Financial Data and Key Metrics - Revenue for the six months ended October 31, 2024, was 26 million in the same period of the prior fiscal year [11] - Gross margin increased due to a large space program completing a major milestone, with older lower-margin programs nearing completion [14] - Operating income for the six months ended October 31, 2024, was 3 million in the prior year [20] - R&D expenses increased to 1.3 million, or 5% of revenue, in the prior year [17] - Consolidated net income for the six months ended October 31, 2024, was 0.53 per share, compared to 0.30 per share, in the previous fiscal year [23] - Backlog reached an all-time high of 70 million at the end of the first quarter and 17.7 million, or 57% of total revenue, compared to 12.1 million, or 39% of total revenue, down from 1.1 million, down from 23 million provide confidence in meeting operating and investing needs for the next 12 months [23] Other Important Information - The company hosted the Quantum Sensor Summit in October 2024, which was well-attended and received positive feedback [9] - SG&A expenses increased to 20% of revenue, driven by payroll-related expenses and costs associated with the Quantum Sensor Summit [15] Q&A Session Summary Question: Competitive Advantage in Small Satellite Products - The company's advantage lies in its history of designing high-quality products and its ability to adapt existing technologies for smaller, lower-cost satellite applications [28][32] - The company is targeting a "sweet spot" in the market, offering smaller, lower-power, and lower-cost products with good performance, though not as high as its premium offerings [29][30] Question: Risk of Small Satellites Cannibalizing Existing Business - While there is potential for small satellites to impact the traditional satellite business, the company believes there will still be demand for high-precision timing and frequency hardware in certain applications [33][34] Question: Revenue Growth and Backlog Correlation - Revenue growth is expected to track qualitatively with backlog growth, though not instantaneously [40] Question: Technical Challenges in Developing Small Satellite Products - The primary challenge is adapting terrestrial products to survive in the space environment, particularly dealing with radiation effects in low Earth orbit [43][46] Question: Government Budgetary Environment - The company is optimistic about the new administration and expects the government fiscal year 2025 budget to be passed expeditiously, which would benefit space-related funding [51] Question: Gross Margins and R&D Spending - Gross margins reached 48%, and R&D spending is expected to remain at approximately 10% of revenue for the foreseeable future [56][57] Question: Quantum Sensor Revenue - Quantum sensor revenue is not significant in the current quarter but is a focus area for future growth [58] Question: Non-Space Government Business Recovery - The company anticipates variability in non-space government business but expects significant growth, though timing is uncertain [75] Question: GEO Contract Prospects - The company expects significant work in GEO contracts over the next six to nine months, with proposals out to multiple primes [80] Question: Zyfer Unit Performance and R&D Priorities - The Zyfer unit is performing well, with R&D focused on smaller, cheaper products and integrating navigation capabilities in the absence of GPS [86][87]
Frequency Electronics(FEIM) - 2025 Q2 - Earnings Call Transcript