Enovix Corp Q4 FY2024 earnings call

• 2024 was a proactive year, with Q4 revenues near guidance high and 2024 total revenues up from 2023. - Completed Site Acceptance Testing of High-Volume Manufacturing line and shipped EX-2M samples. - Shipped early engineering samples to lead smartphone OEM with safety tests passing and received cell dimensions. - Delivered first battery packs of custom cells from Malaysia and secured smart eyewear purchase order. - Ramp of Fab2 in Malaysia was a key accomplishment, with yields beyond Fab1 levels and incremental targets in place. - Focus on smartphones, smart eyewear, and defense industry, with defense industry showing increased inbound interest. - EX-1M testing on track to meet targets, EX-2M early engineering samples received positive feedback, and EX-3M design phase kicked off.

In the fourth quarter of 2024, Enovix's revenues were $9.6 million, near the high end of the guidance range. For the year 2024, total revenues were $23.1 million, up from $7.6 million in 2023. The company completed Site Acceptance Testing of its High-Volume Manufacturing line and shipped first samples of EX-2M to customers, with early engineering samples shipped to a lead smartphone OEM and critical safety tests passing. It also delivered first battery packs of custom cells from Malaysia and secured a purchase order from a smart eyewear customer. The High-Volume Manufacturing line in Malaysia has the ability to add up to four lines, with Line 1 running at 1,350 UPH equivalent to roughly 9.5 million to 10 million batteries a year.

For the first quarter of 2025, Enovix forecasts revenue of $3.5 million to $5.5 million, an adjusted EBITDA loss of $21 million to $27 million, and a non-GAAP EPS loss of $0.15 to $0.21. The company has a strong balance sheet with ~$273 million in cash and cash equivalents, providing runway for funding additional HVM lines.

Forward-looking statements are subject to risks and uncertainties due to various factors that could affect future financial results and business, as discussed in the shareholder letter and SEC filings. These statements are based on current expectations and may differ materially from actual future events or results.

Q: Regarding policies and tariffs implemented by the new administration, what are the potential implications for Enovix's current and future business operations and prospects?

A: Raj Talluri said they are getting increased interest from defense and other industrial customers since last November, factories in Korea and Malaysia are favorable for shipping to US, and don't see much effect on tariffs at this point.

Q: Can you lay out the current guidance for adding lines? What is the current capacity? When will you begin ordering equipment? And how long will it take to install any additional lines?

A: Raj Talluri mentioned they completed SAT of High-Volume Manufacturing line, Malaysia factory can add up to four lines, Line 1 in Malaysia is running at 1,350 UPH. Ajay Marathe added current Line 1 Gen2 Line 1 in Malaysia fab is running at 1,350 UPH equivalent to ~9.5-10 million batteries a year, and they are ordering long lead time items for additional lines to shrink installation timeline.

Q: Just the drone purchase order, I'm curious, just trying to get a better understanding of the growth profile of this customer. Am I thinking about that customer in the right way? And maybe you can comment on, is the defense is coming in better-than-expected?

A: Raj Talluri said they can't comment on specific customer but are seeing a lot of interest for their high-rate batteries from defense customers in US, market is growing early stage in qualification.

Q: Can you lay out the current guidance for adding lines? What is the current capacity? When will you begin ordering equipment? And how long will it take to install any additional lines?

A: Raj Talluri mentioned they completed SAT of High-Volume Manufacturing line, Malaysia factory can add up to four lines, Line 1 in Malaysia is running at 1,350 UPH. Ajay Marathe added current Line 1 Gen2 Line 1 in Malaysia fab is running at 1,350 UPH equivalent to ~9.5-10 million batteries a year, and they are ordering long lead time items for additional lines to shrink installation timeline.

Q: Regarding the drone purchase order, growth profile of customer and defense coming in better-than-expected A: Raj Talluri said can't comment on specific customer but seeing interest in high-rate batteries from defense, market growing early stage in qualification Q: Pivoting to the commercial smartphone, rank order the cell phone customers in terms of the pipeline and the commercialization stage A: Raj Talluri said they have sampled seven of the top eight customers, two agreements progressing, one received exact battery dimensions for phone this year, next stage is qualification with technology in phone, expect other custom cells from following customers in order Q: Capabilities of EX-2M and EX-3M, when they get into marketplace and volume A: Raj Talluri said EX-1M testing on track, EX-2M early engineering samples received positive feedback on energy density, EX-3M design phase kicked off, volumes depend on customer production first, qualification stage, hard to comment on exact volumes now Q: Format or size of defense batteries, how much Korean sites can support, how fast can expand capacity A: Raj Talluri said Korean factory has capacity now, can expand nearby, visibility into demand in next year, can expand in Nonsan facility Q: Smart glasses business, commercial shipments commencement, purchase orders from companies A: Raj Talluri said have purchase orders from both companies, delivered early samples from new factory, results good, optimistic about market potential due to GenAI and technology advantages Q: Production bottlenecks to scale for smartphones and AR devices, how long to add second High-Volume line A: Raj Talluri said factory going through ISO audit, work on producing at volume and scale, Ajay Marathe said taking approach of stockpiling long lead time items to shrink timeline for second line, second line timeline significantly lesser than first