Enovix Corporation

Thank you for standing by and welcome to the Enovix Corporation fourth quarter 2022 earnings conference call. Currently, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, today's program will be recorded. And now, I'd like to introduce your host for today's program, Charles Anderson, Senior Vice President of Investor Relations. Please go ahead, sir.

Hello, everyone, and welcome to Inovix Corporation's fourth quarter 2022 financial results conference call. With us today are President and Chief Executive Officer Raj Tuluri and Chief Financial Officer Stefan Pitska. We'll also be joined today by our Chief Operating Officer Ajay Murathe and our Chief Commercial Officer Ralph Schmidt for the Q&A portion of our call. Raj and Stefan will review the operating and financial highlights, and then we'll take questions. After the Q&A session, we'll conclude our call. Before we continue, let me kindly remind you that we released our fourth quarter 2022 shareholder letter after the market closed today. It's available on our website at ir.inovix.com. A replay of this video call will be available later today on the investor relations page of our website. Please note that the shareholder letter press release in this call all contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are based on current expectations and may differ materially from actual future events or results due to a variety of factors. For discussion of factors that could affect our future financial results in business, please refer to the disclosure in today's shareholder letter and our filings with the Securities and Exchange Commission. All our statements are made as of today, February 22, 2023, based on information currently available to us. We can give no assurance that these statements will prove to be correct, and we do not intend and undertake no duty to update these statements except as required by law. During this call, we will also discuss non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles. You can find the reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the investor relations page of our website. I will now turn the call over to Raj to begin. Raj.

Thank you, Charlie, and thank you all for joining us today. I'm really pleased to report a very strong fourth quarter for Enamics Corporation. We accomplished a number of things in this quarter. We significantly improved our yield of the batteries that we are producing. We made record progress of our customers progressing through our funnel We explained last time the way we work with our customers is to get them samples of our batteries, which then they test, and then they, you know, put them in products that they're actually going to launch and move them along the productization cycle. And through that funnel, you know, we have got a lot of new customers and a lot of progress that we've made to date, and we'll talk more about that. And we just over a million dollars in revenue ahead of the consensus for this quarter. Now, we ended the year with over $322 million in cash. And more importantly, our FAB 1, which is our FAB in Fremont, is working, and we are focused on rapidly increasing its output now. The trajectory I see for NOX is incredibly promising in 23 and beyond. Now, before Stefan talks about financials, I wanted to spend a little bit of time talking to all of you about me and my background, why I joined Inovix, and what are the near-term actions that I'm taking to position the company for success. For nearly 30 years, I've been fortunate to have worked and led teams in some of the best semiconductor companies in the world, Texas Instruments, Qualcomm, Micron. And I worked on products that actually revolutionized the mobile device experience. And these mobile devices are devices from consumer electronic devices like digital cameras, MP3 players, DVD players, smartphones, tablets, and so on. The products I worked on included digital camera chipsets, MP3 player chipsets, the OMAP application processor, which is one of the very successful application processors in the industry at Texas Instruments, that actually transformed our phones from just calling devices to true multimedia devices. And from then on, I joined Qualcomm, where I was fortunate to lead the team that did the Snapdragon application processor, which actually powers majority of the Android cell phones today. And it really assured the era of the modern smartphone. More recently, for about the last five years or so, you know, before I joined InnoVEX, I was at Micron and I was leading the mobile division. It's a division that actually, one of the larger divisions at Micron and, you know, $7 billion of revenue in 2022 with over $2 billion of operating profit for that fiscal year. Now, having been in all these different companies, I understand what it takes to launch products at scale, to launch products at mobile devices, to launch them at very high volume. And it's given me a unique insight to both the customers, the care about the customers, the care about the end users when they use these products. Now, one important insight it gave me is actually the importance of battery technology in portable devices. Now, what became obvious to me, but may not be obvious to all the average person who actually buys these products, is the performance of these products. Whether you bought a digital camera or whether you bought a smartphone or a laptop, the performance is actually throttled because of the constraints of the battery. This is something that's not so obvious to everybody. You know, for example, if you take a smartphone and you run things like an Android bench and so on, you get great performance numbers. But when you get those performance numbers, the CPU, the GPU, the camera, the memory, they're all running full speed to give you that benchmark number. But when you actually use the phone, the process and the memories are not running at that speed because if they did, they would consume the battery really, really fast. So in other words, end users are not realizing the full potential of the devices that they bought because the battery is limiting the performance. So the number one problem I believe to be solved now in the consumer electronic devices is the portable battery. Now, when this opportunity arose for me to actually lead this team, I did a lot of due diligence and different battery companies out there that could actually help solve this problem so the users can get great end products that they paid for. And I felt InnoVIX is perfectly positioned to solve this problem. And that is the reason I'm here. Now, I've been here for about a month. I have been unbelievably impressed by the company and the talent and the resources here. It's really groundbreaking technology. It's highly differentiated across many, many metrics in the battery. These are metrics like performance, you know, energy density, you know, capacity, you know, thermal performance, longevity of the battery, how fast it charges, how safe is the battery. Now, what I also found is the technology in this company that have been done by tremendous number of people working for over 16 years in this space, we have significant technology in our laboratories here that has a lot of headroom to even increase this performance metrics beyond, way beyond what we are actually now able to sample. So I see here the foundation for a high growth, highly profitable business with differentiated products that I can spend the next part of my career scaling to new heights. As you get to know me better, you'll actually see that I always start with the customer first. When I talk about the customer, I talk about the customers who buy our products and also our customers' customers who actually enjoy these products. And I think about the user experience those customers are having with these products. And then I work backwards. What does that mean? I try to imagine how is a wearable device used? How is a smartphone being used? What's limiting the performance of a smartphone? What's limiting the performance of a laptop? What's limiting, you know, a car from charging to full battery capacity very quickly? Then it gives me clarity on what products we should be working on for those things to happen. And then I work on with my team to build the right products to send it to our customers so the end users can benefit from all these technology innovations that we make. Now, we are undergoing a transformation of dynamics. We are an R&D focused company so far. Tremendous amount of R&D has gone in over the past many years to actually make these fantastic batteries that we are sampling. Now we need to transform this company into a customer-focused organization that focuses on morphing and tailoring this great technology that we have into high-volume production very quickly and very profitably. Now, thankfully, that is not the hard part of the job. A lot of us that have joined InnoVIX here know how to ramp products quickly to scale. The core technology development is behind this, and we really owe the founders of InnoVIX, who actually worked tirelessly for a long time, a great debt of gratitude for getting us there. Now, I do recognize that high-volume production area that we have most to prove. We have not ramped as fast as as much as we would have liked to by now. But my commitment, my personal commitment to investors is I will take you through the journey and I'll be transparent about our progress on unit production, important milestones, things like yields, and also what we're doing to de-risk our Gen 2 line, which actually is going to produce high-volume batteries. Scaling is hard. You know, I've done this many times in my career over the last 30 years in large companies with very, very complex products. It won't be perfect. It won't be like exactly how we want it, but we know how to do it and we'll be clear about where we are and how we are doing it and where we are going. I can tell you this, what I see today is unbelievably promising. Our new chief operating officer, Ajay Marathe, he's got 38 years in the industry from some of the top companies. And he was most recently the CEO of Lumileds, where their team has pulled off a tremendous job to make a huge amount of improvements in production. And here, his team has already made solid progress just in the short time that he's been here. And we expect to make very strong gains quarter on quarter throughout this year. Now, it's clear to me that we know how to make batteries. You know, I see we have factories right here. I see the batteries coming off the line. We just need to do it faster. And with Gen 2 line, we will make them faster, and we will make them in high volume. Now, I want to close with a comment about funding and our capacity expansion. Now, we've had numerous conversations with our customers. The battery technology is so compelling. The energy density we are able to provide and the quality we are able to provide is so compelling. that we are now finding many of our customers and also strategics and the government entities where we're actually trying to, that we are working with to build our Gen 2 line, are interested in infusing capital into the company to help us build the capacity. Now, this is a common practice in the battery industry. And given the advanced stage of our technology, a lot of our partners see this as a fairly low risk for them to help us scale. So we plan to explore all these options and find out the most advantageous one to our shareholders. Now, I want to turn the call over to Stefan, who will give you some feel on the guidance, and then we'll take any questions you have.