Atomera, Inc. Q3 FY2026 earnings call

• Gate-All-Around (GAA) Progress: Successfully engaged with three of the four industry leaders developing GAA technology, meeting the February commitment. Two customers are actively integrating MST into their silicon for physical and electrical testing, while one is in early evaluation. Success here positions MST as a standard ingredient for future logic nodes.
• Memory Market Expansion: Broadened reach into both DRAM and NAND markets. For DRAM, leveraging phosphorus blocking know-how to support 4F² vertical transistors and High Bandwidth Memory base wafers. For NAND, addressing CMOS/base die size mismatches to improve cost-effectiveness in 3D NAND structures.
• GaN on Silicon Breakthrough: Announced a Joint Development Agreement (JDA) with IQE to optimize GaN epitaxy on MST silicon substrates. This partnership aims to shorten the qualification cycle and provide a high-volume production path for RF and power GaN applications.
• Product Branding: Introduced 'Prima' for blanket deposition starting wafers (currently six applications) and 'Selecta' for selective integration into transistors (used in GAA, Power, HBT). Prima is expected to reach revenue faster than Selecta.
• Operational Momentum: Maintained steady progress with a major analog/power manufacturer and advanced RFSOI efforts. Internal focus remains on converting simulation and customer silicon evidence into signed agreements for durable revenue.

The company reported $0 in revenue for the third quarter of 2026, a decline from $158,000 in Q2 2026 and $11,000 in Q3 2025. This absence of revenue was due to lumpy wafer deliveries, with no shipments occurring in Q3. The firm operates as a single integrated segment providing MST (Molecular Surface Treatment) solutions; therefore, no distinct product segment breakdowns or percentage contributions are available.

• Revenue: Expects to recognize approximately $50,000 in revenue this quarter from wafer deliveries. No long-term visibility is provided due to the lumpy nature of wafer shipments.
• Operating Expenses: Maintains the full-year 2026 non-GAAP operating expense expectation of approximately $18.5 million (plus/minus $250,000), citing upward cost trends for tool leases, metrology, and device fabrication due to tight industry supply.
• Cash Flow Warning: Noted that fourth-quarter operating cash usage will increase by roughly $1.4 million due to a one-time prepayment for the 200mm tool lease covering all of 2027. This should not be interpreted as a change in the underlying run rate.
• 2027 Guidance: Management declined to provide specific expense guidance for 2027, stating it is too early, but committed to keeping fixed costs as low as possible.

• Revenue Volatility: Wafer delivery-based revenue is inherently lumpy and unpredictable, leading to quarters with zero revenue.
• Cost Inflation: Rising input costs for equipment, tool leases, and services due to strained supply chains in the semiconductor ecosystem.
• Customer Adoption Timeline: Advanced node customers move deliberately, requiring extensive proof points before production adoption; delays in milestones could impact revenue timing.
• Execution Risk: Transitioning from lab results and partnerships (like IQE) to mass-market commercialization involves significant operational and qualification hurdles.

Q: Richard Shannon asked about the specific progress with the first two Gate-All-Around customers and any recent milestones.

A: Scott Bibaud explained that these two customers are currently integrating MST into their confidential silicon for rigorous physical and electrical testing, including uniformity checks and dopant diffusion resistance. He noted that Atomera has successfully met all milestones set so far without being dropped from the program, whereas the third customer is still in earlier evaluation stages. The goal is to prove the technology's viability on actual device structures to secure future adoption across all GAA nodes.

Q: Shannon inquired why IQE, a conservative partner known for thin margins, would enter a JDA for GaN on silicon now.

A: Bibaud agreed that IQE does not take partnerships lightly and focuses on near-production vehicles. He stated that IQE sees clear promise in MST’s early data and anticipates delivering more customers for GaN production if Atomera can tune the solution effectively. The development timeline is shorter than typical multi-year efforts, aiming to accelerate market entry rather than just basic research.

Q: Shannon questioned whether the 'Prima' blank wafer brand would likely generate revenue before the 'Selecta' selective integration process.

A: Bibaud confirmed that Prima has a higher likelihood of reaching production first because it offers an easier route to market for customers to trial and adopt compared to the complex qualification cycles required for Selecta integration. While Selecta engagements are mature, they require longer design-in periods, whereas Prima solutions like those for GaN could see qualification and shipping within months once tuned with IQE.

Q: An analyst asked about headcount plans for next year given the expanding activity across multiple applications.

A: CFO Frank Laurencio stated he does not foresee an immediate need for additional headcount, though onsite installation activities could strain current resources. He emphasized that the primary risk is not labor costs but inflationary pressures on variable costs like equipment and services due to supply chain constraints, which are largely outside the company's control.

Q: Questions were raised regarding the status of STMicroelectronics engagement and whether equipment needs pre-configuration for MST.

A: Bibaud confirmed STMicroelectronics relationships remain strong and positive, with a deal expected eventually, though details remain confidential. Regarding equipment, he clarified that no pre-configured tools are necessary; standard generic tools can be configured for MST by simply changing gas flows and installing specific software modules, ensuring compatibility with existing fab infrastructure.