Enovix Corp Q3 FY2024 earnings call

Key Milestones - Opened Fab2 in Malaysia, which was a significant accomplishment as leading smartphone and IoT companies were impressed by its manufacturing capability. - Executed a new agreement with a leading global smartphone OEM for the qualification of battery cells and late '25 launch of one of their flagship models, marking first official entry into the smartphone market. - Shipped EX-1M samples from Fab2 just weeks after its grand opening. - Formalized a strategic partnership with a second leading smartphone OEM, outlining key milestones towards smartphone market entry in '25. - Aligned on a production schedule with a leading IoT customer including a mass production purchase order. - EX-2M samples are scheduled to be shipped to customers in Q4 2024. ### Yields - Agility line yields are close to 80%. The HVM line, with identical kernels to the Agility line, is in SAT mode and expected to have similar yields. ### Intellectual Property - Enovix has a patent-protected process with significant patents and trade secrets, including in manufacturing higher energy density batteries and the machines used. It is the first to use 100% active silicon in consumer market batteries, with competition typically using lower percentages of silicon.

In Q3, Enovix achieved revenue of $4.3 million, which was above the midpoint of the forecast and grew 13% sequentially. For Q4 2024, the company expects revenue in the range of $8 million to $10 million. Revenue in the fourth quarter is mostly coming from Rugged, with a small amount from the Agility line.

Q4 2024 Guidance - Revenue expected in the range of $8 million to $10 million. - Adjusted EBITDA loss expected to be $19 million to $25 million. - Non-GAAP EPS loss expected to be $0.17 to $0.23. - Long-term gross margin target for premium tier smartphones is in the 50% range (cash gross margin plus).

• Forward-looking statements are subject to risks and uncertainties due to various factors affecting future financial results and business. - Competition could emerge as others start utilizing silicon in batteries on a larger scale, although Enovix has a unique advantage with its 100% active silicon and patent-protected process. - Stringent qualification process for batteries in smartphones may impact time to market and revenue projections.

Q: What yields are we currently seeing on the Agility line? And when can we expect an update on HVM line yields?

A: Ajay Marathe stated that the Agility line completed SAT during the quarter, with yields closer to 80% on the EX-1M technology node. The HVM line is in SAT mode in Fab2 and is expected to have similar yields to the Agility line.

Q: Understand Enovix proprietary process is patent protected where applicable, but how long of a first-mover advantage does Enovix have before you see competition, begin utilizing silicon and batteries on a larger scale once Enovix and customers prove the technology works and there is a demand market. And as your arrangement with Group 14 technologies afford Enovix exclusivity in the markets, where you utilize their SCC55 material.

A: Raj Talluri mentioned Enovix has a patent-protected process with significant patents and trade secrets, including in manufacturing and machines. Competition has mostly used lower percentages of silicon, and Enovix's unique process allows 100% active silicon, giving a competitive edge. The agreement with Group 14 provides exclusivity in certain markets where SCC55 material is used.

Q: In the guidance for fourth quarter and revenue in the $8 million to $10 million, can you just break out what's coming from Rugged and how much is coming off the Agility line and driving that revenue?

A: Farhan Ahmad stated that revenue is mostly coming from Rugged, with a small amount from the Agility line, as the company is mainly in sampling phase.