Everspin: Fiscal 4Q18 Financial Results

(in $ million)	4Q17	4Q18	FY17	FY18
Revenue	10.1	12.3	35.9	49.4
*Growth*		21%		*38%*
Net income (loss)	(4.4)	(3.5)	(21.1)	(1.78)

Everspin Technologies, Inc. announced financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter and Full Year Highlights
• 4Q18 total revenue grew 21% year-over-year to $12.3 million
• Full year total revenue grew 38% over 2017 to $49.4 million, with MRAM product revenue increasing 40%
• Shipped world’s first pre-production customer samples of 28nm 1Gb STT-MRAM product
• Increased volume production of 40nm 256MbSTT-MRAM in support of flash array customer
• Ended the year with cash and cash equivalents of $23.4 million

“2018 marked a transformational year for Everspin, with measurable progress on our MRAM initiatives resulting in MRAM product revenue growth of 40%,” stated Kevin Conley, president and CEO. “We successfully ramped volume production of our 256Mb STT-MRAM product, developed key manufacturing and licensing partnerships, as well as demonstrated continued improvements on Toggle production.
“Further, we achieved a significant milestone of shipping pre-production samples of our 28nm 1Gb STT-MRAM product to customers with positive initial feedback. We are actively preparing for qualifications and production ramp in the second half of this year.
“Looking forward, we continue to be focused on disciplined execution, operational excellence and technology leadership as we work to expand the pipeline of opportunities for both our Toggle and STT-MRAM products.”

Fourth Quarter and Full Year Results
Total revenue for 4FQ18 was $12.3 million, a 21% increase over the $10.1 million reported in 4FQ17 and a 7% increase over the $11.5 million in the previous quarter. For FY18, total revenue increased 38% to $49.4 million from $35.9 million in 2017.

Gross margin for 4FQ18 was 44.2%, compared to gross margin of 61.5% in 4FQ17 and 47.0% in the previous quarter. FY18 gross margin was 51.3% compared to 59.8% in 2017.

Operating expenses for 4FQ18 were $8.8 million, compared to $10.5 million in the year-ago quarter and $10.9 million in the previous quarter. For FY18, operating expenses were $42.7 compared to $41.7 million in 2017.

Net loss for 4FQ18 was ($3.5 million), or ($0.20) per share, based on 17.1 million weighted-average shares outstanding, compared to a net loss of ($4.4 million), or ($0.35) per share in 4FQ17 and a net loss of ($5.6 million), or ($0.33) per share in 3FQ18. FY18 net loss was ($17.8 million), or ($1.08) per share, based on 16.4 million weighted-average shares outstanding, compared to a net loss of ($21.1 million), or ($1.69) per share, in 2017.

Cash and cash equivalents as of December 31, 2018 were $23.4 million, compared to $31.4 million at the end of 3FQ18.

Business Outlook
For 1FQ19, the company expects total revenue in the range of $9.5 million and $9.9 million. Net loss per share is expected to be between ($0.28) and ($0.24) based on an weighted-average share count of 17.4 million shares outstanding.

Comments

Kevin Conley, CEO, president and director:
"Toggle MRAM, which was sequentially lower in Q4 mainly due to an impactful reduction of a relatively significant but low margin automotive program engagement. This is contributing to our expectations for lower revenue in the first quarter of 2019.
"In manufacturing, we saw improving yields on production of Toggle MRAM in the latter part of 2018 and expect these improvements to continue making an increasingly positive contribution to gross margins going forward.
"(...) demand for our ST - for our first STT-MRAM discrete product, a 256-megabit component targeting data center persistent memory applications, has had a well performing production ramp and shipments continue to grow throughout the year-end. This revolutionary product was successfully adopted in IBM's NVMe flash core module in the flash system 9100 family of AFA and subsequently expanded into the storewide V7000 array family."

Jeffrey Winzeler, CFO and secretary:
"The increase in this revenue in the fourth quarter was largely the result of higher-than-normal back-end foundries service revenue. For the full year, licensing, royalties and other revenue increased 94% to $9.9 million from $5.1 million in 2017.
"MRAM product sales in the fourth quarter, which includes Toggle and STT-MRAM, were $9.7 million, a 29% increase from the $7.5 million in the fourth quarter of 2017 and a 6% decrease from the $10.4 million in the previous quarter.
"The sequential reduction in operating expenses was due to reduced R&D spending related to STT-MRAM process and product development per our joint development agreement with GLOBALFOUNDRIES."