Earnings call transcript Q4 2022

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Operator

Good afternoon and welcome to the Conference Call to discuss Everspin Technologies Fourth Quarter and Full Year 2022 Results. At this time, all participants are in a listen-only mode. At the conclusion of today’s conference call, instructions will be given for a question-and-answer session.

As a reminder, this call is being recorded today, Wednesday, March 1st, 2023.

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 and Everspin’s design pipeline and executing on its business plan.

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

whether All date forward-looking forward-looking information, new undertake expect by of our this statements or as no events are made future statements, update made We statements of as a as the to result law. any and this alter call call, of update otherwise. on obligation to or required forward-looking

results on based hereof review The auditors. its estimates reflect the the are internal information today by subject financial preliminary date as to further of and and our are discussed Everspin available

Our from our actual those with are of developments financial and financial closing adjustments that the results of our arising finalized. result a other time period final may results completion now estimates and procedures, as this differ between materially

conference posted Additionally, press GAAP at is income EBITDA, website and provide which and release A Investor made of the adjusted of GAAP release call Included press to definitions certain and reconciliations the net of non-GAAP are statements additional company’s details. Relations www.everspin.com. in of will terms. copy financial Everspin’s in during press discussions and this include and release measures information the company’s section

Sanjeev President go to and turn to like Aggarwal. the now, And over call ahead. Everspin’s Chief please Officer, Sanjeev, Executive I’d

Sanjeev Aggarwal

Everspin a which an We income thanks, revenue the call a record quarter operator XXXX. in delivered company. the to full $XX.X positive end revenue continues leading above for of were row, everyone on million, all-time be million GAAP us $XX for for focus for the joining and seventh high the quarterly year of you, guidance, of Thank to today. net

year A XXXX few a revenue, record records in annual in we total annual reached record record full again record setting annual cash XXXX. product income, flow record in revenue, for wins design net after annual record annual record XXXX include, the from operations, EBITDA, QX annual

million million year. few revenue Next, $XX.X year margin the consistent include, quarter-over-quarter. was and $XX for year-over-year. and a for the for XX% Full QX was million Cash quarter-over-quarter. totaling QX, for million, $XX.X were $X.X revenue the year $X.X year in Product up was full up XXXX for GAAP year-over-year. full million, was net highlights income up $X.X sales XXXX full $XX the QX X% million, sales were from year. gross GAAP for year, flow X% operations Product the XX.X% million, was

business Our outlook.

Our of product from as balance headwinds continues XXXX some XXst, experiencing although to December backlog the of downturn. for high, are be XXXX we semiconductor

helping some to continue We our is alleviate demand. supply chain our which address unfulfilled constraints, foundry Toggle of

remains our and in its to continues to opportunities confident invest technology. STT-MRAM in Everspin Turning leadership in technology. future

DRAM, to markets, NOR technology STT-MRAM products high memory performance our tuned deliver have persistent SRAM multiple We including non-volatile for Flash. and

persistent with delivering Our significant shipping the interfaces. other accelerator currently STT-MRAM and and to in memory are data XXX applications products replacement started battery-backed fabric derivative in gigabit X products are XXXX, production the in cards, These targeting DRAM market. of densities, megabit and center and value DDRX SSD, DDRX

XX-nanometer the legacy the which megabit enabling simplify our memories system interfaces. SPI easily are technology to like MRAM by Octal components and node products These we introduced products for These Quad standardize X available In CMOS our SPI, nodes. was that customers advanced memory CMOS in XXX higher Toggle replace STT-MRAM our STT-MRAM from SRAM tuning and offerings to XXXX, densities to to or scale of are DRAM densities family megabit, products xSPI on architecture, ferroelectric developed SPI on FRAM. and

Based STT-MRAM optimized and meg on low-density on XXXX. compete IoT, us customers we electronic the strong taped XX interest products automation of this network, and use devices, better of process This to infrastructure, ideal xSPI to feedback enterprise for for density an are solution in like out and XX-nanometer designed family CMOS control, solutions medical new from memory gaming. from with aeronautics, QX This in industrial range. allows our this X megabit and alternate in in of systems family

for this for tuned to segment embedded there our shipping are STT-MRAM is megabit densities. the replacement in technology addressing of first STT-MRAM as introduced scaling product, XXX flash megabit similar NOR believe Due limitations to and market of and past the well currently STT-MRAM XX-nanometer, discrete XXXX a the We to XX in we NOR potential the market.

for greater in STT-MRAM to XXX high-density parts Everspin uniquely high-density than megabit design NOR with monolithic replacement. this experience discrete products and manufacture is positioned

and XXXx is phase, available for updates. The systems replacing design in over-the-air for memory, configuration faster when ideal simultaneously product such and be the enabling first store NOR, in FPGA example, would to

a we announced STT-MRAM. could collaborative QX FPGA to to In different technologies a XXXX, engagement Switching radiation-hardened that benefit from technology. develop greatly strategic

that as die] a enable of and This As the solution in or off SRAM FPGA, [ph] will the memory STT-MRAM [no and thus on-chip Everspin cells part tables. characteristics. the lookup that promote will collaboration, execute configuration provide the enhanced on instant eliminating solution a the security acts

available memory is hard-coded and fast configuration be based OTA to multiple this believe nodes play an or possible. next-generation will application. programmed from embedded on can below, updates FPGAs. be in solutions be STT-MRAM We role important Since times can can solution XX-nanometer scaled on will with the Everspin STT-MRAM be monolithic depending and the already Further, advanced

CFO, XXXX will turn I financials now over quarter Anuj? our and first will through fourth quarter take who our to it guidance. Anuj Aggarwal, you

Anuj Aggarwal

good Sanjeev you, and Thank afternoon, everyone.

meaningful the pleased net XXXX positive seventh quarter of of its fourth part income. Technologies quarter results, is financial announce As Everspin to consecutive

of operations addition, a cash positive In generated flows balance million. cash from we healthy $XX.X resulted in

the in of quarter results quarterly guidance, of $XX.X XXXX. above and million revenue solid high compared fourth end million, $XX.X of to the with $XX.X delivered last quarter We million

income also of positive and of the positive XXXX. $X.X of from operations million cash We flow for net million fourth had quarter $X.X

in which prior XXXX. revenue with fourth included Toggle compared at $X.X quarter $XX.X previous royalties, patents, and XXXX. an sales increase other Licensing, $X.X quarter in QX in STT-MRAM million quarter, QX $X.X product consistent $XX.X MRAM in million in was the the was million both revenue quarter the and from million, and the fourth million

versus in high-density in QX, our represented the applications QX data for and of Shipments for largest to STT end X% who XX% ‘XX. suppliers revenue product XX% we revenue center in our quarter serve with customer of

quarter and gross in cost $X.X fourth for gross Industrial in QX quarter in the fourth expenses to XXXX was expenses million fourth volume GAAP operating The quarter to of new the into by XX.X% support ‘XX. $X.X and the margin was GAAP the operating in products QX. Turning versus million production million margin, XX.X% that in went STT prior prior quarter sequentially ‘XX $X.X low for quarter, XXXX. quarter driven higher increased versus primarily the the the in were XX.X% of

basic in per positive third million $X.XX of profitability operational $X.XX or ability basic midpoint quarter cents of drive income net was share million $X.XX to guidance and shares GAAP to our compares $X.X of income in supplies income of the ‘XX basic macroeconomic the We’re or net in Basic better a strategic pleased range, quarter $X.X per share ‘XX. the outstanding. net average report share to or per of weighted reflecting tightening EPS million based discipline the This and quarter basic $X.XX uncertainties. of and fourth on fourth $XX.X million than of of our face $X.X

remain positive. Adjusted continues EBITDA to

EBITDA million, high compared million in year is to a quarter For QX ‘XX. and of $XX.X ‘XX in the million EBITDA QX $X.X prior for million. at ‘XX, of record the $X.X $X.X adjusted Adjusted full was

$XX.X equivalents $X.X quarter, at the cash QX $XX.X in from the to end prior compared quarter $X.X was quarter ‘XX. the Cash of Cash the and increasing and operations flow fourth to million million cash at million operations for current million the to the of year’s flow $XX.X million. from end increased

Everspin macroeconomic be $XX.X range $XX.X million Turning expects to and our in to to million $X.XX, to to remain related influenced revenue from the our products total expenses Toggle and guidance, price navigate development and breakeven suppliers. of primarily to XXXX ability Everspin expects of for quarter is the in Demand by STT-MRAM semiconductor our share and Everspin our confident opportunities challenges. per product income strong. GAAP first its increases XX-nanometer basic net next-generation

Sanjeev commentary brief turn some for open back we for now I it over before it up to questions. additional

Sanjeev Aggarwal

fourth summary, In the history reported financial company’s Thanks, strong the Everspin year Anuj. in quarter results. with best

the to build to employees. sustainable of dedication continue hard the and future Thanks towards Everspin of the work growth. profitable, We

excited future for you from customers to confident see the are Thank joining today. are opportunities products. We us our in our interest our STT-MRAM and in

you open Operator, for questions. the may now line

Operator

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

line open. Your is

Richard Shannon

Well, hi taking questions guys, here. for thanks my

is, we burns think have seen broader dynamics semiconductor I’d the pretty late. companies ask here some like I seen have lot and of to builds in the one first significant inventory the space in some a of

it, constraints capacity seeing still you’ve least are so I at You’re through. But some got far. not working know

if these first degree love constraints you guess and I’d of that be to can talked guess become or about inventory I you with bookings the they you? may that And about which take on thinking your worry get when customers the to best your more I and off do fall So from comfortable expect overcome? to you to maybe they’re all, as backlogs get

Anuj Aggarwal

Yeah, Anuj. is great question. this Richard, Hi,

to couple me a try it pieces. So let take in of

healthy. So right, be as it backlog, at look to we continues the

demand, So we XXXX. in XXXX, we’ve to going solid demand have out got

high as things are XXXX visibility good. perspective, you looking that from So Really into well, right. know

been have cancellations, push some I out. some mean, There

macroeconomic is, future able of able think of there through been we’ve amount been So, backlog, been to seen. we’ve some pull we’ve in quarters, do from high overall, and demand But that. the effects to that has what work I really because

about demand I capacity think are understand capacity working so we’re the them customer current working working and are from what closely Now the as closely a also well. And future them then in frees it current quarters, interested getting product but been pull to in with makes quarter understand there you’re when and very sense demands to as with our not to only sooner? are in frees We’ve that asking their they up. opportunities with standpoint, where very up, customers

Richard Shannon

Okay.

Maybe get enough. don’t would topic second. here assume question any like to first the that the come you quarter. to I how about technical chunk midpoint some probably up revenues, more this in I’m to know Toggle about of with down a fair know drop big to a you kind quarter fair Okay, and there’s really in product out delineate to of a the that building to falling asking than with Is revenues a way licensing? quarter-on-quarter specifics I is licensing Toggle revenues. more more going modest you’re or but back off of in here, here think be this revenue

Anuj Aggarwal

so way promising the the million way think we guidance ‘XX. revenue very is to is the you million up the know feel it going $XX.X Toggle continue about built that in is Yeah, and to XXXX to I strong, $XX backlog we

think strong. that piece I So is

From that’s demand, in The product go it’s tapered I think key little from part seen a But off that right. strong before down, standpoint. a customer, our STT total of that know, that a and a bit as with up revenue perspective, you little continues we’ve challenge to of that’s bit. licensing, we’ve shared kind

opportunities patent that’s for things incorporated deals the none that, like of see and we guidance. as So into

Richard Shannon

roughly the income going that the and the the on if margins, gross $XX. is Maybe first my line fourth well to margins, quarter, another between for like fourth forward statement here about in I and right. focus helpful. Did the math you’re on both I’d did $XX quarter here quarters, here. year talk and to three Gross product Okay, XX%

think had also in the strong I you a some yield. but mix more past quarters, optimal

other drop here off the How fourth much product dynamics? quarter? explain was and So that can’t the of yield’s into mix you

Anuj Aggarwal

model a provide little I careful the margin, know, is guidance much too XXs. Yeah, we’ve between try I’ll say that communicated to so here, always gross you low-to-mid I’ll don’t right. that, internal know we our be because on

stabilizing, bit the we higher past. things little overall, In QX, feel we see did a a normal in I providing. gross back and seeing margin think getting range it’s costs like as guidance and the mix expected supplier and like internal in yield that in more the that we’ve line you’re evident product that’s the to stabilizing more But for we’re model the you’re shared that. the with

Richard Shannon

Okay, fair enough.

FPGAs, this Let of ramping top want here. a product big about if up question here you see me product out bottoms the jump up? over we others maybe on about think that densities know, to ask on, Sanjeev, kind how new And year, you down here just picture, some can from talking thoughts MCUs seen you which us to give xSPI to revenue this then year? ultimately, you’ve attach I and could and product pick to this line how contribution

Sanjeev Aggarwal

Thank Hi, for question. your you Richard.

I an understand think our forward. it’s to question going revenue important profile

industrial So I think most our adoption know, think is in you way markets. the it the about to that, of is

is for qualification. time it a long So cycle

meg XX in I the don’t from So going to you’re or the XX see think significant revenue meg XXXX.

density prompted optimized us for using nvSRAM with and FRAM. the customers opened size that memories, traction tape customers actually in or said in what we memories that like at last SRAM, a actually meg. year, XX QX die out And up were QX. seen Having more which And to that is, did us ferroelectric have our alternate that, strong

So meg low-density I nvSRAM attach the and parts they’re Toggle XX the industrial decade think, XX the applications, seen us from the for into going think with so. some over FRAM, to to IoT application then you’ve process about meg, of and or know, you last high-density, and the the that get defense, taking the then over and aerospace basically example, MRAM automation, market standard

Richard Shannon

on Okay, One I’ll for me. last OpEx. enough. that’s fair in jump line question here

to, level seen in we know, you’re the investing that last know, see this to in are about coming here R&D investment of levels line? long-term? kind see elevated you about STT-MRAM last How do mostly new you going And from line. Or more down OpEx getting we how the much Here up long of you earlier as about then quarters a talked we of, back think year? it couple do

Anuj Aggarwal

the you and share higher off kind out ready know, decrease year question. we but to expect know taping OpEx, great I expect know, we you ready, on as product I the in but Yeah, what bit QX, little And, of don’t progresses. a right to can normally you it as lower-density so what be provide level guidance getting and the getting everything we’re slightly it and is

So helps. that if

Richard Shannon

Yep, me. asked that questions. enough does help I’ve

all the So Thanks answers I’ll I think jump guys. line. Appreciate it. on the for

Anuj Aggarwal

Richard. you, Thank

Sanjeev Aggarwal

Richard. Thanks,

Operator

Ravindra Rajvindra [Operator of Needham our from next & question with you. comes Thank And line Instructions] - the Gill Gill] Company. [sic

open. Your line now is

Rajvindra Gill

you thank on solid and in results Yes, very light of congrats tumultuous environment.

to question a Sanjeev, industrial discrete certain know, xSPI applications. the IoT Just, on family and NOR, applications, ability replace the for you

that kind Now higher-density with a range have xSPI family. you the to of respect

the density. volatile of is the of of been been and of combined cost What kind What’s for ST-MRAM? that has Is the access cost side? with a been non-volatile? the discrete kind the because terms from around benefits side? has the instant issue customers feedback, on that’s the while, thesis feedback the But MRAM the benefit it NOR Is on in replacing been of on it

from you’re So, customers? just hearing of curious what

Sanjeev Aggarwal

afternoon, at if write, it’s way FPGAs, Basically, forever look the the afternoon. pretty it fast. read to is right, Raji, the are current NOR used speeds good but Yeah, in you basically, good takes

that’s where the the So customers, are some appreciated actually is by of it’s being much STT-MRAM writes basically faster. our fast,

are faster read speeds over-the-air updates, the So similar. the

multiple bit you Then streams is, actually the memory. other it store the it does allows to that thing in

streams three number of that in and actually way, that STT-MRAM using. So you’re two depending density on can or you slots have the of the the stored, streams

we we’re obviously STT-MRAM. in we traction know, power you endurance customers. write value less attraction. speeds, So, where getting the write seeing competitive streams, cost from longer configuration than that’s lower our are to cheaper good I environment, are But a actually NOR faster where much the where those is people where and And think the of that’s

just again, customers that parts. adopting value our are So our previous like performance our applications,

Rajvindra Gill

we’re know, And you thinking about, ‘XX. calendar

will and know, rad-hard extension some where product, milestones of push the the will licensing find the first, opportunity to, Defense the in which broader of for before then have Department So, the there. deal, revenue the you going come rad-hard are designs with the you built the technical

in industrial, you opportunity Can know, long, the it you we XXXX, that you also see about rad-hard are XXXX. that And ‘XX? since taking you’ll in it of the kind calendar about, won’t talk time, the a take design you’ll know of then fair on cycles talked see in it amount but

in And growth budding opportunities? so, XXXX, think how year, for then, do impact that we you the for think this kind two of do what main potentially year? will this XXXX, with on driver be those about And

Sanjeev Aggarwal

me, Right. from stop okay. question, If please I deviate the

So I answered. that’s why

question. last the with start I’ll So

I For to there, our going starting and I initial And not XX XXXX, numbers. think are what be to part, meg and seeing meg traction STT-MRAM the revenue you’re XX getting paths? there from it’s huge growth think those see

But you by about the the know, be that to number going talk it’s end decent year. a of we’ll actually

to these growth drive I over other and at in The get as XXXX, think parts, in and qualified thing XX revenue look various they again, the significant will XX that. is, systems adopted the

Now about. want that bit product I just comment we’re a rad-hard the over talking switching here. to to little

as than replacement, XX actually STT-MRAM So, meg and There looking strategic develop our at this SRAM lookup when meg you’re cells is tables. that for we signed the rad-hard technology. deal have well FPGA you’re NOR to execute the as replacing that different the that the NOR, XX

different developed that STT-MRAM. totally a on based have is we that So solution

and would you to [RE] not achieved. you revenue that the be I from But market. nodes some be the project it And XXXX. to XXXX think where an for in there done we you’re licensing what ready that technology so know, try then XXXX. milestones needs are can then new XXXX, on will I to streams and this I for And going in and actually this revenue actually commercial we revenue developed for think sorry, see deploy take think potential see, radiation-hard [ph] royalty, that, that are project, to you in that point then, in royalty, be advanced

not all questions, Raji? I’m answer I your Did sure.

Rajvindra Gill

to of No, ultimate just want you on sure that And and you. would I the be FPGA. product instant would make did. kind Thank reconfigurable the Is an that be goal? end

Sanjeev Aggarwal

correct. is correct. is That That

Rajvindra Gill

you If for has of Got XXXX at $XX okay. historically, I of in last growth million million about know, math company, good. right, quite if kind know And impressive. grown you from, it, kind looking it’s the been question I’m the guess the product $XX odd Very for me, I to XXXX. have it in

So XX% that’s than growth. a little less

While has know, growth last have of couple the growth? what’s lumpy that you’ve licensing kind everybody’s purposes, been of just years, you could expected, you of the that driving been kind maybe as for summarize seeing been just that product

And you family. the product initiatives new these longer-term, thinking revenue higher terms when in that, of like growth inflect, the know, kind you it the of we’re with acceleration, some with XXXX, in could of potentially about know, seems xSPI

So Thanks. if on here of the we and where summarize, product kind do how just kind side? know, we the with get you maybe you of going are could

Anuj Aggarwal

about XXXX us record had Hi so end wins. well, this is as of XXX win XXX a Raji, to design to the Toggle, where of design design of design $XX A couple win and about before been year. was so we Yeah. the right, Anuj. this of refocus it We’ve Yeah, a full years couple lot wins, grew revenue the a or that last of has reiterate, years $XX was right. years, lot at million just year, million that had of for for record in kind for product around the ‘XX so

the the customer wins, periods that XX, importance lock order and because the to can long in time. business us, know, years to design you And industrial, for looking know, think critical get we right. sure really for in how of And as us stays for to you of and XX example, for at cash going for I revenue really, making customers. And that’s that in those reinvigoration back

down last seen wins. revenue data been able years Toggle to few the hard last maybe with center a quarters, little we’ve up all the challenging from and been the gone customer, bit and So side up over really with design over make the the as work few we’ve it our has on their

what as so I we you the think well. you continues And as focus in then to see look that’s be backlog into year, that our this also, know,

Sanjeev Aggarwal

see question that, in to So we Raji, add to how XXXX XXXX, that on your right. to do

technology, So that and Toggle what we it have is, we it our done MRAM have tuned actually our roadmap. STT-MRAM taken we’ve extends actually so

ended XX or megabit So XX our megabit at roadmap Toggle basically parallel.

at a with was meg X X SPI. serial our and megs single And only and

and been And So, making markets think and meg by all going able growth MRAM, I tuning for to Toggle this in and to what’s to we’ve way actually ‘XX that the extend from to to us. density that’s think similar XXX technology now I it lead the opens X up megabit, the ‘XX.

Operator

Thank Dialect you. [Operator Capital the Fitchman comes next John Instructions] - [sic Dialectic from question John with Fichthorn And Capital]. with

open. line Your is

John Fichthorn

environment. Thanks little shape of my however path. just give – answered you’ve questions, lot nice the on max you but talking you’re and this a color or growth a on hear this the was about just for tumultuous in cover could comfortable And taking year more to of my question. granular hoping I

should concentration You more lot your got customers know, revenue and in really makes be customer at point, like them it seems stable. more a diversification lot, like lot a dropped think which has encouraging stream it a your looks and which more you’ve is this

visibility, visibility. more should of got more give industrial got You’ve lot a you you’ve design,

greater looking You’ve all make of got here a at can [technical had from that which has a I’m business it wins, a decent design think backlog, difficulty] me these grow. base things you

diversified pushing And that. dynamics on linear pretty it us it kind kind you you growth? it Is do visibility the Thanks. along path got of of help customer like? kind base macro? thinking then thoughts if Is Is what right way? some growth here path of of also, what kind the seasonal? and kind the growth that that look And about you’re the of does think it path understand a or like I’m and just the you’ve about are I So pipeline, assuming there’s for a

Anuj Aggarwal

Yeah, John. This is hi, Anuj.

it. I tackle to let miss know. If try me something, me Let

So, directionally, in you I know, kind you QX. you we’re in But what provide say full half, the look right, know, only believe we the we a of year, can not there’s, know, potential at for just guidance, of that terms a as typically guidance we for is, providing recovery things. second

good standpoint, a to like industry, And the you macroeconomic there From backlog into lot of the a challenges continues semi we visibility know, have some strong, of is uncertainty XXXX. seen remain I because right. was mentioning before, we’ve within that

seen we big limited, And the we so And as cancellations. backlog that have, backlog to the of that’s we’ve full picture, been look been from have lot pull a some in and at demand we outs But able push really right. right.

things been from have well. standpoint, going So that

design and In concentration. meg got about And lot to Toggle businesses, of rad-hard a business Yeah, the comments now really XX as new right, increase. more product terms grown customer as introducing your customer we’re base we’ve you’re as diversified starting into see the the absolutely wins. we’ve well,

customers So X,XXX we customers to about X,XXX XXXX. went from in

base only And continue expect we that to right. design increase. win, improve, so And that customer get that to we as to continues

quarters. bit. did that I Did some that customer concentration miss from data – so big the the did concentration last of see on few I helped reduced achieve a I us quite a get to we’ve numbers you’ll or that’s that we’ve all And center perspective, our shared And the

John Fichthorn

was Yeah, great. no, that

Operator

Aggarwal like I’d turn to the to time, this back At closing you. comments. for Thank Mr. conference over

Anuj Aggarwal

call. today’s may And with next Okay we’ll Thank and we to results in call. said, the you Operator, that the now joining quarter’s all reporting look call. us. for conclude our you forward disconnect progress

Operator

Thank you.

Anuj Aggarwal

Thank you.

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Everspin (MRAM) 1 Mar 232022 Q4 Earnings call transcript