EVERSPIN TECHNOLOGIES INC

Previous wording

We generated 87% and 79% of our revenue from products sold to distributors for the three months ended June 30, 2024 and 2023, respectively.

Current wording

We generated 84% and 79% of our revenue from products sold to distributors for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Total revenue decreased by $5.1 million, or 32.5%, from $15.7 million during the three months ended June 30, 2023 to $10.6 million during the three months ended June 30, 2024. The decrease was primarily due to a decrease in product sales of $3.5 million due to timing of customer demand, and a decrease in licensing revenue generated from our RAD-Hard projects of $1.5 million, along with a decrease of $0.1 million in other revenue related to foundry services.

Current wording

Total revenue decreased by $4.4 million, or 26.6%, from $16.5 million during the three months ended September 30, 2023 to $12.1 million during the three months ended September 30, 2024. The decrease was primarily due to a decrease in product sales of $3.1 million due to timing of customer demand and a decrease in licensing, royalty, patent, and other revenue of $1.3 million.

Previous wording

Licensing, royalty, patent, and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. Our best estimate of royalty revenue earned is made throughout the year for royalty contracts with an annual performance period, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, patent, and other revenue decreased by $1.6 million, or 68.0% from $2.3 million during the three months ended June 30, 2023, to $0.7 million during the three months ended June 30, 2024. The decrease was driven by a decrease of $1.5 million in licensing revenue generated from our RAD-Hard projects, along with a decrease of $0.1 million of other revenue related to foundry services.

Current wording

Licensing, royalty, patent, and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and terms of each transaction. Our best estimate of royalty revenue earned is made throughout the year for royalty contracts with an annual performance period, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, patent, and other revenue decreased by $1.3 million, or 43.6% from $2.9 million during the three months ended September 30, 2023, to $1.7 million during the three months ended September 30, 2024. The decrease was driven by licensing revenue generated from our RAD-Hard projects of $0.7 million, a decrease of $0.5 million in other revenue related to professional services and a decrease of $0.1 million in royalty revenue.

Previous wording

Cost of product sales decreased by $0.9 million, or 14.0%, from $6.1 million during the three months ended June 30, 2023, to $5.2 million during the three months ended June 30, 2024. The decrease was primarily due to a reduction in product sales, partially offset by increased yields on our toggle products.

Current wording

Cost of product sales decreased by $0.2 million, or 2.9%, from $5.9 million during the three months ended September 30, 2023, to $5.8 million during the three months ended September 30, 2024. The decrease was primarily due to a reduction in product sales and increased yields on our toggle products.

Previous wording

Cost of licensing, royalty, patent, and other revenue decreased by $0.3 million, or 60.1% from $0.5 million during the three months ended June 30, 2023, to $0.2 million during the three months ended June 30, 2024. The decrease was primarily due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.

Current wording

Cost of licensing, royalty, patent, and other revenue decreased by $0.2 million, or 37.8% from $0.6 million during the three months ended September 30, 2023, to $0.4 million during the three months ended September 30, 2024. The decrease was primarily due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.

Previous wording

Gross margin decreased from 58.4% during the three months ended June 30, 2023, to 49.0% during the three months ended June 30, 2024. Gross margin decreased as a result of a decrease in product sales and licensing revenue, partially offset by increased yields on our toggle products.

Current wording

Gross margin decreased from 60.2% during the three months ended September 30, 2023, to 49.2% during the three months ended September 30, 2024. Gross margin decreased as a result of a shift in product mix, a decrease in FAB loadings, and a decrease in licensing revenue partially offset by increased yields on our toggle products.

Previous wording

*Research and Development Expenses.*Research and development expenses increased by $0.7 million, or 27.7%, from $2.7 million during the three months ended June 30, 2023, to $3.5 million during the three months ended June 30, 2024. The primary driver of research and development expenses relates to our new Extended Serial Peripheral Interface (xSPI) family of STT-MRAM products. Our xSPI products offer high-performance, multiple I/O, SPI-compatibility and feature a high-speed, low pin count SPI compatible interface.

Current wording

*Research and Development Expenses.*Research and development expenses increased by $0.7 million, or 27.3%, from $2.7 million during the three months ended September 30, 2023, to $3.3 million during the three months ended September 30, 2024. The primary driver of research and development expenses relates to our new Extended Serial Peripheral Interface (xSPI) family of STT-MRAM products. Our xSPI products offer high-performance, multiple I/O, SPI-compatibility and feature a high-speed, low pin count SPI compatible interface.

Previous wording

*General and Administrative Expenses.*General and administrative expenses decreased by $0.3 million, or 7.2%, from $3.5 million during the three months ended June 30, 2023, to $3.2 million during the three months ended June 30, 2024. The decrease is primarily due to reduced professional services costs.

Current wording

*General and Administrative Expenses.*General and administrative expenses decreased by $0.6 million, or 14.5%, from $3.9 million during the three months ended September 30, 2023, to $3.3 million during the three months ended September 30, 2024. The decrease is primarily due to reduced professional services costs.

Previous wording

We generated 78% and 82% of our revenue from products sold to distributors for the six months ended June 30, 2024 and 2023, respectively.

Current wording

We generated 80% and 81% of our revenue from products sold to distributors for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Licensing, royalty, patent and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and term of each transaction Our best estimate of royalty revenue earned is made through the year, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, patent, and other revenue increased by $0.9 million, or 26.7%, from $3.4 million during the six months ended June 30, 2023, to $4.3 million during the six months ended June 30, 2024. The increase was driven by an increase of $0.7 million in licensing revenue generated from our RAD-Hard projects, along with an increase of $0.2 million of other revenue related to foundry services.

Current wording

Licensing, royalty, patent and other revenue is a highly variable revenue item characterized by a small number of transactions annually with revenue based on size and term of each transaction. Our best estimate of royalty revenue earned is made through the year, with an annual adjustment recognized for actual sales in the first quarter of each fiscal year. Licensing, royalty, patent, and other revenue decreased by $0.4 million, or 5.7%, from $6.3 million during the nine months ended September 30, 2023, to $6.0 million during the nine months ended September 30, 2024. The decrease was driven by a decrease of $0.3 million in other revenue related to professional services and a decrease of $0.1 million in royalty revenue.

Previous wording

Cost of product sales decreased by $1.0 million, or 8.0%, from $12.2 million during the six months ended June 30, 2023, to $11.2 million during the six months ended June 30, 2024. The decrease was primarily due to a reduction in product sales and increased yields on our toggle products.

Current wording

Cost of product sales decreased by $1.1 million, or 6.3%, from $18.1 million during the nine months ended September 30, 2023, to $17.0 million during the nine months ended September 30, 2024. The decrease was primarily due to a reduction in product sales and increased yields on our toggle products.

Previous wording

Cost of licensing, royalty, patent, and other revenue decreased by $0.3 million, or 40.3% from $0.8 million during the six months ended June 30, 2023, to $0.5 million during the six months ended June 30, 2024. The decrease was due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.

Current wording

Cost of licensing, royalty, patent, and other revenue decreased by $0.5 million, or 39.2%, from $1.4 million during the nine months ended September 30, 2023, to $0.8 million during the nine months ended September 30, 2024. The decrease was due to a decrease in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.

Previous wording

Gross margin decreased from 57.6% during the six months ended June 30, 2023, to 53.4% during the six months ended June 30, 2024. Gross margin decreased as a result of a decrease in product sales and increased yields on our toggle products, partially offset by increased licensing revenue.

Current wording

Gross margin decreased from 58.5% during the nine months ended September 30, 2023, to 52.0% during the nine months ended September 30, 2024. Gross margin decreased as a result of a shift in product mix, a decrease in FAB loadings, and a decrease in licensing revenue partially offset by increased yields on our toggle products.

Previous wording

*Research and Development Expenses.*Research and development expenses increased by $1.0 million, or 16.4%, from $5.9 million during the six months ended June 30, 2023, to $6.9 million during the six months ended June 30, 2024. The primary driver of research and development expenses relates to our new xSPI family of STT-MRAM products.

Current wording

*Research and Development Expenses.*Research and development expenses increased by $1.7 million, or 19.8%, from $8.6 million during the nine months ended September 30, 2023, to $10.2 million during the nine months ended September 30, 2024. The primary driver of research and development expenses relates to our new xSPI family of STT-MRAM products.

Previous wording

*Sales and Marketing Expenses.*Sales and marketing expenses remained consistent at $2.6 million during the six months ended June 30, 2024 and 2023, respectively.

Current wording

*General and Administrative Expenses.*General and administrative expenses remained consistent at $10.7 million during both the nine months ended September 30, 2023 and 2024.

Previous wording

Interest expense decreased by $0.1 million, or 100.0%, from $0.1 million during the six months ended June 30, 2023, to $0 during the six months ended June 30, 2024. The decrease was due to having no outstanding balance under our 2019 Credit Facility that we paid off in full in March 2023, resulting in no interest incurred during the six months ended June 30, 2024.

Current wording

Interest expense decreased by $0.1 million, or 100.0%, from $0.1 million during the nine months ended September 30, 2023, to zero during the nine months ended September 30, 2024. The decrease was due to having no outstanding balance under our 2019 Credit Facility that we paid off in full in March 2023, resulting in no interest incurred during the nine months ended September 31, 2024.

Previous wording

As of June 30, 2024, we had $36.8 million of cash and cash equivalents, compared to $36.9 million as of December 31, 2023. As of June 30, 2024, we have no outstanding debt as we paid off our 2019 Credit Facility in full in March 2023. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements in the next 12 months. Our future capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.

Current wording

As of September 30, 2024, we had $39.6 million of cash and cash equivalents, compared to $36.9 million as of December 31, 2023. As of September 30, 2024, we have no outstanding debt as we paid off our 2019 Credit Facility in full in March 2023. We believe our cash and cash equivalents are sufficient to meet our anticipated capital requirements in the next 12 months. Our future capital requirements will depend on many factors, including, among other things, our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, and the introduction of new products.

Previous wording

During the six months ended June 30, 2024, cash provided by operating activities was$0.4 million, which consisted of net loss of$2.7 million, non-cash charges of$4.4 millionand changes of net operating assets and liabilities of$1.2 million. The non-cash charges consisted of stock-based compensation of$3.6 million and depreciation and amortization of$0.8 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of$1.4 million due to timing of cash receipts for outstanding balances, a decrease in prepaid and other current assets of$0.5 million, and a decrease in inventory of$0.4 million offset by a decrease in accounts payable of$0.6 million, a decrease in accrued liabilities of$2.6 million and a decrease in deferred revenue of $0.3 million.

Current wording

During the nine months ended September 30, 2024, cash provided by operating activities was$3.3 million, which consisted of net loss of$0.4 million, non-cash charges of$6.3 millionand changes of net operating assets and liabilities of$2.6 million. The non-cash charges primarily consisted of stock-based compensation of$5.1 million, depreciation and amortization of$1.2 million. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable of$0.2 million, an increase in contract obligations of $3.0 million, an increase in prepaid and other current assets of$3.6 million, a decrease in accounts receivable of$0.1 million due to timing of cash receipts for outstanding balances, and a decrease in accrued liabilities of$2.2 million.

Previous wording

During the six months ended June 30, 2023, cash provided by operating activities was $7.5 million, which consisted of net income of $4.6 million, non-cash charges of $3.2 million and changes of net operating assets and liabilities of $0.3 million. The non-cash charges primarily consisted of stock-based compensation of $ 2.4 million, depreciation and amortization of $0.6 million, and a loss on prepayment and termination of our 2019 Credit Facility of $0.2 million. The change in our net operating assets and liabilities was primarily due to an increase in inventory of $0.7 million, a decrease in accounts payable of $0.7 million, a decrease in accrued liabilities of $0.7 million primarily due to timing of variable compensation costs, and a decrease in deferred revenue of $0.1 million, offset by a decrease in accounts receivable of $1.6 million due to timing of cash receipts for outstanding balances and a decrease in prepaid and other current assets of $0.2 million.

Current wording

During the nine months ended September 30, 2023, cash provided by operating activities was $11.1 million, which consisted of net income of $7.1 million, non-cash charges of $4.8 million and changes of net operating assets and liabilities of $0.8 million. The non-cash charges primarily consisted of stock-based compensation of $3.7 million, depreciation and amortization of $0.9 million, and a loss on prepayment and termination of our 2019 Credit Facility of $0.2 million. The change in our net operating assets and liabilities was primarily due to a decrease in accounts receivable of $0.6 million due to timing of cash receipts for outstanding balances, an increase in inventory of $2.0 million to meet anticipated production volumes, a decrease in prepaid and other current assets of $0.4 million, an increase in accounts payable of $0.6 million, a decrease in accrued liabilities of $0.1 million, and a decrease in deferred revenue of $0.3 million.

Previous wording

Cash used in investing activities during the six months ended June 30, 2024, was $1.2 million, reflecting purchases of manufacturing equipment.

Current wording

Cash used in investing activities during the nine months ended September 30, 2024 was $1.3 million for the purchase of manufacturing equipment.

Previous wording

Cash provided by financing activities during the six months ended June 30, 2024, was $0.6 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.

Current wording

Cash provided by financing activities during the nine months ended September 30, 2024, was $0.7 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.

Previous wording

Cash used in financing activities during the six months ended June 30, 2023, was $2.5 million, consisting mainly of $2.8 million of payments to pay off our 2019 Credit Facility, offset by $0.3 million in proceeds from the exercise of employee stock options.

Current wording

Cash used in financing activities during the nine months ended September 30, 2023, was $1.9 million, consisting mainly of $2.8 million of payments to pay off our 2019 Credit Facility, offset by $0.9 million in proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan.