Everspin Reports Unaudited Second Quarter 2024 Financial Results

Rhea-AI Summary

Everspin Technologies (NASDAQ: MRAM) reported Q2 2024 financial results with revenue of $10.6 million, in line with guidance but down from $15.7 million in Q2 2023. The company experienced a GAAP net loss of $2.5 million, or $0.12 per basic share, compared to net income of $3.9 million in Q2 2023. Gross margin decreased to 49.0% from 58.4% year-over-year.

Despite a slower start to 2024, Everspin sees potential for a stronger second half, supported by design wins for its PERSYST STT-MRAM products. The company ended Q2 with a debt-free balance sheet and generated $1.7 million in cash flow from operations. For Q3 2024, Everspin projects revenue between $11.5-$12.5 million and a GAAP net loss per basic share of $0.05-$0.10.

Positive

• Debt-free balance sheet maintained
• Generated $1.7 million cash flow from operations in Q2
• Anticipates revenue ramp and design wins in Q3
• Projecting Q3 revenue growth to $11.5-$12.5 million

Negative

• Q2 revenue decreased 32.5% year-over-year to $10.6 million
• GAAP net loss of $2.5 million compared to net income of $3.9 million in Q2 2023
• Gross margin declined to 49.0% from 58.4% year-over-year
• Adjusted EBITDA loss of $0.2 million compared to $5.4 million gain in Q2 2023

Insights

Financial Analyst

Everspin Technologies' Q2 2024 results paint a mixed picture for investors. The company reported $10.6 million in revenue, aligning with guidance but showing a significant 32.5% year-over-year decline. This downturn is concerning, particularly in the core MRAM product sales, which dropped from $13.4 million to $9.9 million.

The gross margin compression from 58.4% to 49.0% is noteworthy, indicating potential pricing pressures or inefficiencies. The shift from a net income of $3.9 million in Q2 2023 to a net loss of $2.5 million in Q2 2024 is a red flag, suggesting challenges in maintaining profitability amid revenue declines.

However, it's not all doom and gloom. The company's debt-free balance sheet and positive operating cash flow of $1.7 million provide some financial stability. The management's optimism about a stronger second half, backed by design wins in the PERSYST STT-MRAM product family, particularly in Europe and Asia Pacific, offers a glimmer of hope.

For Q3 2024, the projected revenue range of $11.5 million to $12.5 million indicates a sequential improvement, but still falls short of the previous year's performance. Investors should closely monitor the company's ability to execute on its design wins and translate them into revenue growth.

Tech Expert

Everspin's focus on MRAM technology positions it uniquely in the semiconductor memory market. The company's PERSYST STT-MRAM product family, ranging from 4Mb to 128Mb, represents a significant technological advancement. These products offer non-volatility, high endurance and fast write speeds, making them attractive for applications requiring data persistence and reliability.

The increased design activity in Europe and Asia Pacific is a positive indicator. It suggests that Everspin's MRAM solutions are gaining traction in diverse markets, potentially opening up new revenue streams. However, the overall revenue decline implies that MRAM adoption isn't accelerating as rapidly as hoped.

The semiconductor industry is currently experiencing a downturn, which partly explains Everspin's challenges. The company's ability to weather this storm while continuing to innovate will be crucial. The mention of "signs of recovery in inventory consumption" by customers is encouraging, but it's essential to see if this translates into sustained demand.

Everspin's continued investment in R&D, evident from the increased operating expenses, is critical for maintaining its technological edge. However, the company needs to balance innovation with cost control to improve its financial performance. The coming quarters will be pivotal in determining whether Everspin can capitalize on its technological advantages and return to growth.

Q2’24 revenue of $10.6 million in-line with guidance

CHANDLER, Ariz.--(BUSINESS WIRE)-- Everspin Technologies, Inc. (NASDAQ: MRAM), the world’s leading developer and manufacturer of magnetoresistive random access memory (MRAM) persistent memory solutions, today announced preliminary unaudited financial results for the second quarter ended June 30, 2024.

“Our second quarter revenue and GAAP net loss per basic share came in in-line with our guidance,” said Sanjeev Aggarwal, President and Chief Executive Officer. “Despite a slower start to the year, we continue to see a path towards a stronger second half supported by design wins with our PERSYST 4Mb to 128Mb STT-MRAM product family, especially in the European and Asia Pacific regions where we experienced our highest design activity.”

Second Quarter 2024 Results

• Total revenue of $10.6 million, compared to $15.7 million in the second quarter of 2023.
• MRAM product sales, which includes both Toggle and STT-MRAM revenue, of $9.9 million, compared to $13.4 million in the second quarter of 2023.
• Licensing, royalty, patent, and other revenue of $0.7 million, compared to $2.3 million in the second quarter of 2023.
• Gross margin of 49.0%, compared to 58.4% in the second quarter of 2023.
• GAAP operating expenses of $8.0 million, compared to $7.6 million in the second quarter of 2023.
• GAAP net loss of $2.5 million, or $0.12 per basic share, compared to net income of $3.9 million, or $0.18 per diluted share, in the second quarter of 2023.
• Adjusted EBITDA of a loss of $0.2 million, compared to $5.4 million in the second quarter of 2023.

“We are pleased to end the quarter with a strong balance sheet that remains debt free and the $1.7 million cash flow from operations we generated in the quarter,” said Matt Tenorio, Everspin’s Interim Chief Financial Officer. “Looking ahead to the third quarter, we anticipate a ramp in revenue and design wins and have observed signs of recovery in inventory consumption of our customers.”

Business Outlook

For the third quarter 2024, Everspin expects total revenue in a range of $11.5 million to $12.5 million and GAAP net loss per basic share to be between $0.05 and $0.10.

This outlook is dependent on Everspin's current expectations, which may be impacted by, among other things, evolving external conditions, such as pandemics or endemics, local safety guidelines, worsening impacts due to supply chain constraints or interruptions, including due to the military conflict between Russia and Ukraine, instability in the Middle East, recent market volatility, semiconductor downturn and the other risk factors described in Everspin's filings with the Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, its Quarterly Reports on Form 10-Q filed with the SEC during 2024, as well as in its subsequent filings with the SEC.

Use of Non-GAAP Financial Measures

Everspin supplements the reporting of its financial information determined under generally accepted accounting principles in the United States of America (GAAP) with Adjusted EBITDA, which is a non-GAAP financial measure. Everspin defines Adjusted EBITDA as net income adjusted for interest expense, taxes, depreciation and amortization, stock-based compensation expense, and restructuring costs (if any).

Everspin’s management and board of directors use Adjusted EBITDA to understand and evaluate its operating performance and trends, to prepare and approve its annual budget and to develop short-term and long-term operating and financing plans. Accordingly, Everspin believes that Adjusted EBITDA provides useful information for investors in understanding and evaluating its operating results in the same manner as its management and board of directors. Adjusted EBITDA is a non-GAAP financial measure and should be considered in addition to, not as superior to, or as a substitute for, net income reported in accordance with GAAP. Moreover, other companies may define Adjusted EBITDA differently, which limits the usefulness of this measure for comparisons with such other companies. Everspin encourages investors to review its financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Conference Call

Everspin will host a conference call for analysts and investors on Wednesday, July 31, 2024, at 5:00 p.m. Eastern Time.

Dial-in details: To access the call by phone, please go to this link and you will be provided with dial-in details. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time.

The live webcast of the call will be accessible on the Company’s website at investor.everspin.com. Approximately two hours after conclusion of the live event, an archived webcast of the conference call will be accessible from the Investor Relations section of the Company’s website for twelve months.

About Everspin Technologies

Everspin Technologies, Inc. is the world’s leading provider of magnetoresistive RAM (MRAM). Everspin MRAM delivers the industry’s most robust, highest-performance non-volatile memory for industrial IoT, data centers and other mission-critical applications where data persistence is paramount. Headquartered in Chandler, Arizona, Everspin provides commercially available MRAM solutions to a large and diverse customer base. For more information, visit www.everspin.com. NASDAQ: MRAM.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding future results that involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to the statements made under the caption “Business Outlook.” Forward-looking statements are identified by words such as “expects” or similar expressions. These include, but are not limited to, Everspin’s future financial performance, including the outlook for third quarter 2024 results. Actual results could differ materially from these forward-looking statements as a result of certain risks and uncertainties, including, without limitation, the risks set forth under the caption “Risk Factors” in Everspin’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024, and its Quarterly Reports on Form 10-Q filed with the SEC during 2024, as well as in its subsequent filings with the SEC. Any forward-looking statements made by Everspin in this press release speak only as of the date on which they are made and subsequent events may cause these expectations to change. Everspin disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise, except as required by law.

EVERSPIN TECHNOLOGIES, INC. Condensed Balance Sheets (In thousands, except share and per share amounts) (Unaudited)
		June 30,				December 31,
		2024				2023
Assets
Current assets:
Cash and cash equivalents		$	36,764			$	36,946
Accounts receivable, net			10,114				11,554
Inventory			7,987				8,391
Prepaid expenses and other current assets			517				988
Total current assets			55,382				57,879
Property and equipment, net			3,790				3,717
Right-of-use assets			5,182				5,495
Other assets			211				212
Total assets		$	64,565			$	67,303
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	1,950			$	2,916
Accrued liabilities			1,760				4,336
Deferred revenue			—				336
Lease liabilities, current portion			1,275				1,190
Total current liabilities			4,985				8,778
Lease liabilities, net of current portion			3,996				4,390
Long-term income tax liability			162				214
Total liabilities		$	9,143			$	13,382
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively			—				—
Common stock, $0.0001 par value per share; 100,000,000 shares authorized; 21,656,683 and 21,080,472 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively			2				2
Additional paid-in capital			195,774				191,569
Accumulated deficit			(140,354	)			(137,650	)
Total stockholders’ equity			55,422				53,921
Total liabilities and stockholders’ equity		$	64,565			$	67,303

EVERSPIN TECHNOLOGIES, INC. Condensed Statements of Operations and Comprehensive (Loss) Income (In thousands, except share and per share amounts) (Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Product sales		$	9,887			$	13,406			$	20,747			$	27,183
Licensing, royalty, patent, and other revenue			749				2,341				4,319				3,410
Total revenue			10,636				15,747				25,066				30,593
Cost of product sales			5,235				6,090				11,238				12,213
Cost of licensing, royalty, patent, and other revenue			185				464				452				757
Total cost of sales			5,420				6,554				11,690				12,970
Gross profit			5,216				9,193				13,376				17,623
Operating expenses:1
Research and development			3,457				2,708				6,875				5,907
General and administrative			3,254				3,507				7,290				6,727
Sales and marketing			1,324				1,355				2,630				2,670
Total operating expenses			8,035				7,570				16,795				15,304
(Loss) income from operations			(2,819	)			1,623				(3,419	)			2,319
Interest expense			—				—				—				(63	)
Other income, net			393				2,262				791				2,390
Net (loss) income before income taxes			(2,426	)			3,885				(2,628	)			4,646
Income tax (expense) benefit			(76	)			—				(76	)			—
Net (loss) income and comprehensive (loss) income		$	(2,502	)		$	3,885			$	(2,704	)		$	4,646
Net (loss) income per common share:
Basic		$	(0.12	)		$	0.19			$	(0.13	)		$	0.23
Diluted		$	(0.12	)		$	0.18			$	(0.13	)		$	0.22
Weighted average shares of common stock outstanding:
Basic			21,566,863				20,657,404				21,409,611				20,554,769
Diluted			21,566,863				21,234,253				21,409,611				21,068,059
1Operating expenses include stock-based compensation as follows:
Research and development		$	689			$	503			$	1,269			$	949
General and administrative			980				624				1,960				1,235
Sales and marketing			193				133				347				236
Total stock-based compensation		$	1,862			$	1,260			$	3,576			$	2,420

EVERSPIN TECHNOLOGIES, INC. Condensed Statements of Cash Flows (In thousands) (Unaudited)
		Six Months Ended June 30,
		2024				2023
Cash flows from operating activities
Net (loss) income		$	(2,704	)		$	4,646
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			795				617
Gain on sale of property and equipment			—				(15	)
Stock-based compensation			3,576				2,420
Loss on prepayment and termination of credit facility			—				170
Non-cash warrant revaluation			—				23
Non-cash interest expense			—				26
Income tax benefit of long term tax liability			—				—
Changes in operating assets and liabilities:
Accounts receivable			1,440				1,639
Inventory			404				(662	)
Prepaid expenses and other current assets			471				193
Other assets			1				—
Accounts payable			(595	)			(741	)
Accrued liabilities			(2,628	)			(701	)
Deferred revenue			(336	)			(96	)
Lease liabilities, net			4				12
Net cash provided by operating activities			428				7,531
Cash flows from investing activities
Purchases of property and equipment			(1,239	)			(1,063	)
Proceeds received from sale of property and equipment			—				15
Net cash used in investing activities			(1,239	)			(1,048	)
Cash flows from financing activities
Payments on long-term debt			—				(2,790	)
Proceeds from exercise of stock options and purchase of shares in employee stock purchase plan			629				342
Net cash provided by (used in) financing activities			629				(2,448	)
Net (decrease) increase in cash and cash equivalents			(182	)			4,035
Cash and cash equivalents at beginning of period			36,946				26,795
Cash and cash equivalents at end of period		$	36,764			$	30,830
Supplementary cash flow information:
Interest paid		$	—			$	37
Operating cash flows paid for operating leases		$	699			$	692
Financing cash flows paid for finance leases		$	28			$	6
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for finance lease liabilities		$	297			$	—
Purchases of property and equipment in accounts payable and accrued liabilities		$	75			$	—

EVERSPIN TECHNOLOGIES, INC. Reconciliation of Adjusted EBITDA (In thousands) (Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Adjusted EBITDA reconciliation:
Net (loss) income		$	(2,502	)		$	3,885			$	(2,704	)		$	4,646
Depreciation and amortization			397				284				795				617
Stock-based compensation expense			1,862				1,260				3,576				2,420
Interest expense			—				—				—				63
Income tax (benefit) expense			76				—				76				—
Adjusted EBITDA		$	(167	)		$	5,429			$	1,743			$	7,746

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731883502/en/

Investor Relations:

Monica Gould

The Blueshirt Group

T: 212-871-3927

ir@everspin.com

Source: Everspin Technologies, Inc.

FAQ

What was Everspin's (MRAM) revenue for Q2 2024?

Everspin reported revenue of $10.6 million for Q2 2024, which was in line with their guidance but down from $15.7 million in Q2 2023.

How did Everspin's (MRAM) earnings per share change in Q2 2024 compared to Q2 2023?

Everspin reported a GAAP net loss of $0.12 per basic share in Q2 2024, compared to net income of $0.18 per diluted share in Q2 2023.

What is Everspin's (MRAM) revenue guidance for Q3 2024?

Everspin expects total revenue for Q3 2024 to be in the range of $11.5 million to $12.5 million.

How much cash flow from operations did Everspin (MRAM) generate in Q2 2024?

Everspin generated $1.7 million in cash flow from operations during Q2 2024.