MRAM - Earnings call transcript Q4 2020 | Everspin Technologies, Inc.

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Operator

Good afternoon, and welcome to the conference call to discuss Everspin Technologies' preliminary, unaudited fourth quarter and full-year 2020 financial results. At this time, all participants are in listen-only more. At the conclusion of today's conference call, instructions will be given for the question-and-answer session.

As a reminder, this conference call is being recorded today, Thursday, February 25, 2021.

Before we begin the call, I want to remind you that this conference call contains forward-looking statements regarding future events, including, but not limited to, our expectations for Everspin's future business, financial performance, and goals; customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin's design pipeline; and executing on its business plan. from based involve judgments, may risks results differ are market leads, cause statements the to and in conditions, and materially forward-looking on current estimates, and actual forward-looking These statements. contained those uncertainties that Everspin. may SEC with filings you on quarterly in made filed SEC from our XX-Q investing XXXX, X, we including on our time-to-time We would November review discuss and filings, associated encourage with to in risk report factors Form other which SEC statements as required this law. made forward-looking call, and of All the date are of except by as financial preliminary as on The results and review are discussed date external the and our today are available estimates, auditors. information Everspin to further reflect by the hereof, subject based of its

as Our vital actual are the for a closing our finalized. and completion adjustments, time results events between procedures, financial of that may of differ now estimates disputes developments these result arising other financial and our materially from

call Additionally, are the This to Darin discussions in replay audio which reconciliations release over made to And Everspin's in EBITDA, measures and Everspin's company's at of website terms. statements company's GAAP net Darin, this of to the call conference details. press and now adjusted go performs financial release like in press Billerbeck. non-GAAP GAAP will the additional turn certain CEO, Included be and please available at include I Relations definitions Executive and information loss section conference during call will and for least days www.everspin.com. Investor ahead. XX for the of would Interim now Chairman

Darin Billerbeck

guidance, mix. QX call us joining managed for their revenue inventory everyone the to thanks and distributors Suzanne, came below in our you, today. as Thank on

QX X weeks. a our current 'XX. healthy with at over was 'XX range remains that, Our up to X% inventory XX of revenue QX Even distributed

generated we quarter positive a the second for cash in importantly, flow More row.

for strong pandemic due our was hold, along revenue XXXX, XX.X%, before high-growth the of with up the entire took MRAM, year. Toggle growth primarily first to STT-MRAM half across For our

significantly for in product the PC, We products affecting QX, soft, improvement As we to earnings applications due for rollouts. 'XX our customers end and throughout MRAM call strong Everspin marketplace. to rollout. new and any from MRAM industrial was starting XXXX QX grow demand did as more and in pandemic year AI, been play Unfortunately, mentioned regarding remains in our and ongoing our point. growth last history, its of continued More industrial volumes expect our smartphones, no the XG Design of worldwide volume our low factory the demand such see markets, any don't than QX have of the backlog customers provided XXXX, X,XXX Everspin a production Design MRAM. QX in production more have and XXXX, than reflecting future growing customers to pipeline than purchased in demand adoption in the wins exception. wins and to doubled

improvements the and that various back front, the respect that track product continue across board. healthy yield now line operations the us implementation that focus from get having recovering plans We margins plugged on the On on believe sight of have us in earlier we to we to growth year. issues will on with

We the to gross this see throughout in consistent expect range margins year.

year this getting capacity situation plan we abnormally in our to need tight capacity an risk biggest Our is worldwide. about the

of revenue we result the history to by long in future. Springboarding suppliers radiation QX tight beginning of impacts MRAM in Everspin in silicon production any hardened for certain QX XXXX, in that enabled will in new us trying opportunistically don't prices. material expertise our raise are we're a off addition, to a In beginning foundry Currently, design application. followed win licensing revenue that certain has plan, clearly but we see to areas. the to see

first on our our is based Rad-Hard this STT-MRAM. Importantly, project

We able the provide of next on call. more information at expect to project be end earnings to this

sales global our in from QX embedded of royalties MRAMS. also first We received foundry

offerings. global over and you our who tremendous now with MRAM program partnership turn quarter our will foundries through our Our has Dan? delivered Berenbaum, I to financials our own CFO, benefits, Dan to it and QX will embedded XXXX their guidance. both take QX STT

Daniel Berenbaum

data period. to in chain prior-year revenue due XX% with was previously the lower Shipments from both The year-ago and up product $XX largest includes the the our versus some fourth Thank quarter, $X.X generally $X.X compared specialized licensed them. base for Darin, revenue wafers, in suppliers to million some serve the $X.X in $X.X results, million metrics. discussion on which million of focus for foundry decline the lower and customers Today, royalty, in foundries. source quarter to quarter last which STT products, we their our have to from the and you, our in applications, traditional $X.X XX% in also we using XX% foundry GAAP customer, our of of CMOS the who was quarter million, end fourth due million, flow MRAM revenue, sales fourth that we quarter The Licensing, afternoon, revenue manufacturing everyone. in highlight and to product MRAM I'll quarter with good quarter. flat quarter the silicon XXXX. from in revenue of of of QX as million, those the property, slightly to center revenue $XX.X $X.X XXXX for highly million in Toggle XXXX. and contributed high-density Revenue and cash STT-MRAM in was prior supply financial represented I'll of issues revenue, quarter million for fourth some on other prior that the important we my which usual, complete was the quarter and intellectual compared and

margin, was gross for XX.X%. the fourth of to gross margin quarter Turning GAAP XXXX

roughly million $X.X quarter. that I in stock-based of to to and the prior XX%, recall I the a expenses note quarter to This the quarters compensation included prior fourth XX.X% $X.X at million in obsolescence in XXXX. prior we $X.X our margin stock-based of which of these you of or the the favorably on down gross this would how With but cost quarter stock-based operating gross was royalty from expect Our and of XXXX the to the noncash, decided XXXX charges. course charges. XXXX compensation quarter product quarter higher would structure million of $X.X in compared $X.X slightly fourth year-ago $X.X of will GAAP the the of $X.X in quarter's to as million included were to million depending related mix cash note of the and accelerated reclassification obsolescence, last gross quarter margin, of included million sold excess, of you $X.X margin This million levels, compensation, that operating to and restructuring expenses GAAP margin XXXX. nice $X.X the fourth charges. XXXX fourth minus, periods, in excess, of million plus million, step-up goods XXXX. Also, of $X and compare incentive we've expenses revenue, gross over included quarter million, $X.X remain for than fourth prior from compares depreciation noncash, quarter's compensation in significantly compensation. included million

broad-based our XXXX, we product STT-MRAM other expense in prepare expect of We the industrial launch grow as for and targeted at applications. R&D to

This $X.X XXXX, third XX fourth a was $X.X also in GAAP of $X.X quarter $X.XX uncertain million, the certain net fourth average discipline. coming middle reflecting of the loss jurisdictions. related tight in During per bottom loss GAAP loss million, in $X.XX in noncash $X.XX the Getting outstanding. our the per million weighted range, XXXX, tax was based compares million for of loss a a $X.XX $X.X shares quarter fourth of per of to on loss our XXXX million, and of despite below the to GAAP This guidance our a or net quarter a of we or of guidance of a loss line. foreign operational quarter revenue share share, position to loss recorded range, share the net of or XXXX.

in Turning to once fourth the balance of million increased line quarter the negative from the prior to fourth the of to and flow At million end $X.X year. and sheet, end million the our we to $XX.X in end at $X.X the million compared Cash again at in had on the the fourth equivalents positive quarter of was operations the million cash credit. the cash quarter, $X quarter. of balance $X quarter, of compared $X.X of $XX.X last quarter, prior a million at million

growth sufficient cash to support believe operations to have continue objectives. and We we our our

at which, increase a the quarter over range expect year-ago million we to million, Turning in $XX the $XX.X $XX.X quarter and guidance, $XX.X over midpoint our million X% XXXX. of to million, X% revenue of a first quarter represents of increase the the fourth in the

a of questions. per up some expect million. we $X Darin per and now GAAP expected it of loss brief which We of additional commentary back over loss $X.XX $X.XX of it share, approximately a loss compensation between to stock-based I'll a expenses open for share reflects before turn for

Darin Billerbeck

as towards market Thanks, others, our to the high-density we as behind products of us. next center, at for bottom move continue penetration the we the anticipate our both profitable increasing future revenue build customer for summary, We Toggle as years. our a believe Dan. We of is well top In through STT-MRAM growth. data

to product Rad-Hard customers middle the Operator, will year, now We for continue replacement license are out questions. come. may our on lines IP to low-density STT-MRAM with with you monetize and we the in more at the track open and industrial of mentioned step, targeted our beginning this NOR to next tape the we STT-MRAM

Operator

of question Michael from the First [Operator comes Instructions] line FRT. from Weber

line Your open. is now

Unidentified Analyst

Thank opportunity to a I here. the appreciate questions guys. couple of ask you. Hi,

some respect a know a It space, the The NAND past, just seems in I'm automotive like for from know away were little with with any would first there, business. I the developments has there in a MRAM. curious, of is EV of getting bit that large with just recall the renewed the was defective. with good be one moved one, that interest I recent - it XXX,XXX specifically Tesla, application of their business you're the chips if - the to

Darin Billerbeck

products some the what with right great the specifically of in kind long absolutely is cycle two have our battery, have the Darin, it models One lower-density and way. endurance, and range temperature in the our like we cabin. high-performance areas and high the one products, the also especially a have retention. data of from where for It from feel finding obviously we opportunity extended near a future other the is both And ranges. is under us, because we there's temperature we're a in is, This hood absolutely or different And cars. No, is. is by

So us that's to a for good we go. feel place

I bit place think really McKinley our X-gig the the we're high-densities, for little only for suited is if that again, isn't really that. go a to suffer going because, they

big is other the are. Our necessarily STT for product suited that, offerings have we but not all product

focus absolutely, future our get ours, to and more that thing, just to market of temperature enable also are can So, that and a that's range, there. ourselves extended one target so going have we products penetration

Unidentified Analyst

Great. Okay.

that you quick, year-over-year. K? design wins the Do Q that be will mentioned you Or actual have for real or figure Just the the in QX? doubled

Darin Billerbeck

the the It should in be should That be available K. in - will information be K. that

Unidentified Analyst

Okay. on taping question. ASIC of Can you comment on the one year? progress Great. this out just quick And

Darin Billerbeck

center? X the gig You STT product to mean data for the related ASIC

Unidentified Analyst

correct. That's

Darin Billerbeck

nothing So to report. new

As getting we've qualified out working that on we partners taped discussed with getting and that. publicly, on before are

more So year. do to talk able on we'll plan else And hopefully, a quarter. having about this bit done next We that little be still to nothing report. that

Unidentified Analyst

my for Thanks question. taking great. Okay,

Darin Billerbeck

Mike. you, Thank

Operator

Our next of Company. Pyatchanin the question comes from from Needham Denis line

Your line is now open.

Denis Pyatchanin

good ask on evening. Gill. I'm a Raji everyone to here behalf of few Hi,

currently that guys kind If you the customers? supply on you demand impacting are of tell kind a back constraints for November the chain inventory reported in how What's been about front us moving? bit you the in don't you? more And the the latest the mind, data there? industry little And center of could buildup inventory has

Darin Billerbeck

- answer question. So we'll let the me jump first

middle we slight a year, we concern are see So, of year. as lead buildup, to this through little is doesn't second inventory start have so the walking inventory as We as do that the were a to big items, you'll more did the you a expect burn so off an far in standpoint. see buildup hurt The really balanced. these lot long having half we that

comfortable with the So currently that inventory have. position we're we

The second that question, Sorry. say again?

Denis Pyatchanin

you, wafer impacting the from are the or et supply, industry that issues are in there? supply How that are cetera? Is chain constraints currently impacting kind any the you you guys of seeing

Darin Billerbeck

get ramp-up, data everyone, see consumer and of see getting some the impacting lot is the which utilized not suppliers, share, centers, good we're because capacity starting because a to everyone's foundries. as But tilt, these bigger some noise. is for of their supplier, as pretty also full typically, it's in big Well, impacted as small struggling you're fair and we're you're to starting at to the a and the the

as way wafers because, some for here to through are we are see deal mentioned, a big a we're pound constraints, people will able few our we or So lots. asking again, there not when hundreds of but

negatively far, costs our that think our up. protected. concerned there note that able out and impact that effectively. are been people anything. the earnings of go The can margins did opportunistically that we're to so of I that again, we've bring we're in pretty But if up prices, case, gross any So than mute raising that there Because, I in

Daniel Berenbaum

elaborate let bit. me little And a just

opportunistic strong now, other working go our that, price I to obviously, foundry partners Our and the wafers on as eye else, of all will great our the suppliers, know fortunate of the board and it's working have across there. keep need, us sort in they situation partners are is they right that for for seeing everyone And that we are are - partners to hard large through to we're where we're that definitely foundry we so us, say some for something the get I that tight, a year. us. an but increases through supply

Darin Billerbeck

specifically, houses. assembly test And the

Denis Pyatchanin

and see, assembly I prices? houses the that test specifically, some of it's and are the so raising

Daniel Berenbaum

Yes, bit seen well. we've seen a on side we've assembly and test; little as the material

Denis Pyatchanin

you And anything the then, pipeline? there share kind and else And in of as share that anything contracts well. both that's that of can product? I you you. in QX, you license pipeline Is Thank is now started you of more mentioned Rad-Hard think So shipping kind can How is older the some kind we the going? it. have anything the are Got there about more? of STT-MRAM the STT-MRAM there

Darin Billerbeck

product Well, years, we've STT-MRAM been it's the new. not so for shipping

into data program center, that be that been I and consistently. that The Rad-Hard would doing time. we're think shipping new, it will we've the that take discussing,

As is strategy, product, it we that, product. we which long it. I a little Not of volumes, engage those time. more to also the expect typically And us, agreements a it's we've about is temperature why long an extreme high try it's sign design in it's we very past, of term, talked but extended Rad-Hard lucrative, can and think conditions, a talked long-running about so bit, short and but that in for be extremely our through it's so part both to one particularly

Daniel Berenbaum

our in perspective of kind when put little shipping as about And, STT-MRAM bit Denis, talked think well, more to talked to we about a I second we QX, customer. high-density

both time, for our than some gig X quite as densities. the the So to we've customer high-density STT-MRAM shipping in MEG the well been lead XXX

towards that now talking STT replacement. the We've our talked on markets, bit This Toggle about using and been that's on stuff so about technology. for eventually be the project doing application of as density gets that's the is we've next product. data geared doing years. out our Rad-Hard That another STT-MRAM more a what for we're project, STT yet high-density lower well technology, Rad-Hard taping STT many Rad-Hard as than first we're center, will the little NOR this So project industrial

quite some shipping been So is, we've the STT time. message there for

multiple to out NOR technology. eventual there have center believe. technology This we replacement. are from the there, it, Rad-Hard data best for applications We to ranging And STT is industry-leading the MRAM

Denis Pyatchanin

That's me. all for

Roger think the few of think, so joined his just own. a has line, has I actually, he I

So Raji I'm going the the to ask let jump next back ones. in and queue

Daniel Berenbaum

Raji. We're you. No happy to Denis. take questions from or either you Thank problem,

Operator

question from Raji from Next Gill Needham of comes Company. line the &

is line Your now open.

Rajvindra Gill

Thanks guys. thanks appreciate questions. I it. for Yes, taking my

was I call. bit a little joined And sorry on I a previous late. just

SSDs, So standardize around on easier the integration allow strategy partnering customers. the product. by to trying end company and particularly of higher this ASIC had will to the with developers, part the to you And of be had done was the - of particularly interface, mentioned ASIC MRAM-enabled for that looking company the

was the process you. in update of that wondering can higher of order terms I to kind develop Thank us partnerships, try to terms trying So ecosystem just of MRAM. the is proliferation in of how if of going a to in MRAM of generate

Daniel Berenbaum

Raji, Yes, thanks question. the for

okay so it's was to jump But now. update answer give I don't short it. for so, say was to though, you asked on earlier, to late. going going the bit is, actually some That a anything we I'm And to grief have question

continue to is ASIC, we qualified next to do not partners. expect more to be that should We on that ASIC us. a work It coming We quarter's have over still if to with on focus and important update the our very for the have call. earnings year, this that months, on

Darin Billerbeck

will of in future way - disable that the plan addition anything or don't having have interfaces compatibility. standard on to we all across And that, all so products from would people Yes. our the drop-in board,

Rajvindra Gill

Okay. MRAM cashing. it's the data - you're all Got about on center, and talking And about it. really the in

your up their And start to kind enhanced products. of customers in of starting just capabilities of the curious kind see MRAM center iterations are of in in few a data so, to what now of and as the with of kind value terms come that they MRAM

Darin Billerbeck

Yes.

data technology and architecture. it. the highest by center performance You that and the in the high-performance, It's in nailed about provided cashing is

And that's they how commodity there marketplace are that's the of combination you to both on. So the also and drives, what speed the perspective, or endurance we it's And compete speed we are market. a the fastest speed competition against, an a parallelize that going not segment it's right the from of in are provide so be the but they're that that focus fastest performance what of architecture. today, drives combination but

performance So the we're of at targeted end market. that highest-end data primarily center

Rajvindra Gill

Okay, thank you.

Operator

I this back the call further would to time. [Operator turn showing at questions Instructions] Berenbaum. I no like to am Daniel

Daniel Berenbaum

Great. Thanks, Suzanne.

we you you. the progress our you look Thank call. for quarter's can We forward next Suzanne, So, now call. our with results quarter's all to joining and Thank next that, conclude the in today's call. disconnect reporting us.

Operator

Ladies and for conference you participating. gentlemen, this today's Thank concludes call.

You may now disconnect.

Everspin (MRAM) 28 Feb 212020 Q4 Earnings call transcript