Ladies and gentlemen, good afternoon. At this time, I'd like to welcome everyone to QuickLogic Corporation's Fourth Quarter Fiscal Year 2021 Earnings Results Conference Call. As a reminder, today's call is being recorded for replay purposes through February 23, 2022. I would now like to turn the conference over to Mr. Jim Fanucchi of Darrow Associates. Mr. Fanucchi, please go ahead.

Thank you, operator 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 stated expectations relating to revenue from new and mature products; statements pertaining to QuickLogic's future stock performance, design activity and its ability to convert new design opportunities into production shipments; timing and market acceptance of its customers' products; schedule changes and production start dates that could impact the timing of shipments; the company’s future evaluation systems; broadening the number of our ecosystem partners; and expected results and financial expectations for revenue, gross margin, operating expenses, profitability and cash. Actual results or trends may differ materially from those discussed today. For more detailed discussions of the risks, uncertainties and assumptions that could result in those 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 at QuickLogic’s IR web page shortly after the conclusion of today’s earnings call. I would now like to turn the call over to Brian.

Thank you, Jim. Good afternoon, everyone, and thank you all for joining our fourth quarter and fiscal 2021 financial results conference call. Q4 marked the culmination of a very strong year. Revenue of approximately $3.7 million was within our initial guidance range, and we generated cash from operations for the first time in many years. On an annual basis, we delivered significant across-the-board financial improvement. Revenue of $12.7 million was approximately 47% higher than fiscal 2020. In addition, we saw substantial growth in our gross margin and enhanced bottom line performance versus a year ago. Our financial results in 2021 represent the progress we are making across all aspects of the business for a successful transformation to a platform company focused on enabling more artificial intelligence through our innovative, open-source approach to programmable logic and AI software. I would like to thank the QuickLogic and SensiML teams for their continued dedication and hard work. Our momentum heading into fiscal 2022 is strong, with demand for our products and technologies increasing. I expect we will deliver better results for our company and shareholders this year. Now turning to the business review. We had many key accomplishments in 2021 that will support our long-term upward trajectory. These include signed new eFPGA contracts totaling millions of dollars. Introduced the Australis eFPGA IP generator, ushering in a new era of mass customization of FPGAs and embedded FPGA IP by improving the time-to-IP-delivery from years or months down to weeks or days; broadened the reach of our SensiML Analytics Toolkit through the leverage of new microcontroller partners Infineon, onsemi, Silicon Labs and Microchip, adding them to the list of existing partners Nordic Semi, NXP and STMicro. Significantly expanded our global distribution partnerships for both QuickLogic and SensiML, adding Mouser and Digi-Key Electronics as new partners. And created a pipeline of new opportunities in the tens of millions of dollars entering 2022. The process to reach this point has not been easy, but the momentum is in our favor. I am as confident as ever that the foundation established in 2021 is sustainable. Now I want to move into some of the items that drove our fourth quarter results and review elements that I expect to propel our fiscal 2022 growth. First, last week we announced several long-time institutional investors again contacted me about making a strategic investment in the Company. They were joined by a few new investors who have been following QuickLogic for some time and had previously expressed their desire to support the company. The interest we received was more than we could have hoped for. This private placement raised gross proceeds of $1.48 million and was done with no market discount to the share price on the day of the agreement. The funding comes on top of the approximately $1.1 million raised last fall and provides us with additional capital to further drive our open-source, growth, and profitability objectives. I want to personally thank this group of investors for their dedication and support over many years. Now turning to some key elements since our last call. Our Australis eFPGA IP Generator is turning out to be the game changer we thought it could be when introduced last year. As I mentioned previously, Australis automates and accelerates the porting and development of IP cores, reducing a design time of a year and a half to a couple of months or even weeks. Through Australis, we can customize eFPGA IP for any foundry or process technology within days if it is already supported or within three months if new process technologies are used. Compare this to the years it took using traditional engineering design methods. Our approach is unique and companies are taking notice. Fueling this demand for Australis is the rapid shift for embedded FPGA IP cores and FPGA devices that are supported by open-source tools. During Q4, we completed a project on a new foundry/process node combination, with delivery of IP in just two months. This represents a record for us and is significantly faster than anything we have done before. As we improve on this process in the future, we believe that this timeline can improve even further. Being nimble and helping customers get product to market faster and cheaper means we can operate at the pace of the customer and price it in a more cost-effective way, which opens up a much bigger served available market. This new approach has already been validated with several contracts totaling millions of dollars. Some of these have been announced, including the $2 million win last year. Others are smaller but equally significant in terms of building momentum in the business. Regarding the customer behind the $2 million agreement, we recently closed a second contract with them related to a new design and possibly a third in the coming months. I am offering this additional context as further validation that we are involved in many new opportunities where both current and potential customers are wanting eFPGA technology to embed into a chip that they're planning to bring to market. Furthermore, earlier this month, eTopus Technology announced a partnership with QuickLogic and OpenFive to develop a platform of base IP that can be easily integrated into chiplets with minimal risk and reduced development costs. The chiplet ecosystem is developing now, with major semiconductor companies and system OEMs participating. According to one market research report, the worldwide chiplet market is forecasted to be approximately $1.5 billion in 2021, growing to nearly $50 billion by 2031. This represents a compound annual growth rate of more than 40% over the next ten years. The backbone of this partnership is the eFPGA IP created by our Australis tool, which is a primary enabler for resulting chiplets being brought to market with lower cost and lower risk with silicon-proven IP. The eTopus relationship is just one example of what we believe will be many more working relationships this year. Another piece of our foundation that is often overlooked is our participation in the DARPA Toolbox. DARPA funds a lot of different semiconductor or system research with many defense industry prime contractors, or what are known as DoD Primes, in the U.S. The nearest 7-digit eFPGA-related contract that we won in fiscal Q4 2021 is related to the defense market. We are targeting to expand that first contract to what could be in the millions of dollars over a multi-year period. I should point out for those who are newer to QuickLogic that we have a long history serving the defense industry. In fact, we currently sell into all of the top five, and eight of the top 10, DoD prime contractors. We have been serving the defense space for a long time, and I think this really speaks to the quality, reliability, and trust that the defense industry has in us. From a revenue standpoint, it is important to remember that when our eFPGA IP products go to a production system, we typically receive both a production IP license and royalty revenue. I like to use the analogy that IP revenue is like money in the bank that will start paying interest in 12 to 18 months after receipt. That interest is in the form of royalty revenue when customers start shipping ICs with QuickLogic eFPGA IP. I wanted to share some of these details to give clarity to the comments I have made before and reinforce that we are seeing sharp increases in RFPs and RFQs for our eFPGA IP. And, unlike hardware design wins, there is no annual competition risk of losing the design or having to lower device price and gross margin. There is also no inventory or risk and, of course, no COGS on royalty; just an annuity stream that should begin in late 2022 to early 2023 and build from there. The supply issues have turned into an opportunity for us, and the constraints have created a worldwide shortage of certain display bridge semiconductor solutions. Since our announcement, demand for our ArcticLink III BX display interface devices has picked up even further with several of the world's largest consumer product suppliers reaching out to us. We have several months of inventory ready to ship. We will supply these requests and invest to build more devices based on customer demand. With the continued uncertainty across the broader supply chain making display bridge devices hard to obtain, I am confident our display bridge business will see healthy demand for a good portion of 2022. We are also seeing continued momentum in other parts of our business. New product development with our primary phone manufacturer remains strong. The customer is using our EOS S3 in its next generation 5G-enabled devices and we believe there will be up to two more phone wins in the first half of the year. This customer is also navigating through the supply chain challenges. This will likely limit our anticipated shipments this quarter and the number of opportunities we could have if the supply environment were normalized. Related to the supply chain commentary, we have not experienced the same level of constraints that are prevalent in the IC-related industry. Our pressure point is around the assembly and test part of the chain. Capacity for assembly and test is tight, and our primary vendor is raising prices, which is not unusual in this environment. To counter this situation, we increased our committed inventory for finished goods to help ease supply concerns. Our SensiML business continues to expand, and we are pleased how the collaborations with many well-known semiconductor companies are progressing. Just last week, we announced that SensiML is teaming with Infineon Technologies to deliver a complete AI/Machine Learning solution for the Infineon PSoC 6 family of microcontrollers and a range of sensors they support. The Infineon partnership follows several other SensiML relationships with leading companies including onsemi, Microchip Technology and Silicon Labs who are leveraging the SensiML Analytics Toolkit to add local intelligence to their IoT designs for smart home, industrial, fitness, and other applications. Finally, in our mature product segment, without good clarity on how some of our mature product customers are handling their own supply chain challenges, it is difficult for us to see how mature revenue will be much different in the first half of fiscal 2022 than it was in the second half of fiscal 2021. To summarize, 2021 was a significant inflection point in QuickLogic’s history. Our software and IP related sales are accelerating, the number of new opportunities is expanding, and our balance sheet is strong to support our expected growth. I could not be happier with the position QuickLogic is in and believe our best days are yet to come. And now it is my pleasure to introduce Elias Nader, who joined QuickLogic earlier this month as our Chief Financial Officer and Senior Vice President of Finance. We are fortunate to have someone of Elias’ caliber join the company. His financial discipline and wealth of experience in finance, investor relations and technology businesses, including semiconductors, IP, and SaaS, are a strong complement to the executive team. In his short time, Elias played a key role in the recent private placement and has proactively worked with the team to identify areas where we may be able to reduce costs and increase supply. In addition, Elias will have an active role in our investor relations efforts. His long-standing relationships with several of the financial analysts and investors following QuickLogic should be a plus. I look forward to partnering with Elias as we continue on our path to growth and long-term profitability. I also want to thank Anthony Contos for his contributions leading our finance team for the last several months. We all wish him well in the future. With that, I want to welcome Elias. Elias, please go ahead.

Thank you, Brian. Good afternoon, everyone. I could not be happier to be joining you and the QuickLogic team during this very exciting time for the business. I see a tremendous opportunity as our addressable markets expand and our software and SaaS offerings become a larger part of our revenue. This is also an opportunity to continue my working relationship with the investment community currently following QuickLogic that I have engaged with for several years. The growth trajectory and opportunities to advance into new markets are clear and I look forward to meaningfully contribute to the next stage of QuickLogic’s evolution. Let’s now turn to the recent financial results. For the fourth quarter of fiscal 2021, revenue was $3.7 million. This was slightly below the preliminary estimate we offered last month due to a determination that a small amount of revenue would be deferred into Q1. This compares with revenue of approximately $3.9 million in the third quarter, and $2.5 million in the fourth quarter of 2020, or up 52% from the same quarter last year. Within our Q4 revenue, sales of new products were approximately $2.7 million. This compares with about $2.8 million last quarter and $0.8 million in the fourth quarter of 2020. Our mature product revenue was approximately $1.0 million, compared with $1.1 million last quarter and $1.7 million in the fourth quarter of last year. In Q4, we had four customers who each accounted for 10% or more of our revenue. Non-GAAP gross margin in Q4 was 60%, compared with 73% in the prior quarter and 52% in the same quarter of 2020. Just a reminder that last quarter our product mix included higher eFPGA and other services revenue leading to the higher gross margin. Non-GAAP operating expenses for Q4 were approximately $2.7 million. The lower quarterly operating expenses were mainly due to the allocation of certain R&D expenses into cost of goods sold, which kept gross margin below our original expectations. The Q4 results compare with $3.2 million in Q3 and $2.9 million in the fourth quarter of fiscal 2020. Non-GAAP net loss was $0.5 million, or a loss of $0.04 per share based on 11.8 million shares. This compares with a net loss of $0.4 million, or $0.03 per share last quarter, and a net loss of $1.7 million, or $0.15 per share in the fourth quarter of fiscal 2020. The total cash at the end of Q4 was $19.6 million, flat with the prior quarter. The cash balance also includes the $15 million draw from the revolving line of credit. While the quarter-to-quarter balances were essentially flat, when adjusting for rounding, our balances were up slightly by approximately $25,000, a small but significant milestone in our continued financial improvement. I should also note that the cash position does not include the gross proceeds of $1.48 million from the transaction, which will be reflected in our Q1 numbers. Now, turning to the full year fiscal 2021 results. Total revenue was $12.7 million, up 47% when compared with $8.6 million in fiscal 2020. New product revenue was $7.8 million compared with $2.8 million in the prior year. This reflects higher sensor processing and eFPGA IP product sales. Mature product revenue was $4.9 million compared with $5.9 million in fiscal 2019. For 2021, we had four customers that each accounted for greater than 10% of our total sales. Gross margin for 2021 was 61%, up meaningfully from 51% in 2020. The continued increase in software and IP related revenue drove the annual improvement. And while revenue was up 47% from the prior year, our continued focus of cost controls resulted in operating expenses decreasing slightly to $12.7 million from $12.8 million in 2020. The combination of strong revenue growth, higher margins and slightly lower operating expenses translated into our net loss declining to $4 million, or $0.35 per share, a significant improvement from our net loss of $8.7 million, or $0.88 per share in 2020. Now, moving to our guidance for the first quarter of fiscal 2022, which will end on April 3. The revenue guidance for Q1 is $4 million, plus or minus 15%. Revenue is expected to be comprised of approximately $3.4 million for new products, which would be the highest since the third quarter of 2015. Mature product revenue is forecasted to be approximately $0.9 million. Based on the expected revenue mix, non-GAAP gross margin for the quarter will be approximately 67%, plus or minus 5%. Our non-GAAP operating expenses will be approximately $3.3 to $3.7 million. The higher amount compared with the prior quarter is mainly due to the beginning of the year expenses we will incur. For the remainder of the year, we anticipate quarterly operating expenses to be in the low $3 million range. After interest expense, other income and taxes, we currently forecast our non-GAAP net loss will be approximately $0.8 million to $1.2 million, or a net loss of $0.06 to $0.09 per share, based on roughly 12 million shares outstanding. Most of the difference between our GAAP and non-GAAP results is our stock-based compensation expense. In Q1, we expect this compensation to be approximately $0.4 million. There will be movement in our stock-based compensation over the course of the year and it could vary each quarter based on the timing of grants and estimates related to performance-related awards. For the balance sheet, in Q1 we expect total cash balances to increase between $0.2 million and $0.6 million. The balances will include the recent direct investment and will be partially offset by the higher expenses we see at the beginning of the year. Thank you. With that, let me now turn the call back over to Brian for his closing remarks.

Thank you, Elias, and again, welcome to the team. These are exciting times for QuickLogic. Through the collaborative efforts across the business, we are positioned to achieve sustained growth through a combination of new products serving larger addressable markets, IP and software sales delivering both immediate sales plus a stream of reliable and high margin revenue and greater reach through our expanded distribution channels. These factors will be supported by the strongest balance sheet we have had in many years. While we tend to guide one quarter at a time, I thought with this being our first call of the New Year I would give some additional context into our annual outlook. Bolstered by the improved order flow for our display bridge products, increasing new business partnerships driven by Australis, and new defense programs, as of today I am more certain we will, at a minimum, achieve the same annual growth as we did in 2021. To take it one step further, I am now seeing opportunities that, if we are successful, could lead to revenue approaching $20 million for the year, which would be the highest since fiscal 2015. The revenue cadence over the course of the year will likely be weighted more to the second half of 2022. When combining gross margin that could remain in the mid to high 60s, and operating expenses climbing modestly to support the business opportunities, I am increasingly confident that we can reach profitability by the end of the first half of this year. In closing, I want to thank our key stakeholders, including investors, customers, suppliers, and most of all, the QuickLogic and SensiML teams for their continued support. That completes our prepared remarks. Operator, I would now like to open the call for questions.

Our first question is from Suji Desilva with ROTH Capital. Please proceed with your question.

Hi, Brian and Elias, best of luck in the new role. So, I don't know if I caught it there. Brian, did you guide or give a rough guidance of what you think '22 revenue growth would be over '21? I don't know if I missed that.

Yeah. My closing remarks, essentially saying that we could see this year being the same growth rate as last year. So, we were very close to 50% last year, so 50% this year and I am seeing opportunities on top of that, where revenue could be approaching $20 million for the full year this year.

Great. Thanks for reviewing that. And then, would mature be roughly stable in that '22 and new products being driving the growth here going forward?

Yeah. Definitely. I think what we are thinking in the prepared remarks is the first half of mature, it's probably going to be like the second half that was last year, so flat to that. There may be some increase beyond that in the second half, but it's a little bit early to tell as we are still seeing our customers wrestle with some of the supply chain challenges on their side. So, I think from modeling point of view, modeling mature flat is probably a good idea.

Okay, great. And then, gross margin increasing in the first quarter versus 4Q, is that an underlying indication that there is some eFPGA revenue flowing in to the guidance?

Yeah. We definitely see eFPGA being a big contributor to the revenue and for the gross margins as well.

Okay. That's very helpful. And then Eli, you've worked with several companies, how would you think about, or talk about the revenue visibility here? How would you frame it at QuickLogic in your ability to kind of see the guidance in being able to hit it or how would you characterize it for us?

Well, having been here just 14 days, it's a good question, Suji. Look, it's pretty decent I would say, we have visibility that's very robust. But the type of business we have is also a bit complex, at times you see something that looks pretty good to opine on, and it changes by quarter. So I would say, give me a quarter or so to wrestle with it. And I'll come back with a better answer for you, but right now I see good things. I mean, I love the fact that we could grow 50% year-over-year, that's a big plus. And of course, the things I'm concentrating on, as you know, is simply to look at more opportunities for the company to improve gross margins, find ways to keep costs down and control OpEx that are profitable.

And then maybe lastly, Brian, you indicated, I think, maybe EPS breakeven in the middle of '22. And from the $4 million of revenue guide, and the OpEx, I'm just wondering an EPS loss of, $0.07 to $0.08, what is the revenue level that it would take? I guess the OpEx comes down, right? To be able to hit that breakeven, are you assuming some inflection to get there or any color there would be helpful on the breakeven level from a revenue perspective?

Yeah, from my – sorry, Suji, I’ll take that if you don't mind. From my perspective, I think we hit that $5 million mark here. Remember, at the beginning of the year, you have expenses of course, so Q1 is going to be a bit harder to achieve this. But I would say Q2, Q3 is not an impossibility to get there. At $5 million we could see positive on all levels.

Our next question is from Martin Yang with Oppenheimer. From my perspective, I think we hit that $5 million mark here. Remember, at the beginning of the year, there are expenses to consider, so Q1 may be more challenging to reach this. However, I believe achieving this in Q2 or Q3 is possible. At $5 million, we could see positive outcomes across all levels.

Can you provide more details about the recent private placements? What led investors to invest in your company at this time? Is this related to a specific project or funding purpose, or is it more general?

When I speak to many investors, the common theme I hear is their excitement about our new business model actually generating revenue. It’s no longer just concepts shared at conferences; we are now seeing it reflected in our income statement and overall financial performance. With some of the larger wins we’ve announced recently, including the $1 million display bridge win, and by adjusting expectations for the balance sheet in Q4 with positive operating cash flow, that encouraged investors to reach out and consider investing more in QuickLogic. They truly believe in what we are doing, which is why I expressed my gratitude towards them in my remarks. Eliaz, since you know a lot of these individuals, do you want to add anything?

So basically, I think the consensus that I saw in talking to all of them is that they picked up the phone and actually called Brian, this was not solicited by the company, this was them calling us to show confidence in the company and their belief in it. And what turned out to be an exciting discussion clearly resulted in a $1.48 million net proceeds. Have we opened it to more people, I'm sure would have had more, but we kept it at that level, mainly because this was not our intention to do any rounds, okay? So just I want to give you color on it. But there's a lot of confidence and belief that we will get to that stage of profitability and grow this company.

And then my second question is on the allocation of costs from OpEx to your gross margin during the fourth quarter. Can you give a bit more of related projects and what contributed to the movement in the cost of goods, and timing associated with certain milestones, any details will be appreciated?

We had an R&D amount move to COGS close to $300,000 and basically that impacted gross margin about 8%. So gross margins have been significantly higher than that. But this was done because it was the right thing to do, okay? And so clearly, it's an accounting matter. And that's the best explanation I can give you.

Our next question is from Richard Shannon from Craig-Hallum.

Guidance, I may have mistaken my notes here. I think you said guidance of $4 million, did I catch that the new products, $3.4 million of that with mature being $600,000 and did I catch that correctly?

$3.1 million new, $0.9 million mature.

Okay, perfect. Thank you for that. Second of all, Brian when you talk about growth on a yearly basis this year matching last year, how much will the display bridge products contribute to that as a notable amount of the dollar growth here? Is there any way, you just characterize the contribution from that?

I think the approach we're taking, Richard, is that we've announced a $1 million win, which is part of that growth. We're not relying on additional display bridge wins to impact the growth percentage I mentioned in the prepared remarks. If we achieve success with more projects, which I believe we will, it will make a difference when comparing last year's growth percentage to the $20 million outlook I shared in my closing remarks. So, we are addressing display beyond the $1 million.

How much more supply do you have to supply above that $1 million win you did announce already?

I'm going to say we have plenty to handle upside. I do not want to get into specific inventory values on the call because this is not prudent for me with our customers to do that.

Then maybe Brian, if you could talk about the pipeline for embedded FPGA. If I caught your prepared remarks right, you were talking about a sharp increase in RFPs and RFQs. So maybe just you can talk about this in kind of high-level terms, how many opportunities are you seeing out there? And what kind of TAM or SAM could you describe that you may be addressing in a year or two?

There are several components to your question, so feel free to remind me if I overlook anything. To start, in the first half of last year, we announced one eFPGA design win valued at a couple of hundred thousand dollars. In the second half of the year, we discussed a significant $3 million eFPGA win, effectively doubling our market value. This growth is driven by the Australis tool, which allows us to work much more efficiently than before. Looking at the first half of this year, we are actively involved in over ten embedded FPGA IP projects, which represent significant financial opportunities with multiple seven-digit contracts. To provide further context, our traditional IP design process typically required a year to a year and a half of commitment from our engineering team for one foundry process node. However, currently, eight of the ten projects we're considering involve different foundry process nodes, and we've made progress on about half of these. This is something we could not have managed in the past, but now we are equipped to handle the workload. The key challenge for our sales and engineering teams is to execute and finalize these deals. I see a promising pipeline for the first half of this year. Regarding the total addressable market, I believe we have tens of millions of dollars in opportunities to pursue this year with our upfront licensing and back-end royalty model. As for the future, while I see our IP business remaining strong with tens of millions of dollars, I also anticipate moving toward device sales, particularly through chiplets and similar products for customers. We could generate revenue from these device sales not just in two years but potentially over the next decade with the right customers. This capability to be independent of specific foundry process nodes presents substantial potential, and I believe it will significantly impact the industry and our financial outcomes. We've already seen positive results in the second half of last year, and I see a wealth of opportunities to capitalize on in the first half of this year. Did that answer your questions?

I love the detail, Brian. Thanks for all that. Australis tool, is that something that QuickLogic has exclusive or preferred access to somehow or do other suppliers wish to have access as well?

That's a great question that I get asked often. I also hear inquiries about whether we're open sourcing all of our knowledge at QuickLogic. Publicly, we've stated that our Australis capability is based on some open-source workflows funded by the U.S. government, specifically a tool called open eFPGA, which you can find more about online through the Open Source FPGA Foundation, of which we are a founding member. This workflow automates a lot of the hand design processes used in the past. However, there's a distinction between research-level tools or open-source workflows and the expertise we've gained from over 30 years of building and selling FPGAs and IPs for high-quality, high-reliability systems like airplanes, munitions, data communication systems, and smartphones. We are combining our knowledge of die size, quality, reliability, manufacturing, and scaling with the benefits of that workflow automation. We're not open sourcing our knowledge, meaning we retain a lot of our proprietary methods for making automation effective. This approach enables us to address various opportunities with a relatively small, innovative team. Additionally, to illustrate this point, I've often compared our model to Red Hat, which built a successful business by providing proprietary products, support, and services based on an open-source operating system like Linux. Similarly, while there are open-source workflows available that anyone can access, the crucial question is what makes those products commercially viable. Many of the customers I'm in contact with want to partner with a company that has extensive FPGA experience and a proven track record of support for their products. That's exactly what we're doing, just in a more automated manner.

One last question for me on the topic of SensiML. Just want to get an update here on any way you can characterize, where you sit in terms of number of subscribers, including the ones that are fully licensed versus kind of, call it test version or whatever? And then I think in the last call, you talked about the potential of the SensiML registering doubling sequentially. Just wondering if you can follow up on that with the actual results?

Yes, in my previous call, I shared my perspective on the business direction rather than specific guidance. I won't provide an exact number now, but I can mention that I have noticed reports on our user count and licensees. The number of users for our low-cost or free version has reached well into the four digits, which is encouraging. This growth is partly due to more microcontroller companies actively promoting it through their sales channels. We are also attracting new customers who are subscribing to our service. While AI is still relatively new and its applications are developing, we are beginning to see clearer opportunities, particularly in industrial IoT and some consumer wearables, which remain strong areas for customer engagement.

Our next question is from Rick Neaton with Rivershore Investment Research.

Hi, Brian. Hello, Elias. I'm looking at your large increase in deferred revenue as of year-end. Over $350,000 increase. Is any of that from SensiML?

No. It's from a business transaction we did with QuickLogic. These can occur quarter after quarter, just so you know.

And I'm looking, Brian, you called out the eTopus partnership. That's a startup company that is working with an open source partner from SiFive, is that right? The OpenFive system?

SiFive is a RISC-V processor IP company, and OpenFive is a division of SiFive that specializes in chip design services. If someone has a chip idea but lacks a design team, they can pay OpenFive to create that design, collaborating with SiFive on the IP cores to be included in the chip. The eTopus collaboration pertains to highly specialized high-speed semiconductor IP for data center communications. OpenFive has released several announcements about chip designs in this application area. The advantage we provide is that FPGAs are extensively used in this market. If there are supply chain constraints with other FPGA vendors or a desire to create an ASIC, combining eTopus IP with FPGA technology and OpenFive’s design services can be beneficial. We haven't discussed chiplets extensively before, but they represent a growing segment in semiconductors. Traditionally, chip design involves creating one large monolithic chip, but due to the challenges with Moore's Law and the high costs of large chips, many are looking to break down functionality into multiple chips that work together in a package. This chiplet approach is gaining interest as it can reduce R&D costs, allow for greater flexibility, and lower costs of goods sold. We've received inquiries from customers and others in this area regarding chiplets, particularly with FPGA technology, which is why we found it exciting to announce our collaboration with them.

How do you see the RISC-V ISA developing over the next few years, particularly in competition with ARM?

I believe it will continue to grow rapidly. Several companies have built their entire business on RISC-V cores. The instruction set is open, but the implementations may not be, which is a familiar scenario. Since our last discussion, Intel announced a $1 billion investment fund for the IFS ecosystem and foundry services. A significant portion of this fund will likely be invested in RISC-V, especially since they recently joined the RISC-V foundation. With major players committing funds to ecosystem development, we can expect to see considerable growth in implementation and market share for RISC-V. ARM is a strong processor with a well-established ecosystem, but many companies are reconsidering standard products available to everyone and are interested in customizing their own solutions, possibly adding instructions specific to their systems. RISC-V is designed for that level of customization and mass adaptability. As we navigate supply chain constraints and explore mass customization opportunities, more companies are likely to adopt RISC-V due to its flexibility. The ecosystem has been a limiting factor, but significant funding can change that, and I anticipate we will see progress in the next few years.

We have reached the end of the question-and-answer session. And I'll now turn the call over to Brian Faith for closing remarks.

I wanted to thank everybody for participating in today's call and the continued support. We look forward to speaking with many of you again when we participate in upcoming investor events, and again, when we report our first quarter fiscal year 2022 results in May. Have a good day. Thank you.

This concludes today's conference. Thank you for your participation.