Navitas Semiconductor Corporation

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Novitas Semiconductor Q1 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again. It is now my pleasure to turn the call over to Leanne Savers. You may begin.

Good afternoon and welcome to Novitas Semiconductors' first quarter 2026 financial results conference call. Joining us today are Novitas President and CEO Chris Alexandra and CFO Tanya Stevens. I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures in and customary quarterly review by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10-Q for its quarter-ended March 31, 2026. In addition, management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, May 5, 2026. Navitas assumes no obligation to update these projections in the future, as market conditions may or may not change, except to the extent required by applicable law. Additionally, the company's press release and management statements 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 to non-GAAP items, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the investor relations section and Navitas website at www.NavitasDenny.com. And now it's my pleasure to turn over the call to Navitas president and CEO. Chris, please go ahead.

Good afternoon and welcome to everyone on the call and webcast. We appreciate you joining us in today's call and pleased to report that Q1 is affecting another quarter of solid progress and growing momentum on our transformation to Natita 2.0, highlighted by the company's return to top-line sequential growth. For all of you that may be new or still coming up to speed on our story, I want to begin with a brief high-level summary of our ongoing strategic transformation and Natita 2.0 vision. Over the past two quarters, we have meaningfully re-accelerated our pivot away from the company's historical mobile and low-end consumer business to focus the entire organization on the high-power markets, where Navitas, GAN, and the High Voltage 6 products can deliver long-term differentiation and value. Today, we are singularly focused on four high-growth, high-value market signals. AI data center, energy and green infrastructure, performance computing, and industrial electrification. Our goal and objective are to rapidly achieve scale in these higher-value markets in support of driving sustainable and profitable growth. Turning to another view of the quarter, our Q1 financial results demonstrated solid quarter-by-quarter improvement, and we observed growing momentum across our high-power markets and expanding customer engagement. Highlighting the quarter, we achieved the expected return to growth in Q1, with revenue increasing 18% sequentially. The renewed growth was driven by our high power markets, which also represented a growing and larger majority of total revenue, as we continued to reduce reliance on the company's historical mobile and mobile consumer business. Although far too early to declare victory, we have effectively completed our realignment of the entire organization. And Navitas is back to growth, driven by our high-power markets. In fact, revenue from our high-power business grew up to 25% year-over-year, with all four of our private high-power end markets increasing sequentially in Q1. The increased contribution from our high-power markets also drove a federal mix in our overall revenue mix, resulting in a poor Q1 growth margin. Consistent with our previously communicated expectation, we anticipate continued sequential top-line growth and gradual gross margin expansion for our services. The ultimate success of our strategic transformation continues to be grounded in four pillars, market focus, technology leadership, operational efficiency, and financial density. With respect to market focus, we continue to see new technology adoption accelerating across multiple end markets and customers. both of which are increasingly driving towards GAN and high-voltage SICK solutions. Without question, AI is the primary catalyst driving this momentum and leading to the broadening adoption of high-power solutions across all four of our five FED markets. Collectively, these markets represent a serviceable, adjustable market of $3.5 billion by 2030. This graph is 60-50 between GAN and high-voltage SICK. We combined CAGR exceeding 60%. We are definitely focused on the largest portion of the time, which I'd like to refer as the AI infrastructure, comprised of unique but relative growth opportunity across the AI data center and the grid energy infrastructure, each of which are fundamentally to enabling the AI revolution. Today, the excessive increase in compute power density is accelerating giant and sick adoption in data centers, while the required modernization of the energy-grain infrastructure to support business centers is driving increased needs for high-voltage systems. Navitas is uniquely positioned as one of the very few companies that can frame deep, long-term experiments in both GaN and high-voltage technologies. We also amnestically and readily offer customers the ability to choose the optimal solution for their acoustic applications and architecture. As a result of our proven capability in both SICK and GAN, we believe it allows us to address more of the power chain and ultimately capture greater content per system. Briefly, providing the trends and opportunities specific to each of our four targeted end markets, starting with AI data centers. As a technology user in both GAN and SICK power delivery, we support all major AI data center architectures with industry-leading power density and efficiency. Again, adding both technologies is a strategic differentiator in our ability to fully support a given customer's chosen approach concept into more opportunities across more applications and greater potential lower-content analytics. As conveyed at the recent NVIDIA GTC event in March, AI data center is rapidly evolving towards ML mode HVDC abstractures, leading to expanding content opportunities driven by the need for exponential power levels increased density, and top-tier efficiency. Our immediate focus remains on the spelling and sampling of our newest GAN and SIG products, enabling qualifications, preparing for scale ramp, and supporting hyperscalers and OEM customers in their ongoing design and development efforts, spanning from ACDC PSUs and DCDC PSUs and 8-level HVDC brick designs at higher power levels and densities. In green infrastructure, we continue to advance active engagement across a series of new and existing customers with notable acceleration in design activity in the active space. AI is a main determinant underlying capitalist. As all industry participants increasingly acknowledge, the existing energy grid is not capable of supporting the project in future rollout of AI deployment. This market, where technology and scale are equally important, They present a large and long-term circular growth opportunity for our current and future high-voltage SICK products. Navitas' Genesys technology positions us as a leading enabler of the grid energy infrastructure modernization efforts, providing customers with more reliable and high-intensity power to our recently introduced 2.3 kV and 3.3 kV modules and a roadmap to even higher voltage. In performance computing, we are seeing sustained healthy adoption of GAN in higher power chargers, pollution, for high-end laptops and mobile workstations used for gaming and AI development. Our opportunity in this market continues to be driven by the dramatic increase in power requirements, with CPU moving from 15 to 30 watts to 45 to 80 watts in high-end AI notebooks, with the integration of GPU requiring up to 120 1.75 watts. As a result, we expect to benefit from growing demand and momentum in performance computing market applications throughout 2016 and beyond. Finally, in industrial electrification, we are continuing to see customer traction in both giant and ultra-high-voltage sick in high-performance applications, such as DC-DC converters and megawatt chargers, industrial pumps, motor control, and energy equipment applications. With respect to our seven-peer technology leadership, we remain fully committed to ongoing innovation in GAN and high-voltage SICK, driven by focused R&D assistance and demonstrated by expanding customer engagement and co-development projects. On GAN, we have continued to accelerate sampling of our 100-volt and 650-volt devices to more OEMs and ODMs. Customers pursuing the 8-on-1 HVTC aspect today are testing GAN, and we believe most of the way is testing with monetized devices. We are focused on enabling and supporting customers in this transition from silicon to GaN, like we have always successfully done in our past. More recently, we have seen some customers design internal reality system-level testing on our newest GaN devices. During the first quarter, we continue to deepen our collaboration with OEL, OEL, and hyperscalers, including direct demonstration of enabling new GaN-based architecture and feature high power, efficiency, and reliability. all of which is leveraging Maritas' more than 10 years of GaN Express and Syscon Expedit. One of those highlights was our recent release of the 20kW 800V to 6V DC-DC platform using our latest 8x8 650V GaN Fan Fest, aiming at 97.5% peak efficiency. This platform solution was formally unveiled in March at GDC and showcased at NVIDIA NGX. As a reminder, we also previously released an industry-leading 800V to 50V AI DCDC power brick, fully ganged 60V and 100V, delivering best-in-class efficiency and density. These respective platforms are generating strong interest and prospective customer engagement due to their demonstrated ability to deliver the highest power density, efficiency, and performance for next-generation AI-designed architecture. Today, our team remains focused on execution, including product delivery, qualification, and preparation of RAS, targeting the accelerated growth for CamVade head-on-the-board SVDC architecture in 2020. On high-voltage sticks, we continue to strengthen our technology with a focus on high-power density and heavy-duty, which represents both the primary market drivers and our QD3 shaders in terms of silicon and packaging. Following the introduction earlier this year of our new industry-leading Gen 5 genetic technology, based on our patented trench-assisted planar architecture, in March, we released our 1.2 kg Gen 5 6 product tailored in packages to address the higher power and entity DCDC and ACDC needed in PSU applications. We have since delivered samples to OEM and OEL, and they are currently being evaluated by most PSU vendors. Initial customer feedback has been excellent, with reports up to 60% increase in power density at greater than 98% system efficiency and improved cooling. Turning to operational efficiency, the prior restructuring action initiated late last year, which I discussed in detail last quarter, has been substantially completed. As previously mentioned, today the entire organization and its resources are fully aligned to focus on the high power markets. We've prepared a substantial strategy for positioning from where the company was just nine months ago. Our team is moving fast and working very hard, and their collective dedication is impressive. Recognizing the tremendous opportunities ahead, we plan to continue adding selective engineering skills and competencies to accelerate customer support over the coming months. Also during the quarter, we completed our leadership transformation with the appointment of our new CFO, Tonya Stevens, who formally joined the team in late March. We now have the full leadership team in place, including new leaders in operations, engineering execution, sales and marketing, business units, and finance, all of whom joined the company in recent weeks and months from larger companies with strong practicals in execution and scale. Importantly, this new authority team and our employees are demonstrating strong buy-in and excitement for 90 plus 2.0, and it's a privilege to lead this transformation alongside each other. We also want you to make progress on our strategic technology and fund-raising partnership with Global Fundraising on GAN. We are confident this will enable our planned 8-inch pivot in 2027 for GAN manufacturing in the United States. At the same time, we are starting to build appropriate buffers with TSMC to ensure a smooth transition for all existing customers. Additionally, we have begun actively scanning our supply chain to support upcoming growth and demand, and we leverage AI internally across design and most of the functions to allow us to scale even faster. Our fourth pillar is financial discipline, which we are committed to as we execute our scale of plans and transformation to Narita 2.0, a consistently growing and profitable high-power company. This includes remaining diligence with respect to prioritizing of investment in high-power programs, maintaining leveraged OPEX, and focusing on high-margin, long-term engagement that builds multi-generational customer quality features. We made significant progress in Q1 with our previous restructuring effort and full availability towards high-power market now substantially complete. Going forward, we'll continue to drive efficiency across the organization and are committed to disciplined investment in the business, even as we target a much larger market opportunity. Our focus remains on top-line growth and margin expansion, driven by improving scale and mix of our high-power business in support of achieving long-term profitability. In summary, I am very pleased with the continuous progress and growing momentum we have achieved in such a short period of time. We are taking further steps toward positioning Navitas as a high-power company. We anticipate continuous sequential revenue growth in the second quarter and throughout the rest of 2016. Q1 was the first clear proof point, and the growth in the high-power market demonstrated the momentum of our 902.0 strategy. We also anticipate growth margins to steadily improve, as volume, growth, drive better fixed-cost absorption, and our revenue mix increasingly favors the high-power business. Mobile contribution will continue to diminish its quarter and become insufficient by the end. At that time, we expect our business and revenue will be defined almost entirely by a high-power market, a transformation that positions wealth for sustainable long-term growth and profitability. Before I turn the call over to review our functions, I'd like to take this moment to welcome Tonya Stevens, our newly elected CFO. I'm thrilled to have her join our executive team. She brings over 30 years of exceptional practical financial leadership in the semiconductor industry, most recently at Lattice Semiconductor. I look forward to her valuable contribution as we grow the business and scale our operations to a larger financial discipline and profitable company. With that, I'd like to go to Tonya to introduce herself and give you our first quarter financials and second quarter outlook.

Thank you, Chris. Before reviewing the financials, I would like to take a moment to introduce myself and share my motivations for joining Navitas. My corporate finance career spans more than 30 years and began with seven years in public accounting. I've since spent the majority of my career in the semiconductor industry, including 17 years at Intel in corporate finance, and the last seven years at Lattice Semiconductor as Chief Accounting Officer and previously Interim CFO. I'm incredibly excited to join Navitas for several reasons. The team is comprised of extremely talented and capable leaders and individuals who are laser focused on executing the company's strategic objectives in a rapidly advancing and high velocity environment. Together with its compelling technology portfolio, The company represents the fair play and sick opportunity to scale up and capitalize on the substantial AI-driven secular growth in high-power markets. It's a privilege to be part of the Novitas leadership team, and I look forward to meeting many of you that I haven't met already over the coming weeks and months. With that said, I will now review the financial results for the first quarter of 2026. and then discuss our outlook for the second quarter. Please note, unless otherwise indicated, I will focus my comments on non-GAAP results. A detailed reconciliation of all non-GAAP to GAAP financial measures can be found in our press release published earlier today. Revenue in the first quarter of 2026 exceeded the high end of guidance, increasing 18% sequentially to $8.6 million on a GAAP basis. This compares to revenue of $7.3 million in the fourth quarter and $14.0 million in the first quarter of 2025. As Chris highlighted, the return to sequential growth was driven by high-power markets, which grew approximately 35% from the first quarter of 2025 and now represents a large majority of total revenue. As the company continues to reduce its reliance, on historical revenue contribution for mobile and low-end consumer business. Notably, we expect high-power markets to continue driving sequential growth throughout 2026. The higher quarterly revenue and improved revenue mix drove a 30 basis point expansion in gross margin, which improved to 39.0%, from 38.7% in the prior quarter and 38.1% in the first quarter of 2025. A shifting mix of total revenue toward higher value, high-power markets, and away from mobile and low-end consumer is key to our gross margin expansion strategy. We expect sustained, gradual improvements in gross margin throughout the coming year. Operating expenses for the first quarter were 15.0 million compared to 14.9 million in the prior quarter and 17.2 million in the same quarter a year ago. Operating expenses for the quarter reflect our commitment to focused and disciplined spending particularly at SG&A, which created the opportunity to invest more in R&D projects order over quarter in support of our strategic pivot to Novitas 2.0 while keeping total operating expenses flat. Loss from operations for the first quarter was $11.7 million compared to a loss of $12.1 million in the prior quarter and $11.8 million in the first quarter of 2025. In Q1, dilutive shares outstanding was approximately $230 million, resulting in Q1 loss per share of $0.04 compared to $0.05 loss in the prior quarter. Turning to the balance sheet, cash and cash equivalents at the end of the first quarter of 2026 were $221 million compared to $237 million at the end of the fourth quarter, and the company continues to have no outstanding debt. With respect to inventory, we ended the first quarter with 14.9 million compared to 13.3 million at year end. The sequential increase in inventory primarily reflects our measured investment to support future anticipated revenue growth. With respect to channel and distributor inventory, as a result of previous streamlining actions taken during the latter part of last year, we now have a significantly healthier channel and inventory profile. Going forward, we are committed to disciplined monitoring and management of these inventories to ensure we are well positioned to respond quickly to end market demand. Overall, the balance sheet remains very strong and provides the company with an extensive amount of liquidity as well as ample flexibility in terms of working capital to execute our strategic objectives and anticipated growth. Moving to guidance for the second quarter of 2026. Consistent with the company's previous communications, we expect continued sequential growth with revenue increasing to $10.0 million plus or minus half a million. At the midpoint, this represents over 16 percent sequential growth compared to the first quarter of 2026. Non-GAAP gross margin is expected to be 39.25 percent, plus or minus 75 basis points, which at the midpoint represents a 25 basis point increase, primarily reflecting the ongoing shift in revenue mix toward higher power markets. Non-GAAP operating expenses are expected to remain approximately flat sequentially between $14.5 to $15.5 million as we continue to emphasize disciplined cost management. Moving forward, we may choose to selectively invest in OPEX to accelerate growth at a fraction of the rate of revenue growth. That concludes our formal remarks. Operator, please open the call for questions.

As a reminder, to ask a question, simply press star 1 on your telephone keypad. Our first question comes from the line of Tristan Guerra with Baird. Please go ahead.

Hi. Good afternoon. I know it's still probably a bit early, but would you be able to talk about the dollar content that we could expect per WAC for silicon carbide on the first generation 800-volt architecture? What type of ramp in content should we expect with Kyber for both silicon carbide and GAN?

Okay. Hi, Tristan. This is Chris. Thanks for the question. If you refer to prior communication, right, we gave guidance in terms of content per megawatt because that's the best way to kind of define the content. We talked about for GAN in the range of $10,000 to $15,000 per megawatt really driven by the native 800 volt HVDC when the DCDC gets inside the rack as we discussed privately. In the ACDC PSU, there's about $5,000 to $8,000 per megawatt, which is coming from both the higher power of those PSUs. If you refer to GTC, right, NVIDIA announced that at the end of the year, the PSUs, the ACDC are going to get to 18.5 kilowatts, which is much higher The factor is if we look at the power level from today's PSUs, the ACDCs, which are in the range of, you know, 5 to 10 kilowatts to 18.5 kilowatts for NVIDIA, but even 25 to 30 for other hyperspheres, there's a ratio of when power goes up by 2, the SIG content goes up by 5. So, there is a nonlinear increase, right? So, I'm not going to get specific in terms of content because it really depends on the architecture, one phase, pre-phase, going to pre-phase, but refer to the $5,000 to $8,000 of content for the sick inside the center, which is mostly ACDC PSUs. And the mental model, which I just mentioned, which is when the ADC move from, let's say, 5 to 10 kilowatts to 18 to 25 to 30 kilowatts, there's about 2.5x content acceleration compared to power level. Thank you. That's very useful.

Yeah, very useful. And then for my follow-up, specific to silicon carbide, you know, clearly pricing's been coming down drastically in 24, 25. Given the ramp that you see, do you expect pricing to stabilize? And I know you're going to be in a very high voltage, so how different is that pricing dynamic there than in the lower voltage? But also, do you expect at some point supply-demand balance in silicon carbide?

So, we don't participate, as you know, to the low-voltage sick business inside mostly industrial and EV, right? What we see is for inside the center, the ACDC mostly use 1.2 kV and more, 650 sometimes, and 1.2 kV and above, right? Where the driver today is more speed, reliability, and density. So, of course, this is a competitive market, and as the hyperscalers are driving more power and more PSUs and more PSUs per rack, there is quite competitive. Today, what we see is what the customers are pushing us on is how we execute and how we help them to get to the best scalability and the best density of power, which I think saves a lot more money at the system level than a cheaper device.

Great. Thank you very much. Welcome, Tristan. Thank you.

Your next question comes from the line of Madison DePaulo with Rosenblatt Securities. Please go ahead.

Hi, guys. This is Maddie calling on behalf of Kevin Cassidy. So you highlighted that Gann and Sick are both playing vital roles in AI power and that you guys are uniquely positioned to win both technologies. And I know you mentioned this, but can you provide any more color on how having both capabilities is helping in customer discussions or design when activity and data center over your larger competitors?

So Hey Maddy, this is Chris. So first of all, I think we focus on the high-power markets, right? So we have four markets. Each of them have a different flavor of architecture and technology. If I refer to AI in the center, it's mostly a GAN and SIG play. If I look at grid infrastructure, it's mostly a SIG play. Of course, high-purpose computing is more a GAN play, and industrial is actually both a SIG and a GAN play, right? So, if you look at the first two, which is what your question is, right? If you look at the evolution of the architecture, so let's zoom out a little bit, right? Today, in the current architecture, the traditional architecture is 50 volt buzz bar, where the voltage from the grid which is 480, 400 volt ACs converted into 50 volts DC, right? That mostly used sick, okay? And that's been going for a while, right? The first step, and I think I referred to what has been announced to GDC, right? The first step is to the 800 volts is the introduction of pre-phase much higher power, which I referred to in my answer to Tristan. The first phase is both higher power pre-phase AC DCs, right? where you convert the 400-volt, 480-volt AC into 800-volt DC, okay? That's the first phase we're going to start at the end of the year, early next year, right? That, on the AC-DC, we use mostly SIC. Now, there is a DC-DC conversion to that. If you refer to what NVIDIA announced at GDC, there is a DC-DC top-of-rack converter, right, at 15 kilowatt points. Those use either GAN or SIC. So, adding both, is already right there, enabling customers to have a choice, depending on their preference. What is very interesting is when you move to the next step, which is the second phase of the 800-volt DC architecture, where you get to, let's call it, high-density rack. So, megawatt rack would be Kyber for NVIDIA, or more high-density racks for the Googles of this world and the others, right? That's where you move the DC-DC conversion inside the tray inside the rack when you do that you have no choice than to use the gap okay because the level of density the level of power requirements make it impossible to use uh silicon but also silicon carbide doesn't have the switching frequency so that's where you're going to get right and the fourth step is when you replace that's more on the grid side when you replace the acdc psu on the uh the sidecar track uh basically by ssd so if you think about this is a continuum of architecture change and evolution, and I think both helps us to see that should it be current generation, next generation, next, next generation, and how less of the guys are evolving from current architecture to next phase of air revolt into hybridization, and even down the road with the reorganization and the restructuring of the grid.

Okay, awesome. Thank you, guys. Thank you, Marty.

Our next question comes from the line of Quinn Bolton with Needham & Company. Please go ahead.

Hey, guys. This is Shadi Mewali off for Quinn. Thanks for taking our questions. My first question is for Chris, but do you have any big picture takeaways from GTC and APAC in March, especially in regard to the direction of GAN versus SIC and 800-volt data centers?

So my takeaway was,

kind of what i just mentioned to uh to my first of all we've talked about 800 volts architecture now for more than a year it's happening okay i think nvidia was very clear that they see at the end of the year uh early next year okay this what i call the the first phase of the 800 volt uh hvdc architecture where you basically do the acdc at a much higher level of power with sick and then you do a ccdc where you can use and again right but also outlining that as you move to next step the move to much higher density rack is kind of enabling GAN content towards the next level. So that's my takeaway from the GDC is 800 volts is happening. Now, keep in mind that we talk about NVIDIA here, but the other hyperscalers, they might have a different path. They might actually go even faster to the next phase where you get the power, the DC-DC power, enabling directly on the tray and in the rack, which will accelerate the data adoption. So, I would say, I come out of GCC with the stronger conviction having both makes a huge difference. Okay? I think we talked about this before where I said Navitas is uniquely positioned because we have both SICK and GAN. I think it's actually very hard for a supplier to sit at the big table if you either have GAN or if you have a SICK. Okay? And there's only a handful to not say a very few number of suppliers who have both. And that's a key differentiation. So that's my takeaway on top of the fact that .

Great. Thank you. And then my follow-up is just on the product landscape for GAN. But as you're sampling with hyperscalers, what are some of the key specs that matter most to them when evaluating GAN products? And how does your portfolio measure up against those requirements? Thank you.

Thank you, Sean. So what we said before is we sampled both high-voltage, so 650-volt GAN as well as mid-voltage GAN, 100 volts. We've done that in different flavors of package, okay, depending on the level of integration and that the customers are looking. In the last order, we mentioned we've done the initial samples. Since then, we've now delivered the final samples, okay, which is basically the samples that would go to production. We are working with customers on, you know, they move from, let's say, device-level testing to kind of bold system-level testing. And, you know, the feedback we get is technology as well as packaging offering is actually adequate to what they're trying to do.

Great. Thank you.

And your next question comes from the line of Richard Shannon with Craig Hallam Capital Group. Please go ahead.

Hi, everyone. This is Tyler Anderson on for Richard. Thank you for taking my questions. I was just wondering, could you talk about why customers would want to upgrade transformers that aren't connecting to data centers? And have you heard of any talks within the government to force the upgrade of transformers?

Okay, so I'll start by the last part of your question. We have no knowledge of any forcing function or requirement from the government to move from traditional transformers to SST. What I will tell you is if you look at, and I think we've released some slides in our investor package, right? If you look at the transformers today are very kind of old school, so to speak, okay? They are operating at low frequency, which is in the 60 hertz. They have limited efficiency, which is less than 95%. They are heavy metal. They are very large and very big. And as you move to an explosion, because that's what we're talking about, an explosion of rollout of air in the center, which basically pulls from the grid a lot more energy, You have to install a lot more transformers, right? And that's going to be, at some point, impossible if we keep the conventional transformer, right? So the move to SSD is a bit of a necessity as we scale up and deploy the hundreds of gigawatts, okay, in the next few years, right? The other thing I would refer to is we keep referring to SST, but when we talk about grid and energy, this is going beyond the SST. The SST is going to be the last step, okay, of evolution, right? Today, you have much higher level of power of transformers, megawatt converters. You have grid-type solar farms that are being deployed, so there's a lot of grid-type applications are being deployed, which we see as a growing driver, even in 2016 and 2017, ahead of the big acceleration of the SST, which will come really in late 2017, early 2018.

Make sense, Simon?

That does. I'm just, I'm also wondering, you know, if there's anything around the switching. I'm seeing something about, And please, I understand I may be wrong on this or going down the wrong path. Correct me if I am. Aluminum conductor steel transformers, you know, I'm seeing things about them wanting to focus on the switching. Would you be able to benefit from that upgrade in the switching?

I mean, yes, you will, but I think the grid companies have realized that the only way to make the grid, as I said, compatible with the acceleration of power is really to get to this new form of conversion, less conversion, less steps, moving from super high voltage to a normal DC through a form of electronification of the grid, okay, for lack of better terms, right? And I think this will require SST. and isolation transformers, basically.

And then have you heard of any conversations around the lack of supply of transformers, accelerating anything with your customers?

I have not, but I would not be surprised that the requirements for volume in terms of classic transformers and the dependency on metal and a few other things might actually play also in the acceleration of the modernization of the grid.

Okay. Thank you.

You're welcome. As a reminder, to ask a question, simply press star 1 on your telephone keypad, and your next question comes from the line of John Kenwunting with CJS Securities. Please go ahead.

Hi, guys. This is actually Jeremy on for John. Thanks for taking the time. Can you just talk a little bit more about the sequential improvement you're seeing heading into Q2, if that's mostly data center driven, and if you're meaningfully ahead of where you thought you were going to be a quarter or two ago? Thanks.

Yeah, so this is Tanya. Hey, Jeremy. So I'll start and let Chris add. So relative to your point in high markets, if you remember in Q4, we talked about high power being the majority for the first time in the company's history, and we talked about it being greater than 50%, mobile being less than 25%, and a vast majority of the company last year. Now, in Q1, high power continued to grow. It was a large majority of the company, like you heard us say. And throughout the year, to your point, we expect it to continue to grow as a percent of the company. And we exit the year almost an entirely high power company, and that being driven by what you said, the data center and the grid and infra, the AI infrastructure component of that. So you saw in our press release and our discussions, high power grew 35% year over year from Q1 of 25 to Q1 of 26. And we expect that growth to accelerate in the second half of 26. And again, driven by both components, but the key catalyst is that AI component. And the momentum is driven by all of the high power markets, but particularly the AI infrastructure, and that's data center and energy grid.

I'll add something, Jeremy. Thank you for the question. So, first of all, if you look at Q4 to Q1, when we grew 18%, we said, as Tonya said, that the high power markets, okay, grew at the percentage of the company mobile went down. So, that means that the growth of high power was actually much higher, okay, than 18%, the top line of the company, and grew 35% year-over-year. Now, we don't break down by markets, right? We refer to kind of high power, but we also said in our script that all markets grew sequentially. And as we see, this will continue throughout the year. Now, I'll give you one data point, okay? Tonya referred to, and I referred to that also in my script, about AI infrastructure. uh and what this means is we are combining within the high power combining data center and grid and the reason why we do that is what i've noticed is the driver of the grid is in a center so at the end of the day you cannot look at ai data center and grid energy as two independent markets like computing would be right this is really kind of intertwined internally that business grew 50% quarter-to-quarter from Q1 to Q1, right? That's the only quarter I'm going to give you, right? So, as the company grew 16% or 18% quarter-to-quarter, the combination of data center and green infrastructure grew 50%. That's stronger than expected. Okay? You asked me where I think we were, we are versus where I think we're going to be. That's stronger than expected. And the reason why it's stronger is that we already see it. It's an acceleration of rollout. We have not seen yet the content going up. I talked about the fact that content is going to go up. Okay? The content is going to go up because when you move from a 10 kilowatt PSUs to an 18.5 kilowatt PSUs or even a 25 to 30, The ratio is 2x power leads to 5x content. So the thick content is going to accelerate. So today what we are seeing is just the growth of AI. And then next year, we're going to see even an acceleration of GAN as power gets, the GCDC gets inside the rack. So I think what we are seeing here with the 50% is that the AI data center is accelerating. I will also tell you, even though we don't guide by market, that what we see today for Q2 And as a reminder, we are confident in our guide for Q2. We're seeing that that AI infrastructure that grew 50% for Q4 to Q1 is actually going to grow faster. So that growth is going to accelerate throughout the area. And that's before even the step up in context. So, yes, I would say we are a bit, you know, ahead. where I think we're going to be. I look at Q2 guide with confidence. The benefit of being high power is we have longer visibility. We used to be in mobile where you get, you know, you're still chasing orders within a quarter. I think the high power market, particularly data center and data infrastructure, are giving us a much longer visibility. So I look at Q2 with confidence.

And we think, as we said before, that this growth will continue for R26.

Awesome. Thank you both so much. That call was super helpful. One last follow-up. Any update on the use of cash this year and next in support of the growth ramp? And what are your thoughts on when cash flow break-even is likely to occur? Thank you again.

Yeah, so I'll take that one. And coming into Navitas and being new, when you look at the strength of our balance sheet, and I even referenced that in my script, right, a very strong balance sheet, we have over $221 million in cash. and no debt at the company. So that gives us a pretty long runway to support our working capital needs and CapEx flexibility. So I'm confident we can execute the objectives and the organic plan consistent with what I said in the script. So, again, we remain focused on profitability, and like Chris said, you know, we remain on track and maybe a little ahead of where we thought we would be to profitability. So, we're very focused on that. Nothing's changed in our thoughts around profitability and, in fact, potentially accelerated a bit.

Jeremy, you can make the math, right? I mean, at our end, you know, at today's gross margin, Okay. And today's OPEX, it will take us to be in the high 30s from a revenue standpoint to be profitable. Okay. Now we're guiding 10, okay, for Q2. We said that we expect that growth to continue throughout the year. There is no reason to believe, based on what we just discussed, that the momentum that we are seeing in data center, grid infrastructure, as well as the other hypermarket would slow down. So you can extrapolate that to where we're going to be profitable. I'm not going to get specific, right, but what I will tell you is when we look at our business, both Tonya, myself, and the leadership team is getting to break even is a key objective. We're going to spend what we have to spend to optimize and to drive our growth, but being, you know, financially efficient, okay, and make sure that we get to break even at some point is a key priority cost.

Thank you.

And your next question comes from the line of Quinn Bolton with Needham and Company. Please go ahead.

Hi, Chris, and welcome, Tanya. Great to have you on board. I wanted to follow up, Chris. You mentioned that at least on the 800-volt GAN opportunity, you've got to move from device-level testing to board-level testing. Can you walk us through what the following steps would be to get to final production and sort of the timeline if these Higher power racks go to production, say, second half of calendar 2027. When do you think those designs would be sort of fully locked down? Would that happen at the end of this year, or could that continue into 2027 in terms of the testing process?

Okay, so thank you, Quinn. You're very persistent asking the same question every quarter, so I appreciate that. So nothing has changed really, right? So I would change the answer, as you said, depending if you're looking at the first phase of the ADC to the second phase. And again, for everybody to understand, the second phase is when the DC-DC conversion gets inside the rack, right? The big difference is in the first phase, you're designing AC-DC-PSUs, DC-DC-PSUs, right? So, you're working with hyperscalers, but really the implementation of that is at the merchant power, ODM, OEMs, okay, the delta, the flex powers, the vertib, the etens, and so on and so forth, right? So, as we all, where we all go, guys, we first deliver the samples, both the 1.2 kV that we mentioned, the Gen 5, in the new package, as well as the GaN devices. We now have delivered the final samples, okay, which I think is the samples that we get to production, which I think is important. For those boards, we are, as I said, moving from component-level testing to standard testing. What does it mean? Well, the customers have done a couple of prototypes. They are optimizing their systems. the layout, the EMI performance, the efficiency. We are highly active and supportive of this, okay, with our application engineers and our field application engineers. So, that's kind of where we are, right? So, you know, the next step is once they've done some level of system testing, then they're going to do system reliability and system validation, right, at the next level. So, I would say for the first phase of the 8004DC, since this is meant to ramp at the end of the year to earlier next year, I mean, we're going to get clarity very quickly. And as I told you before, for me, I'm not going to comment on design and engagement with customers and let the customer also. But you're going to see the proof point in the backlog and as we go, right? Now, when it comes to the second phase, which is really driven by the hyperscale, when the DC-DC conversion gets in the tray, inside the rack, Mostly with GAN because there is no other technology that helps you to do this 800 volt 50 or 800 volt 12, 800 volt 6, okay, inside the rack. I think today we are still working with hyperscalers and getting the OTM to be comfortable, okay. One of the reasons why we're spending so much time developing was reference balls that we've announced earlier this year, the 800 volt 50. or the other 60 that gives comfort to the hyperscalers and the customers on how to implement. So, it's probably six to nine months behind. So, if you ask me when we're going to get proof point of the entry GAN-based DCD conversion, probably Q1 to Q2 next year, okay? But, again, this is a duration, right? So, you know, customers, what I see is I measure my team and the engagement with customers in terms of the number of samples we ship You see 10 samples or 50 samples. When you get to 5,000 samples, it's not 10 percent new, okay? It's . I measure my team on the amount of energy that the customer is spending on testing the technology and putting us in from an app's point of view into helping us, right? And I see that energy, that momentum, that number of samples. So that's why I'm comfortable in the momentum we're building. However, as I said in the past, I think the proof is in the pudding, and we are not going to talk about pipeline. We're not going to talk about customer engagement unless the customer decides to, but we're going to refer to growth and outlook and guidance and backlog, which I think is what you'd expect in terms of success.

Thanks for all that detail, Chris. I guess a follow-up, just longer term, do you guys have a view or are you seeing customers push the intermediate bus voltage to 48, 12, or 6 in that 800 to step down? Do you think that 800 to 6 ultimately wins, or do you think there's going to be a mix of different intermediate bus voltages across different hyperscaler platforms?

So in the first phase, as we talked about, right, at the end of the year, the bus bar stays at 50, right? I think you're referring to the true in-train, native 800-volt HVDC, right? Yes, yeah, that's correct. At this point, I would say it depends on the hyperscaler. I think you can see different flavors. You've probably seen that we announced a GTC IMGX with NVIDIA, and they're going to six. I think that's kind of one of the trends we see. with that scale back to 12, okay? It's a possibility. Some other hyperscalers might decide to stay at 50, okay? So you might see some hyperscalers ramping next year with an in-tray, native, 8-volt HVDC keeping 50 volts at the bus bar, but moving the DC-DC conversion from top of rack to inside the rack, right? So the short answer to your question is I think we're going to see multiple flavors. Directionally, I would say, The trend is the same, reduced number of conversions as you move to a higher density rack, which means that the secondary voltage is going to go down over time.

Got it. Thank you, Chris. Thank you, Gwen.

And with that, I will now turn the call back over to Chris Alexander for closing remarks.

Yeah, so thank you for joining us today. As I said early on, too early to declare victory, but what I see is the company is on track and accelerating the pivot and the transformation to Navitas 2.0. We have a lot of work to do still ahead of us, but if you look at our momentum in Alpower, the growth, in high power, the growth in AI infrastructure, which I mentioned, quarter over quarter, and the trend that we have ahead of us. I'm confident this will continue, but I want to close by thanking our teams. The Navitas team, it's a lot of work. This was a big pivot that we asked the team to go through. We informed a story called uh consumer low-end uh mobile type of business to high power it's a big shift in terms of uh geographical uh uh coverage uh and in terms of uh product mix so i want to thank them for the effort the reliance and the uh and the effort that they are putting into making that happen and of course our customers okay they are supporting us as well thank you

Thank you again for joining us today.

This does conclude today's conference call. You may now disconnect.