Q1 2022 Enovix Corp Earnings Call

May 11, 2022

Yeah.

Operator 3: Thank you for standing by, and welcome to Enovix Corporation's Q1 2022 Earnings Conference Call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. As a reminder, today's conference will be recorded. Now I'd like to introduce your host for today's program, Charles Anderson, Vice President of Investor Relations. Please go ahead.

Operator: Thank you for standing by, and welcome to Enovix Corporation's Q1 2022 Earnings Conference Call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. As a reminder, today's conference will be recorded. Now I'd like to introduce your host for today's program, Charles Anderson, Vice President of Investor Relations. Please go ahead.

Thank you for standing by. And welcome to Innovix Corporation's first quarter 2022 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. As a reminder, today's conference will be recorded. And now I'd like to introduce your host for today's program, Charles Anderson, Vice President of Investor Relations. Please go ahead.

Thank you for standing by and welcome to <unk> Corporation's first quarter 2022 earnings Conference call. Currently all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. As a reminder, today's conference will be recorded and now I'd like to introduce.

Your host for today's program Charles Anderson, Vice President of Investor Relations. Please go ahead.

Charles Anderson: Thank you. Hello, everyone, and welcome to Enovix Corporation's Q1 2022 results conference call. With us today are President, Chief Executive Officer, and Co-founder, Harold Rust, and Chief Financial Officer, Steffen Pietzke. We will also be joined today by Chief Commercial Officer, Cam Dales, and Chief Technology Officer and Co-founder, Ashok Lahiri, for the Q&A portion of the call. Harold and Steffen will review the operating and financial highlights, and then we'll take your questions. After the Q&A session, we'll conclude the call. Before we continue, let me kindly remind you that we released our Q1 2022 shareholder letter after the market closed today. It's available on our website at ir.enovix.com. A replay of this conference call will be available later today on the investor relations page of our website.

Thank you. Hello, everyone, and welcome to Innovix Corporation's first quarter 2022 results conference call. With us today are President, Chief Executive Officer and Co-Founder Harold Rust and Chief Financial Officer Stephan Pizzi.

Thank you Hello, everyone and welcome to <unk> Corporation's first quarter 2022 results conference call with US today are president and Chief Executive Officer and co.

Andre Harold Rust and Chief Financial Officer, Stefan Pizza, We will also be joined today by Chief Commercial Officer, Cam deals and Chief Technology Officer, and co founder of Shuffle here for the Q&A portion of the call.

We will also be joined today by Chief Commercial Officer Cam Dales and Chief Technology Officer and Co-Founder Ashok Lahiri for the Q&A portion of the call.

Harold and Stephan will review the operating and financial highlights, and then we'll take your questions.

Harold and Stefan will review, the operating and financial highlights and then we'll take your questions. After the Q&A session and we'll conclude the call before we continue let me kindly remind you that we released our first quarter 2022 shareholder letter after the market close today, it's available on our website at IR doesn't overstock Com a replay of this conference call will be available later today on.

After the Q&A session we'll conclude the call. Before we continue let me kindly remind you that we released our first quarter 2022 shareholder letter after the market closed today. It's available on our website at ir.inovix.com. A replay of this conference call will be available later today on the investor relations page of our website.

The Investor Relations page of our website.

Charles Anderson: Please note that the shareholder letter, press release, and this conference call all contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are based on current expectations and may differ materially from actual future events or results due to a variety of factors. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's shareholder letter and our filings with the Securities and Exchange Commission. All our statements are made as of today, 11 May 2022, based on the information currently available to us. We can give no assurance that these statements will prove to be correct, and we do not intend and undertake no duty to update these statements except as required by law.

Please note that the shareholder letter, press release, and this conference call all contain forward-looking statements that are subject to risks and uncertainty.

Please note that the shareholder letter press release and this conference call. All contain forward looking statements that are subject to risks and uncertainties. These forward looking statements are based on current expectations and may differ materially from actual future events or results due to a variety of factors for a discussion of factors that could affect our future financial results and business. Please refer.

These forward-looking statements are based on current expectations and may differ materially from actual future events or results due to a variety of factors.

For discussion of factors that could affect our future financial results in business, please refer to the disclosure in today's shareholder letter and our filings with the Securities and Exchange Commission.

<unk> to the disclosure in today's shareholder letter and our filings with the Securities and Exchange Commission.

All our statements are made as of today, May 11th, 2022 based on the information currently available to us. We can give no assurance that these statements will prove to be correct and we do not intend and undertake no duty to update these statements except as required by law.

All our statements are made as of today May 11, 2022 based on the information currently available to US we can give no assurance that these statements will prove to be correct and we do not intend and undertake no duty to update these statements except as required by law.

Charles Anderson: During this call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. You can find a reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the investor relations page of our website. I will now turn the call over to Harrold to begin. Harrold?

During this call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles.

During this call. We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. You can find a reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the Investor Relations page of our website I will now turn the call over to Harold to begin apparel.

You can find a reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the Investor Relations page of our website. I will now turn the call over to Harold to begin

Thank you, Charlie. Hopefully, everyone had a chance to review our shareholder letter, which detailed our first quarter.

Harrold Rust: Thank you, Charlie. Hopefully, everyone had a chance to review our shareholder letter, which detailed our Q1. I'll keep my comments high level around our progress in technology, manufacturing, and commercialization. Then Stefan will cover our financials, and we'll take your questions. As Charlie mentioned, we'll be joined by Cam and Ashok for that portion of the call. Let's dive in. Most important, our first production line of Fab One in Fremont is up and running, and we began shipping qualification cells in Q1. We expect to make our first shipments for product revenue to a technology leader in the wearable category in Q2. This marks a significant milestone and delivers on a commitment we made over a year ago, highly differentiating us from other advanced battery companies still working to develop and bring new battery technologies to market.

Thank you Charlie hopefully everyone had a chance to review our shareholder letter, which detailed our first quarter.

I'll keep my comments high-level around our progress in technology, manufacturing, and commercialization. Then Stephan will cover our financials and we'll take your questions.

I'll keep my comments high level around our progress in technology manufacturing and commercialization.

Then Stefan will cover off our financials and we'll take your questions.

As Charlie mentioned, we'll be joined by Cam and Ashok for that portion of the call.

Harley mentioned, we'll be joined by camera to shuck for that portion of the call.

So let's dive in.

Most important, our first production line of FAB1 in Fremont is up and running and we began shipping qualification cells in Q1.

Most important our first production line at Fab one in Fremont is up and running and we began shipping qualification sells in Q1, we.

We expect to make our first shipments for product revenue to a technology leader in the wearable category in Q2.

This marks a significant milestone and delivers on a commitment we made over a year ago, highly differentiating us from other advanced battery companies still working to develop and bring new battery technologies to market.

This marks a significant milestone and delivers on our commitment that we made over a year ago highly differentiating us from other advanced battery companies still working to develop and bring new battery technologies to market.

Harrold Rust: Moving into commercialization has not gone unnoticed by our customers. We have engagements with leading companies that want our revolutionary battery in order to enable features, functions, and form factors not previously available. Last week, we announced that we received an order from one of the largest consumer electronics companies in the world for our smartwatch battery. What makes this engagement so exciting is the potential for our technology to proliferate across this customer's broad consumer electronics product portfolio. After touring our Fab One, a senior leader at this customer told us, quote, "We need to move this technology into our mobile products quickly," and quote, "The line proves you can scale." Bolstering our value proposition to industry-leading customers with our announcement in March of BrakeFlow, a breakthrough technology in advanced lithium-ion battery safety.

Moving into commercialization has not gone unnoticed by our customers. We have engagements with leading companies that want our revolutionary battery in order to enable features, functions, and form factors not previously available.

Moving into commercial.

Commercialization has not gone unnoticed by our customers, we have engagements with leading companies that want our revolutionary battery.

In order to enable features functions and form factors not previously available.

Last week, we announced that we received an order from one of the largest consumer electronics companies in the world for our smart watch battery.

Last week, we announced that we received an order from one of the largest consumer electronics companies in the world for our Smartwatch battery.

What makes this engagement so exciting is the potential for our technology to proliferate across this customer's broad consumer electronics product portfolio.

After touring our Fab One, a senior leader at this customer told us, quote, we need to move this technology into our mobile products quickly. And quote, the line proves you can scale.

After touring our fab one a senior leader at this customer told us quote.

We need to move this technology into our mobile products quickly and quote the line proves you can scale.

Yeah.

Bolstering our value proposition to industry-leading customers was our announcement in March of BreakFlow, a breakthrough technology in advanced lithium-ion battery safety.

Bolstering our value proposition of two industry, leading customers with our announcement in March a break flow a breakthrough technology and advanced lithium ion batteries safety.

Harrold Rust: This innovation is enabled by our unique 3D architecture and allows us to add a significant layer of safety as we boost energy density. All of us are aware of the restrictions we face checking luggage with lithium-ion batteries when flying. We've all seen the headlines of battery fires and the terrible impact they've had on our industry and consumers. With BrakeFlow, we are pioneering a new path in battery safety. Customer response has been extremely positive, and we look forward to making BrakeFlow available in our battery cells next year. Now let's talk about scaling our capacity beyond Fab 1. Many of you have been wondering where we stand on Fab 2, our second plant production facility. We recognize that we've taken longer than we previously communicated to announce the Fab 2 location, but it's for a very good reason.

This innovation is enabled by our unique 3D architecture and allows us to add a significant layer of safety as we boost energy density.

This innovation is enabled by our unique three D architecture and allows us to add a significant layer of safety as we boost energy density.

All of us are aware of the restrictions we face checking luggage with lithium-ion batteries when flying.

All of US are aware of the restrictions, we face checking luggage with lithium ion batteries when flying.

And we've all seen the headlines of battery fires and the terrible impact they've had on our industry and consumers.

With BreakFlow, we are pioneering a new path in battery safety.

With break flow, we are pioneering a new path and batteries safety.

Customer response has been extremely positive, and we look forward to making break flow available in our battery cells next year.

Customer response has been extremely positive and we look forward to making brake flow available in our battery sales next year.

Now let's talk about scaling our capacity beyond FAB 1.

Now, let's talk about scaling our capacity beyond fab one.

Many of you have been wondering where we stand on Fab 2, our second plant production facility.

Many of you hadn't been wondering where we stand on fab two our second plant production facility.

We recognize that we've taken longer than we previously communicated to announce the FAB 2 location.

We recognize that we've taken longer than we previously communicated to announce the fab two location.

But it's for a very good reason.

Our engineering team has taken the learnings from Fab 1 and designed a significantly improved production line we call Gen 2.

Harrold Rust: Our engineering team has taken the learnings from Fab One and designed a significantly improved production line we call Gen Two, that is designed to be faster and require far less space than our current generation. Major portions of the Gen Two line will occupy half the space of Gen One with significantly higher output. This gave us the opportunity to reevaluate the optimum size for Fab Two and caused us to shift gears and focus on smaller facilities than we had been considering. On that note, I'm pleased to share today that we have begun placing orders for our Gen Two equipment and expect to have the full line ordered over the next several weeks.

Our engineering team has taken the learnings from fab, one and designed a significantly improved production line we call Gen. Two.

that is designed to be faster and require far less space than our current generation.

It is designed to be faster and require far less space than our current generation.

Major portions of the Gen 2 line will occupy half the space of Gen 1 with significantly higher output.

Major portions of the Gen. Two line will occupy half the space of Gen, one with significantly higher output.

This gave us the opportunity to re-evaluate the optimum size for FAB 2 and caused us to shift gears and focus on smaller facilities than we had been considering.

This gave us the opportunity to reevaluate the optimum size for fab, two and caused us to shift gears and focus on smaller facilities than we had been considering.

Okay.

On that note, I'm pleased to share today that we have begun placing orders for our Gen 2 equipment and expect to have the full line ordered over the next several weeks.

On that note I'm pleased to share today that we have begun placing orders for our gen. Two equipment and expect to have the full line ordered over the next several weeks.

That will allow us to take delivery at a Fab 2 location in the first half of 2023.

Harrold Rust: That will allow us to take delivery at a Fab 2 location in H1 2023, and we are confident in our ability to close on a site selection later this year that meets our needs. Our overriding goal remains the same, install capacity to scale to $1 billion in annual revenue with leading margins and serve the tremendous demand we see forming in our funnel. We intend to further augment our direct capacity with strategic joint venture or licensing deals that allow us to capture battery markets that require more capacity than we can put in on our own. Now I'll turn the call over to our CFO, Steffen, who will discuss our financials. Steffen?

That will allow us to take delivery at a fab to location in the first half of 2023 and.

And we are confident in our ability to close on a site selection later this year that meets our needs.

And we are confident in our ability to close on our site selection of later this year that meets our needs.

Our overriding goal remains the same, install capacity to scale to $1 billion in annual revenue with leading margins, and serve the tremendous demand we see

Our overwriting goal remains the same install capacity to scale to 1 billion in annual revenue with leading margins and.

And serve the tremendous demand, we see forming in our funnel.

We intend to further augment our direct capacity with strategic joint venture or licensing deals that allow us to capture battery markets that require more capacity than we can put in on our own.

We intend to further augment our direct capacity with strategic joint venture or licensing deals that allow us to capture battery markets that require more capacity than.

And then we can put it on our own.

Now I'll turn the call over to our CFO Stephan, who will discuss our financials.

Now I will turn the call over to our CFO , Stefan who will discuss our financials.

Stefan.

Steffen Pietzke: Thank you, Harold. Our detailed financials can be found in our shareholder letter, so I will spend my time covering a few high-level topics. First, starting this quarter, in addition to our GAAP reporting, we are providing a non-GAAP income statement that excludes stock-based compensation, warrant mark-to-market adjustment, and other non-cash and one-time items. We use non-GAAP financial information to evaluate our ongoing operations and for internal planning purposes. We believe that non-GAAP financial information may be helpful to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies. You can find a full reconciliation between our GAAP and non-GAAP metrics in our shareholder letter. Now turning to the results. We closed Q1 2022 with net cash of $408 million, up from $385 million in Q1 2021.

Thank you, Harald. Our detailed financials can be found in our shareholder letter. So I will spend my time covering a few high-level topics.

Thank you Howard our detailed financials can be found in our shareholder letter. So I'll spend my time, covering a few high level topics.

First, starting this quarter, in addition to our GAAP reporting, we are providing a non-GAAP income statement that excludes stock-based compensation.

First starting this quarter. In addition to our GAAP reporting we are providing a non-GAAP income statement that excludes stock based compensation.

warrant mark-to-market adjustment, and other non-cash and one-time items.

Lauren Mark to market adjustment and other noncash and onetime items.

We use non-GAAP financial information to evaluate our ongoing operations and for internal planning purposes.

We believe that non-GAAP financial information may be helpful to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies.

We believe that non-GAAP financial information may be had put to investors in assessing our operating performance and comparing our performance with competitors and other comparable companies.

you can find a full reconciliation between our GAAP and non-GAAP metrics in our shareholder latest.

You can find a full reconciliation between our GAAP and non-GAAP metrics in our shareholder letter.

Now turning to the results, we closed the first quarter of 2022 with net cash of $408 million up from $385 million in the fourth quarter of 2021, due to proceeds from the exercise of our public warrants of $52.8 million, partially offset by $19.7 million of cash used operationally.

Now turning to the results.

We closed the first quarter of 2022 with net cash of $408 million.

Up from $385 million in the fourth quarter of 2021.

Cam Dales: Due to proceeds from the exercise of our public warrants of $52.8 million, partially offset by $19.7 million of cash used operationally and $10.5 million of cash used on capital expenditures. We expect higher capital spending the rest of the year as we make payments for our Gen2 production line and our new automated pilot line, which we refer to as the Agility Line. We did not recognize product revenue in Q1 2022, consistent with our expectations. As Harrold mentioned, we continue to expect to begin recognizing product revenue from the sale of our batteries in Q2 2022, consistent with our previously reported goal. Our operating expenses in the first quarter were $25.1 million.

Steffen Pietzke: Due to proceeds from the exercise of our public warrants of $52.8 million, partially offset by $19.7 million of cash used operationally and $10.5 million of cash used on capital expenditures. We expect higher capital spending the rest of the year as we make payments for our Gen2 production line and our new automated pilot line, which we refer to as the Agility Line. We did not recognize product revenue in Q1 2022, consistent with our expectations. As Harrold mentioned, we continue to expect to begin recognizing product revenue from the sale of our batteries in Q2 2022, consistent with our previously reported goal. Our operating expenses in the first quarter were $25.1 million.

Due to proceeds from the exercise of our public bonds of $52 $8 million.

Partially offset by $19 $7 million of cash used operationally.

$10.5 million of cash used on capital expenditures.

And $10 $5 million of cash used on capital expenditures.

We expect higher capital spending the rest of the year as we make payments for our Gen 2 production line and our new automated pilot line, which we refer to as the agility line.

We expect higher capital spending the rest of the year as we make payments for our Gen. Two production line and our new automated pilot line, which we refer to as the agility light.

We did not recognize product revenue in the first quarter of 2022 consistent with our expectations.

We did not recognize product revenue in the first quarter of 2022, consistent with our expectations.

As Harold mentioned, we continue to expect to begin recognizing product revenue from the sale of our batteries in the second quarter of 2022, consistent with our previously reported goal.

As Harold mentioned, we continue to expect to begin recognizing product revenue from the sale of our batteries in the second quarter of 2022.

System with our previously reported Golar.

Our operating expenses in the first quarter were $25.1 million.

Our operating expenses in the first quarter were $25 $1 million.

Cam Dales: Excluding stock-based comp, our non-GAAP operating expenses in the quarter were $19.9 million, down from non-GAAP operating expenses of $20.8 million in Q1 2021, which also excludes stock-based comp. I want to highlight that once we begin shipping for product revenue, we will shift our factory headcount cost to cost of goods sold from R&D and start depreciating our production equipment also within cost of goods sold. Now let's discuss our expectation for 2022. For full year 2022, our outlook is unchanged. We expect to use between $190 million and $210 million of cash, of which we expect roughly 55% will be CapEx. We expect to generate revenue between $6 million and $12 million. As a reminder, our revenue will consist of both product revenue and non-recurring engineering, or NRE, service revenue.

Steffen Pietzke: Excluding stock-based comp, our non-GAAP operating expenses in the quarter were $19.9 million, down from non-GAAP operating expenses of $20.8 million in Q1 2021, which also excludes stock-based comp. I want to highlight that once we begin shipping for product revenue, we will shift our factory headcount cost to cost of goods sold from R&D and start depreciating our production equipment also within cost of goods sold. Now let's discuss our expectation for 2022. For full year 2022, our outlook is unchanged. We expect to use between $190 million and $210 million of cash, of which we expect roughly 55% will be CapEx. We expect to generate revenue between $6 million and $12 million. As a reminder, our revenue will consist of both product revenue and non-recurring engineering, or NRE, service revenue.

excluding stock-based comp our non-GAAP operating expenses in the quarter were 19.9 million dollars down from non-GAAP operating expenses of 20.8 million dollars in the fourth quarter of 2021 which also excludes stock-based comp.

Excluding stock based comp our non-GAAP operating expenses in the quarter with $19 $9 million.

Down from non-GAAP operating expenses of $20 8 million.

In the fourth quarter of 2021, which also excludes stock based comp.

I want to highlight that.

Once we begin shipping for product revenue, we will shift our factory headcount cost to cost of goods sold from R&D and start depreciating our production equipment also within cost of goods sold.

But once we begin shipping for product revenue is a shift our factory had cone costs to cost of goods sold from R&D and start depreciating. Our production equipment also was in cost of goods sold.

Now let's discuss our expectation for 2022. For full year 2022, our outlook is unchanged. We expect to use between $190 million and $210 million of cash.

Now, let's discuss our expectation for 2022 for full year 2022, our outlook is unchanged, we expect to use between $190 million and $210 million of cash.

of which we expect roughly 55% will be Capex.

Of which we expect roughly 55% will be capex.

we expect to generate revenue between $6 million and $12 million.

We expect to generate revenue between $6 million and $12 million.

As a reminder, our revenue will consist of both product revenue and non-recurring engineering or NRE service revenue.

As a reminder, our revenue with consists of both product revenue and nonrecurring engineering or in our service revenue.

To summarize, our balance sheet is strong, and we are investing in our commercialization engine, technology roadmap, and production capacity for scaling. I will now turn it back to Harold for closing.

Cam Dales: To summarize, our balance sheet is strong, and we are investing in our commercialization engine, technology roadmap, and production capacity for scaling. I will now turn it back to Harrold for closing remarks.

Steffen Pietzke: To summarize, our balance sheet is strong, and we are investing in our commercialization engine, technology roadmap, and production capacity for scaling. I will now turn it back to Harrold for closing remarks.

To summarize our balance sheet is strong and we are investing in our commercialization engine technology roadmap and production capacity for scaling.

I have and I'll turn it back to Howard for closing remarks.

Okay.

Harrold Rust: Thanks, Steffen. To summarize, Q1 was one of excellent progress for Enovix. A little over a year ago, we told you we would bring up a first-of-a-kind factory making an industry-leading lithium-ion battery for shipment in H1 2022. We delivered on that promise and are hard at work ramping our production this year in Fab One and moving forward with our Gen2 equipment destined for Fab Two. What we didn't tell you about a year ago were all the other innovations enabled by our unique architecture beyond just energy density. A first example of this is BrakeFlow, which we believe is a game changer in advanced lithium-ion battery safety. Before we close, I thought I would pass along comments from some industry leaders that have recently tested our batteries.

Thanks Stefan.

To summarize, the first quarter was one of excellent progress for Inova.

To summarize the first quarter was one that excellent progress for <unk>.

A little over a year ago, we told you we would bring up a first-of-a-kind factory making an industry-leading lithium-ion battery for shipment in the first half of 2022.

A little over a year ago. We told you we would bring up a first of a kind factory, making an industry, leading lithium ion battery for shipment in the first half of 2022.

We've delivered on that promise, and are hard at work ramping our production this year in Fab 1, and moving forward with our Gen 2 equipment destined for Fab 2.

We've delivered on that promise and are hard at work ramping our production this year in fab, one and moving forward with our Gen. Two equipment destined for fab two.

What we didn't tell you about a year ago were all the other innovations enabled by our unique architecture beyond just energy density.

Well, we didn't tell you about a year ago, where all the other innovations enabled by our unique architecture beyond just energy density.

A first example of this is BreakFlow, which we believe is a game-changer in advanced lithium-ion battery safety.

First example of this is break flow, which we believe is a game changer in advanced lithium ion battery safety.

Before we close, I thought I would pass along comments from some industry leaders that have recently tested our batteries.

Before we close I thought I would pass along comments from some industry leaders that have recently tested our batteries.

One said, quote, the best advanced battery we have seen. And quote, we are ecstatic with the cycle life.

Harrold Rust: One said, quote, "The best advanced battery we have seen," and quote, "We are ecstatic with the cycle life." Another said our battery is, quote, "The best silicon-enabled cell we tested by far," and quote, "Most silicon cells failed after 100 to 200 cycles." As you can see, this is really an exciting time at Enovix and for our customers. With that, I'd like to turn it back to the operator for your questions. Operator?

One said quote the best advanced battery, we have seen and quote we are ecstatic with the cycle of life.

Another said, our battery is, quote, the best silicon-enabled cell we've tested by far. And quote, most silicon cells failed after 100 to 200 cycles.

Another said our battery is quote the best Silicon enabled cell, we tested by far and quote most silicon cells failed after 100 to 200 cycles.

As you can see, this is really an exciting time at Innovix and for our customers.

As you can see this is really an exciting time at <unk> and for our customers.

With that, I'd like to turn it back to the operator for your question.

With that I'd like to turn it back to the operator for your questions operator.

Operator. Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Gabe Dow with Cowen. Your line is now open.

Operator 3: Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from George Gianarikas with Cowen. Your line is now open.

Operator: Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from George Gianarikas with Cowen. Your line is now open.

As a reminder to ask a question you need to press star one on your telephone to withdraw your question. Please press the pound key please standby, while we compile the Q&A roster. Our first question comes from Gabe Daoud with Cowen. Your line is now open.

Thank you. Afternoon, everyone, and thanks for all the prepared remarks. Maybe, Harold, just starting with the consumer electronic company that placed an initial order. So, what are the steps to get that into an active design win? And then, what kind of has to happen to have your battery be designed into other products across the portfolio?

George Gianarikas: Thank you. Afternoon, everyone, and thanks for all the prepared remarks. Maybe Harold, just starting with the consumer electronic company that placed an initial order. What are the steps to get that into an active design win? What kinda has to happen to have your battery be designed into other products across the portfolio?

Thank you afternoon, everyone and thanks for all the prepared remarks, maybe Harold just starting with the consumer electronic company. That's placed an initial order.

So what are the steps to get that into an active design win and then what what kind of has to happen too.

I have to have your battery would be designed into other products across the portfolio.

Harrold Rust: Yeah. Let me. I'll comment that briefly and then have Cam give a little bit more color. You know, we're super excited about this customer. It's an industry leader in this space. I think, you know, this first product they're working on with them is really a leader into a bunch of other opportunities and markets of that customer, and it's something that's very exciting for the company. I'll let Cam add a little bit more color to that.

Yeah, let me I'll comment that briefly and then have have come can give a little bit more color. You know, we're we're super excited about.

Yeah, Let me I'll comment on that briefly and then I'll have Tom can give a little bit more color.

We're super excited about.

It's about this customer it's an industry leader in this space and I think this first products.

about this customer. It's an industry leader in this space. And I think, you know, this first product they're working on with them is really a leader into a bunch of other opportunities and markets of that customer. And it's something that's very exciting for the company. And I'll let Cam add a little bit more color to that.

We're working on with them is really a is really a leader into a bunch of other opportunities in markets of that customer and it's something that's very exciting for the company and I'll, let cam add a little bit more color to that.

Sure, Harold, happy to do that. So yeah, as Harold mentioned, this is one of the largest consumer products company in the world.

Cam Dales: Sure, Harrold. Happy to do that. Yeah, as Harrold mentioned, this is one of the largest consumer products company in the world. They have a very sophisticated product development process, and, you know, it's a multi-step process, as you can imagine. You know, this is a company that has one of the premier brands in the world, and they take great care in making sure they protect that with the quality products that they launch. You know, from our perspective, we think this is a major step for us because the first part of their process is really technology verification. We've been working with them for significantly more than a year. We've sampled them multiple times, both out of our pilot lines.

Sure happy to do that so as Harold mentioned this is one of the largest <unk>.

Similar products company in the World.

They have a very sophisticated product development process, and it's a multi-step process, as you can imagine. This is a company that has one of the premier brands in the world, and they take great care in making sure they protect that with the quality products that they launch. From our perspective, we think this is a major success.

They have a very sophisticated product development process and it's a multi step process. As you can imagine. This is a company that has one of the premier brands in the world and they take great care in making sure they protect that with the with the quality of products that they launched so.

From our perspective, we think this is this is a major.

step for us because the first part of their process is really technology verification. So we've been working with them for

Step for us because the first part of their process is really technology.

<unk>, so we've been working with them for significantly more than a year, we've sampled them multiple times both.

significantly more than a year. We've sampled them multiple times, both out of our pilot lines.

Out of our pilot lines.

Cam Dales: You know, they've essentially tested those cells, verified our claims, and you know, given it the stamp of approval that it meets their product requirements. That's kind of a big deal. The next step in this particular product, they purchased batteries from our Fab One that will go into prototype watches of their design. They'll run them through their paces, do the integration with their electronics, at which point they'll then move towards customized cells for their volume product. They'll start over the next, you know, let's say, the next step of

and they've essentially tested those cells, verified our claims, and given it the stamp of approval that it meets their product requirements. So that's kind of a big deal.

And.

They've essentially tested those cells verified our claims and given at the stamp of approval that it meets their product requirements. So that's kind of a big deal.

The next step in this particular product, they've purchased batteries from our Fab One that will go into prototype watches of their design. They'll run them through their paces, do the integration with their electronics, at which point they'll then move towards customized cells for their volume product. And they'll start over the next, you know, let's say the next step.

The next step in this particular product.

<unk> purchased batteries from our from our fab one that will go into a prototype.

Watches of their design.

Run them through their paces do the integration with electronics.

At which point they'll they'll then moved towards customized sells for their volume product and they'll start over the next.

Let's say the next step of building thousands to tens of thousands of products, what they would likely keep in house for for testing purposes at which point when you pass that hurdle they move into full scale high volume production. So it's a fairly extended.

building thousands to tens of thousands of products which they would likely keep in-house for testing purposes, at which point when you pass that hurdle, they move into full-scale, you know, high-volume production. So, it's a fairly extended program, but we've gone through one of the key hurdles, and at this point, we're now actively moving towards the commercialization process.

Harrold Rust: Building thousands to tens of thousands of products, which they would likely keep in-house for testing purposes. At which point, when you pass that hurdle, they move into full-scale, you know, high volume production. It's a fairly extended program, but we've gone through one of the key hurdles and at this point we're now actively moving towards the commercialization process.

Cam Dales: Building thousands to tens of thousands of products, which they would likely keep in-house for testing purposes. At which point, when you pass that hurdle, they move into full-scale, you know, high volume production. It's a fairly extended program, but we've gone through one of the key hurdles and at this point we're now actively moving towards the commercialization process.

Program, but we've gone through one of the key hurdles and at this point, we're now actively moving towards the commercialization process.

Yeah.

Cool. Thanks, Ken. That's helpful. And then maybe just as a follow-up...

George Gianarikas: Cool. Thanks, Cam. That's helpful. Maybe just as a follow-up, shifting gears a bit to manufacturing scale. You obviously mentioned all the great learnings from the first line and comfortable now ordering Gen2 equipment for Fab 2. I think you've mentioned this before, if you can maybe just remind me, what's the output improvement on the with the Gen2 equipment on this, on the second line, either on a meters per minute or number of units or gigawatt-hour improvement, however, wherever you wanna disclose it. But just curious, what's that output improvement look like?

Cool Thanks, Tim that's that's helpful. And then maybe just as a follow up.

Shipping gears a bit to manufacturing scale, you obviously mentioned all the great learnings from the first line and comfortable now ordering Gen 2 equipment for Fab 2. And I think you've mentioned this before, if you can maybe just remind me, what's the output improvement on the?

Shifting gears a bit to manufacturing scale up you, obviously mentioned all the great learnings from the first line and comfortable now ordering Gen two equipment for for Fab two.

I think you've mentioned this before if you can maybe just remind me what's the what's the output improvement on the.

with the Gen 2 equipment on the second line, either on meters per minute or number of units or gigawatt hour improvement, however you want to disclose it. But just curious, what's that output improvement look like?

With the Gen. Two equipment on this on the second line either on our meters per minute or the number of units or gigawatt hour improvement wherever wherever you want to disclose it but just curious what's the what's that output improvement look like.

Yeah, I mean, I think about it calling it kind of two axes. One is just the absolute kind of space efficiency, right?

Harrold Rust: Yeah. I mean, I think about it along kind of 2 axes. One is just the absolute kind of space efficiency, right? If you look at the line, major portions of it are twice as efficient from a space standpoint in terms of, you know, how many units you can get out for, you know, a certain amount of square foot, which is obviously a huge factor when we think about, you know, kind of our expansion plans in Fab 2. And then beyond that, there are elements of the line which actually just have higher throughput in general, you know, on top of the space improvement, and that varies. You know, I think in some cases, you know, that could be somewhat significant, and in other cases it could be quite large.

Yeah, I mean, I think about it.

Colin in kind of two axes, one is just the absolute kind of space efficiency right.

you know, if you look at the line, major portions of it are twice as efficient from a space standpoint in terms of, you know, how many units you can get out for, you know, a certain amount of square foot, which is obviously a huge factor when we think about, you know, kind of our expansion plans in tab two. And then beyond that, there are elements of the line which actually just have higher throughput in general, you know, on top of the space improvement. And that varies, you know, I think in some cases, you know, that could be, you know,

If you look at the line major portions of it are twice a sufficient from a space standpoint in terms of you know how many units you can get out for a certain amount of square foot, which is obviously a huge factor. When we think about you know kind of our expansion plans in fab two.

And then beyond that there are elements of the line, which actually just have higher throughput in general on top of the space improvement and that varies I think.

In some cases that could be.

a small significant number and in other cases it can be quite large and you know one point I'll just make specifically is, you know, we've

You know a small significant number and in other cases, it could be quite large and you know one playing out just may.

Harrold Rust: You know, one point I'll just make specifically is, you know, a key part of our process is some laser patterning we do at the front end of our process. You know, we've been developing some strategic relationships with some of the industry leaders in the laser space to really leverage their know-how, get early access to new technologies. In some cases, you know, that's driving well beyond, you know, double-digit improvement in throughput for some of those processes, right? It can be very significant, and, you know, we wanna really harness all that advantage to build the most profitable line going forward.

Specifically as we've.

A key part of our process is some laser patterning we do at the front end of our process, and you know, we've.

A key part of our processes some laser patterning, we do at the front end of our process and we've.

We've been developing some strategic relationships with some of the industry leaders in the laser space to really leverage their know-how Get early access to new technologies and in some cases that you know That's driving well beyond, you know, double-digit improvement and throughput for some of those processes, right? so it can be very significant and you know, we want to really Harness all that advantage to build the most profitable line going forward

We've been developing some strategic relationships with some of the entries of leaders in the laser space to really.

Leverage their know how.

Get early access to new technologies and in some cases, that's driving well beyond double digit improvement in throughput for some of those processes right. So it can be very significant and we want to.

Really harness all that advantage to build the most profitable line going forward.

Gotcha. Really helpful. Thanks, Hal. And then just one more for me, and then I'll hop back in. But just where are we on getting to 900 watt-hours per liter? I think the roadmap had that hitting – or you hitting that number this year. Is that still the case?

George Gianarikas: Gotcha. Really helpful. Thanks, Harold. One more for me, and then I'll hop back in. Just, where are we on getting to 900 watt-hours per liter? I think the roadmap had that hitting or you hitting that number this year. Is that still the case? Thanks, guys.

Got it really helpful. Thanks, and then one just one more for me and then I'll hop back in but just.

Where are we on on getting to 900 watt hours per liter.

I think the road map had that hitting hitting that number. This year is that that's the case thanks guys.

Harrold Rust: Yeah. Thanks for that question again. Maybe I'll ask Ashok to talk about it since he's driving the R&D efforts.

Thanks for that question. Maybe I'll ask Ashok to talk about it, since he's driving the R&D efforts. Sure. Let me comment on that. Yes, that continues to be our goal. We plan to hit 900 watt-hours per liter in a product this year coming out of Fab One.

Yes, Thanks for that question, Dave maybe Alaska subject to talk about it since he's driving the R&D efforts sure. Let me comment on that yes that continue.

Ashok Lahiri: Sure. Let me comment on that. Yes, that continues to be our goal. We plan to hit 900 watt-hours per liter in a product this year coming out of Fab 1.

Continues to be our goal we plan to hit.

900 watt hours per liter in a product.

This year.

Coming out of Fab one.

George Gianarikas: Great. Thanks, Ashok.

Alright, Thank you Sir.

Operator 3: Thank you. Our next question comes from Colin Rusch with Oppenheimer. Your line is now open.

Operator: Thank you. Our next question comes from Colin Rusch with Oppenheimer. Your line is now open.

Thank you.

Our next question comes from Colin Rush with Oppenheimer. Your line is now open.

Our next question comes from Colin Rusch with Oppenheimer. Your line is now open.

Colin Rusch: Guys, with the changes in the process for Gen2, can you talk a little bit about your, you know, your CapEx number implications there? It seems like you should be able to get some savings out of that. As well as the site selection, you talked a little bit about having some diverse sites for Fab 2 and Fab 3, but it seems like you might be able to consolidate some of that. Just wanna understand, you know, 1, the cost numbers for your fast expansion, and 2, the geographic footprint that are being enabled by the Gen2 process.

Guys, with the changes in the process for Gen 2, can you talk a little bit about your CapEx number implications there? It seems like you should be able to get some savings out of that, as well as the site selection. You talked a little bit about having some diverse sites for Fab 2 and Fab 3, but it seems like you might be able to consolidate some of that. So, I just want to understand one of the cost numbers for your capacity expansion into the geographic footprint that are being enabled by the Gen 2 process.

Yes.

With the changes in the process for Gen. Two can you talk a little bit about your.

Your Capex number applications. There it seems like you should be able to get some savings out of that as well as the site selection.

A little bit about having some diverse sites for fetzer et cetera, but it seems like you might be able to consolidate some of that so I just want to understand that.

Loss numbers for your past expansion into the geographic footprint.

Being able to buy the degenerative process.

Harrold Rust: Maybe, Colin, I'll kinda answer those in reverse sequence and ask Stefan to comment a bit on the CapEx. From a site selection standpoint, obviously, having a much more efficient footprint for a fair amount of equipment has a significant benefit on the sites. You know, we were looking at a quite large, close to 1 million square feet building earlier this year for Fab 2. As we were working through kind of these Gen equipment designs and looking at what these vendors were capable of, we realized that we could do much better than we were thinking. You know, that allowed us to kind of not move forward with that one building 'cause we thought it was much too large for what we needed.

Yeah, maybe, Colin, I'll kind of answer those in reverse sequence and ask Stephan to comment a bit on the CapEx. From a site selection standpoint, obviously, having a much more efficient footprint for a fair amount of equipment has a significant benefit on the sites. You know, we were looking...

Yeah, maybe I can.

Oliver I'll kind of answer those in reverse sequence, then ask Stefan to comment a bit on the capex from a from a site selection standpoint, obviously.

Having a much more efficient.

Footprint for a fair amount of its equipment has a significant benefit on the sites.

You know what.

We were looking at quite large close to a million square foot building earlier. This year her fab two and as we were working through kind of these gen equipment designs and looking at what these vendors or cable, but we realize that we could do much better than we were thinking.

quite large, close to a million square foot building earlier this year for Fab Two. And as we were working through these gen equipment designs and looking at what these vendors were capable of, we realized that we could do much better than we were thinking. That allowed us to kind of not move forward with that one building, because we thought it was much too large for what we needed. And then on top of that, I think we realized that as we look at the customer funnel, that we're gonna need.

That you know that allowed us to kind of not move forward with that one building because we thought it was much too large for what we needed.

Harrold Rust: On top of that, I think we've realized that as we've been looking at the customer funnel, that, you know, we're gonna need more of a global presence, you know, both some domestic manufacturing and overseas manufacturing over the next several years. You know, between those two things, I think it's shaping kind of what we need out of Fab 2, and it's something, you know, quite a bit smaller than 1 million sq ft. We're actively working with one of the largest global real estate firms now, and we're actively looking at buildings. The good news of being a bit smaller on the building size is it just gives you a lot more opportunities for buildings that meet our needs.

And then on top of that I think we've realized that as we've looking at the customer funnel that we're going to need more.

more of a global presence, you know, both some domestic manufacturing and overseas manufacturing over the next several years. And you know, between those two things, I think it's shaping kind of what we need out of Fab 2. And it's something, you know, quite a bit smaller than the million square feet. We're actively working with one of the largest

More of a global presence.

Some domestic manufacturing and at overseas manufacturing over the next several years and.

Between those two things I think it's shaping kind of what we need out of fab two and it's something you know quite a bit smaller than.

And then the million square feet.

Sure.

We're actively working with one of the largest.

on global real estate firms now when we're actively looking at buildings. The good news of being a bit smaller in the building size is it just gives you a lot more opportunities for buildings that meet our needs. And we see a number of them based on the requirements we've given for that search that can hit our timeline to be ready for equipment.

Global real estate firms now and we're actively looking at buildings and the good news is being a bit smaller than the building size is it just gives you a lot more opportunities for buildings that meet our needs in.

Harrold Rust: We see a number of them based on the requirements we've given for that search that can hit our timeline to be ready for equipment for Fab 2. I'll ask Steffen to talk a bit about the CapEx. Obviously, efficiency of that Gen2 line is an important factor there as well.

We see a number of them based on their requirements. We gave we've given for that search they can hit our timeline to be ready for equipment.

And then I'll ask Stephan to talk a bit about the CAPEX. Obviously, efficiency of that Gen 2 line is an important factor there as well.

For Fab, two and then I'll ask I'll ask Stephanie.

Stefan talk a bit about the capex, obviously efficiency of the Gen. Two line is an important factor there as well.

Steffen Pietzke: Sure. Colin, in terms of CapEx, we finished the quarter with $408 million of cash, so we are fortunate to have sufficient funds here to put initial capacity into Fab 2. As a reminder from a guidance perspective, we're guiding around midpoint of the range, $110 million of CapEx for this year. Going back, we are reiterating spending capital on building out Fab 1, investing into Fab 2.

Sure. Colin, in terms of CAPEX, we finished the quarter with $408 million of cash. So we are fortunate to have sufficient funds here to put initial capacity into FAB 2. As a reminder from a guidance perspective, we're guiding around midpoint of the range $110 million of CAPEX for this year.

Sure Colin in terms of Capex.

We finished the quarter was $408 million of cash. So we are fortunate to have sufficient funds here too to put initial capacity into fab two.

As a reminder, from a guidance perspective.

We guiding of around the midpoint of the range $110 million of Capex for this year.

And going back, we are reiterating spending capital on building out FAB 1.

And going back we are reiterating spending.

Capital on building out fab one.

Investing into a fab to Jen.

Gen 2 line and then also putting capital to work for our agility line that helps us to move customer quicker to the funnel. In terms of long-term plan and accelerating our plan, we have multiple avenues to do that more efficiently in a way of

Harrold Rust: Gen2 line, and then also putting capital to work for our Agility Line that helps us to move customer quicker to the funnel. In terms of long-term plan and accelerating our plan, right, we have multiple avenues to do that more efficiently, in a way of taking opportunity on a joint venture partnership that we alluded to. In outer years, certainly we use our free cash flow to put more capacity in. One point to mention here, strategic partnerships. The company has a history of having strategic partners or customers stepping up. The fourth point in that area, you all have read a lot of initiatives in the US to bring US manufacturing back.

Steffen Pietzke: Gen2 line, and then also putting capital to work for our Agility Line that helps us to move customer quicker to the funnel. In terms of long-term plan and accelerating our plan, right, we have multiple avenues to do that more efficiently, in a way of taking opportunity on a joint venture partnership that we alluded to. In outer years, certainly we use our free cash flow to put more capacity in. One point to mention here, strategic partnerships. The company has a history of having strategic partners or customers stepping up. The fourth point in that area, you all have read a lot of initiatives in the US to bring US manufacturing back.

Gen. Two line and then also putting capital to work for our agility line that helps us to move.

Customer click out to the funnel.

In terms of long term plan and accelerating our plan right you have.

We have multiple avenues to two.

To do that more efficiently in a way of taking opportunity on the joint venture partnership that we alluded to in the outer years, certainly you use our free cash flow to put more capacity in.

taking opportunity on a joint venture partnership that we alluded to in our outer years. Certainly, we use our free cash flow to put more capacity in.

And.

One point to mention here, strategic partnerships. The company has a history of having strategic partners or customers stepping up. And then the fourth point in that area, you all have read a lot of initiatives in the U.S. to bring U.S. manufacturing back. There are certain vehicles that we can tap into, and we have internal initiatives going on in that area.

One point to mention here strategic partnerships that the company has a history of having strategic partners or customers stepping up and then the fourth point in that area you all have read a lot of.

Initiatives in the U S to bring U S manufacturing back to a certain vehicles.

Harrold Rust: There are certain vehicles that we can tap into, and we have internal initiatives going on in that area.

Steffen Pietzke: There are certain vehicles that we can tap into, and we have internal initiatives going on in that area.

That we can tap into and behalf internal initiatives going on in that area.

Colin Rusch: Okay. That's helpful. With the BrakeFlow technology, it seems to me that you're able to potentially eliminate some of the extra weight and, you know, functionality of, you know, something like a vehicle pack design. I'm just curious about some of the efficiencies and some of the monetization that you guys can target with that technology for, you know, safety and elimination of some of the fire retardants and other elements that go into-

Okay, that's helpful. And then with the BreakFlow technology, it seems to me that you're able to potentially eliminate some of the extra weight and functionality of something like a vehicle pack design. I'm just curious about some of the efficiencies and some of the monetization that you guys can target with that technology for safety and elimination of some of the fire returns and other elements that go into additional packs.

Okay. That's helpful.

It's a breakthrough technology it seems to me that you're able to potentially eliminate some of the the extra weight.

Functionality.

Like a vehicle pack design.

I'm just curious about some of the efficiencies in some of the monetization that you guys can target with that technology for safety and elimination of some of the higher returns on other elements.

Harrold Rust: Do you think?

Colin Rusch: traditional packs.

So just taking all of that.

Tax.

You say monetization? Did I hear you say that? Yeah. I'm just wondering if you can charge more, simply putting it around. Maybe I'll start off and, you know, Bashuk can talk a little bit about technology side and Cam can maybe talk about it from the customer perspective. You know, I think at a high level, I'm super excited about BreakFlow because I think...

Harrold Rust: Colin, did you say monetization? Did I hear you say that?

Because you say monetization did I hear you say that yeah, I mean, I'm just wondering you can charge more.

Colin Rusch: Yeah. I mean, I'm just wondering if you can charge more, I mean, simply?

Harrold Rust: Yeah, yeah.

Colin Rusch: Simply putting it right.

Yeah, Hey, putting around so maybe I'll start off and you know.

Harrold Rust: Maybe I'll start off, you know, well Shuk can talk a little bit about technology side, and Cam can maybe talk about it from the customer perspective. You know, I think at a high level, I'm super excited about BrakeFlow because I think, you know, as we all know, battery safety has been a huge issue in the past. It's kinda plagued the industry that we're all acutely aware of. As you think about kind of the demand of batteries going forward, we're all wanting more energy, which kinda just raises the bar on kind of the safety equation. You know, our architecture, we think, just gives us a remarkably unique opportunity to have a true safety differentiator that changes that playing field.

Sure I can talk a little bit about technology site in Cam can maybe talk about it from the customer perspective.

At a high level I'm I'm Super excited about break flow because I think.

You know, as we all know, battery safety has been a huge issue in the past. It's kind of plagued the industry that we're all acutely aware of.

As we all know battery safety has been a huge issue in the past has kind of plagued the industry that we're all acutely aware of and as you think about kind of the demand of batteries going forward. We're all wanting more energy, which kind of just raises the bar on kind of the safety equation.

as you think about kind of the demand of batteries going forward, we're all wanting more energy, which kind of just raises the bar on kind of the safety equation. And, you know, our architecture, we think, just gives us a remarkably unique opportunity to have a true safety differentiator that changes that playing field. And so we're super excited about that. And we think it, you know, has benefits technology-wise, but also certainly as we talk with customers.

You know our architecture, we think just gives us a remarkably unique opportunity to have a true safety differentiator the changes that that playing field and so we're super excited about that and we think it.

Harrold Rust: We're super excited about that, and we think it, you know, it has benefits technology-wise, but also certainly as we talk with customers, it's a super attractive thing for them that, you know, is very much supportive of our premium pricing model, and Cam can talk about that first. But maybe, Shuk, you can talk a little bit about from a technology standpoint first, to his question.

You know it has benefits technology wise, but also certainly as we talk with customers.

It's a super attractive thing for them that, you know, is very much supportive of our premium pricing model. And Cam can talk about that first. But maybe, Shik, you can talk a little bit about, from a technology standpoint, first to his question.

It's a super attractive thing for them that is.

Very much supportive of our premium pricing model and camp can talk about that first but maybe you can talk a little bit about from a technology standpoint first.

Curious question.

Sure. I'd be happy to. So, you know, I think we're all aware of how battery fires have.

Ashok Lahiri: Sure. I'd be happy to. You know, I think we're all aware of how battery fires are a critical factor that you know that people are aware of that cause you know all kinds of damage to property and potentially to people. You know, the BrakeFlow technology essentially addresses at the cell level. It adds a layer of safety protection that prevents what you know most of these incidents start off with an internal short that leads to a thermal runaway, and this protection prevents that internal short, in many cases, to turn into a situation where the battery catches fire. It's very unique, and it is really a direct application of our architecture to solve a problem in a way that would be difficult for others to copy.

Sure I'd be happy to.

So.

I think we're all aware of.

No matter refiners have.

are a critical factor that people are aware of that cause all kinds of damage to property and potentially to people. The BreakFlow technology essentially addresses at the cell level, it adds a layer of safety protection.

Our critical factor of that.

People are aware of that cause.

All kinds of damage to property and potentially to people.

The breakthrough technology.

Essentially.

<unk> at the Salon level.

Yeah.

Adds a layer of safety protection.

that prevents what, you know, most of these incidences start off with an internal shore.

That prevents what most of these incidents so start off with a with an internal short.

that leads to a thermal runaway and this protection prevents.

That leads to a thermal runaway.

Protection prevents.

that internal short in many cases to turn into a situation where the battery catches fire.

We have internal short in many cases to turn into a situation where the battery catches fire.

And it's very unique and it is really a direct.

And it's very unique and it is.

Really a direct.

application of our architecture to solve a problem in a way that would be difficult for others to cop.

Application of our architecture.

To solve a problem in a way that would be difficult for others to copy.

And, you know, to answer your question on PAC design, sure. It adds a huge layer of, you know, additional advantages in improving the PAC design as a result of having a cell that is more resistant to go.

Ashok Lahiri: You know, to answer your question on pack design, sure, it adds a huge layer of you know, additional advantages in improving the pack design as a result of having a cell that is more resistant to go into runaway. I should also explain that, you know, our cell has many other properties that make the pack a much better you know, potential for it to be designed in a much better way. For example, the thermal properties of our cells are significantly better than a traditional cell, and that plays a huge role in making the pack design more efficient and potentially cheaper. I can hand it over to Cam, and he can talk more about the impact from a customer's standpoint.

And.

To answer your question on pack design sure. It adds huge later.

Of an additional advantages and improving the pack design as a result of having a cell that has more resistant.

To go into runaway.

I should also explain that our cell has many other properties that make the PAC a much better

I should also explain that you know our south has many other properties that make the pack.

A much better.

you know, potential for it to be designed in a much better way. For example, the thermal properties of our cells are significantly better than a traditional cell. And that plays a huge role in making the PAC design more efficient and potentially cheaper.

Potential for it to be designed in a much better way for example, the thermal properties of ourselves are significantly better than a traditional sale and that plays a huge role in making the pack design board of Fisher and potentially cheaper.

And I can hand it over to Cam, and he can talk more about the impact from a customer's standpoint. Yeah, sure. Just to add to what you said, you know, I think that the feedback from customers is universally positive. And I would say that

And I can you can hand, it over to Cam and he can talk more about the impact from our customers' standpoint sure sure just just to add to what you've said I think the feedback from customers is universally positive and I would say that.

Harrold Rust: Yeah. Sure, Shuk. Just to add to what you've said. You know, I think the feedback from customers is universally positive, and I would say that, amongst the different categories where we're active, the larger the battery pack or the larger the batteries, the more important they believe the BrakeFlow technology is. So we've gotten some really great feedback from our automotive OEMs, for instance. You know, these guys are evaluating multiple options, to try and get to higher energy densities. Of course, looking across the technology range from silicon-anode companies to solid-state. We think this differentiates us really quite dramatically relative to that competition.

Amongst the different categories where we're active, the larger the battery pack, or the larger the batteries, the more important they believe the brake flow technology is. So we've gotten some really great feedback from our automotive OEMs, for instance.

Amongst the different categories, where we're active the larger the battery pack or the larger the batteries. The more important they believe break flow technology is so we've gotten some really great feedback from our automotive Oems for.

And, you know, these guys are evaluating multiple options to try and get to higher energy densities.

<unk> for instance.

And you know these guys are evaluating multiple options to try and get to higher energy density.

Of course, looking across the technology range from silicon anode companies to solid-state, and we think this differentiates us really quite dramatically relative to that competition.

Of course looking across the technology range from Silicon anode companies too to solid state and we think this differentiates us really quite dramatically relative to that competition.

As people try to build higher and higher energy cells, of course, the hurdle for safety goes up and up. And the question is, what can you do about it?

Harrold Rust: People try to build higher and higher energy cells. Of course, the hurdle for safety goes up and up, and the question is what can you do about it? One way is to try and handle it at the pack. The way I think about the question of ASP and value is that, you know, the Enovix cell by its architecture, including the safety aspects, is really pulling functions out of the pack and embedding it into the cell, essentially without any additional cost. We think there's a real value there to our solution.

As people try to build.

Build higher and higher energy.

Cells of course, the the hurdle for safety goes up and up and the question is what what can you do about it.

One way is to try and handle it at the pack. The way I think about the question of ASP and value is that, you know, the Inovic cell by its architecture, including the safety aspects

One way is to try and handle it at the pack the way I think about the question of Asps and value is that the inova excel by its architecture, including the safety aspects is really pulling functions out of the pack and embedding it into the cell essentially without any additional cost and so we think there's real value there.

is really pulling functions out of the pack and embedding it into the cell, essentially without any additional cost. And so we think there's a real value there to our solution.

So our solution.

Colin Rusch: Great. Thanks so much, guys.

Alright, thanks, so much guys.

Thank you. Our next question comes from Gus Richard with Northland. Your line is open.

Operator 3: Thank you. Our next question comes from Gus Richard with Northland. Your line is open.

Operator: Thank you. Our next question comes from Gus Richard with Northland. Your line is open.

Thank you.

Our next question comes from Gus Richard with Northland. Your line is open.

Yes, thanks for taking the question. Just on FAB 2, with your ability to shrink your footprint, do you expect the revenue output of that FAB to be the same as you originally thought? And also, if you just give the timing of first revenue of FAB 2, that'd be helpful.

Gus Richard: Yes, thanks for taking the question. Just on Fab Two, with your ability to shrink your footprint, do you expect, you know, the revenue output of that fab to be the same as you originally thought? You know, and also, if you just give the timing of first revenue of Fab Two, that'd be helpful.

Yeah. Thanks for taking the question just on fab two what's your ability to shrink your footprint do you expect.

The revenue output of that had to be the same as you originally thought.

And.

And also.

If you could just give the timing of first revenue offset to that would be helpful.

Yeah, thanks. Thanks for that question, Gus. You know, I think I would think about it on two axes, right?

Harrold Rust: Yeah, thanks. Thanks for that question, Gus. You know, I think I would think about it on 2 axes, right? We are working as fast as possible to get Gen Two equipment in. You know, we stated that'll be in H1 next year, and that'll start producing, you know, revenue next year as well. To your question about does that mean Fab 2 will be larger from a capacity standpoint? You know, I think we think about that kind of more of an aggregate. You know, we're committed to still get to our billion-dollar revenue run rate, as quickly as we can. I would think about it more in terms of our global footprint.

Yeah. Thanks, Thanks for that question, yes.

I think.

I would think about it on two axes right. We are working as fast as possible they get gen. Two.

working as fast as possible to get gen two uh... equipment in uh... you know we stated that'll be in the first half of this next year and that'll start producing revenue next year as well

Equipment in.

We stated that it'll be in the first half of this next year and that will start producing revenue next year as well.

To your question about will we put, does that mean FAB 2 will be larger from a capacity standpoint? You know, I think we remain, we think about that kind of more of an aggregate. You know, we're committed to still get to our billion dollar revenue run rate as quickly as we can.

To your question about will we put but does that mean fab two will be larger from a capacity Stanley.

Thank you.

We remain we think about that kind of more of an aggregate we're committed to still get to a billion dollar revenue run rate as quickly as we can but I would think about it more in terms of our global footprint.

But I would think about it more in terms of our global footprint. You know, we strongly believe that over the next several years, we're going to need.

Harrold Rust: You know, we strongly believe that over the next several years, we're gonna need both a domestic presence as well as an Asian presence. The exact mix of how much is in each one, I think, is not determined yet. It is most likely at this point that it will not be a single Fab 2 servicing the billion-dollar run rate along with Fab 1. There'll be a Fab 3 as a key component of that as well.

We strongly believe that over the next several years, we're going to need both a domestic presence as well as in anything presence and the exact mix of how much is in each one I think is not determined yet.

But the but the domestic presence as well as an agent presence and the exact mix of how much is in each one I think is not determined yet.

But it is most likely at this point that it will not be a single FAB 2 service thing, the billion dollar run rate along with FAB 1. There'll be a FAB 3 as a key component of that as well.

But it is it is most likely at this point that it will not be a single fab to servicing the billion dollar run rate along with fab one there'll be a fab three is a key component of that as well.

Gus Richard: Got it. Just, you know, with the new Gen Two equipment, you know, you add in lines, and how much is the, you know, how much do you estimate the incremental revenue is for each line, and how much CapEx is required for a line?

Got it. And then, just, you know, with the new Gen 2 equipment, you know, you add in lines, and how much is the, you know, how much do you estimate the incremental revenue is for each line, and how much CapEx is required for a line?

Got it and then just.

Yeah.

The new Gen two equipment.

You add in lines and how much is the how much do you estimate the incremental revenue was for each line and how much capex is required for a line.

Harrold Rust: Yeah. I think, you know, as we mentioned, there's increased output, there's increased efficiency. It's probably a bit early to be giving specific guidance on kind of, you know, what's the nameplate revenue capacity for each line. It obviously is dependent on the products we're making. I think as we get a bit further along this year, with those lines coming up, and seeing, you know, that we're hitting our capacity numbers, we can start giving some more, you know, guidance around those things. I think we just like to be a bit further along before we kind of talking about those things.

Yeah, So I think.

You know, as we mentioned, there's increased output, there's increased efficiency. It's probably a bit late, I'm sorry, a bit early to be giving specific guidance on kind of, you know, what's the nameplate revenue capacity for each line. It obviously is dependent on the products we're making. I think as we get a bit further along this year with those lines coming up and seeing, you know, that we're hitting our capacity numbers, we can start giving some more.

As we mentioned there is increased output there is increased efficiency.

It's probably a bit late I'm, sorry, a bit early to be giving specific guidance on kind of what's the what's the nameplate revenue capacity for each line. It obviously its dependent on the products are making.

I think as we get a bit further along this year with those lines coming up and seeing you know that we're hitting our capacity numbers, we can start giving some more some more guidance around those things, but I think we just like to be a bit further along before we kind of talking about those things.

some more guidance around those things. But I think we'd just like to be a bit further along before we kind of talk about those things.

Got it. And then last one for me, you know, just any update on your program, your program with the DOE and, and, you know, automotive in general, how is that development program going? And, and sort of how is your initial foyer into discussions with the auto guys?

Gus Richard: Got it. Last one from me. You know, just any update on your program with the DOE and you know, automotive in general, how is that development program going and sort of how is your initial foray into discussions with the auto guys going?

Got it and then last one for me.

Just any update on Europe .

Sure.

Program with the Doe.

And automotive in general how is that development program going in and sort of how is your initial planned discussions with the auto guys Scott.

Yeah, I think, you know, I think that's it's a great story. You know, we're kind of proceeding along, I think, three different angles there. As we mentioned before, we've kind of been actively sampling batteries into the consumer set, you know, over the last six, nine months, that's continuing.

Harrold Rust: Yeah, I think, you know, it's a great story. You know, we're kind of proceeding along, I think, three different angles there. As we've mentioned before, we've kind of been actively sampling batteries into the consumer set, you know, over the last 6, 9 months. That's continuing. The DOE program you talked about, we're kind of halfway through that 3-year program. I'd have to say the results on that continue to be pretty stellar in terms of our demonstration of our architecture with EV class cathodes paired with our silicon anodes. That's been very good. The last piece I think is that we've, you know, put in place a new unit within the company called Enovix Mobility.

Yeah, I think yeah.

I think it's a great story.

We're kind of proceeding along I think three different angles, there as we've mentioned before we've kind of been actively.

Sampling batteries into that consumer set in over the last six nine months that's continuing.

The DOE program you talked about, we're kind of halfway through that three-year program, and I'd have to say the results on that continue to be pretty stellar.

The Doe program, you talked about we're kind of halfway through that three year program and I'd have to say the results on that continued to be pretty stellar in terms of our demonstration of our architecture with.

in terms of our demonstration of our architecture with EBK.

E V class cathodes paired with our silicon anodes, that's been very good and then the last piece I think is that we've you know we've.

cathodes paired with our silicon anodes, that's been very good.

And then the last piece, I think, is that we've put in place a new unit within the company called Innovix Mobility. We've hired some key resources on the outside.

Put in place a new unit within the company call. It stability, we've hired some key resources on the outside.

Harrold Rust: We've hired some key resources on the outside, in that group, and we've got, you know, some really strong leadership across the EV space to kind of drive that. We're having pretty regular conversations with EV players today, and I think the excitement's there with those guys. Obviously, you know, there's work ahead to do that, but that's a big focus for us going forward, and we think long term, it's a big growth opportunity for the company.

um in that group and we've got you know some really strong leadership um across across the EV space to kind of drive that and we're having

In that group and we've got some really strong leadership.

Cross across EV space to kind of drive that and we're having.

pretty regular conversations with EV players today, and I think the excitement's there with those guys. Obviously, there's work ahead to do that, but that's a big focus for us going forward, and we think long-term, it's a big growth opportunity for the company.

Pretty regular conversations with E V players today, and I think the excitement there with those guys.

We see you know Theres a work ahead to do that but that's a that's a big focus for going is for us going forward and we think long term big big growth opportunity for the company.

Gus Richard: Got it. Okay, thanks for the update.

Got it okay. Thanks for the update.

Operator 3: Thank you. Our next question comes from Ananda Baruah with Loop Capital. Your line is open.

Operator: Thank you. Our next question comes from Ananda Baruah with Loop Capital. Your line is open.

Thank you.

And our next question comes from Ananda Bruja with Loop Capital. Your line is open.

Our next question comes from Ananda Baruah with loop capital Your line is open.

Hey, good afternoon guys. Thanks for taking the questions. Appreciate it.

Ananda Baruah: Hey, good afternoon, guys. Thanks for taking the question. Appreciate it. Just a couple if I could. Maybe, Harrold, just to stick there on the conversations about the different fabs. In the shareholder letter, you make mention of Fab Three, and I think say a future facility will likely be needed after Fab Two to localize production. Is that any different than what you've told us in the past? It sounds like it could be similar, but you guys also highlighted it in the shareholder letter. Just wanted to ask about any incremental context on that. I have a quick follow-up. Thanks.

Hey, good afternoon, guys. Thanks for taking the question.

Just a couple, if I could, maybe, Harold, just to stick there on the conversations about the different FAPs. In the shareholder letter, you make mention of FAP3, and I think, say, a future facility will likely be needed after FAP2 to localize production. Is that any different than what you've told us in the past?

Got it.

Just a couple if I could maybe.

Carol just to stick there on the conversations about.

Good with that.

In the shareholder letter a unique niche in fab three and I think Jay if he can kill you will likely be needed after that to the localized production is that any different than what you've told us in the past.

It sounds like it could be similar, but you guys also highlighted it in the Sheldon letter just so I wanted to ask about it in the incremental context on that, and then I have a quick follow-up thing.

It sounds like it could be similar but you guys also highlighting that.

In the shoulder like I'd, just like to ask you that would be any incremental contacts on that and I have a quick follow up thanks.

Yeah, I think we've discussed in the prior calls our need to have local capacity close to our customers, right? Both domestically and Asia. So I don't think that's, that's probably not.

Harrold Rust: Yeah. I think we've discussed in the prior calls our need to have local capacity close to our customers, right, both domestically and Asia. I don't think that's probably not new information. I would say, you know, from a location standpoint, you know, we've been searching for Fab 2 facilities and Fab 3 at the same time, right, that are, you know, through this global real estate firm. Our plan is to basically identify those optimum locations, so we're ready to act on them, as quickly as we can and as quickly as the demand requires we do it.

Yeah, I think we've discussed in prior calls our.

Our our needs to have local capacity close to our customers right. Both domestically in Asia. So I don't think that that's probably not.

not new information. I would say, you know, from a location standpoint, you know, we've been searching for Fab 2 facilities and Fab 3 at the same time, right, that are, you know, through this global real estate firm. And so, you know, our plan is to basically identify those optimum locations so we're ready to act on them as quickly as we can and as quickly as the demand requires we do it.

Not new information.

I would say from a from a location standpoint.

Where we've been we've been searching for fab two facilities and fab three at the same time right that are you know through this global real estate for them and so our plan is to basically identify optimum locations. So we're ready to act on them.

Quickly as we can and as quickly as demand requires we do it.

Oh, interesting. I got it. And so, any context around, you know, sort of, I mean, I don't want to put you on this, I mean, I know you can't commit now, and I wouldn't be responsible, but if you identify, I guess I'm sort of trying to stitch this together. I guess the question, Harold, is any sense of, you know, sort of when you may begin to settle on factory facilities, and I'm asking it this way, if the firm helps you identify it now, you know, how long could you wait? Yeah, I mean.

Ananda Baruah: Oh, interesting. I got it. Any context around, you know, sort of, I mean, I don't wanna put you on the spot. I mean, yeah, I know you can't commit now, that wouldn't be responsible, but, I guess I'm sort of trying to stitch this together. I guess the question, Harrold, is any sense of, you know, sort of when you may begin to settle on Fab Three facilities? I'm asking it this way, if the firm helps you identify it now, you know, how long could you wait, you know, to actually close on the Fab Three?

Interesting I got it.

Any any context around sort of the other one.

Yeah.

I know you can't commit now that wouldn't be responsible but.

If you identified I guess I'm sort of trying to stay just again I get the question Harold.

Any sense of you know.

Well you may begin to settle on fab T cell would be.

And I'm asking in Pennsylvania. The firm helps you identify it now how long could you could you wait to.

Yes.

Great.

Harrold Rust: Yeah. I think I kinda look at it kind of from a milestone perspective. I mean, you know-

Yeah, so I think I kind of look at it kind of from a milestone perspective. I mean, you know, we're going to, we're in the, we're ordering our Gen 2 lines right now destined for Fab 2. You know, the focus initially will be getting those lines up in Fab 2 working. And then once we're at a point where we're satisfied with the performance, I think we're going to want to move forward.

So I think.

I kind of look at it kind of from a milestone perspective, I mean, you know.

Harrold Rust: We're ordering our Gen2 lines right now destined for Fab 2. You know, the focus initially will be getting those lines up in Fab 2 working. Once we're at a point where we're satisfied with the performance, I think we're gonna wanna move forward with Fab 3, you know, as quickly as we can. We're not waiting though, right? We're actually doing some of that searching now, right? That we-

We're in the we're ordering our gen. Two lines right now destined for fab two.

The focus initially will be getting those lines up in fab two working.

And then once we're at a point, where we're satisfied with the performance I think we're going to want to move forward.

with Fab 3 as quickly as we can. We're not waiting, though. We're actually doing some of that searching now, so that we know where that would be. But I think we want to just make sure we're not cutting any corners on the learning on the Gen 2 equipment before we start trying to expand into two locations before we get the first one running.

With fab three.

As quickly as we can.

We're not waiting, though right, we're actually doing some of that searching now right. So that we you know we know where that would be but I think we will we want to just make sure we're not cutting any corners on the learning on the Gen. Two equipment before we start trying to expand into two locations before we get the first one running right.

Ananda Baruah: Mm-hmm.

Harrold Rust: You know, we know where that would be. I think we wanna just make sure we're not cutting any corners on the learning on the Gen 2 equipment before we, you know, start trying to expand into two locations before we get the first one running right?

That's very helpful and thanks for that and then super helpful and a quick follow-up is can you remind us how much of the 6 to 12 million this year will be product revenue versus NRE revenue or any sort of relative representation?

Ananda Baruah: That's very helpful. Thanks for that. Super helpful. A quick follow-up is, can you remind us how much of the $6 to 12 million this year will be product revenue versus NRE revenue or at least sort of relative representation?

That's very helpful.

Thanks for that and then.

Super helpful and a quick follow up can you remind us.

How much how much of the of the $6 million to $12 million this year.

Will the product revenue and our revenue or at least sort of that sort of relative to that presentation.

Okay.

Steffen Pietzke: Yes, Stefan and Ananda. From a breakout, the service revenue, the non-recurring engineering revenue is certainly like a significant component. As to the specific breakout, we are not guiding towards the specific breakout. Maybe as a reminder, these service revenue, they are milestone-based, right, so they are more lumpy and, we at the end of the day, make delivery from the production line. Because of those milestones, it's to be seen how it's gonna unfold over the year. As Harrold alluded to from the product revenue, we are anticipating to ship first this quarter.

Yes, definitely, Amanda. From a breakout, the service revenue, the non-recurring engineering revenue is certainly like a significant component.

This is Stephan and then.

From a break out.

The service revenue the nonrecurring engineering nearing revenue is certainly like a significant component.

As to the specific breakout, we are not guiding towards the specific breakout. Maybe as a reminder, these service revenues, they are milestone-based, right? So they are more lumpy.

As to the specific break out we are not guiding towards the specific breakdown maybe as a reminder, these services.

Service revenue, they're milestone based right, so they're more lumpy and.

We, at the end of the day, make delivery from the production line, but because of those milestones, it's to be seen how it's going to unfold over the year.

We at the end of the day make delivery from the production line, but because of those milestones.

It will be seen how it is going to unfold over the year.

And as Harold alluded to, from the product revenue, we are anticipating to ship first this quarter.

And as Howard alluded to from the <unk>.

Product revenue, we anticipate anticipating to ship.

This quarter.

Can you give us any context on, for the NRE revenue, what types of applications are available?

Ananda Baruah: All right. Thanks, Steffen. That's helpful. Just real quick on that. Can you give us any context on the NRE revenue, what types of applications they may, you know, may be contributing to that you see coming this year? That's it for me. Thanks a lot.

Alright, Thanks, that's helpful.

Real quick on that any can you give us any context on that for that.

<unk> revenue what types of applications.

they may be contributing to that that you see coming this year. That's it for me. Thanks a lot.

Yes may be contributing to that.

That's it for me Thanks, a lot.

Harrold Rust: Yeah. This is Cam. I'll take that one. Not necessarily just for this year, but we have programs kind of across the various categories that we're active in. Everything from, you know, AR/VR to, you know, kind of just more generic wearables, to mobile communications, to laptop computers, all of these have development programs associated with them. It's pretty broad-based.

Cam Dales: Yeah. This is Cam. I'll take that one. Not necessarily just for this year, but we have programs kind of across the various categories that we're active in. Everything from, you know, AR/VR to, you know, kind of just more generic wearables, to mobile communications, to laptop computers, all of these have development programs associated with them. It's pretty broad-based.

Yes, so this is Cam. I'll take that one. Not necessarily just for this year, but we have programs kind of across the various categories that we're active in. So everything from AR, VR, to kind of the more generic wearables, to mobile communications, to laptop computers, all of these have development programs associated with them. So it's pretty broad-based. Cool.

Yes. This is cam I'll take that one.

Not necessarily just for this year, but but we have programs kind of across the various categories that we're active in so everything from a R V are too.

Kind of just more generic wearables to mobile communications to laptop computers all of these have.

Development programs associated with them, so it's pretty broad based.

Ananda Baruah: Cool. Thanks, guys. Appreciate it.

Cool thanks.

Thanks, guys appreciate it.

Operator 3: Thank you. Our next question comes from Mark Kahutis, a Private Investor. Your line is open.

Operator: Thank you. Our next question comes from Mark Kahutis, a Private Investor. Your line is open.

Thank you. And our next question comes from Mark Cohodes, a private investor. Your line is open. Thank you very much.

Thank you and our next question comes from Mark <unk>.

A private investor Your line is open.

Mark Kahutis: Thank you very much. First, a couple comments is I like to say there's no greater motivator than disrespect, and at $7.50, you know, the stock is ridiculous, and the market doesn't really give a rat's ass of what you're preaching. As the window opens, it's gonna be very telling of who on the management team, and who at the board is gonna buy or not buy stock. I know I'll be watching, and I'm sure others will. I think, Harrold, you're the CEO and you're the leader. I would take this as a direct affront to your leadership, and I would get things snapping. My question is for Cam.

Thank you very much first a couple of comments as I like to say there is no greater motivator than disrespect and at 750.

As I like to say, there's no greater motivator than disrespect, and at $7.50, the stock is ridiculous and the market doesn't really give a rat's <expletive> of what you're preaching.

The stock is ridiculous and the market doesn't really give a wrap has some.

Of what you are preaching so as the window opens it's going to be very telling of who on the management team and the board is going to buy or not buy stock and I know I'll be watching and I'm sure others will Herald, you're the CEO and you're the leader I would take this up.

It's going to be very telling of who on the management team and who at the board is going to buy or not buy stock. I know I'll be watching and I'm sure others will. So I think, Harold, you're the CEO and you're the leader. I would take this as a direct affront to your leadership.

As a director frontier leadership, and I would get think snap and my question is for Cam at CES. There was a lot of talk about goggles, and Wearables and how from some people that your battery.

and I would get things snapping. My question is for Cam. You know, at CES, there was a lot of talk about goggles and wearables, and how, from some people, that your battery is enabling a product to be introduced, and without the battery, the product wouldn't come to market. Could you talk about that a little bit?

Mark Kahutis: You know, at CES, there was a lot of talk about goggles and wearables, and how from some people that your battery is enabling a product to be introduced, and without the battery, the product wouldn't come to market. Could you talk about that a little bit, if that's true or false?

Enabling our product to be introduced and without the battery the product wouldnt come to market can you talk about that a little bit.

If that Hey, Martin Shaul.

Sure. Yeah, happy to address that. And I can kind of put it in the broader context as well. I mean, specific to ARVR, you know, there's a huge amount of investment that's going into what many of the leaders in the technology space consider potentially to be the next computing platform, right? Kind of went from mainframes to PCs to laptops to the computer in your pocket, which is a phone. And the question is kind of what's next?

Harrold Rust: Hey, Mark. Sure, yeah. Happy to address that and, I can kind of put it in the broader context as well. I mean, specific to AR/VR, you know, there's a huge amount of investment that's going in, into what many of the leaders in the technology space consider potentially to be the next computing platform, right? Kind of went from mainframes to PCs, to laptops, to the computer in your pocket, which is a phone. The question is kind of what's next. A lot of people think that may be in the AR or the VR space. Some companies have changed their name to, you know, to recognize how important that is.

Cam Dales: Hey, Mark. Sure, yeah. Happy to address that and, I can kind of put it in the broader context as well. I mean, specific to AR/VR, you know, there's a huge amount of investment that's going in, into what many of the leaders in the technology space consider potentially to be the next computing platform, right? Kind of went from mainframes to PCs, to laptops, to the computer in your pocket, which is a phone. The question is kind of what's next. A lot of people think that may be in the AR or the VR space. Some companies have changed their name to, you know, to recognize how important that is.

Sure Yeah happy to address that and I can kind of put it in the broader context as well I mean specific to our V are theirs.

There's a huge amount of investment that's going in.

What many of the leaders in the technology space consider potentially to be the next computing platform right kind of went from mainframes to Pcs to laptops to the computer in your pocket, which is a phone and the question is kind of what's next and a lot of people think that may be in the a or the VR space.

And a lot of people think that may be in the AR or the VR space.

Some companies have changed their name to recognize how important that is.

Some companies have changed their name to.

To recognize how important that is and when you think about the engineering challenge there what you're really trying to do is take all the functionality of a smartphone and make it small enough that you can wear it on your face without you know without significant weight and bulk to it and that's a massive engineering challenge and probably in at least in.

And when you think about the engineering challenge there, what you're really trying to do is take all the functionality of a smartphone and make it small enough that you can wear it on your.

Harrold Rust: When you think about the engineering challenge there, what you're really trying to do is take all the functionality of a smartphone and make it small enough that you can wear it on your face without, you know, without significant weight and bulk to it. That's a massive engineering challenge. Probably, at least in our opinion, one of the largest challenges of that is dealing with the power budget. You know, all these components, the modems, the RF, the display, the compute, all that stuff takes power. Of course, it's a mobile device. You don't want this thing, you know, tethered to the wall. It requires battery power to power it. We think this is an ideal application for an Enovix battery.

Cam Dales: When you think about the engineering challenge there, what you're really trying to do is take all the functionality of a smartphone and make it small enough that you can wear it on your face without, you know, without significant weight and bulk to it. That's a massive engineering challenge. Probably, at least in our opinion, one of the largest challenges of that is dealing with the power budget. You know, all these components, the modems, the RF, the display, the compute, all that stuff takes power. Of course, it's a mobile device. You don't want this thing, you know, tethered to the wall. It requires battery power to power it. We think this is an ideal application for an Enovix battery.

without significant weight and bulk to it. And that's a massive engineering challenge. And probably, at least in our opinion, one of the largest challenges of that is dealing with the power budget. You know, all these components,

In our opinion.

One of the largest challenges of that is dealing with the power budget and all of these components the modems.

the uh... the rf the display the compute all that stuff takes power and of course it's a mobile device you don't want this thing you know tethered to the wall

The RF the display the compute all that stuff takes power and of course, it's a mobile device you don't want this thing tethered to the wall.

it requires battery power to power it. And so we think this is an ideal application for an Innovix battery. As you know, we've mentioned in the past, we have two of the leaders in this space who have invested significant dollars into the company, both on the equity basis and in direct product development in order to be well-positioned with us to power their products as they come on the market. So.

It requires battery power to power it and so.

We think this is an ideal application for VIX battery.

Harrold Rust: As you know, we've mentioned in the past, we have two of the leaders in this space who have invested significant dollars into the company, both on the equity basis and in direct product development in order to be well positioned with us to power their products as they come on the market. You know, kind of from a bottom-line perspective, we think battery is actually the gateway or the bottleneck to the entire application. If you look at the products that are on the market today in the space, they're very rudimentary. Some of them have battery lives that, you know, that's measured in kind of tens of minutes, not really ready for a prime time product.

Cam Dales: As you know, we've mentioned in the past, we have two of the leaders in this space who have invested significant dollars into the company, both on the equity basis and in direct product development in order to be well positioned with us to power their products as they come on the market. You know, kind of from a bottom-line perspective, we think battery is actually the gateway or the bottleneck to the entire application. If you look at the products that are on the market today in the space, they're very rudimentary. Some of them have battery lives that, you know, that's measured in kind of tens of minutes, not really ready for a prime time product.

As we've mentioned in the past we have two of the leaders in this space, who have who have invested significant dollars into the company. Both both on the equity basis and direct product development in order to be well positioned with us to power their their products as they come on the market. So.

You know, kind of from a bottom line perspective, we think battery is actually the gateway or the the bottleneck to the entire The entire

Kind of from a bottom line perspective, we think battery is actually the gateway or the bottleneck to the entire.

The entire application.

You know, if you look at the products that are on the market today in the space, they're very rudimentary.

Look at the products that are on the market today in the space there theyre very rudimentary some of them have battery life that this measured in kind of tens of minutes.

Some of them have battery lives that's measured in kind of tens of minutes.

not really ready for a prime time product. And we think our solution to that is a big part of moving the industry forward.

Not really ready for the for a for a prime time product and we think our solution to that is a big part of moving the industry forward.

Harrold Rust: We think our solution to that is a big part of moving the industry forward. Now that said on ARVR, we think this is true from an application perspective in a number of the applications that we're active in. You think about wearables and smartwatches, one of the big application drivers there is monitoring of your health. Of course, this means you need to have sensors that are always on. If you're taking your device and plugging it in because it needs to be recharged or you can't wear it through the night, that's a very big limitation. Again, that's a battery challenge ultimately. Even things that are more mature, devices that are more mature for phones, if you actually use the 5G networks in your phones today, your phone would not last through the day.

Cam Dales: We think our solution to that is a big part of moving the industry forward. Now that said on ARVR, we think this is true from an application perspective in a number of the applications that we're active in. You think about wearables and smartwatches, one of the big application drivers there is monitoring of your health. Of course, this means you need to have sensors that are always on. If you're taking your device and plugging it in because it needs to be recharged or you can't wear it through the night, that's a very big limitation. Again, that's a battery challenge ultimately. Even things that are more mature, devices that are more mature for phones, if you actually use the 5G networks in your phones today, your phone would not last through the day.

Now that said, on ARVR, we think this is true from an application perspective in a number of the applications that we're active in.

That said on a R V R.

We think this is true from an application perspective, and a number of the applications that were we're active in so.

You think about wearables and smart watches. One of the big application drivers there is monitoring of your health.

Do you think about Wearables smartwatch is one of the big application drivers there is monitoring of your health.

And of course, this means you need to have sensors that are always on if you're taking your device and plugging it in because it needs to be recharged or you can't wear it through the night. That's a very big limitation. So again, that's a battery challenge ultimately. Even things that are more mature, devices that are more mature, you know, for phones.

And of course. This means you need to have sensors that are always on if you're taking your device and plugging it in because it needs to be recharged or you can't wear it through the night, that's a very big limitation. So again, that's a battery challenge ultimately even even things that are more mature devices are more mature you know for phones.

If you actually use the 5G networks in your phones today, your phone would not last through the day. So, you know, in order to really get the benefit of that, you need better batteries. We talked a little bit earlier on the call about laptop computers. These devices are trying to move towards being more like your mobile phone, always on, ability to last through an entire day without plugging in. Again, what does that point to? It's the battery challenge. And so.

If you actually use the <unk> networks and your phones today your phone would would not last through the day. So in order to really get the benefit of that.

Harrold Rust: In order to really get the benefit of that, you need better batteries. We talked a little bit earlier on the call about laptop computers. These devices are trying to move towards being more like your mobile phone, always on, ability to last through an entire day without plugging in. Again, what does that point to? It's the battery challenge. From an Enovix perspective, we think that having a breakthrough product here, it's a way for companies to be able to invest across the whole stack of their applications. This is an investment that they can make that impacts essentially all the functions and all the components that go into their device. It's a great place to be strategically within the ecosystem.

Cam Dales: In order to really get the benefit of that, you need better batteries. We talked a little bit earlier on the call about laptop computers. These devices are trying to move towards being more like your mobile phone, always on, ability to last through an entire day without plugging in. Again, what does that point to? It's the battery challenge. From an Enovix perspective, we think that having a breakthrough product here, it's a way for companies to be able to invest across the whole stack of their applications. This is an investment that they can make that impacts essentially all the functions and all the components that go into their device. It's a great place to be strategically within the ecosystem.

Need better batteries, we talked a little bit earlier on the call that laptop computers. The these devices are trying to move towards being more like your mobile phone always on.

Ability to last through an entire day without plug in again, what does that point to it's the battery challenge and so from from an <unk> perspective, we think that having a breakthrough product here, it's a way for companies to be able to invest across the whole stack of their applications.

From an Inovix perspective, we think that having a breakthrough product here is a way for companies to be able to invest across the whole stack of their applications. This is an investment that they can make that impacts essentially all the functions and all the components that go into their device. So it's a great place to be strategically within the ecosystem.

This is an investment that they can make that impacts essentially all the functions and all the components that go into their device. So it's a great place to be strategically within our within the ecosystem.

Did you say that that the two companies in goggles or equity holders? Did you hit that? Did I hear that right?

Mark Kahutis: Did you say that the two companies in Goggles are equity holders? Did I hear that right?

Did you say that that the two companies and goggles or equity holders.

Did I hear that right.

Harrold Rust: What I said is that they've both made significant investments into the company historically, both in equity and in direct product development.

Cam Dales: What I said is that they've both made significant investments into the company historically, both in equity and in direct product development.

So what I said is that they've both made significant investments into the company historically, both in equity and in direct product development.

So what I said is that they have both made significant investments into the company historically.

Both in equity and in it.

Direct product development.

Mark Kahutis: Okay. Well, I appreciate that. My final comment is, it would be very helpful to the people who hold the stock that the company is not quiet for the next 90 days till we have another one of these updates. Given your technology and your standing in your industry, I would expect hope, and it's unacceptable to be as quiet as you guys have been. I hope there's change there, and I'll be watching to see who buys and doesn't buy the stock. Thank you, and I'm glad we finally have Fab 2.

Okay.

Well, I appreciate that. And my final comment is, you know, it would be very helpful to the people who hold the stock.

I appreciate that and my final comment is it would be very helpful to the people who hold the stock that the company is not quiet for the next 90 days until we have another one of these update given your technology and your stand against your industry I would I would expect hope and.

that the company is not quiet for the next 90 days till we have another one of these updates.

Given your technology and your standing in your industry, I would expect hope.

and it's unacceptable to be as quiet as you guys have been. So I hope there's change there, and I'll be watching to see who buys and doesn't buy the stock. But thank you, and I'm glad we finally have FAB 2.

It's unacceptable to be as quiet as you guys have been so I hope there is change there and.

I'll be watching to see who buys from doesn't buy the stock.

Thank you and I'm glad we finally helps too.

Thank you. And this concludes the Q&A portion of the conference call. I'd like to hand the conference back over to Mr. Harold Russ for any closing remarks.

Operator 3: Thank you. This concludes the Q&A portion of the conference call. I'd like to hand the conference back over to Mr. Harrold Rust for any closing remarks.

Operator: Thank you. This concludes the Q&A portion of the conference call. I'd like to hand the conference back over to Mr. Harrold Rust for any closing remarks.

Thank you.

This concludes the Q&A portion of the conference call I'd like to hand, the conference back over to Mr. Harold.

For any closing remarks.

Harrold Rust: I just want to thank everybody for their attendance on the call today. We're really pleased and excited with the progress this quarter and also on the future this year and executing the rest of our plan, including Fab 2, and we're super excited about the Gen2 equipment and what that represents. With that, I think I'll say thank you again, and we'll look forward to updating you in the future.

I just want to thank everybody for their attendance and the call today. You know, we're really pleased and excited with the progress this quarter and also on, you know, the future of this year and executing the rest of our plan, including FAB 2. And we're super excited about the Gen 2 equipment and what that represents. So with that, I think I'll say thank you again, and we'll look forward to updating you in the future.

I just wanted to thank everybody for their attendance on the call today.

We're really pleased and excited with our progress this quarter.

And also on the future of this year in executing the rest of our plan, including fab.

<unk> two and we're Super excited about the Gen two equipment and what that represents so.

With that I think all I'll say, thank you again, and we will look forward to updating you in the future.

And this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.

Operator 3: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

And this concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

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Q1 2022 Enovix Corp Earnings Call

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