GCT Semiconductor Holding, Inc.(GCTS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenues decreased by $2,800,000 or 85$3,300,000 for the three months ended March 31, 2024, to $500,000 for the three months ended March 31, 2025 [8] - Cost of net revenues decreased by$900,000 or 69% from $1,300,000 for the three months ended March 31, 2024, to$2,400,000 for the three months ended March 31, 2025 [10] - Gross margin decreased to 18% for the three months ended March 31, 2025, from 60% for the three months ended March 31, 2024 [11] Business Line Data and Key Metrics Changes - The decrease in net revenues was primarily due to a reduction of $2,300,000 in product sales and a decrease of$500,000 in service revenue [9] - The gross margin for product sales was at negative 120%, mainly due to low volume of product sales [11] Market Data and Key Metrics Changes - The company anticipates that the average selling price of the new 5G chipset will be approximately four times higher than that of the current 4G offering [7] - The company expects to benefit from higher global market demand and market prices in the 5G chip market once sales commence [10] Company Strategy and Development Direction - The company has officially begun the 5G product era and is focused on customer sampling starting this month, leading to volume shipments in Q3 and beyond [4] - The company has accelerated partnerships with renowned partners like Globalstar, Aramco Digital, Samsung, and Kyocera to enhance its 5G initiatives [4][5] - A letter of intent has been signed with Orbit North America to jointly develop and supply a mobile hotspot and FWA gateway utilizing a Verizon certified 5G module [5] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the impact of 5G on the company's income statement and balance sheet starting from the second half of the year [7] - The company is focused on driving innovation and supporting the global transition to 5G solutions, aiming for substantial growth based on the 5G chipset launch [12] Other Important Information - The company closed the quarter with cash and cash equivalents of $1,000,000, net accounts receivable of$4,500,000, and net inventory of $3,100,000 [11] - The company has filed shelf registrations providing up to$200,000,000 in capacity, including a $75,000,000 at-the-market facility to enhance financial flexibility [11] Q&A Session Summary Question: Follow-up on the partnership with Orbit for the 5G mobile hotspot - Management expressed excitement about the Orbit relationship, indicating it will involve collaboration for multiple operators and products [16][18] Question: Details on the sampling and commercial shipments for 5G - Management confirmed that sampling will commence with six primary customers, with plans to move into commercial shipments in the second half of the year [23][25] Question: Supply chain readiness for volume production - Management indicated confidence in the supply chain's capability to transition to volume production, leveraging existing relationships [26] Question: Operational expenses outlook for the second half of the year - Management stated that operational expenses are not expected to scale at the same rate as revenue, with tight cost control processes in place [28]