Enovix (US:ENVX)2022-11-03 16:00Financial Performance - Revenue for the quarter ended October 2, 2022, was $8,000, compared to $0 for the same quarter in the previous year, indicating a significant increase [131]. - Revenue for the fiscal year-to-date ended October 2, 2022 was $5.1 million, with $5.0 million attributed to Customer A [141]. - The net loss for the quarter ended October 2, 2022, was $82 million, a 657% increase compared to a net loss of $10.8 million in the same quarter of the previous year [131]. - Net loss for the fiscal year-to-date was $40.4 million, a slight improvement from a loss of $41.3 million in the prior year [150]. - Free cash flow for the fiscal year-to-date was $(92.3) million, compared to $(66.0) million in the prior year [151]. - The company expects to continue incurring operating losses and negative cash flows for the foreseeable future [152]. Revenue and Cost Analysis - Cost of revenue for the quarter ended October 2, 2022, was $6.6 million, a rise of $6.5 million from $0.1 million in the prior year, primarily due to labor costs and depreciation [133]. - Cost of revenue increased to $12.9 million from $1.8 million, driven by $4.7 million in labor costs and $3.3 million in allocated depreciation [142]. - Research and development expenses increased by $3.6 million, or 35%, to $13.9 million for the quarter ended October 2, 2022, driven by higher employee headcount and associated costs [135]. - Research and development expenses rose by 67% to $42.5 million, primarily due to increased headcount and stock-based compensation [145]. - Selling, general and administrative expenses rose by $4.3 million, or 49%, to $13.1 million for the quarter ended October 2, 2022, largely due to increased personnel and professional fees [136]. - Selling, general and administrative expenses increased by 109% to $36.5 million, largely due to higher employee headcount and legal fees [146]. - Total operating expenses for the fiscal year-to-date were $79.1 million, an increase of 84% from the previous year [146]. Manufacturing and Technology Developments - Enovix recorded its first product revenue in Q2 2022, following the commencement of commercial manufacturing at its Fab-1 facility [107]. - The company shipped production cells to 25 OEMs, including three Strategic Accounts with market capitalizations exceeding $200 billion [113]. - Enovix's EX-1 technology node batteries for wearables achieved an energy density of 714 Wh/l, with expectations to reach 900 Wh/l for mobile communications devices by 2024 [116]. - The Gen2 manufacturing line is expected to be operational in the second half of 2023, with a target to produce over nine million cells annually at 80% overall equipment effectiveness [116]. - The company anticipates that the Gen2 Autoline will require capital expenditures between $50 million and $70 million [116]. - Enovix has developed nine Design Wins across various applications, including wearables and AR/VR, with two wins from Strategic Accounts [113]. - The company aims to improve battery energy density to 1,030 Wh/l by 2024 and 1,255 Wh/l by 2025 with its EX-2 and EX-3 nodes [116]. - Challenges in Fab-1 included technical issues affecting yield and volume production, which are being addressed to enhance manufacturing efficiency [118]. Financial Position and Cash Flow - As of October 2, 2022, the company had cash and cash equivalents of $349.0 million and a working capital of $338.0 million [152]. - The change in fair value of common stock warrants was $(50.2) million for the quarter ended October 2, 2022, reflecting a significant decrease in value compared to the previous year [137]. - The change in fair value of common stock warrants was $44.0 million for the fiscal year-to-date, significantly higher than the prior year's $3.7 million [147]. - Net cash used in operating activities for the fiscal year-to-date ended October 2, 2022, was $60.9 million, an increase of $26.4 million compared to $34.5 million for the same period in the prior year [155][156]. - Net cash used in investing activities was $31.4 million for the fiscal year-to-date ended October 2, 2022, compared to $31.5 million for the same period in the prior year [159]. - Net cash provided by financing activities was $56.0 million for the fiscal year-to-date ended October 2, 2022, a significant decrease from $375.7 million in the prior year [160]. - As of October 2, 2022, the company's commitments included approximately $21.2 million in open purchase orders and contractual obligations [161]. - The company has no outstanding interest-bearing debt as of October 2, 2022, and its primary exposure to market risk is interest rate sensitivity [167]. Future Outlook and Strategic Initiatives - The company anticipates continued increases in research and development expenses as it expands hiring and invests in additional facilities for product development [135]. - The company is establishing a research and development center in India focused on developing machine learning algorithms [135]. - The company plans to increase property and equipment purchases to support the build-out of manufacturing facilities for battery production [154][159]. - The company expects research and development expenses and selling, general and administrative expenses to continue increasing in the coming years [154]. - Inflation has been rising significantly, which may increase costs and expenses for the company in the future [169]. - The Li-ion battery cell market is projected to grow from $45 billion in 2020 to $75 billion by 2025, with a focus on high-value segments estimated at $13 billion by 2025 [119]. - The company is currently classified as an "emerging growth company" and intends to utilize the exemptions provided under the JOBS Act [162].