Everspin Technologies(US:MRAM)2022-03-03 02:44Financial Data and Key Metrics Changes - Q4 2021 revenue was $18.2 million, a 23% increase from Q3 2021 and an 82% increase from Q4 2020 [14] - Positive GAAP net income of $3.7 million for Q4 2021, compared to a net income of $880,000 in Q3 2021 and a net loss of $1.6 million in Q4 2020 [19] - GAAP gross margin for Q4 2021 was 62.8%, up from 57.1% in Q3 2021 and 52% in Q4 2020 [16] - Cash and cash equivalents increased to $21.4 million at the end of Q4 2021, compared to $14.6 million at the end of Q3 2021 [20] Business Line Data and Key Metrics Changes - MRAM product sales in Q4 2021 were $12.6 million, compared to $12 million in Q3 2021 and $9.7 million in Q4 2020 [14] - Licensing, royalties, patents, and other revenue in Q4 2021 was $5.6 million, up from $2.8 million in Q3 2021 and $0.3 million in the prior year [15] - STT revenue remained flat due to supply constraints affecting the largest customer [11] Market Data and Key Metrics Changes - Shipments to the largest end customer represented 23.4% of revenue in Q4 2021, down from 28.5% in Q3 2021 and 39.9% in the year-ago quarter [16] - The company experienced over $2 million of unmet customer demand due to supply constraints [10] Company Strategy and Development Direction - The company aims for profitable, sustainable growth, focusing on improving product yields and controlling operating expenses [8][23] - A deliberate strategy of monetizing intellectual property (IP) has been recognized, generating $3.95 million in revenue in Q4 2021 [13] - The company is preparing to launch a next-generation 28-nanometer STT-MRAM product targeted at industrial applications [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong backlog for 2022, despite ongoing supply constraints [28] - The expectation is that supply constraints will continue to impact demand realization into 2022, with a potential easing not anticipated until 2023 [30] - Management indicated that gross margins are expected to remain in the low to mid-50s long-term, despite some price increases from suppliers [36] Other Important Information - The company achieved record annual total revenue and product revenue in 2021, along with record design wins and a record product backlog for 2022 [9] - Operating expenses for Q4 2021 were $7.7 million, up from $7.4 million in Q3 2021, primarily due to product development and administrative costs [17] Q&A Session Summary Question: Supply situation and unmet demand realization - Management acknowledged that unmet demand of at least $2 million is expected to be pushed into Q2 2022 due to supply constraints, with a long lead time for recovery [27][30] Question: Backlog composition and pricing - The backlog is a combination of unit growth and some price increases to cover supplier costs, with no evidence of double booking among customers [31] Question: IP monetization strategy for 2022 - Management indicated that while specific licensing deals are unpredictable, they aim for IP to represent around 10% of total revenue [68] Question: Gross margin expectations - Management expects gross margins to remain in the low to mid-50s, supported by improved product yields and IP monetization [36] Question: Operating expenses outlook - Operating expenses may see a slight increase in Q1 2022 due to investments in the new product, but management aims to keep overall expenses flat [38]