EVERSPIN TECHNOLOGIES INC

Previous wording

We monitor a variety of key financial metrics to help us evaluate trends, establish budgets, measure the effectiveness of our business strategies and assess operational efficiencies. These financial metrics include revenue, gross margin, operating expenses and operating income determined in accordance with GAAP. Additionally, we monitor and project cash flow to determine our sources and uses for working capital to fund our operations. We also monitor Adjusted EBITDA, a non-GAAP financial measure, and design wins. We define Adjusted EBITDA as net income or loss adjusted

Current wording

We monitor a variety of key financial metrics to help us evaluate trends, establish budgets, measure the effectiveness of our business strategies, and assess operational efficiencies. These financial metrics include revenue, gross margin, operating expenses and operating income determined in accordance with GAAP. Additionally, we monitor and project cash flow to determine our sources and uses for working capital to fund our operations. We also monitor Adjusted net

Previous wording

Adjusted EBITDA. Our management and board of directors use Adjusted EBITDA to understand and evaluate our operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operating and financing plans. Accordingly, we believe that Adjusted EBITDA provides useful information for investors in understanding and evaluating our operating results in the same manner as our management and our 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. The following table presents a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted EBITDA for the periods indicated:

Current wording

*Adjusted net income.*Our management and board of directors use Adjusted net income to assess and evaluate our overall performance and financial trends, inform the annual budgeting process, and guide both short-term and long-term operational and strategic planning. As such, we believe Adjusted net income provides meaningful insight for investors into our financial performance, consistent with how our management team and board view and analyze our results. Adjusted net income is a non-GAAP financial measure and should be considered alongside, but not as a replacement for or superior to, net income as reported in accordance with GAAP. The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to Adjusted net income for the periods presented:

Previous 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.

Current wording

We generated 60% and 71% of our revenue from products sold to distributors for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

regions: North America; EMEA; and APAC. We recognize revenue by geography based on the region in which our customer is located and to which our products are sold, and not to where the end products in which they are assembled are shipped. Our revenue by region and by type of revenue for the periods indicated were as follows (in thousands):

Current wording

In addition to selling our products to our distributors, we maintain a direct selling relationship, for strategic purposes, with several key customer accounts. We have organized our sales team and representatives into three primary regions: North America; EMEA; and APAC. We recognize revenue by geography based on the region in which our customer is located and to which our products are sold, and not to where the end products in which they are assembled are shipped. Our revenue by region and by type of revenue for the periods indicated were as follows (in thousands):

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 $1.3 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.

Current wording

Total revenue decreased by $1.3 million, or 9.0%, from $14.4 million during the three months ended March 31, 2024 to $13.1 million during the three months ended March 31, 2025. The decrease was primarily due to a decrease in licensing, royalty, patent, and other revenue of $1.5 million. 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 $1.5 million, or 40.8% from $3.6 million during the three months ended March 31, 2024, to $2.1 million during the three months ended March 31, 2025. The decrease was primarily due to the progression of our contractual agreements with customers for the development of RAD-Hard products, along with the conclusion of a contractual arrangement with a customer for the development of reliability models for strategic radiation hardened toggle MRAM, partially offset by a new agreement for the development of an AI technology application.

Previous 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.

Current wording

Cost of licensing, royalty, patent, and other revenue slightly increased by $0.1 million, or 32.8% from $0.3 million during the three months ended March 31, 2024, to $0.4 million during the three months ended March 31, 2025. The increase was primarily due to an increase in licensing costs related to labor and materials associated with the progression of our RAD-Hard projects.

Previous 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.

Current wording

Gross margin decreased from 56.5% during the three months ended March 31, 2024, to 51.4% during the three months ended March 31, 2025. 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 $1.7 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.

Current wording

*Research and Development Expenses.*Research and development expenses remained consistent at $3.4 million during the three months ended March 31, 2025 and 2024. Research and development expenses relate primarily to the development and enhancement of our new Extended Serial Peripheral Interface (xSPI) family of STT-MRAM products,

Previous 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.

Current wording

which offer high-performance, multiple I/O, SPI-compatibility and feature a high-speed, low pin count SPI compatible interface, and increases in share-based compensation.

Previous 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.

Current wording

*General and Administrative Expenses.*General and administrative expenses decreased by $0.2 million, or 4.9%, from $4.0 million during the three months ended March 31, 2024, to $3.8 million during the three months ended March 31, 2025. The decrease is primarily due to reduced professional services costs.

Previous wording

*Sales and Marketing Expenses.*Sales and marketing expenses remained consistent at $1.3 million during the three months ended September 30, 2024 and 2023, respectively. Sales and marketing expenses relate primarily to compensation costs and contract labor.

Current wording

*Sales and Marketing Expenses.*Sales and marketing expenses increased by $0.2 million, or 14.2%, from $1.3 million during the three months ended March 31, 2024, to $1.5 million during the three months ended March 31, 2025. Sales and marketing expenses relate primarily to compensation costs and contract labor.

Previous 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.

Current wording

As of March 31, 2025, we had $42.2 million of cash and cash equivalents, compared to $42.1 million as of December 31, 2024. 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 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.

Current wording

During the three months ended March 31, 2025, cash provided by operating activities was$1.4 million, which consisted of net loss of$1.2 million, non-cash charges of$2.4 millionand changes of net operating assets and liabilities of$0.2 million. The non-cash charges primarily consisted of stock-based compensation of$1.6 million, depreciation and amortization of$0.8 million. The change in our net operating assets and liabilities was primarily due to an increase in accounts payable of $1.1 million, an increase in deferred revenue of $1.1 million, an increase in contract obligations of $0.6 million, a decrease in prepaid expenses and other current assets of $0.2 million, offset by an increase in inventory of $1.9 million, and an increase in accounts receivable of $0.8 million.

Previous 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.

Current wording

During the three months ended March 31, 2024, cash used in operating activities was $1.3 million, which consisted of net loss of $0.2 million, cash provided by non-cash charges of $2.1 million and changes of net operating assets and liabilities of $3.3 million. The non-cash charges consisted of stock-based compensation of $1.7 million and depreciation and amortization of $0.4 million. The use of cash due to the change in our net operating assets and liabilities was primarily due to an increase in accounts receivable of $1.5 million due to timing of cash receipts for outstanding balances, offset by a decrease in inventory of $0.3 million, a decrease in prepaid and other current assets of $0.5 million, a decrease in accrued liabilities of $2.3 million, and a decrease in deferred revenue of $0.3 million.

Previous wording

Cash used in investing activities during the nine months ended September 30, 2023 was $1.1 million primarily for the purchase of manufacturing.

Current wording

Cash used in investing activities during the three months ended March 31, 2025 was $1.4 million primarily due to $0.9 million in purchases of manufacturing equipment and $0.5 million in purchase of intangible assets.

Previous wording

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

Current wording

Cash used in investing activities during the three months ended March 31, 2024 was $1.2 million primarily for the purchases of manufacturing equipment.

Previous 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.

Current wording

Cash provided by financing activities during the three months ended March 31, 2025 was $0.01 million, consisting of proceeds from the exercise of employee stock options and purchase of shares under our employee stock purchase plan, offset by payments of finance leases.