of U.S. government contracts and aims to secure strategic design wins.
eFPGA Hard IP: QuickLogic announced a $1 million eFPGA hard IP contract for a high-performance data center ASIC on TSMC's 12-nanometer process. The eFPGA hard IP will be the primary IP in the design, showcasing the increasing value of eFPGA in customer designs.
Digital FPGA Chiplet POC: QuickLogic completed the initial phase of its digital FPGA chiplet proof-of-concept (POC), which connects eFPGA IP to UCIe IP. This initiative is supported by strategic partners and targets defense, aerospace, industrial, and commercial markets.
Commercial Market Expansion: QuickLogic is expanding its penetration in commercial market sectors, with license revenue potentially surpassing NRE revenue for the first time this quarter.
Defense Industrial Base (DIB) Engagement: QuickLogic has significantly expanded its ability to address lucrative markets for high-density discrete FPGAs and ASICs requiring large blocks of eFPGA. The company is also leveraging its SRH FPGA test chip to secure storefront business opportunities.
Revenue Guidance: QuickLogic is targeting Q4 2025 revenue of $6 million, with a wide guidance range of $3.5 million to $6 million due to the timing of a $3 million contract. The company anticipates positive cash flow even at the low end of the range.
Cost Management: Non-GAAP operating expenses in Q3 2025 were approximately $2.9 million, below the midpoint of the outlook. Cash usage during Q3 was $1.9 million, primarily driven by tape-outs and wafer costs for the SRH FPGA test chip.
Onshore Fabrication Advantage: QuickLogic is the only U.S. company offering strategic rad-hard FPGAs and SRH eFPGA hard IP fabricated onshore, aligning with government requirements for strategic programs.
Smart Systems Trend: The increasing demand for smart systems is driving the need for larger blocks of eFPGA in ASIC designs, enhancing flexibility, security, and lifecycle adaptability.
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Risk or Challenges
Market Acceptance Delays: Delays in the market acceptance of the company's new products could impact revenue generation and overall business performance.
Revenue Replacement Challenges: The company's ability to replace revenue from end-of-life products is uncertain, posing a risk to financial stability.
Customer Design Activity: The level and timing of customer design activity may not align with the company's expectations, potentially affecting revenue.
New Orders Risk: There is a risk that new orders may not result in future revenue, impacting financial projections.
Advanced Wafer Technology: Challenges in introducing and producing new products based on advanced wafer technology on a timely basis could hinder growth.
Competitive Pressures: Intense competition from competitors may affect the company's market share and pricing strategies.
Talent Retention: The ability to hire and retain qualified personnel is critical and poses a risk if not managed effectively.
Supply Chain Disruptions: Changes in demand or supply, as well as general economic conditions, could disrupt operations.
External Disruptions: Political events, international trade disputes, natural disasters, and other business interruptions could disrupt the supply or delivery of or demand for the company's products.
Tax Liabilities: Changes in tax rates and exposure to additional tax liabilities could impact financial performance.
Revenue Recognition Timing: Delays in contract awards or funding, such as the $3 million commercial application contract and the mid-7-figure DIB contract, could push revenue recognition into future quarters, affecting short-term financial results.
Gross Margin Variability: Unfavorable absorption of fixed costs due to lower revenue and R&D cost allocations to COGS have led to negative gross margins, which could persist if revenue does not improve.
Government Contract Payments: The timing of payments from U.S. government contracts could negatively impact cash flow.
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Guidance & Outlook
Revenue Guidance for Q4 2025: QuickLogic is targeting a total revenue of $6 million for Q4 2025. However, this is contingent on the timely award of a nearly $3 million contract for a commercial application. If the contract is delayed, Q4 revenue could drop to $3.5 million. The company has a high level of confidence in winning the contract, but timing remains uncertain.
Revenue Mix and Gross Margin Projections: At $3.5 million in revenue, the company expects $2.5 million in new product revenue and $1 million in mature product revenue, with a non-GAAP gross margin of approximately 45%. At $6 million in revenue, new product revenue is expected to be $5 million, with a gross margin of 68%.
Full-Year 2025 Non-GAAP Gross Profit Margin: The company projects a full-year 2025 non-GAAP gross profit margin of 38%, plus or minus 5%.
SRH FPGA Test Chip and Development Kits: QuickLogic expects delivery of SRH FPGA test chips in early Q1 2026, with development kits ready for shipment shortly thereafter. The initiative is aimed at securing strategic design wins and accelerating the storefront business model.
Intel 18A Contracts and Future Opportunities: A mid-7-figure contract targeting Intel 18A has been delayed to 2026 due to funding issues. However, QuickLogic has already delivered customer-specific eFPGA hard IP for Intel 18A test chips and expects further contracts, including a high-density proof-of-concept device in the second half of 2026.
Digital FPGA Chiplet Proof-of-Concept (POC): QuickLogic has completed the initial phase of its digital FPGA chiplet POC and plans to move forward with additional phases once external funding is secured. The initiative is expected to lead to storefront revenue in 2026.
eFPGA Hard IP Contract for Data Center ASIC: QuickLogic announced a $1 million eFPGA hard IP contract for a high-performance data center ASIC to be fabricated on TSMC's 12-nanometer process. This contract highlights the increasing value of eFPGA in customer designs.
Evaluation Kits for 12LP Test Chips: QuickLogic plans to offer evaluation kits for 12LP test chips by late 2026, enabling customers to accelerate system-level evaluations and designs.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What impact is the government shutdown having on your business? Have you seen any cancellations, and what gives you confidence in a rebound of the USG strategic radiation Arden FPGA program in Q4?
A:The government shutdown has caused delays in some new programs due to furloughs, but no cancellations have been observed. Existing contracts are not experiencing delays. The company is confident in a rebound as the demand for programmable logic in defense systems remains strong, and once the government is funded, paused programs are expected to resume.
Q:What is the expected range of storefront revenue in 2026, and what factors could drive upside or downside to these expectations?
A:Storefront revenue in 2026 is expected to be significant, around 10% of total revenue. Upside could come from strong demand for strategic router initiatives and modernization programs, while downside risks include delays in development or unforeseen challenges in execution.
Q:How do we think about the opportunity for FPGAs versus ASICs on the GF12LP process, and are the timing dynamics for each markedly different?
A:The GF12LP process is widely used in the defense industry due to its advanced capabilities and U.S.-based manufacturing. FPGAs offer a near-term licensing and royalty opportunity, while ASICs involve longer development cycles. The company plans to monetize both through licensing and device sales, with FPGAs providing a significant revenue potential due to higher ASPs.
Q:How does the opportunity with GF12LP compare to other foundries like SkyWater and Honeywell?
A:The GF12LP opportunity is larger due to its advanced process technology, which allows for higher functionality and value. It also offers strategic FPGA revenue and IP licensing opportunities. Other foundries use older process geometries, which have different capabilities and revenue potential.
Q:Can you provide details on the expected orders for new dev kits and the design cycle once customers receive them?
A:The company expects significant revenue from dev kit orders, with enough die purchased to meet customer demand. Customers will conduct rigorous testing over a couple of quarters, aiming to reach TRL5 by mid-next year, after which the company hopes to intercept programs of record and move into late-stage designs.
Q:What are the expected spend levels for next year, and how will the company support a broad range of customers?
A:The company plans to hire critical engineering and field application resources, with OpEx expected to be around $3.5 million per quarter starting in Q2. Investments will be mindful and potentially co-funded by customers to offset costs.
Q:Are you proposing an either/or situation for Q4 guidance with $3.5 million or $6 million revenue?
A:Yes, the guidance depends on the timing of a significant order. If the order comes late in Q4, only a portion may be recognized, leading to $3.5 million revenue. If recognized fully, revenue could reach $6 million.
Q:What is the forecasted share count for 2025?
A:The forecasted share count for 2025 is 17,090,252 shares.
Q:What caused the expected revenue decline for 2025 compared to earlier guidance?
A:The decline is due to the timing of large IP contracts, some of which have shifted to 2026. This creates lumpiness in revenue, which will smooth out as higher-value contracts become more consistent.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numbers for storefront revenue in 2026, the exact number of dev kits and customers, and detailed programmatic information about opportunities with GF12LP and other foundries. Additionally, they did not clarify the exact timing and impact of certain large IP contracts on revenue.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
DIB
DIBs
FPGA chiplet
FPGA test
Hard IP
IP ASIC
SRH FPGA
SRH dev
backlog
block eFPGA
book week
chip addition
chiplet POC
confidence contract
contract application
contract date
contract outlook
contribution customer
customer contract
date portion
design contract
design fabrication
dev kit
engineering
evaluation kit
fabrication node
feasibility study
figure contract
funding
hardware
initiative
level confidence
market density
market sector
objective level
outlook book
phase FPGA
portion objective
reason margin
requirement
QUIK Transcript
QuickLogic Corporation (QUIK) Q1 2026 Earnings Call Transcript
Positive5-13
The earnings report shows strong growth in new product revenue and a significant improvement in gross margins from the previous quarter. The company is on track to meet its ambitious revenue growth target of 50%-100%, supported by government contracts and new product introductions. Despite a slight increase in net loss, the positive outlook on revenue growth, improved financial health, and strategic partnerships suggest a positive market reaction. The Q&A further confirms progress on key projects and an optimistic revenue growth profile, reinforcing a positive sentiment.
QuickLogic Corporation (QUIK) Q4 2025 Earnings Call Transcript
Unknown3-3
The earnings call summary presents mixed signals. While there is a 15% revenue increase and improved gross margins, challenges in market acceptance and revenue conversion pose risks. The Q&A section didn't provide clarity on management's responses to these concerns, maintaining uncertainty. The absence of shareholder return discussions and dependency on uncertain government contracts further contribute to a neutral sentiment.
QuickLogic Corporation (QUIK) Q3 2025 Earnings Call Transcript
Unknown11-12
Despite a promising Q4 revenue outlook and potential future contracts, Q3 shows concerning financial metrics: a sharp decline in gross margin, increased net losses, and reduced cash reserves. The Q&A highlights further risks, including government shutdown impacts and delayed IP contracts. Management's lack of clarity on key metrics adds uncertainty. While Q4 guidance is optimistic, the current negative financial performance and uncertainties suggest a negative stock price movement in the short term.
QuickLogic Corporation (QUIK) Q2 2025 Earnings Call Transcript
Unknown8-12
The earnings call presents a mixed picture: strategic partnerships and government contracts suggest potential growth, but financial performance shows increased losses and less favorable cost absorption. The Q&A section highlights positive sentiment towards defense market opportunities but also reveals management's reluctance to provide specific future guidance, indicating uncertainty. With no market cap data, the net result is a neutral stock price outlook over the next two weeks.
QUIK Report
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