Workflow
Everspin Technologies(MRAM) - 2024 Q3 - Earnings Call Transcript
MRAMEverspin Technologies(MRAM)2024-10-31 00:40
Filings

Financial Data and Key Metrics Changes - Everspin reported Q3 2024 revenue of 12.1million,inlinewithguidance,andEPSof12.1 million, in line with guidance, and EPS of 0.10, ahead of guidance range [10][28] - Year-over-year revenue decreased from 16.5millioninQ32023,withMRAMproductsalesdownto16.5 million in Q3 2023, with MRAM product sales down to 10.4 million from 13.5million[28]−GAAPgrossmarginwas49.213.5 million [28] - GAAP gross margin was 49.2%, down from 60.2% in Q3 2023, attributed to lower product sales and licensing revenue [29] - GAAP net income for Q3 2024 was 2.3 million, compared to 2.4millioninQ32023[32]−Cashandcashequivalentsincreasedto2.4 million in Q3 2023 [32] - Cash and cash equivalents increased to 39.6 million from 36.8millionattheendofthepriorquarter[33]BusinessLineDataandKeyMetricsChanges−ProductrevenuefromToggleandSTT−MRAMdecreasedduetotimingofcustomerdemand[28]−Licensing,royalty,patent,andotherrevenuefellto36.8 million at the end of the prior quarter [33] Business Line Data and Key Metrics Changes - Product revenue from Toggle and STT-MRAM decreased due to timing of customer demand [28] - Licensing, royalty, patent, and other revenue fell to 1.7 million from 2.9millioninQ32023,duetolowerroyaltiesandRadHardprojectrevenue[29]−ContinuedgrowthindesignwinsforPERSYSTSTT−MRAMproducts,withexpectationsforrevenuerampingin2025[15][27]MarketDataandKeyMetricsChanges−Signsofinventoryconsumptionobservedamongcustomers,particularlyinEurope,whichisexpectedtodriveadditionaldemand[35]−ChallengesnotedinJapanandGermanyaffectingrevenueprofileforQ4[49]CompanyStrategyandDevelopmentDirection−Everspinisfocusedonexpandingitsmarketopportunitiesthroughnewcontractsanddesignwins,particularlyintheautomotivesector[20][24]−Thecompanyisengagedindevelopingenergy−efficientAIsolutionsthroughcollaborations,includingaprojectwithPurdueUniversity[22][60]−StrategicagreementswithdefensecontractorstoenhanceMRAMmanufacturingcapabilitiesareinplace[30]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementremainsoptimisticabouttheadoptionofPERSYSTSTT−MRAMproducts,withexpectationsforadditionaldesignwins[15]−ThecompanyanticipatesflatproductrevenueforQ42024,withacautiousoutlookduetomixedsignalsfromthemarket[35][47]−Managementhighlightedtheimportanceofongoingcustomerdiscussionsthatmayleadtofuturedesignwins[27]OtherImportantInformation−Everspinreceiveda2.9 million in Q3 2023, due to lower royalties and RadHard project revenue [29] - Continued growth in design wins for PERSYST STT-MRAM products, with expectations for revenue ramping in 2025 [15][27] Market Data and Key Metrics Changes - Signs of inventory consumption observed among customers, particularly in Europe, which is expected to drive additional demand [35] - Challenges noted in Japan and Germany affecting revenue profile for Q4 [49] Company Strategy and Development Direction - Everspin is focused on expanding its market opportunities through new contracts and design wins, particularly in the automotive sector [20][24] - The company is engaged in developing energy-efficient AI solutions through collaborations, including a project with Purdue University [22][60] - Strategic agreements with defense contractors to enhance MRAM manufacturing capabilities are in place [30] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the adoption of PERSYST STT-MRAM products, with expectations for additional design wins [15] - The company anticipates flat product revenue for Q4 2024, with a cautious outlook due to mixed signals from the market [35][47] - Management highlighted the importance of ongoing customer discussions that may lead to future design wins [27] Other Important Information - Everspin received a 14.6 million award from a DoD contractor for MRAM manufacturing capabilities, recognized as other income [19][30] - The company is working on multiple RadHard programs that are on track to move to their next phases [17] Q&A Session Summary Question: Details on the onshore MRAM strategic award recognition - Management clarified that the award is recognized as other income due to revenue recognition standards not being met [38] Question: Clarification on gross margin stability - Management explained that lower demand for toggle products is affecting fixed costs absorption, keeping margins flat [39] Question: DoD contract recognition and guidance impact - Management indicated that the DoD contract will be recognized ratably over 2.5 years and is factored into Q4 guidance [41] Question: Dynamics affecting product revenue guidance - Management noted that qualification times for new products and mixed market signals contribute to conservative revenue expectations [45][47] Question: Market challenges in Japan and Europe - Management confirmed ongoing challenges in Japan and economic turmoil in Germany impacting revenue [49] Question: Differences between MRAM product families - Management provided insights into the PERSYST, Unisys, and AgILYST product families, highlighting their specific applications and markets [51][56] Question: Financial contributions from the Purdue program - Management stated that no contract has been signed yet, so financial contributions remain uncertain [60]