Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enovix Corp (ENVX, Financial) reported Q3 revenue of $4.3 million, exceeding the midpoint of their forecast and showing a 13% sequential growth.
- The company successfully opened Fab2 in Malaysia, which has impressed leading smartphone and IoT companies, enhancing confidence in their manufacturing capabilities.
- Enovix Corp (ENVX) secured a new agreement with a leading global smartphone OEM for battery cell qualification, marking their first official entry into the smartphone market.
- The company has formalized a strategic partnership with a second leading smartphone OEM, setting the stage for high-volume production in 2025.
- Enovix Corp (ENVX) ended the quarter with a strong balance sheet, holding approximately $200 million in cash and equivalents, providing financial runway well into 2026.
Negative Points
- The company reported a non-GAAP EBITDA loss of $21.6 million, although it was above their guidance range.
- Non-GAAP EPS came in at a loss of $0.17, at the high end of their guidance range.
- Enovix Corp (ENVX) used $31 million in cash for operations during the third quarter, indicating significant cash burn.
- The company anticipates an adjusted EBITDA loss of $19 million to $25 million for Q4 2024.
- There is still significant work required to pass customer qualification processes and ramp up high-volume production lines.
Q & A Highlights
Q: What yields are currently being seen on the Agility line, and when can we expect an update on HVM line yields?
A: Ajay Marathe, Chief Operating Officer, stated that the Agility Line completed the SAT last quarter and is operating at yields close to 80%. The HVM line, which is in SAT mode at Fab2, is expected to achieve similar yields.
Q: How long of a first-mover advantage does Enovix have before competition begins utilizing silicon in batteries on a larger scale?
A: Raj Talluri, President and CEO, explained that Enovix has a patent-protected process with significant trade secrets and industry know-how. They are the first to use 100% active silicon in consumer market batteries, which gives them a unique advantage over competitors who use much less silicon.
Q: Can you clarify the announced volume customer for December quarter 2025? Is it a new or prior relationship?
A: Raj Talluri confirmed that the announced customer is a new relationship. The agreement includes a commitment to launch next year, and they are also working with other customers in the smartphone market.
Q: How are pricing dynamics trending, and how does this affect target gross margins?
A: Raj Talluri mentioned that Enovix can command a premium for their batteries due to higher energy density, which is valuable in premium-tier smartphones. Farhan Ahmad, CFO, added that they expect to achieve cash gross margins of 50% plus at scale.
Q: How many top smartphone OEMs have received EX-1M samples, and what's the initial feedback?
A: Raj Talluri stated that they have sampled some top-tier OEMs and are working to meet demand. Farhan Ahmad added that the two disclosed customers are top five OEMs in smartphones, indicating strong interest from prominent companies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
