Earnings call transcript Q1 2023

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Operator

Good afternoon and welcome to the conference call to discuss Everspin Technologies' First Quarter 2023 Financial 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 the question-and-answer session.

As a reminder, this conference call is being recorded today, Wednesday, May 03, 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 expectation of 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 pipelines and executing on its business plan. from based involve judgment, may risks results differ are market trends, cause statements the to and in conditions, and materially forward-looking on current estimates, and actual forward-looking These statements. contained those uncertainties that

factors as the to SEC made may as and you no on with , quarterly information, of made other associated are forward-looking except forward-looking which call statements or be a SEC our XX-Q, and events update discuss on SEC time or including filed our future filings We whether would as with Everspin. to by review of statements time result May in undertake date we of filings, we update All this this on our encourage to will to risk law, in report new call which otherwise. made any Form X, investing from XXXX, required alter obligation statements, forward-looking

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

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

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

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

Sanjeev Aggarwal

year-over-year. which and to for and few revenue the We delivered QX Thank increase which the of strong a thanks high end guidance today. be $XX.X Xth us on of for quarter for income the net joining continues XXXX. at everyone positive a quarterly a call A X% operator the for highlights row, were company. million, GAAP you Everspin is in focus

paid we our credit in QX, off and line full. loan term During of

is XX family products end Best Storage Everspin's, completed the Category of of of Show free. are the Exhibition this the in first debt our STT-MRAM Memory silicon xSPI xSPI in in XXXX. megabit XX-nanometer family from was and successfully for family QX, for that taped QX CMOS March now products. of STT-MRAM Everspin at to We available X of samples of Engineering XXXX. new products awarded Embedded World Conference As out was megabit on and of

early densities products see our We are megabit. from xSPI design-ins to XXX starting family wins X some for of to megabit and STT-MRAM

into XX, XXXX balance levels cancellations, our and backlog outlook, of XXXX For we product push-outs for to as business pull-ins. March be continues seeing high, of and low although of XXXX are

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

xSPI new X the last Everspin XX densities products call, As had a of out XX-nanometer family from with CMOS mentioned megabit. in earnings to STT-MRAM taped on megabit

are silicon first are our on samples have now We that to engineering customers. available verified report excited and we to functionality

XX-nanometer had density we on reminder, introduced As products STT-MRAM to CMOS. a in XXXX, megabit megabit XXX xSPI XX

CMOS gaming. discrete and for Everspin process our megabit like customers get memory and node medical, replacement. these density megabit, the access easily system components a on than megabit. have to from NOR With densities XXX and our and customers of automation These legacy for products xSPI family network avionics, electronic aeronautics our systems architecture discrete to industrial greater replace They're customers ideal SRAM will high use X FRAM. Xx interest to IoT, two ranging XXX such for infrastructure, simplify as to and continues and flash enable enterprise control, and STT-MRAM from STT-MRAM products, part

The When replacing in and in store first and this such product be enabling is XXXX. available updates. simultaneously production the to for NOR faster ideal would FPGA part systems for design configuration over-the-air on phase schedule memory, XXXx in

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

Anuj Aggarwal

Sanjeev, and everyone. good afternoon Thank you,

net pleased income. of announce part financial quarter quarter of is As consecutive Everspin Technologies eighth to XXXX results, first its positive

in loan We QX of paying milestone line and credit also making in off our officially free. reached an term Everspin incredible debt

the with flow revenue during $XX.X quarter. from $X.X We XXXX. million of operations In of quarter the of quarterly cash high-end $XX.X addition, in last solid at and compared the $XX.X quarter generated delivered million results first we positive guidance of to

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

XX% compared of quarter the X% the prior quarter largest to royalties, revenue quarter, sales XX% to and product $XX.X end in QX in in data which for density we who at includes STT-MRAM $X.X of million in $XX.X in and versus with the suppliers first prior million revenue first million $XX.X increase an $X.X customer, XXXX. revenue remained XXXX. our QX for in serve quarter MRAM and high and with quarter product from STT million QX compared other million to revenue QX both the Shipments center applications, in Licensing consistent our XXXX. represented patents Toggle was the

per positive quarter the of $X.XX outstanding. basic strategic share Basic range first net the and $X.X XXXX the share first of the EPS XXXX the product XX. $X.X or shares versus $X.X the million million the pleased better quarter basic prior the in the prior certainties. in XX.X% basic was cost and our in first GAAP the quarter XXXX, in quarter of compared The volume based quarter income driven Turning production. XX.X is XXXX. to We're margin of first operating a guidance macroeconomic operational expenses quarter to in to of on was of of that our the than average tightening basic XXXX. increased QX reflecting million to xSPI million or STT gross higher $X.XX discipline was and net GAAP were of GAAP $X.X by margin, first a primarily compares XXXX of $X.XX XX% family low quarter versus weighted report fourth per currently to net support in profitability expenses the million share in income This of to million XXXX face million QX $X.XX for of quarter, supplies XX.X% $X.X quarter $X.X income or in gross per operating and midpoint for in of ability drive

continues remain to EBITDA Adjusted positive.

and $XX.X million term cash The during quarter prior line loan prior million the $X.X flow XXXX, in XXXX. paying and quarter. result million cash the end off to for was $XX.X in QX adjusted the QX equivalents decrease $X.X quarter. QX million a of the a quarter quarter-over-quarter Cash full ended its in EBITDA of For Cash the in million is credit million from XXXX. million in compared and to healthy $X.X compared quarter current was of at at $X.X and the Everspin $XX.X operations

the Everspin $X.XX, guidance, our price influenced Everspin remains XXXX a primarily $XX.X net quarter family between breakeven product Toggle Everspin of revenue in strong. by total basic Demand $XX.X be expects to is products second of and million share range development our to cautiously million. Turning optimistic. for from our expects income per xSPI related suppliers. GAAP increases expenses to STT and to

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

Sanjeev Aggarwal

of Thanks, which quarter, profitability, focus Anuj. Everspin row for is now another a strong a In summary, eighth in the company. reported the

lead QX, by paid we for our Everspin of free the first is loan successfully navigating our Bolstered quarter rest to Everspin the us the believe our During of views and making QX slowdown debt into XXXX. quarter performance, semiconductor of in line second off and as term the in the early industry. credit full guidance year

We able interest see are STT-MRAM these were and to excited customers with products. of are another pleased that family our to products to bring traction and their we

may open you line for Thank today. for the you questions. now us joining Operator,

Operator

Thank come Instructions] Richard Craig-Hallum. First Shannon from you. of [Operator question will

Your line is open.

Richard Shannon

hi, Well, my taking Thanks guys. questions. for

Sanjeev, navigating here here. little you guess also slowdown pull-ins the remarks and about talked Let's follow cancellation. comments, earlier I outs on some about a your your bit comments second I in your of to see one on wanted semis. and in of set of up push

come So in? that in now? quarter I And up book-to-bill lead to to I might does going where you in get it think want guess a of first that's sense what are or about the Where what them the and expect you be do your second? imply ultimately And backlog down. times

Sanjeev Aggarwal

doing? Hi, Richard. you How are

Richard Shannon

you. fine, thank Doing

Sanjeev Aggarwal

is push-out, every call We business basically a of was I what basically Yes, little and so in to the going pull-ins see quarter. that talking some a some cancellations first in on and returning that we about typically baseline. bit section Everspin

we in XXXX and backlog and and looking and did towards we I'm and grow us terms makes into seeing year. We're well seeing saying actually that end feel is a why – we as actually – can are actually it backlog are year. quarter-over-quarter of actually we us going as the last pretty it's because slowdown navigating successfully So we pretty healthy to the the seeing in XXXX, that do well do what of or actually are

Richard Shannon

more think interested year, you probably of quarter, the statement the I product think your and interesting are Would to specifically can grow the quarter? most an I'm also that quarter-on-quarter part of is Okay, about declare thinking second growing that revenues. product I investors including revenues about that rest quarter and

Sanjeev Aggarwal

Anuj?

Anuj Aggarwal

is This Richard. Hi, Anuj. Yes.

very feedback some in design based also and we to product So gotten from family into seeing as And low with of doing our on Toggle sales. production, strong xSPI optimistic is begin get we're volume customers product well, wins. revenue We're the coming we've right? growth

as we're So data as the really challenges the ramping you around product the that then, center. know, And seeing well. are of

xSPI but some And is product strong going the nicely. sluggishness so still Toggle very ramping and is there, there's

Richard Shannon

Okay, about on what the margins financial and touching couple fair gross a enough. for always on both thinking – of to the get sense in elements on try a quarter, OpEx. guidance Maybe you're

reported on a was second. you Let margins a five look you bit quarter quarters, last fourth of below. just me four If at had for the in I five touch the gross those levels near the

kind your a in of you more bit XX% of some optimized? talked on of quarter out Would the you about I mix last side gross little more XX% know as and the is or out margin, of it the to long-term quarter. dynamics had success think in normal four last call some you've situation five high fourth in quarters. yield I mix that, but relative last a of to guidance good

an optimistic here whether get And expect to as – of sense as that so quarter of you outcome. see I see to first a want you maintain more the or

Anuj Aggarwal

yes. Richard. Yes, Sure,

that. Let me answer try to

So, we're – little provide we try a I cautiously guess, optimistic, we when guidance. bit to be

so, And other than XX.X XX.X are think just I that's glide bit QX why of mix seeing results, right? margin, see to in some the product and QX in terms higher the But to you of little terms you gross in a of trying benefit slightly revenue items.

to realistic. still think we mid-XXs So low mid-XXs, is maybe more that

would we've that standpoint, OpEx And now. we're spending so story kind be for an to I with And without we're stick but terms of of trying guidance shared smart in how that giving frugal, then money. from

it related uptick xSPI we has product. product, to ramp and continue And the there so to been as that be at the level industrial OpEx in an new will

Richard Shannon

this start out xSPI you of to and fair It early your can Okay, Then in family an products bit little what jump to of some, to sounds what which attention Maybe here, line ask the seeing calendar density, you're some enough. we to getting XXXX? question, going you're Sanjeev. conversation like are in new more see versus here. me, coming And excuse give benefits designs in maybe I'll what success a you then stage more color or, applications and – products, the degree if where one early? on year

Sanjeev Aggarwal

going to probably but Most are to be space, upside our going so XXXX, the wins think and Yes, of so best ins see be design in some case to revenue quite start in with challenging could question. this of last any QX okay. significant in it's see I the you year, I'll industrial

[indiscernible] wins wins. to major actually are most megabit. even to early part die. of go are actually the the the our we design with wins, I the that that in all once we of design megabit But was we We a first are and this from of statement terms parts the or see to family out the that making, our X the the sentence megabit the customers. year XX brought the across range way it of I are are new starting – available are design XXX to expect actually that seeing second up wins In Those do XX design product that was half the with ones

Richard Shannon

glad That's guys. line, here in perfect. news going to Thank I very strongly. great very Okay, much. the see and outlook jump will the you

Sanjeev Aggarwal

Richard. you, Thank

Anuj Aggarwal

Richard. Thanks,

Operator

Thank you. Richard We will Shannon [Operator ahead please. moment another coming. follow-up question this Go be from a please. Instructions] have One of Craig-Hallum. And

Richard Shannon

jump back I'll then. in well, Okay,

Let's A Sanjeev, see maybe of comments. on here. questions. other your up to couple prepared follow one

You've last talked STT you're NOR about that's here. progress few be this to seeing flash edge, some this density It continued replacement. more in sounds the about calls going higher leading like

kind And architectural you are you'd of some start be for to a drop-in going If it'll short to is sales fairly from see this customers when be be? make? would to that, decisions to And you were more think think by difficult replacement? do that these Or cycle? benefit timeframe a about which

Sanjeev Aggarwal

that Yes, high density about. so talking the part we're

the far you think sometime of as second is in revenue it concerned, XXXX. half in As would revenue into seeing production I going XXXX with start some

so this for drop-in architecture it's to a for replacement standalone be part, a the NOR. direct going will part, it as far As be

are And be XX going to drop-in, least to them In our the the sense, be easier still cycle qual cycle, but for to long it be going their so customers to put still to in that months. think products it's a systems. at – the it's XX industrial, still making is be so going to a I but going

Richard Shannon

go line debt, with time your free you've here. existence, a a and for of in Okay, is perfect. your quarters your of your balance cash very to this last the is nicely – comments product you little question, first kind prepared management investments a again other be nature? been of on see what find we areas growth that cost side profitable being being helpful. to row a growing your good the or cash you eventually should – as – Should to we do – up My public jump terms in expect R&D which out remarks we how can looks or just of eight aggressive What tick be about about a I'll and as more does start think inorganic times, what good and even in something highlighting paid into, That's few debt help off to structure balance? like fantastic in bit might or having see

Anuj Aggarwal

the more Anuj, Yes, and are. mentioned the the the family Richard, near-term We're focus this question. continuing a on the there to lot is opportunities and is the you product evaluate looking other in at great Obviously, xSPI that longer in of term. where product roadmap

that the on this position, flow, really current time based ramp products without borrowing standpoint So from that we're we can at support cash money. and cash what support and – time our a we seeing from operations at feel

the pay we that. we'll we opportunities other to right? look now If up where might that additional feel it come so, borrow to makes I like sense debt, have funds, off is But And trying balance we're right think what right into balance healthy. sheet There is to We good business. the We a sheet. cash. this balance demonstrate cash viable is of can can that on amount generate The be is now a there's profitable.

and And can growth support from so, opportunities we future that.

Richard Shannon

sense. Okay. Fair enough. That makes

and nice me again, I to that's year. start for guys. the think a Thanks all you the lot congratulations

Sanjeev Aggarwal

Thank you.

Anuj Aggarwal

Thanks, again, Richard.

Operator

up. One question next Instructions] [Operator please. The is moment you. Thank coming

will Please be from ahead. AIGH. coming Orin Our question go next of Hirschman

Orin Hirschman

very congratulations showing you're Hi. I real can thank a and tough environment progress. God give on also

Sanjeev Aggarwal

Thanks, Orin.

Anuj Aggarwal

Orin. Thanks,

Orin Hirschman

the one asked. to was of back that questions go just to wanted I

great – asking So, great you questions. you have analyst got

leave So we a anybody else. lot – he for didn't

revenues? hoping terms So, review seeing of of to just just versus Can again? real you – then is the when you're in for products actual design the the and actually in When cycle. volume you begin actual you the production some that mentioned replacement one sampling hope

Sanjeev Aggarwal

sure. Yes,

we one And XXXX, megabit. die megabit. XXX out the to XX part that native brought and megabit between X is megabit new was remember and actually the a sampling were out X in So, XX from we we that that megabit taped

going So, megabit megabit. way megabit and there XX is up an X all XXX between overlap to the

XX use for actually meg that the were going the to and production. that die from into start we people integrate out qual and meg the their original a able procedure, they that die I So, will benefit into see benefit to first systems we taped think will X the and

it So, cut the will down qual actually of cycle. some

XX-month samples case, come answer months I a out. let's months Did it's probably this the we based So, that down XX-month if nine available before it'll in to that cycle, just Orin? cycle six part a other or assume your being question, brought on

Orin Hirschman

Yes.

of So, already... on in going design-ins terms that's

Sanjeev Aggarwal

part, correct, the except now. is is Yes. That X Yes. new which for megabit

Orin Hirschman

And the how does And feedback, of like? feedback on? in what's terms customer traction in early where getting you terms – – niches, the have are you of the seen what the does that how customer

Sanjeev Aggarwal

Yes.

is feedback, perform So, part of published. It's in to the seems terms there not customer The detailed. spec that very very we early to some feedback. have

So, is of forgot the sorry good. question, always that appreciated. second that's part And always Orin. I'm the feedback I

Anuj Aggarwal

feedback. Customer

Sanjeev Aggarwal

feedback. Customer

Orin Hirschman

seeing Which Yes. verticals the...

Sanjeev Aggarwal

Yes.

of the defense in is the then space. the the early and seeing now industrial markets traction industry right are aerospace also So, traction or and in that some

Orin Hirschman

realize your licensing Okay. to us when open you've something that B, timing far you that huge out. of royalty terms a product-related on might going very been project, a back And of can I to MEMS on just revenue the on doing [ph] and tell some you, side, be A, comes side What it work IP, the project. because in over side,

Sanjeev Aggarwal

there. project? the referring you just So, over QuickLogic to to Are up you are confirm, Orin, breaking FPGA

Orin Hirschman

Yes.

Sanjeev Aggarwal

Yes.

for And is so that progressing half the design, schedule. this project tape-out that year. I design in expected the So, the second think tape-out is on of of that

which seeing on start silicon XX-nanometer from early which SkyWater will we some we be So, on the silicon, a the design. data would do

start data in we'll let's seeing some of or say, QX So, XXXX, XXXX. QX

foundry products at or are and product from least I revenue those think royalty the years revenue revenue Orin. associated with the two out there,

Orin Hirschman

licensing royalties milestones? happens when you already hit happened or has also – said licensing both both gradually or or you certain licensing And – product and happens

Sanjeev Aggarwal

probably and which The revenue royalty into foundry the gradually when XXXX. timeframe. XXXX XXXX over and And licensing is go then revenue starts happens we the production,

Orin Hirschman

quick And life question Okay, one picture you signs great. data would the overall there? term or of how Any bottoming on center.

Sanjeev Aggarwal

are Orin, the data about products? asking So, you center

Orin Hirschman

Yes.

Just now? what's right on in terms still back... that's of the – stabilized and there coming overall going you Do declining think

Sanjeev Aggarwal

Yes, we I I still XX% QX in QX. then – were mean, at as to that number we Anuj did definitely QX think in like were reported, good was provided in X% versus compared peak Anuj we not at as the But QX. about better XX% we the and

but So, we we're indications we we level some up from seeing to to not to – that have are QX, get to earlier. that recovered up that QX XX% going had the

Orin Hirschman

and do then making fair data center in the of on center not assumption on point enough just happened to the assumes up that stable see the question in progress assuming a side, conservative are or any sorts even you think is considering center other meaning at my what this stable? that's rather coming the a down products of gaps? side. any quarter-to-quarter on data And guidance upside data just some that follow-up terms product is your So for hoping year, stance that and Does take

Anuj Aggarwal

Yes, Orin, Anuj. this is

increased So, see, with in to continue strong this I the flip wins be customer deals our happening. and to largest we've things side, Toggle have quarter-over-quarter. decreased, And design nicely. have then we strong the are on other was that But you'll mentioning. that, addition ramping Sanjeev like has think concentration as revenue and continues that that in is got rad-hard to The

fairly data and other piece, well. moving just on is but as is So, wins center will Industrial the the on conservative that good. the side everything is naturally things as looking concentration out. product xSPI now, the And But more gets help happen, looking good. we're design

Orin Hirschman

up chip or that. it? end to? is my of the demoed. companion What's thoughts And on the just commercialization question chip on the on companion FPGA Where's I'll And last that

Sanjeev Aggarwal

So, we with our with the companies xSPI have communication FPGA. product actually in their family integrate been FPGA to

it early now. So, in I ongoing think really too is an that on comment we much, but right stages it's process and cannot

Orin Hirschman

is, their commitment they on saying part [indiscernible] to [indiscernible] So, some are enough interested do

Sanjeev Aggarwal

with commitment, shouldn't enough to interest I there think FPGA with to with too win more are the guess. than market up that company continuing customer but a end say indeed FPGA engage customer, I actually early design one an – an it's With a customer. market. for and end we in is with I basically end

Orin Hirschman

through that's directly? But through you or them that's

Sanjeev Aggarwal

vendor. would through FPGA It be the

Orin Hirschman

good. Okay,

Congratulations again on Okay. progress. the

Sanjeev Aggarwal

thank you. Okay,

Anuj Aggarwal

you. Thank

Operator

moment the queue. Thank no like more over I this management Instructions] please. there would to in you. One [Operator time, remarks. closing call at the And to for back questions are turn

Sanjeev Aggarwal

joining we Okay. you With forward look Operator, and next progress that call. call. you us the Thank today's and conclude quarter's for call. may said, we now all the on results disconnect reporting our to

Operator

disconnected. for Have call the is Thank you, joining, great everyone evening. a and

Everspin (MRAM) 3 May 232023 Q1 Earnings call transcript