QuickLogic Corporation ($QUIK)

Ladies and gentlemen, good afternoon. At this time, I would like to welcome everybody to QuickLogic Corporation's First Quarter Fiscal 2026 Earnings Results Conference Call. As a reminder, today's call is being recorded for replay purposes. I would now like to turn the conference over to Ms. Alison Ziegler of Darrow Associates. Ms. Ziegler, you may proceed.

Thank you, Sherry, and thanks to all of you for joining us. Our speakers today are Brian Faith, President and Chief Executive Officer; and Elias Nader, Senior Vice President and Chief Financial Officer. As a reminder, some of the comments QuickLogic makes today are forward-looking statements that involve risks and uncertainties, including, but not limited to, statements regarding our future profitability and cash flows, expectations regarding our future business and statements regarding the timing, milestones and payments related to our government contracts, statements regarding the expected magnitude of potential contracts and statements regarding expected adoption rates and/or orders by our customers. Actual results may differ due to a variety of factors, including delays in the market acceptance of the company's new products, the ability to convert design opportunities into customer revenue, our ability to replace revenue from end-of-life products, the level and timing of customer design activity, the market acceptance of our customers' products, the risks that new orders may not result in future revenue, our ability to introduce and produce new products based on advanced wafer technology on a timely basis; our ability to adequately market the low-power competitive pricing and short time to market of our new products; intense competition by competitors, our ability to hire and retain qualified personnel, changes in product demand or supply, general economic conditions, political events, international trade disputes, natural disasters and other business interruptions that could disrupt supply or delivery of or demand for the company's products and changes in tax rates and exposure to additional tax liabilities. For more detailed discussions of the risks, uncertainties and assumptions that could result in these differences, please refer to the risk factors discussed in QuickLogic's most recently filed periodic reports with the SEC. QuickLogic assumes no obligation to update any forward-looking statements or information, which speak as of the respective dates of any new information or future events. In today's call, we will be reporting non-GAAP financial measures. You may refer to the earnings release we issued today for a detailed reconciliation of our GAAP to non-GAAP results and other financial statements. We have also posted an updated financial table on our IR web page that provides current and historical non-GAAP data. Please note, QuickLogic uses its website, the company blog, corporate Twitter account, Facebook page and LinkedIn page as channels of distribution of information about its business. Such information may be deemed material information, and QuickLogic may use these channels to comply with its disclosure obligations under Regulation FD. A copy of the prepared remarks made on today's call will be posted on QuickLogic's IR web page shortly after the conclusion of today's earnings call. I'd now like to turn the call over to Brian. Go ahead, Brian.

Thank you, Alison. Good afternoon, everyone, and thank you all for joining our first quarter 2026 conference call. Since our last conference call, we have made significant progress toward our goal of delivering 50% to 100% year-over-year revenue growth in 2026. With this, we continue to expect storefront and our new RadPro FPGA will contribute to our anticipated revenue growth and second half profitability. As we announced in an April 9 press release, we introduced and demonstrated our new RADPro FPGA and development kit at the Hardened Electronics and Radiation Technology, or HEART Conference last month. HEART is a highly specialized conference where attendees must show proof of U.S. citizenship and their affiliation with a company or academia that is certified through the joint certification program. RADPro is our trademark brand for radiation-hardened FPGAs. The test chip we demonstrated at the HEART Conference with our RADPro dev kit was internally funded and is independent of our U.S. government contract. These test chips were fabricated on GlobalFoundries' 12LP Process, which is the same process used by many DIBs for radiation-hardened ASICs. This means that in addition to successfully demonstrating our new discrete RADPro FPGA, we have also illustrated our capability to support requirements for eFPGA and radiation hardened ASICs and SoCs fabricated on the GlobalFoundries 12LP process. Our demonstrations and meetings at HEART with leading DIBs went very well, and we have since shipped multiple RADPro dev kits. These shipments will provide a low six-figure contribution to our Q2 revenue. While we expect it will take until the end of 2026 for DIBs to fully evaluate our new RADPro FPGA, we have already signed an MOU with one DIB to accelerate the mutual evaluation of a potential RadPro chiplet application. In addition to the progress we've made with our RADPro FPGA, in a March 17 press release, we announced our fourth contract targeting Intel 18A technology. While these initial contracts have been smaller, their total value is now nearly $2 million. And together, they are the framework for the larger contracts we expect to book later this year. The first two contracts were for Intel 18A test chips. We anticipate receiving our test chip allocation from the first contract later this quarter. We believe the data we gather from our evaluation of these test chips will enhance our ability to win new production contracts. The third contract was for a 1 million LUT Feasibility Study, which led us to implement some notable architectural enhancements that we can leverage across all advanced fabrication nodes. With these architectural enhancements in place, we can address the lucrative markets that require very high-density eFPGA cores in ASIC designs and very high-density discrete FPGAs. This significantly expands our SRAM for eFPGA hard IP and discrete devices, including chiplets and a variety of storefront opportunities. The fourth and most recent contract leverages the architectural enhancements that were developed during the 1 million LUT Feasibility Study. In support of this contract, we will deliver hard IP for a very large Intel 18A eFPGA core in support of our customers' ASIC design. The test chip for this ASIC design is targeted for tape-out during the second half of 2026. We anticipate a fifth mid-6-figure contract from this customer during the second half of 2026 that further extends our work on very high-density architecture. While the timing of funding remains uncertain, our discussions with this DIB have expanded to include the potential of QuickLogic providing storefront services for a customer-designed ASIC that will include our eFPGA hard IP. We expect to learn more about the potential expansion to storefront services and the timing of this possible award in the coming months. In addition to these DIB contracts, we are working closely with a large commercial customer contract based on Intel 18A valued at several million dollars. In our last conference call, I said that I expected this contract would be awarded in late Q2. However, the customer is evaluating an expansion in the size and function of the eFPGA core in their ASIC to provide greater programmable flexibility. While this is a beneficial trend for QuickLogic, we are now forecasting this contract to be awarded during Q3. On December 8, we issued a press release announcing Idaho Scientific selected our eFPGA hard IP for forward-leaning hardware-based cryptographic solutions designed to address mobile IoT infrastructure and defense systems applications. We are continuing to support the integration of our hard IP into the tape-out that is anticipated next year. Idaho Scientific has a rich history in leveraging FPGA technology to deliver robust security systems that can adapt quickly to changing external threats without the vulnerabilities that are inherent in software-based solutions. By integrating our eFPGA hard IP into its secure system on a chip processors, Idaho Scientific can further enhance its cryptographic security and address new markets much more quickly with lower risks and lower costs. Since our last conference call, Idaho Scientific has been fully integrated with General Dynamics Mission Systems. We believe this integration may lead to new opportunities for QuickLogic. Last year, we announced an eFPGA hard IP contract with a new defense industrial-based customer valued at $1.1 million that will be fabricated on the GF 12LP process. This application utilizes a large block of our eFPGA hard IP for critical functions, which is a trend we are seeing in designs targeting advanced fabrication nodes. With the cooperation of this DIB and its end customer, we have leveraged the large eFPGA core to win a new seven-figure contract that was finalized last week and will contribute to Q2 revenue. The delay of this award is why our Q1 revenue was below the midpoint of our guidance. In the scope of this new contract, we will be provided with test chips that we will incorporate in an evaluation kit. The evaluation kit, which is currently scheduled for late 2026, will be compatible with common third-party development environments used by both DIBs and commercial customers. This enables these customers to accelerate system-level evaluations and designs that can use either a storefront version of the discrete FPGA or our eFPGA hard IP in an ASIC. In parallel with these efforts, we're exploring the potential to leverage the FPGA from this contract as a storefront chiplet. We are already seeing interest from some of our partners on this concept. Due largely to the strategic initiatives we launched in 2025, we believe we are building meaningful traction in the chiplet markets. We are currently working on numerous proposals at various stages that include direct U.S. government, DIB and commercial applications. These proposals include opportunities targeting several fabrication processes, including GlobalFoundries 12LP and Intel 18A. Last year, the commercial chiplet ecosystem was mired in debate regarding the communications and protocol layers. In response, we introduced the first phase of our digital proof-of-concept chiplet program as a strategy to move forward prior to customer commitments and with that, accelerate our storefront chiplet initiatives. Internally, we refer to this as POC. With the support of our large strategic partners, we leveraged our existing eFPGA hard IP and readily available third-party IP to move this program forward rapidly and with minimal investment. We presented a paper on the POC at the Chiplet Summit in mid-February and gave a presentation with Intel Foundry at an event at the Government Microcircuit Applications and Critical Technology, or GOMACTech Conference in March. As a reminder, QuickLogic is a member of the Intel Foundry Accelerator Ecosystem Alliance Program, participating in the chiplet, IP and USMAG Alliances. In our last conference call, I stated that the net takeaway from our presentation at the Chiplet Summit supports our optimism that chiplets will build traction in 2026. This opinion was bolstered at the GOMACTech Conference. The primary hurdles today are interoperability gaps, and we believe a storefront FPGA chiplet is a logical solution for a programmable bridge. With that, I will turn the call over to Elias for his presentation of financial data.

Thank you, Brian. Good afternoon, everyone. Total first quarter revenue was $5.1 million. This was up 16.5% from Q1 2025 and up 35.3% from Q4 2025. Revenue was approximately $450,000 below the midpoint of our guidance due to a delay in the award of a certain contract that we finalized last week. Revenue recognition for this contract will be ratable and will now extend through Q1 2027 versus through Q4 2026. This shift forward in revenue recognition does not impact the full year revenue outlook that Brian shared earlier. New product revenue in Q1 was $4.3 million and mature product revenue was $0.8 million. New product revenue was up 14.2% from Q1 2025 and up 50.7% compared to Q4 2025. Mature product revenue was up 31.7% compared to the first quarter of 2025 and down 14.2% from the fourth quarter of 2025. Non-GAAP gross margin in Q1 was 39.6%. This was below our outlook of 45%, plus or minus 5%. The shortfall was due to inventory reserves of about -- $298,000. This compares to 45.7% in Q1 2025 and 20.8% in Q4 2025. Non-GAAP operating expenses in Q1 were approximately $3.3 million. This compares to $3 million in Q1 2025 and $3.5 million in Q4 2025. Q1 2026 non-GAAP net loss was $1.3 million or a loss of $0.08 per share. This compares to a non-GAAP net loss of $1.1 million or a loss of $0.07 per share in Q1 2025 and a non-GAAP net loss of $2.8 million or a loss of $0.17 per share in the fourth quarter of fiscal 2025. The difference between our GAAP and non-GAAP results is mainly related to noncash stock-based compensation expenses. Stock-based compensation for Q1 was $858,000 compared to $904,000 in Q1 2025 and $744,000 in Q4 2025. Restructuring costs were $11,000 in Q1 2026 compared with $141,000 in Q1 2025 and $0 in Q4 2025. For the first quarter, two customers accounted for 10% or more of total revenue. At the close of Q1, net cash was $6 million. This compares with $3.8 million in net cash at the close of Q4 2025. This increase of $2.2 million in net cash is inclusive of $3.2 million raised with our ATM during Q1 2026. Now moving to our guidance and outlook for our second fiscal quarter, which will end on June 28, 2026. Based on backlog and customer forecasts, our total revenue guidance for Q2 is $6 million, plus or minus 10%. We expect total revenue to be comprised of $5.2 million in new product revenue and $0.8 million in mature product revenue. We anticipate an increase in mature product revenue during the second half that drives the full year total to approximately $4 million. Based on the anticipated Q2 revenue mix, non-GAAP gross margin for the second quarter is expected to be approximately 42%, plus or minus 5%. As I noted in our last conference call, there are several factors weighing on our non-GAAP gross profit margin during the first half of 2026. For the full year, we're still modeling a non-GAAP gross profit margin of approximately 57%. Please note that given the nature of our industry, we may occasionally need to classify certain expenses to COGS versus OpEx or capitalize certain costs. These classifications are related to labor and tooling for our IP contracts. This may cause variability in our quarterly gross margins and operating expenses that will usually balance out on the operating line. With that in mind, our Q2 non-GAAP operating expenses are expected to be approximately $3.3 million, plus or minus 5%. We are still expecting full year non-GAAP operating expenses to be approximately $13.5 million. This forecasted growth of approximately 14% in non-GAAP OpEx over 2025 is to support our anticipated 50% to 100% revenue growth in 2026 that Brian mentioned earlier. After interest and other income, we are forecasting a Q2 net loss of about $800,000 or a loss of approximately $0.04 per share. Based on our current outlook, we anticipate non-GAAP profitability for the second half of 2026. The main difference between our GAAP and non-GAAP results is related to non-cash stock-based compensation expenses. In Q2, we expect this compensation will be approximately $900,000, which is similar to Q1 2026 and Q2 2025. As a reminder, there will be movement in our stock-based compensation during the year, and it may vary quarter-to-quarter based on the timing of grants. We raised approximately $6.4 million in net proceeds during Q2 2026 using our existing ATM. Based on our current outlook, we do not anticipate further sales using our existing ATM during the balance of fiscal 2026. Excluding money raised with our ATM, we anticipate Q2 cash use of approximately $500,000. Inclusive of money raised with our ATM, we anticipate closing Q2 with just under $12 million in net cash. Please note that our cash use could vary based on the timing of certain payments and receipts from contracts during the quarter. Based on our current outlook, we anticipate positive cash flow during the second half of 2026. As reported in our 8-K filed on April 30, 2026, we have secured a new banking partner. With this new agreement and considering the amount we have raised with the ATM, we intentionally lowered our credit line to $10 million and secured more favorable terms that will lower our borrowing costs. I want to thank you for your time. And with that, I will now turn the call over to Brian for his closing comments.

Thank you, Elias. The entire QuickLogic team has worked very hard to accomplish numerous tangible milestones that have set the stage well for 2026 and beyond. This execution, along with the strategic investments and strong customer alliances are the driving forces for the revenue growth we are forecasting to begin this year. The most significant investments have been our development of eFPGA hard IP for Intel 18A technology and the tape-out of our first RadDPro FPGA test chip. These internally funded investments have provided us with unique positioning in the market and have enabled us to develop close alliances with strategic customers that we believe will benefit QuickLogic for years to come. With our first RadDPro FPGA in hand, we have already received numerous orders for our RadDPro dev kits for evaluation. Shipment of these dev kits will make a low six-figure contribution to our Q2 revenue. This positions us very well to address applications for various levels of radiation hardened discrete FPGAs and eFPGA hard IP for customer ASIC and SoC designs. Our early investments to become the first and as it stands today, only company to offer eFPGA hard IP for Intel 18A has also enabled us to build strong customer alliances. One of these customers has already awarded us four contracts with a fifth anticipated during the second half of 2026. Through these contracts, we expect to receive our allotment of test chips that will enable us to fully characterize the performance of our eFPGA hard IP on Intel 18A. With these data in hand, I believe we can accelerate new contract awards for DIB and commercial applications. This customer also funded the 1 million LUT on Intel 18A feasibility study that led us to implement a number of architectural enhancements. These enhancements have expanded our SRAM to include the lucrative markets for very high-density discrete FPGAs and eFPGA hard IP blocks in ASIC and SoC designs. In addition to the many initiatives I've outlined today that are designed to power our long-term growth, we are planning three multi-project-wafer or MPW tape-outs this year. All three tape-outs are for chips that we intend to sell via our storefront program. And as I mentioned earlier, the cost for two of these tape-outs will be fully covered by customer contracts that are already on the books. We believe the third tape-out will be covered at least in part by a customer contract. Our strong outlook for 2026 is based largely on the foundation we built during the preceding years. As I hope we have articulated well during this call, the QuickLogic team is intensely focused on the continued execution of the strategic milestones that we believe will fuel our growth and profitability for years to come. With that, we will now open the call for questions.

[Operator Instructions] Our first question is from Richard Shannon with Craig-Hallum Capital Group.

Apologies, I'm in transit and hopefully, the ambient noise isn't too bad here. I guess my first question, Brian, is you talked about your customers that are ordering and taking in the test chips, I think you called the RADPro dev kit here. They're going to take most of the year to do this year. I just want to make sure that we're -- that's well within the timing to hit some key programs. I'm sure these are intended for. I just want to get some assurances that's not at risk in any way.

Yes, Richard, we've modeled out some of these key programs that we've been designing this chip for from day one, and it aligns well with those. I'll remind everybody that's why we actually invested in funding our own test chip is to make sure that we did have chips out in time on dev kits to meet within that evaluation window, and we feel like we are within that window. And thrilled to see the uptake of both the orders and the request for pricing and lead times of the dev kits coming out of the HEART Conference.

What do you expect to be the next steps with these customers? Just help us understand what to expect next? What are those milestones to look for?

I mean there's numerous milestones to get to getting designed into an architecture. But I think from the outward-facing milestones that we can talk about throughout this year, people will be doing their own functional evaluation of the tools, of the devices, perhaps their own radiation testing along with us doing that. And then like I said on the call, by the end of the year time frame, that's when we expect to start getting some feedback from people on interest in designing us into these architectures for hopefully programs of record and even ones that aren't out there yet. That lines up well with what we think will be the schedule for our next chips coming off this whole initiative. And we're tracking those schedules very detailed, as you can imagine, to line up architecture, finish and then need of new silicon in the 2027 time frame.

Okay. That's good to hear, Brian. I wanted to ask a question on Intel 18A here. It sounds like you had some great progress with one particular customer. I think you mentioned as a DIB here. I guess I'd love to get a sense of what kind of breadth you're expecting or hoping to see in that node, which I understand is being promoted broadly by the U.S. government to the DIBs here. We've heard a lot about one customer. Do we expect to see any more here? What's kind of the pipeline for expansion with Intel?

Yes. We're actually tracking, I would say, a handful of opportunities at different customers, not just this first one. Some of them are looking at the developments that we are doing and some of these architectural enhancements and assessing how they might use that to benefit from those enhancements as well for larger density. Some of the opportunities could be using our smaller density architecture today. So we have several. Like I said, it's a handful. So I think we are going to expand on that at some point this year. And I've said this publicly, I'll reiterate it here. It's not just the defense industrial base that is looking at Intel 18A from our perspective for eFPGA, it's actually into the commercial side. So we are targeting a commercial win this year as well for our IP on that node.

Okay. That's good to hear, Brian. Let's hear. Unless I missed something here, I didn't hear any comments specifically about the revenue growth profile you mentioned in the last earnings call for this year, that being 50% to 100%. If you did, I apologize for that. But I just want to get an update thought process on how -- what the profile of the year looks like given the guidance here? Unfortunately, I haven't been able to update my model, so I don't have an overly intelligent way of asking this question. But if you could just kind of give me the top down about how you're going to approach that? And are you thinking of anything meaningfully towards the low end or high end of that number?

No. In fact, the -- you probably weren't logged in yet, but the first sentence I said after welcoming everybody was the progress we've made towards delivering on that 50% to 100% revenue growth target for the year. And if you think about what we did in Q1 plus our guide for Q2, that's already 80% of last year, just in the first half of this year. So we're still tracking to be within that range. You could probably surmise it's moving up in that range now since we're halfway through and we're guiding for what would be a total of 11 in the first half versus 13-point something last year. So I think we're making really good progress on that, really on all fronts on the IP side with 18A, thrilled to get the test chips and dev kits out for the RadPro for FPGA because that's a huge uplift there. And then also just on some of these new proposals we talked about earlier on different chiplet initiatives, storefront initiatives and then bolstered by some of our mature business being stronger in the second half than the first half. So we're feeling good about being in that range that we talked about entering the year.

Okay. Perfect. Thanks for doing all that math for me. I will do that offline and ask some better questions later, but thanks for that, Brian. Last question, probably for Elias here on gross margins. What are the dynamics here driving the gross margins from, I think, kind of the 40-ish range here to the 50 -- what did my notes say, 57% for the year, that implies pretty healthy levels for the second half year. Just want to get a sense of the dynamics driving that Elias.

Yes. As you know, Richard, I've said this so many times, it's the most difficult one to gauge, the gross margin in this company up and down and different. But the way I'm looking at it is that there's going to be more higher gross margin mix in the second half than in the first half. So for example, when you have certain professional services, for example, they bring in lesser gross margin than the IP itself or the product itself that you're selling. So as you increase that in the second half, to Brian's point, that we're going to have to see something in the second half, that gives you the comfort that the gross margin should be up there. I still want to shoot for 57%. Now if it comes at 55%, nobody should shoot at me with errors, but I mean that's a pretty good bump from last year.

Our next question is from Tyler Burmeister with Lake Street Capital Markets.

I guess I wanted to ask maybe on the U.S. government Strategic Radiation Hardened program. You received a $13 million last tranche end of last year, beginning of this year. Any updated thoughts on potential for additional funding tranches from that program later this year?

Yes, definitely. So we had talked previously, I think or shared publicly that, that $13 million tranche, we're expecting to fully recognize this year as we're continuing on our developments of these next chips. And I think there -- you could assume that we would probably be getting another contract by the end of the year to continue that even further into 2027 and sort of round out the necessary things to complete it. Yes, we didn't really give a lot of airtime directly to that on the call just because things are going fine, and we'd already said it would be recognized fully this year. So it's sort of just a matter of fact.

Perfect. Perfect. I guess that kind of already answers my next question, but then that would, I think, imply that the final chip design with that program remains on track for later this year.

I wish I could share more programmatic details on that. I'm not allowed to. So I'm not going to do that here, but we're -- let me say we're comfortable with the way we're executing.

Perfect. All right. And then maybe pivoting over to your RadPro Development Kits. I think you said several of them had shipped so far. Is that with one customer, multiple customers? Any way to maybe think about the diversity of the customers so far?

It is multiple. I'll start with that. And I'd say the frequency of inbound interest for it has picked up now that we've been able to talk more about it in sort of forms that matter like the HEART Conference. And there's like -- there's a slew of these, let's call them, government, defense, radiation-oriented type conferences. They tend to be a little bit more boutique in nature than something like Design Automation Conference or Embedded Systems. But the quality of leads that we engage with there is high because it's very focused. And coming out of HEART, there was a lot of interest for the dev kits. We're going through that now. We even got messages even today from people saying, "Hey, we're interested, what's the lead time and the cost and stuff like that." So I think we're going to continue to ship these throughout the year, which is great because that's a leading indicator of, a, interest in something like this; and b, it just gets our software and devices into the hands of these customers and gets them evaluating, which is what we want, right? It's good to see skin in the game from our customers as far as engineering resources, working with our technology.

Perfect. I appreciate that color. Maybe last one for me. I think you explained well the one contract pushout from Q1 to Q2, reiterate the full year to be 50% to 100%. One quarter through the year, that's still a decent range for the full year. Is it possible to call out maybe the couple of biggest potential drivers that could swing that from the low end to the high end? Or is it really just potential timing kind of across the board?

Well, I guess the way I was answering that first question from Richard on the revenue for the year and how it fills in the 50% to 100% growth. I mean the math now with 11% in the first half, like I said, that 80% of last year. So I think we're well on our way to getting into this range that we talked about for the year, the 50% to 100%. As far as the components of that growth, one is the continued execution on the government contract, which I already alluded to that we're feeling good about that progress. Another was entering the year was to be shipping these dev kits for the RadPro FPGA, which we've started. So that's another, you know, check the box. We do have in the forecast some 18A, the embedded FPGA hard IP. One, as I mentioned, is for this customer we've already had multiple contracts with and getting this next one for the second half. So that has to be done still, but I think we're feeling good about that. We do have a larger 18A IP contract in the forecast for the year, like a real contract. So to the extent you guys are tracking press releases on this, this would be that commercial customer I'm talking about for Intel 18A embedded FPGA IP. So that would be one that we need to do to be into the upper end of the forecast range. Like I said, I think we're feeling good about it. Felt great to finally get that one signed that we just signed last week. That's a good milestone to check off the box because that was a fairly large amount of revenue that we're forecasting for the year. Yes, one quarter later, but it's good to get on the books and start executing on that. So not too many more deals to sign to get into the upper half of that range that we talked about.

Our next question is from Neil Young with Needham & Company.

I wanted to start asking on storefront here. So as storefront begins to scale, how should we think about the financial profile? More specifically, should storefront carry a meaningfully different gross margin or revenue recognition pattern once you move from these dev kits and test chips into more of a repeat -- sorry, repeatable product shipments? And then just one more for me after that.

Yes, I can take that one. So storefront is just like the classic semiconductor device business. So we run the supply chain. We sell the device to the customer. It's a revenue and a gross margin at that point in time. Very, very little R&D that goes on top of that because the devices are effectively done. And so the gross margin, a, yes, will be higher. We're modeling like what Elias has historically said on devices like mid- to high 60% for that, like what you would expect in FPGA to be. But more, I think, more predictable and less up and down because it's less to do with the services and much more to do with just shipping a product, revenue recognized as it goes out the door, gross margin at that point in time because we know the cost of goods, much more predictable.

Perfect. And then the other one I wanted to ask on Quantum Leap solutions. I know you guys put out a press release and you appointed them as authorized sales rep for IP and chiplet offerings. How should we think about the role of that channel in accelerating customer acquisition? Should we think about the bigger opportunities revolving around opening new commercial accounts, sort of deepening the defense aerospace engagement, helping customers navigate chiplet and ASIC integration decisions earlier in the design cycle? Just any color you wanted to throw on that would be helpful.

Yes. I mean, as a company of our size, like most semiconductor companies, which are employees at QuickLogic and then we have our external sales force or indirect. And indirect is usually distributors or sales reps. So in the case of having what I would call design-in products, which are -- you really have to get into your point at the early stages of the architecture, you want sales reps that are sort of focused on that type of technology. So for us, that could be semiconductor IP, it could be EDA tools. It's all of the stuff that ASIC teams typically have to be using because now our sales rep knows those ASIC design groups. And so they can go in. They've already established report, they've established trust and they can expose those groups to QuickLogic technology. So they've been around for a while. We've known them. We're happy that they've joined QuickLogic. They're not just defense. They also do a lot of commercial. And I think that they have a pretty strong background in helping sell EDA tools, which is great because every ASIC design team that needs IP needs EDA tools. So they know the right people to go to. So that really helps, gives us leverage in our operating model because that means we have what we call variable costs because most sales reps and distributors are sort of success-based, right? They license -- they help license IP, they help sell devices, they get a commission or a margin on the sale. So it's a fantastic way of aligning what we need as a company with financial incentives for them. And like I said, I think they're doing a great job getting us into people that are beyond or groups that are beyond or numbers of customers that are beyond what we could handle with just our direct sales force today. Does that answer your question, Neil?

Yes.

[Operator Instructions] With no further questions at this time, I would like to turn the floor back over to Brian for closing remarks.

Yes. Thank you all for joining and participating today. We look forward to speaking with you in the near future or on our next earnings call in August, whichever comes sooner. Thank you.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.