GCT Semiconductor Q4 2025 Earnings Call Transcript

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DATE

March 25, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — John Brian Schlaefer
• Chief Financial Officer — Edmond Cheng
• Operator

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TAKEAWAYS

• 5G Commercial Shipments -- More than 1,900 5G chipsets shipped for commercial use in the quarter, supporting initial deployments and customer testing programs.
• Sequential Revenue Growth -- Fiscal fourth-quarter revenue increased 76% sequentially from the fiscal third quarter, as 5G programs began contributing to the top line. (Fiscal year ended December 31, 2025.)
• Annual Revenue -- Net revenues decreased by $6.3 million, or 69%, to $2.9 million compared to the prior year, due to lower product and service sales.
• Gross Margin -- Full-year gross margin was negative because product revenue was not sufficient to absorb production overhead costs.
• Expense Discipline -- Research and development expenses declined by $3.3 million, or 19%, to $14.0 million, mainly from completion of a 5G chip project.
• General and Administrative Costs -- General and administrative expenses rose $5.7 million, or 53%, to $16.5 million, driven by a $3.2 million swing in credit loss estimates and a $3.2 million increase in stock-based compensation related to warrant issuance.
• Convertible Note Facility -- Entered into a $20 million convertible note facility, with an initial $1 million advance during the quarter to support working capital and growth initiatives.
• Quarterly Customer Account -- Shipped to three customers in the quarter, with one representing the main commercialization order.
• Cash Position -- Ended the year with $0.6 million in cash; subsequent to year-end, cash increased to $9.4 million as of February 2026.
• Operational Partnerships -- Signed a licensing agreement with a major satellite communications provider, and announced a collaboration with Skylo to expand 5G and IoT satellite-enabled connectivity.
• Gogo Network Launch -- Enabled Gogo's broadband 5G air-to-ground service, the first live network deployment powered by the company’s chipset technology.
• Gross Margin Guidance -- Edmond Cheng said, "we believe that, going forward, our gross margin should be in the range of maybe the high 30s to low 40s when our product becomes more mature and our product revenue ramps."
• OpEx Outlook -- Edmond Cheng said, the normal run rate should be around $8 million to $8.5 million per quarter going forward. Lisa Thompson.
• Fixed Wireless Access (FWA) -- Backlog from FWA lead customers is expected as early as fiscal Q2, with increasing shipments into that market through the year.
• Satellite Opportunity Size -- John Brian Schlaefer said shipment volumes for the satellite communications partnership are expected to be "the million-unit-plus type of quantities" annually, with the company serving as sole supplier for its application at present.

SUMMARY

GCT Semiconductor Holding (NYSE:GCTS) advanced from development to early 5G commercialization, highlighted by initial shipments and live network deployment with Gogo in the quarter. Management executed strategic licensing and partnership agreements, positioning the company to drive new chipset revenue streams through satellite and IoT connectivity markets. The company ended the period with enhanced financial flexibility following a convertible note facility and capital raise, ensuring resources to support increased production and expanded customer engagements in 2026.

• Management identified automation improvements as a driver for higher chip testing throughput and yield, addressing fiscal Q4 supply limitations.
• The company expects meaningful shipment increases to three to five customers in the following quarter as program backlogs develop.
• Schlaefer reported that 5G chipset customers remarked positively on the product and support, calling the device "enabling" for future roadmaps and applications.
• Upcoming satellite partner orders are anticipated to begin shipping in the second half of 2026, potentially accelerating volume ramp and revenue diversification.

INDUSTRY GLOSSARY

• FWA (Fixed Wireless Access): A technology using wireless signals to deliver broadband internet to fixed locations, such as homes or businesses, without wired infrastructure.
• NTN (Non-Terrestrial Networks): Satellite-based communication systems providing wireless network coverage via space-based assets rather than terrestrial cell towers.

Full Conference Call Transcript

John Brian Schlaefer: Thank you, and thanks everyone for joining us today for our fourth quarter and full year 2025 earnings call. I will begin by discussing the operational milestones we achieved during the year as we executed on our strategy to transition the company toward full 5G commercialization. Following my remarks, our CFO, Edmond Cheng, will walk through the full year financial results in greater detail. 2025 was a defining year for GCT Semiconductor Holding, Inc., as we reached several key milestones in the transition from our development to commercialization of our 5G chipset.

Over the past year, we have focused on bringing our 5G chipset technology to commercial readiness while expanding our ecosystem of partners and customers who are preparing to deploy and integrate our 5G platform across a growing set of applications. After the launch of sampling with lead customers in June, in the fourth quarter, we shipped more than 1,900 5G chipsets for commercial use. These shipments represent early commercial volumes that support initial deployments and/or customer testing programs and mark continued progress toward our broader production ramp.

While still small in scale relative to long-term opportunities ahead, these shipments demonstrate that our production pipeline is now actively supporting real-world deployment and preparing for high volumes as customers move through their rollouts. We expect this momentum to continue, generating sequential growth in 5G chipset shipments throughout 2026. Speaking of customer rollouts, another important milestone achieved during the quarter, like Gogo, was their new broadband 5G air-to-ground service powered by GCT Semiconductor Holding, Inc.'s 5G chipset.

As our first network operator to bring a live network to market using our technology, this milestone validates the performance and reliability of our 5G platform in one of the most demanding wireless connectivity environments and demonstrates the readiness of our chipset technology to support real-world commercial deployments. The launch also underscores the growing demand for GCT Semiconductor Holding, Inc.'s 5G solutions and reinforces our positioning for broader 5G commercialization and market penetration. As additional customers advance through testing, certification, and deployment phases, we expect the success of Gogo's launch to serve as a strong validation point for other customers evaluating our technology and to support further adoption in 2026 and the years ahead.

In parallel with these developments, we continued expanding our strategic partnerships to broaden the applications and markets for our semiconductor solutions. During the quarter, we signed a licensing agreement with one of the world's largest satellite communications providers, under which our 4G and 5G chipsets will integrate into the partner's user equipment to support global, resilient, and high-bandwidth connectivity across both satellite and terrestrial networks. This integration will enable direct-to-satellite applications across the partner's rapidly expanding network, creating new 5G chipset sales opportunities for GCT Semiconductor Holding, Inc., while positioning us at the intersection of terrestrial wireless infrastructure and satellite connectivity. Shipments for this program are expected to begin as early as 2026.

More broadly, this collaboration places both companies at the forefront of emerging 5G-to-space networks designed to extend connectivity worldwide, including in underserved regions, and supports the industry's transition toward more integrated terrestrial-satellite infrastructure. By combining our advanced 5G semiconductor technology with a global satellite footprint, we are helping enable a new era of always-on connectivity that is more resilient, flexible, and accessible than ever before. We also announced a partnership with Skylo to expand seamless global satellite connectivity for next-generation cellular-to-IoT devices. As part of this collaboration, our teams are working jointly toward chipset and module certification that will enable ubiquitous connectivity across satellite-enabled networks for a wide range of IoT applications.

This initiative further demonstrates the flexibility of our architecture and the growing number of connectivity environments our platform can operate in. Collectively, these partnerships reflect our broader strategy to position GCT Semiconductor Holding, Inc. at the intersection of several major technology trends, including the expansion of 5G networks, the rapid growth of connected devices, and the increasing integration of satellite connectivity with terrestrial wireless infrastructure. In addition to these commercial developments, we also took steps to strengthen our financial flexibility and ensure we have the resources necessary to support the upcoming production ramp. During the fourth quarter, we entered into a $20 million convertible note facility with an initial $1 million advance.

This financing provides us with additional optionality to support working capital requirements, production readiness, and strategic growth initiatives while minimizing dilution at the current stock price for shareholders. Taken together, the progress we have achieved throughout 2025 reflects a company that has successfully transitioned from the development phase of its 5G program toward the early stages of commercialization and volume production, expanded our ecosystem of partners, advanced multiple customer programs through evaluation, design, and optimization phases, and began supporting live network deployment using our chipset platform. As we look ahead, our focus is on scaling operations to support the commercialization of our 5G chipset.

This includes aligning our supply chain partners, strengthening production readiness, and continuing to support customers as they move from evaluation to deployment. We believe the groundwork laid over the past year positions us well for the next stage of growth as production volumes increase and additional network operators begin featuring GCT Semiconductor Holding, Inc.-enabled 5G devices. And with that, I will turn the call over to Edmond to discuss the full year results. Edmond?

Edmond Cheng: Thank you, John. While 2025 represented a transitional year for our financial performance, it also reflected the deliberate investment required to bring our 5G chipset platform to commercial readiness while managing our capital allocation and optimizing our cash flow. As we have discussed in prior quarters, the transition from our legacy 4G product cycle to our next-generation 5G platform created a temporary gap in revenue while customers completed development and integration efforts. We believe this transition reached its trough during 2025. We are now at the inflection point as commercialization progresses. Reflective of this, total revenue in the fourth quarter increased 76% sequentially from the third quarter, demonstrating early momentum as our 5G programs begin contributing to the top line.

We expect this sequential improvement to continue into 2026 as additional deployments roll out and production volumes ramp. With that context, I will now review our full year 2025 financial results. Further details can be found in the Form 10-K that will be on file with the SEC. Net revenues decreased by $6.3 million, or 69%, from $9.1 million for the year ended December 31, 2024 to $2.9 million for the year ended December 31, 2025. The change was due to a decrease of $3.6 million in product sales and a decrease of $2.6 million in service revenues.

The lower product sales were driven by lower 5G reference platform sales as we continue transitioning into 5G, while service revenue decreased due to the completion of a substantial service project during the prior-year period. Cost of net revenue increased by $0.6 million, or 16%, from $4.1 million for the year ended December 31, 2024 to $4.7 million for the year ended December 31, 2025, largely due to additional production overhead costs. Our gross margin for the year ended December 31, 2025 was negative. This primarily reflects the current level of product revenue, which is not yet sufficient to fully absorb our production overhead cost and therefore is not fully indicative of the underlying profitability of our products and services.

We expect margins to improve as product volumes increase, particularly as our 5G chipset sales begin contributing more meaningfully to revenue later in 2026 following the commercial launch in 2025. Research and development expenses decreased by $3.3 million, or 19%, from $17.3 million for the year ended December 31, 2024 to $14.0 million for the year ended December 31, 2025, largely due to the completion of a 5G chip project, which resulted in a $3.3 million reduction in professional services from Alpha.

This reduction was partially offset by a $0.9 million increase in personnel-related costs due to our higher engineering headcount, a $0.3 million increase in stock-based compensation expense due to the issuance and vesting of share-based awards, and a $0.4 million increase in preproduction and engineering supply related to our 5G initiative. Sales and marketing expenses were relatively flat year over year, totaling $3.9 million for the year ended December 31, 2024 compared to $4.2 million for the year ended December 31, 2025. General and administrative expenses increased by $5.7 million, or 53%, from $10.8 million for the year ended December 31, 2024 to $16.5 million for the year ended December 31, 2025.

The increase was primarily due to changes in our credit loss estimate for receivables, which resulted in a $2.8 million expense in 2025 compared to a $0.4 million benefit in 2024, resulting in a $3.2 million net increase to G&A expenses. Stock-based compensation expense increased by $3.2 million from $2.0 million for the year ended December 31, 2024 to $5.2 million for the year ended December 31, 2025. The increase was primarily due to the issuance of equity-classified common stock warrants to investors in 2025. Personnel-related costs increased by $0.6 million. These increases were partially offset by a $1.2 million decrease in professional services and other costs due to lower transactional activities during the year.

Turning briefly to liquidity, we closed the year with cash and cash equivalents of $0.6 million. We also had net accounts receivable of $2.6 million and net inventory of $0.9 million. Subsequent to year-end and as of February 2026, we had cash and cash equivalents of $9.4 million. In addition, we maintain access to our at-the-market equity program of up to $75 million and have ample capacity on the remaining $125 million of our $200 million shelf registration statement, which was effective since April 1, 2025. These capital resources provide us with flexibility to support working capital needs and execute on our commercialization strategy as we scale production.

Looking ahead, we expect sequential growth in both revenue and 5G chipset shipments throughout 2026 as additional customers move into commercial deployment phases. As this transition continues, our financial priorities remain focused on maintaining operational discipline, preserving capital flexibility, and supporting the production ramp necessary to convert our growing customer pipeline into meaningful revenue. With this, I will turn it back to John. Thanks, John.

John Brian Schlaefer: 2025 represented a pivotal year for GCT Semiconductor Holding, Inc. as we transitioned from development to commercialization of our 5G platform. We began supporting live network deployments, expanded our ecosystem of strategic partners, and initiated commercial 5G chipset shipments that marked the early stages of our production ramp. While our financial results still reflect the transitional nature of this period, we believe the foundation established over the past year positions us well for the next phase of growth. Our focus moving forward is on executing efficiently as we support customer launches, expand production volumes, and convert the growing demand for our technology into sustained revenue growth.

I would like to thank our employees, partners, and shareholders for their continued support and commitment. As we enter this important next chapter for the company, we are encouraged by the progress we have made and look forward to building on this momentum during 2026. I will now turn the call over to the operator, who will assist us in taking your questions.

Operator: Thank you. To remove yourself from the queue, you may press 11 again. Our first question comes from the line of Craig Ellis of B. Riley Securities. Your line is open, Craig.

Craig Ellis: Guys, congratulations on getting the 5G chips starting to ship for revenue in the fourth quarter. John, I wanted to start with one with you, and it takes off on that point and some of your comments that you are engaging with more partners and programs and a priority this year is scaling. Can you just talk a little bit on two fronts? First, on fixed wireless access, can you talk a little bit more about the visibility that you have from customers for ramps through the year and how material you think things might be, not looking for guidance, but just help give us a sense for what you are seeing.

And then given that there has been so much success with the company, and the way you are engaging with satellite and ground-to-air programs, just help us understand as you look at 2026, when revenues there could start to materialize and to what extent? Thank you.

John Brian Schlaefer: Thank you, Craig. So FWA is still a really important vertical for us, and we are focused there strongly. The lead customers that we are working with there are focused on that area, so we expect that we will be shipping more into that market this year, and we will have some growing backlog as early as in Q2 for the lead customers. And then on the satellite front, we already have some product that is shipping for NTN applications.

We are expecting that this new partner that we just talked about will be shipping into that in the second half of the year, and we think that is going to be a very important second vertical for us that we have gotten a lot of attention for, for 5G products as well as pairing with some of our 4G products as well.

Craig Ellis: And I will give it a shot, although I am unsure if you can speak to this specifically. But can you help us size the trajectory of revenue as we go through this year, John? I know the company has its eye on $25 million since that is the level where I think it would look for adjusted EBITDA breakeven and profitability. But any sense on how these different contributors add up and layer in for specific revenues as we hit the middle of the year and then the end of the year?

John Brian Schlaefer: It is a little hard to lay them all in right now because their schedules are still a little vague to us. We are thinking that the point that you just mentioned would be probably in the Q1 period. Q1 next year, so 2027. But we are going to have to see how that actually lays in. It could happen faster, but we are really waiting for some visibility that will come in the Q2 timeframe for us as we start seeing some backlog for these programs lay in.

Craig Ellis: That is helpful. And then, Edmond, I will switch it over to you and jump back in the queue. First, nice to see gross margins coming in at 32% in the quarter. As you see revenues rising sequentially through the year, how should we think about gross margins? And then as a follow-up, operating expense was a little bit higher in the fourth quarter than what we were looking for, but you also noted some special charges on a calendar-year basis. Can you just talk about what drove the sequential increase in operating expense quarter on quarter in addition to gross margin? Thank you.

Edmond Cheng: First of all, related to your question about the gross margin, we do not think that this year's gross margin is representative of what we can achieve in 2026 going forward because of the low volume of our product revenue. From that sense, we believe that, going forward, our gross margin should be in the range of maybe the high 30s to low 40s when our product becomes more mature and our product revenue ramps to a level representing the normal level of revenue. In terms of operating expenses, this year, our OpEx is higher.

As we explained, there are two areas which we feel will be one-off type of situations for this year, which will not continue into next year. One is refocusing on cleaning up our balance sheet, looking at some risk management, looking at the receivable part of it. So, in a way, we feel that this part of it is under control. This is cleaned up from that perspective, and we do not expect it to continue into this year. The second portion is a special item. This year, we have issued warrants to some investors which we account for as a G&A expense, and this portion we do not expect to continue into 2026.

So we expect the G&A running expenses to go back to a normal run-rate level which is very similar to what you experienced in the 2025 run rate, maybe adjusted to some normal inflation rate. Other than that, it all depends on whether our next development programs, on continuation of our product roadmap and our R&D expenses, and that is something that we constantly monitor in terms of the revenue ramp and how much we can afford to spend on the R&D side to continue our product roadmap.

Craig Ellis: That is really helpful, Edmond. And if I could just jump back for one more for John. John, given that we are at an early stage with 5G and you have a couple of customers that have taken product, can you just help us understand as you interact with those customers, what are you hearing from the customers about the product—its strengths, how they plan to use it, etcetera? Thank you so much, guys.

John Brian Schlaefer: They are happy with the product, happy that they have been able to roll out their unique solution. They have also been telling us that our level of support for their unique applications is actually very good. So it is an enabling device for their particular application, and it gives them options on their future roadmap. So it is all positive, and we think that we are going to see additional revenue and volume going forward as their volumes increase.

Craig Ellis: Thanks, John. Thanks, Edmond.

Operator: Thank you. Our next question comes from the line of Lisa Thompson of Zacks Investment Research. Please go ahead, Lisa.

Lisa Thompson: Hi. Thanks for the call. And you have answered a few of the questions I have, but I still have some more. So can we first go back to the satellite communications company that you just signed a license with? Is there some way you can quantify the potential for that business? Have you sized up how much they could possibly take from you?

John Brian Schlaefer: We think it can be actually quite large. We are talking about the million-unit-plus type of quantities, and we are very optimistic about it, and it will have a large position going forward.

Lisa Thompson: Is that an annual number or a total number?

John Brian Schlaefer: That, I would say, is the low end of their annual number.

Lisa Thompson: Nice. And are you sole supplier, or are you just one of some others?

John Brian Schlaefer: For this particular application, it looks like we are the sole supplier, but I would expect that they would have, you know, that the volume that I am talking about would be our volume. I would like to be a sole supplier for as long as I can be, but I have to believe that everybody is doing what they can to de-risk their supply chain. But we are providing some unique customization that makes the product sticky, and we will try to add as much value as we can as we go forward.

Lisa Thompson: Very nice. So good stuff about the customers. How many customers did you ship to in Q4, and what does it look like in Q1?

John Brian Schlaefer: The quantities in Q4 were three. But as far as the production or the commercialization part of that, that was one main customer, and then we would think that for Q1, that would be in the range of three to five.

Lisa Thompson: Okay. So it is starting. Let me just clarify what you said about expenses. Are you saying that Q1 G&A would be around $3 million? Or is it not coming down that fast?

Edmond Cheng: Lisa, I am looking forward to the OpEx. There are some special charges in Q4, but the normal run rate should be around $8 million to $8.5 million per quarter going forward.

Lisa Thompson: Okay. And that includes Q1?

Edmond Cheng: Yep.

Lisa Thompson: Alright. Let us see. What else I have here? At some point, we had a conversation, and you said you were supply limited in Q4. What was that about? Is that still a thing?

John Brian Schlaefer: In Q4, that was really just where the wafers were and what we could actually produce in the quarter. That is a standard issue we have to deal with when we are ramping anything. In the Q4 timeframe, I think it was mainly a result of the fact that testing was not as optimized as it could be and the throughput was lower. In Q1, testing throughput has increased significantly, and that automation, which we will be optimizing going forward even more because we want to squeeze as much yield out of our products as we can, is pretty much in place.

Lisa Thompson: Okay. Great. Well, that is good. I think that is all my questions for now. Thank you.

Operator: Thank you, Lisa. Thank you. There appear to be no further questions in queue. Ladies and gentlemen, thank you for joining us. That concludes our fourth quarter and full year 2025 conference call. A replay will be available for a limited time on our website later today.

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