Navitas Semiconductor Corporation

Hello and thank you for standing by. My name is Glyza and I will be your conference operator today. At this time, I would like to welcome everyone to the Navitas Semiconductor second quarter 26 earnings. 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. If you would like to ask questions during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Please go ahead.

Good afternoon and welcome to Novitas Semiconductor's second quarter 2026 financial results conference call. Joining us today are Novitas' president and CEO, Chris Alexander, and CFO, Tanya Stevens. Thank you for joining us. from those discussed today, and therefore we refer you to a more detailed discussion of 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 estimates as of today, July 27, 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 of Navitas' website at www.navitasemi.com. and now it's my pleasure to turn the call over to Navitas's President and CEO, Chris, please go ahead.

Good afternoon and thank you for joining us on today's second quarter 2026 earning call. We appreciate your continued interest and support as we execute our strategic transformation to Navitas 2.0. In the second quarter, we delivered increasing revenue of 22% sequentially coupled with a stronger third quarter guidance. High-power markets grew more than 50% year-over-year, serving as further evidence of the building momentum in our GaN and high-voltage SIG products, especially in our focus area of AI infrastructure. We are also delivering on our Navitas 2.0 transformation. We are well ahead by over one quarter of expected traction for nearly all sales to be coming from high-power markets by year-end. with revenue contribution for mobile and low-end consumer being insignificant. We continue to deliver step-by-step on what we said we would do, and this quarter serves as another proof point of our consistent progress. Over the past several quarters, we have aggressively pivoted the entire organization to focus on high-power market, where Navitas GAN and high-voltage SICK technology can deliver meaningful differentiation and increase long-term value. The resource reallocation and organization realignment is now substantially complete. With new leadership in place and a refreshed product and technology roadmap, we are sharpening our focus on AI infrastructure, which comprise both AI data center and the grid energy infrastructure required to power them. Combined, these AI infrastructure market represent the vast majority of our long-term serviceable addressable market for GAN and high voltage SIC. and underpin our future growth trajectory as a high-power company. Turning into a closer look at our reported results and progress for the second quarter. As previously mentioned, total revenue increased 22% sequentially to $10.5 million, driven by growth across our high-power markets. High-power represents the majority of our overall revenue mix, with revenue contribution from mobile in Q2 declining both sequentially and year-over-year, as in the prior quarter. I also want to highlight that both CAN and SICK contributed to our SICK control growth with a particular acceleration in our SICK business during the quarter. As expected, we also delivered expanded gross margin as a result of more favorable revenue mix towards higher value, higher power product, and improving scale. Notably, our strong momentum continues to build and accelerate into the second half of the year. Our expanding backlog extends beyond 26, coupled with record book to build, supporting our expectation for continued double-digit quarterly growth through the second half of the year. The third quarter will also represent a return to year-over-year growth driven entirely by high power markets. This also translates to achieving mid-single-digit revenue growth for the full year, while simultaneously having substantially exceeded the mobile and the low-end consumer markets. This is a significant change in the revenue composition for the company and clear evidence that we are delivering on a Navitas 2.0 transformation. With growth increasingly driven by a combination of AI data center and grid and energy infrastructure, we expect AI infrastructure market will represent more than one-third of our total sales by year-end, setting the stage for continued momentum in 2027. While we are nearing completion of our transformation to a high-power company, our focus continues to be grounded in four key pillars, market focus, technology leadership, operational efficiency, and financial discipline. Starting with our focus on high-power market, the rapid adoption of AI is driving immense market demand for overcome critical power bottlenecks across AI infrastructure, including both AI data center and green energy. As a result of Navitas' unique ability to deliver high-power products leveraging both GAN and high-voltage SICK technologies, we are benefiting from accelerating momentum to enable customers' high-power applications within AI data centers as well as the grid and energy infrastructure needed to supply them with power. Together, those two areas of AI infrastructure represent the large majority of our long-term science growth trajectory and where the company is headed. In AI data center, we are currently generating growth ahead of the market transition to 800 volt DC. For example, increasing power level in AC-DC power supply units are driving the need for higher density, which in turn is accelerating the replacement of silicon with our high voltage sick. We are also actively engaged with hyperscalers Merchant Power Customers, Data Centers, OEM, ODM on multiple program ramping in the second half of 26 that will accelerate throughout 2027. We're also seeing strong traction in DC-DC PSUs and battery backup units where both our SICK and GAN solutions are being designed in. Again, this activity is happening today in advance of the 800 volt transition. In fact, we continue to believe that the transition to 8-on-1 architecture for next-generation AI data centers will happen in 2027, as various XPUs, GPUs, hyperscalers will introduce it at different times and it will unfold in a series of steps. Each step will represent an inflection point that drives increasing momentum and explosive growth for Navitas high-power GAN and high-voltage SIG content. I will briefly walk through each of those inspection points, which are also outlined in the earnings-related slide deck that we've posted to the investor section of our website. What's clear is the evolution to analvolts is inevitable, and it remains the industry's only path forward to achieve much higher power and higher density AI racks. The first inspection point, second half 26 ramp and accelerating in first half 27. SICK adoption in AC-DC PSUs is being driven by power scaling and density requirement, independent of the 800VDC initiatives. As the AIDF center racks require more power, it is driving higher power level AC-DC PSUs, which ultimately drives high density and therefore accelerating the replacement of silicon by SICK, even with 50VDC output. This is already on the way and the growth is happening now and will continue throughout 2027 and beyond. Following, there will be a second inflection ramping in mid-2027. First, the introduction of the 800V bus bar in the side car rack with power system elements such as AC-DC power shelves and BBU moving from the IT rack to the power side car with output of 800V DC to the IT rack. This change is bringing additional high voltage SIC content in higher power AC DC PSUs, now with 80V DC output, plus new SIC and GAM content in top of rack DC PSUs and BBUs. We are in advanced system design and reliability testing with several key customers and are preparing the ramp. Then the third infection point, ramping mid to late 2027, really accelerating in late 27 and early 2028. The integration of the high density DC-DC conversion directly into the GPU and XPU trays using GaN for its superior switching frequency and power density in megawatt scales rack across various GPU and XPU and hyperscalers at various times. At that point, a fundamental change happened in data center IC rack power architecture. 800V comes in straight to the server trace. This is what most are referring as native 800V. We are highly confident in our position for 2027 ramp with our gas. Similary, the ACDC PSU will continue to be in higher demand for high voltage thick with increased power level and density on top of BBUs and other power systems. Lastly, there will be a fourth inflection point, 2028 and beyond. This is where solid-state transformers come into play and onsite data center, taking mid-voltage AC electricity from utility grid and directly converting to 800 volt DC, which get distributed across the data center. This is the full 800 volt DC evolution with ultra-high voltage SIC and GAN across grid modernization, solid-state transformers, and end-to-end power delivery from grid to core with full wideband gap solutions. Complementing this significant opportunity within AI data center is the equally large and even longer duration market opportunity in grid and energy infrastructure. Today, we're actively advancing design activity and sampling across BSS, solar farm converters, PSUs, and solid state transformers application. Our recently introduced 2.3 kV and 3.3 kV Genesys modules are receiving excellent feedback and customers have begun requesting volume samples for system-level testing in the second half of the year. We are also seeing early interest in our new isolated TO247 family, which offers unique advantages in liquid cooling applications. Importantly, I want to re-emphasize that Navitas remains technology agnostic and we are prepared to offer customers the optimal solution. whether that be GaN or high voltage SIC across the full power chain from grid to rack. This unique flexibility allows us to capture weather content per system as well as support multiple architectures. As previously mentioned, both GaN and SIC are contributing to the current growth and we expect AI infrastructure to drive the substantial majority of our revenue and growth going forward. Turning to our second key pillar, technology leadership is essential to our success. and we continue to diligently invest in innovation and expanded product roadmap for both GaN and high voltage SIC. On GaN, we are advancing our reference platform solution, including the 800V to 6V DC-DC power delivery board demonstrated at recent industry events, with the 800V to 12V version in development. We have kicked off new program utilizing Nalita's unique solution to maximize system efficiencies and the secondary site for 800-volt data center of topologies. Our industry-leading DFN 8x8 dual-site cool package continues to gain broad adoption with superior power density, thermal performance, and board space savings. And our 650-volt, 11-milli-ohm GaN FET remains the lowest RDSM high-voltage GaN device in the industry. And we have a significant number of customers preparing for mass production. Additionally, our medium-voltage honorable GAN is seeing increasing adoption for secondary side and other applications. On the high-voltage genetic technology, based on our proprietary trench assisted planner architecture, continues to differentiate with its best in-class scalability, efficiency, and manufacturability, attributes that are increasingly critical as voltage scale from grid and energy infrastructure applications. We recently introduced our isolated TO247 product family spanning 1.2 kV to 3.3 kV delivering module-like performance in standard discrete footprint with integrated isolation for direct cooling and simplified customer's manufacturing. As mentioned earlier, we're also seeing customer traction in both AIDC and grid and energy infrastructure application. We also recently expanded our SICK portfolio We newly introduced 1.2 kV JFET product line to be released early next year. Initially targeting AI data center, solid-state transformers, and energy grid infrastructure application, our new JFET product line opens the door to address an additional $1 billion of incremental SAM by 2030. Also, we continue accelerating towards our ambition to deliver best-in-class ultra-high voltage SIC technology and products and already in discussion with selected customers regarding the planned third quarter release of our new 6.5 kV SICK technology, which we expect to unveil very soon. Additionally, we are currently engaged on the development of next generation 10 kV SICK devices with a prominent lead customer and expected announcement in coming weeks. In addition to expanding our existing SICK portfolio and technology, Last week, we announced a strategic partnership for Magnetshift to license our Genesys Gen4 and Gen5 trans-assisted planar technology spanning 1.2 kV, 2.3 kV, 3.3 kV and higher voltage. Supported by our supply chain and material ecosystem, the technology will be ported, qualified and internalized in their fab in South Korea. This partnership delivers two primary strategic benefits. First, It enables expanded adoption of our SICK technology across more target markets, expanding Navitas technology beyond the technology current focus. Second, and longer term, this collaboration facilitates establishing of another fund resource of Navitas SICK wafers, ultimately strengthening our supply chain resilience and supporting our ability to efficiently scale Genesys solution. Our deliberate strategic decision to prioritize AI infrastructure over automotive Unlike some of our competitors, it allows us to bring focused, high-performance products to market faster. Having both GAN and SICK is also seen by customers as a key differentiator and allows us to focus on customer needs, independent of any technology bias. Additionally, this has allowed us to secure initial design wins with key customers that will continue to support our long-term growth trajectory for years to come. Operational Efficiency With respect to operations, we are making excellent progress on our strategic partnership with global foundries. Lead paths from our pivot to 8-inch GAN are on track for customer sampling and qualification before year-end, and we expect to have initial qualified products in early 2027. This transition will enable U.S.-based GAN manufacturing, supporting national security applications and long-term supply chain resilience. I also want to note that we have secured appropriate buffer capacity at TSMC to ensure a smooth transition for existing customers throughout 2019 and beyond. In addition, we continue to further strengthen and streamline our supply chain, consolidating to fewer, more strategic OSAT partners that are better equipped to support high-powered scale. We are also increasingly leveraging AI tools across designs, operations, and other functions to accelerate execution and improve efficiency as we scale. In terms of the fourth pillar, maintaining financial discipline continues to be a fundamental operating principle. Over the past nine months, we've transformed the organization. We've realized significant efficiency and have held operating expense essentially flat. With our transformation now substantially complete and with a clear visibility into accelerating reports, we are prudently increasing investment in specific areas, including expanded product development like our JFET or ISO-TO, strengthening customer support for key committed programs, and enhancing operational readiness for upcoming ramp of volume shipments. Each of these objectives are directly aligned with our goal of capturing a substantial multi-year growth opportunity for our GaN and high-voltage SIC solution across AI infrastructure markets. Also, we recently raised additional capital to further strengthen our balance sheet and support ongoing strategic execution. More specifically, with $567 million of cash at quarter end, we now have increased flexibility to fund strategic investment in our business, including our Foundry Plus program, Thank you very much. I'm very pleased with our continued progress and growing momentum. Q2 represents another proof point that we are executing on our strategic Navitas 2.0 transformation. We are delivering on our commitment to achieve quarterly growth by end. We have substantially completed our transition to a high-power company and expect to be back to year-over-year growth. This majority of the growth is being driven by AI infrastructure market. This is also supporting our expectation for continued double-digit growth for the second half, setting the stage for continued growth, momentum into 27 and beyond. With our substantial cash balance and market leadership, we are well positioned to deliver sustained growth as we capitalize on the opportunity to enable the AI revolution with our differentiated high-power GAN and high-voltage SIC. With that, I'll pass the call to Tonya to review our second quarter financials and the third quarter outlooks.