Everspin Technologies, Inc.

And welcome to the conference call to discuss Everspend Technologies' second quarter 2022 financial results. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session. As a reminder, this conference call is being recorded today, Thursday, August 11, 2022. Before we begin the call, I want to remind you that this conference call contains forward-looking statements regarding future events, including but not limited to our expectation of Everspen's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspen's design pipeline, and executing on its business plan. These forward-looking statements are based on estimate, judgment, current trends, and market conditions, and involve risks and uncertainties that may cause results to differ materially from those contained in the forward-looking statements. We would encourage you to review our SEC filing, including our quarterly report on Form 10-Q, which will be filed with the SEC on August 12, 2022, and other SEC filings made from time to time, in which we may discuss risk factors associated with investing in Everspend. All forward-looking statements are made as of the date of this call and accept as required by law. We undertake no obligation to update any forward-looking statements made on this call to update or alter our forward-looking statements, whether a result of new information, further events, or otherwise. The financial results discussed today reflect our preliminary estimates are based on information available as of the date hereof and are subject to further review by Everspin and its external auditors. Our actual results may differ materially from these estimates as a result of the completion of our financial closing procedures, final adjustments, and other developments arising between now and the time that our financial results for this period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income loss or adjusted EBITDA, which provide additional details. A copy of press release is posted in the investor relations section of Everspen's website at www.Everspen.com. And now I'd like to turn the call over to Everspen's CEO, Sanjeev Agrawal. Sanjeev, please go ahead.

Thank you, Operator, and thanks, everyone, for joining us on the call today. Everspan delivered quarterly revenue of $14.7 million, an increase of 24% compared to the second quarter of 2021 and above the high end of guidance. We were gap net income positive for the fifth quarter in a row, which continues to be a strong focus of the company. We offset cost increases attributed to supply chain constraints and inflation with cost reductions and improved efficiency in our manufacturing facilities, thus maintaining our gross margins in a healthy range. A few highlights for the quarter. Revenue was 14.7 million, up 24% year-on-year. Cash flow from operations was 4.3 million, up from negative 0.6 million year-on-year. GAAP gross margin was 58.4%, and GAAP net income was 1.7 million. We announced availability of a new STD MRAM product, EM128LX, which has a capacity of 128 megabit and supports the expanded SPI or XPI protocol. This broadens our STD MRAM XPI product portfolio from 8 meg to 128 megabits. Our product backlog for balance of 2022 as of June 30th, 2022 remains at an all-time high. Our team continues to successfully navigate changing supply to meet customer demand, which remains strong with existing and new design wins on our toggle products. We are working with our foundry partners for more wafers and assembly and test houses for more capacity. Although we are alleviating some of our supply chain constraints, we have unfulfilled toggle demand, which is expected to carry over into upcoming quarters. We continue to invest in our leadership in STTM RAM technology and focus on opportunities that will grow our business in the near term and long term. Samples of our new XPI family of low density STTM RAM products from 8 megabit to 128 megabit are now available and sampling at our customers. This family of products can be deployed as a persistent fast serial RAM or North Flash replacement in industrial IoT and embedded system applications. Compared to NORFLASH, this family of products offers faster writing speeds, which was on display at Embedded World earlier this year. We demonstrated configuration with a bit stream integrity and faster download speeds for bit streams using our 64 megabit STTM RAM XPI product compared to standard NORFLASH in a simulated FPGA setup. This family of low-density STTM RAM XPI products is on schedule for volume production in second half of 2022. I will now turn it over to our CFO, Anuj Agarwal, who will take you through our second quarter financials and third quarter 2022 guidance. Anuj.

Thank you, Sanjeev, and good afternoon, everyone. Today we are pleased to announce Q2 financial results. The team continues to execute to the strategy we highlighted last year, resulting in five consecutive quarters of positive net income. In addition, despite the supply constraints and cost increases, we generated positive cash flow from operations resulting in a healthy cash balance of $23.1 million. We delivered solid quarterly results beating top end of guidance with revenue of $14.7 million compared to $14.3 million last quarter and $11.8 million in the second quarter of 2021. We also had positive net income of $1.7 million and positive cash flow from operations of 4.3 million for the second quarter of 2022. MRM product sales in the second quarter, which include both our Toggle and SCT MRM revenue, was 13.2 million versus 12.7 million in the prior quarter and 10.2 million in Q2 2021. Licensing, royalties, patents, and other revenue in the second quarter was 1.5 million compared to 1.7 million in the previous quarter and 1.7 million in Q2 2021. Shifts to suppliers for our largest end customer who we serve with our high density STT product for data center applications represented 15% of revenue in the quarter versus 19% of revenue in Q1 and 35% in Q2 a year ago. Turning to gross margin, GAAP gross margin for the second quarter of 2022 was 58.4% versus 58% in the prior quarter and 60.7% in Q221. GAAP operating expenses for the second quarter of 2022 were $6.9 million versus $6.3 million in the prior quarter and $6.7 million in the second quarter of 2021. The highest operating expenses in the quarter was primarily driven by increased costs to support the new SDT industrial product. We expect R&D expense to grow in 2022 as we continue to support the 28-nanometer SDT MRAM product targeted at industrial and other broad-based applications. We are pleased to report second quarter positive net income of $1.7 million, or $0.08 per basic share. based on 20.1 million basic weighted average shares outstanding. This compares to a GAAP net income of 1.9 million or 10 cents per basic share in the first quarter of 2022 and net income of 0.3 million or 1 cent per basic share in the second quarter of 2021. Basic earned EPS of 8 cents was better than the top end of our guidance range reflecting our strategic operational discipline and strong gross margins in the face of tightening supplies. Cash and cash equivalents increased to $23.1 million at the end of the second quarter compared to $19.9 million at the end of the prior quarter and $14.2 million in Q2 2021. Cash flow from operations was $4.3 million for the current quarter compared to a negative $1 million in the prior quarter and a negative 0.6 million for Q2 of last year. Turning now to our third quarter 2022 guidance, demand for our toggle product remains strong. We expect total revenue in a range of 14.4 million to 15.4 million. Everston expects industry supply constraints to limit supply and push some unfulfilled customer demand to future quarters. We expect the gap net income per basic share to be between break-even and $0.05 per share, primarily influenced by expenses related to next-generation 20-nanometer SCT MRAM product that's development and price increases from our suppliers. I'll now turn it back over to Sanjeev for some brief additional commentary before we open it up for questions.