MRAM - Earnings call transcript Q2 2019 | Everspin Technologies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Everspin Technologies Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Ms. Group Shelton of Sievers Investor Relations. Leanne may you begin. Ma’am,

Leanne Sievers

Technologies Good Sievers, earnings XXXX welcome President Everspin afternoon, to second firm. conference Relations Shelton Everspin’s quarter Group, and of Investor call. I’m Leanne

Financial Everspin’s today me CEO; Winzeler, are Conley, Officer. Joining President Kevin and and Jeff Chief

Before not want remind adoption limited business, expectations Everspin’s this call, to, you pipeline, regarding future financial I forward-looking successfully on bringing manufacturing technology, and and Everspin’s future goals, MRAM industry call our of contains statements the customer performance events, plan. we that business begin market to executing conference including and its in and but for to products design

XXXX actual in to filings are statements we We market involve with filings uncertainties, on forward-looking you results Everspin. conditions, and XX, SEC XXXX, the including our These investing would to review materially encourage in XX-K time and the cause SEC and to the factors filed associated those March discuss from risk from time, forward-looking on trends differ SEC estimates, statements. contained with judgments, other current risks in Form and may made based may that which

XX www.everspin.com. required website date in not This Everspin’s All made are as except of days the will be we of intend call conference Investor section at replay law, this forward-looking least call, audio and the as at to update statements information. Relations by do of this for available

And call go ahead. and now, to please I’d Kevin, to Conley. CEO, like turn the Kevin President over Everspin’s

Kevin Conley

joining today’s good those us Leanne, and you, Thank on afternoon to call.

Memory includes our Santa Clara, Day from a participation and to that Developer you week reporting today We’re at MRAM Summit. Flash during

number information on a of to lot interesting of a there’s So report fronts.

quarter challenging want original resulted start I that guidance. our in that, market in second the to the first into that coming revenue below we going in experienced conditions acknowledging by Before

than on call. we revise the to delivered had more talk higher originally it’s even about our results important that forecasted. performance contributing original much the recognize later EPS the we strong results We’ll guidance, to factors While to these

With to our strong model, regard and from products. the excluding recognize incurred device. past contribution for improvement operations It’s upon based product both of quarter, operating charge X-gigabit production the target in Toggle that margins inventory includes returned our STT-MRAM was when yields this quarter. important a the to gross this to pilot This our growing

coming solid cost for partners operations in [ph] groundwork demonstrates performance partnership our the our and execution This with structure by lower our foundry and quarters. lays in the for team products [OSAT]

shipments revenue X-gigabit our the of quarter the most that Our It growing a track expectations has STT-MRAM. sales to record. quarters. in also STT-MRAM experienced total, In pricing despite grew from included STT-MRAM significantly XXX-megabit STT-MRAM of challenges qualification reached new units shipments the demand revenue storage quarterly included and market recent in of

on milestone this cross-over mass we’re yield our to by of production Internally, track for end hit X-gigabit quarter. production the qualification

our STT-MRAM today. which Our executed to as working this team important in results, GLOBALFOUNDRIES, extremely these achieve relevant commercial a with manufacturing are technology has partner, well making reality

our with part development. traction part. next-generation new its extremely Day hear of week, the are increased this X-gigabit module we confirm achieving we’re is to part side, MRAM engagement IBM customer X-gigabit FlashCore At the On Developer pleased

in our also including first We’re only they advantages are latest it to but enterprise pleased for by the their not storage, their that technology architecture. showing next-generation our technology’s were demonstrate in MRAM confidence

persistent part. again, our high-performance applications, memory database that at of X-gigabit OpenCAPI the is STT-MRAM were non-volatility large development FMS, for the This also using memory exciting in the X-terabyte taken persistent technology the brings. exciting our new data-center another need unique an that and is card In application, demonstrate that off addresses wraps BittWare low-latency value

reductions, coupled a customer next significant revenue cost progress operational our we our engagement X-gigabit As to we year. of anticipate progress, a our result with as and of important represent production our portion other on enter attainment product yield

requirements Based in news are X-gigabit meeting additional a that of technology able able upon and groundbreaking this center at stringent to other applications, technology STT-MRAM extended operate will data qualification, Flash data usage models. In or our the Memory Summit be this support shown progress more of applications now that to in environments, to week, bring announced in we retention. technology reliably specific the require we to addition our temperature decade

existing important universal truly demonstrated its the memory for takes is production-worthy performance, STT-MRAM device. another of another as endurance now strengths This significant and advancement a reliability, X-gigabit technology. the towards with of STT-MRAM Combined step requirements our meeting in

and call, On controller announced partners ecosystem talked X-gigabit that X for Phison devices. functionality enterprise in that about DDRX-based enterprise accelerate of weeks, storage last jointly DRAM interface SSD Electronics traction and Sage In integrated Micro, our capacitor-backed eliminate SSD with associated support with the and the risks quarter’s their write to these the we will our have limitations previous low-latency chips we controller partners, platforms buffers. into STT-MRAM next-generation growing two

of be both available from these year. companies controllers to expect next We

availability systems steps in Cadence support into broader addition, center penetration enabling OEMs controller are These from build design of into will further to In data leading designs. our system other Design their that their DDRX IP, storage functionality of applications. important STT-MRAM Systems STT-MRAM in designers announced general enable

in progress pleased opportunities. this working product are expand we set important further made the are being and on our X-gigabit fronts many of with All to all, on program

products. Now, Toggle let turn to me our

have a have yet we in to these stated headwinds current of for experienced customers’ our a loss impacted products. but to our opening challenges I As that lack, want my active have business conditions. caused due demand underlying end-market designs, some remarks, not in emphasize market

special China. a Toggle majority upon deserve factory based observations. Significant mention which, of Two automation our sold for these is application systems, in are of our MRAM

sector, With levels. the continue purchases in historic factory well China to the slowdown below equipment run manufacturing

trade continued customers without has that our result. this dispute, A serve product on This, in of we, contributor major like larger U.S.-China demand has turn, a and to experience continue the we has some see which ongoing demand resolution, impact many as reduced others, the market. an from been

market has significant we believe dynamics server this Toggle are out. with situation segment, with customers has on orders demand mostly delayed been data build an our We is long-term center platform segment temporary below of our and key in products into servers. for rate the function controllers the leading believe share with a do this Despite share number market space. to installed position as server maintaining do suppliers our focused within running this is in not MRAM our expectations that the increase of in in a Another as

MRAM established And solid remain the disruptive of customer technology the as some MRAM demand larger last opportunity design Toggle customers, seeing softened trend especially second the for has and in grow, of this pipeline market to we conditions are has our growth we growth for expanded. believe improve. continues to quarter, once long-term breadth We Relative the markets renewed to base expect customers. has our while grow, end core in traction to our continues and this for tier generate

also the have than to or better activity two in last at We design win see quarters. seen what we continue new

coming QX had new Toggle entered and we XX the design XX months. revenue in in fact, will production that contribute measurable In wins

MRAM the year. we feel on As exit back Toggle be we confident a growth that as result, will trajectory

Later Toggle map we road have quarter, to release extend begin second MRAM to best opportunities. years, product in to Toggle we been our XX-megabit and XXXX in key our new the new at and first expect this looking also sale this in opportunities. order new contributing of parts customers We sales start half Toggle revenue address capitalize over how beyond. to and developed – on This will five first the qualification product to is to

our an to has strides made point on future quarter number continuing opportunities. new team structure; our of products; In our reducing our expenses view, support great fronts: cost this to improve of growing expand customer continuing execution improving summary, our past base; our market while advancing on a to from

quarter quarter you now through second financials take and third guidance. will Jeff

Jeff Winzeler

quarter XXXX XXXX revenue XXXX. end million above everyone. guidance our Revenue of you, the million the by was and afternoon, million quarter $XX quarter of high the the Kevin, start first Thank at of second in statement. $XX.X to of compared good in second income I’ll and quarter and the in $X.X reviewing revised

$X previous $X.X same quarter million the sales previous sales Second quarter. the $X compared total to of XX% quarter. product represented second during royalties of the quarter the from million of million year second and of in in down the revenue of $X or XXXX compared $X.X million approximately and million revenue in quarter last sales XXXX or approximately Licensing, contributed quarter total in XX% to and or $XXX,XXX other XX%

compared million MRAM quarter revenue reflects and includes in quarter. MRAM in which sales the sales the Looking the offset were and specifically was in at sequential second and million product $X.X record MRAM STT-MRAM. of Toggle Toggle Revenue $X.X in which sales, both lower decline quarter, year-over-year. STT-MRAM partially The second million by XXXX $X.X sequentially previous primarily product to

XXXX million $X.X Gross of XX% XX.X% of to million compared compared XX.X% revenue quarter $X million and second quarter. of XXXX of or the revenue or quarter of was the or the profit to XX.X% for $X.X revenue – in in prior second

the that worth sold quarter inventory was in material included of charge Cost scrapped. of second of $XXX,XXX approximately goods an

new manufacturing was XXX for impact, on the this basis quarter point production. Excluding improved gross margin XX%, reflecting yields

not production $X X-gigabit compared R&D million XXXX has $XX.X R&D development the future same reduction quarter. spend quarter. in Operating in of result the down quarter spending research of the our STT-MRAM to and operating and which quarter is the our to $X products, the XXXX continues million the quarter of fact The a $X.X were technology $X.X from reflects and $X.X transitioned Breaking million year in to development an part second priority. were Everspin in quarter, and and ago million expenses last second be expenses in reduction million that million to compared second the previous for of for

and of were quarter second our expenses profitability. the in XXXX both in the million focus income quarter in for the $X and quarter first and XXXX of Interest of quarter to reducing income a was $X.X SG&A strong second compared $XXX,XXX $XXX,XXX to on $XXX,XXX of million quarter income XXXX second of second the in reflecting in positioning company of spending the quarter XXXX of XXXX quarter expense compared $XXX,XXX XXXX, first compared the of the was cash in XXXX. and the quarter. in previous $XXX,XXX second $XXX,XXX of the to Other

the quarter loss prior per a XXXX share year-ago quarter. GAAP in $X.XX second compared during of and $X.X loss on average This outstanding. loss based or XX.X loss per million loss $X.XX with weighted or million shares the a net or quarter $X.X million $X.XX loss a same net GAAP was for $X.X share the million per of share

debt The Cash payments call. management the significant Now turning sheet. end burn $X.X comprised service $XX.X the first were million quarter progress $X.X at of second of end the million XXXX. strategies last made quarter to since balance million QX the $XX.X was burn. at million cash and the of We’ve cash of of the earnings to of our equivalents cash operating in and compared

This existing Valley our on week, a will Bank with we reducing payments significantly that Silicon agreement push signed revised debt. going year, a debt to loan service for cash out principal

profitability better less through Additionally, This by cash OpEx reduction. operating strong our a product focused QX expenses the spending improving and evidenced cost of we have on consuming through in cash our reductions late will focus up. is on products which for short our to levels, the public cash term These XXXX. since generate as were positive went the the and preserve actions lowest ramp revenues company in position the company

we’ve in company equity balance to raise our an facility and strong, cash put the place that keep enable market To pricing. through will issuing periodically equity sheet

intention measured this facility capital shareholders, Our way as providing minimizes is of required. dilution to in that while our a use

the us while the keep balance business. sheet healthy, All of growing our actions give these to ability

equity compared the in Total in the quarter XXXX. second the quarter in the of to liabilities million compared were $XX.X assets million previous was compared the $XX.X as $XX.X first first to quarter $XX.X million at Stockholders’ were end million XXXX. to million second $XX.X $XX.X in of the quarter million quarter. Total of

Looking of Toggle MRAM ahead, the headwinds spoke we of that quarter Kevin to expect continue the third market XXXX. for through

weighted is we per GAAP share loss a range share revenue per $X.X loss As between average quarter. per and share $X.XX million million range outstanding. $X.XX expect based on to million share, the XX.X $X between to shares result, of loss a for anticipated and count an

now over the I’ll call turn to back Kevin.

Kevin Conley

new Nevertheless, Obviously, there on in Jeff. have positive just are Thanks, amount achievements not segment. just for conditions of but for call. is market a tremendous difficult, as us, of reviewed semiconductor a other the number this companies we

remains on managing expectation demonstrated revenue the compelling ever progress We a looking track, and And our Our achieving our more as our focused future, and focus its line been. is on promise technology to remain fulfill our is execution results. growing now bottom by has is profitability. STT-MRAM our universal unwavering, can business, our it that memory than responsibly

operator, you up – now call line that, may the for questions. With open for

Operator

our [Operator Shannon first with Craig-Hallum. question from Instructions] And Thank Richard you. comes

is Your open. now line

Richard Shannon

Jeff, my Thanks, Kevin, for taking questions.

are Let’s questions get of to third Toggle some second you. guidance a some expecting have from or is see, get it quarter. there you’re reductions. And just for level know balance? to about set. Want couple that inventory there the on what versus if more on a I I filler, kind of going from reductions trends want here. quarter MRAM like maybe your your a just the you still Wondering second to talked sense in but to about I of pre-announcement guess, a inventory is hear

Jeff Winzeler

Richard. Hi,

me let first So, talk about guidance.

Our versus statements, our really STT-MRAM. broken out MRAM Toggle have guidance our we not

we what MRAM Toggle quarter. saw just of the portion going business, characterize we really experiencing our this think forward I headwinds in as guidance our

while technologies, as much not our numbers to exact and give result for very these a Toggle of prepared of market continued the we’re in headwinds So products. each customers’ are the

Kevin Conley

see to could point; talk U.S./China when two visible at other, the about yet that have this the we expected build-outs, don’t the that are Richard, the and server ending And which Yeah, we address one, we maybe of dispute, sign end. we are, which in which to the again, call, don’t on trade did trends specifics happens. things a forecast

Richard Shannon

of STT-MRAM lines Okay. Maybe the revenues. I’ll along the product ask

a the in second third? record you noted You expecting in quarter. Are the record level another

Jeff Winzeler

it’s challenge prefer we The decreasing grow going whether be the to not us. is increasing relative give again, to from to for or Yeah, to guidance QX.

are that’s expect that We’re very, today. market the experience And QX. guiding STT-MRAM. fact I growth very again, to just we still slight don’t of affect that think where function in resistance we from we Toggle a same our And softness

Richard Shannon

of reserve question the Fair gross A that for Okay. helpful. you enough. in about mentioned outside that the quarter quarter. and second margins, in second on That’s is inventory XX%

Given other similar affecting the revenues or similar mix or level a it other dynamics of is fair to think margins that? of any level here, about gross

Jeff Winzeler

our to important our Richard, I think margins of here, underlying back the business trend that is are kind returning targets.

mean our material factory targeting. that’s back allows the we’re that producing by I we’ve out that coming margin So, that, business that actually of now the us been get mid-XX%s to to

yield produced that The Toggle relates charge subsequently we’ve mid the last these we year, taken that we reflective that quarter having were. we second took a of charge late And we of to when before. in some in were that product to this the issues really re-tested parts. was We

charge is ship for the what And able scrapped. And really some therefore And of about. we failed to were revenue. were others and that’s retest them,

inventory exposure continue going what would in we’re forward. and being I of planning were quarter. this less re-test significantly before experienced characterize to tested than We to parts the we have that that the

Richard Shannon

of experienced multi-part Okay. relate the maybe with in of sounds here versus question That’s fair a great last X-gig it’s you regarding or like could STT-MRAM, terms what question how for you X-gig A, customer part specifically in enough. building the One here, deal Kevin, Maybe, customers. different of is ramp-up enthusiasm a XXX-gig, breadth?

X-gig which And of and being last talked two you the storage. being think is designed outside then, – OEM of I products, also one about quarter the that’s

IBM on quantitatively you as or qualitatively update, of an that. give if one those You the can mentioned anything Wondering customers. us

Kevin Conley

above less yield in the or at itself, with XXX experienced of we et what terms the In more it’s or attainment, ramp cetera. of terms

So pleased we’re on pretty that.

early parts several We product. in experienced customers kind are this I days the that’s talked at broader distribution hope X-gigabit sampling than XXX-meg. of past, as the we’re helpful we much so understanding of of we’ve about with where had in the our in

platform The the as IBM BittWare well at their that as talked being their Day. were memory card. about talked here call, on both persistent two MRAM I Developer about, OEM one with next-generation with customers those we

Richard Shannon

guys. I’ll Okay. at all lines, Perfect. for you. Thank That’s me. jump

Kevin Conley

Richard. Thank you,

Operator

from & Company. And our comes next Ari question with Needham Shusterman

now line Your open. is

Ari Shusterman

is question This taking Rajvi guys. Ari Hey, for Gill. the

and your exacerbation last earnings and But seen regards been you’ve you off an So the to quarter, want on congrats effect quarters? turning effect. I wondering strong to forward. like Has more the if Thank it pronounced you. mentioned China call that a start just quarter having to on few this you’re to some things compared seeing moving yes, remember by situation. this business last with

Kevin Conley

Ari, below those not with entire it change. or slightly we Really, at the started manifesting It’s for impact we maybe continue then at customers, And or saw quarter, QX. big what – less more that it’s a in that the last on saw so particular itself QX level.

Ari Shusterman

given regards reduce line sense. with do you makes help there time your – things That on taken to you And can cash steps Is to give towards that? Okay. have moves the maybe burn. – you have to some guys Or steps profitability – profitability? a

Jeff Winzeler

Yeah, Ari.

this that spending we’ve So I at bar and gross matter going about is about margin talk necessary to the that would we’ve done covering we to the quarter talked to is our point a kind we’ve for our by of forward pretty profitability thing revenues to significantly always in company XX% get dramatically. reduced the reducing of And OpEx. profitability XX% that fact

total OpEx so we’re went since on the focused As was it’s lowest and been I really that. stated call, we on public, the our time the

Toggle a is something what above return we the line to need the of obviously, that I back a think experienced ramp profitability, portion going this we’re business, which believe get terms that happen. will our of of In to to we growth And to quarter. revenues lot gets to time still for to

a getting of wins. lot new We’re design

see start should new ease, to existing have customers And give that Toggle. as position for with of We us profitability. customers to solid kind very in our the path we large the headwinds company a

Kevin Conley

Yeah.

major So we’re in what to of we’re and of cost three spent revenue mind drive, – means three third us keep we’d just sort to what our we products what by able are sort profitability ask able do things is factors build, what operationally. to of

one. And obviously effort within the our third so of a into and control, are two those we driving put of lot

progress quarter. to and So what our continue work that, the our while our look driving that side I’d We’ll improving there And on the sooner. do both product last we’ll get at say over is meanwhile, operations on we’ve control that we margins made cost top-line help us to spend.

Ari Shusterman

That sense. Okay. makes

with to question on progress that? MRAM. updates – you regards more GLOBALFOUNDRIES to seen one Just of any then on your and Have

Kevin Conley

Yeah. GLOBALFOUNDRIES In MRAM announced that at was had present they production of Day. pilot one milestone. their sessions, Developer achieved they here their

They So customers about to that’s parts in now fully talked that out be customers. number them allowing in quarters. they sample the pipeline that to coming a and have go they’ll prototype of the giving

on next shipments so customer they’re track year. for And

Ari Shusterman

Great. much. Okay. Thanks so

Kevin Conley

Ari. you, Thank

Operator

you. showing no turn I to to time. now would for remarks. Conley any this at questions the Thank call I’m closing like And further Kevin back over

Kevin Conley

for you and questions participating call. the Thank for today’s in

in XX, progress Semiconductor, we the on to Communications Conference investors, look across Investors our forward that to our quarter. Minneapolis our Hardware we’ll in and inform be August next you want attending Summit X. next the We Institutional interested September on business For Jefferies Dougherty reporting Chicago call on &

disconnect call. now may the Operator, you

Operator

thank for wonderful participating today’s gentlemen, day. does conclude and a This you all Ladies program, may you have conference. today’s Everyone, in disconnect. and

Everspin (MRAM) 11 Aug 192019 Q2 Earnings call transcript