On August 14, 2024, GCT Semiconductor Holding Inc (GCTS, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 30, 2024. GCT Semiconductor Holding Inc. is a designer and supplier of 5G and 4G LTE semiconductor solutions, enabling fast and reliable connectivity for various commercial devices.
Performance and Challenges
GCT Semiconductor Holding Inc (GCTS, Financial) reported a significant decrease in net revenues, which fell by $2.8 million to $1.5 million for the three months ended June 30, 2024, compared to $4.3 million for the same period in 2023. This decline was primarily due to a $4.0 million drop in product sales, partially offset by a $1.2 million increase in service revenue. The company attributed the decrease in product sales to an anomaly in 4G product sales, which they expect to rebound in the future.
Despite the revenue decline, GCT Semiconductor Holding Inc (GCTS, Financial) made notable progress in its 5G chipset development and secured significant partnerships with global companies like Kyocera and Samsung. The company anticipates strong demand for its new multi-mode 4G chipset GDM7243SL, which is ideal for industrial, utility, and satellite applications.
Financial Achievements
GCT Semiconductor Holding Inc (GCTS, Financial) successfully strengthened its capital structure by deleveraging and recapitalizing its balance sheet. The company restructured the terms of some outstanding debt, aligning the maturities with expected proceeds from 5G chipset sales in 2025. Additionally, GCT began utilizing its previously announced ELOC facility to support its financing needs.
Income Statement Highlights
Net revenues for the second quarter of 2024 were $1.5 million, down from $4.3 million in the same period of 2023. The cost of net revenues decreased by $1.0 million to $0.5 million, primarily due to a reduction in direct product costs. Gross margin decreased to 63% from 66% in the previous year, reflecting the lower product sales.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Revenues | $1.5 million | $4.3 million |
| Cost of Net Revenues | $0.5 million | $1.5 million |
| Gross Margin | 63% | 66% |
| R&D Expenses | $4.2 million | $4.0 million |
| Net Loss | $(1.0) million | $(6.6) million |
Balance Sheet and Liquidity
As of June 30, 2024, GCT Semiconductor Holding Inc (GCTS, Financial) had cash and cash equivalents of $4.0 million and net accounts receivable of $5.2 million. The company entered into an ELOC with an affiliate of B. Riley Securities, Inc., allowing it to sell shares of common stock up to $50 million, providing additional cash flow to fund operations.
5G Outlook
GCT Semiconductor Holding Inc (GCTS, Financial) remains confident in its 5G chipset development progress and expects to have its 5G chipsets available for broad sampling to customers during the fourth quarter of 2024, with volume shipments commencing in the first half of 2025.
“The announcements we have made over the last few weeks showcase the momentum we are gaining in building the customer foundation for substantial growth based on our 5G chipset launch, and I couldn’t be more excited about the progress we are making,” said John Schlaefer, Chief Executive Officer of GCT.
For more detailed information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from GCT Semiconductor Holding Inc for further details.
