QuickLogic Corporation (QUIK)

Q2 2012 Earnings Conference Call

July 31, 2012 17:30 ET


Andy Pease – Chief Executive Officer

Ralph Marimon – Chief Financial Officer

Brian Faith – Vice President, Worldwide Sales and Marketing


Krishna Shankar – Roth Capital

Quinn Bolton – Needham & Company

Brian Coleman – Hawk Hill Asset Management

Bob West – NI Technical Research



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Good day, ladies and gentlemen, and welcome to the QuickLogic Corporation Second Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded.

Your host for today’s conference will be Andy Pease, CEO; Ralph Marimon, CFO; and Brian Faith, VP of Worldwide Sales and Marketing. I would now like to hand the call over to Ralph Marimon.

Ralph Marimon – Chief Financial Officer

Thank you and good afternoon. Before we get started, let me take a moment to read our Safe Harbor statement. During this call, we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to stated expectations relating to revenue from our new and mature products, statements pertaining to our design activity and our ability to convert new design opportunities into customer activity, market acceptance of our customer’s products, our expected results, and our financial expectations for revenue, gross margin, operating expenses, profitability and cash.

QuickLogic’s future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and prior press releases for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. This conference call is open to all and is being webcast live.

For the second quarter of 2012, total revenue was $4.1 million, which was just above the midpoint of our guidance of $4 million. New product revenues totaled $1.7 million, which was up 5% from the Q1 level. Mature product revenue in the quarter totaled $2.4 million, which represents a 6% sequential decrease from Q1, but was slightly above the midpoint of our guidance.

Our non-GAAP gross profit margin for Q2 was 51% and was above the midpoint of our guidance. The higher than forecasted margin is due to lower inventory reserves and a benefit from selling previously reserved inventory.

Non-GAAP operating expenses for Q2 totaled $4.8 million, which was just below the midpoint of our guidance. As we have previously discussed, the decline in spending is primarily due to lower engineering expenses for two new platform developments as these platforms are now being introduced to the market.

On a non-GAAP basis, the total for other income and expenses and taxes was $82,000. This resulted in a non-GAAP loss of $2.8 million or $0.07 per share. We ended the quarter with approximately $26.9 million in cash. During the quarter, we’ve raised approximately $11.9 million in an equity offering, which was partially offset by cash usage of $2.3 million. This usage was consistent with our guidance.

Our Q2 GAAP net loss was $3.2 million or $0.08 per share. Our GAAP results include stock-based compensation charges of $434,000. Please see today’s press release for a detailed reconciliation of our GAAP to non-GAAP results.

Now, I’ll turn it over to Andy who will update you on the status of our strategic efforts. Following this, I’ll rejoin the call to present our Q3 guidance.

Andy Pease – Chief Executive Officer

Thank you for joining us this afternoon. As Ralph mentioned, our new product revenue was aligned with our expectations. As forecasted, we saw an increase in the broadband data card demand, the ramp of the Kyocera URBANO PROGRESSO smartphone, and shipments to support Micron’s PoP Video pico projector during the second quarter. These proved to be effective offsets to the production shipments of the Pantech Vega 5 and Kyocera DIGNO smartphones that were completed in Q1.

The URBANO PROGRESSO uses our ArcticLink II VX CSSP, the same silicon platform that Kyocera is using in its DIGNO smartphone. In addition to using the same display bridge as the big no, the URBANO PROGRESSO utilizes our visual enhancement engine or VEE and display power optimizer or DPO technologies, making it the first smartphone available in the Japanese market to incorporate VEE and DPO.

During the second quarter we shipped our ArcticLink II VX CSSP to Micron to support their PoP video pico projector. We continued to forecast shipments for this project during the third quarter. In addition we have secured an architectural design win and a second OEM pico projector. Based on forecast we believe we will initiate production shipments for this OEM architectural design win in Q4. On top of that a pico projector light engine company is including one of our VX based CSSPs in their new reference design. They expect to begin customer demonstrations during the third quarter.

In our last conference call I stated that we initiated sampling of ArcticLink III VX during Q1 and expected to have all 13 variance of this new CSSP platform qualified and available to ship and production volume during Q3. I’m very pleased to report that we’ve received our first production life on July 23. To-date the silicon has passed all functional verification and necessary qualification tests keeping us on our previously communicated schedule.

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