Enovix Corporation (“Enovix”) (Nasdaq: ENVX), an advanced
silicon battery company, announced today financial results for the
third quarter of 2023, which included the summary below from its
President and CEO, Dr. Raj Talluri.
Fellow Shareholders,
In the third quarter of 2023 we made meaningful strategic and
go-to-market decisions while achieving important milestones on our
journey to scale:
- Factory Acceptance Testing (“FAT”) of Gen2 manufacturing
equipment: Commenced on schedule in August and we have completed
FAT for one zone of the full production line. We continue to expect
to complete FAT for all four zones by January 2024.
- Fab1 strategic realignment: We achieved our 2023 strategic
goals for Fab1 and began transitioning from costly 24/7
manufacturing in California to R&D and customer qualification
from this site, reducing our cash burn rate by approximately $22
million on an annualized basis.
- Acquisition of Routejade: Vertically integrates electrode
coating to reduce cost, enhance manufacturability, and speed up
access to and qualification of new battery materials, accelerating
cycles of learning.
- Enovix-enabled products in the market: Enovix battery selected
for FDA-approved Accurate Meditech “Mini,” a multi-vital sign
monitor to be sold at CVS, Walgreens, and Walmart in 2024.
- BrakeFlowTM commercialization: Shipment of custom-size Enovix
batteries for U.S. Army contract.
We are in a large and fast-growing industry (McKinsey is now
projecting the entire lithium-ion battery chain will grow over 30%
annually to $400 billion by 2030) that remains starved for product
performance improvement to unlock economic value for the World’s
most important industries. Based on customer feedback, the
ecosystem is looking for silicon replacement of graphite as the
lever to unleash increased battery performance and we believe our
progress this year has positioned Enovix as the leading contender
in silicon batteries.
To seize this opportunity, Enovix in 2023 has evolved into a
product-centric, customer-driven organization. Doing so required
overhauling the leadership team and driving deeper relationships
with top decision makers at key customers to understand their
unique product requirements.
Our battery architecture is highly sought after by smartphone
OEMs. This is due to our path to higher energy density matched with
high cycle life as well as a more robust structure compared to
conventional battery cells, including new variants that include
blends of engineered silicon. During the third quarter, our
engagements with leading smartphone OEMs Xiaomi, Vivo, Lenovo, and
others, continued to strengthen.
Products such as smartphones with large displays face the
greatest challenge in keeping up with user demands for battery
capacity. On top of this, emerging artificial intelligence
applications drain even more power. Contrast that with meager
improvements from conventional battery architectures, and the
opportunity for Enovix to make a meaningful impact has never been
greater.
For this reason, Enovix has shifted to a vertical business
strategy focused on a subset of customer relationships where our
value proposition is highest, as are the unit volumes. This mimics
the strategy I successfully executed at Micron and Qualcomm. A
vertical strategy allows us to maximize the return on R&D
efforts and build the most efficient and profitable manufacturing
lines. Our focus is clear: Give OEMs a path to the best-performing
battery in the world through our patented architecture and
materials agnostic strategy. By executing against our plan, we
believe Enovix will become a scale supplier with multi-billions of
dollars in annual revenue and industry-leading margins.
Business Update
Manufacturing. We commenced FAT of Gen2
equipment on schedule in August and with one zone already complete
we expect receive first equipment at Fab2 in November. We reiterate
our expectation for a completion of FAT for all four zones by
January 2024, and to have first Gen2 samples from the line ready by
April 2024.
Enovix is readying Fab2 in Malaysia to receive both the Gen2
high-volume Autoline and Agility Line, both designed in-house. As
detailed during the quarter, we are putting our 24/7 Agility Line
(which can make roughly 100 batteries per hour for customer
qualification) in Malaysia to shorten customer qualification cycles
while creating a separate R&D Agility Line in Fremont to
accelerate technology development of our more advanced
architectural nodes and battery chemistries.
Enovix made strong yield progress in the quarter at Fab1 on our
production line, bolstering confidence that we will begin in Fab2
with high yields. With Gen2 design improvements and coated
electrode rolls from Routejade suited to our approach, we see a
clear path to industry-leading yields as Enovix moves to high
volume manufacturing in Malaysia.
Commercialization. With our shift to a vertical
business strategy, Enovix has chosen to focus on the largest
customer opportunities and begin projects for these OEMs. We
believe serving these demanding markets will provide us with the
real-world data necessary to keep our batteries on an aggressive
learning curve, driving cost down and performance up in a
systematic way.
During the quarter, we received consistent feedback from
customers that conventional graphite-based batteries and even new
batteries that have anodes mixed with engineered silicon, are
failing to provide a significant boost in energy density and
battery capacity. For example, we estimate that our next-generation
smartphone battery will deliver an average of over 30% more battery
capacity at the same size than the cells used in this year’s
leading smartphone models. That contrasts to single digit annual
improvements in energy density in this market.
Recent positive feedback includes high marks from a third-party
testing lab that was hired by a Tier-1 wearable company to evaluate
advanced batteries for their next generation product. According to
Polaris Labs: the Enovix cells not only met the customer’s
performance specifications but also “have shown the highest energy
density among the cells evaluated” and “perform better than other
silicon products we’ve assessed in our lab.”
Enovix continued to make significant progress with our partners
in the automotive industry throughout the quarter. Enovix has
received strong interest in its cell architecture from numerous
OEMs due to its unique thermal and mechanical properties.
Improving the fast charge capability of next generation vehicles
will be key to driving continued adoption of electric vehicles as
it addresses core customer concerns of range anxiety, charging
inconvenience and cost. However, current conventional cells
are limited by their ability to reject heat to the cooling system
during fast charge leading to reduced charging power and increased
charging times. The Enovix architecture can reduce the
internal temperature gradient of a cell by an order of magnitude
compared to conventional battery structures giving OEMs a unique
path to enabling fast charge. With Fab1’s shift from 24/7
manufacturing to an R&D “Center for Innovation,” we are looking
forward to expanding our Mobility efforts with expanded dry room
capacity and engineering support.
Technology and Products. Aligned with our
vertical business strategy and the flexibility of our manufacturing
process, Enovix has established a technology roadmap suited to the
unique requirements of each end market. For example, in mobile, we
are developing a high energy density next generation battery that
has a targeted cycle life of 1,000 cycles and a charge rate of 3C
(i.e., full battery recharge in 20 minutes while maintaining
excellent thermal performance) to enable best-in-class
smartphones.
In other markets, such as IoT and computing, we see a different
set of battery specifications. For example, a leading laptop OEM
that we are working with wants to trade lower cycle life for even
higher energy density. And in some IoT applications, customers are
willing to trade off fast charge rates in exchange for higher
energy density and cycling performance in extreme temperatures.
Enovix is well-positioned to address these varying needs due to
our material agnostic strategy, which allows us to fine-tune
battery performance based on the anodes and cathodes we select.
Enovix is currently evaluating a dozen different anode and cathode
formulations, giving us multiple candidates to drive improvements
in energy density, cycle life, and charge rate.
Last, our patent portfolio covering everything from our battery
architecture to our use of 100% active silicon to our manufacturing
process, continues to grow. We now hold over 400 patents and patent
applications following our acquisition of Routejade and our patents
have been frequently cited as prior art by leading automakers and
consumer electronics companies.
Financials. Total revenue in the third quarter
of 2023 was $0.2 million, driven primarily from the delivery of
custom cells for the U.S. Army program.
Our GAAP cost of revenue of $16.8 million in the third quarter
of 2023 was up from $14.2 million in the second quarter of 2023.
Our non-GAAP cost of revenue of $14.4 million in the third quarter
of 2023 was up from $12.6 million in the second quarter of
2023.
Our GAAP operating expenses of $33.8 million in the third
quarter of 2023 were down from $37.7 million in the second quarter
of 2023. Our non-GAAP operating expenses of $18.8 million in the
third quarter of 2023 were down from $19.9 million in the first
quarter of 2023.
We exited the third quarter of 2023 with $371.3 million of cash,
cash equivalents, and short-term investments due to cash used in
operating activities of $28.2 million and capital expenditures of
$17.3 million.
A full reconciliation of our GAAP to Non-GAAP results is
available later in this report.
Outlook
For the fourth quarter of 2023, we expect revenue to increase
sequentially to between $3 million and $4 million due to a partial
quarter from Routejade and continued shipments of silicon batteries
for the U.S. Army program.
For full-year 2023, we are reducing our operational cash use
forecast from $120 million to $110 million due to the strategic
realignment of Fab1 and are reducing our CapEx forecast from $70
million to $65 million due to the timing of a portion of Gen2
equipment being installed in Malaysia with no impact to the start
of production.
Summary
We remain on track to move to high volume production in Malaysia
in 2024 and deliver an industry-leading battery that enables our
customers to launch compelling new products. We have made
significant strategic moves to lower our cost structure while
accelerating our technology development and enhancing our
manufacturability.
Conference Call Information
Enovix will hold a video conference call at 2:00 PM PT / 5:00 PM
ET today, November 7, 2023, to discuss the company’s business
updates and financial results. To join the call, participants must
use the following link to register:
https://enovix-q32023-earnings.open-exchange.net/registration. This
link will also be available via the Investor Relations section of
Enovix’s website at https://ir.enovix.com. An archived version
of the call will be available on the Enovix website for one year
at https://ir.enovix.com.
About EnovixEnovix is on a mission to power the
technologies of the future. Everything from IoT, mobile and
computing devices, to the vehicle you drive, needs a better
battery. The company’s disruptive architecture enables a battery
with high energy density and capacity without compromising safety.
Enovix is scaling its silicon-anode, lithium-ion battery
manufacturing capabilities to meet customer demand. For more
information visit www.enovix.com and follow us on LinkedIn.
Management’s Use of Non-GAAP Financial
Measures
EBITDA, Adjusted EBITDA, Free Cash Flow and
other non-GAAP measures are intended as supplemental financial
measures of our performance that are neither required by, nor
presented in accordance with GAAP. We believe that the use of
Non-GAAP measures provides an additional tool for investors to use
in evaluating ongoing operating results, trends, and in comparing
our financial measures with those of comparable companies, which
may present similar Non-GAAP financial measures to investors.
However, you should be aware that when
evaluating the non-GAAP measures, we may incur future expenses
similar to those excluded when calculating these measures. In
addition, the presentation of these measures should not be
construed as an inference that our future results will be
unaffected by unusual or nonrecurring items. Our computation of
EBITDA, Adjusted EBITDA, Free Cash Flow and other Non-GAAP measures
may not be comparable to other similarly titled measures computed
by other companies, because all companies may not calculate the
Non-GAAP measures in the same fashion.
Forward-Looking Statements
This letter to shareholders contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, about us and our
industry that involve substantial risks and uncertainties.
Forward-looking statements generally relate to future events or our
future financial or operating performance. In some cases, you can
identify forward-looking statements because they contain words such
as “will,” “goal,” “prioritize,” “plan,” “target,” “expect,”
“focus,” “look forward,” “opportunity,” “believe,” “estimate,”
“continue,” “anticipate,” and “pursue” or the negative of these
terms or similar expressions. Forward-looking statements in this
letter to shareholders include, but are not limited to, statements
regarding our expectations regarding, and our ability to respond
to, market and customer demand, our customers’ releases of products
using our batteries, our financial and business performance,
projected improvements in our manufacturing, commercialization and
R&D activities, our expectations regarding the Gen2 Autoline,
our ability to meet goals for yield and throughput, the set up and
creation of the manufacturing facility in Malaysia, our ability to
get to full factory acceptance testing, and our expectations
regarding the benefits of such location, the anticipated
contributions of and benefits from personnel, our revenue funnel,
our efforts in the portable electronics market, particularly IoT,
Mobile, and Computing categories, our ability to meet milestones
and deliver on our objectives and expectations, the implementation
and success of our business model and growth strategy, including
targeting various addressable markets and the expansion of our
customer base, our ability to manage our expenses, our ability to
integrate Routejade effectively, and our forecasts of our financial
and performance guidance and metrics. Actual results could differ
materially from these forward-looking statements as a result of
certain risks and uncertainties, including, without limitation, our
ability to improve energy density among our products, our ability
to establish sufficient manufacturing and optimize manufacturing
processes to meet demand, sourcing or establishing supply
relationships, adequate funds to acquire our next manufacturing
facility, set up and creation of manufacturing facility in
Malaysia, ability to obtain financing in Malaysia, market
acceptance of our products, changes in consumer preferences or
demands, changes in industry standards, the impact of technological
development and competition, and global economic conditions,
including inflationary and supply chain pressures, and political,
social, and economic instability, including as a result of armed
conflict, war or threat of war, terrorist activity or other
security concerns or trade and other international disputes that
could disrupt supply or delivery of, or demand for, our products.
For additional information on these risks and uncertainties and
other potential factors that could affect our business and
financial results or cause actual results to differ from the
results predicted, please refer to our filings with the Securities
and Exchange Commission (the “SEC”), including in the “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” sections of our most recently
filed annual report on Form 10-K and quarterly report on Form 10-Q
and other documents that we have filed, or that we will file, with
the SEC. Any forward-looking statements made by us in this letter
to shareholders speak only as of the date on which they are made
and subsequent events may cause these expectations to change. We
disclaim any obligations to update or alter these forward-looking
statements in the future, whether as a result of new information,
future events or otherwise, except as required by law.
For investor and media inquiries, please
contact:
Enovix CorporationCharles AndersonPhone: +1 (612) 229-9729Email:
canderson@enovix.com
For media inquiries, please
contact:
Enovix CorporationKristin AtkinsPhone: +1 (650)
815-6934Email: katkins@enovix.com
Enovix
CorporationCondensed Consolidated Balance
Sheets (Unaudited) (In Thousands, Except Share and per
Share Amounts)
|
October 1, 2023 |
|
January 1, 2023 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
270,817 |
|
|
$ |
322,851 |
|
Short-term investments |
|
100,522 |
|
|
|
— |
|
Accounts receivable, net |
|
1 |
|
|
|
170 |
|
Inventory |
|
215 |
|
|
|
634 |
|
Deferred contract costs |
|
— |
|
|
|
800 |
|
Prepaid expenses and other current assets |
|
4,182 |
|
|
|
5,193 |
|
Total current assets |
|
375,737 |
|
|
|
329,648 |
|
Property and equipment,
net |
|
136,713 |
|
|
|
103,868 |
|
Operating lease, right-of-use
assets |
|
5,912 |
|
|
|
6,133 |
|
Deferred contract costs,
non-current |
|
800 |
|
|
|
— |
|
Other assets, non-current |
|
780 |
|
|
|
937 |
|
Total assets |
$ |
519,942 |
|
|
$ |
440,586 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
18,272 |
|
|
$ |
7,077 |
|
Accrued expenses |
|
15,784 |
|
|
|
7,089 |
|
Accrued compensation |
|
9,126 |
|
|
|
8,097 |
|
Deferred revenue |
|
— |
|
|
|
50 |
|
Other liabilities |
|
944 |
|
|
|
716 |
|
Total current liabilities |
|
44,126 |
|
|
|
23,029 |
|
Long-term debt, net |
|
167,080 |
|
|
|
— |
|
Warrant liability |
|
44,940 |
|
|
|
49,080 |
|
Operating lease liabilities,
non-current |
|
7,538 |
|
|
|
8,234 |
|
Deferred revenue,
non-current |
|
3,774 |
|
|
|
3,724 |
|
Other liabilities,
non-current |
|
9 |
|
|
|
92 |
|
Total liabilities |
|
267,467 |
|
|
|
84,159 |
|
Commitments and
Contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.0001 par value; authorized shares of
1,000,000,000; issued and outstanding shares of 161,665,677 and
157,461,802 as of October 1, 2023 and January 1, 2023,
respectively |
|
16 |
|
|
|
15 |
|
Preferred stock, $0.0001 par value; authorized shares of
10,000,000; no shares issued or outstanding as of October 1, 2023
and January 1, 2023, respectively |
|
— |
|
|
|
— |
|
Additional paid-in-capital |
|
791,340 |
|
|
|
741,186 |
|
Accumulated other comprehensive loss |
|
(13 |
) |
|
|
— |
|
Accumulated deficit |
|
(538,868 |
) |
|
|
(384,774 |
) |
Total stockholders’ equity |
|
252,475 |
|
|
|
356,427 |
|
Total liabilities and stockholders’ equity |
$ |
519,942 |
|
|
$ |
440,586 |
|
Enovix
CorporationCondensed Consolidated Statements of
Operations(Unaudited)(In Thousands, Except Share and per
Share Amounts)
|
Quarters Ended |
|
Fiscal Years-to-Date Ended |
|
October 1, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
Revenue |
$ |
200 |
|
|
$ |
8 |
|
|
$ |
263 |
|
|
$ |
5,109 |
|
Cost of revenue |
|
16,809 |
|
|
|
6,629 |
|
|
|
43,292 |
|
|
|
12,883 |
|
Gross margin |
|
(16,609 |
) |
|
|
(6,621 |
) |
|
|
(43,029 |
) |
|
|
(7,774 |
) |
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
13,508 |
|
|
|
13,948 |
|
|
|
53,810 |
|
|
|
42,506 |
|
Selling, general and administrative |
|
17,245 |
|
|
|
13,110 |
|
|
|
61,207 |
|
|
|
36,545 |
|
Impairment of equipment |
|
— |
|
|
|
— |
|
|
|
4,411 |
|
|
|
— |
|
Restructuring cost |
|
3,021 |
|
|
|
— |
|
|
|
3,021 |
|
|
|
— |
|
Total operating expenses |
|
33,774 |
|
|
|
27,058 |
|
|
|
122,449 |
|
|
|
79,051 |
|
Loss from operations |
|
(50,383 |
) |
|
|
(33,679 |
) |
|
|
(165,478 |
) |
|
|
(86,825 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Change in fair value of common stock warrants |
|
31,320 |
|
|
|
(50,160 |
) |
|
|
4,140 |
|
|
|
44,040 |
|
Interest income |
|
4,326 |
|
|
|
1,746 |
|
|
|
9,942 |
|
|
|
2,399 |
|
Interest expense |
|
(1,557 |
) |
|
|
— |
|
|
|
(2,827 |
) |
|
|
— |
|
Other income (expense), net |
|
109 |
|
|
|
80 |
|
|
|
129 |
|
|
|
(55 |
) |
Total other income (expense),
net |
|
34,198 |
|
|
|
(48,334 |
) |
|
|
11,384 |
|
|
|
46,384 |
|
Net loss |
$ |
(16,185 |
) |
|
$ |
(82,013 |
) |
|
$ |
(154,094 |
) |
|
$ |
(40,441 |
) |
|
|
|
|
|
|
|
|
Net loss per share, basic |
$ |
(0.10 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.98 |
) |
|
$ |
(0.27 |
) |
Weighted average number of
common shares outstanding, basic |
|
159,829,716 |
|
|
|
153,332,007 |
|
|
|
157,559,138 |
|
|
|
152,497,010 |
|
Net loss per share,
diluted |
$ |
(0.29 |
) |
|
$ |
(0.53 |
) |
|
$ |
(1.00 |
) |
|
$ |
(0.55 |
) |
Weighted average number of
common shares outstanding, diluted |
|
161,371,417 |
|
|
|
153,332,007 |
|
|
|
158,260,393 |
|
|
|
153,773,271 |
|
Enovix
CorporationCondensed Consolidated Statements of
Cash Flows (Unaudited)(In Thousands)
|
Fiscal Years-to-Date Ended |
|
October 1, 2023 |
|
October 2, 2022 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(154,094 |
) |
|
$ |
(40,441 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities |
|
|
|
Depreciation |
|
10,566 |
|
|
|
4,388 |
|
Amortization of right-of-use assets |
|
436 |
|
|
|
407 |
|
Accretion of discount on investments |
|
(1,499 |
) |
|
|
— |
|
Amortization of debt issuance costs |
|
497 |
|
|
|
— |
|
Stock-based compensation |
|
57,832 |
|
|
|
22,117 |
|
Changes in fair value of common stock warrants |
|
(4,140 |
) |
|
|
(44,040 |
) |
Impairment of equipment |
|
4,411 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
169 |
|
|
|
(6 |
) |
Inventory |
|
418 |
|
|
|
(452 |
) |
Prepaid expenses and other assets |
|
546 |
|
|
|
(2,004 |
) |
Deferred contract costs |
|
— |
|
|
|
3,015 |
|
Accounts payable |
|
4,338 |
|
|
|
(192 |
) |
Accrued expenses and compensation |
|
3,113 |
|
|
|
(122 |
) |
Deferred revenue |
|
— |
|
|
|
(3,527 |
) |
Other liabilities |
|
(1 |
) |
|
|
(46 |
) |
Net cash used in operating
activities |
|
(77,408 |
) |
|
|
(60,903 |
) |
Cash flows from
investing activities: |
|
|
|
Purchase of property and
equipment |
|
(32,979 |
) |
|
|
(31,366 |
) |
Purchases of investments |
|
(115,736 |
) |
|
|
— |
|
Maturities of investments |
|
16,700 |
|
|
|
— |
|
Net cash used in investing
activities |
|
(132,015 |
) |
|
|
(31,366 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from exercise of
common stock warrants, net |
|
— |
|
|
|
52,828 |
|
Proceeds from issuance of
Convertible Senior Notes |
|
172,500 |
|
|
|
— |
|
Payments of debt issuance
costs |
|
(5,251 |
) |
|
|
— |
|
Purchase of Capped Calls |
|
(17,250 |
) |
|
|
— |
|
Payroll tax payments for
shares withheld upon vesting of RSUs |
|
(2,988 |
) |
|
|
— |
|
Proceeds from the exercise of
stock options |
|
9,232 |
|
|
|
2,052 |
|
Proceeds from issuance of
common stock under employee stock purchase plan |
|
1,169 |
|
|
|
1,112 |
|
Repurchase of unvested
restricted common stock |
|
(23 |
) |
|
|
(9 |
) |
Net cash provided by financing
activities |
|
157,389 |
|
|
|
55,983 |
|
Change in cash, cash
equivalents, and restricted cash |
|
(52,034 |
) |
|
|
(36,286 |
) |
Cash and cash equivalents and
restricted cash, beginning of period |
|
322,976 |
|
|
|
385,418 |
|
Cash and cash equivalents, and
restricted cash, end of period |
$ |
270,942 |
|
|
$ |
349,132 |
|
Net Income (Loss) to Adjusted EBITDA
While we prepare our consolidated financial
statements in accordance with GAAP, we also utilize and present
certain financial measures that are not based on GAAP. We refer to
these financial measures as “Non-GAAP” financial measures. In
addition to our financial results determined in accordance with
GAAP, we believe that EBITDA and Adjusted EBITDA are useful
measures in evaluating its financial and operational performance
distinct and apart from financing costs, certain non-cash expenses
and non-operational expenses.
These Non-GAAP financial measures should be
considered in addition to results prepared in accordance with GAAP
but should not be considered a substitute for or superior to GAAP.
We endeavor to compensate for the limitation of the Non-GAAP
financial measures presented by also providing the most directly
comparable GAAP measures.
We use Non-GAAP financial information to
evaluate our ongoing operations and for internal planning,
budgeting and forecasting purposes. We believe that Non-GAAP
financial information, when taken collectively, may be helpful to
investors in assessing its operating performance and comparing its
performance with competitors and other comparable companies. You
should review the reconciliations below but not rely on any single
financial measure to evaluate our business.
“EBITDA” is defined as earnings (net loss)
adjusted for interest expense, income taxes, depreciation expense
and amortization expense. “Adjusted EBITDA” includes additional
adjustments to EBITDA such as stock-based compensation expense,
change in fair value of common stock warrants, impairment of
equipment and other special items as determined by management which
it does not believe to be indicative of its underlying business
trends.
Below is a reconciliation of net loss on a GAAP
basis to the Non-GAAP EBITDA and Adjusted EBITDA financial measures
for the periods presented below (in thousands):
|
Quarters Ended |
|
Fiscal Years-to-Date Ended |
|
October 1, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
Net loss |
$ |
(16,185 |
) |
|
$ |
(82,013 |
) |
|
$ |
(154,094 |
) |
|
$ |
(40,441 |
) |
Interest expense |
|
1,557 |
|
|
|
— |
|
|
|
2,827 |
|
|
|
— |
|
Depreciation and amortization |
|
2,900 |
|
|
|
2,995 |
|
|
|
10,000 |
|
|
|
4,795 |
|
EBITDA |
|
(11,728 |
) |
|
|
(79,018 |
) |
|
|
(141,267 |
) |
|
|
(35,646 |
) |
Stock-based compensation expense (1) |
|
13,274 |
|
|
|
8,699 |
|
|
|
57,473 |
|
|
|
22,117 |
|
Change in fair value of common stock warrants |
|
(31,320 |
) |
|
|
50,160 |
|
|
|
(4,140 |
) |
|
|
(44,040 |
) |
Impairment of equipment |
|
— |
|
|
|
— |
|
|
|
4,411 |
|
|
|
— |
|
Restructuring cost (1) |
|
3,021 |
|
|
|
— |
|
|
|
3,021 |
|
|
|
— |
|
Acquisition cost |
|
1,115 |
|
|
|
— |
|
|
|
1,115 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
(25,638 |
) |
|
$ |
(20,159 |
) |
|
$ |
(79,387 |
) |
|
$ |
(57,569 |
) |
(1) $0.4 million of stock-based compensation
expense is included in the restructuring cost line of the table
above for the quarter and fiscal year-to-date ended October 1,
2023.
Free Cash Flow
We define “Free Cash Flow” as (i) net cash from
operating activities less (ii) capital expenditures, net of
proceeds from disposals of property and equipment, all of which are
derived from our Consolidated Statements of Cash Flow. The
presentation of non-GAAP Free Cash Flow is not intended as an
alternative measure of cash flows from operations, as determined in
accordance with GAAP. We believe that this financial measure is
useful to investors because it provides investors to view our
performance using the same tool that we use to gauge our progress
in achieving our goals and it is an indication of cash flow that
may be available to fund investments in future growth initiatives.
Below is a reconciliation of net cash used in operating activities
to the Free Cash Flow financial measures for the periods presented
below (in thousands):
|
Fiscal Years-to-Date Ended |
|
October 1, 2023 |
|
October 2, 2022 |
Net cash used in operating activities |
$ |
(77,408 |
) |
|
$ |
(60,903 |
) |
Capital expenditures |
|
(32,979 |
) |
|
|
(31,366 |
) |
Free Cash Flow |
$ |
(110,387 |
) |
|
$ |
(92,269 |
) |
Other Non-GAAP Financial Measures
Reconciliation (In Thousands, Except Share and per Share
Amounts)
|
|
Quarters Ended |
|
Fiscal Years-to-Date Ended |
|
|
October 1, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
Revenue |
|
$ |
200 |
|
|
$ |
8 |
|
|
$ |
263 |
|
|
$ |
5,109 |
|
|
|
|
|
|
|
|
|
|
GAAP cost of
revenue |
|
$ |
16,809 |
|
|
$ |
6,629 |
|
|
$ |
43,292 |
|
|
$ |
12,883 |
|
Stock-based compensation
expense |
|
|
(2,396 |
) |
|
|
(1,067 |
) |
|
|
(5,001 |
) |
|
|
(1,317 |
) |
Non-GAAP cost of
revenue |
|
$ |
14,413 |
|
|
$ |
5,562 |
|
|
$ |
38,291 |
|
|
$ |
11,566 |
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin |
|
$ |
(16,609 |
) |
|
$ |
(6,621 |
) |
|
$ |
(43,029 |
) |
|
$ |
(7,774 |
) |
Stock-based compensation
expense |
|
|
2,396 |
|
|
|
1,067 |
|
|
|
5,001 |
|
|
|
1,317 |
|
Non-GAAP gross
margin |
|
$ |
(14,213 |
) |
|
$ |
(5,554 |
) |
|
$ |
(38,028 |
) |
|
$ |
(6,457 |
) |
|
|
|
|
|
|
|
|
|
GAAP research and
development (R&D) expense |
|
$ |
13,508 |
|
|
$ |
13,948 |
|
|
$ |
53,810 |
|
|
$ |
42,506 |
|
Stock-based compensation
expense |
|
|
(4,949 |
) |
|
|
(3,372 |
) |
|
|
(22,072 |
) |
|
|
(9,705 |
) |
Non-GAAP R&D
expense |
|
$ |
8,559 |
|
|
$ |
10,576 |
|
|
$ |
31,738 |
|
|
$ |
32,801 |
|
|
|
|
|
|
|
|
|
|
GAAP selling, general
and administrative (SG&A) expense |
|
$ |
17,245 |
|
|
$ |
13,110 |
|
|
$ |
61,207 |
|
|
$ |
36,545 |
|
Stock-based compensation
expense |
|
|
(5,929 |
) |
|
|
(4,260 |
) |
|
|
(30,400 |
) |
|
|
(11,095 |
) |
Acquisition cost |
|
|
(1,115 |
) |
|
|
— |
|
|
|
(1,115 |
) |
|
|
— |
|
Non-GAAP SG&A
expense |
|
$ |
10,201 |
|
|
$ |
8,850 |
|
|
$ |
29,692 |
|
|
$ |
25,450 |
|
|
|
|
|
|
|
|
|
|
GAAP operating
expenses |
|
$ |
33,774 |
|
|
$ |
27,058 |
|
|
$ |
122,449 |
|
|
$ |
79,051 |
|
Stock-based compensation
expense included in R&D expense |
|
|
(4,949 |
) |
|
|
(3,372 |
) |
|
|
(22,072 |
) |
|
|
(9,705 |
) |
Stock-based compensation
expense included in SG&A expense |
|
|
(5,929 |
) |
|
|
(4,260 |
) |
|
|
(30,400 |
) |
|
|
(11,095 |
) |
Impairment of equipment |
|
|
— |
|
|
|
— |
|
|
|
(4,411 |
) |
|
|
— |
|
Restructuring cost (1) |
|
|
(3,021 |
) |
|
|
— |
|
|
|
(3,021 |
) |
|
|
— |
|
Acquisition cost |
|
|
(1,115 |
) |
|
|
— |
|
|
|
(1,115 |
) |
|
|
— |
|
Non-GAAP operating
expenses |
|
$ |
18,760 |
|
|
$ |
19,426 |
|
|
$ |
61,430 |
|
|
$ |
58,251 |
|
|
|
|
|
|
|
|
|
|
GAAP loss from
operations |
|
$ |
(50,383 |
) |
|
$ |
(33,679 |
) |
|
$ |
(165,478 |
) |
|
$ |
(86,825 |
) |
Stock-based compensation
expense (1) |
|
|
13,274 |
|
|
|
8,699 |
|
|
|
57,473 |
|
|
|
22,117 |
|
Impairment of equipment |
|
|
— |
|
|
|
— |
|
|
|
4,411 |
|
|
|
— |
|
Restructuring cost (1) |
|
|
3,021 |
|
|
|
— |
|
|
|
3,021 |
|
|
|
— |
|
Acquisition cost |
|
|
1,115 |
|
|
|
— |
|
|
|
1,115 |
|
|
|
— |
|
Non-GAAP loss from
operations |
|
$ |
(32,973 |
) |
|
$ |
(24,980 |
) |
|
$ |
(99,458 |
) |
|
$ |
(64,708 |
) |
|
|
|
|
|
|
|
|
|
(1) $0.4 million of stock-based compensation
expense is included in the restructuring cost line of the table
above for the quarter and fiscal year-to-date ended October 1,
2023.
|
|
Quarters Ended |
|
Fiscal Years-to-Date Ended |
|
|
October 1, 2023 |
|
October 2, 2022 |
|
October 1, 2023 |
|
October 2, 2022 |
GAAP net
loss |
|
$ |
(16,185 |
) |
|
$ |
(82,013 |
) |
|
$ |
(154,094 |
) |
|
$ |
(40,441 |
) |
Stock-based compensation
expense (1) |
|
|
13,274 |
|
|
|
8,699 |
|
|
|
57,473 |
|
|
|
22,117 |
|
Change in fair value of common
stock warrants |
|
|
(31,320 |
) |
|
|
50,160 |
|
|
|
(4,140 |
) |
|
|
(44,040 |
) |
Impairment of equipment |
|
|
— |
|
|
|
— |
|
|
|
4,411 |
|
|
|
— |
|
Restructuring cost (1) |
|
|
3,021 |
|
|
|
— |
|
|
|
3,021 |
|
|
|
— |
|
Acquisition cost |
|
|
1,115 |
|
|
|
— |
|
|
|
1,115 |
|
|
|
— |
|
Non-GAAP net
loss |
|
$ |
(30,095 |
) |
|
$ |
(23,154 |
) |
|
$ |
(92,214 |
) |
|
$ |
(62,364 |
) |
|
|
|
|
|
|
|
|
|
GAAP net loss per
share, basic |
|
$ |
(0.10 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.98 |
) |
|
$ |
(0.27 |
) |
GAAP weighted average number
of common shares outstanding, basic |
|
|
159,829,716 |
|
|
|
153,332,007 |
|
|
|
157,559,138 |
|
|
|
152,497,010 |
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
share, diluted |
|
$ |
(0.29 |
) |
|
$ |
(0.53 |
) |
|
$ |
(1.00 |
) |
|
$ |
(0.55 |
) |
GAAP weighted average number
of common shares outstanding, diluted |
|
|
161,371,417 |
|
|
|
153,332,007 |
|
|
|
158,260,393 |
|
|
|
153,773,271 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per
share, basic |
|
$ |
(0.19 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.59 |
) |
|
$ |
(0.41 |
) |
GAAP weighted average number
of common shares outstanding, basic |
|
|
159,829,716 |
|
|
|
153,332,007 |
|
|
|
157,559,138 |
|
|
|
152,497,010 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per
share, diluted |
|
$ |
(0.19 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.41 |
) |
GAAP weighted average number
of common shares outstanding, diluted |
|
|
161,371,417 |
|
|
|
153,332,007 |
|
|
|
158,260,393 |
|
|
|
153,773,271 |
|
(1) $0.4 million of stock-based compensation
expense is included in the restructuring cost line of the table
above for the quarter and fiscal year-to-date ended October 1,
2023.
Enovix (NASDAQ:ENVX)
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