QuickLogic Corporation — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparative quarter ended April 2, 2023. QuickLogic is a fabless semiconductor and software company focused on eFPGA IP and services, silicon products, and AI/ML software. Figures below are in U.S. dollars; financial statement amounts are generally in millions unless stated otherwise.
Financial performance
| Metric | Q1 2024 | Prior-year quarter | Change |
|---|---|---|---|
| Revenue | $6.007m | $4.133m | +45% |
| Gross profit / margin | $3.983m / 66% | $2.390m / 58% | Margin +8 percentage points |
| Operating income (loss) | $0.173m | ($1.100m) | Returned to operating profit |
| Net income (loss) | $0.108m; $0.01 per diluted share | ($1.228m); ($0.09) per diluted share | Returned to net profit |
| Operating cash flow | $0.086m | ($0.359m) | Improved |
| Investing cash flow | ($0.590m) | ($0.187m) | Higher investment |
| Financing cash flow | $3.297m | $2.247m | Included equity proceeds |
New-product revenue was $4.876m, up 60%, and represented 81% of revenue. eFPGA IP and professional services contributed $4.043m, primarily professional services; hardware revenue was $0.495m and SaaS and other revenue was $0.338m. Mature-product revenue was $1.131m, up 5%. Management attributed revenue growth mainly to Department of Defense contract activity, eFPGA professional services, and device sales. Gross profit rose 67%; cost of revenue increased 16%, while total operating expenses rose 9%. R&D expense declined 10%, partly due to labor and tooling costs allocated to customer contracts; SG&A increased 26%, primarily from consulting and outside services.
Management also reported revenue down 20% sequentially from the prior quarter, with new-product revenue down 29% and mature-product revenue up 73%. Net income was $0.1m versus $2.0m in the prior quarter.
Financial position and liquidity
- Cash, cash equivalents and restricted cash were $27.399m at March 31, 2024, including $0.1m restricted cash; cash was $24.606m at year-end 2023.
- Total assets were $51.929m; total liabilities were $29.682m and stockholders’ equity was $22.247m. Current assets were $35.309m against current liabilities of $28.471m.
- Debt included $20.0m drawn on the Heritage Bank revolving facility at 9.00% and $1.4m of notes payable. The revolving facility matures December 31, 2025, is secured by substantially all company assets, and the company reported covenant compliance.
- Operating cash flow was slightly positive despite cash outflows from operating assets and liabilities. Investing outflows included $0.496m for capitalized internal-use software and $0.094m for property and equipment. The company also capitalized $3.96m of company-owned semiconductor tooling for long-term professional services contracts; $3.547m of property and equipment purchases were in accounts payable at quarter-end.
- A March registered direct offering of 222,500 shares at $16 per share generated approximately $3.5m net proceeds. The company stated that cash, operating revenue and available revolving-facility resources should fund operations and capital expenditures for the next 12 months.
Outlook, risks and other notable items
- No numerical revenue or earnings guidance was provided. Management expects growth to depend mainly on eFPGA IP and silicon solutions, with additional contribution from SensiML AI software, and expects mature-product revenue to fluctuate.
- Management’s liquidity outlook depends on revenue growth, conversion of design opportunities, customer acceptance, manufacturing capacity, product cycles, working-capital movements, and access to debt or equity capital. Longer-term liquidity assumes renewal of the revolving facility or replacement financing before its 2025 expiration; additional capital may not be available on acceptable terms.
- Customer concentration is significant: Customer A represented 62% of Q1 revenue, compared with 54% in the prior-year quarter. The United States accounted for 82% of revenue. Cash deposits were concentrated at Heritage Bank, which management identified as a liquidity risk.
- A $1.21m customer note receivable, including accrued interest, is due June 28, 2024 unless prepaid. Purchase obligations for other goods and services totaled $2.9m due within 12 months, with an additional $0.1m wafer commitment.
- The company reported no legal proceedings and no material changes to the risk factors in its 2023 Form 10-K. It disclosed an immaterial correction to prior-year cash-flow classifications; management said it did not materially affect the prior-period financial statements.
- Disclosure controls were assessed as effective at the reasonable-assurance level, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the June 2024 customer note was collected or otherwise resolved, and the customer’s credit quality.
- Revenue conversion and sustainability of professional-services contracts, especially given Customer A’s 62% revenue concentration and the sequential revenue decline.
- Cash availability and bank concentration, continued compliance with the 9% revolving facility, and plans for its 2025 maturity or renewal.
- Cash requirements for tooling, the $2.9m near-term purchase obligations, and the effect of stock-based compensation and further equity issuance on dilution.
- The filing’s stock-offering share count is inconsistent in one note (stated as “222,500 thousand shares”); the liquidity discussion and equity statement indicate approximately 223 thousand shares. Verify against the filed exhibits and share records.