Everspin Technologies, Inc. — Q1 2024 Form 10-Q
Business context and period. The filing covers the three months ended March 31, 2024. Everspin develops and sells non-volatile MRAM products and licenses related technology for industrial, medical, automotive/transportation, aerospace, and data-center applications. Amounts below are in U.S. dollars; financial statement amounts are in millions unless otherwise noted.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Total revenue | $14.43 | $14.85 |
| Gross profit / gross margin | $8.16 / 56.5% | $8.43 / 56.8% |
| Operating expenses | $8.76 | $7.73 |
| Operating income (loss) | $(0.60) | $0.70 |
| Net income (loss) | $(0.20) | $0.76 |
| Adjusted EBITDA (non-GAAP) | $1.91 | $2.32 |
| Cash from operating activities | $(1.29) | $1.20 |
- Revenue comprised $10.86 million in product sales and $3.57 million in licensing, royalty, patent, and other revenue. Product sales were 75% of revenue, versus 93% a year earlier.
- At March 31, cash and cash equivalents were $34.80 million, versus $36.95 million at year-end 2023; total assets were $66.17 million and stockholders’ equity was $55.79 million.
- The company reported no outstanding debt. Lease liabilities totaled $5.58 million, including $1.26 million current. Capital expenditures were $1.21 million; option exercises provided $0.35 million in financing cash.
Material changes versus Q1 2023
- Revenue declined 2.8% as product sales fell $2.92 million (21.2%), primarily due to timing of customer demand. Higher RAD-Hard licensing revenue, up about $2.3 million, and $0.2 million more foundry-services revenue largely offset the product decline.
- Gross margin edged down to 56.5% from 56.8%. Management cited lower product sales and higher supplier pricing, partly offset by improved yields on toggle products and increased licensing revenue.
- Operating expenses rose 13.3% to $8.76 million. General and administrative expense increased 25.3%, primarily from stock-based compensation, professional services, and depreciation; R&D increased 6.8%, mainly reflecting the xSPI STT-MRAM product family.
- The company moved from net income to a net loss and from positive to negative operating cash flow. The 2024 operating cash use included working-capital movements, notably a $2.27 million decline in accrued liabilities and a $1.52 million increase in receivables.
- Other income increased to $0.40 million, primarily from interest income on cash. Interest expense was zero following repayment of the credit facility in March 2023.
Outlook, management commentary, and risks
- Management believes existing cash is sufficient for anticipated capital requirements over the next 12 months, but says future needs depend on growth, R&D spending, sales and marketing investment, and new-product introduction. The filing provides no specific revenue or earnings guidance.
- For the $6.5 million RAD-Hard 1 arrangement, $5.9 million had been recognized through March 31, 2024; $0.1 million was deferred revenue. The company expects to recognize the remaining $0.6 million as services are performed, with work expected to be complete in 2024.
- Licensing, royalty, patent, and other revenue is described as highly variable and dependent on a small number of annual transactions. Customer and distributor demand can also shift, and orders may be changed or delayed.
- Key risks include reliance on third-party suppliers and GLOBALFOUNDRIES for certain advanced-node production, supply constraints and input-cost increases, customer concentration, competition, uncertain STT-MRAM adoption, and the need to secure design wins. Management cautions that Q1 results are not necessarily indicative of full-year results.
- At Q1, two significant direct-purchasing customers represented 21% and 24% of revenue and 23% and 44% of net receivables, respectively. The filing states there were no material legal proceedings. Disclosure controls were assessed as effective at a reasonable-assurance level.
Investor verification priorities
- Assess whether product demand and sales recover after the reported timing-related decline, and whether licensing revenue can offset product volatility.
- Track operating cash use, receivables collection, accrued-liability movements, and cash runway against management’s 12-month sufficiency assessment.
- Verify RAD-Hard project execution, completion timing, and recognition of the remaining transaction price during 2024.
- Monitor customer concentration, supplier pricing and availability, and reliance on GLOBALFOUNDRIES and other external manufacturing partners.
- Consider dilution and expense from equity compensation: Q1 stock-based compensation was $1.71 million, and shares outstanding were 21.41 million at March 31, 2024.