Enovix Corporation

Thank you for standing by and welcome to the Inovix Corporation's second quarter 2024 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, Charlie Anderson, Senior Vice President of Investor Relations and Corporate Strategy. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to Inovix Corporation's second quarter 2024 financial results conference call. With us today are President and Chief Executive Officer, Dr. Raj Taluri, Chief Financial Officer, Farhan Ahmad, and Chief Operating Officer, Ajay Marathi. Raj and Farhan will provide an overview, and then we'll take your questions. After the Q&A session, we'll conclude our call. Before we continue, let me kindly remind you that we released our second quarter 2024 shareholder letter after the market closed today. It's available on our website at ir.anovix.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, and this conference 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 of our statements are made as of today, July 31st, 2024, based on information currently available to us. We can give no assurance that these statements will prove to be correct, and we none intend and undertake no duty to update the 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 a reconciliation of the GAAP financial measures to the 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? Raj?

Thank you, Charlie. And thanks to everyone for joining us today. For our format today, I'm going to start with the recap of our recent results and some of our recent milestones before I turn it over to Farhan for the financials and the outlook. I'll have a few closing comments and then we'll take your questions. Now, we had a very productive second quarter. To recap some of our recent achievements, first, we delivered a Q2 revenue of 3.8 million, which was above the midpoint of our forecast. And we expect significant revenue growth in the second half of the year from the first half. Second, we had some very important commercial successes, starting with an agreement we announced in June with the leading California-based technology company in the XR market. Then today we're announcing a collaboration agreement with a Fortune 200 company and also our second deal with an auto EM. And lastly, we moved into operational mode in Malaysia as we began building batteries on the agility line while ramping down our high cost manufacturing operation in the US. After this, we did it after completing the first batch of EX1M samples, which we've now sent to some of our customers. Now, Malaysia has come along very nicely. To the extent we've taken a little bit longer than we planned, this has been due to our previously stated desire not to cut any corners and make sure all the equipment we're installing meets our rigorous specifications. We now have an agility line that has cleared the SAT, or the Site Acceptance Test, and is producing fast runs of our EX1M batteries. Our high volume line is right behind it, having cleared the FAT of all the key modules and is the process of arriving and being installed at our site. We are super excited to show off this progress at our Malaysia grand opening next week. And many customers, including some big-name customers with lots of revenue, including smartphone customers and some cloud OEMs, have now begun scheduling visits to our facility, and we'll be welcoming them next week to showcase our factory. We believe everyone who sees it will be amazed by the quality of the factory we have built and the quality of the team we have hired. Now, speaking of customers, our engagement activity continues to strengthen. In the smartphone market, we work closely with the top five OEM we identified in our last call to clear the first two key milestones in the development agreement that we signed. As noted in the last call, we broadly engage with the leaders in this market and continue to discuss more formal agreements and arrangements like this, similar to the one we announced in May. As we all saw over the course of the last quarter, leading OEMs are now starting to announce AI features which will become native and standard in the next generation smartphones. Clearly, we were early in pointing this out trend last year as we engaged with the customers and saw where these product roadmaps were heading. As I sit here and observe what's happening, it's my belief that the 4,000, 5,000 milliamp hour battery in the smartphones in our pockets today will soon go to more than 6,000 milliamp hours and beyond due to AI and other enhanced features. Now, this is really good news for the battery industry broadly, and especially for us at Innovix. That's because we offer the customers in our target markets what we believe is the only path forward to fully replace graphite with silicon to boost energy density in order to keep up with this rapidly increasing power needs without unduly increasing the size of the battery. Now, notably, we've already made early prototypes of our EX2M batteries here in Fremont, and we were able to validate the high energy density through the next generation chemistries that we've been working on. We are super excited by this result. We also see incremental growth opportunities for the conventional battery business we acquired last year in Korea, the company called RoutJet. Specifically, these batteries have very high rate capabilities. Now, these high rate capabilities have proven very useful for the Korean military and also a number of industrial IoT applications. We see this also being applicable to other allied military forces, including the U.S., And this high rate capability is also designed in other product categories, such as power tools. It's important also to realize that we are investing heavily to support lasting technical leadership to build out a roadmap. For example, our core R&D ad count at the end of second quarter was nearly double that of a level ago, double the level a year ago. And that's excluding the R&D team we added through the RouteJet acquisition. Now, if we include the Korea R&D team also, our R&D headcount is up nearly 170% year on year. And we intend to keep growing. For example, we now have a core R&D team in Malaysia that we now intend to double by the end of the year. Now, we've done all this while in parallel taking actions to significantly reduce our fixed costs by exiting the expensive California manufacturing. We also topped up our strong balance sheet via the ATM. This gives us a strong runway and plenty of time to prove out our manufacturing along with our customer acceptance of our leading battery. With that, I'm going to turn it over to Farhan for the financials. Farhan.