MRAM - Earnings call transcript Q3 2019 | Everspin Technologies, Inc.

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Operator

Good afternoon, ladies and gentlemen and welcome to the Everspin Technologies Third 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 turn the conference over to your host, Ms. Shelton Relations. of President Sievers, Group, Investor Leanne Please go ahead.

Leanne Sievers

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

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

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

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

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

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

Kevin Conley

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

across business. product team and key objectives solid of other We period achieved its delivery sequential cost by Operations product to was positive MRAM revenue well another growth Toggle and Everspin and by STT-MRAM marked revenue over delivered the quarter third on The record further reduction. supported our QX. developments execution

positive signed increasing our against developments Additionally, revenue key next product we license of of drivers. These markets to and signs for sight roadmap, our year. royalty have demand a recovery line backdrop of another of patent expanded are meaningful recently many and happening

this growth the rising card server meaningful number as the sold in side. server into continued demand rate increases application, Toggle on segment We benefit enterprise function our MRAM new Leading components in well builds, saw builds progress in as quarter coupled of strong a storage were arrays storage products products. as with the of STT-MRAM continued for datacenter an which our controller

to we trend continue this expect and XXXX. We end enter year as throughout

modest This demand segment broadly, also first have trend the show in most applications indicator of this distributor is in in year. to restocking More we coupled geographies. challenged was seen significantly with starting recovery quarters positive that increasing a from two industrial a

of QX Toggle early more giving longer-term recovery, indication our further of potential growth nearly indication further As wins for in we an secured XX% than these design QX, for products, products.

The and trade recent of the challenges, resolution at since bring previously at the recovers. may sector segment conflict factory as relief the China hand finally of automation core the discussed

as indicated as in customers certain these in continued an to overall of positive healthy levels. by inventory current seems some Although the of ordering trend exist be increase as challenges distributor number the areas, still well

competitiveness chain by Other optimizations this With being partners. to our a bottom and our manufacturing we team have increase work based operations our continue our quarter, ongoing an will These as supply of the regard entire yields also production focus some support our strong past to area production our cost, be our increase chain manufacturing and efforts our healthy done helped to in of improve upon across line. supply operations lower strive costs.

internal X quarter-to-date of technical gigabit X maturity gigabit bring-up and driven met and our the products. results revenue both our quarter strongest our production quarter. third our the yield Notably, megabit for ramp included targets STT-MRAM milestones XXX of shipments by product exceeded Our has

Summit Flash work at toward as in by as presented new this to continue programs IBM the qualification We engage well product. for with groundbreaking Memory customers

Additionally, at to the cultivate storage including datacenter FMS, ecosystem controller enterprise as we set in companies others, segment. announced well continue partners, as a customers with of to work the broader

over outside market. Now new qualification, I’d August, characteristics moment is and the The a datacenter achieving extended nanometer that nanometer to significance retention announced product data that opportunities of XX-year our can like our roadmap. technology we take operating in capability, discuss technology. major to temperature MRAM completed XX both our important an development address In these now we improvements XX STT-MRAM

excited we’re our development, STT-MRAM to customers existing industrial of a this set broad solutions using new the that upon will and interfaces an announce with roadmap IoT memory extension to packages. standard Based in engage our segments

we opportunity enable market will unmatched existing expanding economical in easily game-changing on in technology. way to This further than higher into base that our today’s integrate customer the are Combined applications for MRAM’s focused applications, a advantages density more much our efforts with STT-MRAM datacenter this need solutions.

to that started segments. last announced across already Shifting Toggle multiple sampling developments our Toggle week has XX product related several product to recent we megabit market new line, to customers our leading

the employ eager This highest smaller footprint reduce customers more can ever system are memory important are test have to density which the Toggle in produced. new considerations product These allow segments. systems and in design will we MRAM costs, to a

gaps second revenue expanded and beyond. and to customers X new certain the current customer in memory we providing requirements. addition starting believe solutions the for Toggle to recognize lower with also XXXX while X density begin of affordable more we now, addressing megabit densities, With cost to offerings, and half qualification product part, megabit XX we roadmap in our MRAM our megabit include In will

the agreement patents portfolio. HDD applications. the Seagate head our announcement with a of patent license Everspin Seagate is This patent further granted during TMR cross-licensing was to Technologies. agreement quarter has strength highlight a sensors Another our covering of of indication for

patents is patent granted and its of license strong that the patents of is MRAM and already our which In MRAM Everspin turn, of gain validation strengthening our complements step portfolio of to another our IP this number a a position. further significant to in remaining Seagate has strong patents these IP believe We transferred STT-MRAM early family portfolio.

And held MRAM the GlobalFoundries eMRAM, pipeline public Their finally, FDX on eMRAM-based year. remains next of XX the embedded $XXX portion FDX shipments productization Technology should quantified that that its XX includes revenue Conference GF valued product products of at that start potential. last is nanometer or in in nanometer month, million over commentary consistent

royalty positive license their with GlobalFoundries is indication another meaningful in that MRAM potential result shipments. their This commensurate to embedded from to stream the for program ramp has our the product

tight by lower significantly execution quarter resulting and productive consumption. in solid operational expense underscored control, another been it’s summary, In cash further

portfolio Additionally, have IP conditions, meaningful we’re and improved to customer interest strengthening revenues, of sight have driven we in line by seeing demand our portfolio. increasing current MRAM and made progress improving product our expanded royalty market good and growing

as Everspin. demonstrate towards sustainable growth position leverage the growth continued our and these leadership Collectively, progress in developments market we MRAM future our for drive

this detail out more third Jeff fourth numbers, you on For our take through will playing on quarter how now is and quarter guidance. financials

Jeff Winzeler

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

reflected in STT-MRAM, Toggle increase of sales was Looking compared third both $X.X the growth MRAM includes in $X.X revenue million the million revenue of to at product quarter, and quarter. MRAM third XXXX product specifically revenues. in in the sequential which and quarter STT-MRAM previous million Toggle and $XX.X The

XXXX approximately the third Licensing, royalties and quarter. $XXX,XXX of third contributed $XXX,XXX million other the of approximately in in revenue $X XXXX previous to compared quarter the and quarter in

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

to the third $X.X quarter, margins quarter. the XXX underutilization our expenses million by third somewhat cost necessary penalty quarter the and previous products. millimeter on hit Toggle fab. compared yields million of for in million continued the of $X.X quarter $XX.X will to the of were our XXXX offset target During to XXXX Operating This of in the see we

operating $X.X in the million million quarter quarter, ago million to a and our year third down Breaking $X.X the same $X.X expenses compared for were development research and last spend quarter.

SG&A expenses of OpEx quarter $X million third million in compared prior quarter. $X.X the evidenced were tight and the by $X.X reduction focused million remain spending controls in XXXX on $X.X year-over-year. in million to We the as

during for the for of shares net million quarter or million On $X.XX million $X.X loss with EBITDA per or prior per previous $X.X share $X.X quarter a loss third million was the This GAAP weighted third average the quarter an ago on in XX.X $X.XX $X.X $X.X quarter loss $X.XX the third in the year the and basis, GAAP share and million per a of quarter. compared $X.X to was the the based loss million same XXXX or XXXX outstanding. million in loss net of loss loss quarter. share compared

end Cash to $XX.X $XXX,XXX at were quarter, end from of of a equivalents at cash turning the reduction Now the sheet. the and million the million of balance third $XX.X the year. plus $X.X of the third second million used quarter compared million specifically, of capital the to More were in expenditures last for operations and last XXXX. cash quarter $XXX,XXX $X.X quarter

an in facility from we was this on with issuance the debt new quarter, and in Valley that August. through we our funds loan place August million year. Silicon During of ATM put principal These Bank, to remaining the announced enabled third of raised the in our refinance $X.X that down pay us balance agreement stock

mid-year used $X.X interest-only quarter of As XXXX $XXX,XXX through this from result a quarter to decline will per approximately approximately on remaining debt balance. loan of for payment the per an significantly refinancing, service million million $X cash

operations for the preserve sheet the components provide in to combined to continue strategy company service driving and cash growth. and costs reductions for on the of necessary resources are cash The sustainable used our debt key balance

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

is $X.X average loss anticipated the share shares revenue range share XX.X $X.XX outstanding. loss with expect weighted to at fourth based a between GAAP per our guidance an loss and continued growth between quarter, we for share and per increasing to Looking of $X.XX count $X.X range share on per million million million. a

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

Operator

Your with and first comes Hallum. Richard Craig the from line question Instructions] Shannon of [Operator

line Your is open.

Richard Shannon

Jeff. sense your a And to where are that you’re us products like opportunity terms more seeing It now of Kevin, when from have here. prepared your you, you products How of might STT Thank give Maybe XX-year of my questions. regarding if seems taking one comments design those Thanks pretty Kevin the a interesting of retention. would the effect an and significant revenues? for a be? interest? cycles you can long in start remarks see

Kevin Conley

question. Thanks, Sure. the for Richard

So IoT going XX industrial of of are from datacenter host with a data up we to, I retention the that months lower our which referred years Toggle many of to densities servicing three requirement opens in and applications products.

that in we the So these the expect pretty significantly. target is of XXXX see products for expanding the timeframe. our us would We for opportunity production opportunity –

qualification customers time. So see after would would products we be of sampling to we that revenues that at expect

Richard Shannon

displacing socket security? to the Okay. Are sockets or Toggle in these addition

Kevin Conley

addition. These are in

the out product, products, with announced top XX our They newest megabit. So Toggle top XX they at out megabit. our

these So be and megabit upward. XX will

Richard Shannon

the What range XX the upward. XX-year you’re expecting of for retention? high that density end and is

Kevin Conley

up be would to These XXX megabit.

Richard Shannon

here what Obviously, you customers that seen XXX, you’ve progress okay. Kevin, X Maybe discuss we’ve with seeing gig it like you with looked here stage Excellent. describe the quarter? can qualifications, the to engagements, And the the maybe pipeline at describe announced similar in progress two of far. last XXX so cetera. a again, development? et the you’re maybe can relative

Kevin Conley

megabit. And ahead qualification or of targets, what said line not on I of in yield about saw less our which our with milestones were experienced ramp we’ve with from I ahead more if similar, XXX. the think been we remarks on we’re the As we in prepared on what XXX the

So looking things pretty are good.

Richard Shannon

Okay.

will jump line Let’s see here. here. I of Maybe question, one and out more

on I market announced that talked if in I I you partner you’ve of really see once opportunities think some the MRAM. when support market the so should or more X regarded think controllers terms one of Kevin, think a expansion an SSD there progress gig some do sales? help during lot the you’re you product far, And – I gig or but expect can year – one you’ve this I than to wonder the us think line this there ASIC X start you’ve next. one inflected more you update were about market give year point at expecting to that and if

Kevin Conley

August, Yeah, released timeframe. companies two partners continues. two announced publicly. to expect named expected there the would XXXX controllers yet those using those are with Sage so we XXXX products and and wouldn’t their haven’t the Engagement timeframe. in others all see be again we to And And Faison in to controllers four therefore, we customers that before be

Richard Shannon

Okay.

question Okay the maybe numbers for here actually on quick side ask I’ll you Jeff another here.

your safe then nicely, model would line as of reach the last it levels kind quarter think OpEx you quarter to there. gave? that to try see off a talked we and is coming down kind December to level try I to about of you bottom guidance number your assumption which great Is

Jeff Winzeler

OpEx and a has In of as can we QX, total million. feel $X.X we going talked really the past, service this forward. come million our I’ve in OpEx reported we so the where level business We’ve quarter down. $X.X Yeah, reached about

indicative opportunities I think to budgetary an pretty to the last couple to number. of expect spend. at additional We’re quarters But look that from continuing of we perspective, what reduce OpEx were

Richard Shannon

the That’s for Thanks all questions perfect. Okay, guys. me.

Jeff Winzeler

Richard. Thanks,

Operator

the of Shusterman line question Your comes & next with Needham from Ari Company.

is line Your open.

Ari Shusterman

Hey, Raji for I’m taking question guys. this Gill.

first to application the want of I about So Toggle. automation factory talk

there And has softness last of said I a impacted recall your been remarks, recovery. quarter in was in bit I prepared by So you think it China. some

can business of and kind kind you. signs business, a thank of macro seeing STT-MRAM talk on into you’re from your softness? head So of about impact next the you you Toggle Yeah Yeah, the as any quarter?

Kevin Conley

the that, redesign for as seen Thanks dispute. customers chain we Ari. trade in comment our end challenges was demand of supply that To that the the question, to clarify The the international a comment. function from was the resulted had

seen been resolved. we think that positive clears recover. seeing we’re a haven’t segment disputes Now There this challenges But least that indication still for of that. will amount demand that the to recover. have those that for This there. terms the we segment is, at way allow in of To-date, to

Ari Shusterman

is makes automation that would applications, the And actually you Toggle into like you, of Toggle applications compared datacenters, et you Got as biggest percent say up other can or break roughly sense. what factory to cetera?

Kevin Conley

is those into to highlight quite percentages guidance We Yeah, don’t rate deck, say in servers. that of that frequently Ari. buckets, earnings in major one of segments We automation we of on as controllers provide highlight don’t we a for needless our these factory the specific but precise top one datacenter lot direct terms those. applications our as

Ari Shusterman

a switching bit. Okay. gears I guess

moment? into guess and we can gross enter QX in to takes margins, the your we can gross we As what trending, some at margin talk how go puts and you XXXX, think gross about about target I mean margins is as I

Jeff Winzeler

I yield where like achieve key companies are for the perspective most in our been semiconductor target have that of and as we my happy Ari very component is a we from gross yields us the that said the product plus. margin margins in XX% Yeah, business a at remarks, point we’ve can prepared

So that’s good.

on tax talked put and of about also talked business factors being associated with that has about our products. cost macroeconomic the a fact we’ve because Toggle I these manufacturing that down Toggle the product

as volume I we gross expect we trend we to think see So as margin increased up. that and Toggle, would for see recovery

Ari Shusterman

one just sense. Yeah, Right. that more And makes question.

what I well higher opportunity compare XX in megabytes megabytes? megabytes. opportunity from the megabytes, XX XX move in megabytes Toggle continue X to density as megabytes your the we X in be megabytes it of et cetera, think XX we’re what will to relates would would megabytes XXX as opportunity incremental increasing How kind as to the seeing up? XX it versus you and As of

Kevin Conley

As increasing we demand seeing said, for higher densities. we’re

best-selling our products is Toggle Our of one XX today. megabit

market for said, number opportunity the about by already received being well XX as samples are qualifying enthusiastic And taking our and a pretty that them key meg. we’re segments. So of customers it’s in the I

product don’t about the customers compete. higher with engagements lot new where of the for likewise lot the a seeing we’re In densities, of enthusiasm STT options line a non-volatile

that to effective more on a cost STT, So bit-per-bit Toggle. is be also allows much basis versus it done using which

pretty these we’re So both opportunities. enthusiastic about

Ari Shusterman

one more Actually question. just Right.

comes revenue greater than when to So wouldn’t to you between know expect had you it to STT-MRAM, STT-MRAM you I if guys Toggle, STT-MRAM you but break the and roughly timeframe? mix Toggle, up would give say a rough be when

Kevin Conley

I for for to pretty hard predict think that’s you, Ari. us

Ari Shusterman

you. Thank worries. no Okay,

Kevin Conley

Thank you.

Operator

Shannon question Craig-Hallum. follow-up line a have coming with from the Richard of We

Your line open. is

Richard Shannon

questions, my they mentioned mentioned so. from $XXX here. guys. the a started when GlobalFoundries see whatever assumption that are the more or TAM couple to they Have of you’d a you to have your about or confident now? Thanks And part details for Tech sort million just of is or I an next some give some was. start event taking a forecast Kevin, happen on pickup? said that year you you production schedule or right can it And we name can

Kevin Conley

first to design million a it wasn’t million just actually a pipeline. $XXX it clarify, So $XXX was TAM,

that the So that’s of that MRAM FDX. with tracking embedded are their designs on quantification are on, XX their using they customers

can what best guidance said into to they which their we production that publicly, is go track first And probably And expect that that’s they’ve Richard. next you there customers continue year. give to I the

some a us. has that that their great. with the upon partnership we’re well. customers them been It’s think I think capability. have as gives based confident produced advantage for great they good We what we’re The seeing, technology

Richard Shannon

for today? maybe and give when expansion expect an up Toggle you’re as start do a running? quick fill know And when you your My SilTerra, are Okay, you be would up fair to do us capacity think and where out with you there enough. that that need just last to you I question. update that building business you

Kevin Conley

Yeah towards well. previously goes so our We’ve that towards tremendous goal made along XXXX. production. progress the XXXX be will We’ve talked about that that and partnership getting in starting into of beginning of

go continues everything track yeah, to on So there.

In that throughout a come hope also benefits a something are advantage recover to that the we of advantages capacity. that take doing can as terms chain. just will several having that of on expanded besides it there’s that from basis, but us continue be year, We gives things the diversified supply there other needs

Richard Shannon

Okay.

that’s Kevin a to all Jeff. need lot, and think know. I thanks, Thanks I

Jeff Winzeler

Right.

Kevin Conley

you. thank Right,

Operator

are there Ms. now time, at further no over this As call to the questions Sievers. would I back turn Leanne

Leanne Sievers

Thank everyone you, Xth. you you, on One XXth and on Discovery the York on final in in that also management Craig-Hallum for December York operator participating call. Benchmark We and attending today’s will want to be Conference thank the Alpha Select New comment. Conference November New inform

to For results reporting those scheduling the look We quarter’s hosting interested progress a our or meeting, Operator, you call. and our in the Group next forward contact now may please Shelton firms. business on disconnect.

Operator

today’s teleconference. This concludes

You disconnect. may now

Everspin (MRAM) 10 Nov 192019 Q3 Earnings call transcript