8-K: Everspin Technologies Reports Q1 2024 Results: Revenue Near Guidance, Net Income Below Expectations

Everspin Technologies announced its Q1 2024 financial results, with revenue near the high end of guidance but net income falling short of expectations.

Summary

• Everspin Technologies reported a total revenue of $14.4 million for the first quarter of 2024, which was near the high end of their guidance range.
• This compares to $14.8 million in revenue for the same quarter of the previous year.
• MRAM product sales were $10.9 million, down from $13.8 million in Q1 2023.
• Licensing, royalty, patent, and other revenue increased significantly to $3.6 million, up from $1.1 million in the first quarter of 2023.
• The company's gross margin was 56.5%, slightly down from 56.8% in the first quarter of 2023.
• GAAP operating expenses rose to $8.8 million, compared to $7.7 million in the first quarter of 2023.
• Everspin reported a GAAP net loss of $0.2 million, or $(0.01) per diluted share, compared to a net income of $0.8 million, or $0.04 per diluted share, in the first quarter of 2023.
• Adjusted EBITDA was $1.9 million, down from $2.3 million in the first quarter of 2023.
• For the second quarter of 2024, Everspin expects total revenue to be between $10.0 million and $11.0 million and a GAAP net loss per basic share between $(0.14) and ($0.09).

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While revenue was near guidance, the net loss and decreased EBITDA are concerning. The positive design wins and foundry agreement are counterbalanced by the negative financial results and forward looking guidance.

Positives

• Revenue was near the high end of the guidance range.
• Licensing, royalty, patent, and other revenue saw a substantial increase.
• The company secured a significant design win with IBM.
• A new foundry services agreement is being established.
• The company has a strong balance sheet and solid gross margin.

Negatives

• MRAM product sales decreased compared to the same quarter last year.
• GAAP net loss was reported for the quarter, compared to a net income in the same quarter last year.
• Adjusted EBITDA decreased compared to the first quarter of 2023.
• Operating expenses increased compared to the first quarter of 2023.
• The company is forecasting a net loss for the next quarter.

Risks

• The company's outlook is dependent on external conditions, such as the military conflict in Ukraine, instability in the Middle East, recent market volatility, and the semiconductor downturn.
• The company's future performance is subject to risks and uncertainties detailed in their SEC filings.

Future Outlook

Everspin expects total revenue in a range of $10.0 million to $11.0 million and GAAP net loss per basic share to be between $(0.14) and ($0.09) for the second quarter of 2024. The company also expects Toggle and STT-MRAM design wins to ramp in the second half of 2024.

Management Comments

• Our first quarter revenue came in near the high end of our expectations while our GAAP net income came in below our expectations, said Sanjeev Aggarwal, President and Chief Executive Officer.
• We are very pleased with some of our recent wins, most notably with IBM for our PERSYST STT-MRAM solution, which will be used in their FCM4 FlashCore Module, and we are entering into an agreement with a commercial customer to provide foundry services.
• We are pleased to end the quarter with a strong balance sheet and solid gross margin, said Anuj Aggarwal, Everspins Chief Financial Officer.
• We are encouraged by the traction our products have had, as evidenced by our recent design wins, and we remain confident in our ability to scale the business and convert those design wins to revenue.

Industry Context

The announcement reflects the ongoing demand for advanced memory solutions in the semiconductor industry, particularly for applications requiring persistent memory. The win with IBM highlights the growing adoption of STT-MRAM technology in high-performance computing and data center applications.

Comparison to Industry Standards

• Everspin's gross margin of 56.5% is relatively strong compared to some other semiconductor companies, but it is important to compare this to companies with similar product mixes.
• For example, companies like Micron Technology and Western Digital, which have a broader range of products, may have different gross margin profiles.
• The company's focus on MRAM technology positions it in a niche market, and its performance should be compared to other companies in the non-volatile memory space, such as Adesto Technologies (now part of Dialog Semiconductor) or companies developing emerging memory technologies.
• The reported net loss, while concerning, is not uncommon for companies in the growth phase, especially those investing heavily in R&D and market expansion.

Stakeholder Impact

• Shareholders may be concerned about the net loss and decreased EBITDA.
• Employees may be encouraged by the design wins and foundry agreement.
• Customers may be interested in the new products and services.
• Suppliers may see potential for increased business.
• Creditors may be monitoring the company's financial performance.

Next Steps

• The company will host a conference call for analysts and investors on May 1, 2024, at 5:00 p.m. Eastern Time.
• The company expects Toggle and STT-MRAM design wins to ramp in the second half of 2024.

Key Dates

Keywords

MRAM, STT-MRAM, Toggle MRAM, Persistent Memory, Semiconductor, Financial Results, Revenue, EBITDA, Net Loss, Gross Margin, Foundry Services, IBM