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GSI Technology, Inc. (NASDAQ:GSIT) Q4 2022 Earnings Conference Call May 5, 2022 4:30 PM ET

Company Participants

Lee-Lean Shu - Chairman, President and Chief Executive Officer

Douglas Schirle - Chief Financial Officer

Didier Lasserre - Vice President, Sales

Conference Call Participants

Jeff Bernstein - Cowen

James Poko - Private Investor

Luke Gabeni - Private Investor

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the GSI Technology’s Fourth Quarter and Fiscal 2022 Results Conference Call. [Operator Instructions]

Before we begin today’s call, the company has requested that I read the following Safe Harbor statements. The matters discussed in the conference call may include forward-looking statements regarding future events and the future performance of GSI Technology that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company’s Form 10-K filed with the Securities and Exchange Commission. Additionally, I have also been asked to advise you that this call is being recorded today, May 5, 2022 at the request of GSI Technology.

Hosting the call today is Lee-Lean Shu, the company’s Chairman, President and Chief Executive Officer. With him are Douglas Schirle, Chief Financial Officer and Didier Lasserre, Vice President of Sales.

I would now like to turn the conference over to Mr. Shu. Please go ahead, sir.

Lee-Lean Shu

Good afternoon and thank you for joining us to review our fiscal fourth quarter and the full year 2022 financial results. Our fourth quarter revenue grew year-over-year by 14%. And for the full fiscal year 2022, revenue increased by 20%. The growth in the quarter was due to new projects, expanded business in all categories and the price increase effective in December 2021.

Gross margin improved in the fourth quarter by 840 basis points year-over-year, reflecting a more attractive mix of higher-margin product sales and our ability to manage supply chain challenges and increased costs. As a result, we lowered our operating loss year-over-year by 19%. We ended the year with $44 million cash, cash equivalents and short-term investments.

Our biggest use of cash remains R&D. The R&D budget and ongoing software development are two large funding projects, one is a software project, the upcoming launch of Version 2 of the Gemini-I compiler stack. The second is a major hardware project, representing the most significant portion of the R&D budget, the design of Gemini-II that we intended to complete by calendar year-end. We will incur a onetime loss charge when we pay that. Other than that, our R&D budget will remain at the current run rate for the foreseeable future due to the ongoing need for software development and our commitment to continuously advancing the hardware platform.

We are on track to release Version 2 of the compiler stack in July which will be entirely Python enabled for coding algorithms, application and libraries. This is exciting because our team will be armed with the tools to increase our Gemini-I customer engagement across the various markets we are pursuing. GSI has a highly talented software team that has achieved impressive outcomes in several competitions. This team is a valuable resource as the software is a crucial component to produce success in this market. And one of the reasons we commit a significant portion of our R&D budget to it.

The GSI software team has been especially effective and efficient in their work on several high-profile content, which resulted in the first place wins in two challenges. We took one of the top spots in the Billion-Scale Approximate Nearest Neighbor Search Challenge and improved our technology to perform on par with category leaders in AI. In addition to the great PR, the biggest benefit of this contest is how it rates GSI’s profile in key market sectors such as with the U.S. and the military and defense agencies and other government agencies and organizations related to defense and security.

Recently, we announced our first greater win in the MAFAT Challenge for the human and object taking categories. GSI load software and algorithms that could most successfully, as judged by speed and accuracy automatically detect, classify and track humans. And differentiate between males and females plus identify objects of interest such as weapons, like a rifle, pistol or knife that the person might be carrying. Our software was the fastest and most accurate in performing at various distance and under diverse lighting conditions using image from real-time HD video sourced from moving to one. This capability has many applications in large global security market.

The MAFAT Challenge gives GSI a high-profile exposure to the leading agency in the Israeli and American military and the defense organizations, including the U.S. Department of Defense and the new agency, the Irregular Warfare Technical Support Directory. Using our contacts from the military and defense business, we are working aggressively to pursue the additional opportunities as the most challenge win may offer.

In fiscal year 2022, we also had wins in other challenges. GSI was among the Billion-Scale Approximate Nearest Neighbor Search Challenge leader. We proved that APU technology and software could perform on par with the prominent industry leaders in EMEA. In addition to the industry exposure, participating in this contest also teach us a lot about how we need to work on and how we can improve our performance.

Our first quest win in the MAFAT challenge resulted in several valuable benefits to GSI. First was our POC with Elta, which is funding a SAR image processing as a relation system on APU technology. Second is the exclusive perpetual license of the FASTA algorithm. The Elta will allow GSI to sell as a SAR system product containing these algorithms. We plan to go after the entire SAR market with this product. The third benefit is Elta is credit to deploy decisive volume, assuming that the POC is successful.

In fiscal year 2022, we increased the customer engagement for the APU and made contact into new market segments. We are in the early stage of working with numerous POCs and expect to further our engagement with the certain version of our competitors. In fiscal year 2023, we plan to launch our OpenSearch platform on AWS marketplaces with the software starting to select sector search. Our OpenSearch software platform is particularly good at market model search that can search with multiple inputs like image, text, voice, et cetera. We are working with our partners to build a software platform that performs multi-model and multilingual factor search with hardware accelerations based on the APU in AWS OpenSearch. The software platform called [indiscernible] conference in June being held in Berlin, Germany. We have the servers in place and now building the website with the goal of having the OpenSearch platform available for client use by the third quarter of calendar 2022. Ideally, we are targeting a fully functioning platform, where clients can download the platform and work independently of our support to the process.

Another important goal will be the new version of the competitor and then using the same product data center to allow customers to work with the APU more easily. This will enable us to build a funnel of cost and move towards building the future revenue stream for the APU. The U.S. team has been working on the design of Gemini-II and finalized the layout for taking out the chip. We are very excited about how Gemini-II could deliver. Gemini-II could attend our addressable market with a simple dramatically intense performance and much lower cost.

We have a great team, and I appreciate their dedication and hard work. We are aligned from our goal for this year and have a lot of motivation to achieve them. I thank all the GSI shareholders for the support and I value the contribution from that many of you made the feedback and input as the CEO and the shareholders and determined to make the AV successful.

Now I will hand the call over to Didier, who will discuss our business performance further. Please go ahead, Didier.

Didier Lasserre

Thank you, Lee-Lean. Let me start with an update on our radiation-hardened or Rad-Hard business. We have seen increased traction in this area, and in the fiscal year 2020, we shipped 4 prototypes to 3 separate Rad-Hard customers. All the customers are currently testing these systems that require chips to withstand harsh conditions.

In the first quarter of fiscal year 2023, we have another program with a major prime contractor for a Rad-Hard prototype, which is anticipated to ship in the first half of this fiscal year. This prototype order could potentially be the same revenue magnitude as all of our radiation-hardened orders from last fiscal year. As a reminder, Rad-Hard is a high-growth profit product. And if a few of these prototypes move to production, it could add incrementally to fiscal years 2023 and 2024 revenue.

In terms of building a pipeline for APU right now, we are creating awareness of our technology and getting the brand known in the right places. We are encouraged by the response and the incoming interest that we have received from these efforts. The company is evolving from the engineering to the production stage, meaning we are getting the tools and systems in place and modifying how we work to build a sales culture for the APU. I’m optimistic we can progress on these fronts in the upcoming fiscal year.

Let me switch now to customer and product breakdowns for the fourth quarter. In the fourth quarter of fiscal 2022, sales to Nokia were $2.0 million or 23.1% of net revenues compared to $2.8 million or 36.5% of net revenues in the same period a year ago, and $1.9 million or 24.0% of net revenues in the prior quarter. Military defense sales were 22.3% of fourth quarter shipments compared to 22.5% of shipments in the comparable period a year ago and 27.1% of shipments in the prior quarter. SigmaQuad sales were 47.6% of fourth quarter shipments compared to 52.9% in the fourth quarter of fiscal 2021 and 40.5% in the prior quarter.

Lastly, I want to comment on the supply or the current supply chain situation. We currently moved the majority of our chip substrate suppliers out of China last year to limit the potential damage by any COVID-related lockdowns in China could cause. We are actively addressing supply chain variances that could potentially impact our order fulfillment, but the situation remains fluid. Overall, most of the cost increases from our suppliers were successfully passed on to our customers in December of 2021. We are closely watching costs and evaluating if we need to change prices in the future. GSI and the industry as a whole are constrained by the availability of FPGAs. Since we use FPGAs on our leaderboard, we could potentially be constrained if we receive a large order for an APU platform.

For SRAM sales, we have implemented some changes to our supply chain management to ensure that we can fulfill orders that we have in hand for the upcoming quarters for our SRAM customers. We are optimistic that we have sufficient capacity to meet this demand.

I’d now like to turn the call over to Doug. Please go ahead, Doug.

Douglas Schirle

Thank you, Didier. GSI reported a net loss of $4.3 million or $0.18 per diluted share on net revenues of $8.7 million for the fourth quarter of fiscal 2022 compared to a net loss of $5 million or $0.21 per diluted share on net revenues of $7.7 million for the fourth quarter of fiscal 2021 and a net loss of $4.6 million or $0.19 per diluted share on net revenues of $8.1 million for the third quarter of fiscal 2022.

Gross margin was 58.6% in the fourth quarter of fiscal 2022 compared to 50.2% in the prior year period and 55.3% in the preceding third quarter. The improvement in gross margin was primarily due to changes in the mix of products sold and price increases effective in December 2021. Total operating expenses in the fourth quarter of fiscal 2022 were $9.4 million compared to $9.1 million in the fourth quarter of fiscal 2021 and $9 million in the prior quarter. Research and development expenses were $6.5 million compared to $6.1 million in the prior year period and $6.2 million in the prior quarter.

Selling, general and administrative expenses were $2.9 million in the quarter ended March 31, 2022 compared to $3 million in the prior year quarter and $2.8 million in the previous quarter. Fourth quarter fiscal 2022 operating loss was $4.3 million compared to an operating loss of $5.3 million in the prior year period and an operating loss of $4.5 million in the prior quarter.

Fourth quarter fiscal 2022 net loss included interest and other expense of $47,000 and a tax provision of $21,000 compared to $21,000 in interest and other expense and a tax benefit of $304,000 for the same period a year ago. In the preceding third quarter, net loss included interest and other income of $15,000 and a tax provision of $64,000. Total fourth quarter pretax stock-based compensation expense was $714,000 compared to $753,000 in the comparable quarter a year ago and $740,000 in the prior quarter.

At March 31, 2022, the company had $44 million in cash, cash equivalents and short-term investments and $3.3 million in long-term investments compared to $54 million in cash, cash equivalents and short-term investments of $5.8 million at March 31, 2022 – or 2021. Working capital was $45.8 million as of March 31, 2022, versus $56 million at March 31, 2021, with no debt.

Stockholders’ equity as of March 31, 2022, was $63.1 million compared to $75.6 million as of the fiscal year-ended March 31, 2021. For the fiscal year-ended March 31, 2022, we reported a net loss of $17.7 million or $0.73 per diluted share on net revenues of $33.4 million compared to a net loss of $21.5 million or $0.91 per diluted share on net revenues of $27.7 million in the fiscal year-ended March 31, 2021.

Gross margin for fiscal 2022 was 55.5% compared to 47.7% in the prior year. Total operating expenses were $36.2 million in fiscal 2022, an increase of 5.1% from $34.5 million in fiscal 2021. Research and development expenses were $24.7 million compared to $23.3 million in the prior year – prior fiscal year.

Selling, general and administrative expenses were $11.6 million compared to $11.1 million in fiscal 2021. The increase in research and development expense was primarily related to the development of Gemini-II. The operating loss for fiscal 2022 was $17.7 million compared to an operating loss of $21.3 million in the prior year. The improvement in the operating loss was primarily due to the increase in revenue and gross profit. The fiscal 2022 net loss included interest and other expense of $60,000 and a tax benefit of $45,000 compared to $94,000 in interest and other income and a tax provision of $335,000 a year ago.

Operator, at this point, we will open the call to Q&A.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question is from Jeff Bernstein with Cowen. Please go ahead.

Jeff Bernstein

Hi, guys. I just wanted to get an update. I think you were supposed to get a ride for Rad-Hard parts satellite here at some point so you could get that space legacy. What’s the schedule on that now?

Didier Lasserre

Great question. This is Didier, Jeff. So that was shipped out last year or – yes, some time last year. And so it was, as you said, it was going to be very end of calendar 2021 or beginning of calendar 2022 they were supposed to go up. We’ve been in constant contact with this prime contractor, and they are still waiting for some other components for that satellite. As you know – I’m sure you know, the semiconductor lead times are way out right now for everything. And so there are still some components they have not received. And so the satellite has not been launched yet.

Jeff Bernstein

Any visibility on when that might happen?

Didier Lasserre

No. They are not telling us too much about that. They are not telling us what components are missing and when. But they certainly feel that the – it’s going to be some time in the summertime they should have all the components.

Jeff Bernstein

Got it. Okay. And then just curious, what’s the cost of the mask set for the Gemini-II? What process node is that on? Is that a 14-nanometer part? Or what is it?

Lee-Lean Shu

Yes. Well, you’re talking about the process or the...

Didier Lasserre

Yes, the process, 16. So Jeff, the process is 16-nanometer.

Lee-Lean Shu

The process node.

Didier Lasserre

Yes, the process node, 16-nanometer. And as far as what would that mask set cost?

Lee-Lean Shu

About $2.5 million.

Jeff Bernstein

Got it. Okay. And I was curious about what kind of visibility you have with Nokia in fiscal ‘23. I think you had better visibility this last year partly because of all the supply constraints, etcetera. What kind of visibility do you have now?

Didier Lasserre

Same. So we have a 12-month – sorry. We have a 12-month rolling forecast right now and so that’s remained the same. So the visibility is constant. So we still have pretty good visibility.

Jeff Bernstein

Got it. And so that’s indicating what? A flat year? A lower year? What kind of a year with Nokia?

Didier Lasserre

Good question. It looks right now it will be flat to maybe a touchdown, but it’s pretty constant.

Jeff Bernstein

Got it. Okay. And I’m curious, we had talked about the potential and the mosaic when kind of suggests this, that there might be application in the very large driver monitoring and cockpit monitoring applications that are going to be legislated here in Europe and then potentially in the U.S. What have you guys figured out there?

Didier Lasserre

It’s still an ongoing process. So there are some areas we think there could be a fit. Other areas are closer to the edge, and we think it’s going to have to be more of a Gemini-II play. As you know, with the Gemini-I, it goes on a board that has an FPGA. With the Gemini-II, we don’t have those constraints. So we’re still looking into it. We think there is certainly some opportunity with Gemini-I, but I think a lot of it, because it’s more of an edge application, will require the Gemini-II.

Jeff Bernstein

Got it. Okay. And then you mentioned that you think the brand is getting known in the right places. What are the right places?

Didier Lasserre

Certainly, the markets we’re going after, right? So we’ve made some announcements recently with the SAR initiative that we have. I mean, certainly, that came out of the original MAFAT Challenge we won. And as Lee-Lean mentioned, we have the POC with Elta. And so what we’re doing now is with that relationship, we got access to a very fast back projection SAR algorithm, which we’re going to be able to use without any license or anything for any other customers. And so, we are putting together a marketing sales package to be able to address that to all the other SAR players. We also, with this latest win in Mosaic, it’s giving us inroads into some of the DoD programs. And so certainly, what we’re – the areas that we’re going after, certainly the markets where there is certainly a need for our type of fast search.

Jeff Bernstein

Got it. Okay. And then you talked about this new OpenSearch multiple input search, which sounds very interesting that it can take natural language and symbolic language and pictures for searching. Is that correct? And just talk about what’s your angle here. What do you think the objective is with that?

Lee-Lean Shu

Yes. Just as I mentioned, I mean, we are working on the margin model, which means you can have a query which come in the text, the image and the voice, everything coming together for the query. And especially good is we have a software platform to OpenSearch. I mean the OpenSearch OE large search has a lot of in-store customer bases and we – the software parking, so a customer doesn’t require to learn a lot of software to do the search. I mean, right now, you see some website can do the search service, but that requires the proprietary software to do it, okay? And now we’re going with the OpenSearch or large search. I mean that’s – all this software is really behind the customer. Customers don’t even have a visibility for it. So that is how we are excited about, with all the installed customer base in the industry. And so that’s a big marketplace we can go after.

Jeff Bernstein

So Lee, just so I understand, so if a retailer has a search button on its mobile website, you could plug in the back end, put your software in between and allow somebody to say, take a picture of a bicycle and say, I want this bicycle in a different color. And the search algorithm would be able to search and take those two inputs, the picture and the person’s voice, and come out with search. And they would be able to essentially plug that functionality into their search without doing a lot of heavy lifting?

Lee-Lean Shu

Exactly. And they can talk in the price rage too. You can have a picture of the bicycle. And then you say you want the color. And then you want the $500 to $1,000. You will get exact merchandise you’re looking for.

Jeff Bernstein

Got it. Okay. And then so this could be won by you as a business where those queries would go to APU boards that you own and it would be a cloud accessible kind of search? Or is it caught on, you would just sell the APU boards to the retailer or whoever their cloud provider was?

Lee-Lean Shu

Yes, they can – yes, we can provide either the cloud service or we can provide hardware for the on-premise applications.

Jeff Bernstein

Got it. That’s great, thank you very much.

Douglas Schirle

Thanks, Jeff.

Operator

Our next question is from James Poko, Private Investor. Please go ahead.

James Poko

Hi, couple of questions regarding the development of Gemini and the I and II and the APU. What is the budgeted cash burn for fiscal year 2023 what’s the expectations?

Douglas Schirle

Right now, going into the year, I would expect something similar to fiscal 2022.

James Poko

And what’s that?

Douglas Schirle

Probably something less.

James Poko

Approximately?

Douglas Schirle

I don’t know, $10 million, $12 million.

James Poko

Yes. And also regarding development of the Gemini-I, according to past company statements, the compiler stack was supposed to have been available in 2021 and it faced repeated delays. Now we’re looking at July, if we even get it done then. Could you tell me why that’s taking so long?

Lee-Lean Shu

Well, compiler has – okay, the Gemini software, we have two portion of the software. One is the library, functional library which can drive the – our processing rate. That’s one portion of the software. The other portion is we have embedded processor or we call it coprocessor in the chip which is a console, the insertion flow and the data flow, okay? So right now, we have completed the compiler on the instruction side, the microcode, the functional library. And we can use a sheet for the embedded part for the coprocessor. So we do have a compiler available if a customer want to use a high-level language to program the APU. Like I use sheet compiler for the coprocessor and like I can use Python for the functional level, okay? So the version two, we are talking about they can do the Python for everything, right, for the coprocessor and for the library. Okay. So that’s – not really is a delay, it’s just an extra step we need to go to have a full compiler stack for it.

James Poko

How many people are testing the Gemini-I APU? How many customers?

Didier Lasserre

You’re saying about customers?

James Poko

Yes, how many potential – how many right now are using it?

Didier Lasserre

Some people – right, so it’s on multilevel. So we have some people who have purchased some boards for pro typing. We have a couple of boards that are out as loaners. And then a fair amount of folks are doing their testing with us, not with physical hardware, but over the cloud. And so we have a data center set up in our Israeli facility, here in our Sunnyvale, California facility. And then we also have, as we’ve talked about in the past, the setup that we have at CoreSite for the OpenSearch Elastic search. And so we have folks doing their testing there. And so, how many? Right now, we’re talking about dozens.

Lee-Lean Shu

Well, we also have, just like I mentioned in the earnings call, I just mentioned the – we have a partner developing the multiyear marketing search. So that’s the development and that’s going to be – and also that’s going to be presented in the conference. So that’s the customer also behind us. So he can promote the algorithm with the APU hardware.

Didier Lasserre

Right. And just to take a little bit more color. We also have begun working with some integrators. And the integrators would be a single entity itself, but they are working with multiple customers on their end. So it’s hard to determine how many more customers we touch via these integrators.

James Poko

And the share price sits at a multiple year low. What is management’s position there to try to improve on that because that’s sitting at quite a low level. I’m not sure what it closed today. But if you look at a chart, that’s kind of rock bottom. Why do you think the company’s shares don’t gain any respect for what they are doing with the APU and then Gemini-I and II?

Douglas Schirle

Well, I think the biggest thing is, is that there is not a lot of visibility in terms of what the revenue stream is going to be. I don’t think people understand that well yet. We put out some TAM and SAM data couple of…

James Poko

Yes, you did. $4.5 billion on SAM, and you got some pretty large numbers there. We are a small company. We have an enterprise value of about, what, $50 million right now? A couple of hundred million in sales would make a huge impact. So, how does that…?

Douglas Schirle

As Didier said, there is a lot of activity going on. And we don’t have a lot of input from customers in terms of volumes and quantities and so on, so we haven’t put any revenue forecast. But we believe that there is a large opportunity. There is a lot of traction as Didier and Lee-Lean have talked about here today that we believe will lead to that revenue growth.

James Poko

I hope so. And regarding AWS, wasn’t there another 2.0 coming up or what’s happening there?

Didier Lasserre

Correct. That’s – as you say, it’s 2.0. And AWS has not released it yet.

James Poko

When is the expectations for that?

Didier Lasserre

It was supposed to be March. Well, it was supposed to be last year, then it was supposed to be March of this year and it hasn’t come out yet. I mean we are still working on the current version just to get everything up and running, but we don’t control the release of 2.0. And so I don’t know what the latest projection is on the release of that.

James Poko

Anything else you can add to help shareholders understand like what the potential is for APU because the shares are sitting at $50 million enterprise value. It’s pretty disappointing.

Douglas Schirle

Well, hopefully, we will have a lot more to say in terms of commitments from customers, design wins and so on. And I think that’s where we are going to see the benefit to the stock price.

James Poko

And that’s when you get the Compiler Stack done in July. Is that correct?

Didier Lasserre

The Compiler Stack will only make the process easier. I mean the first release in February of the initial Compiler Stack that Lee-Lean mentioned that had the combination of Python and C+ depending on the – so that certainly started the process. This is the next step to make it even simpler. So, everything is in Python. So, that helps build the ecosystem. But we are certainly working – even outside of that, we are working with customers. As I mentioned the SAR applications that we are going after and some of these other issues – some of these other areas that aren’t strictly tied to the Compiler Stack. The Compiler Stack is really to get us to a much broader, larger level where we are not involved in the POCs or the algorithm writing.

James Poko

Well, we need to get that done. And I am holding you accountable for that July date that you guys mentioned.

Didier Lasserre

Yes.

James Poko

Alright. Very good. Thanks for your time and I appreciate you taking all my calls and all my questions. Thank you.

Didier Lasserre

Thank you.

Operator

[Operator Instructions] Our next question is from Luke Gabeni [ph], Private Investor. Please go ahead.

Luke Gabeni

Hi. Can you all hear me?

Didier Lasserre

Yes.

Luke Gabeni

I am going to possibly reiterate a few things or components of other questions from past quarters and in this quarter. But also trying to really gain some resolution in this bigger picture and also zoom into some of the esoteric that will be difficult for common investors who aren’t in the field to understand like the big and nearest neighbor with a competition that had a great deal of complexity, it seemed like. There were maybe sub-competitions within that main competition category that you all participated and very curious about the landscape there with Facebook and Yandex. I can’t remember the other participants, but I could call it up now. But yes, just curious if you could unpack that a little bit about, yes, your – just the networking involved there as well as the actual operations being tested.

Didier Lasserre

Specific to that competition?

Luke Gabeni

Yes, just trying to get myself into that competition a little bit. And there is very little information available publicly online. So, curious what the different sub competitions are like. And when you say ranked like highly, somewhat like the first place for one of the components and competed well with low resources against these large players who are kind of big in this, yes. So, curious how that looks and feel for you all?

Didier Lasserre

Sure. So, I have to think back a little bit on this. It’s been a little while. So, we were introduced to the competition via Microsoft. So, they had read one of our blogs that we had written on the subject. And so they had asked if we wanted to participate. And we said, sure. And we were – they had a few tracks, and again, this is off the top of my head, so I may be a little off on this. But I want to say we were on Track 3, which was the custom silicon category. And as you said, there were Yandex and there was Microsoft and Facebook, and I can’t remember who else had some databases in there, but there were six databases total. And they were all supplied by those folks. And we did – no one of us – none of us had access to it beforehand. And what was used as a baseline was the FAISS, the Facebook AI Similarity Search. So, that was kind of the baseline, which was the state-of-the art for quite some time. And so it was – now you would test your solution, which is both a hardware and a software solution, to try and better that baseline of Face. And so there were many, many participants that entered the challenge and many could not improve upon the baseline. And then, of course, there were a few entries by Intel and a few entries by Nvidia and then we had our single entry. And so we were the only ones that were able to better the baseline, which is why they presented our data, the other folks dropped out. One of the highlights was that we were – we actually ran and beat the baseline on all six of the databases, and we were the only one to do that. The other entries focused on two or three or four of the databases and didn’t go with the others. We were able to improve on all six of them. And as you said, we had a very limited team compared to the other folks. When you look at the “winners,” they – when it came down to who do you recognize at the company, there were several groups and there were also external folks, like universities and researchers that were had a hand in helping them write the algorithm for this competition. And with us, it was just a handful of software engineers out of our Israeli team. And it was all done. Again, this was before we had our first release of the Compiler Stack. And so this was all done in a micro code level, which a few folks out there are familiar with coding and high level versus microcode, it’s a much larger effort to do it in microcode. So, again, we were proud of the results. So, with the team we had and the resources we had, we were able to improve upon the baseline in all six of the databases. And we certainly feel like going forward, with the introduction of the Compiler Stack, we will be able to develop algorithms much faster for these kind of competitions and for real-life use cases.

Luke Gabeni

Excellent. So, that’s phenomenal versatility, phenomenal performance, like you said, David and Goliath, you all versus the other competitors. So, it would seem like that would where you operate and would be getting knocks on the door to help you to maximize R&D to expedite as well as build out. And so just curious, are you getting pitches for partnerships that you are turning down or anything to that extent where you are kind of choosing an independent path rather than taking on other investment money from a large corporation like Microsoft who would, in the theory, be interested in, say, buying a 20% stake in the company and lending resources or something like that? So just curious what the chatter is at your door?

Douglas Schirle

Well, there is nothing to talk about at this time, but obviously if something were to come along that made sense to do and benefited the company and the shareholders, we would certainly consider it.

Luke Gabeni

Okay. I know that you could have an incredible feeling as fully independent. Just curious, yes, if there was anything you were able to get to say about whether you have gotten or have not just in general. Yes, I am thinking another quick question about the Rad-Hard and the Gemini combination. I have gathered some industry research showing that they are – there is great eagerness in the satellite and aerospace industry to get better processing up there. And so, wondering if that has motivated enough for you all to open a channel for that development in the – with the mid-fiscal year effect?

Didier Lasserre

Absolutely. And so you hit it on the head. So, there is certainly – if you look at some of the other technologies out there, they don’t lend themselves well to the radiation harshness of space. And so we actually – I want to say it was about 1.5 years ago, it could have been longer, we actually put the Gemini-I under the beam. And the beam was just coming back online when we did it. And so we were only able to take it up to a certain level, which was something above rad-tolerant, but below Rad-Hard as far as the intensity of the beam and the part did great. And so we are right now – we are getting a board together because we want to go back to – I am sorry, Texas A&M where the beam is and to do further testing. And we want to take it all the way up to the full radiation hard levels. And then we are also going to do additional tests, along with the SCE, SEL. We are going to do some SCU and SEFI testing as well so that we can get the full spectrum of the testing required to enter this area. But you are right. I mean we have been presenting to the space folks and we have attended some conferences, and there is tremendous interest in having a part like ours in space that can do some processing. So, we are actively working on getting all of the data from these radiation tests.

Luke Gabeni

Excellent. Yes, another quick point. Gur Kimchi is still your only adviser on the APU project? Is that correct?

Didier Lasserre

Is Gur the only adviser?

Lee-Lean Shu

You are asking about who?

Didier Lasserre

It’s your only adviser right now?

Lee-Lean Shu

Yes, right. He is the only technical adviser in APU.

Luke Gabeni

Okay. Yes. I know he is very accomplished, very forward thinking. And curious if you all are seeking or have gotten any interest for further – or other advisers to join him?

Lee-Lean Shu

Yes, if some technical – greater technical adviser come along, yes, we definitely will look into it.

Luke Gabeni

Okay. Excellent. Yes. And there is great like competition coming into play. It seems like neck and neck with you all with Photonics. I am just curious how intimidate you are there, or have you already – yes, that was the proper differentiation is for, yes, for kind of final applications. And do you see healthy coexistence basically for the next 5 years, 10 years?

Didier Lasserre

So, I am sorry, you are kind of little in and out, but it sounds like you are talking about competition and anything we are seeing. Is that correct?

Luke Gabeni

Yes, specifically in Photonics and sort of this – the gateway into quantum computing. So, wondering how you all see yourselves coexisting with that and differentiating in your specific applications?

Didier Lasserre

Yes. So, I mean the cloud computing, it’s – I don’t think we have anything to say at this point on that. What we are doing is we are looking at the competition of what’s out there, what’s coming out. And what we are seeing is, there certainly have been some announcements recently. But it – they are not addressing the issue which is of un-human bottleneck, and that’s what we have addressed. I mean they certainly are having access to faster external memory. But at the end of the day, they are still fetching data and bringing it back. And that’s where our advantage is, is that we are doing the processing in place and the data is there. And after we have used it, it remains there in place. So, we are not going back and forth, fetching and writing data. So, that’s certainly – we are not seeing anybody in that area, and that’s where we have done extensive work on building our patent portfolio to make sure we protect that unique technology.

Luke Gabeni

Excellent. Yes. And you have very impressive patent portfolio. That’s all my questions. I appreciate it. Very excited for strong future.

Operator

And there are no further questions at this time. You may continue with your presentation or closing remarks.

Lee-Lean Shu

Thank you all for joining us. We look forward to speaking with you again when we report our first quarter fiscal 2023 results. Thank you.

Operator

And that does conclude the conference call for today. We thank you all for your participation and kindly ask that you please disconnect your lines. Have a great day, everyone.

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