Enovix Corporation

Thank you for standing by and welcome to the Inovix Corporation second quarter 2026 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, Monica Gould, investor relations for Inovix. Please go ahead.

Thank you, operator. I would like to welcome everyone to Enovix Corporation's second quarter 2026 financial results conference call. Joining me today are President and Chief Executive Officer Dr. Raj Talluri and Chief Financial Officer Ryan Benton. Raj and Ryan will be speaking to the slide presentation displayed on today's webcast, which will also be posted along with our press release on our investor relations website at ir.enovix.com. They will provide prepared remarks and we will then open the call for questions. 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 a number of factors. For 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 also find these materials on our IR website. All statements made on this call are as of today, August 12, 2026, and we undertake no obligation to update them except as required by law. During the call, we may also reference non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in the materials posted on our IR website. And with that, I will turn the call over to Raj.

Good afternoon, everyone, and thank you for joining us. We have one final cycle life test and it's already well underway. We expect to finish remaining testing by the end of 2026 with the customer acceptance and smartphone field testing to follow. In Smart Eyewear, the production ramp of our lead customer has begun. We shipped approximately 2,100 batteries to a Tier 1 customer, recorded our first Smart Eyewear product revenue from this customer, and expect to deliver roughly nine times that volume in the third quarter. In drones, defense, and industrial, we grew the pipeline by 41% from the first quarter. Drones led the way, we advanced product development, and the drone pipeline alone exceeds over $100 million now. Thank you for joining us. Thank you for watching. Arthi Chakravarthy, Arthi Chakravarthy, Arthi Chakravarthy, Briefly on the two platforms, the AI platform uses a proprietary 100% silicon anode architecture for space-constrained applications where the volumetric energy density and cycle life are most critical, while the MX platform blends silicon with graphite for greater gravimetric energy density and high power performance manufactured at a proven facility in South Korea. These are not isolated businesses. They are mutually reinforcing. and we're seeing this convergence translate into new areas for growth today. We're working on silicon blended opportunities beyond our traditional drone defense and industrial markets. Drilling down a bit further, First on smartphones, we moved materially closer to completing qualification with our lead customer. The customer has now confirmed the cells passed more than 1,000 cycles under the 0.2C discharge cycle test. This is the same test our internal testing indicated when we shared it with you in February. The customer's own data has now borne it out. Fundamentally, this is a customer-confirmed evidence that our silicon anode batteries can perform at high levels. Remaining work to be done is an accelerated cycle life test built around a hybrid protocol we defined in close collaboration with our customer to replace the traditional 0.7C testing approach for legacy graphite batteries. Testing is now live across several combinations of charge and discharge conditions as well with an enhanced cell design. and the same progression is underway. The enhanced cells are now showing stronger capacity retention or internal work and the data is now with our lead customers' hands for evaluation along with multiple variants of the hybrid protocol. We anticipate completing this final test in 2026. Our second smartphone OEM is also moving towards a similar qualification framework and we expect to begin sample deliveries in the fourth quarter. As we look towards 2027, we see the pattern repeating and expanding. Our lead customer moving into commercial introduction with our second OEM advancing through qualification and additional leading OEMs with whom we are in active dialogue entering the qualification pipeline behind them. We pioneered the qualification testing pathway for silicon batteries and smartphones so every customer after the first gets a faster, clearer path to execution and deployment. I'm especially proud of our progress in smart eyewear, which has now moved from initial production into early commercial revenue with a Tier 1 customer. Recently, we completed a key international safety certification for cells and battery packs, as well as a full suite of customers' reliability tests. We shipped approximately 2,100 AI1 batteries in Q2 and recognized our first Smart Eyewear product revenue. Thank you for watching. Turning to our defense sector, I'm proud of the team's execution from initial product launch in the first quarter to substantial increase in our drone pipeline in the second quarter to customer sampling beginning now in the third quarter. The pipeline for products manufactured in South Korea increased 41% to approximately $183 million from the $130 million at the end of first quarter. As a reminder, this figure represents the estimated peak annual production value, the lifetime opportunities often many multiples more. More than half the growth came from drone opportunities, which now exceed $100 million on their own. Let me walk through what's inside that number. Because the funnel you see on the slide, more than $40 million in this pipeline is at stages where customers are actively evaluating and testing our cells or designing them into products. And the breadth is striking, including some of the most recognized names in defense technology and consumer electronics. We also introduced MX-01 to a broader set of customers and industry events in the United States and Europe. At approximately 360 Wh per kg, while supporting high continuous and pulse discharge, MX-B01 is designed to improve mission execution. Flight time? Thank you. Thank you. Thank you. Thank you very much. Our South Korea operation is a meaningful advantage in pursuing these programs. It combines an established history serving defense customers with enhanced manufacturing, quality, and supply chain capabilities in a TAA-designated country. Our South Korea supply is TAA-compliant today and ready for the expected mid-2027 capacity ramp, and we expect NDAA compliance across multiple product SKUs. In July, our drone battery completed UN 38.3 transportation testing, clearing an important step for commercial shipment, and we're commencing sampling with numerous customers in the third quarter. The next phase of Korea capacity is expected to come online in mid-2027, a very capital-efficient expansion utilizing existing land and buildings we own and using readily available equipment. The economics are attractive as well. ASPs are healthy and because we own our own manufacturing, we believe the scaled volume can support solid margins. Beyond the current product, MX2 remains targeted for 2027 with the goal of reaching 401 hours per kilogram. Let me now come back to the AI technology platform. We produced the first AI2 engineering samples in the first quarter. AI2 is expected to provide approximately 20% higher volumetric energy density than AI1 by combining thinner materials, better packaging efficiency, and higher cathode voltage through our EX3M technology node. We sampled cells to one Tier 1 Smart Eyewear customer in Q2, Many of the same EX3M innovations are expected to carry into the future smartphone batteries and support another meaningful step forward in performance in that area as well. I want to give you some insight into how our pace of innovation is also accelerating, as it is something I'm particularly focused on. In batteries, the grading factor on development speed is cycle life testing. A full cycle life test has historically taken four to five months. That sets the tempo of learning in the entire industry. We are developing AI models that can predict cycle life outcomes much earlier in the cycle life test than has historically been the case. Our models for AI cells are getting close and we're making very good progress in smart fold cell modeling as well. To be clear, customer qualification will always be the physical test, but this is about how fast we can learn and iterate internally. If we get this right, every design generation arrives faster and that speed itself becomes a durable competitive advantage. Turning to manufacturing, the second quarter showed continued improvements across Fab 2, with particularly strong results through most of the smart eyewear production flow. In fact, our smart eyewear cell output came in well ahead of our internal plan for the quarter, and our integral yield, the cumulative yield across the entire production line, has now improved for three consecutive quarters. Outside Zone 1, all but one process step operated yields of at least 95%, with individual steps as high as 99.6%. Zone 1 dicing remains our primary throughput bottleneck and a top focus, but the yield has improved to approximately 84% from 80% in the first quarter. Zone 1 has been a stubborn constraint for a long time. This is exactly why we changed the approach rather than simply tuning it. The hybrid dicing configuration uses laser and mechanical processes where each is most effective and is designed to lift Zone 1 throughput to multiples of today's rate. The step change we need to support the production volumes we are planning for 2027. Several of the key mechanical dicing steps are expected to come online around the year end. Supporting all of this execution is our growing team in India. A team, in addition to conducting advanced research, directly supports manufacturing execution at both Malaysia and South Korea factories. Finally, I want to spend a moment on leadership because I'm thrilled to have Michael Vyvoda on board as a Chief Operating Officer. Michael brings decades of operations experience, including at Apple. He has a full scope mandate across manufacturing, supply chain, quality, and customer delivery. His immediate priorities are increasing SmartiWare output, preparing manufacturing for smartphone field test builds, and driving the cost, yield, and delivery output improvements underway. Adding Michael gives me even more confidence that you're the right team for the next phase of scale. With that, I will turn the call over to Ryan to review our financial results and outlook.