Enovix (ENVX)2025-02-20 00:17Financial Data and Key Metrics Changes - In Q4 2024, the company reported revenues of 23.1 million, a significant increase from 11.7 million, which was better than the guidance of a loss between 25 million. Non-GAAP EPS also showed a loss of 0.15 and 273 million in cash and cash equivalents, with capital expenditures (CapEx) in Q4 amounting to 16.4 million [20][21]. Business Line Data and Key Metrics Changes - The company completed its top manufacturing and product objectives for the quarter, including the Site Acceptance Testing (SAT) of its High-Volume Manufacturing (HVM) line and shipping the first samples of EX-2M to customers [11][12]. - The ramp-up of Fab2 in Malaysia was highlighted as a pivotal accomplishment, with yields exceeding those achieved in Fab1, indicating readiness for smartphone mass production by Q4 2025 [13][14]. Market Data and Key Metrics Changes - The company is focusing on segments with significant battery constraints, such as smart eyewear and the defense industry, which have emerged as unique growth opportunities. The defense sector has seen increased interest from drone manufacturers and defense suppliers since the US elections in November [15][16]. - The company has secured a purchase order from a marquee smart eyewear customer and is developing custom cells for this segment [12][15]. Company Strategy and Development Direction - The company is prioritizing smartphone markets while also exploring opportunities in smart eyewear and defense, where its technology offers a competitive advantage due to battery constraints [15][16]. - The design phase for EX-3M has officially begun, incorporating feedback from lead OEMs to align with their evolving requirements [18]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential upside from the defense industry and noted that the demand for higher capacity batteries is driven by applications such as AI, which consume significant energy [57][58]. - The company is confident in its manufacturing readiness and customer interest, with multiple customer audits ongoing [14][22]. Other Important Information - The company is in the process of optimizing its manufacturing lines to improve efficiency and throughput as it gains more visibility into customer demand [51][52]. - The company is also focused on expanding its capacity in response to customer qualifications and market demand, with plans to add additional manufacturing lines as needed [26][28]. Q&A Session Summary Question: What are the implications of new policies and tariffs on Enovix's operations? - Management indicated that there has been increased interest from defense and industrial customers in the US, and the company's manufacturing locations in Korea and Malaysia are favorable for shipping to the US, thus not seeing much effect from tariffs [24]. Question: What is the current guidance for adding manufacturing lines and capacity? - The company has completed SAT of its HVM line in Malaysia, which has a capacity of approximately 9.5 million to 10 million batteries per year. They are planning to add up to four lines in total [26][27]. Question: Can you provide insights on the growth profile of a drone customer? - While specific customer details could not be disclosed, management noted significant interest in high-rate batteries for applications requiring fast discharge, indicating a growing market [33][34]. Question: What is the status of the EX-2M and EX-3M models? - The EX-2M has received positive feedback from OEMs, and the design phase for EX-3M has commenced, focusing on increased energy density and customer requirements [41][43]. Question: How quickly can the company ramp up production for new lines? - The company is stockpiling long lead time items to reduce the timeline for adding new lines, with expectations that the second line will be set up significantly faster than the first [97][98]. Question: What is the expected CapEx for 2025? - The company has budgeted between 30 million to $40 million for CapEx in 2025, focusing on long lead time items and additional manufacturing capacity [110]. Question: How does the sales cycle work for cellphones? - The sales cycle involves working closely with customers to meet their requirements, with the expectation that cells can be qualified for multiple models over time, extending into 2026 [120][124].