QuickLogic ((QUIK)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for QuickLogic Corporation presented a mixed sentiment, highlighting both significant achievements and notable challenges. While the company has made impressive strides in strategic areas such as eFPGA and RadHard FPGA development, and garnered strong interest from the defense sector, it is also grappling with substantial revenue declines and negative gross margins. Delays in key contracts further exacerbate the risks to its immediate financial performance.
Significant Progress in eFPGA and RadHard FPGA
The engineering team at QuickLogic has achieved significant progress in accelerating storefront design wins for strategic RadHard FPGA, expanding the market for high-density eFPGA hard IP designs. This advancement is expected to contribute meaningfully to the company’s revenue by 2026, marking a pivotal step in its strategic growth initiatives.
Strong Interest from Defense Industrial Base
QuickLogic has reported higher-than-anticipated interest from large defense industrial base entities in its SRH test chip. This interest indicates potential lucrative markets for high-density discrete FPGAs and ASICs, underscoring the company’s strategic alignment with defense sector needs.
New Contracts and Engagements
The company has secured new contracts for larger blocks of eFPGA and advanced fabrication processes. Notably, license revenue is poised to surpass NRE revenue for the first time, driven by accelerated contract closure rates, signaling a shift in revenue dynamics.
Positive Revenue Guidance for Q4 2025
QuickLogic is targeting a total revenue of $6 million for Q4 2025, expressing high confidence in securing a $3 million contract that could significantly contribute to this target. This positive outlook suggests a potential recovery in the upcoming quarter.
Development of Strategic RadHard FPGA
The company has successfully taped out a strategic RadHard FPGA test chip using GlobalFoundries’ 12 LP process, positioning itself as the sole U.S. source for such FPGAs. This development is a strategic milestone for QuickLogic, enhancing its competitive edge.
New Contract in Data Center Segment
QuickLogic announced a new $1 million eFPGA hard IP contract for a high-performance data center ASIC, highlighting its success in penetrating the commercial sector and diversifying its revenue streams.
Significant Revenue Decline in Q3 2025
The company reported a total revenue of $2 million for Q3 2025, marking a 52.5% decline from Q3 2024 and a 45% decrease from Q2 2025. This significant drop underscores the challenges QuickLogic faces in stabilizing its financial performance.
Negative Gross Margin
QuickLogic’s non-GAAP gross margin for Q3 was negative 11.9%, a stark contrast to the 65.3% margin in Q3 2024. This decline is primarily attributed to unfavorable absorption of fixed costs and R&D costs allocated to COGS, highlighting the need for cost management strategies.
Delay in Key Contracts
A mid 7-figure contract anticipated for Q4 2025 has been delayed to 2026 due to funding issues, impacting the company’s revenue expectations. This delay poses a risk to QuickLogic’s short-term financial outlook.
Potential Revenue Loss if Contract Delays Persist
The Q4 revenue guidance range is set between $3.5 million and $6 million, heavily reliant on the timely award of a nearly $3 million contract. Any further delays could push revenue recognition into Q1 2026, posing a potential setback.
Forward-Looking Guidance
During the earnings call, CEO Brian Faith emphasized the company’s strategic initiatives, particularly in the defense sector. QuickLogic is targeting a total revenue of $6 million for Q4 2025, contingent on the timely award of a significant commercial contract. The company anticipates Q4 non-GAAP gross margins to range between 45% and 68%, with operating expenses projected at approximately $3 million. These forecasts reflect a cautious optimism for the near future.
In summary, QuickLogic’s earnings call highlighted a blend of strategic achievements and financial challenges. While the company is making notable progress in key areas like eFPGA and RadHard FPGA development, it faces immediate hurdles with revenue declines and contract delays. The forward-looking guidance suggests potential recovery, contingent on successful contract executions and strategic initiatives.