Navitas Semiconductor Corporation

Good afternoon and welcome to Novitas Semiconductor's third quarter 2026 financial results conference call. 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. If anyone needs assistance at any time during the conference call, please press the start key followed by zero on your touch phone. As a reminder, this conference call is being recorded today, Tuesday, November 3, 2026. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Thank you, and good afternoon. Welcome to Novitas Semiconductor's Third Quarter 2026 Financial Results Conference Call. Joining us today are Novitas President and CEO Chris Allexandre and CFO Tonya Stevens. Thank you for joining us. 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 the company's filings on Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, November 3, 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 President and CEO, Chris, please go ahead.

Good afternoon and thank you for joining us on today's third quarter 2026 earnings call. We appreciate your continued interest and support as we near completion of our strategic transformation and begin executing as Navitas 2.0. Our third quarter results reflect another period of solid financial performance and accelerated momentum. Total revenue was on the high end of guidance at $14 million, up 33% sequentially and 38% year-over-year, marking the company's first quarter of year-over-year growth since 2024. This revenue growth was driven by high-power markets, which increased more than 50% sequentially and grew by triple digits year-over-year. As anticipated, mobile and low-end consumer continue to decline as a percentage of revenue and remains untapped to becoming insignificant in the fourth quarter. By year-end, Hyper will essentially represent the entire company and we will have substantially exceeded mobile and low-end consumer markets. In fact, as we now delivered multiple quarters of double-digit sequential revenue growth and gross margin expansion, driven by high-power market and an acceleration in AI infrastructure, our co-focus. Gross margin expanded sequentially and was above the midpoint of guidance, reflecting the continued benefits of favorable revenue mix and increasing scale. Notably, third quarter non-GAAP gross margin of 40% was 130 basis points higher than the third quarter of 2025 when we began the Navitas 2.0 journey. Book2Build remains well above one and has been for the last several months, and we currently have solid backlog extending into mid-2027. We also expect continued revenue growth and margin expansion in the fourth quarter, which will represent the fourth consecutive quarter of double-digit sequential revenue growth and margin increase, with the company exceeding 2026 as a high-par company. Briefly stepping back, roughly a year ago, we made a deliberate decision to pivot away from mobile and low-end consumer and focus our resources on the high-power market where GaN, high-voltage SIC, and ultra-high-voltage SIC provide greater differentiation and stronger long-term growth. We labeled AI data center, energy and grid infrastructure, high-performance computing, and industrial electrification high-power market as clear focus and AI Infrastructure as North Star. The success of this pivot is not clearly visible in our revenue mix. At the beginning of 2026, Navitas 2.0 was only a strategy, and now it is a reality. By the fourth quarter, we expect mobile revenue to be effectively gone, as stated earlier, and the company revenue to be essentially all high power. More than upsetting our exit from low-margin mobile and low-end consumer has been the tremendous growth of AI Infrastructure, our North Star. AI data centers plus the grid and energy infrastructure required to power them. We anticipate AI infrastructure to represent more than 40% of our total revenue exceeding this year. And we believe this business is poised to triple in the calendar 2027. Over the last few months, it has become clear and broadly accepted that power is now the number one constraints on AI compute. The question is no longer only how many GPUs or XPUs can be manufactured are deployed, but how many can realistically be powered? In other words, power efficiency is becoming capacity. When access to power is constrained, every watt saved in conversion and delivery can become another watt available for compute. It increases the scale of compute that can be deployed inside a given power envelope, not only the energy cost. Together with our high and ultra-high voltage SIC, Gann and recently acquired Claros IVR technology stack serving both vertical and embedded power delivery architectures further positions us to break the AI infrastructure power wall by addressing these efficiency, power density and performance bottlenecks across the full power chains from grid to XPU. With our strategic acquisition of Claros in early October, Navitas has now a complete platform that is capable of addressing the final stage of delivering efficient power all the way to the XPU. I want to emphasize that there is a growing number of processor sites, CPU, GPU, TPU, XPU, and other custom processors, as well as companies developing them, each requiring a specific power implementation for the last step of power conversion to core voltage. This requires a modular approach, which is one of the key differentiators of Claros IVR's technology stack, as it allows several IVRs to be combined very flexibly in a power array to deliver the required power level and density. Nafitas was already unique by having both GaN and SIC, and now with Claros, we are even more so. We are now an enabler of efficient power delivery from the source of energy, starting in the modernized grid with our ultra-high voltage SIC, then high-density and high-efficiency centralized AC-DC and DC-DC conversion with our high-voltage SICK and GAN, and finally, the power delivery to the XPU with the PLAUS IVR technology stack. Going one step deeper, IVR technology solves a real-world scaling problem. Processor power demands are increasing faster than lateral delivery can support. with packaged power moving from roughly the mid-1 kilowatt range towards several kilowatts at sub-1 volt core and several thousand amps. By moving conversion closer to the XPU with vertical power delivery directly beneath the processor and embedded power delivery ultimately in the PCB package or substrate, the path is shortened from centimeters towards millimeters or even less. This reduces resistance. Inductance, Droop, and Heat. As an integrated IVR platform, not another power set, we are combining digital control, power transistors, high density capacitors, embedded inductors, and packaging in one architecture. The platform is also designed to scale with processor currently through a repeatable building block of the order of 40 amps through larger chips and a modular power array into multiple kilo-amp systems packaged and embedded. In simple terms, the Klaus IVR technology stack with its ability to serve both future VPD and EPD architectures give us a complete power solution platform. Together with the addition of JFETS, it doubles our 2030 SAM to over $8 billion and represents a multi-year content growth opportunity that layers on top of the existing inflection points we are pursuing with our high-voltage SIC and GAN. The ultimate benefit is Navitas' ability to help customers convert more of every available megawatt into useful AI compute. While our transformation to a high-power company is effectively complete, our go-forward strategy remains grounded in multiple key pillars of transformation that we have discussed over the last 12 months. Market focus, technology leadership, operational efficiency, and financial discipline. On market focus and technology leadership, we continue to advance a series of customer and technology proof points. Since our previous conference call, we announced our collaboration with NVIDIA on an 800-volt to 12-volt power delivery board for next-generation AI infrastructure. This builds on our previously announced 800-volt to 6-volt and 800-volt to 50-volt DC-DC conversion boards, further highlighting the breadth of our system knowledge and capabilities. We also license Genesys technology to Magnachip, underscoring the strength of our trench assisted planner process foundation and supporting expanded SIC adoption, particularly in Asia, while also creating long-term potential for additional fund resource. We recently partnered with Microchip to deliver an 800-volt reference design for next generation AI data center. Then in late September, Navitas was selected by the US government to develop Next Generation 10KV SIGPAR Semiconductor reinforces both technology superiority and domestic supply chain resilience. And we also announced the first shipments of our U.S.-manufactured fifth-generation GANFAST technology as part of our long-term strategic partnership with global foundries. Following shipments of the first wafers in September for the initial product family including 650-volt GANFETs, we expect to have strategic customers sampled very soon. On a related note, we previously talked about pursuing a Foundry Plus model. Going forward, we've renamed and we refer to this strategic operating model as Integrated Fabless Manufacturing, or ISM, a deliberate alternative to the traditional IDM approach. The core difference and principles are that we choose what to own, where to invest, and who to partner with, allowing us to retain the capabilities that differentiate product while leveraging partners for manufacturing at scale. Importantly, we remain ownership of critical technology IP, selected manufacturing equipment, together with targeted co-investment, not purely supplier collaboration. For purpose of today's call, I want to briefly take this opportunity to clearly define and lay the foundation of our IFM model, as I expect it to play a strategic role in our go-forward strategy. Looking more near-term, I will also note that we are actively taking advantage of our strengthened balance sheet to strategically build inventory buffers, including raw materials, and secure future capacity to support of unexpected strong and consistent mid- to long-term growth. Turning to an update in our progress towards the four infection points that I introduced in our last conference call, which I intend to keep using to map our growth to architecture change in AI infrastructure. Today, the transition to 800-volt architecture for next-generation AI data center is now certain. The debate is no longer whenever 800-volt is happening, but instead how it will unfold. As previously outlined, the transition will have a series of inflection points that will drive increasing momentum and growing need for higher power solutions. Navitas' unique combination of high power GAN, high voltage SIC, and now IVR capabilities will allow us to capitalize on each of these inflections. I want to emphasize that we are not dependent on one architectural transition and that we are not waiting for the final data center architecture to emerge. These inflection points represent successive opportunities, each of which can increase content per system as the overall market continues to grow and expand. The first inflection, pre-800 volt, is already well on the way. We are seeing an acceleration of silicon replacement for any ACDC above a 3 kilowatt. Product based on our SICK technology addressing this opportunity are in production and driving accelerated growth in the fourth quarter and the first half of 2027 across multiple hyperscalers and OEM ODM. We are seeing an acceleration of demand, in particular for 1.2 kV SICK, where our previously mentioned Gen 5 is gaining strong traction. The second inflection, the sidecar rack and the first rollout of plus or minus 400 volt and or 800 volt is also accelerating. We discussed this in our last earning call and it was clear at the OCP Summit in October that this is coming and now definitely coming in 2027. We are seeing broader design conversion and program across more customers and application. including ACDC, DCDC and battery backup units of BBU, all with modular content. Large orders already in place and slated to ramp in the first half of next year. This will drive growth in 2027 on top of the first inflection point continuing across AI descenters that not yet to adopt high voltage DC. The power level and density acceleration of ACDC PSUs is really stunning and driving this content jump. On the DCDC side, the same is true. We are currently progressing through the final stage of design in and qualification with many customers and orders already in place, which will give us additional programs in support of continued growth over the coming year. What is very interesting about this second inflection point is the variety of application and board, DCDC, ACDC, BDUs and others, and the use of different technologies between SICK and GAN, which reinforce Navita's strategic positioning. The third inflection point, All native 800-volt continues to progress. We all know by now, and it was reconfirmed again at OCP, that this is the only path to achieving really high-density, high-power racks. I mean 500 kilowatt and plus and up to megawatt racks. We are advancing design and preparation for these high-density racks across multiple vendors, depending on the XPU. Everyone is looking at it. We continue to believe native 800-volt solution will be in production before the end of 2027 and be material in 2028. Today, we are sampling and progressing with customers on more than a dozen programs and are currently in final stage with certain leading OEM ODM for 800-volt power DC-DC conversion board. One existing customer's targeting hyperscalers has already placed a large order for significant system tests which reinforce Navitas' strong market position. The fourth inflection point, the complete modernization of energy and grid infrastructure. While further out, it is also moving forward, driven by the speed and energy requirement of AI data centers. We are continuing to work to secure initial design-ins with our ultra-high voltage modules in solid-state transformers, which is really more of a 2028 and beyond growth driver. In the interim, we're also seeing an acceleration of engagement for shorter-term revenue opportunities with battery energy storage system, or BSS, and other power grid-related applications, which are driving high demand for ultra-high voltage SIC. A portion of these opportunities are expected to continue to grow in calendar 2027, layering on top of the first and second inflection points with AI data center. In closing, I'm very pleased with the progress. Navitas 2.0 is no longer a plan, but a reality. The results are demonstrated by the revenue mix, growth, and margin expansion. By year end, we will be a high-power company with mobile and no-end consumer essentially eliminated. The market rationale has sharpened. Power is the immediate constraint on increased compute. Therefore, power efficiency is the solution to expanding capacity. The architecture of AI infrastructure is in the early stage of being rebuilt from the grid to the XPU. The acquisition of cloud's complete Navitas platform and our grid to XPU strategy with SICK, GAN, and IVR, we are positioned not only to participate, but to enable the multi-year transition with more than one motivation point. The timing of our complete transformation is ideal, as we are at the intersection of two secular trends. The growth of AI compute and the re-architecture required to power it. From the grid to the XPU, our end goal is to help customers turn more of every available megawatt into useful AI compute. Specific to the fourth quarter, the midpoint of our guidance represents another consecutive quarter of double-digit sequential growth and more than 100% growth year-over-year, driven by high power and AI infrastructure, and contributing to further growth margin expansion. Our expectations for the fourth quarter also represent a return to growth for the full year, increasing approximately 7% in 26, with high-power growth more than upsetting our exit from the mobile business. We believe this is only the beginning, as we remain committed on the path of delivering continued growth, incremental growth margin, expansion, and ultimately profitability. With that, I'll pass the call to Tonya to review our third quarter financial results and outlook for the fourth quarter.