Q4 2022 Everspin Technologies Inc Earnings Call
Speaker 2: Good afternoon and welcome to the conference call to discuss every spend technologies 4th quarter in full year 2022 results at this time. All participants are in a listen only mode. At the conclusion of today's conference call instructions will be given for a question and answer session.
Speaker 2: As a reminder, this call has been recorded today Wednesday, March 1, 2023. Before we begin the call, I want to remind you that this conference call contains forward looking statements regarding future events, including but not limited to our expectations for ever spent future business.
Speaker 2: financial performance and goals customer and industry adoption of
Speaker 2: market and manufacturing products in Everspin's design pipeline and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions and involve risks and uncertainties that may cause actual results to different materials.
Speaker 2: filing to me from time to time in which we may discuss risk factors associated with investing in Everspin.
Speaker 2: All forward-looking statements are made.
Speaker 2: As of the date of this call and expect as required by law, we undertake no obligation to update any forward looking statements made on this call to update or alter our forward looking statements, whether as a result of new information, future events or otherwise.
Speaker 2: The financial results discussed today reflect their presence of...
Speaker 2: Preliminary estimates are based on the information available as the date hereof and are subject to further review by Eversman and its internal auditors. Actual results may differ materially from those estimates as a result of completion of our financial closing procedures.
Speaker 2: Final adjustments and other developments arising between now and the time that our financial results for this period are finalized.
Speaker 2: Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to adjust it even though.
Speaker 2: which provide additional details. A copy of the press release is posted in the investor relations section of Everspin's website at www.everspin.com. And now I'd like to turn the call over to Everspin's President and Chief Executive Officer, Sanjeev Agarwal. Sanjeev, please go ahead.
Speaker 3: Thank you, operator, and thanks everyone for joining us on the call today.
Speaker 3: Everspin delivered quarterly revenue of $15.7 million above the high end of guidance, leading to an all-time record full year revenue of $60 million for 2022.
Speaker 3: We were GAP net income positive for the seventh quarter in a row, which continues to be a focus for the company. A few records we reached in Q4 for the full year 2022 include record annual total revenue ran at MAX about 0. peaks.
Speaker 3: record annual product revenue
Speaker 3: annual product revenue, record annual net income.
Speaker 3: Record annual cash flow from operations.
Speaker 3: Record annual EBITDA
Speaker 3: Record annual design wins again in 2022 after setting a record in 2021.
Speaker 3: Next, a few highlights for Q4, 2022, and the full year 2022 include. A revenue for Q4 was 15.7 million up 3% quarter over quarter.
Speaker 3: Full year revenue was 60 million up 9% year over year.
Speaker 3: Product sales were 14.6 million, consistent quarter over quarter.
Speaker 3: Product sales for the full year were 55 million up 25% year over year. Cash low from operations was 5.2 million in Q4 totaling 9.5 million for the full year.
Speaker 3: Gap growth margin was 56.6% for the year and Gap net income was 6.1 million for the year.
Speaker 3: Our business outlook, our product backlog for balance of 2023 as of December 31st, 2022 continues to be high, although we are experiencing some headwinds from the semiconductor downturn.
Speaker 3: We continue to alleviate some of our foundry supply chain constraints, which is helping address our unfulfilled toggle demand.
Speaker 3: Turning to technology.
Speaker 3: Everspin remains confident in its future opportunities and continues to invest in our leadership in FTT MRAM technology.
Speaker 3: We have tuned our SATM RAM technology to deliver high performance, persistent products for multiple non-volatile memory markets including DRAM, SRAM and NOR flash.
Speaker 3: Our SDDM RAM products targeting the replacement of battery-backed DRAM started production in 2017 and are currently shipping in 256 megabits and 1 gigabit densities with DDR3 and DDR4 derivative interfaces.
Speaker 3: These products are delivering significant value to SSD, persistent memory cards, fabric accelerator and other applications in the data center market.
Speaker 3: In 2022, we introduced a X-Pi family of STTM RAM products that was developed by tuning our STTM RAM technology for DRAM to scale our toggle M-RAM offerings to higher densities on advanced CMOS nodes.
Speaker 3: These products are available on 28 nanometers CMOS node in densities from 8 megabits to 128 megabits which standardize SPI, quartz pi and octals pi interfaces.
Speaker 3: These products are enabling our customers to simplify the system architecture and easily replace legacy memory components like SRAM and Ferroelectric Memories or FRAM.
Speaker 3: Based on the strong interest and feedback from our customers in this new Xpy family of STTM RAM devices, we designed and taped out an optimized solution on 28 nanometer CMOS for lower densities from 4 Meg to 16 Megabit in Q4 of 2022.
Speaker 3: This allows us to better compete with alternate memory solutions in this density range.
Speaker 3: This family of products are ideal for use in electronic systems like industrial IoT, network, enterprise infrastructure, process automation and control, aeronautics, medical and gaming.
Speaker 3: Due to the limitations of north scaling passed 45 nanometer, we believe there is a potential for STTM RAM for discrete north flash replacement similar to the embedded market.
Speaker 3: We tune our SIDM RAM technology and introduce the first SIDM RAM product addressing this segment of the market in 2022 as well and are currently shipping in 16 megabit to 128 megabit densities.
Speaker 3: I would spend with this experience in high density greater than 256 megabytes, a megabit as CDM RAM products is uniquely positioned to design and manufacture monolithic high-density discrete parts for non-replacement.
Speaker 3: The first such product is in the design phase, and when available would be ideal for replacing NOR, for example, in FPGA systems to store configuration memory and simultaneously enabling 100X faster over the air updates. Switching to adjacent technologies that could benefit greatly from SDTM RAM. In Q4 2022, we announced a collaborative engagement.
Speaker 3: to develop strategic radiation hardened FPGA technology. As part of the collaboration, Everspin will provide a STTM RAM solution that acts as a configuration memory in the FPGA first eliminating the off or on chip, nor die and the SRAM cells that execute the lookup tables.
Speaker 3: This solution will promote enhanced security and enable instant on characteristics.
Speaker 3: Further, the STTM RAM-based configuration memory can be programmed multiple times with fast OTA updates or can be hard coded depending on the application.
Speaker 3: Since STT MRAM can be scaled to advanced nodes and is already available on 22 nanometer and below, monolithic embedded solutions will be possible.
Speaker 3: We believe this solution from Evertspin will play an important role in next-generation FPGF.
Speaker 3: I will not turn it over to our CFO Anujagarwal who will take you through our fourth quarter of financials and first quarter of 2023 guidance.
Speaker 4: Thank you, Senjeev, and good afternoon everyone. As part of the fourth quarter, 2022 financial results, ever spend technologies is pleased to announce its seventh consecutive quarter of positive meaningful net income.
Speaker 4: and good afternoon everyone as part of the fourth quarter 2022 financial results. Ever spend technologies is pleased to announce its seventh consecutive quarter of positive meaningful net income. In addition…
Speaker 4: We generated positive cash flows from operations resulted in a healthy cash balance of 26.8 million. We delivered solid quarterly results above the high end of guidance with revenue of 15.7 million compared to 15.2 million last quarter and 18.2 million in the fourth quarter of 2021.
Speaker 4: We also had positive net income of 0.6 million and positive cash flow from operations of 5.2 million for the fourth quarter of 2022. MRAM product sales on the fourth quarter, which included the Otago and SETMRAM revenue, was 14.6 million consistent with the prior quarter.
Speaker 4: and an increase from 12.6 million in Q4 2021. Licensing royalties, patents, and other revenue in the fourth quarter was 1.1 million compared to 0.7 million in the previous quarter and 0.5 million in Q4 2021.
Speaker 4: Shipments, suppliers for our largest end customer who we serve with our high density SDT product for data center applications represented 5% of revenue in the quarter versus 19% of revenue in Q3 and 16% in Q421.
Speaker 4: Turning to Gross Margin, Gap, Gross Margin for the first fourth quarter of 2022 was 51.4% versus 58.8% in the prior quarter and 62.8% in Q421. Gap operating expenses for the fourth quarter of 22.
Speaker 4: We're 7.5 million versus 7.1 million in the prior quarter and 7.7 million in the fourth quarter 2021. The higher operating expenses in the quarter sequentially was primarily driven by increased cost to support the new FCT industrial product that went into low volume production in Q4.
Speaker 4: We are pleased to report fourth quarter positive net income of 0.6 million or three cents per basic share based on 20.1 million basic weighted average shares upstanding this compares to a gap net income of 1.9 million or 9 cents per basic share in the third quarter of 22
Speaker 4: and net income of 3.7 million or 19 cents for basic share in the fourth quarter of 21.
Speaker 4: Basic EPS of 3 cents was better than the midpoint of our guidance range, reflecting our strategic operational discipline and ability to drive profitability in the face of tightening, supplies, and macroeconomic uncertainties. Adjusted IVIDA continues to remain positive. For Q4-22, adjusted IVIDA was 2.1 million.
Speaker 4: compared to $3.4 million in the prior quarter and $4.8 million in Q421. Adjusted EBITDA for the full year of 2022 is at a record high of $11.8 million.
Speaker 4: Cash and cash equivalents increased to 26.8 million at the end of the fourth quarter, compared to 23.4 million at the end of the prior quarter and 21.4 million in Q421. Cash flow from operations was 5.2 million for the current quarter.
Speaker 4: increasing the year's cash flow from operations to 9.5 million. Turning to our first quarter of 2023 guidance, EverSpin is confident in its opportunities and ability to navigate the semiconductor macroeconomic challenges. Demand for our toggle products remains strong.
Speaker 4: Everston expects total revenue in a range of 14.1 million to 14.8 million.
Speaker 4: and ever spent expect gap net income for basic share to be break even to five cents. Primarily influenced by expenses related to our next generation, 20 NMSTT, MRA and product development and price increases from our suppliers.
Speaker 4: I now turn it back over to Senji for some brief additional commentary before we open it up for questions.
Speaker 3: Thanks very much. In summary, Averspin reported the best financial year in the company's history with strong fourth quarter results. We continue to build towards the future of profitable, sustainable growth thanks to the hard work and dedication of the Averspin employees.
Speaker 3: We are confident in our future opportunities and are excited to see the interest from our customers in our STDM brand products.
Speaker 3: Thank you for joining us today. Operator, you may now open the line for questions.
Speaker 2: Thank you. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced.
Speaker 2: Please stand by while we compile the Q&A roster. One moment for our first question.
Speaker 2: And our first question comes from the line of Richard Shannon with Craig Hallam. Your line is open. Your line is open.
Speaker 5: Well, hi guys, thanks for taking my questions here.
Speaker 5: I think the first one I'd like to ask guys is in the broader dynamics in the semi-etherspace you're seeing the semi-mentary builds in a lot of companies have seen some pretty significant burns here of late. You're not seeing it at least so far, but I know you've got some capacity constraints just so working through. So I guess I'd love to get your best take on the degree to which...
Speaker 5: Or I guess maybe thinking about first of all, when do you expect these constraints to be overcome? And do you worry, and if you talk to your customers about backlogs and bookings that may fall off as they become more comfortable with the inventory that they can get from you.
Speaker 4: Hi, Richard. This is Outage. Yeah, great question. So let me try to take it in a couple of pieces. So as we look at the backlog, right, it continues to be healthy. So in 2023, we've got cell demand. We've had demand going out to 2024. So from that perspective, things are looking good.
Speaker 4: really high visibility in 2004 as well, right? There have been, I mean some cancellation, some pushouts, so there has been some macro economic effects that we've seen. But I think overall, what we've been able to do is because of the high amount of backlog, we've been able to pull in demand from future quarters.
Speaker 4: and really work through that. Now from a customer standpoint, I think you're asking about that as well. We've been working very closely with our customers to understand not only what their current demands are in the current quarter and future quarters, but then also working with them to understand when there are opportunities and capacity frees up, are they interested in getting the product sooner? And so we're working very closely with them to pull in demand where it makes sense.
Speaker 5: But I would assume that there's probably a big chunk of licensing revenue falling off quarter and quarter with some more modest drop-off in the title to get to the revenues. Can the midpoint of revenues? Is that a fair way to think about this or is the title and product revenue is going to be down more than licensing?
Speaker 4: Yeah, so the way I think about it is the way we built the 14 million to 14.8 million guidance and revenue. We continue to feel that toggle is strong. The backlog is very promising in 2023 going up to 24. So I think that piece is strong.
Speaker 4: The part that's a little bit of a challenge that I think we've shared before is we've seen SET demand with our key customer that's kind of tapered off a little bit, but it's strong in that perspective from a total product revenue standpoint.
Speaker 4: From licensing, that continues to go up and down, right? So as we see opportunities for patent deals and things like that, none of that's incorporated into the guidance.
Speaker 5: Okay. That is helpful. Maybe another line here. I'm the, you could say me to talk about here both for the fourth quarter and going forward here. Gross margins and I like to focus on the product gross margins if I did my math right. Did roughly 49% in the fourth quarter.
Speaker 5: Well, first record is the area between 54 and 58. I think you had a more optimal mix in the past quarters, but also some strong yields. So I'd explain the drop-off here into the fourth quarter. How much of that was yields, product mix, and other dynamics.
Speaker 4: Yeah, so I'll try to be a little careful here because I know we don't provide too much gut and some gross margin, right? I'll say that, you know, we've always communicated that our internal model is between the load to mid-50s. I think as you're seeing the yield stabilizing and the product next stabilizing.
Speaker 4: You're getting back to a more normal expected range for the gross margin and that's evident in the guidance that we're providing. In Q4 we did see a little bit higher supplier cost and things like that, but overall we feel like it's more in line with the internal model that we've shared in the past.
Speaker 5: Okay, so let me jump over to Sunjeev talking about the new XSPI product here. I just want to kind of ask a big picture, top down question here on how you see this product ramping out this year. If you can get us some...
Speaker 5: Maybe bottoms up thoughts here on attached to FPGAs, MCUs, and others, and which densities you're seeing to pick up. And also, Lee, how can we think about revenue contribution from that product line this year?
Speaker 3: Hi, Richard. Thank you for your question. I think it's an important question to understand our revenue profile going forward. So I think the way to think about it is that most of our adoption is in the industrial markets.
Speaker 3: So it is a long cycle time for qualification. So I don't think you're going to see significant revenue from the 64 mag or the 16 mag in 2023
Speaker 3: Having said that, we have seen strong traction with our customers in Q4 and in Q3 last year, which actually prompted us to tape out a more optimized density and die size at 16 megs. And what that did for us is it actually opened up the customers that were using alternate memories like SRAM, NVS RAM or federal lettering memories are from.
Speaker 3: So I think, think about us taking over some of the market with the lower density parts from NES, time and F RAM, and then the high density, the 64 mag and the 32 mag for example, they're going to basically attach to...
Speaker 3: industrial IoT applications, aerospace and defense process automation, the standard applications that you've seen, toggle MRAM get into over the last decade or so.
Speaker 5: Okay, that's fair enough. One last question, and then I'll jump in line here on OPEX here. You've talked about the last couple of quarters about OPEX coming up here as you're investing more in this new STT MRAM line. How much longer are we going to see kind of elevated levels in investment, mostly from the R&D line? And then do we see it getting back down to a level seen earlier last year, or how do we think about that long term?
Speaker 4: Yeah, and a great question. And, you know, we, so we don't normally provide guidance on the op-ax, but what I can share is, you know, what we expected to be a little bit higher in Q1 right as we're getting ready and taping out the lower density product and getting everything ready. But I expected to kind of level off and slightly decrease as a year progress.
Speaker 2: And our next question comes from the line of Aventra Gill with Needham & Company. Your line is now open. Your line is now open.
Speaker 6: Yes, thank you and then congrats on the sole results and my very kind of tumultuous environment. Just to give a question on the X5 family and the ability to replace, to screen or, you know, for certain industrial applications, IOT applications.
Speaker 6: the street north with STM RAM? Is it on the cost side? Is it on the instant on access side? What's been the feedback? That's been the features for a while is that M-RAM combined the benefits of volatile and non-volatile.
Speaker 6: but the issue has been kind of around density. So just curious about what you're hearing from customers. Yeah, good afternoon, Raji. Good question.
Speaker 3: Basically, if you look at the way the knowledge used in current FPGA is, it basically takes forever to write, but the reach speeds are pretty fast. So that's where SCTM RAM is actually being appreciated by some of our customers. It's basically the right so much faster, so the faster over the air updates.
Speaker 3: of the HCTM RAM that you're using.
Speaker 3: So where people value the faster right speeds, the longer endurance and the lower power to actually write those configuration streams, I think that's where we're getting good traction from our customers.
Speaker 3: But where we are in a cost-comparative environment, Nore is obviously much cheaper than STTM RAM, and that's where we get it, seeing less of a traction. So again, just like our previous applications, customers that value our performance are adopting our parts. And we're thinking about calendar 24.
Speaker 6: So first the opportunity with the department of defense for the rad hard.
Speaker 6: product where the designs are going to, you find an extension of the Radhard deal which will, has built in some technical milestones before the licensing revenue will come and then the broader push there. Can we talk about that opportunity on the Radhard in Counter24 and then you also talked about the industrial.
Speaker 6: since the design cycles are taking a fair amount of time that you won't see it in 2023, but you'll see it in 2024. And so how do we think about that impact potentially on 2024 with those two budding opportunities?
Speaker 6: And then for this year in 2023, what do you think will be the kind of the main growth driver for this year? Great. If I deviate from the question, please stop me. Okay. So, I'll try to answer. So, I'll start with the last question. How can I develop growth drivers with an engineering, a program- mock release Blackboard solution API?
Speaker 3: for 2023, what are the growth paths? And I think there you're seeing our 16 meg and 64 meg STM ramp part. I think those getting traction and starting to see initial revenue from that. It's not going to be huge numbers, but it's going to be...
Speaker 3: these are numbers that we will actually talk about by the end of the year.
Speaker 3: The other thing to look at is these parts, again the 16 and 64 and 2024, I think will drive significant revenue growth as they get adopted and qualified in the various systems over that. You can also look at why these products work.
Speaker 3: Now switching to the Radhard product that we're talking about, I just want to comment a little bit over here. When you are looking at our 16 mag and 64 mag at city MRAM for non replacement, that is different than the deal that we have signed to develop this strategic Radhard FPGA technology.
Speaker 3: There you're actually replacing the NOR as well as the SRAM cells that execute the lookup tables. So that is a totally different solution that we have developed based on SDM RAM. I think for that you will see, there are some milestones to achieve, but then you're gonna see royalty, not royalty, licensing revenue.
Speaker 3: and an RE revenue from that project through 2023. And then I think in 2024 would be the point where you can actually take this technology that we developed for this radiation heart project and then try and deploy it on advanced notes in the commercial market. And I think that work needs to be done in 2023 so that we are actually ready for potential new revenue streams in 2024.
Speaker 6: Good answer, all the questions ready? I'm not sure. No, it is. Thank you. And I just want to make sure that the end product would be reconfigurable and it would be an instant on FBGA. Is that the ultimate kind of goal? That is correct. Got it. Okay. Okay.
Speaker 6: odd million in 2020 to about 55 million in 2022.
Speaker 6: in 2020 to about 55 million in 2022. So that's a little less than 40% growth.
Speaker 6: While the licensing has been lumpy, as expected, that kind of product growth that you've been seeing the last couple years.
Speaker 6: Maybe you could just summarize just for everybody's purposes what's been driving that growth. When we're thinking about longer term on terms of the product growth acceleration, it seems like that the revenue could kind of inflect potentially higher in 2024.
Speaker 6: with some of these new initiatives with the X5 family. So just kind of maybe if you could summarize, you know, how do we get here and kind of where are we going with the on the product side? Thanks.
Speaker 4: Yeah, Harajit, this is on edge. Yeah, it's just a kind of reiterate, right? So the product revenue at the end of 21 was about 44 million and it grew to about 55 million in 2022 for the full year. A lot of that has been around the refocus for toggle, right? We've had a lot of record design win years.
Speaker 4: and making sure we could get those design wins because as you know in industrial for example the customer stays for 10-20 years and that's critical for us in order to really lock in revenue for long periods of time. So as we've seen our data center customer
Speaker 4: Their revenue has maybe gone up and down and been a little bit challenging over the last few quarters. We've really been able to make up with it from all the hard work on the toggle side over the last few years with the design ones.
Speaker 4: And so that continues to be our focus as we look into this year. And I think that's also, you know, what you've seen in the backlog as well.
Speaker 3: So to add to that, Raji, your question on how do we see that in 2023 to 2024, right? So what we have done is we have taken our STT Mram technology and we've actually tuned it so that it actually extends our toggle Mram roadmap. So our toggle roadmap basically ended at 16 megabit or 32 megabit parallel. So
Speaker 3: And our serial was only at one meg and four megs, and with a single spy. So by tuning this technology and making it similar to toggle M-RAM, we've now been able to actually extend the density all the way from four meg to 128 megabit. And I think that opens up markets for us, and I think that's what's gonna lead to the growth in 23 and 24.
Speaker 7: says in my question and I see you in a trippy environment. I was just, you've answered a lot of my questions, but you just hope you could give a little, a little more granular cover on this color in the shape of this year and max or however you're comfortable talking about the growth path. It looks like your, your customer concentration has dropped a lot, which is really encouraging and makes me think you've got a lot more customers and a lot of that.
Speaker 7: So just like some thoughts on that, but then also what is it if you look like? Is it seasonal? Is it macro? Is it a pretty one-year growth?
Speaker 7: to help us understand what kind of dynamics are going to push for the growth path and the aerosomalty of the growth path. And I mean, think about the path along the pipeline, the visibility, and that kind of diverse side customer base. You've got to hear if I am the kind of thing about a very, very, very, very, thanks.
Speaker 4: Yeah, hi, hi, John , this is Onage. Let me try to tackle it, if I miss something, let me know. So just in terms of the full year, right, we typically only provide guidance for Q1. But what I can say is, directionally, you know, without providing guidance, you know, we believe that there's, you know, potential for recovery in the second half as we kind of look at...
Speaker 4: But that's really been limited, right? And as we look at the full backlog picture, we've been able to pull in a lot of demand from the big backlogs that we have, right? So from that standpoint, think that we're going well. In terms of your comments about customer concentration, yeah, you're absolutely right. As we've diversified into rad-heart businesses, as we've grown the toggle business.
Speaker 4: and got a lot more design wins and now introducing the new 60-poor Mac product as well. We're starting to see the customer base really increase. So we went from 1200 customers to about 1300 customers in 2022. And so that customer base continues to increase. And as we get the design win, we only expect that that to continue to improve.
Speaker 4: And so from a concentration perspective, you'll see that we reduce the concentration on our big data center customer quite a bit. And that's helped us to achieve some of the numbers that we've shared last few quarters.
Speaker 6: Did I get all better than I did at this? Yeah. That was great. Thank you.
Speaker 2: At this time, I'd like to turn the conference back over to Mr. Agabwalt for closing comments.
Speaker 4: Okay, with that said, we'll conclude today's call. Thank you all for joining us, and we look forward to reporting our progress and results in the next Quarters call. Operator, you may now disconnect the call.
Speaker 4: Okay, with that said, we'll conclude today's call. Thank you all for joining us, and we look forward to reporting our progress and results in the next Quarters call. Operator, you may now disconnect the call. Thank you.
Speaker 1: Thank you. The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11.
Speaker 8: Spicy Chicken
Speaker 8: No.
Speaker 2: Good afternoon and welcome to the conference call to discuss every Smen technologies fourth quarter in full year 2022 results. At this time all participants are now listen only mode at the conclusion of today's conference call instructions will be given for a question and answer session.
Speaker 2: As a reminder, this call has been recorded today Wednesday, March 1, 2023. Before we begin the call, I want to remind you that this conference call contains forward looking statements regarding future events, including but not limited to our expectations for every spend future business.
Speaker 2: financial performance and goals. Customer and industry adoption of MRAM technology successfully bringing to market and manufacturing products in ever-spinning design type of like, and executing on its business plan. These forward-looking statements are based on estimates.
Speaker 2: judgments, current trends, and market conditions, and involve risk and uncertainties that may cause actual results to differ materially from those contained in forward-looking statements.
Speaker 2: We would encourage you to renew our SEC filings, including an annual report form 110K, which will be filed with the SEC on March 2, 2023, and the other SEC filings made from time to time in which we may discuss risk factors associated with investing in an ever spent.
Speaker 2: We would encourage you to renew our SEC filings, including our annual report form 110K, which will be filed with the SEC on March 2, 2023, and the other SEC filings made from time to time, in which we may discuss risk factors associated with investing in an ever spent. All forward-looking statements are made.
Speaker 2: As of the date of this call and expect as required by law, we undertake no obligation to update any forward-looking statements made on this call to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
Speaker 2: The financial results discussed today reflect the preliminary estimates are based on the information available as the date hereof and are subject to further review by the investment and its internal auditors. Accel results made different material from those estimates as a result of the completion of our financial closing procedures.
Speaker 2: Final adjustments and other developments arising between now and the time that our financial results for this period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information and non-gap terms.
Speaker 2: Included in the company's press release are definitions and reconciliations of GAP net income to a death-set EBITDA which provided additional details. A copy of the press release is posted and invest a relation section of Eversmith's website at www.Eversmith.com.
Speaker 2: And now I'd like to turn the call over to Avery Smith's president and Chief Executive Officer, Fandeev Agawal. Fandeev, please go ahead. Thank you, operator. And thanks everyone for joining us on the call today.
Speaker 3: Ever spend delivered quarterly revenue of $15.7 million above the high end of guidance, leading to an all-time record, full year revenue of $60 million for 2022.
Speaker 3: We were gap netting compositive for the seventh quarter in a row which continues to be a focus for the company.
Speaker 3: A few records we reach in Q4 for the full year 2022 include record annual total revenue, record annual product revenue.
Speaker 3: record annual net income, record annual cash flow from operations.
Speaker 3: Record Annual EBITDA. Record Annual Design wins again in 2022 after setting a record in 2021.
Speaker 3: Next, a few highlights for Q4, 2022, and the full year 2022 include revenue for Q4 was 15.7 million up 3% quarter over quarter. Full year revenue was 60 million up 9% year over year.
Speaker 3: Product sales were 14.6 million, consistent quarter over quarter.
Speaker 3: Product sales for the full year were 55 million up 25% year over year. Cash low from operations was 5.2 million in Q4 totaling 9.5 million for the full year. Gap growth margin was 56.6% for the year.
Speaker 3: and gap net income was 6.1 million for the year. Our business outlook, our product backlog for balance of 2023 as of December 31, 2022 continues to be high, although we are experiencing some headwinds from the semiconductor downturn.
Speaker 3: We continue to alleviate some of our farmries supply chain constraints which is helping address our unfilfilled toggle demand.
Speaker 3: Turning to technology, Evertspin remains confident in its future opportunities and continues to invest in our leadership in FITM RAM technology.
Speaker 3: We have tuned our SETM RAM technology to deliver high performance persistent products for multiple non-volatile memory markets including DRAM, HRAM and North Flash. Our SETM RAM products targeting the replacement of battery-back DRAM.
Speaker 3: started production in 2017 and are currently shipping in 256 megabits and one gigabit densities with DDR3 and DDR4 derivative interfaces.
Speaker 3: These products are delivering significant value to SSD, persistent memory cards, fabric accelerator and other applications in the data center market.
Speaker 3: In 2022, we introduced an X-Pi family of STTM RAM products that was developed by tuning our STTM RAM technology for DRAM to scale our toggle M-RAM offerings to higher densities on advanced CMOS nodes.
Speaker 3: These products are available on 28 nanometers CMOS node in densities from 8 megabit to 128 megabit, which standardize SPI, quartz pi and octals pi interfaces.
Speaker 3: These products are enabling our customers to simplify the system architecture and easily replace legacy memory components like SRAM and Ferroelectric Memories or FRAM.
Speaker 3: Based on the strong interest and feedback from our customers in this new Xpy family of STTM RAM devices, we designed and taped out an optimized solution on 28 nanometer CMOS for lower densities from 4 meg to 16 megabit.
Speaker 3: in Q4 of 2022. This allows us to better compete with alternate memory solutions in this density range. This family of products are ideal for use in electronic systems like industrial IoT, network, enterprise infrastructure, process automation and control, aeronautics, medical and gaming.
Speaker 3: Due to the limitations of North scaling past 45 nanometer, we believe there is a potential for STTM RAM for discrete North Flash Ship placement similar to the embedded market. We tune our STTM RAM technology and introduce the first STTM RAM product addressing this segment of the market in 2022 as well and are currently shipping in 16 megabit to 128 megabit density.
Speaker 3: for example in FPGA systems to store configuration memory and simultaneously enabling 100x faster over the air updates.
Speaker 3: Switching to a different technology that could benefit greatly from SKTM RAM. In Q4 2022, we announced a collaborative engagement to develop strategic radiation hardened FPGA technology.
Speaker 3: As part of the collaboration, Everspin will provide a STTM RAM solution that acts as a configuration memory in the FPGA, first eliminating the off or on chip, nor die, and the SRAM cells that execute the lookup tables. This solution will promote enhanced security.
and enable instant on characteristics. Further, the STT MRAM-based configuration memory can be programmed multiple times with fast OTA updates or can be hard coded depending on the application.
Since STDM RAM can be scaled to advanced nodes and is already available on 22 nanometer and below monolithic embedded solutions will be possible. We believe this solution from Ever Spin will play an important role in next-generation FPGS. I will not turn it over to our CFO , Anujagarwal.
who will take you through our fourth quarter financials and first quarter 2023 guidance. Anuj. Thank you, Sanjeev, and good afternoon, everyone. As part of the fourth quarter of 2022 financial results, Everspend Technologies is pleased to announce its seventh consecutive quarter of positive meaningful net income.
In addition, we generated positive cash flows from operations, resulted in a healthy cash balance of $26.8 million. We delivered solid quarterly results above the high end of guidance with revenue of $15.7 million compared to $15.2 million last quarter and $18.2 million in the fourth quarter of 2021.
We also had positive net income of 0.6 million and positive cash flow from operations of 5.2 million for the fourth quarter of 2022.
MRAM products sales on the fourth quarter, which included the Otago and SET MRAM revenue was 14.6 million consistent with the prior quarter at an increase from 12.6 million in Q4 2021. Licensing royalties, patents, and other revenue in the fourth quarter was 1.1 million compared to 0.7 million in the previous quarter and 5.6 million.
in Q4 2021. Shipments, suppliers for our largest end customer who we serve with our high density SDT product for data center applications represented 5% of revenue in the quarter versus 19% of revenue in Q3 and 16% in Q421. Turning to Gross Margin, GAP, Gross Margin for the first fourth quarter of 2022.
was 51.4% versus 58.8% in the prior quarter, and 62.8% in Q421. GAP operating expenses for the fourth quarter of 22 were 7.5 million versus 7.1 million in the prior quarter and 7.7 million in the fourth quarter of 2021. The higher operating expenses in the quarter
sequentially was primarily driven by increased cost to support the new SCT industrial product that went into low volume production in Q4. We are pleased to report fourth quarter positive net income of 0.6 million or 3 cents per basic share based on 20.1 million basic weighted.
average shares of standing. This compares to a gap net income of 1.9 million or 9 cents per basic share in the third quarter of 22 and net income of 3.7 million or 19 cents per basic share in the fourth quarter of 21.
Basic EPS of 3 cents was better than the midpoint of our guidance range, reflecting our strategic operational discipline and ability to drive profitability in the face of tightening, supplies, and macroeconomic uncertainties. Adjusted IViDA continues to remain positive. For Q4-22, adjusted IViDA was $2.1 million.
compared to 3.4 million in the prior quarter and 4.8 million in Q421. Adjusted EBITDA for the full year of 22 is at a record high of 11.8 million. Cash and cash equivalents increased to 26.8 million at the end of the fourth quarter, compared to 23.4 million at the end of the prior quarter.
and $21.4 million in Q421. Cash flow from operations was $5.2 million for the current quarter, increasing the year's cash flow from operations to $9.5 million. Turning to our first quarter of 2023 guidance, Everspin is confident in its opportunities and ability to navigate the semiconductor macroeconomic challenges. Demand for our toggle products remains strong. Everspin expects total revenue in a range of $14.1 million in 2021,
the 14.8 million and ever spent expect scap net income for basic share to be break even to 5 cents. Primarily influenced by expenses related to our next generation, 20 Nandomir STT, MRA and product development and price increases from our suppliers.
I now turn it back over to Senji for some brief additional commentary before we open it up for questions. Thanks a lot. In summary, Everspin reported the best financial year in the company's history with strong fourth quarter results. We continue to build towards the future of profitable, sustainable growth.
thanks to the hard work and dedication of the Everspin employees. We are confident in our future opportunities and are excited to see the interest from our customers in our SDM brand products.
Thank you for joining us today. Operator, you may now open the line for questions.
Thank you for joining us today. Alberta, you may now open the line for questions. Thank you.
As a reminder to ask a question, you'll need to press start 1-1 on your telephone. To withdraw your question, please press start 1-1 again. Please wait for your name to be announced. Please stand by, but we compiled the Q&A roster, one moment for our first question. And our first question comes from the line of Richard Shannon with Craig Hallam, your line is open.
Well, hi guys, thanks for taking my questions here. I think the first one I'd like to ask guys is in the broader dynamics in the semi-attracpace here, I've seen the semi-mentary builds in a lot of companies have seen some pretty significant burns here of late. You're not seeing it. You're not seeing it.
at least so far, but I know you've got some capacity constraints just so working through. So I guess I'd love to get your best take on the degree to which, or I guess maybe you think about first of all, when you expect these constraints to be overcome, and do you worry and if you talk to your customers about backlogs and bookings that may fall off as they become more comfortable with the inventory that they can get from you?
Hi, Richard. This is Abich. Yeah, great question. So let me try to take it in a couple of pieces. So as we look at the backlog, right, it continues to be healthy. So in 2023, we've got cell demand. We have demand going out to 2024. So from that perspective, things are looking good.
really high visibility into 2004, 24th Law, right? There have been, I mean, some cancellations, some pushouts, so there has been some macro to get out my effects that we've seen. But I think overall, what we've been able to do is because of the high amount of backlog,
and really work through that. Now from a customer standpoint, I think you're asking about that as well. We've been working very closely with our customers to understand not only what their current demands are in the current quarter and future quarters, but then also working with them to understand when there are opportunities and capacity frees up, are they interested in getting the product sooner? And so we're working very closely with them to pull
higher building up to the quarter here, but I would assume that there's probably a big chunk of licensing revenue falling off quarter on quarter with some more modest drop-off in the revenue can be pointed to revenues. Is that a fair way to think about this or is is a toggle and in product revenue is going to be down more than licensing.
Yeah, so the way I think about it is the way we built the 14 million to 14.8 million guidance and revenue. We continue to feel that toggle strong, the backlog is very promising in 2023 going up to 24. So I think that keeps us strong. Yeah, do thing. Yeah, so tomorrow we will be moving on to the platform. Yeah.
from a total product revenue standpoint. From licensing, that continues to go up and down, right? So as we see opportunities for patent deals and things like that, and then if that's incorporated into the guidance.
Okay. That is helpful. Maybe another line here. You could see me to talk about here both for the fourth quarter and going forward here. And I like to focus on the product. If I did my math right. Did roughly 49% in the fourth quarter. Okay.
Well, first record is the area between 54 and 58. I think you had a more optimal mix in the past quarters, but also some strong yields. So, I'd explain the drop-off here into the fourth quarter. How much of that was yields, product mix, and other dinally?
Yeah, so I'll try to be a little careful here because I know we don't provide too much guidance on gross margin, right? I'll say that we've always communicated that our internal model is between the low to mid-50s. I think as you're seeing the yield stabilizing and the product mix stabilizing, we've seen
You're getting back to a more normal expected range for the gross margin and that's evident in the guidance that we're providing. In Q4 we did see a little bit higher supplier cost and things like that, but overall we feel like it's more in line with the internal model that we've shared in the past. Thank you.
Okay, Sarah Nuff, let me jump over to Sunjeev talking about the new SPI product here. I just want to kind of ask a big picture, top down question here on how you see this product ramping out this year. If you could give us some maybe bottoms up thoughts here on, you know, attacks to FPGAs, MCUs and others. And which densities you're seeing to pick up and then also lay, how can we think about revenue kind of?
when you from the 64 mag or the 16 mag in 2023.
Having said that, we have seen strong traction with our customers in Q4 and in Q3 last year, which actually prompted us to tape out a more optimized density and die size at 16 megs. And what that did for us is it actually opened up the customers that were using alternate memories like SRAM, NDS RAM or a federal lettering memory is a frame.
So I think, think about us taking over some of the market with the lower density parts from NES, RAM and AppRAM, and then the high density, the 64 mag and the 32 mag for example, they're going to basically attach to industrial IoT applications.
aerospace and defense process automation, the standard application that you've seen to all the time I'm getting to over the last decade or so.
Okay, that's for enough one last quicks from me. I'll jump on a line here on OpX here. You've had to talk about the blue out cells a couple of quarters about OpX coming up here. You're investing more in this new STT and Ram line. How much longer are we going to see kind of elevated levels in the investment, mostly from the R&D line?
And then do we see it getting back down to a level seen earlier last year or how do we think about that one term? Yeah, and a great question. So we don't normally provide guidance on the outbacks, but what I can share is we expected to be a little bit higher in key one, right, as we're getting ready and taping out the lower density product.
and getting everything ready, but I expected to kind of level off and slightly decrease as the year progresses. So that's...
So if that helps. Yep, that does help me. I've asked enough questions, so I think I'll jump out of line, but thanks for all the answers, guys. Appreciate it. Thank you, Richard. Thank you. One moment for our next question.
And our next question comes from the line of our Vendra Guild with Needham & Company. Your line is now open.
Yes, thank you and congrats on sole results and my very kind of tumultuous environment. Just to give a question on the X5 family.
And the ability to replace discrete nor, you know, for certain industrial applications, IOT applications.
Now that you have kind of a higher density range with respect to the X5 family, what has been the feedback from the customers in terms of the cost benefit of replacing discrete nor with STM RAM.
Is it on the cost side, is it on the instant on-access side? What's been kind of the feedback? That's been the features for a while, is that MRAM combined to benefit the volatile and non-volatile.
but the issue has been kind of around density. So just curious about what you're hearing from customers. Yeah, good afternoon, Rashi. Good question. Basically, if you look at the way the knowledge used in current FPGAs, it's basically, it takes forever to write, but the reach speeds are pretty fast.
So that's where SCTM RAM is actually being appreciated by some of our customers. It's basically the rights are much faster, so the faster over the year updates.
The read speeds are similar. Then the other thing that it does is it actually allows you to store multiple bit streams in the memory. So in that way, you can actually have two streams or three streams stored depending on the number of lots and the number of and the density of the STTM RAM that you're using. This great partnership is further into the clipping pile
So where people value the faster right speeds, the longer endurance and the lower power to actually write those configuration streams, I think that's where we're getting good traction from our customers.
But where we are in a cost-comparative environment, you know, Nore is obviously much cheaper than STTM RAM, and that's where we get it, seeing less of a traction. So again, just like our previous applications, customers that value our performance are adopting our parts. And we're thinking about, you know, calendar 24.
the licensing revenue will come and then the water pushed there. We talked about that opportunity on the Red Heart in Canada 24 and then you also talked about the industrial since the design cycles are taking a fair amount of time that you won't see it in 2023 but you'll see it in 2024.
But how do we think about that impact potentially on 2024 with those two budding opportunities? And then for this year, in 2023, what do you think will be the kind of the main growth driver for this year?
If I give you it from the question, please stop me. Okay. So for, I started the last question for 2023, what are the growth paths? And I think they're using our 16 Meg and 64 Meg STTM rampart. I think those getting traction and starting to see initial revenue from there. It's not going to be.
huge numbers, but it's going to be decent numbers that we'll actually talk about by the end of the year. The other thing to look at is these parts, again the 16 and 64 and 2024, I think will drive significant revenue growth as they get adopted and qualified in the various systems over that. Switching to the Radhard product that we're talking about, I just want to comment a little bit over here.
When you are looking at R16 mag and 64 mag HCTM RAM for non replacement, that is different than the deal that we have signed to develop this strategic radar FPGA technology. There you're actually replacing the NOR as well as the S-RAN cells that execute the lookup tables. So there is a totally different solution that we have developed based on HCTM RAM. I think for that, you will see, there are some miles from CV-Acheap, but then you're going to see royalty, sorry not royalty, licensing revenue.
and an RE revenue from that project through 2023. And then I think in 2024 would be the point where you can actually take this technology that we developed for this radiation heart project and then try and deploy it on advanced nodes in the commercial market. And I think that work needs to be done in 2023 so that we are actually ready for potential new revenue streams in 2024. Did I answer all your questions, Raji? And I'm not sure. No, it is. Thank you. And I just want to make sure that the end product would be reconfigurable and it would be an instant on F.
can have been lumpy as expected. That kind of product growth that you've been seeing the last couple of years, maybe you could just summarize just for everybody's purposes what's been driving that growth. And when we're thinking about longer term in terms of the product growth.
acceleration, it seems like that the revenue could kind of inflect potentially higher in 2024 with some of these new initiatives with the X5 family. So just kind of maybe if you could summarize, how do we get here and kind of where are we going with the on the product side?
Yeah, Harajit, this is on edge. Yeah, it's just a kind of reiterate, right? So the product revenue at the end of 21 was about 44 million and it grew to about 55 million in 2022 for the full year. A lot of that has been around the refocus for toggle, right? We've had a lot of record design win years.
last couple of years this year as well, was a record design win for us, where we had 210 design wins before that, a couple of years of 180 or so design wins. And I think that reinvigoration and that importance of going back to the customers and really looking at the cash cow business for us, right? And making sure we get those design wins because as you know,
In industrial, for example, the customer stays for 10, 20 years, and that's critical for us in order to really lock in revenue for long periods of time. So as we've seen our data center customer, their revenue has maybe gone up and down and been a little bit challenging over the last few quarters. We've really been able to make up with it from all the hard work on the toggle side over the last few years with the design ones. And so that continues to be our focus as we look into this year, and I think that's also what you see in the backlog as well.
So to add to that, Raji, your question on how do we see that in 2023 to 2024, right? So what we have done is we have taken our STT Mram technology and we've actually tuned it so that it actually extends our toggle Mram roadmap. So our toggle roadmap basically ended at 16 megabit or 32 megabit parallel and our serial was only at 1 meg and 4 meg and with a single spy.
So by tuning this technology and making it similar to Tauval M Ram, we've now been able to actually extend the density all the way from 4 Meg to 128 Megabit. And I think that opens up markets for us, and I think that's what's going to lead to the growth in 2023 and 24. Thank you. One moment for our next question.
And the next question comes from John Fitchman with dialed capital. Your line is open. Thanks for taking my question. And nice year. I was just, you answered a lot of my questions, but you just hope you could give a little, a little more granular cover on this color in the shape of this year. Thank you.
and Max or however you're comfortable talking about the growth path. You know, it looks like your customer concentration is dropped a lot, which is really encouraging and makes you think you've got a lot more customers than a lot more diversification in your revenue stream at this point, which seems like it should be more stable. It's got more visibility. We've got a lot of industrial design. It should give you more visibility. We've got the pieces.
to help us understand what kind of dynamics we're going to push and pull the growth path and here are some of the growth paths. I mean, think about the path along the pipeline, the visibility, and that kind of diverse like customer base needs out here if I am kind of thinking about it very well. Thanks. Yeah. Hey John , this is On Edge. Let me.
in the second half as we kind of look at things. From a backlog standpoint, you know, continues to remain strong. We have a lot of good visibility into 2024. And like I was mentioning before, there is some uncertainty that we've seen because of the macroeconomic challenges within the semi-industry, right? And so we have seen some push outs and cancellations, but that's really been limited.
And as we look at the full backlog picture, we've been able to pull in a lot of demand from the big backlogs that we have. So from that standpoint, it thinks it'll be going well. In terms of your comments about customer concentration, yeah, you're absolutely right. As we've diversified into Radhart businesses, as we've grown the toggle business and gotten a lot more design wins and now introducing the new 60-poor Mac product as well, we're starting to see
The customer base really increased. So we went from 1,200 customers to about 1,300 customers in 2022. And so that customer base continues to increase. And as we get the ZineWin, we only expect that to continue to improve. And so from a concentration perspective, you'll see that we reduce the concentration on our big data center customer quite a bit. And that's helped us achieve some of the numbers that we've shared last few quarters. Thank you.
Did I get all better? Did I miss that? Yeah. No, it's great. Thank you. At this time, I'd like to turn the conference back over to Mr. Agawol for closing comments. OK, well, that said, we'll conclude today's call. Thank you all for joining us.
and we look forward to reporting our progress and results in the next quarter's call. Obrator, you may now disconnect the call.