ENVX

• Product Development and Customer Qualification

  • Smartphones: Lead customer confirmed 100% silicon anode cells passed over 1,000 cycles on the 0.2C discharge cycle test, matching internal Enovix testing results. The remaining final accelerated hybrid protocol cycle life test is underway, with enhanced cells showing strong capacity retention currently with the lead customer for evaluation. Sample deliveries to the second smartphone OEM are expected to begin in Q4 2026, with a similar qualification framework.
  • Smart Eyewear: Completed international safety certification and all customer reliability tests, shipped 2,100 AI1 batteries and recorded first commercial revenue in Q2. ~18,900 units are expected to ship in Q3 2026, with a 50,000 unit full-year order currently committed.
  • Drones, Defense and Industrial: Total pipeline grew 41% QoQ to $183 million (peak annual production value), with drones alone accounting for over $100 million of the pipeline. Over $40 million of the pipeline is in active customer evaluation/design-in phases. MX-01 cells completed UN 38.3 transportation testing, with customer sampling starting in Q3 2026.
  • Technology Platforms: The AI platform uses proprietary 100% silicon anode architecture for space-constrained applications, while the MX platform blends silicon and graphite for high power/gravimetric energy density produced at a TAA-compliant South Korea facility. The two platforms are mutually reinforcing, opening new growth opportunities. AI2 engineering samples were sampled to a Tier 1 smart eyewear customer in Q2, delivering ~20% higher volumetric energy density than AI1 via EX3M technology, which will also benefit future smartphone cells. Enovix is developing AI models to accelerate internal cycle life prediction, reducing internal iteration time and creating a competitive advantage.

• Manufacturing Operations

  • Fab 2 (Malaysia): Integral yield improved for three consecutive quarters. All process steps outside Zone 1 dicing achieve at least 95% yield, with individual steps up to 99.6%. Zone 1 dicing yield improved to 84% from 80% in Q1, and remains the primary throughput bottleneck. A new hybrid laser-mechanical dicing approach is being implemented, with key steps coming online by year-end 2026 to dramatically increase throughput to support 2027 volume plans. Smart eyewear output exceeded internal plans in Q2.
  • South Korea Facility: The existing facility has over a decade of production experience serving defense customers. Capacity expansion for drone/defense products is capital-efficient, utilizing existing owned land and buildings, with new capacity coming online in mid-2027. The facility is already TAA-compliant, with NDAA compliance expected for multiple SKUs in 2027.

• Leadership Update

  • Michael Vyvoda joined as Chief Operating Officer, bringing decades of operations experience including at Apple. He has full oversight of manufacturing, supply chain, quality and customer delivery, with immediate priorities of increasing smart eyewear output, preparing for smartphone field test production, and driving yield, cost and delivery improvements.

• Q3 2026 revenue is expected between $9 million and $10 million, representing 13% to 25% year-over-year growth. The guidance assumes continued defense/industrial shipments from South Korea and a significant sequential increase in smart eyewear deliveries.
• Q3 2026 non-GAAP loss from operations is expected between $29 million and $32 million, with non-GAAP net loss per share expected between 13 cents and 17 cents.
• Q3 2026 capital expenditures are expected between $8 million and $12 million, primarily for Fab 2 initiatives and South Korea capacity expansion.
• Gross margin in Q3 will be impacted by South Korea product mix and early stage ramp costs for smart eyewear, consistent with Enovix's approach of disciplined investment aligned with customer milestones.
• For the longer term, commercial launch of smartphones with Enovix batteries is expected in 2027, with drone/defense volume ramping from the South Korea expansion starting in mid-2027.

Total Q2 2026 revenue was $9 million, up 21% year-over-year and 19% sequentially. The defense, drones, and industrial segment (MX platform, produced at the South Korea facility) was the largest revenue contributor in the quarter, accounting for the majority of total revenue. The smart eyewear segment (AI platform, produced at the Malaysia Fab 2 facility) generated its first ever product revenue in Q2 2026, from 2,100 shipped AI1 batteries, with revenue that is modest in absolute amount. The smartphone segment has not yet generated commercial revenue, and remains in the qualification stage as of Q2 2026.

• Commercial revenue generation depends on successful completion of customer qualification testing, with actual commercial adoption dependent on customer product launch timelines and market acceptance of end products.
• Zone 1 dicing at Fab 2 remains a throughput bottleneck, and successful implementation of the new hybrid dicing process is required to support planned 2027 production volumes.
• Early stage product ramps (such as smart eyewear) will create near-term gross margin drag until sufficient scale is achieved to absorb allocated overhead costs.
• Conversion of the $183 million drone/defense pipeline into actual revenue and backlog depends on customer design win outcomes and qualification timelines, which vary between 6-18 months for different customer segments.
• Supply chain component tightness could potentially impact future high volume production, though it has not impacted ongoing qualification activities to date.

Q: When ramping the smart eyewear business, how many quarters will it take to reach optimal margins, and what volume is needed? / A: Enovix is on track to fulfill a 50,000 unit full-year order after shipping 2,100 units in Q2 and ~19,000 units in Q3. Customer feedback on cell performance is very strong, driven by Enovix's energy density advantage that enables longer battery life for AI-enabled smart glasses. Smart eyewear will remain negative margin through the end of 2026, as low volumes cannot absorb allocated overhead. Healthy gross margins are expected as scale and customer adoption grow, but no specific breakeven volume or timeline is provided.

Q: The lead smartphone customer passed the 0.2C 1,000 cycle test, what is the purpose of the remaining final test? / A: The traditional legacy 0.7C cycle test was designed for graphite anode batteries and is not representative of real-world performance for silicon anodes. Enovix worked with the lead customer to develop a new hybrid accelerated protocol that combines different discharge rates to better reflect real phone usage, which is the test currently underway. Multiple protocol variants are being tested, with results expected by the end of 2026, after which the next step will be in-phone field testing ahead of commercial launch in 2027.

Q: What is the typical timeline to convert the $100 million drone pipeline into revenue, and when will meaningful volumes begin? / A: Commercial drone customers typically move from pipeline to production in 6-9 months, while defense prime customers have longer 18-month average timelines. The new South Korea capacity needed to support volume production is on track to come online in mid-2027, so meaningful revenue ramping from the pipeline is expected after that date. The expansion is capital-efficient, using existing owned land and buildings, and can be incrementally expanded further as more design wins are secured.

Q: What areas will the new COO Michael Vyvoda prioritize, and how will he impact operations? / A: Michael Vyvoda has end-to-end responsibility for all operational functions across both the Malaysia and South Korea factories, including manufacturing, supply chain, material sourcing, and advanced equipment development. His immediate priorities are supporting the ongoing smart eyewear ramp, driving continued yield improvements at Fab 2 (particularly for the Zone 1 dicing bottleneck), and preparing manufacturing for upcoming smartphone field test production builds.