Everspin Technologies(US:MRAM)2024-08-02 20:00Financial Performance - Total revenue decreased by $5.1 million, or 32.5%, from $15.7 million during the three months ended June 30, 2023, to $10.6 million during the same period in 2024[63]. - Product sales accounted for $9.9 million, representing 93% of total revenue for the three months ended June 30, 2024, compared to $13.4 million or 85% in the same period of 2023[61]. - Gross profit for the three months ended June 30, 2024, was $5.2 million, a decrease from $9.2 million in the same period of 2023, resulting in a gross margin of 49% compared to 58%[61]. - Operating expenses increased to $8.0 million for the three months ended June 30, 2024, from $7.6 million in the same period of 2023, representing 76% of total revenue[61]. - Net loss for the three months ended June 30, 2024, was $2.5 million, compared to a net income of $3.9 million in the same period of 2023, reflecting a significant decline in profitability[61]. - Total revenue decreased by $5.5 million, or 18.1%, from $30.6 million in the first half of 2023 to $25.1 million in the first half of 2024[78]. - Product sales decreased by $6.4 million, or 23.7%, from $27.2 million in the first half of 2023 to $20.7 million in the first half of 2024[77]. - Gross margin for the first half of 2024 was 53.4%, down from 57.6% in the first half of 2023, due to decreased product sales[81]. - Cash provided by operating activities was $0.4 million for the six months ended June 30, 2024, compared to $7.5 million in the same period of 2023, reflecting a significant decrease[92][93]. Revenue Sources - The company generated 87% of its revenue from products sold to distributors for the three months ended June 30, 2024[63]. - Licensing, royalty, patent, and other revenue decreased to $749,000, or 7% of total revenue, down from $2.3 million, or 15%, in the same period of 2023[61]. - Licensing, royalty, patent, and other revenue decreased by $1.6 million, or 68.0%, from $2.3 million in Q2 2023 to $0.7 million in Q2 2024[65]. - Licensing, royalty, patent, and other revenue increased by $0.9 million, or 26.7%, from $3.4 million in the first half of 2023 to $4.3 million in the first half of 2024[79]. Expenses and Costs - Total cost of sales for the three months ended June 30, 2024, was $5.4 million, representing 51% of total revenue, compared to 42% in the same period of 2023[61]. - Cost of product sales decreased by $0.9 million, or 14.0%, from $6.1 million in Q2 2023 to $5.2 million in Q2 2024[70]. - Research and development expenses rose to $3.5 million, accounting for 33% of total operating expenses for the three months ended June 30, 2024, compared to 17% in the same period of 2023[61]. - Research and development expenses increased by $0.7 million, or 27.7%, from $2.7 million in Q2 2023 to $3.5 million in Q2 2024, driven by new xSPI product development[70]. - General and administrative expenses increased by $0.6 million, or 8.4%, from $6.7 million in the first half of 2023 to $7.3 million in the first half of 2024[85]. Cash Flow and Financial Position - Cash and cash equivalents as of June 30, 2024, were approximately $36.8 million, slightly down from $36.9 million at the end of 2023, with no outstanding debt[91][107]. - Cash used in investing activities was $1.2 million for the six months ended June 30, 2024, compared to $1.0 million in the same period of 2023[94]. - Cash provided by financing activities was $0.6 million for the six months ended June 30, 2024, while $2.5 million was used in financing activities in the same period of 2023[95]. - The company believes its existing cash and cash equivalents will be sufficient to meet anticipated cash requirements for at least the next 12 months[107]. - The company may need additional funding in the future, which could impact planned activities if not secured[106][108]. - The company has no committed sources of funding and there is no assurance that additional funding will be available on acceptable terms[107]. Market and Competitive Risks - The company faces risks related to competition and the ability to sustain profitability amid market uncertainties[110]. - The semiconductor industry is currently experiencing a worldwide shortage of components, which could lead to increased costs and extended lead times for Everspin's products[125]. - Increased competition in the semiconductor market is expected, which may lead to price pressure and reduced revenue[138]. - The company faces risks related to unpredictable revenue and increased expenses due to the competitive nature of the semiconductor industry and macroeconomic factors[114]. - The company must continuously develop new products to remain competitive, and failure to market these effectively could materially impact its financial condition[129]. Operational Risks - Everspin relies on a single foundry, GLOBALFOUNDRIES, for higher density products, which may not have sufficient capacity to meet customer demand[116]. - The company faces risks related to manufacturing yields, which can significantly impact production costs and operating results[144]. - Transitioning to new wafer fabrication process technologies may result in reduced manufacturing yields and increased expenses[148]. - The loss of customers or reduced orders could significantly adversely affect Everspin's operations and financial results[135]. - Securing design wins is a lengthy and competitive process, and delays in this process could lead to revenue declines for Everspin[131]. Regulatory and Compliance Risks - The company may incur substantial costs related to compliance with environmental regulations, which could restrict business expansion[181]. - The semiconductor memory industry is subject to various governmental regulations that could impose additional compliance costs and risks[181]. - The company must comply with evolving industry standards and technical requirements, which could require significant redesign efforts[153]. - The company may face challenges in verifying the origins of conflict minerals used in its products, which could harm its reputation and customer relationships[185]. Strategic and Growth Risks - The company is seeking to expand international operations, which exposes it to various regulatory, economic, and political risks[159]. - The ability to attract and retain key employees is critical for the company's growth and execution of business strategies[155]. - Significant investments in new technologies and products may not achieve profitability or technological feasibility, potentially harming revenue growth[171]. Financial and Stock Risks - The market price of the company's common stock is expected to be highly volatile, influenced by various factors including product introductions and market conditions[187]. - The company has approximately $96.2 million in federal net operating loss carryforwards, with $55.8 million expiring between 2028 and 2037 if not utilized[186]. - The company has state net operating loss carryforwards of approximately $48.7 million, with $45.9 million expiring between 2028 and 2043 if not utilized[186]. - The company may incur significant additional costs if exclusive forum provisions in its amended certificate of incorporation are challenged in other jurisdictions[196]. - The company’s board has the authority to issue undesignated preferred stock, which could impede acquisition attempts[192]. External Risks - The military conflict in Ukraine has led to sanctions and tariffs that may cause inflationary pressures and supply chain disruptions for the company[198]. - Recent inflation rates in the United States have reached levels not seen in decades, prompting federal actions that affect capital markets[198]. - The company’s operations may be disrupted by natural disasters, industrial accidents, and public health issues, which could impair business continuity[199]. - The company may not have adequate insurance to cover losses from catastrophic events, which could seriously impair its financial condition[199]. - The company relies on a network of suppliers and distributors, and any financial difficulties faced by these partners could adversely affect its business[197].