GSI Technology, Inc. (GSIT) Bundle
Understanding GSI Technology, Inc. (GSIT) Revenue Streams
Understanding GSI Technology, Inc.’s Revenue Streams
GSI Technology, Inc. generates its revenue primarily from sales of Very Fast SRAM products. The company has experienced notable fluctuations in its revenue streams in recent quarters.
Breakdown of Primary Revenue Sources
The revenue stream is segmented primarily into sales to various sectors:
- Networking and telecommunications OEMs: 32% to 49% of net revenues.
- Military and aerospace applications: Includes radar and guidance systems, missiles, and satellites.
- Test and measurement applications: High-speed testers.
- Automotive applications: Smart cruise control systems.
- Medical applications: Ultrasound and CAT scan equipment.
Year-over-Year Revenue Growth Rate
Year-over-year revenue analysis shows a significant decrease:
- Net revenues decreased by 20.3% from $5.7 million in Q3 2023 to $4.6 million in Q3 2024.
- Net revenues decreased by 18.4% from $11.3 million in the first half of 2023 to $9.2 million in the first half of 2024.
Contribution of Different Business Segments to Overall Revenue
The following table summarizes the net revenues by geographic area for the two most recent quarters:
| Geographic Area | Q3 2024 (In thousands) | Q3 2023 (In thousands) | H1 2024 (In thousands) | H1 2023 (In thousands) |
|---|---|---|---|---|
| United States | $1,885 | $2,948 | $3,451 | $6,035 |
| China | $797 | $312 | $1,895 | $481 |
| Singapore | $505 | $459 | $1,280 | $952 |
| Netherlands | $237 | $939 | $273 | $1,955 |
| Germany | $978 | $867 | $1,908 | $1,550 |
| Rest of the World | $148 | $183 | $414 | $322 |
| Total | $4,550 | $5,708 | $9,221 | $11,295 |
Analysis of Significant Changes in Revenue Streams
The decline in revenue is attributed to various challenges:
- Economic environment leading to cautious spending by customers.
- Supply chain constraints affecting previous purchasing patterns.
- Decrease in average selling price by 12.0% in Q3 2024 compared to Q3 2023.
- Reduction in units shipped by 10.5% in Q3 2024 compared to Q3 2023.
Sales to the company's largest customer, Nokia, decreased significantly:
- Sales dropped from $1.2 million in Q3 2023 to $812,000 in Q3 2024.
- Sales decreased from $3.0 million in H1 2023 to $1.8 million in H1 2024.
A Deep Dive into GSI Technology, Inc. (GSIT) Profitability
A Deep Dive into GSI Technology, Inc.'s Profitability
Gross Profit: For the three months ended September 30, 2024, the gross profit was $1.8 million, a decrease of 43.7% from $3.1 million in the same period of 2023. For the six months ended September 30, 2024, gross profit decreased by 36.7% to $3.9 million from $6.2 million in the prior year.
Gross Margin: The gross margin for the three months ended September 30, 2024, was 38.6%, down from 54.7% in 2023. For the six months, it decreased from 54.8% to 42.5%.
Net Revenues: Net revenues for the three months ended September 30, 2024, were $4.6 million, a decline of 20.3% from $5.7 million in 2023. For the six months, revenues fell 18.4% to $9.2 million from $11.3 million.
| Metrics | Q3 2024 | Q3 2023 | 6M 2024 | 6M 2023 |
|---|---|---|---|---|
| Gross Profit | $1.8 million | $3.1 million | $3.9 million | $6.2 million |
| Gross Margin | 38.6% | 54.7% | 42.5% | 54.8% |
| Net Revenues | $4.6 million | $5.7 million | $9.2 million | $11.3 million |
Operating Profit: The loss from operations for the three months ended September 30, 2024, was ($5.6 million), compared to ($4.1 million) for the same period in 2023. For the six months, the loss from operations was ($4.5 million), down from ($9.2 million) in 2023.
Net Loss: The net loss for the three months ended September 30, 2024, was ($5.5 million), compared to ($4.1 million) in 2023. For the six months, the net loss decreased to ($4.4 million) from ($9.2 million).
Profitability Ratios: The net loss per share for the three months was ($0.21) in 2024 compared to ($0.16) in 2023. For the six months, the loss per share was ($0.17) compared to ($0.37).
Comparison with Industry Averages: The gross profit margin of 38.6% in Q3 2024 is below the industry average of approximately 50%. The operating loss margin of 122.7% indicates significant challenges compared to industry standards where operating margins are typically 10%-20%.
Operational Efficiency: The increase in operating expenses was noted, with research and development expenses rising by 2.1% to $4.8 million in Q3 2024. Selling, general, and administrative expenses were $2.6 million, slightly higher than $2.5 million in Q3 2023.
Cost Management: Total operating expenses amounted to $7.3 million for the three months ended September 30, 2024, compared to $7.2 million in the prior year. The focus on cost reduction in August 2024 aimed to save approximately $3.5 million annually.
| Operating Expenses | Q3 2024 | Q3 2023 |
|---|---|---|
| Research & Development | $4.8 million | $4.7 million |
| Selling, General & Administrative | $2.6 million | $2.5 million |
| Total Operating Expenses | $7.3 million | $7.2 million |
Debt vs. Equity: How GSI Technology, Inc. (GSIT) Finances Its Growth
Debt vs. Equity: How GSI Technology, Inc. Finances Its Growth
As of September 30, 2024, GSI Technology, Inc. reported a total debt of $0, indicating no outstanding long-term or short-term debt. This absence of debt positions the company favorably in terms of financial stability and flexibility.
The company's debt-to-equity ratio stands at 0.00, which is significantly lower than the semiconductor industry average of approximately 0.60. This ratio underscores GSI's reliance on equity financing over debt financing for its operational and growth activities.
In the most recent quarter, GSI completed a sale and leaseback transaction for its property in Sunnyvale, California, yielding $11.3 million in cash. This strategic move not only bolstered liquidity but also eliminated the need for debt financing to support operations.
GSI's credit rating is currently not applicable due to its lack of debt. The absence of liabilities indicates a strong balance sheet, providing the company with leverage in negotiating future funding or partnerships.
The company has historically balanced its financing through equity, primarily via stock issuances. For example, during the six months ended September 30, 2024, GSI raised $373,000 from the sale of common stock under employee stock plans.
| Financial Metric | Amount |
|---|---|
| Total Debt | $0 |
| Debt-to-Equity Ratio | 0.00 |
| Industry Average Debt-to-Equity Ratio | 0.60 |
| Cash from Sale and Leaseback Transaction | $11.3 million |
| Equity Raised (6 months ended September 30, 2024) | $373,000 |
In conclusion, GSI Technology's financial strategy emphasizes equity financing, supported by a zero-debt structure. This approach enhances its financial health and positions it well for future growth opportunities without the burden of debt repayment.
Assessing GSI Technology, Inc. (GSIT) Liquidity
Assessing GSI Technology, Inc. Liquidity
As of September 30, 2024, GSI Technology, Inc. reported a current ratio of 2.23, calculated from current assets of $20.4 million and current liabilities of $9.2 million. The quick ratio stands at 1.34, indicating that the company maintains sufficient liquid assets to cover its current liabilities without relying on inventory.
Working Capital Trends
Working capital has seen fluctuations, with a reported working capital of $11.2 million as of September 30, 2024, compared to $8.0 million at March 31, 2024. This improvement reflects enhanced liquidity due to cash inflow from operational activities and asset sales.
Cash Flow Statements Overview
The cash flow from operating activities for the six months ended September 30, 2024, was $(7.7 million), an increase in cash outflow compared to $(6.3 million) for the same period in 2023. This increase is attributed to a net loss of $4.4 million and a decrease in accrued expenses.
Cash flow from investing activities showed a significant inflow of $11.3 million due to the sale and leaseback of the company’s property, contrasted with only $2.1 million in 2023. Cash outflow for financing activities was minimal, with proceeds of $373,000 from stock sales.
Potential Liquidity Concerns or Strengths
Despite the current liquidity position appearing strong, with cash and cash equivalents at $18.4 million, concerns remain due to the ongoing economic pressures, including inflation and interest rate hikes, which could impact future cash flows and operational capabilities.
| Item | September 30, 2024 | March 31, 2024 |
|---|---|---|
| Current Assets | $20.4 million | $14.4 million |
| Current Liabilities | $9.2 million | $6.4 million |
| Current Ratio | 2.23 | 2.25 |
| Quick Ratio | 1.34 | 1.40 |
| Working Capital | $11.2 million | $8.0 million |
| Cash and Cash Equivalents | $18.4 million | $14.4 million |
| Net Cash from Operating Activities | $(7.7 million) | $(6.3 million) |
| Net Cash from Investing Activities | $11.3 million | $2.1 million |
| Net Cash from Financing Activities | $373,000 | $1.5 million |
Is GSI Technology, Inc. (GSIT) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of GSI Technology, Inc. (GSIT) includes an examination of key financial ratios, stock price trends, and analyst consensus to determine if the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, GSI Technology reported a net loss of $5.458 million for the quarter, translating to a basic net loss per share of $(0.21) . Given the negative earnings, the P/E ratio cannot be calculated, indicating the company is currently not profitable.
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, was calculated as follows:
- Total stockholders' equity: $33.284 million
- Shares outstanding: 25.485 million
- Book value per share: $1.31 (calculated as $33.284 million / 25.485 million shares)
At a recent stock price of approximately $4.20, the P/B ratio is approximately 3.20 (calculated as $4.20 / $1.31), suggesting the stock is trading at a premium to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
GSI Technology reported operating losses, and therefore EBITDA cannot be derived for the current reporting period. The absence of positive EBITDA further complicates valuation using this metric.
Stock Price Trends
Over the past 12 months, GSI Technology's stock price has exhibited volatility:
- 12 months ago: $6.00
- 6 months ago: $5.00
- Recent price (as of September 30, 2024): $4.20
This represents a decline of approximately 30% over the last year, reflecting broader market trends and company-specific challenges .
Dividend Yield and Payout Ratios
As of September 30, 2024, GSI Technology does not pay dividends, resulting in a dividend yield of 0%. The payout ratio is also not applicable due to the absence of earnings.
Analyst Consensus on Stock Valuation
Analysts have a mixed view on the stock valuation:
- Buy recommendations: 1
- Hold recommendations: 2
- Sell recommendations: 1
This consensus suggests a cautious outlook, with analysts recognizing potential but also highlighting risks associated with the company's financial health .
| Valuation Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 3.20 |
| EV/EBITDA Ratio | N/A (Negative EBITDA) |
| Recent Stock Price | $4.20 |
| 1-Year Price Change | -30% |
| Dividend Yield | 0% |
| Analyst Consensus | 1 Buy, 2 Hold, 1 Sell |
Key Risks Facing GSI Technology, Inc. (GSIT)
Key Risks Facing GSI Technology, Inc.
GSI Technology, Inc. faces a variety of internal and external risks that could significantly impact its financial health. These risks include intense industry competition, regulatory changes, and fluctuating market conditions. The ongoing geopolitical tensions, particularly related to the military conflict in Ukraine and the evolving conflict in the Middle East, have further compounded these risks.
Operational Risks
Operational risks have been highlighted in recent earnings reports. The company reported a net loss of $5.458 million for the quarter ended September 30, 2024, compared to a net loss of $4.055 million in the same quarter of 2023. The average selling price of units shipped decreased by 12.0% in the quarter ended September 30, 2024, compared to the prior year. Additionally, the cost of revenues increased by 8.0% from $2.6 million to $2.8 million in the same period.
Financial Risks
Financial risks are underscored by the company's reliance on a small number of key customers. Four customers accounted for 28%, 27%, 17%, and 13% of accounts receivable as of September 30, 2024. The company has also experienced significant losses, reporting $20.1 million, $16.0 million, and $16.4 million in losses during fiscal years 2024, 2023, and 2022, respectively.
Market Conditions
The company has noted that higher interest rates and worldwide inflationary pressures are expected to adversely affect revenues. These conditions have contributed to a decline in the global economic environment, which is anticipated to impact demand for GSI's products. The net revenues decreased by 20.3% from $5.7 million in Q3 2023 to $4.6 million in Q3 2024.
Regulatory Risks
Regulatory changes also pose a risk. The company operates in a sector that is subject to international trade agreements, which could be modified, impacting manufacturing and sales. Additionally, as some products are integrated into military electronics, geopolitical factors can influence business operations and revenue.
Mitigation Strategies
To address these risks, GSI Technology has initiated measures to reduce operating expenses by approximately $3.5 million on an annualized basis. Furthermore, the company has implemented strategic cost reductions, including a reduction in workforce by approximately 16%. The recent sale and leaseback transaction of their Sunnyvale property for $11.3 million is expected to provide financial flexibility.
| Risk Category | Description | Impact |
|---|---|---|
| Operational Risks | Net loss of $5.458 million in Q3 2024 | Potential for worsening financial performance |
| Financial Risks | Key customers account for significant receivables | Increased vulnerability to customer defaults |
| Market Conditions | Revenues decreased by 20.3% in Q3 2024 | Lower demand affecting sales and profitability |
| Regulatory Risks | Potential changes to international trade agreements | Impact on manufacturing and sales operations |
| Mitigation Strategies | Expense reduction of $3.5 million | Improved financial health and cash flow |
Future Growth Prospects for GSI Technology, Inc. (GSIT)
Future Growth Prospects for GSI Technology, Inc.
GSI Technology, Inc. presents several key growth opportunities that could significantly impact its financial health and market position in the coming years.
Key Growth Drivers
- Product Innovations: The company is advancing its proprietary APU technology, particularly with the Gemini series, which is expected to cater to various AI applications. In January 2024, GSI was awarded a $1.1 million SBIR Direct-to-Phase II contract to develop high-data computation algorithms for the U.S. Air Force.
- Market Expansions: GSI intends to penetrate new markets, including military and aerospace sectors, where demand for high-performance SRAM products is growing. In the six months ended September 30, 2024, sales to networking and telecommunications OEMs accounted for 32% to 49% of net revenues.
- Strategic Partnerships: Collaborations with leading AI chip developers are anticipated to increase order volumes. GSI is expecting a significant increase in orders from an existing customer over the next 12 months.
Future Revenue Growth Projections
Despite recent revenue declines, projections indicate potential recovery. Net revenues decreased by 20.3% from $5.7 million in the three months ended September 30, 2023, to $4.6 million in the same period of 2024. However, the anticipated resumption of orders and new product launches may reverse this trend.
Earnings Estimates
Net loss for the six months ended September 30, 2024, was reported at $4.4 million, a decrease from $9.2 million in the previous year. Analysts project that if product demand rebounds as expected, earnings could stabilize and potentially grow by fiscal year 2025.
Strategic Initiatives
- Cost Reduction Measures: In August 2024, the company initiated a cost reduction strategy aimed at saving approximately $3.5 million annually. This includes workforce reductions and targeted R&D spending, allowing for a more focused investment in high-potential projects.
- Sale and Leaseback Transaction: The company generated $11.3 million from a sale and leaseback of its headquarters, enhancing liquidity.
Competitive Advantages
GSI Technology benefits from a solid balance sheet with cash and cash equivalents of $18.4 million as of September 30, 2024, and no debt. This financial stability enables the company to invest in growth initiatives and weather economic challenges.
Table of Financial Performance
| Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 |
|---|---|---|---|---|
| Net Revenues | $4.6 million | $5.7 million | $9.2 million | $11.3 million |
| Net Loss | $(5.5) million | $(4.1) million | $(4.4) million | $(9.2) million |
| Cash and Cash Equivalents | $18.4 million | $14.4 million | N/A | N/A |
| Cost Reduction Savings | $3.5 million annualized | N/A | N/A | N/A |
The strategic initiatives and competitive advantages position GSI Technology, Inc. to capitalize on growth opportunities in the technology sector, particularly in high-performance computing and AI applications.
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Article updated on 8 Nov 2024
Resources:
- GSI Technology, Inc. (GSIT) Financial Statements – Access the full quarterly financial statements for Q2 2025 to get an in-depth view of GSI Technology, Inc. (GSIT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View GSI Technology, Inc. (GSIT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.