Core Viewpoint - Navitas Semiconductor is facing significant losses and will take time to achieve profitability, leading to a 14.7% drop in share price following its second-quarter earnings report [1][2]. Financial Performance - The earnings report met analyst expectations, but the extent of the losses highlighted the long road ahead for profitability [2]. - The company raised capital by selling 20 million shares, which may dilute existing shareholders' claims on future profits and cash flows [2][3]. Investment Outlook - Investors should recognize that Navitas is a growth stock in its early stages, with potential driven by its partnership with Nvidia for next-generation 800V data centers [4]. - The technology offered by Navitas, including silicon carbide (SiC) and gallium nitride (GaN) solutions, is expected to play a crucial role in the evolving power train architecture of these data centers [4]. Future Projections - CEO Gene Sheridan stated that Navitas' technologies could enable a 100x increase in server rack power capacity for AI data centers, addressing the growing power demand [5]. - Initial customer evaluations are complete, with final engineering samples expected in Q4, and management anticipates final supplier selections and system designs to be completed by 2026, leading to volume production in 2027 [7].

Group 1 - The semiconductor sector experienced a significant rally, with Wolfspeed rising over 11%, Nexperia Semiconductor increasing nearly 9%, and AMD, ON Semiconductor, and Micron Technology all gaining over 3% [1] - Nvidia saw an increase of over 2%, while Texas Instruments and Broadcom rose by more than 1.8% [1] - The market reaction was influenced by President Trump's announcement of a 100% tariff on imported semiconductor chips, excluding companies that have manufacturing facilities in the U.S. [1]

Navitas Semiconductor TodayNVTSNavitas Semiconductor$6.35 -0.42 (-6.20%) 52-Week Range$1.52▼$9.48Price Target$5.65Add to WatchlistInvestors in Navitas Semiconductor NASDAQ: NVTS are grappling with a story of two distinct timelines. On one hand, the company’s stock dropped sharply by nearly 16% on August 5, 2025, after it released a challenging second-quarter 2025 earnings report and a weak forecast for the upcoming quarter. This near-term picture has understandably given investors pause. On the other hand, ...

Group 1 - Palantir Technologies Inc. and Navitas Semiconductor Corporation are significant beneficiaries of the ongoing AI transformation [1] - Both companies have different operations and business models but are essential components in the AI sector [1]

Group 1 - U.S. stock futures are higher, with Dow futures gaining around 0.1% [1] - Inspire Medical Systems, Inc. shares fell 25% to $98.00 in pre-market trading after reporting second-quarter results and cutting FY25 guidance below estimates [1] - Ichor Holdings, Ltd. declined 24.3% to $15.24 in pre-market trading due to worse-than-expected second-quarter adjusted EPS results and below-estimate third-quarter adjusted EPS guidance [3] Group 2 - Gartner, Inc. shares fell 15% to $287.20 after issuing soft FY25 guidance [3] - Vertex Pharmaceuticals Incorporated declined 14.5% to $403.85 following second-quarter financial results and Vx-993 Phase 2 trial results [3] - Semrush Holdings, Inc. fell 14.1% to $7.91 after reporting a second-quarter EPS miss [3] - Navitas Semiconductor Corporation shares dropped 14.1% to $6.92 after issuing third-quarter sales guidance below estimates [3] - Kyndryl Holdings, Inc. fell 12.2% to $32.21 after reporting a first-quarter revenue miss [3]

Navitas Semiconductor (NVTS 0.69%), a developer of gallium nitride (GaN) and silicon carbide (SiC) power semiconductors, reported results for the quarter ended June 30, 2025, on August 4, 2025. Navitas posted GAAP revenue of $14.5 million, precisely matching analyst expectations, but saw a 29.3% year-over-year decline in GAAP revenue from the same period last year. Non-GAAP loss from operations improved to $10.6 million from $13.3 million in Q2 2024, showing progress on cost control. However, GAAP net loss ...

Over the last four quarters, the company has not been able to surpass consensus EPS estimates. Navitas Semiconductor, which belongs to the Zacks Electronics - Semiconductors industry, posted revenues of $14.49 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.23%. This compares to year-ago revenues of $20.47 million. The company has not been able to beat consensus revenue estimates over the last four quarters. Navitas Semiconductor Corporation (NVTS) came out with a quarterl ...

Financial Data and Key Metrics Changes - Q2 2025 revenues were $14.5 million, in line with guidance despite industry headwinds [5][26] - Gross margin improved to 38.5% from 38.1% in Q1 2025, attributed to a favorable product mix [27] - Operating loss decreased sequentially to $10.6 million from $11.8 million in Q1 2025 [27][30] Business Line Data and Key Metrics Changes - Revenue decline primarily due to lower sales in the China EV and industrial markets as semiconductor customers await better economic indicators [26] - Operating expenses reduced sequentially from $17.2 million to $16.1 million, with SG&A expenses down by 17% [27] - Inventory decreased to $15.1 million from $16.1 million in Q1 2025, with a $3 million reserve taken for China SiC inventory [28] Market Data and Key Metrics Changes - The semiconductor industry is experiencing a downturn, particularly affecting solar, industrial, and EV sectors [5] - The transition to AI data centers is seen as a significant opportunity, with expectations of a $2.6 billion annual market by 2030 for gallium nitride and silicon carbide [24][14] Company Strategy and Development Direction - The company is shifting focus towards AI data centers and energy infrastructure, reducing emphasis on lower-margin mobile applications [9][31] - A new partnership with PowerChip aims to enhance manufacturing capabilities, transitioning to an 8-inch low-cost platform [7][8] - The company plans to maintain operating expenses at or below current levels while investing in AI data centers [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing industry headwinds but believes strategic investments will position the company for significant growth in AI data centers [24][31] - The transition period may result in softer revenue in the near term, but is expected to set the stage for growth in 2026 and beyond [35][36] - Management expects gross margins to remain flat in the near term, with improvements tied to revenue inflection points [86] Other Important Information - The company raised nearly $100 million in new capital during Q2 2025 to support growth plans [7] - Cash and cash equivalents at the end of Q2 2025 were $161 million, with no debt [30] Q&A Session Summary Question: Revenue expectations during the transition - Management expects softer quarters in the near term as the company reduces dependency on mobile while layering in new design wins [35][36] Question: Margin structure for future business - Management anticipates long-term gross margins north of 50%, driven by high-value markets in AI data centers [39][40] Question: Impact of mobile business transition - The company is focusing on higher-margin ultrafast chargers while reducing exposure to lower-margin products [43][45] Question: Supply chain and inventory during transition - Management confirmed no supply issues, with TSMC committed to a two-year supply, ensuring a smooth transition to PowerChip [55][56] Question: Engagement with data center customers post-NVIDIA announcement - The NVIDIA partnership has opened doors for engagement with other data center customers, enhancing market opportunities [62] Question: Competition and market positioning - The company believes it has a competitive edge due to its range of products and focus on high efficiency and high density technologies [68][70] Question: Design wins and cash flow expectations - Management expects to see design wins ramping up in 2026, with operating cash flow usage projected at $10 million to $11 million going forward [77][78]

Financial Data and Key Metrics Changes - Q2 2025 revenues were $14.5 million, in line with guidance despite industry headwinds [6][26] - Gross margin improved to 38.5% from 38.1% in Q1 2025, attributed to a favorable product mix [27] - Operating expenses decreased sequentially from $17.2 million to $16.1 million, with SG&A expenses down 17% [27][30] - Loss from operations improved to $10.6 million from $11.8 million in Q1 2025 [27] Business Line Data and Key Metrics Changes - The company is shifting focus from mainstream price-sensitive applications to high-end performance applications in mobile consumer and appliance sectors [9] - The transition to PowerChip's eight-inch manufacturing platform is expected to yield higher gross margins and better price points for customers [8][9] Market Data and Key Metrics Changes - The semiconductor industry is experiencing a downturn, particularly in the solar, industrial, and EV sectors, exacerbated by tariff conflicts and the removal of tax credits [6] - The AI data center market is projected to grow significantly, with power consumption expected to increase from 7 gigawatts in 2023 to over 70 gigawatts by 2030 [10][11] Company Strategy and Development Direction - The company is investing in AI data centers, aiming to establish a leadership position in this emerging market [7][24] - A strategic decision was made to reduce focus on lower-margin mobile business while increasing investments in AI data centers and energy infrastructure [31][32] - The company anticipates a significant market opportunity of $2.6 billion per year by 2030 in AI data centers and related energy infrastructure [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term headwinds but expressed confidence in long-term growth potential driven by AI data centers [24][31] - The transition to AI data centers is expected to take multiple quarters, with a focus on maintaining spending discipline [31][32] - Management expects revenue to decline to approximately $10 million in Q3 2025 due to tariff risks and strategic decisions [30][31] Other Important Information - The company raised nearly $100 million in new capital during Q2 2025 to support growth plans [7] - Cash and cash equivalents at the end of Q2 2025 were $161 million, with no debt [30] Q&A Session Summary Question: Revenue expectations during the transition period - Management indicated that revenues may soften in the near term due to reduced dependency on mobile, but new design wins will help offset this in the future [35][36] Question: Margin structure in the AI data center market - Management expects long-term gross margins to exceed 50%, driven by high-value markets focused on performance and efficiency [39][41] Question: Impact of mobile business transition on revenue - The company is refocusing on higher-margin ultra-fast chargers while reducing exposure to lower-margin products, which may lead to a decrease in revenue but is expected to be offset by AI data center growth [44][46] Question: Supply chain and inventory during the transition to PowerChip - Management confirmed no supply issues and that TSMC will provide a two-year supply, ensuring a smooth transition to PowerChip [56][58] Question: Drivers for expected decline in Q3 revenue - The decline is attributed to tariff impacts, reduced mobile dependency, and a slowdown in new design wins [61][63] Question: Engagement with other data center customers post-NVIDIA announcement - The NVIDIA partnership has opened doors for engagement with other data center customers, although the focus will remain on NVIDIA for the foreseeable future [65] Question: Competition in the AI data center market - The company believes it has a competitive edge due to its range of products and focus on high efficiency and reliability [70][72]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the company's unaudited condensed consolidated financial statements for the periods ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show a significant increase in total assets and liabilities as of June 30, 2025 Condensed Consolidated Balance Sheets | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $161,189 | $86,737 | | Total current assets | $192,865 | $120,266 | | Total assets | $449,441 | $389,978 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $23,429 | $21,144 | | Earnout liability | $30,059 | $10,208 | | Total liabilities | $60,564 | $41,965 | | Total stockholders' equity | $388,877 | $348,013 | | Total liabilities and stockholders' equity | $449,441 | $389,978 | - Total assets increased by **$59.46 million (15.2%)** from $389.98 million at December 31, 2024, to $449.44 million at June 30, 2025, primarily driven by a significant increase in cash and cash equivalents[14](index=14&type=chunk) - Total liabilities increased by **$18.60 million (44.3%)** from $41.97 million at December 31, 2024, to $60.56 million at June 30, 2025, largely due to an increase in earnout liability[14](index=14&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations reveal a decrease in revenues and a significant increase in net loss for H1 2025 Condensed Consolidated Statements of Operations | (In thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $14,490 | $20,468 | $28,508 | $43,643 | | Cost of Revenues | $12,162 | $12,478 | $20,873 | $26,138 | | Loss from Operations | $(21,653) | $(31,137) | $(46,957) | $(62,712) | | Total other income (expense), net | $(27,149) | $8,870 | $(18,312) | $36,834 | | Net Loss | $(49,075) | $(22,328) | $(65,904) | $(26,009) | | Basic Net Loss Per Share | $(0.25) | $(0.12) | $(0.34) | $(0.14) | | Diluted Net Loss Per Share | $(0.25) | $(0.12) | $(0.34) | $(0.14) | - Net revenues decreased by **29%** for the three months ended June 30, 2025, and by **35%** for the six months ended June 30, 2025, compared to the same periods in 2024[16](index=16&type=chunk) - Net loss significantly increased by **120%** for the three months ended June 30, 2025, and by **153%** for the six months ended June 30, 2025, primarily due to a substantial loss from the change in fair value of earnout liabilities[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased due to proceeds from At-the-market offerings, offsetting the impact of net losses Condensed Consolidated Statements of Stockholders' Equity | (In thousands, except shares) | Dec 31, 2024 | Mar 31, 2025 | Jun 30, 2025 | | :--- | :--- | :--- | :--- | | Class A common stock (shares) | 188,114 | 191,763 | 213,084 | | Class A common stock (amount) | $22 | $22 | $24 | | Additional paid-in capital | $732,784 | $743,420 | $839,550 | | Accumulated deficit | $(384,786) | $(401,615) | $(450,690) | | Total stockholders' equity | $348,013 | $341,820 | $388,877 | - Total stockholders' equity increased from $348.01 million at December 31, 2024, to **$388.88 million** at June 30, 2025, primarily driven by **$100.0 million** in proceeds from At-the-market offerings, partially offset by net losses[19](index=19&type=chunk) - The number of Class A common shares issued and outstanding increased from 188.11 million at December 31, 2024, to **213.08 million** at June 30, 2025, largely due to shares issued in connection with At-the-market offerings[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flow](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) Cash flow from financing activities increased significantly due to market offerings, while operating cash usage decreased Condensed Consolidated Statements of Cash Flow | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(24,765) | $(34,908) | | Net cash used in investing activities | $(674) | $(8,139) | | Net cash provided by financing activities | $98,540 | $2,203 | | Net increase (decrease) in cash | $73,101 | $(40,844) | | Cash, cash equivalents, and restricted cash at end of period | $161,341 | $111,995 | - Net cash used in operating activities decreased by **$10.14 million**, from $(34.91) million in H1 2024 to $(24.77) million in H1 2025, despite a higher net loss, due to non-cash adjustments like earnout liability changes and stock-based compensation[22](index=22&type=chunk) - Net cash provided by financing activities significantly increased from $2.20 million in H1 2024 to **$98.54 million** in H1 2025, primarily driven by **$100.0 million** in proceeds from At-the-market offerings[22](index=22&type=chunk) [Condensed Notes to Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of significant accounting policies and financial statement components [1. Organization and Basis of Presentation](index=8&type=section&id=1.%20ORGANIZATION%20AND%20BASIS%20OF%20PRESENTATION) Navitas designs next-gen power semiconductors using a fabless model and recently raised capital via ATM offerings - Navitas Semiconductor Corporation specializes in gallium nitride (GaN) power integrated circuits (ICs) and silicon carbide (SiC) devices for power conversion and charging applications[25](index=25&type=chunk) - The company operates a fabless business model, outsourcing chip manufacturing and packaging to partner suppliers[25](index=25&type=chunk) - As of June 30, 2025, Navitas completed two At-the-Market (ATM) offerings, selling **19.8 million shares** of Class A common stock for gross proceeds of approximately **$100.0 million**[27](index=27&type=chunk) [2. Significant Accounting Policies and Recent Accounting Pronouncements](index=9&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company is evaluating new accounting standards for expense disaggregation and income tax disclosures - FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, effective for annual periods after December 15, 2026, requiring enhanced disclosure of specific costs and expenses[31](index=31&type=chunk) - FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective for fiscal years beginning after December 15, 2024, to enhance transparency regarding income tax information[32](index=32&type=chunk) - The Company adopted ASC 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, during the year ended December 31, 2024, requiring disclosure of segment profit/loss measures and significant segment expenses[33](index=33&type=chunk) [3. Accounts Receivable](index=9&type=section&id=3.%20ACCOUNTS%20RECEIVABLE) Net accounts receivable decreased while the allowance for credit losses increased significantly in H1 2025 Accounts Receivable, Net | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable, gross | $12,443 | $12,578 | | Unbilled receivables | $918 | $1,539 | | Allowance for credit losses | $(885) | $(135) | | Accounts receivable, net | $12,476 | $13,982 | Allowance for Credit Losses Activity | (In thousands) | Allowance for Credit Losses | | :--- | :--- | | Balance at December 31, 2024 | $(135) | | Provision for credit losses | $(750) | | Balance at June 30, 2025 | $(885) | [4. Inventories](index=10&type=section&id=4.%20INVENTORIES) Total inventories remained relatively stable with a slight decrease from year-end 2024 Inventories | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | $1,966 | $2,422 | | Work-in-process | $11,142 | $10,465 | | Finished goods | $2,016 | $2,590 | | Total | $15,124 | $15,477 | [5. Property and Equipment, Net](index=10&type=section&id=5.%20PROPERTY%20AND%20EQUIPMENT,%20NET) Net property and equipment decreased due to depreciation expense outpacing new asset additions Property and Equipment, Net | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Furniture and fixtures | $332 | $330 | | Computers and other equipment | $13,317 | $11,714 | | Leasehold improvements | $4,321 | $4,302 | | Construction in Progress | $5,942 | $6,887 | | Accumulated depreciation | $(9,391) | $(7,812) | | Total | $14,521 | $15,421 | - Depreciation expense for the six months ended June 30, 2025, was **$1.7 million**, an increase from $1.4 million in the same period of 2024[39](index=39&type=chunk) [6. Fair Value of Financial Assets and Liabilities](index=11&type=section&id=6.%20FAIR%20VALUE%20OF%20FINANCIAL%20ASSETS%20AND%20LIABILITIES) The fair value of the Level 3 earnout liability increased substantially, resulting in a significant adjustment loss - Cash equivalents classified as Level 1 instruments were **$92.9 million** as of June 30, 2025, and $66.5 million for December 31, 2024[42](index=42&type=chunk) Fair Value of Financial Liabilities | (In thousands) | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Earnout liability (June 30, 2025) | $— | $— | $30,059 | $30,059 | | Earnout liability (Dec 31, 2024) | $— | $— | $10,208 | $10,208 | Level 3 Fair Value Reconciliation | (In thousands) | Fair Value Measurements Using Significant Unobservable Inputs | | :--- | :--- | | Balance at December 31, 2024 | $10,208 | | Fair value adjustment | $19,851 | | Balance at June 30, 2025 | $30,059 | [7. Goodwill and Intangibles](index=12&type=section&id=7.%20GOODWILL%20AND%20INTANGIBLES) Goodwill remained stable while net intangible assets decreased due to amortization expense - Goodwill balance remained at **$163.2 million** as of June 30, 2025, with no impairment losses recorded[47](index=47&type=chunk) Net Intangible Assets | Intangible Asset | Net Book Value (June 30, 2025) | Net Book Value (Dec 31, 2024) | | :--- | :--- | :--- | | Developed Technology | $16,770 | $22,426 | | Patents | $27,836 | $29,066 | | Customer Relationships | $17,314 | $18,529 | | Non-Competition Agreements | $807 | $997 | | Total | $62,727 | $72,195 | - Amortization expense for intangible assets was **$9.47 million** for the six months ended June 30, 2025, consistent with $9.55 million for the same period in 2024[46](index=46&type=chunk) [8. Leases](index=13&type=section&id=8.%20LEASES) The company holds operating and finance leases with total operating lease expense of $1.06 million in H1 2025 Lease Cash Flows and Assets Obtained | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash paid for operating lease liabilities | $1,074 | $1,122 | | Right-of-use assets obtained (operating) | $137 | $530 | | Cash paid for principal portion of finance lease | $51 | $— | | Right-of-use assets obtained (finance) | $985 | $— | Lease Terms and Discount Rates | Lease Type | Weighted-average remaining lease term (years) | Weight-average discount rate | | :--- | :--- | :--- | | Operating Leases | 3.57 | 4.9% | | Finance Lease | 2.83 | 5.0% | Lease Expenses | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Operating lease expense | $1,062 | $1,178 | | Finance lease amortization | $55 | $— | | Finance lease interest expense | $8 | $— | [9. Stock-Based Compensation](index=14&type=section&id=9.%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense decreased significantly due to an expense reversal from a senior management resignation Total Stock-Based Compensation Expense | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total stock-based compensation expense | $(913) | $13,091 | $6,059 | $26,639 | - A credit of **$(8.3) million** and **$(8.0) million** was recognized for stock-based compensation expense related to 2021 LTIP Options for the three and six months ended June 30, 2025, respectively, including an **$8.4 million reversal** due to a senior management resignation[65](index=65&type=chunk) - Unrecognized compensation cost related to unvested RSU awards totaled **$37.9 million** as of June 30, 2025, expected to be recognized over a weighted-average period of 1.7 years[69](index=69&type=chunk) - Under the 2022 ESPP, employees purchased 400,431 shares for **$0.8 million** in H1 2025, compared to 393,139 shares for $1.8 million in H1 2024[72](index=72&type=chunk) [10. Earnout Liability](index=20&type=section&id=10.%20EARNOUT%20LIABILITY) The earnout liability's fair value increased significantly, resulting in a substantial loss due to a higher stock price - The earnout liability is for up to **10,000,000 Class A common stock shares**, contingent on three independent stock price milestones[77](index=77&type=chunk) Fair Value of Earnout Liability | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fair value of earnout liability | $30,059 | $10,208 | Change in Fair Value of Earnout Liabilities | (In thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Loss from change in fair value of earnout liabilities | $(27,964) | $(19,851) | [11. Significant Customers and Credit Concentrations](index=21&type=section&id=11.%20SIGNIFICANT%20CUSTOMERS%20AND%20CREDIT%20CONCENTRATIONS) The company has significant revenue concentration with key distributors and faces supply chain risk with its sole GaN supplier Revenue Concentration by Customer | Customer | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Distributor A | 54% | 53% | | Distributor B | * | * | Revenue by Geographic Region | Region | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Hong Kong | 60% | 60% | | Rest of Asia | 16% | 20% | | China | 12% | 9% | | United States | 11% | 10% | | Europe | 1% | 1% | - Navitas relies on a single foundry for GaN IC wafers (TSMC) and a separate single foundry for SiC MOSFET wafers[87](index=87&type=chunk) - **TSMC**, the sole GaN wafer supplier, plans to cease GaN production in July 2027; Navitas is mitigating this by expanding collaboration with **Powerchip** (initial qualification Q4 2025, mass production H1 2026) and evaluating additional suppliers[88](index=88&type=chunk) [12. Net Loss Per Share](index=23&type=section&id=12.%20NET%20LOSS%20PER%20SHARE) Potentially dilutive securities were excluded from the diluted EPS calculation due to the company's net loss position Net Loss Per Share Calculation | (In thousands, except per share amounts) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Basic net loss per share | $(0.25) | $(0.34) | | Diluted net loss per share | $(0.25) | $(0.34) | | Weighted-average common shares - basic | 198,956 | 193,462 | | Weighted-average common shares - diluted | 198,956 | 193,462 | - Potentially dilutive securities (stock options, RSUs, ESPP shares) totaling **1.7 million** and **1.55 million** for the three and six months ended June 30, 2025, respectively, were excluded from diluted EPS due to the net loss[93](index=93&type=chunk) - **10.0 million earnout shares** and **3.3 million LTIP options** were excluded from diluted weighted average share count as their performance and/or market conditions have not been achieved as of June 30, 2025[94](index=94&type=chunk) [13. Provision for Income Taxes](index=24&type=section&id=13.%20PROVISION%20FOR%20INCOME%20TAXES) The effective tax rate remains near zero due to full valuation allowances against deferred tax assets Income Tax Provision | | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Effective tax rate | (0.1)% | (0.2)% | | Income tax provision | $48 | $130 | - The company expects its tax rate to remain close to zero in the near term due to **full valuation allowances** against deferred tax assets[97](index=97&type=chunk) [14. Segment Information](index=24&type=section&id=14.%20SEGMENT%20INFORMATION) Navitas operates as a single operating segment, with the CEO evaluating performance on a consolidated basis - Navitas operates as a **single operating segment** under ASC 280 - Segment Reporting[99](index=99&type=chunk) - The CEO, Gene Sheridan, serves as the Chief Operating Decision Maker (CODM) and primarily evaluates **consolidated net income (loss)** for performance assessment and resource allocation[99](index=99&type=chunk) [15. Commitments and Contingencies](index=24&type=section&id=15.%20COMMITMENTS%20and%20CONTINGENCIES) The company has non-cancellable contractual agreements for leases, equipment, and a university license - Non-cancellable contractual arrangements include lease obligations (Note 8) and an agreement for equipment purchase, with **$1.6 million** due within one year and **$1.4 million** present value in noncurrent liabilities as of June 30, 2025[101](index=101&type=chunk)[102](index=102&type=chunk) - The company provides customer indemnification against patent, copyright, or trademark infringement, but has not had to reimburse any distributors or end customers to date[104](index=104&type=chunk)[105](index=105&type=chunk) - An agreement with a university requires **$1.0 million** in payments by March 2026 and royalty fees on covered products, with expected indemnification for up to $1.0 million of royalty amounts[106](index=106&type=chunk) [16. Related Party Transactions](index=26&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) The company holds an equity method investment in a related entity and has terminated prior lease agreements with executives - Navitas has an equity method investment of **$8.4 million** as of June 30, 2025, in an entity under common control, recognizing a **$0.5 million loss** for the six months ended June 30, 2025[109](index=109&type=chunk) - Related party leases with family members of a senior executive and an entity owned by an executive were terminated by December 2024 and May 2024, respectively, with no rent obligations as of June 30, 2025[110](index=110&type=chunk)[111](index=111&type=chunk) [17. Restructuring](index=26&type=section&id=17.%20RESTRUCTURING) The company implemented cost-reduction plans, including a 19% workforce reduction, incurring $1.5 million in costs - The 2024 Restructuring Plan, announced October 15, 2024, focused on streamlining the organization and incurred **$1.2 million** in Q4 2024[112](index=112&type=chunk) - The 2025 Restructuring Plan, announced January 20, 2025, included a **19% workforce reduction** and incurred **$1.5 million** in costs for the six months ended June 30, 2025[113](index=113&type=chunk) Restructuring Liability Activity | (In thousands) | Amounts accrued as of December 31, 2024 | Costs Incurred | Cash Payments | Adjustment | Amounts accrued as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Employee Severance and Benefits | $511 | $1,469 | $(1,865) | $(93) | $22 | | Other | $6 | $— | $(6) | $— | $— | | Total | $517 | $1,469 | $(1,871) | $(93) | $22 | [18. Subsequent Events](index=27&type=section&id=18.%20SUBSEQUENT%20EVENTS) The company's sole GaN wafer supplier, TSMC, announced it will cease GaN production in July 2027 - On July 1, 2025, **TSMC**, Navitas' sole GaN wafer supplier, announced it would cease GaN production in July 2027[118](index=118&type=chunk) - Navitas is expanding collaboration with **Powerchip Semiconductor Manufacturing Corporation**, targeting initial device qualification in Q4 2025 and mass production in H1 2026, to mitigate supply risk[118](index=118&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Conditions and Operating Results](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Operating%20Results) Management discusses financial condition and operational results, highlighting revenue changes and liquidity [Overview](index=28&type=section&id=Overview) Navitas develops GaN and SiC power devices for various high-growth markets using a fabless business model - Navitas Semiconductor Corporation, founded in 2014, develops gallium nitride (GaN) power integrated circuits and silicon carbide (SiC) devices, utilizing a fabless business model[123](index=123&type=chunk)[124](index=124&type=chunk) - The company's products are used in fast chargers for mobile phones and laptops, consumer electronics, data centers, solar products, and electric vehicles[124](index=124&type=chunk) - Navitas has established relationships with Tier 1 manufacturers and suppliers, shipping GaN products in mass production to major mobile OEMs like Samsung, Dell, and Xiaomi[125](index=125&type=chunk)[126](index=126&type=chunk) - The company spent approximately **79%** and **85%** of its revenue on research and development for the three and six months ended June 30, 2025, respectively[127](index=127&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section compares operational results for the three and six months ended June 30, 2025, and 2024 [Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024](index=32&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030,%202024) Net revenues decreased 29% while operating expenses were significantly reduced due to lower stock-based compensation - Net revenues decreased by **$6.0 million (29%)** to $14.5 million, primarily due to a decline in industrial China markets[140](index=140&type=chunk) - Cost of revenues decreased by **$0.3 million (3%)** to $12.2 million, driven by lower sales offset by a **$3.2 million inventory reserve** due to demand softness in China[141](index=141&type=chunk) - Research and development expense decreased by **$7.5 million (39%)** to $11.5 million, mainly due to a **$6.8 million decrease in stock-based compensation** (including a $4.2 million reversal) and $2.7 million in headcount reductions, partially offset by a $2.2 million NRE impairment[142](index=142&type=chunk) - Selling, general and administrative expense decreased by **$7.6 million (50%)** to $7.8 million, primarily from a **$7.0 million decrease in stock-based compensation** (including a $4.2 million reversal) and $1.1 million in headcount reductions[143](index=143&type=chunk)[144](index=144&type=chunk) - A **$28.0 million loss** from the change in fair value of earnout liabilities was recognized, a $35.5 million change from a gain in the prior year, driven by an increase in the Class A common stock closing price[147](index=147&type=chunk) [Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024](index=33&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030,%202024) Net revenues declined 35% and operating expenses fell 38%, driven by lower stock-based compensation and headcount - Net revenues decreased by **$15.1 million (35%)** to $28.5 million, due to declines in mobile and industrial markets[150](index=150&type=chunk) - Cost of revenues decreased by **$5.3 million (20%)** to $20.9 million, driven by lower sales and product mix[151](index=151&type=chunk) - Research and development expense decreased by **$15.0 million (38%)** to $24.2 million, primarily due to a **$10.3 million decrease in stock-based compensation** (including reversals), $4.5 million in headcount reductions, and $2.7 million in R&D product development cost decreases, partially offset by a $2.2 million NRE impairment[152](index=152&type=chunk) - Selling, general and administrative expense decreased by **$12.0 million (38%)** to $19.5 million, mainly from a **$10.1 million decrease in stock-based compensation** (including reversals) and $2.1 million in headcount reductions[153](index=153&type=chunk) - Restructuring expense of **$1.5 million** was incurred for cost-reduction plans involving headcount reductions[155](index=155&type=chunk) - A **$19.9 million loss** from the change in fair value of earnout liabilities was recognized, a $53.6 million change from a gain in the prior year, due to an increase in the Class A common stock closing price[157](index=157&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased significantly due to proceeds from At-the-market offerings - As of June 30, 2025, cash and cash equivalents totaled **$161.2 million**, an 86% increase from December 31, 2024[162](index=162&type=chunk)[164](index=164&type=chunk) - The company expects to fund cash requirements through existing cash on hand and believes current levels are sufficient for the foreseeable future[162](index=162&type=chunk) - Proceeds from At-the-market (ATM) offerings contributed approximately **$100.0 million** in gross proceeds, significantly bolstering liquidity[161](index=161&type=chunk) - The company anticipates continued net operating losses and negative cash flows from operations, with increasing R&D, G&A, and capital expenditures to expand operations and product offerings[161](index=161&type=chunk) [Cash Flows](index=35&type=section&id=Cash%20Flows) Financing activities provided significant cash inflow, while operating cash usage improved from the prior year Cash Flow Summary | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(24,765) | $(34,908) | | Net cash used in investing activities | $(674) | $(8,139) | | Net cash provided by financing activities | $98,540 | $2,203 | - Net cash used in operating activities decreased by **$10.14 million**, from $(34.91) million in H1 2024 to $(24.77) million in H1 2025, primarily due to non-cash adjustments like earnout liability changes and stock-based compensation[165](index=165&type=chunk)[166](index=166&type=chunk) - Net cash provided by financing activities significantly increased to **$98.54 million** in H1 2025, mainly from **$100.0 million** in proceeds from ATM offerings[169](index=169&type=chunk) [Contractual Obligations, Commitments and Contingencies](index=36&type=section&id=Contractual%20Obligations,%20Commitments%20and%20Contingencies) The company's primary contractual obligations relate to leases and an equipment purchase agreement - The company's non-cancellable contractual arrangements include lease obligations and an agreement for equipment purchase, as detailed in Note 8 and Note 15[171](index=171&type=chunk) [Off-Balance Sheet Commitments and Arrangements](index=36&type=section&id=Off-Balance%20Sheet%20Commitments%20and%20Arrangements) The company did not have any off-balance sheet arrangements as of the reporting date - As of June 30, 2025, Navitas did not have any off-balance sheet arrangements[172](index=172&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There have been no material changes to critical accounting policies from the 2024 annual report - There have been no material changes to the company's critical accounting policies and estimates from those disclosed in its 2024 annual report on Form 10-K[175](index=175&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses exposure to market risks, including economic conditions and commodity price fluctuations - Adverse changes in the global economic landscape have impacted demand for Navitas' products, leading to changes in customer order behaviors and vendor inventory levels[176](index=176&type=chunk) - The company faces commodity risk from market price fluctuations of raw materials, notably gold, which can result in increased costs passed on by suppliers[177](index=177&type=chunk) [Item 4. Control and Procedures](index=37&type=section&id=Item%204.%20Control%20and%20Procedures) Management concludes disclosure controls were ineffective due to material weaknesses in internal control - As of June 30, 2025, Navitas' disclosure controls and procedures were **not effective** due to material weaknesses in internal control over financial reporting[178](index=178&type=chunk) - Material weaknesses include insufficient processes for identifying and analyzing risks, lack of competent personnel for complex transactions, and inadequate control activity performance and evaluation[179](index=179&type=chunk) - These weaknesses led to issues in accurately identifying and presenting activities within statements of operations and cash flows, and in the external reporting process for R&D assets, property and equipment, and equity transactions[181](index=181&type=chunk) - Management is actively implementing a remediation plan, including engaging external advisors, assessing training needs, and strengthening controls for financial close and reporting processes, with expected completion by the end of fiscal 2025[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - Navitas is not currently a party to any material legal proceedings[187](index=187&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Introduces new risks related to product announcements and significant supply chain vulnerabilities [Risks Related to Product or Technology Announcements](index=39&type=section&id=Risks%20Related%20to%20Product%20or%20Technology%20Announcements) Product announcements may not translate into future revenue, especially in new and emerging markets - Announcements regarding product selections by key customers (e.g., Nvidia collaboration) may affect stock price but do not guarantee binding commitments or future revenues[189](index=189&type=chunk)[191](index=191&type=chunk) - The ability to accurately predict future revenues and profits is uncertain, especially in new or emerging markets for products like those intended for AI data centers, where end-customer acceptance and system architecture adoption are unproven[193](index=193&type=chunk)[194](index=194&type=chunk) [Risks Related to Our Supply Chain and Manufacturing](index=40&type=section&id=Risks%20Related%20to%20Our%20Supply%20Chain%20and%20Manufacturing) The announced cessation of GaN wafer production by the company's sole supplier poses a significant risk - Navitas relies on **TSMC** as its sole supplier for GaN wafers, and TSMC's announced cessation of GaN production by July 2027 poses a significant risk[195](index=195&type=chunk) - Delays or disruptions in qualifying alternative suppliers like **Powerchip** could negatively impact customer orders, increase costs, and lead to revenue loss or market share decline[196](index=196&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including agreements and officer certifications - Exhibits include an agreement with Ranbir Singh and SiCPower, LLC, a letter of resignation and separation agreement for Daniel M. Kinzer, and certifications from the Chief Executive Officer and Chief Financial Officer[198](index=198&type=chunk) [Signatures](index=42&type=section&id=Signatures) The report is duly signed by the CEO and CFO on behalf of the company - The report was signed by Gene Sheridan, President and CEO, and Todd Glickman, Sr. V.P., CFO and Treasurer, on August 4, 2025[200](index=200&type=chunk)