QuickLogic Corporation

Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to QuickLogic Corporation's third quarter fiscal 2023 earnings results conference call. As a reminder, today's call is being recorded for replay purposes through November 21st, 2023. I would now like to turn the conference over to Ms. Allison Ziegler of Darrow Associates. Ms. Ziegler, 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 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 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 and 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 obligations under Regulation FD. A copy of the prepared remarks made on today's call will be posted on QuickLogic's IR web page shortly after the conclusion of today's earnings call. I would now like to turn the call over to Brian. Go ahead, Brian.

Thank you, Allison. Good afternoon, everyone, and thank you all for joining our third quarter fiscal 2023 financial results conference call. QA3 revenue of $6.7 million exceeded the midpoint of our guidance, nearly doubling year over year. and increasing 128% sequentially. This growth was driven by new product sales, which increased by over 170%, both sequentially and year over year. QuickLogic set a record for non-GAAP gross profit margin, achieving 78%, which exceeded the midpoint of the outlook we shared last quarter. Driven by strong gross profit and the inherent scalability of our business model, Non-GAAP net income of $1.8 million was an all-time record for QuickLogic. Elias will share our outlook in a few minutes. That projects will set another non-GAAP net profit record in Q4, which will drive positive full-year earnings for fiscal 2023. The strategic transformation we initiated in 2020 has enabled us to fully leverage the proprietary IP assets that we have developed over the last 30 years and execute a highly scalable and profitable business model. When compared to 2020, we expect to grow full-year 2023 revenue by over 144%, non-GAAP gross profit dollars by over 235%, and with a 2% reduction in non-GAAP OPEX, improve our operating leverage by nearly 244%. The bottom line here is our strategic transformation is delivering strong results, and I believe the best is yet to come. Now I'll take a few minutes to highlight the initiatives and contracts that are driving our growth and success. First, we have continued to grow our sales funnel to a record $162 million. Included in this number are deals for both EFPGA IP, as well as customer-specific device development that incorporates our EFPGA IP. These deals span numerous foundries, process technologies, and end markets. In August, we were awarded the $15 million second phase of the strategic Rathart FPGA contract that was initiated in 2022, bringing the total awarded so far to $22 million. The contract has the potential to extend through 2026 with a total potential value of $72 million. This second phase provided a significant contribution to our rebound in Q3 and expanded the scope of the contract to include a second foundry in addition to continuing our development efforts with our current foundry partner. In November 2022, I shared that we had taped out a new device for our customer that incorporates our EFPGA IP. Due to strict confidentiality requirements, I can't share more details on the specific design width. We are continuing to do development work with this customer, and we are generating revenue from this design each quarter. We believe this customer could represent tens of millions of dollars in potential device revenue starting in a couple of years. As mentioned on our previous call, contributing to our sales funnel growth includes new government-focused EFPGA IP-based opportunities targeting a 12-nanometer process node. Initial revenue from one contract began in Q1. Furthermore, we announced the availability of our EFPGA IP on the Global Foundry's 12LP process technology, and we now have multiple new opportunities for this IP, totaling several million dollars. The new 12-nanometer EFPGA solution is ideal for a wide range of applications, including 5G infrastructure, automotive electronics, aerospace and defense, AI ML acceleration, and IoT devices. In late September, we announced that a leading technology company chose our EFPGA IP for Global Foundry's 22 FDX platform. We expect to deliver on this initial program this year. In total, during this quarter, we expect to be in development with five different process technologies spanning four different foundries. This is only possible through the proprietary automation of the Astralis IP generator, which lets us create customized versions of our IP within one quarter from contract signing. Customers are increasingly seeing QuickLogic as the lowest risk path to a solution that meets their technical requirements, development schedule, and target costs. The not so subtle point here is by lowering risk and shortening time to market, we save our customers money and that provides us with a meaningful competitive advantage. We announced a partnership with Xifera, a provider of hardware-based cryptographic security solutions to provide architects with a path towards securing their assets against the quantum threat, enabling them to stay one step ahead in the evolving landscape of cyber threats. With Xifera's standards-based PQC IP, combined with the design flexibility of QuickLogic's EFPGA platform, Solution designers can cost-effectively meet the rapidly evolving market demands for quantum resilience. Moving to chiplets. We recently announced a partnership with YourChip to develop low-power, low-cost UCIE FPGA chiplets optimized for Edge IoT and AI ML applications. This opens new possibilities for a wide range of applications. the first chiplets could be available in early 2025. Concerning our mobile phone business, our lead customer has digested most of their EOS S3 inventory and we expect a slight rebound starting this quarter. Furthermore, we have been informed that our EOS S3 will be used in new smartphone models that will ship into 2025. Finally, We are forecasting slight improvements in our display bridge and mature product segments for Q4 and for fiscal 2024. Moving to Sensible, the top-tier semiconductor company that has integrated a private label version of a Sensible-powered solution to address its customers' demand across its broad line of microcontrollers has officially launched. This private labeling of the Sensible Toolkit provides significant revenue potential because of the company's large installed customer base and sales force. As I have noted in the past, this is not an exclusive relationship and we will continue to engage with other microcontroller companies. Before turning the call over to Elias, I'd like to share my perspective on the key differentiators that are driving our wins, growth, and our profitability. QuickLogic has been developing proprietary FPGA IP and delivering high-volume commercial FPGA-based devices for 30 years. With this and our Australis IP generator that allows us to quickly target our customers' chosen foundry and fabrication node, we can lower customer risk and shorten time to market in addition to providing unique and proprietary IP. We can also engage with customers at any level from providing a simple IP license, to supporting development efforts, and even to fully managing everything from fabrication to finished goods through our storefront program. Together, these benefits set us apart from the competition and have enabled both our rapid growth and now profitability. With that, let me now turn the call over to Elias for a review of the financial results, and I will rejoin for our closing remarks. Elias, please go ahead.