Enovix Corporation

Thank you for standing by and welcome to the Enevix Corporation fourth quarter 2025 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, Robert Leahy, Head of Investor Relations. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to the Novix Corporation's fourth quarter and full year 2025 Financial Results Conference call. With me today, our President and Chief Executive Officer, Dr. Raj Diluri, and Chief Financial Officer, Ryan Benton. Raj and Ryan will provide remarks, followed by Q&A. Before we begin, please note that today's call contains forward-looking statements that are subject to risks and uncertainties. These statements are based on current expectations and may differ materially from actual future results due to various factors. For a discussion of these risks, please refer to the disclosures in today's press release and our filings with the Securities and Exchange Commission. You can find these materials on our website at ir.anovix.com. All statements made on this call are as of today, February 25th, 2026, and we undertake no obligation to update them except as required by law. Additionally, during the call, we may reference non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP measures in the materials posted on our investor relations website. With that, I'll turn the call over to Raj.

Good afternoon, everyone, and thank you for joining us. The fourth quarter represented continued progress as we transitioned from qualification into early commercialization across multiple end markets. First, we continued advancing smartphone qualification for the AI1 platform with our lead mobile customer. Second, engagement expanded across Smart Eyewear and other AI-powered devices. We view Smart Eyewear as an earlier commercialization pathway for AI1 due to lower qualification barriers and thresholds. We're currently preparing production to support initial high-volume demand from our lead smart eyewear customer. Third, defense and industrial programs continue to provide revenue, operational validation, and manufacturing execution experience as we prepare for consumer-scale production. Finally, we ended the year with a strong liquidity position, giving us flexibility to execute our commercialization roadmap while maintaining disciplined capital allocation, including recently authorized share repurchase program. Overall, we believe 2025 positioned us well for the next phase, moving from qualification towards commercialization across smartphones, smart eyewear, and additional defense applications. And we'll walk through that progress today. For the full year 2025, revenue grew 38% year over year to $31.8 million, with the defense shipments remaining our largest contributor and batteries for naval munitions specifically being a top product in Q4. Full year non-grab gross margin improved to 23%, reflecting higher production volumes and improved mix shift towards higher margin defense batteries following our April 2025 asset acquisition. We ended the year with $621 million in cash, cash equivalent, and marketable securities, supporting qualification completion, commercial scale-up, and additional potential strategic transactions. To support this next phase, we strengthened our operational leadership. Ki Hong Park, or KH as he prefers to be called, now leads our global manufacturing organization. bringing decades of battery production experience and deep operational knowledge from our South Korea platform to our Malaysia scale-up efforts. We also welcome Ed Casey to lead advanced manufacturing engineering, adding significant expertise in scaling complex high-volume manufacturing environments across global networks. Together, this leadership alignment reinforces our focus on manufacturing execution as we prepare for high-volume production. We continue to improve yield and throughput across Fab 2. As we discussed in our previous call, Zone 1 laser dicing remains the primary rate-limiting factor, and we are methodically addressing that constraint to process optimization and alternative dicing approaches. We believe in our ability to unlock higher production rates as we transition towards commercialization. In 2026, we are capable of qualifying other new products and customers in the very production line they will use and meeting demand for smart eyewear customers. Our overall company focus remains on disciplined execution, advancing smartphone qualification, while expanding into adjacent markets that support earlier revenue and manufacturing scale and leading in smart eyewear markets with our silicon battery shipment. You'll see how these pieces come together through today's presentation. Now let's talk about markets. Last quarter, we introduced this framework for outlining the end applications where our technology can create a durable moat. The smartphone market represents the fastest path, the large scale, and is ideal for our technology. An independent study from Polaris Labs previously validated our energy density leadership in smartphone batteries. In this quarter, we extended the validation through a second apples-to-apples comparison against a leading competitor using identical methodologies. The results confirmed that AI1 delivers a meaningful volumetric density advantage versus commercially available silicon-doped lithium-ion batteries. We expect AI2 and AI3 to further expand our technology lead with performance gains well beyond historically industry advancement rates. This quarter, we updated this slide by breaking out smart eyewear and drone applications as distinct, growing addressable markets where our engagement has progressed. Smart eyewear adoption is presently accelerating as AI workloads migrate to compact, always-on devices. We expect to ship our first smart eyewear batteries for use in AI AR devices in the second half of 2026. Exceptional growth in this market is expected to continue throughout this decade with display-enabled architectures that significantly increase power demand and require higher energy density for constrained form factors. We believe smart eyewear battery TAM could exceed $400 million by 2030, and we are targeting meaningful participation based on early engagement with key partners and strong technical suitability. Drones represent another priority area of focus where we see an attractive TAM and a strong competitive advantage. Western drone platforms, both defense and commercial, are increasingly prioritizing higher energy density, extended flight time, and supply chain diversification. This battery segment is projected to be approximately $1.5 billion this year. Breaking these markets out reflects growing conviction that we are well positioned across multiple high-growth platforms. With that context, let me walk you through our smartphone qualification progress and the defined pathways we see towards commercialization. Turning to our smartphone commercialization plan, we remain engaged with seven of the top eight global smartphone OEMs by market share, and validation efforts have expanded this year with multiple leading OEMs, including those serving the U.S. market. Our near-term focus, though, remains on two Asia market leaders, with Honor being our lead customer. We commenced their formal product qualification process in the third quarter of 2025, and Most of the requirements have now been met, and cycle life testing remains the primary gating item to complete qualification and move into system integration and production planning. Because cycle life testing is often misunderstood, particularly for silicon anode batteries, let me spend a minute explaining what these tests actually measure and why they matter for real-world smartphone usage. The key point, and what we want to clarify next, is that cycle life results are complex. and depend heavily on test protocols, which is especially important when evaluating next-generation silicon nanotechnology. When we say cycle life testing, we are referring to multiple tests based on different charge and discharge rates, or C-rates. This is a standardized measure of how quickly a battery is discharged relative to its total capacity. where a 1C rate means the battery can be fully discharged in one hour, and a 0.2C rate means battery is discharged in five hours. This slide illustrates relative C rates across common smartphone applications. The highest power consuming activity is video recording, which requires approximately 0.17C discharge rate. We include a host of other popular consumer applications as well as scenario for running multiple applications simultaneously to account for use cases such as using chat GPT while also playing a Netflix movie. When we refer to our lead customer's primary qualification requirement of 1,000 cycles, that is based on a rate of 0.2C. As you can see that, everything below this level, which is why smartphone as well as smart fair OEMs rely on this test to ensure batteries provide a positive experience for a wide range of consumer usage patterns. A test purely based on this rate would take a year to complete, though, so most companies compress the test time to four months by using an accelerated 0.7C rate for a majority of the cycles where the battery is fully discharged in 1.4 hours. Smartphone OEMs also include in their qualification process a secondary requirement of 800 cycles for just the 0.7C cycles though this C-rate is well beyond any single app consumption we are aware of. For the parts shipped in December, customer qualification testing for CycleF began in January. This testing is progressing in parallel under customer control protocols. On this slide, you can see how batteries we send to our lead customer perform in our .2C cycle test. We made improvements over our initial version submitted in July, and our internal test indicates we are now likely to exceed the requirement of 1,000 cycles at 0.2 C rate. This is a significant achievement that is indicative that our product is approaching readiness for integration into commercial products. However, these same batteries are not currently on track to exceed the accelerated 0.7C target. As it is the first time a 100% silicon anode smartphone battery has been brought to the market, we are working closely with our customer on alternative pathways for testing that is more suitable for silicon anode batteries. So while customer testing ultimately determines qualification, this internal data set gives us increasing confidence that the current batteries are tracking towards the required performance. Because there has been no 100% silicon battery qualified in a smartphone, there are no defined testing protocols for qualification. Based on current test results, we're discussing multiple pathways to qualification with our lead customer. The first scenario is approval based on our 0.2C results and acceptance of the 0.7C cycle life below their current requirement. A second scenario involves adoption of new accelerated testing protocol tailored for silicon anode batteries. Finally, we're also continuing to develop improved electrochemistry variation to hit the 0.7C target. While we believe our battery platform is ready for deployment, We also understand that we're entering the largest consumer electronic market in the world. Customers appropriately maintain a high qualification bar for new entrants. We look forward to meeting all the necessary standards in 2026 and transitioning into commercial production. Initial smartphone-related revenue in 2026 is expected to support system integration and launch preparation, positioning us for a larger-scale commercialization in late 2026 or beginning in 2027. Now let's turn to Smart Eyewear. We view Smart Eyewear as an earlier commercialization pathway for AI1 due to shorter qualification cycles and lower durability thresholds. We believe this market represents a compelling near-term expansion opportunity for the platform, where our high energy density architecture is well aligned with product requirements. Our engagement in this category began early, and we are working with partners we believe are well positioned to lead in this market as it scales. Compared to smartphones, where an incumbent is deeply entrenched, this creates a more direct path to initial adoption. Our focus now is execution as we prepare for initial volume shipments to lead smart fair platform later this year. Today, the eyewear market is dominated by products without displays. Largely focused on audio, connectivity, and basic AI assistance. However, over the balance of this decade, we expect more than 5x unit growth as display-enabled ecosystems emerge, which translates to even higher battery time expansion as ASPs increase over the same timeframe. Display-enabled eyewear materially increases the power demand, Always-on AI processing, image capture, and augmented reality overlays create sustained energy draw in highly constrained form factor. That combination, compact design and higher sustained power consumption, is precisely where volumetric energy density matters most. Based on current engagement, which has accelerated rapidly, we expect Smart Eyewear to represent an earlier commercialization pathway for the AI1 relative to smartphones. As this market matures, we estimate the Smart Eyewear battery time could exceed $400 million by 2030, and we believe AI1 is well-suited to participate meaningfully in this market. This slide illustrates how our platform aligns with Smart Eyewear cycle life requirements. Importantly, in this segment, customers typically require less than 1,000 cycles durability at 0.2C rates and do not have a pure 0.7C cycle test. Our energy density architecture is optimized for constrained space and sustained power draw. And because we architected AI1, first for smartphones, the segment which has the highest technical qualification standards in consumer electronics, we believe extending the platform into smart eyewear is comparatively more straightforward from a performance standpoint. Once you design for the most demanding use case, adjacent applications become natural extensions of the same core architecture. That allows us to prioritize energy density and power efficiency while comfortably meeting eyewear durability thresholds. In addition, we expect this market will have a mix of smaller customers who address a wide range of fashion preferences and use cases that are also enabled by the budding Android XR ecosystem. This means our future sales mix may include meaningful percentage of off-the-shelf products in addition to customized products for the market leaders. We are seeing this dynamic play out already with multiple wins we announced at CES earlier this year. Let me now turn to defense. Defense continues to provide both revenue and operational validation of our technology and manufacturing capabilities. We operate two differentiated defense-focused platforms across our global footprint. In Malaysia, we're advancing our 100 percent silicon anode architecture, our largest format AI-1 variation, optimized for high energy density applications. These batteries are well-suited for next-generation soldier systems, including augmented reality headsets and wearable power systems. We have supported U.S. Army programs since 2021 and recently provided deliveries under the conformal wearable battery program. In Korea, we have a conventional architecture platform utilizing graphite and silicon-doped anodes. This facility has an extensive operating history in Korean defense markets and supports a wide range of battery sizes and configurations optimized for high discharge rate applications, including drones, subsea systems, and munitions for several Korea's large defense contractors. Naval munitions specifically were the largest growth driver in 2025, and our pipeline is increasingly focused on expanding our presence in the aerial drones market. In 2024, we kicked off a campaign to introduce our technology to U.S. and European military contractors who are attracted by our diverse supply chain and internal manufacturing capacity. Establishing initial programs and building a pipeline has required time but it is starting to pay off. We entered 2026 with a global pipeline of approximately $100 million, including opportunities with multiple Tier 1 defense contractors. Recent design interaction in Q4 has strengthened our confidence in pipeline conversion. As programs progress, we expect to provide greater visibility into customer engagements as we convert pipeline to backlog. Aerial drones represent a compelling battery growth opportunity with an estimated $1.5 billion TAM this year. Next-generation drone platforms require higher energy density to extend flight time and strong discharge capability to support power-intensive missions. As autonomy and AI capabilities expand, power requirements will continue to increase. Our platform aligns well with these needs, enabling longer flight times, sustained high discharge performance, and diversified supply chains through our manufacturing in Korea and Malaysia. We are building on deployed defense cells and existing customer relationship to expand into next-generation silicon nano drone applications. This segment demonstrates how our architecture scales beyond smartphones and supports a diversified growth strategy. This slide highlights our energy density progress in drone applications. Today, we have deployed different cells supporting high discharge drone programs. We are now advancing a higher energy drone cell in development with internal testing, achieving approximately 342 watt hours per kilogram. Looking ahead, our next generation silicon anode roadmap targets energy density above the 400 watt hours per kilogram to support increasingly autonomous platforms. The roadmap shows clear progression. Deploy itself today, higher energy product launches next, and next-generation silicon anode performance that expands mission capability. Now, I'll turn it over to Ryan to talk about our financials. Ryan?