QuickLogic (QUIK) Q3 2026 earnings review
QuickLogic's quarterly sales slip, while its fourth-quarter hurdle grows
QuickLogic, a designer of customizable chip circuits and radiation-hardened chips for defense, saw sales slip from last quarter while its fourth-quarter hurdle grew steeper. Third-quarter revenue more than doubled from last year's low point to $5.1 million, but fell 6% from the second quarter as new product sales dropped. Gross margin excluding one-offs fell to 41%, missing the company's own plan. Chief executive Brian Faith said he still anticipates a strong finish to the year.
| Revenue | $5.1M -6% from last quarter (+153% from a year ago) |
|---|---|
| Gross margin, excluding one-offs | 41% missed the 42% to 52% plan |
| Loss per share, excluding one-offs | $(0.07) $(0.05) loss planned |
| Year-end outlook | Held Q4 needs ~$8.4M by our math to hit 75% annual growth |
⚖️ Verdict: 🔴 Bearish
The story got worse because third-quarter sales and margins moved the wrong way ahead of a heavily back-loaded fourth quarter. By our math, hitting the middle of the company's 70% to 80% full-year growth plan now requires $8.4 million of fourth-quarter sales and a 67% gross margin excluding one-offs, yet the release announced no large government or architectural license contract. One bright spot: upfront customer payments on the balance sheet nearly doubled to $786 thousand alongside a six-figure automotive chip win.
The question now is whether QuickLogic has signed enough high-margin license deals and government funding to deliver that fourth-quarter jump, or whether contract delays will force a full-year cut. If the deals are in hand, fourth-quarter gross margin will rebound above 60%; if they slipped into 2027, the company will miss its second-half profit goal. The fourth-quarter numerical outlook on the conference call will settle it.
🐂 Bull Case
Upfront Customer Payments and Automotive Wins Grow
"Our recent automotive and industrial design win is a strong validation of our eFPGA technology," chief executive Brian Faith said. QuickLogic sells eFPGA Hard IP, which is customizable circuit designs that other chipmakers build into their own chips, alongside radiation-hardened chips for space and defense.
During the third quarter, the semiconductor designer won a six-figure contract "for an automotive industrial SoC targeting battery management, precision motor control, and robotic applications on a 16nm process technology". It also launched a GlobalFoundries 12LP design with "scalability beyond 250,000 LUTs, and optional configuration-bit health monitoring for improved reliability in mission-critical applications".
Customer prepayments backed up the commercial progress, because deferred revenue — cash collected from customers for work not yet delivered — nearly doubled from last quarter to $786 thousand. The release did not update progress on Intel 18A-P chip ports or defense customer evaluations of RadPro, its radiation-hardened chip family.
What to watch: remaining performance obligations, the total value of signed contracts not yet recognized as revenue, in the third-quarter filing. A figure above last quarter's $6.3 million would show new commercial contracts are replacing completed government work.
Mature Products Cushioned the Quarter
QuickLogic splits its sales between new products made on modern manufacturing processes and mature products, which are older antifuse chips produced on processes larger than 180 nanometers. Earlier this year, the chipmaker cut its full-year target for mature products to $3.3 million.
In the third quarter, mature product sales rose 33% from last quarter to $1.1 million, beating the $0.8 million plan set three months ago. That gain raised mature products to 21% of total revenue, up from 15% in the second quarter, and cushioned the drop in new product revenue.
What to watch: fourth-quarter mature product sales against the implied $0.6 million needed to reach the $3.3 million annual target. Another quarter near $1.0 million would show that defense and industrial orders for legacy chips are recovering faster than planned.
🐻 Bear Case
Fourth-Quarter Targets Now Require a Record Quarter
QuickLogic entered the second half promising 70% to 80% full-year revenue growth and a profitable second half excluding one-offs. Faith said in the release that the team is building momentum and continues to "anticipate a strong finish to the year".
Third-quarter results moved the company further from those goals. Total revenue fell 6.3% from last quarter to $5.1 million, and new product sales dropped 13.2% to $4.0 million against a $4.7 million plan. Headline revenue grew 153.2% from a year ago only because last year's third quarter was a $2.0 million low point.
- Nine-month revenue: $15.7 million, leaving $7.7 million to $9.1 million for Q4 by our math to hit the 70% to 80% full-year plan
- Implied Q4 revenue at the 75% middle of the range: $8.4 million, up 64% from Q3 by our math
- Q4 profit excluding one-offs needed for a profitable second half: at least $1.3 million, after Q3 lost $1.3 million
- Track record: quarterly revenue has landed below the middle of the company's own range in six of the last eight quarters
Hitting the full-year target now requires signing and recognizing large new contracts inside a single quarter. Because the press release did not announce the next tranche of the US government radiation-hardened chip contract or a second architectural license, the fourth-quarter jump still rests on deals not yet disclosed.
What to watch: the fourth-quarter revenue outlook on the conference call. A range below $7.7 million would confirm that contract delays have pushed the full-year growth target out of reach.
Gross Margin Missed the Plan on Services Mix
QuickLogic's business model relies on high-margin intellectual property licenses to lift gross margin toward its full-year target of about 51% excluding one-offs. For the third quarter, the company had planned on a gross margin excluding one-offs of 42% to 52%.
Instead, gross margin excluding one-offs fell 5.8 percentage points from last quarter to 41.0%, missing the bottom of the range. Cost of revenue — the direct cost of engineers working on customer contracts and making chips — rose 5.8 percentage points of revenue from last quarter as lower-margin engineering services made up a larger share of new product work.
That miss leaves nine-month gross margin excluding one-offs at 42.5%. By our math, reaching the 51% full-year model at the middle of the revenue target now requires a 66.7% gross margin in the fourth quarter, which is a 25.7-point jump in three months.
What to watch: whether QuickLogic cuts its 51% full-year gross margin target on the call. A reduction would show that high-margin license deals have slipped into 2027.
Operating Losses and Share Dilution Persist
Even with operating expenses excluding one-offs coming in at $3.3 million — below the $3.4 million to $3.8 million plan — QuickLogic's cost base exceeded its gross profit. Sales, general and administrative overhead rose 2.3 percentage points of revenue from last quarter to 48.9% as sales shrank.
Net loss excluding one-offs widened to $1.3 million, or $0.07 per share, missing the $0.05 loss plan. Under standard accounting, the continuing net loss jumped from $0.9 million last quarter to $2.2 million, because last quarter included a one-time $950 thousand gain from cancelling a vendor bill; without that one-off, last quarter's loss was $1.8 million by our math.
To fund its operations and chip development, the company has issued new stock. Weighted average diluted shares rose 11.5% from a year ago to 18.4 million, and total common shares issued reached 18.8 million, up 1.5 million since December 2025 as paid-in capital rose $12.8 million.
What to watch: common shares issued in the third-quarter filing's equity note. Any new at-the-market share sales during the third quarter would contradict prior commentary that 2026 share issuance was finished.
Risks this quarter didn't answer
Four standing concerns depend on disclosures that only appear in the quarterly filing or on the conference call, neither of which was included with the earnings release.
- Customer concentration: one government customer accounted for 65% of second-quarter revenue; the filing's footnote will show if dependence stayed that high.
- Government contract balance: by our math only about $2 million to $3 million of the $13 million government tranche remained after the third quarter; the call must confirm if a new tranche was signed.
- Storefront hardware revenue: sales of finished chips were pushed to 2027 last quarter; the filing's revenue disaggregation table will show third-quarter hardware sales.
- Intel 18A-P follow-on contract: targeted for fourth-quarter delivery; the call will show whether the customer signed the order.
👓 Other Themes
New Finance Chief Joins Ahead of Fourth-Quarter Push
QuickLogic appointed James Sullivan as Senior Vice President of Finance and Chief Financial Officer during the quarter, replacing Elias Nader. Sullivan takes over the financial outlook just as the company faces its steepest fourth-quarter revenue and gross margin hurdle of the year.
Regional Demand Shifts Toward North America and Europe
North America generated 85% of third-quarter sales, rising 323% from a year ago on US defense contract work while dipping 9% from last quarter. Europe grew 54% from last quarter to 6% of sales, while Asia Pacific dropped 53% from a year ago to 9% of sales.
💲 Other KPIs
Net cash — cash minus the credit line and notes payable — edged down from $10.9 million at the end of Q2 on a debt basis, while total cash rose to $19.2 million from $18.5 million in Q2. Total debt stood at $7.3 million, down from $17.8 million in December 2025 after the company paid down $10.0 million of its credit line in the first half.
Uncollected customer bills fell 30.5% from last quarter's $1.48 million and are down by nearly two-thirds from $2.81 million in December 2025. Collecting those bills helped lift the cash balance in the third quarter even as the business recorded an operating loss.
Property and equipment fell to $16.2 million from $17.4 million last quarter and $18.2 million in December 2025 as prior chip-tooling investments depreciated through cost of revenue. Capitalized internal-use software rose to $1.43 million from $1.33 million in Q2.
🔮 Guidance
Unchanged qualitatively. Chief executive Brian Faith said QuickLogic continues to "anticipate a strong finish to the year", while the press release provided no numerical outlook table, which the company normally gives on the conference call. By our math, the standing 70% to 80% annual growth plan leaves $7.7 million to $9.1 million for Q4 — up 64% from Q3 at the middle of the range — after QuickLogic missed the middle of its quarterly range in six of the last eight quarters.
❓ Key Questions
What is the fourth-quarter revenue and gross margin outlook?
The press release gave no numerical fourth-quarter outlook. After third-quarter sales fell 6.3% from last quarter, reaching the 70% to 80% full-year growth plan requires $7.7 million to $9.1 million in the fourth quarter by our math.
Has the US government signed the next radiation-hardened chip tranche?
One government contract generated about two-thirds of first-half sales, and by our math only $2 million to $3 million of the current $13 million tranche remained for the fourth quarter.
How much of fourth-quarter revenue is already under signed contract?
Remaining performance obligations stood at $6.3 million at mid-year. Investors need the third-quarter backlog figure to see how much of the fourth-quarter ramp depends on unsigned licenses.
Did QuickLogic sell shares under its equity program in Q3?
Common shares issued and outstanding reached 18.75 million at quarter-end, up from 17.72 million in March. The call should clarify whether the company issued stock after saying it expected no further 2026 at-the-market sales.