Navitas Semiconductor (NVTS) - 2024 Q3 - Quarterly Results

Executive Summary & Strategic Highlights Navitas reported Q3 2024 results, highlighting record GaN mobile charger sales, new low-voltage GaN for AI data centers and EVs, a dual-source partnership, and a cost reduction plan Key Announcements Navitas Semiconductor announced Q3 2024 financial results, emphasizing record sales in the GaN mobile fast charger market, the launch of new low-voltage GaN technology for 48V AI data centers, EVs, and robotics, and a strategic dual-source partnership with Infineon Technologies - Record sales in the GaN mobile fast charger market[1] - Launched new low-voltage GaN technology for 48V AI data centers, electric vehicles, and robotics markets[1] - Established a strategic partnership with Infineon Technologies for customer dual-sourcing[1] CEO Commentary & Strategic Initiatives CEO Gene Sheridan emphasized market-beating growth despite macroeconomic challenges, highlighted the strategic importance of the new low-voltage GaN platform for new markets and dual-sourcing, and initiated a cost reduction plan expected to save $2 million quarterly, including a 14% workforce reduction - The company maintained market-beating growth despite macroeconomic challenges[2] - The new low-voltage GaN platform opens new strategic markets and provides dual-source options through the Infineon partnership[2] - Initiated a cost reduction plan, expecting $2 million in quarterly savings and a streamlined organization, including a 14% workforce reduction (approximately 45 employees)[2] Q3 2024 Financial Highlights Q3 2024 revenue was $21.7 million, GAAP operating loss $29.0 million, non-GAAP operating loss $12.7 million, and cash $98.6 million Revenue Performance Total revenue for Q3 2024 was $21.7 million, a slight decrease from $22.0 million in Q3 2023 but an increase from $20.5 million in Q2 2024 Revenue Performance (Millions USD) | Metric | Q3 2024 (Millions USD) | Q3 2023 (Millions USD) | Q2 2024 (Millions USD) | | :----- | :--------------------- | :--------------------- | :--------------------- | | Revenue | $21.7 | $22.0 | $20.5 | Profitability and Cash Position GAAP operating loss for Q3 2024 was $29.0 million, slightly higher than Q3 2023 but improved from Q2 2024, with non-GAAP operating loss at $12.7 million and cash and cash equivalents at $98.6 million as of September 30, 2024 Operating Loss and Cash Position (Millions USD) | Metric | Q3 2024 (Millions USD) | Q3 2023 (Millions USD) | Q2 2024 (Millions USD) | | :-------------------- | :--------------------- | :--------------------- | :--------------------- | | GAAP Loss from Operations | $(29.0) | $(28.6) | $(31.1) | | Non-GAAP Loss from Operations | $(12.7) | $(8.7) | $(13.3) | | Cash and Cash Equivalents (as of Sep 30, 2024) | $98.6 | N/A | N/A | Market, Customer & Technology Updates Navitas launched a new low-voltage GaN platform, secured design wins across AI, EV, mobile, appliance, and solar markets, and expanded partnerships New Low-Voltage GaN Platform Navitas launched a new low-voltage (80-200V) GaN platform optimized for 48V systems in AI data centers, EVs, and motor drives, with sampling expected in Q4 2024, supported by a strategic dual-source partnership with Infineon Technologies to accelerate GaN adoption - Launched a new low-voltage (LV) GaN platform (80-200V) optimized for 48V systems in AI data centers, electric vehicles, and motor drives[5] - Sampling expected to begin in Q4 2024, with a strategic dual-source partnership established with Infineon Technologies[5] - Utilizes common specifications (package, pin-out, footprint, and IP) to accelerate customer adoption of GaN in high-volume mainstream applications[5] AI Data Center Market Navitas introduced a new 98% efficient, 8.5 kW AI power reference design using HV GaN+SiC architecture and proprietary IntelliWeave™ PFC control, with data center production revenue commencing in Q3 and over 60 active customer projects - Introduced a new 98% efficient, 8.5 kW AI power reference design featuring HV GaN+SiC architecture and proprietary IntelliWeave™ PFC control technology[6] - Over 60 active customer projects with direct customers including Delta, GreatWall, Compuware, and LiteON, supplying end-users like AWS, Azure, and Google[6] - Data center production revenue commenced as expected in Q3 and is projected to continue into 2025[6] Electric Vehicle (EV) Market Leading trench-assisted planar gate Gen-3 'Fast' SiC devices are fully AEC Q101 automotive-qualified, securing six new design wins for on-board and roadside chargers in Q3, with production expected in 2025-2026, and the new low-voltage GaN platform optimized for 48V battery EV applications - Leading trench-assisted planar gate Gen-3 'Fast' SiC devices are fully AEC Q101 automotive-qualified[7] - Secured six new design wins for on-board and roadside chargers in Q3, with mass production anticipated in 2025 and 2026[7] - The EV sector represents the largest pipeline with over 200 projects[7] - The new low-voltage GaN platform is optimized for 48V battery electric vehicle applications[7] Mobile & Consumer Market GaNSlim ICs secured 26 new design wins in Q3, including three new Tier-1 OEM orders expected to contribute revenue by Q2 2025, further solidifying the previously announced Samsung order - GaNSlim ICs secured 26 new design wins in Q3[8] - Three new Tier-1 OEM orders are expected to contribute revenue by Q2 2025, further solidifying the previously announced Samsung order[8] Appliance & Industrial Market The company secured 30 new design wins in Q3 across various applications from vacuum cleaners to heat pumps, with the new low-voltage GaN platform also suitable for 48V industrial motor drives including AI robots - Secured 30 new design wins in Q3, covering applications from vacuum cleaners and LED lighting to solid-state, grid-tied circuit breakers, multi-kilowatt power supplies, and heat pumps[8] - The new low-voltage GaN platform is suitable for 48V industrial motor drives, including AI robots[8] Solar & Energy Storage Market Secured 10 design wins, including a partnership with Generac, with mass production expected by mid-2025, and next-gen GaN ICs are on track for significant growth in solar microinverters by mid-2025, with the new low-voltage GaN platform doubling the total addressable market for inverters - Secured 10 design wins, including a partnership with Generac, with mass production expected by mid-2025[9] - Next-generation GaN ICs, including Navitas' proprietary industry-leading bidirectional GaN ICs, are on track for significant growth in solar microinverters by mid-2025[9] - The new low-voltage GaN platform doubles the total addressable market (TAM) for the inverter market, complementing HV GaN and SiC[9] Business Outlook Navitas projects Q4 2024 net revenues between $18 million and $20 million, with non-GAAP gross margin expected at 40% ± 50 basis points and non-GAAP operating expenses around $20.5 million Q4 2024 Business Outlook | Metric | Q4 2024 Outlook | | :-------------------- | :--------------------- | | Net Revenues | $18.0 - $20.0 million | | Non-GAAP Gross Margin | 40% ± 50 basis points | | Non-GAAP Operating Expenses | ~$20.5 million | Non-GAAP Financial Measures & Disclosures This section explains non-GAAP financial measures, clarifies the customer pipeline, and discloses forward-looking statements and associated risks Explanation of Non-GAAP Measures The company uses non-GAAP financial measures (e.g., non-GAAP gross margin, operating expenses, operating loss, loss per share) to provide supplementary information on operating performance and enable period-over-period comparisons, excluding certain expenses listed in the reconciliation tables, and these measures are intended to complement, not replace, GAAP results - Non-GAAP financial measures provide useful supplemental information on operating performance and enable period-over-period comparisons of financial trends and results[12] - These non-GAAP financial measures adjust GAAP results by excluding certain expenses listed in the 'Reconciliation of GAAP Results to Non-GAAP Financial Measures' table[11] - These non-GAAP financial measures should be considered supplemental to, and not a substitute for or superior to, the corresponding GAAP measures[12] Customer Pipeline Statistic Note The 'customer pipeline' is a statistical metric reflecting estimated potential future business based on prospective customer interest in qualified projects, not a backlog or forecast of future revenue, with actual business realization dependent on factors like customer selection, project allocation, qualification, production ramp-up, and strategic decisions - The 'customer pipeline' reflects estimated potential future business based on prospective customer interest in qualified projects[13] - It is not a proxy for backlog or future revenue and should not be considered any other measure or indicator of financial performance[13] - Actual business realization depends on whether prospective customers ultimately select Navitas solutions, customer project allocation, successful customer qualification, time required for customers to commence production, speed and duration of production ramp-up, and Navitas' strategic decisions[13] Forward-Looking Statements This press release contains forward-looking statements, including 'Business Outlook' and 'Customer Pipeline' information, based on estimates and projections, which are illustrative and subject to risks and uncertainties such as integration failures, competition, demand fluctuations, and supply chain issues, as detailed in SEC filings, and Navitas disclaims any obligation to update these statements - This press release, including the 'Business Outlook' paragraph, contains 'forward-looking statements'[14] - Forward-looking statements are based on estimates and projections of financial and performance metrics, market opportunity, and market share, and are subject to various risks and uncertainties[14] - Risk factors include failure to successfully integrate acquired businesses, competitive impacts, customer end-market demand levels, changes in governmental trade policies, and the impact of the COVID-19 pandemic, as discussed in the company's SEC filings[14][15] - Navitas expressly disclaims any obligation to update these forward-looking statements at any time in the future[15] About Navitas Semiconductor Founded in 2014, Navitas Semiconductor is a pure-play next-generation power semiconductor company focusing on Gallium Nitride (GaN) power ICs (GaNFast™) and Silicon Carbide (SiC) solutions (GeneSiC™), with products designed for faster charging, higher power density, and greater energy savings across markets like EVs, solar, data centers, mobile, and consumer electronics, holding over 250 patents and being the world's first CarbonNeutral® certified semiconductor company - Navitas Semiconductor, founded in 2014, is the only pure-play, next-generation power semiconductor company[16] - GaNFast™ power ICs integrate Gallium Nitride (GaN) power with drive, control, sensing, and protection, while GeneSiC™ power devices are optimized high-power, high-voltage, high-reliability Silicon Carbide (SiC) solutions[16] - Key markets include electric vehicles, solar, energy storage, appliance/industrial, data center, mobile, and consumer electronics[16] - Holds over 250 issued or pending patents and is the world's first CarbonNeutral® certified semiconductor company[16] Consolidated Financial Statements (GAAP) This section presents the company's consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) Consolidated Statements of Operations (GAAP) GAAP net loss attributable to controlling interest for Q3 2024 was $18.7 million, compared to a net income of $7.5 million in Q3 2023, with a net loss of $44.7 million for the nine months ended September 30, 2024 Consolidated Statements of Operations (GAAP, in thousands USD) | Metric (GAAP, in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Revenues | $21,681 | $21,978 | $65,324 | $53,399 | | Cost of Revenues (exclusive of amortization) | $13,069 | $14,878 | $39,207 | $33,322 | | Total Operating Expenses | $37,585 | $35,746 | $117,802 | $111,415 | | Loss From Operations | $(28,973) | $(28,646) | $(91,685) | $(91,338) | | Total Other Income (Expense), net | $10,368 | $36,188 | $47,202 | $(22,048) | | Income (Loss) Before Income Taxes | $(18,605) | $7,542 | $(44,483) | $(113,386) | | Net Income (Loss) Attributable to Controlling Interest | $(18,730) | $7,519 | $(44,739) | $(112,855) | | Basic Net Income (Loss) Per Share | $(0.10) | $0.04 | $(0.25) | $(0.68) | | Diluted Net Income (Loss) Per Share | $(0.10) | $0.04 | $(0.25) | $(0.68) | Consolidated Balance Sheets (GAAP) Total assets as of September 30, 2024, were $419.4 million, down from $485.5 million at December 31, 2023, with total liabilities significantly reduced to $38.6 million primarily due to a decrease in earnout liability, and stockholders' equity remaining stable at $380.8 million Consolidated Balance Sheets (GAAP, in thousands USD) | Metric (GAAP, in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :------------------------------------------ | :----------- | :----------- | | ASSETS: | | | | Cash and cash equivalents | $98,614 | $152,839 | | Total current assets | $145,150 | $207,109 | | Total assets | $419,409 | $485,546 | | LIABILITIES AND STOCKHOLDERS' EQUITY: | | | | Total current liabilities | $25,964 | $48,487 | | Earnout liability | $3,932 | $46,852 | | Total liabilities | $38,581 | $104,929 | | Stockholders' equity | $380,828 | $380,617 | | Total liabilities and stockholders' equity | $419,409 | $485,546 | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides a detailed reconciliation of GAAP financial measures to their corresponding non-GAAP counterparts, highlighting adjustments for specific expenses Gross Margin Reconciliation Navitas' GAAP gross margin for Q3 2024 was 21.5%, while non-GAAP gross margin was 40.1%, with adjustments primarily including amortization of intangible assets and stock-based compensation expense Gross Margin Reconciliation (in thousands USD) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | GAAP Gross profit | $4,653 | $3,141 | $14,241 | $8,476 | | GAAP Gross margin | 21.5% | 14.3% | 21.8% | 15.9% | | Non-GAAP Gross profit | $8,688 | $9,246 | $26,442 | $22,223 | | Non-GAAP Gross margin | 40.1% | 42.1% | 40.5% | 41.6% | | Adjustments: | | | | | | Cost of revenues (amortization of intangibles) | $3,959 | $3,959 | $11,876 | $11,601 | | Stock-based compensation expense | $76 | $0 | $325 | $0 | Operating Expenses Reconciliation Non-GAAP R&D expenses for Q3 2024 were $11.6 million, lower than GAAP R&D expenses of $17.8 million due to stock-based compensation adjustments, and non-GAAP SG&A expenses were $9.9 million, lower than GAAP SG&A expenses of $15.0 million Operating Expenses Reconciliation (in thousands USD) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | GAAP Research and development | $17,828 | $16,553 | $57,028 | $50,740 | | Non-GAAP Research and development | $11,561 | $10,540 | $36,953 | $30,603 | | GAAP Selling, general and administrative | $15,040 | $14,419 | $46,509 | $46,629 | | Non-GAAP Selling, general and administrative | $9,874 | $7,410 | $27,375 | $22,185 | | Total Non-GAAP Operating expenses | $21,435 | $17,950 | $64,328 | $52,788 | | Key Adjustments: | | | | | | Stock-based compensation expenses (R&D) | $(6,267) | $(6,013) | $(20,075) | $(20,137) | | Stock-based compensation expenses (SG&A) | $(5,029) | $(6,066) | $(17,611) | $(21,673) | Loss from Operations Reconciliation GAAP operating loss for Q3 2024 was $29.0 million with a GAAP operating margin of (133.6)%, while non-GAAP operating loss was $12.7 million with a non-GAAP operating margin of (58.8)% after adjustments for stock-based compensation, intangible asset amortization, and other non-recurring items Loss from Operations Reconciliation (in thousands USD) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | GAAP Loss from operations | $(28,973) | $(28,646) | $(91,685) | $(91,338) | | GAAP Operating margin | (133.6)% | (130.3)% | (140.4)% | (171.0)% | | Non-GAAP Loss from operations | $(12,747) | $(8,704) | $(37,886) | $(30,565) | | Non-GAAP Operating margin | (58.8)% | (39.6)% | (58.0)% | (57.2)% | | Key Adjustments: | | | | | | Total Stock-based compensation | $11,372 | $12,079 | $38,011 | $41,810 | | Amortization of acquisition-related intangible assets | $4,717 | $4,774 | $14,265 | $14,046 | Net Loss Reconciliation GAAP net loss attributable to controlling interest for Q3 2024 was $18.7 million, while non-GAAP net loss was $11.7 million, or $0.06 per share, after adjustments including significant gain from change in fair value of earnout liabilities, stock-based compensation, and intangible asset amortization Net Loss Reconciliation (in thousands USD) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | GAAP Net income (loss) attributable to controlling interest | $(18,730) | $7,519 | $(44,739) | $(112,855) | | Non-GAAP Net loss | $(11,675) | $(7,032) | $(33,943) | $(26,629) | | Non-GAAP Net loss per share (basic and diluted) | $(0.06) | $(0.04) | $(0.19) | $(0.16) | | Key Adjustments: | | | | | | Loss (Gain) from change in fair value of earnout liabilities | $(9,171) | $(34,473) | $(42,920) | $25,503 | | Total stock-based compensation | $11,372 | $12,079 | $38,011 | $41,810 | | Amortization of acquisition-related intangible assets | $4,717 | $4,774 | $14,265 | $14,046 |