QuickLogic Corporation (QUIK) Q2 2010 Earnings Call Transcript August 3, 2010 5:30 pm ET Executives Tom Hart – President and CEO Ralph Marimon – VP of Finance and CFO Andrew Pease – President Analysts Edwin Mok – Needham & Company Brian Coleman – Hawk Hill asset management Bob West – Nitech Research [ph] Presentation Operator
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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 description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. For your information, this conference call is open to all and is being webcast live.For the second quarter 2010, total revenue was 6.5 million; this represents a sequential increase of 19% and was at the high end of our guidance range. New product revenue was 2.3 million; this represents a sequential increase of 11% and was within the lower half of our guidance range. During Q2, there were capacity constraints with our packaging, tests and assembly subcontractor. If we had enabled to obtain timely deliveries, we would have reported new product revenue at the midpoint of our guidance. The good news is that these delays didn't impact our customers and the 200,000 we would have shipped in Q2 will be reported in Q3 in addition to the new product revenue growth forecast I'll share with you in a few minutes. Our second quarter legacy product revenue was 4.2 million. This represents a sequential increase of 25% and was above the high end of our guidance. As we experienced in Q1, we saw an increase in demand for our legacy products for multiple customers during the quarter. Our non-GAAP gross profit margin for Q2 was 61%, due primarily to the higher mix of legacy product sales; this was above the midpoint of our guidance. Non-GAAP operating expenses for Q2 totaled 3.5 million. This was better than our guidance of approximately 4 .1 million and when combined with the higher than expected gross profit margin and higher than expected total revenue produced a non-GAAP operating profit of 508,000.
Non-GAAP operating expenses declined versus Q1 due to a decrease in engineering expenses, which was partially offset by an increase in SG&A. The decline in engineering expenses was primarily due to a reduced level of third-party chip design costs. We expect these expenses to increase during the third quarter.On a non-GAAP basis, tax and other expenses totaled approximately 90,000. This resulted in a non-GAAP net profit of 418,000 or $0.01 per share compared with a net loss of 484,000 or $0.01 per share in the first quarter of 2010. Our ending cash position of 17.8 million reflects a decrease of approximately 473,000 from the Q1 ending balance. Cash usage benefited from higher than expected total revenue, gross margins and lower than expected operating expenses. Our Q2 a GAAP net loss was 215,000 or $0.01 per share. Our GAAP results include stock-based compensation charges of 633,000. Please see today's press release for detailed reconciliation of our GAAP to non-GAAP results. I'll rejoin you in a few minutes to discuss our guidance for the third quarter, but first Tom will update you on the status of our strategic efforts. Tom Hart Thank you, Ralph. It's been a year of tremendous progress for QuickLogic. I'm extremely pleased with the traction we've developed and the fact that we reported non-GAAP profitability. These are early milestones in what we believe will be our future of sustained revenue growth and profit improvement. As Ralph noted, constraints in our assembly, package and test subcontractor caused us to miss shipping roughly $200,000 of new products during Q2. Working closely with our customers, our subcontractor and our channel partners, we were able to prioritize product shipments so that none of our customers were negatively affected by CSSP shortages. Read the rest of this transcript for free on seekingalpha.com