Everspin: Fiscal 3Q18 Financial Results

Everspin Technologies, Inc. announced financial results for the third quarter ended September 30, 2018.

Third Quarter and Recent Highlights

• Total revenue of $11.5 million, an increase of 28% year-over-year
• Executed joint agreement with SilTerra to establish additional manufacturing capacity for Toggle products
• Extended length of joint development agreement with GLOBALFOUNDRIES providing both companies more effective controls on their respective development programs
• Everspin 256Mb STT-MRAM will be available on another storage array platform from the company’s leading enterprise storage customer
• Ended quarter with cash balance of $31.4 million

“Third quarter results demonstrated meaningful progress from both a revenue and an operational perspective. The third quarter results show an important return to top line growth for the company. I am pleased with the ongoing improvement our team has made in our Toggle operations and with the traction our 256Mb STT-MRAM product is gaining both within our lead customers and beyond. We remain on track with the planned sampling of our 1Gb STT product next month. And finally, we’ve successfully executed multiple strategic agreements and initiatives that we believe will support longer-term profitable growth,” said Kevin Conley, president and CEO.

Summary of Preliminary Restated
Second Quarter Financial Results
Everspin also announced that it will be restating its second quarter 2018 financial results due to a discrepancy related to the timing of recognizing scrapped inventory in the amount of $770 thousand. As a result, the company will reflect an additional $770 thousand increase in cost of sales for the three- and six-month periods ended June 30, 2018, which will reduce gross profit and increase both loss from operations and net loss. The company anticipates filing its third quarter 10-Q and an amended second quarter form 10-Q/A on or before November 16, 2018.

2FQ18 financials are expected to be restated as follows:

• Company to restate second quarter inventory to $8.9 million, versus $9.6 million previously reported
• Cost of sales to be restated to be $6.2 million, versus $5.5 million as previously reported
• Gross profit to be restated to be $4.5 million, versus $5.3 million as previously reported
• Gross margin to be restated to be 42%, versus the 49% as previously reported
• Loss from operations to be restated to be $7.3 million, versus $6.5 million as previously reported
• Net loss and comprehensive loss to be restated to be $7.4 million, versus $6.6 million as previously reported

Third Quarter Results (2FQ18 Results as restated for comparison)

• Revenue for the third quarter of 2018 was $11.5 million, a 28% increase over the $9.0 million reported in the third quarter of 2017 and a 7.0% increase over the $10.8 million in the previous quarter.
• Gross margin for the third quarter of 2018 was 47% compared to gross margin in the third quarter of 2017 of 58% and in the second quarter of 2018 of 42%.
• Operating expenses for the third quarter of 2018 were $10.9 million, an increase from the $10.6 million in the year-ago quarter and $11.8 million in the previous quarter.
• Net loss for the third quarter of 2018 was $5.6 million, or ($0.33) per share, based on 16.9 million weighted-average shares outstanding, compared with a net loss of $5.4 million, or ($0.43) per share, in the third quarter of 2017 and a net loss of $7.4 million, or ($0.44) per share, in the second quarter of 2018.
• Cash and cash equivalents as of September 30, 2018 were $31.4 million as compared to $32.7 million at the end of the second quarter of 2018.

Business Outlook
For the fourth quarter of 2018, Everspin expects revenue to range between $11.8 million and $12.2 million. Net loss per share is expected to range between ($0.22) and ($0.18) based on an average-weighted share count of 17.1 million shares outstanding.