Yahoo Finance Everspin Technologies Inc (MRAM) (Q1 2024) Earnings Call Transcript Highlights: Navigating ...
Revenue: $14.4 million in Q1 2024, compared to $14.8 million in Q1 2023.
Gross Margin: 56.5% in Q1 2024, slightly down from 56.8% in Q1 2023.
Net Income: Loss of $0.2 million in Q1 2024, versus a net income of $0.8 million in Q1 2023.
Earnings Per Share (EPS): Loss of $0.01 per diluted share in Q1 2024, compared to earnings of $0.04 per diluted share in Q1 2023.
Cash and Cash Equivalents: Ended Q1 2024 with $34.8 million.
Adjusted EBITDA: $1.9 million in Q1 2024, down from $2.3 million in Q1 2023.
Cash Flow from Operations: Used $1.3 million in Q1 2024.
MRAM Product Sales: $10.9 million in Q1 2024, down from $13.8 million in Q1 2023.
Licensing, Royalty, Patent, and Other Revenue: Increased to $3.6 million in Q1 2024 from $1.1 million in Q1 2023.
Q2 Revenue Guidance: Expected to be between $10 million and $11 million.
Q2 EPS Guidance: Anticipated net loss per diluted share between negative $0.14 and negative $0.09.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Everspin Technologies Inc (NASDAQ:MRAM) reported Q1 revenue of $14.4 million, at the high end of the guidance range.
The company maintains a strong, debt-free balance sheet with $34.8 million in cash and cash equivalents.
Gross margin remained stable at 56.5%, demonstrating consistent profitability.
Everspin Technologies Inc (NASDAQ:MRAM) has secured significant design wins, particularly for its PERSYST industrial STT-MRAM product line, expected to translate into revenue in the second half of 2024.
The company's radiation hard programs continue to progress, with expectations of additional funding and continued revenue recognition in upcoming quarters.
Negative Points
Product revenue for Q1 2024 was down compared to Q1 2023, with MRAM product sales decreasing from $13.8 million to $10.9 million.
Everspin Technologies Inc (NASDAQ:MRAM) anticipates a flat product revenue in Q2 2024 due to ongoing weakness in key markets such as Asia Pacific and industrial sectors.
The company reported a slight net loss of $0.2 million in Q1 2024, a decrease from a net income of $0.8 million in Q1 2023.
There is uncertainty regarding the timing and impact of potential funding under the CHIPS and Science Act, which the company plans to use for expanding capacity.
Operational expenses increased to $8.8 million in Q1 2024 from $7.7 million in Q1 2023, contributing to the net loss for the quarter.
Q & A Highlights
Q: Nick Doyle on for Quinn. A couple of housekeeping ones first. For the first quarter, product revenue was down as expected. But did the high-density STT, did that increase quarter-over-quarter? A: Anuj Aggarwal - Everspin Technologies, Inc. - CFO: Nick, this is Anuj. Great question. So from a product perspective, yes, we did see some softness in Toggle as we've had some challenges with industrial. But from an STT data center perspective, that product has been pretty healthy. So it was up in Q4, and it was pretty healthy in Q1 as well.
Q: Great. And then for OpEx, I mean, what drove the sharp increase this quarter? And do you expect to maintain this higher level? I don't remember if that's related to NREs and not having them this quarter. Just how are you thinking about OpEx? A: Anuj Aggarwal - Everspin Technologies, Inc. - CFO: Yes, sure. So from an OpEx standpoint, there's a couple of things. We had some higher professional services, some stock-based compensation and depreciation. I think without giving guidance, looking forward, we expect OpEx to be relatively flat to down. So the team's working on reducing spending and making sure we can have that decline.
Q: Okay. And then for the 2Q guide, I mean, the guide missed our estimate by about $3 million. Can you just speak to what drove the miss? I mean reading through the lines, it just seems like Toggle is just a little bit worse so that products are expected to decline next quarter. And you mentioned RAD-Hard's going down before it goes up. So in that same vein, margin should probably decline as licensing goes down as well? Just any more color on the guide? A: Anuj Aggarwal - Everspin Technologies, Inc. - CFO: Yes. No, I think you're hitting it as well. I think from a Q2 guidance perspective, if I take a step back, from a product revenue perspective, we expect things to be relatively flat. So as you mentioned, Toggle is flat to slightly down. STT data center, that's going pretty healthy, and we expect it to be relatively flat. But then from a RAD-Hard perspective, as you might recall from some of the previous calls, we've been able to close and complete out several RAD-Hard projects. And we're currently in the works on a couple of additional new RAD-Hard projects. So the guide you're seeing today doesn't include any RAD-Hard revenue since we haven't signed anything yet. And so really, the decline there is you're seeing the RAD-Hard not being incorporated into Q2.
Q: Okay. And then last question. I'll jump back in. Just what gives you confidence on the second half ramp? Maybe how much -- maybe you can give a percent or absolute dollar range how much of the growth in the back half is coming from the RAD-Hard. A: Anuj Aggarwal - Everspin Technologies, Inc. - CFO: Yes. So I want to be careful because we don't necessarily give guidance for the full year. But I will say we're seeing the same macroeconomic challenges everyone else is, so talking about things before, the working capital, we continue to see there's some pressure there from distis as they're reducing inventory. From a Japan, China perspective, the yen versus dollar impact and seeing that products are a little bit more costly, right, because the yen is depreciated. And then we're seeing ordering kind of going back to the lead times.
Q: Maybe a follow-up on the topic here of RAD-Hard. It seems like a particular project here seems to be the reason for the sequential decline here as your products seem to be kind of mostly flat sequentially. Is there like a pause in the project here? Is there a question as to whether it will continue? Because I think your partners talked about a program, assuming all the options are picked up to something that lasts on the order of 4 years, and we've got at least 2 years left to go. So I just want to get some sense of the visibility in that project and whether this is just a lull between the kind of sub programs within the bigger picture? A: Sanjeev Aggarwal - Everspin Technologies, Inc. - President, CEO & Director: Richard, this is Sanjeev. Thanks for the question. Yes, you're right. I think we expect the project that we are working on, the strategic radiation hardened FPGA project with our partner. We expect that to get renewed sometime in the next coming months and quarter. The reason for the delay is that there has been some delay from the U.S. government funding agency in continuing the project because of some changes in the schedule on their side.
Q: Well, I guess I'll follow up on that last part of your comments, Sanjeev, sounds very interesting. How do we think about this in the scale of the other Toggle reliability project? And what's the source there? Is it another U.S. or other government agency? Or what's the source of that one? A: Sanjeev Aggarwal - Everspin Technologies, Inc. - President, CEO & Director: So that's basically a follow-up from the same agency that we did a project with them in 2023. They had some follow-up questions on the reliability models that we shared. So we are actually collecting some more data to bring them up to speed on that one. So the -- in terms of scale, it won't be as big as it was in '23, but we don't have the financial figures yet to disclose.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
