QuickLogic Corporation

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to QuickLogic Corporation's first quarter fiscal year 2022 earnings results conference call. As a reminder, today's call is being recorded for replay purposes through May 24th of 2022. I would now like to turn the conference over to Mr. Jim Finucchi of Darrow Associates. Mr. Finucchi, please go ahead.

Thank you, Operator, and thanks to all of you for joining us. Our speakers today are Brian Faith, President and Chief Executive Officer, and joining remotely is Elias Nader, Senior Vice President and Chief Financial Officer. As a reminder, some of the comments QuickLogic makes today are forward-looking statements that involve risks and uncertainties, including but not limited to stated expectations relating to revenue from new and mature products, statements pertaining to QuickLogic's future stock performance, design activity, and its ability to convert new design opportunities into production shipments, timing and market acceptance of its customers' products, schedule changes, and production start dates that could impact the timing of shipments, the company's future evaluation systems, broadening the number of our ecosystem partners, and expected results in financial expectations for revenue, gross margin, operating expenses, profitability, and cash. Actual results or trends may differ materially from those discussed today. For more detailed discussions of the risks, uncertainties, and assumptions that could result in those differences, please refer to the risk factors discussed in QuickLogic's most recently filed periodic reports with the SEC. QuickLogic assumes no obligation to update any forward-looking statements or information which speak as of the respective dates of any new information or future events. In today's call, we will be reporting non-GAAP financial measures. You may refer to the earnings release we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements. We have also posted an updated financial table on our IR webpage that provides current and historical non-GAAP data. Please note, QuickLogic uses its website, the company blog, corporate Twitter account, Facebook page, and LinkedIn page as channels of distribution of information about its business. Such information may be deemed material information, and QuickLogic may use these channels to comply with its disclosure obligation under Regulation FD. A copy of the prepared remarks made on today's call will be posted at QuickLogic's IR webpage shortly after the conclusion of today's earnings call. I would now like to turn the call over to Brian.

Thank you, Jim. Good afternoon, everyone, and thank you all for joining our first quarter fiscal 2022 financial results conference call. We are off to a great start this year. As you can see from the press release issued after market closed today, our Q1 revenue was slightly above the midpoint of the guidance we gave in February. Our revenue mix continues the trend toward higher growth segments, and we are seeing an even higher number of IP and open source related opportunities. All of these items helped produce a significant improvement over the results we reported in the first quarter a year ago. As the first programmable logic company to actively contribute to a fully open source suite of development tools, we are gaining more traction in this market as potential customers are looking for differentiated and open source software solutions for their hardware. I remain confident our growth trajectory will continue. Based on our current outlook, which we will provide later, we believe we will reach our profitability objective in the middle of this fiscal year. Leading our revenue efforts will be Owen Bateman, our newly appointed vice president of sales. Owen has been on the QuickLogic team for many years, running our US and European sales. In fact, much of our recent new product revenue is the result of Owen's sales leadership. Owen's breadth of experience spans more than 30 years across many Summit Conductor sales positions, including strategic accounts, direct sales, international, and channel sales. He also has deep experience in the programmable logic industry. I am pleased he accepted this critical role, and we plan to work collaboratively to ensure the company's growth continues. Now, turning to the business review. We have been very active since our last earnings call with several important events that are important to our growth. Leading off, we announced two separate eFPGA contracts worth approximately $2.5 million. These contracts bill on top of the contracts worth about $3 million that we announced in our last call. In addition, Recently, one of our existing EFPGA contracts has been increased in value by at least 50%, which we expect to start recognizing in Q3. Our Astralis tool that was introduced last year enabled the upsizing of this particular EFPGA contract through its inherent flexibility and automation. Current and potential customers are recognizing that Astralis allows us to compress the time it takes to go from early engagement with the customer to IP delivery and then revenue. Moreover, Astralis allows us to be foundry and process node agnostic, expanding our served available market significantly. We have several bids in process, most of which are seven digits in magnitude. I can say that more often than not, we get into the final rounds and our odds of winning continue to improve. As I noted in prior calls and investor events, these wins bring the added bonus of no annual risk of losing the design to a competitor no inventory investment or risk, and of course, no COGS on royalties. For most wins, we generally start receiving an annuity royalty stream after 12 to 15 months. This means for the wins in 2021, we should start to receive royalty revenue early next year. During the quarter, we announced new EFPGA IP support for two of the world's leading semiconductor foundries, TSMC and Global Foundries. With TSMC, we made available the first customer-defined EFPGA block targeting TSMC's 22-nanometer process node. The IP was developed using the Astralis IP generator tool, enabling rapid EFPGA IP generation while shrinking the time to development for nearly any foundry and process node combination from a few months to a few weeks. As of now, we have active customer engagements for our EFPGA in four of the world's top five semiconductor foundries. TSMC, Global Foundries, Samsung, and UMC. Additionally, with our recent announcement with Skywater Technologies, we also now have our EFPGA IP available in an onshore foundry focused on the radiation-hardened aerospace and defense markets. Just to expand for a moment on our relationship with Skywater, in March, we announced QuickLogica's collaborating with Skywater for RadHard EFPGAs. further expanding their design ecosystem for advanced extreme environment solutions. Products are expected to come to market in the early 2024 timeframes. This technology can be embedded as an IP core in ASIC and SOC devices or implemented as a custom standalone RadHard FPGA for mission-critical and or ruggedized applications. These are used by space agencies, private space flight companies, the defense community, and research scientists to ensure consistently reliable performance and longer service life. Once you are designed into an application with one of the large companies that serve these markets, the tail will last for several years, if not decades. Based on recent commentary, additional open source-enabled designs will be important in the evolution and implementation of RadHeart solutions. For example, high-end applications and commercial markets are developing, specifically those requiring radiation-tolerant capabilities. While the technology specifications may not be as stringent as government-sponsored programs, the technology itself will be vitally important across a growing number of industries. Currently, our IP is available on certain nodes in these foundries. However, since we are now in the door, we have a better opportunity to more easily expand our offerings. Also, the fact that we have IP relationships established with the four of the top five semiconductor foundries in the world is a testament to the value of our technology offering. Just establishing the business and legal relationships with these foundries took a significant amount of time and resources, all driven from customer demand. You will hear me continue to say this. Astralis is quickly changing the game in terms of generating and delivering eFPGA IP for the foundry and process combination our customers need. These partnerships with the major semiconductor foundries are just the beginning. Our Sensible business had its best quarter of business development since our acquisition in 2019. In April, we announced Sensible is partnering with Silicon Labs, one of the leaders in the fast-growing IoT-connected world. Sensible is using the machine learning accelerator built into its latest Silicon Labs wireless SOCs to enable new edge AI ML applications for their customers. Together, Sensible and Silicon Labs are developing a proof-of-concept demonstration showing door locks, which use machine learning with audio sensors to detect and distinguish relatively subtle acoustic events to strengthen home security. This is a significant win for us and represents an expansion of Sensible's partnership with Silicon Labs. Beyond this announcement with Silicon Labs, Sensible recently won its largest contract to date worth six digits with a large customer in the IoT space. We believe this agreement will lead to additional SAS revenue and royalties early next year. We also announced Sensible now supports AI ML development for boards that feature Bosch SensorTech sensors. This integration allows developers to use the Sensible analytics toolkit to add local intelligence quickly and easily to IoT endpoint applications using any number of Bosch sensors for a variety of applications, including smart home and building, consumer and athletic wearables, and industrial automation. In our February call, I mentioned a new collaboration with eTOPAS Technology. The target of the collaboration is an eFPGA-based chiplet that combines the best of both worlds with a variety of standard IOs and the flexibility of FPGA programmability. Semiconductor design is getting more expensive, with some costs getting into the tens of millions of dollars for a chip design. Chiplets allow integration of existing devices at a significantly reduced cost. The demand is high, especially in the data center, high-speed computing, and military markets. Some industry research firms have forecasted that the chiplet market could be in the tens of billions of dollars in the next several years. Our starting point has been the Global Foundry's 22FDX process, which is a node we have supported for some time now. We are under evaluation with lead customers to see how we might architect a chiplet that can be reused across multiple customers. This would spread out customer-funded NRE across multiple implementations. Shifting now to some of the other components of our business, sales of our DisplayBridge product remain strong as global supply chains remain challenged. These supply issues, while a negative for the industry, have been a positive for us. as the constraints have created a worldwide shortage of certain display bridge semiconductor solutions. We have won multiple large designs for these products in the past quarter that we believe will contribute meaningful revenue later this year. Ahead of this demand, we have proactively implemented enhancements in our supply chain that will result in gross margin improvements for our display bridge products moving forward. One area where supply chain issues are slowing development and production is with our primary mobile phone customer. While we continue to have new designs ready for market, the supply disruptions are making it more difficult for our customer to build their product. This was reflected by lower shipments in the first quarter that we believe will persist in the second quarter. At this time, we see no change in the outlook for the second half of the year for this customer. And on the same topic of the global supply chain, I want to reiterate that we don't experience the same level of constraints that are impacting the broader IC-related industry. Our sticking point is in the assembly and test part of the supply chain. Capacity is staying tight, and in order to get the access required, we continue to increase our committed inventory for finished goods to help ease supply concerns. Finally, in our mature product segment, We are starting to see some stabilization in bookings for this quarter and the balance of this year. Without good clarity on the macro economy, we currently believe mature revenue will be slightly down from 2021. It has been a productive period for QuickLogic, and I am as confident as ever that our positive trajectory is sustainable. Let me now turn the call over to Elias for a review of the financial results. Elias, please go ahead.