Release Date: May 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- QuickLogic Corp (QUIK, Financial) reported a significant year-over-year revenue increase of 45% in Q1, driven by a 60% increase in new product revenue primarily from eFPGA IP contracts.
- The company has a record $179 million sales funnel and significant eFPGA contract proposals pending, indicating potential for continued growth.
- QuickLogic Corp (QUIK) is strategically positioned to expand its IP business across new customers and market sectors, with support for multiple fabrication nodes.
- The company successfully transitioned revenue recognition from engineering services to IP license, aligning revenue more closely with deliverables and improving contract negotiation leverage.
- QuickLogic Corp (QUIK) remains cash-flow positive and projects solid profitability for the full year of 2024, despite strategic shifts in revenue recognition.
Negative Points
- Despite overall growth, QuickLogic Corp (QUIK) anticipates a sequential revenue decrease in Q2 from Q1 due to strategic shifts in revenue recognition between engineering services and IP licenses.
- The change in revenue recognition will push significant revenue into the second half of 2024, potentially affecting short-term financial reporting.
- There are uncertainties in the timing of contract awards and shipments, which could impact projected revenues and growth rates.
- The company faces intense competition in the eFPGA market, particularly from companies like Flex Logix and Menta, which could impact market share and pricing.
- Dependence on significant contracts, such as the Strategic Radiation Hardened FPGA government contract, poses risks if there are delays or reductions in funding.
Q & A Highlights
Q: Can you clarify if the guidance for Q2 includes expectations from the RedHat project's third tranche?
A: Brian Faith, President and CEO of QuickLogic, confirmed that estimates for the third tranche of the RedHat project are included in the Q2 guidance.
Q: Is the revenue cadence for the third tranche of the RedHat project expected to be similar to the first tranche?
A: Yes, Brian Faith explained that the funding rate for the third tranche is expected to be similar to that of the first tranche, which was spread over approximately 10 months.
Q: Can you provide more details on the major MCU company contract mentioned in relation to SensiML?
A: Brian Faith described the contract as significant, involving one of the top 10 microcontroller vendors, but specific details were withheld due to confidentiality agreements.
Q: What can you share about the potential $40 million in chiplet proposals mentioned?
A: Brian Faith indicated that these proposals, if successful, could significantly impact revenue but are not currently included in the sales funnel as they are beyond the two-year horizon.
Q: How has the competitive environment in the embedded FPGA IP space changed over the past two years?
A: Brian Faith noted that the competitive landscape has remained relatively stable with key players like Flex Logix and Menta. He emphasized QuickLogic's unique position due to its extensive experience and comprehensive service offerings that extend beyond just IP to include full device development.
Q: Are there concerns about the impact of US federal budget uncertainties on the awarding of government contract tranches?
A: Brian Faith acknowledged potential impacts but felt that the specific nature and execution of QuickLogic's projects likely shield them from significant risks related to budget fluctuations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
