Enovix Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ananda Baruah - Loop Capital Markets - Analyst : Yeah. Hey guys. Thanks a lot. Yeah congrats on the new announcement. Two, if I could. I guess I'll just start with the -- is really a clarification around the announcements, Raj. So is the announced volume customer for December quarter 2025, is that the new customer? Is that the new relationship? Or is that the prior relationship? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 9:00PM, ENVX.OQ - Q3 2024 Enovix Corp Earnings Call

Question: Ananda Baruah - Loop Capital Markets - Analyst : I got it. I got it. That's very helpful. And EX-2M, can you remind us which batteries you'll be going to market with next year at volume, EX-1M, EX-2M if it goes, if everything goes well, once you start getting samples out.

Question: Ananda Baruah - Loop Capital Markets - Analyst : Got it. That's helpful. Thanks so much. Appreciate it.

Question: Colin Rusch - Oppenheimer - Analyst : Thanks so much guys. As you look at initial yields as well as the evolvement specs from your customers and what's happening with pricing on batteries, can you talk a little bit about how those pricing dynamics are trending and how that rolls through into your target gross margins that you've previously communicated?

Question: Colin Rusch - Oppenheimer - Analyst : Okay. Fantastic. And then million (multiple speakers)

Question: Colin Rusch - Oppenheimer - Analyst : Fantastic. I appreciate the clarification. And then in the guidance for fourth quarter and revenue in the $8 million to $10 million, can you just break out what's coming from (inaudible) and how much is coming off the Agility line and driving that revenue?

Question: Colin Rusch - Oppenheimer - Analyst : Appreciate it.

Question: Will Peterson - JPMorgan Chase & Co - Analyst : Yeah, hi, good afternoon and thanks for taking the questions and nice to see the additional announcements I wanted to ask about sampling. So I guess how many of the top smartphone OEMs have received the excellent samples thus far? What's the initial feedback then? I think you're looking to sample six out of the top eight. Have you sample the large Korean or the large US player? Are these pretty much all in China? And I guess, are there other form factors or device types that you also sample in the quarter with similar technology.

Question: Will Peterson - JPMorgan Chase & Co - Analyst : Okay. I guess on the commercial side, given your expectations with the new smartphone OEM announcement, plus, I guess, some early IoT production schedules. Can you give a sense of what kind of volumes you're expecting broadly in 2025? I mean are these -- can these be in the millions, I guess, in the smartphone side? Or how should we think about volumes?

Question: Will Peterson - JPMorgan Chase & Co - Analyst : That's it. Thank you.

Question: George Gianarikas - Canaccord Genuity - Analyst : Everyone. Thank you. For taking my questions. Just to maybe tack on to the previous question, to the extent you wanted to fill your revenue pipeline additionally for next year, given how late we are in 2024 and how long it takes to qualify and get designed in, is there still potential if customers come to you that are testing your samples to fill the 2025 revenue pipeline between now and the end of the year or wherever that deadline kind of meets?

Question: George Gianarikas - Canaccord Genuity - Analyst : Maybe as a follow-up to that, does the same logic applied to additional IoT customers who could fill the revenue pipeline for next year?

Question: Gus Richard - Northland Capital Markets - Analyst : Yes. Now that you're getting visibility into '25, given the mix you're expecting, what do you think the revenue potential for that line would be given the mix you're looking into both IoT and mobile? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 9:00PM, ENVX.OQ - Q3 2024 Enovix Corp Earnings Call

Question: Gus Richard - Northland Capital Markets - Analyst : Okay. Got it. And then just thinking about the second line I think you had talked about that starting production maybe at the end of next year. And I was wondering if those plans are still on track.

Question: Gabe Daoud - TD Cohen - Analyst : Hey, everyone. Thanks for the time. Maybe just going back to the order, guys, could you maybe talk a little bit about what exactly has to happen from here into 4Q 2025? Obviously, they're going through a prolification process, but maybe some of the milestones that need to be achieved, whether it's specific targets on energy density or cycle life or cash charge capability. I know it may differ depending on specific model, but curious if there's any kind of brackets you could put around that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 9:00PM, ENVX.OQ - Q3 2024 Enovix Corp Earnings Call

Question: Gabe Daoud - TD Cohen - Analyst : Okay. And then just a quick follow-up to that. So you expect to get the order in 2Q. And any kind of range on the specific models what they do in terms of shipments a year, just to try to get a sense of what the actual size of the order could look like?

Question: Gabe Daoud - TD Cohen - Analyst : Okay. And then just a quick follow-up. Any comments on capital needs and maybe options to bring in additional capital in the door if you think you need it.

Question: Gabe Daoud - TD Cohen - Analyst : Thanks, Farhan. Thanks, Raj.

Question: Derek Soderberg - Cantor Fitzgerald - Analyst : Yeah. Hey guys, thanks for taking the questions. Just regarding the Smart Glass opportunity for you guys. I'm curious how investors should think about the addressable market there maybe relative to smartphones. I don't know if you could talk about that. The size of that market today versus what maybe you guys expect over the next 10 years or so. And then from a content standpoint, Raj, it sounded like these smartphone customers want a pretty sizable battery cell. But for the smart glass devices, what sort of capacities are those devices targeting?

Question: Derek Soderberg - Cantor Fitzgerald - Analyst : Got it. And then as my follow-up, just regarding the announcement around the IoT customer. Some of the wording that's been used is mass production. I'm curious if you can sort of quantify what that means by mass production? Is it sort of 1 million battery units annually, something like that? Is there maybe something we should go off of? And then also, I'm curious if you can speak to which kind of device that IoT device is. Thanks.

Question: Sean Milligan - Janney Montgomery - Analyst : Hey, thanks for taking the question have been from another call, so sorry if you already answered this. But can you kind of go over the remaining CapEx to deliver the first auto line? And kind of maybe how that splits up into in terms of like what's the fourth quarter and what's the first half next year?

Question: Sean Milligan - Janney Montgomery - Analyst : How much of that is left to be spent of the $80 million to $90 million?

Question: Sean Milligan - Janney Montgomery - Analyst : Okay. And then as you start to order additional lines, how should we think about like the payment splits. How much is on order. How should we think about that cadence?

Question: Sean Milligan - Janney Montgomery - Analyst : Okay. That's helpful. Thank you.

Question: Mark Shooter - William Blair - Analyst : Thanks, team. Congrats again on the second customer. We got more details in that engagement. So should we read this as more concrete? Or is this customer more eager than the other? Is there an opportunity here to try to pick these two against each other in a race for qualification?

Question: Mark Shooter - William Blair - Analyst : Got it. Thank you both. Silicon has a slightly lower reduction potential and so a lower voltage profile. And I know smartphones are a high-power device with high voltage. I'm wondering if customers have brought this up. Is there any pushback in terms of the voltage profile? Or are they open to modifying the power management in the electronics any conversation like that with your customers?

Question: Mark Shooter - William Blair - Analyst : Got it. Thanks for color

Question: Tony Stoss - Craig-Hallum - Analyst : Thanks, Raj. I wanted to follow up on your comment about the 7,000 milliamp batteries. I'm curious kind of when you think you could be producing something to that density? And also, what would the ASP be like in that? Are we kind of stuck in that $10 per battery ASP? Or would the higher densities markedly move up from that $10 number?

Question: Tony Stoss - Craig-Hallum - Analyst : Great. Thanks, Farhan.