ENVX

Thank you for standing by, welcome to the Enovix Corporation first quarter 2026 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. As a reminder, today's program will be recorded. Now I'd like to introduce your host for today's program, Robert Lahey, Head of Investor Relations. Please go ahead, sir.

Thank you. Hello, everyone. Welcome to Enovix Corporation's first quarter 2026 financial results conference call. With me today are President and Chief Executive Officer, Dr. Raj Talluri, and Chief Financial Officer, Ryan Benton. Raj and Ryan will provide remarks followed by Q&A. Before we begin, please note that today's conference call contains forward-looking statements that are subject to risks and uncertainties. These statements are based on current expectations and may differ materially from actual future results due to various factors. For a discussion of these risks, please refer to the disclosures in today's press release and our filings with the Securities and Exchange Commission. You can also find these materials on our website at ir.enovix.com. All statements made on this call are as of today, May 13, 2026, and we undertake no obligation to update them except as required by law.

Additionally, during the call, we may reference non-GAAP financial measures. You can find a reconciliation of these to the most directly comparable GAAP measures in the materials posted on our investor relations website. With that, I'll turn the call over to Raj.

Good afternoon, everyone, and thank you for joining us. This quarter marked another meaningful step in Enovix's transition towards commercialization and scale. We advanced across the areas we believe are most important for long-term value creation: customer engagement, commercial deployment of our silicon anode batteries, and manufacturing readiness. I'm very excited to share that in the smart eyewear market, we commenced commercial production of our AI-1 battery for our lead customer's reference platform and have multiple customers in the process of launching smart eyewear products. Initial shipments are underway, with production expected to ramp through the second half of the year. We believe this validates our ability to manufacture our 100% silicon anode architecture at commercial scale. On smartphones, we aligned with Honor on an updated qualification framework designed specifically for silicon anode batteries. This framework, which includes revised specifications and testing protocols, better reflects real-world usage conditions.

We are pleased to have also aligned with our second smartphone OEM on the view that they too will need to adapt a similar testing framework in order to get their products to market on a competitive timeline. Beyond these lead customer engagements, we're in active dialogue with several additional leading OEMs regarding silicon anode battery qualification standards, and we are encouraged by the constructive cadence of our discussions with these OEMs as we work towards future qualifications and commercialization programs. Importantly, we believe we are doing the hard work now that will enable our future OEMs to roll out their silicon anode solutions more rapidly. The principal structural mismatch in qualification has now been addressed to align with silicon anode performance while maintaining, and in some respects increasing, qualification rigor.

Cycle life testing at our lead customer for batteries that we shipped at the beginning of the year is progressing under the updated protocols with the results approaching required thresholds. The deep partnership and technical engagement we are seeing with multiple customers in the smartphone market reinforces our belief in the industry's interest in high-performance silicon anode battery solutions. We're encouraged to see growing demand across our drone, defense, and industrial applications, securing new customer design wins during Q1 2026 in each of these markets, with deployments expected in 2027. Our global pipeline for products manufactured in Korea now exceeds $130 million, with the majority driven by rapidly expanding drone applications, where demand for high-performance battery solutions continues to outpace the available supply. This creates an opportunity for an additional scaled high-performance supplier.

We believe Enovix is positioned to emerge as that differentiated supplier in this rapidly expanding market. We continue to improve manufacturing execution at Fab 2. Yields in most production zones are now nearing or exceeding 90%. Zone 1 dicing, a key throughput driver, is delivering step-level yields of approximately 80%, demonstrating continued progress with our laser-based equipment. We recently appointed Steve Bakos as Senior Vice President of Worldwide Sales to support Samira Naraghi, our Chief Business Officer. Steve brings more than 35 years of global semiconductor sales leadership from companies such as Infineon, where he served as a Vice President of Corporate Account Sales for large global accounts, including Apple. This quarter, revenue was $7.6 million, driven by Korean military contractors above the high end of our guidance range and up 49% year-over-year. Non-GAAP gross margin was 26.3%.

I'll walk through each of these areas in more detail, starting with manufacturing. On that front, I want to give you an update on our Zone 1 dicing, which is our current throughput bottleneck. Since I joined, to improve the throughput of Zone 1, we have been working on a faster, cheaper way to dice our coated rolls. We've been making great progress. Last week, I received a re-video from our equipment vendor showing this in action. Rather than trying to describe it with another chart, let me just show you the actual process. What you saw was our mechanical dicing system processing silicon anode strips directly from coated rolls. We're implementing a hybrid dicing configuration strategy that combines both laser and mechanical dicing approaches.

I continue to be encouraged by the substantial progress our global operations and advanced manufacturing equipment teams are making in this novel area for silicon anode batteries. As we mentioned on the last call, legacy smartphone qualification protocols were originally developed around the graphite-based batteries and relied on a 0.7C discharge requirement. That standard can artificially stress silicon anode cells at discharge rates far above real-world smartphone usage, which typically remains well below 0.2C. The consequence was important. Silicon life testing under this framework systematically understated silicon anode batteries' longevity. We've aligned with Honor on a new silicon anode-specific qualification framework. The updated framework prioritizes a version of the 0.2C cycle test that commenced in Q1. This methodology better reflects real-world usage for silicon anode batteries while enhancing the rigor and visibility into performance.

We are seeing broader industry alignment around silicon anode-specific qualification standards. Our second smartphone OEM has joined our lead customer in removing the 0.7C test from their list of hard requirements, as they're now progressing towards an updated framework similar to our lead customer. Discussions with several additional top OEMs are ongoing. We expect broad adoption of similar silicon anode-specific qualification approaches over time. With this framework now established, the plan with Honor is a targeted system-level deployment in the second half of the year to confirm in-field performance ahead of the broader commercial launch in 2027. Importantly, we also recently received the battery form factor for their next-generation device to support readiness for the next major product launch. Our commercial strategy centers on two complementary technology platforms that address large and, in some cases, rapidly expanding market opportunities.

AI, short for artificial intelligence class, is our flagship 100% silicon anode platform. It's targeted at smartphones and smart eyewear markets where volumetric energy density is a key requirement. Smartphones represent the largest battery market opportunity for Enovix. However, smart eyewear is emerging as one of the fastest-growing new device categories. We think that the smart eyewear battery market opportunity could exceed $1 billion by the end of the decade. More broadly, the AI platform is applicable to virtually any space-constrained device requiring high energy density and long cycle life, including future applications in wearables, computing, industrial handhelds, EVs, and humanoid robotics. Previously, we acquired an established business producing graphite anode-based products. These products are in production today, generating revenue in defense, drone, and industrial markets through our Korea facility.

We've been able to leverage these capabilities in combination with our silicon anode technology know-how to create high-performance MX silicon-enhanced platform. Our initial targets markets for MX represent more than $4 billion in opportunity, including approximately $2.4 billion in drones and $1.8 billion in defense technologies beyond drones. These applications prioritize performance and supply chain security with a greater focus on gravimetric energy density. Over the longer term, we believe the MX platform is also well-positioned for adjacent markets, including robotics, eVTOL, healthcare devices, transportation, agriculture, and broader industrial applications. The first product Enovix is launching on this platform is MX1, a ruggedized drone cell design requiring rapid discharge and high gravimetric energy density. I want to highlight something important here. These are not separate bets. They're mutually reinforcing platforms, sharing technology, supply chain capabilities, and commercial infrastructure.

We're increasing seeing benefits flow in both directions with the AI platform leveraging Korea manufacturing strength and the MX platform benefiting from our silicon expertise and global commercial reach. Alongside qualification progress, our R&D efforts continue to advance the platform. This quarter, we produced the first engineering samples of AI-2 for smartwear, delivering greater than 20% higher volumetric energy density compared to AI-1. This represents a meaningful architectural-driven improvement, potentially enabling product categories that require significantly more power within highly constrained form factors. We've achieved this improvement through two primary drivers: reducing inactive material to improve packaging efficiency and increasing the cathode voltage. Together, these advances increase energy density within the same footprint and further demonstrate the advantages of our 100% active silicon anode architecture.

We believe this represents the first of many future advancements, unlocking the full energy potential of our 100% active silicon anode architecture on the future AI product roadmap. Display-equipped smart eyewear is expected to become a rapidly growing battery market, and we believe increasing power requirements create a strong fit for our technology. Smart eyewear also represents an attractive initial commercialization opportunity for our silicon anode platform. Qualification cycles are generally shorter, more flexible, and durability requirements are lower, and the market is in the early adoption stage. Customer sampling of AI-2 is planned for later this quarter. We have already received initial sampling orders and engagement commitments from several leading smart eyewear companies. The 20% energy density improvement achieved with AI-2 is important, not only for smart eyewear but also because similar gains to the future smartphone batteries could materially extend our technology advantage.

The current AI-1 smartphone battery delivers 935 watt-hours per liter and has been independently validated against graphite and silicon-doped alternatives. We believe this positions Enovix with a meaningful competitive advantage in high energy density mobile applications. Competing approaches remain largely focused on conventional graphite-based designs with incremental silicon additions. These architectures continue to face swelling constraints that limit long-term performance and energy density improvements. Our architecture is designed around 100% active silicon anodes, which we believe provides a substantially higher long-term scaling opportunity. Let's talk about our second platform, MX. This week at the Michigan Defense Expo, we formally launched MX1-B01, a drone battery cell delivering energy density of 360 Wh/kg, positioning us competitively within the high-performance drone battery market. We achieve this performance through targeted silicon content enhancements, leveraging an already proven manufacturing platform.

MX1 is designed for applications requiring extended flight time, high discharge capability for power-intensive missions, and a secure supply chain. We believe the product compares favorably with similar leading high-density solutions currently available in the market and offers a material cycle life advantage. We are manufacturing these cells from our South Korea factory, which has supported defense customers for years, and our commercial focus is on drone manufacturers globally, as well as their packaging partners. Following the Michigan Defense Expo, we plan to showcase MX1 at 11 additional conferences around the U.S. and Europe over the next 2 quarters as we continue building customer engagement and commercial pipeline activity. This slide shows how we see the MX platform evolving beyond the initial MX1 launch. Demand for high-performance drone battery supply continues to exceed currently available Western capacity, which we believe creates a meaningful opportunity for Enovix.

These applications prioritize performance, reliability, and supply chain security, supporting differentiated positioning relative to commoditized consumer battery markets. While drones are a key near-term focus, we've also established product offerings for sub-C munitions and industrial applications, expanding the MX platform across multiple high-performance end markets. Our Korea and Malaysia manufacturing footprint directly addresses defense supply chain requirements, backed by years of production history supporting major contractors and deployed programs. A key structural advantage for Enovix is vertical integration. Because we own our manufacturing operations, we're not sharing economics with third-party contract manufacturers, which we believe supports both competitive pricing and attractive long-term unit economics as volume scales. As product competitiveness becomes increasingly established, the grading factor becomes commercial conversion, which is why we recently appointed Steve Bakos as a Senior Vice President of Worldwide Sales.

He brings more than 35 years of global semiconductor and industrial sales leadership experience and will help build the commercial infrastructure required to support growth. Looking ahead, MX2 is targeted for 2027, with the goal of reaching 400 Wh/kg. Over time, we intend for MX to evolve into a broader platform strategy spanning multiple product formats and defense and industrial end markets. Now I'll turn it over to Ryan to walk through our financial results. Ryan?

Thanks, Raj. Our first quarter results reflect disciplined financial execution alongside continued commercialization investment. First quarter revenue was $7.6 million, above the high end of our guidance range and up 49% year-over-year. These are largely batteries deployed in active programs with repeat demand. Non-GAAP gross margin was 26.3%, our sixth consecutive quarter of positive gross profit on both a GAAP and non-GAAP basis. Non-GAAP operating expenses were $30.8 million, reflecting continued investment in customer qualification completion, research and product development, and smart eyewear production readiness. Non-GAAP loss from operations was $28.8 million, better than the guidance range of $29 million-$32 million.

Non-GAAP net loss per share was $0.14 at the better end of the guidance range, despite higher interest expense from the 2030 convertible notes issued last year in Q3. Adjusted EBITDA was negative $20.3 million, roughly flat year-over-year. We ended the quarter with approximately $582.7 million in cash equivalents, restricted cash, and marketable securities. We believe this provides substantial liquidity to execute on our operating plan, to support commercial scale-up, and to pursue strategic opportunities from a position of strength. Free cash flow was an outflow of $36.3 million, increased from the same period a year ago, primarily driven by timing related items, including the semiannual interest payment on the 2030 convertible notes and working capital movements, primarily higher inventory levels in Korea to support planned shipments.

Capital expenditure payments were $3.2 million in Q1, below guidance due to the timing delay of certain payments, the majority of which we expect to be paid in Q2. Turning to Q2 2026 guidance. Revenue is expected in the range of $8 million-$9 million, reflecting continued growth in defense and industrial shipments and initial smart eyewear revenue as deliveries to our lead customer begin. non-GAAP loss from operations is expected between $29 million and $32 million. non-GAAP net loss per share between $0.13 and $0.17. Capital expenditure payments are projected in the range of $9 million-$13 million, which includes the aforementioned deferred payments as well as initial payments for the investment to support capacity expansion in Korea. Last quarter, we approved a share repurchase authorization to provide additional capital allocation flexibility. We have not made any purchases under that program.

Our capital deployment priorities remain unchanged: qualification completion, scaling smart eyewear and defense production capabilities, and selectively pursuing strategic opportunities with a high bar on strategic fit and return. With that, I think we're ready to take questions. Operator?

We will now begin the Q&A session. Please note that this call is being recorded. Before we go to live questions, we're going to read the 2 most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is: previously, management has discussed multiple pathways to achieve final smartphone qualification targets. Could you elaborate on which of these pathways currently appears most promising?

Yeah. Thank you for the question, and thank you all for listening. Of the pathways we discussed, as I mentioned in the prepared remarks, we have now aligned with the Honor, at a combination of, you know, of different pathways that we could use. The 0.7C legacy test requirement, that's been mainly for based on graphite batteries. We've aligned with our customers that that is not a must-have requirement, and it's been removed as a gating item. We're now working on a slightly different 0.2C test, which more better reflects the real-world usage of the smartphone, and that's been prioritized now. Not just with Honor, but many of our other lead customer also agreed to the same thing.

In general, I feel like the smartphone market now, people are realizing that as silicon batteries become more and more popular, we should really, they should really change the requirements that are in the market that have been used mostly for graphite. It's really nice, really great result. I'm really pleased with my team being able to convince them. Now the 0.2C test is more than halfway done at our customer, and it's continuing to go, and we're tracking it.

The second question is for your AI-Class-2 platform, when will the samples be submitted to customers so that testing can begin?

Yeah, as I mentioned in the remarks, that we have engineering samples now inside, and they look really good in terms of the 20% energy density increase that from AI-1. Great achievement by the R&D team. You know, harnessing the full potential of silicon, and these will continue to get better over time. These samples, we expect to sample this quarter to our customers, and quite a few people have actually expressed interest in that, and we got a few sample batches out as well.

Thank you. We will now go to the queue. If you would like to ask a question, please use the raise hand feature on your screen. If you have dialed in via phone, please use star nine to raise your hand and star six to unmute. Questions will be answered in the order they are received. Please ask one question and one follow-up question at most. We will now pause for a moment to assemble the queue. Our first question will come from Mark Shooter with William Blair. Your line is open. Please ask your question.

Thank you. Hi, guys. Congrats on the progress. My first question is just focusing in on Honor a bit. I saw in the press release that you have some field testing looking at the second half, right, is when you're targeting? I'm wondering if you could give us a updated understanding of what unit volumes may be for that field testing with Honor. If successful, do you have a better view on what a ramp would look like in 2027?

Yeah. Again, as I mentioned, now we have a test methodology that align with Honor, we're in the middle of doing that. The next big step is to put the battery inside an existing phone for which we made this custom-sized cell. It's hard to predict the number of units. It will be small because it'll be initial test just to make sure that everything is smooth and a limited launch maybe. The real volume will be in 2027. We more importantly, we got the size for that particular battery that's gonna be launched in 2027, we're now working on how to make that battery after the field testing is complete.

Okay, great. Thanks for the color. Switching gears into drones, which is very interesting opportunity, and congrats on the silicon carbon composite, you know, that mixed graphite cell. At 360 Wh/kg, that's gonna put you know, well in the running against the current peer set. I'm wondering if you could speak to maybe some of the customers that you're engaged with in sampling and say you win all that business today, everyone you're engaged with. Do you have an idea of what those qual times look like and your current unit volume and revenue capacity?

Firstly, thank you for that comment on the drone cell. We are also super proud of the engineering team that came up with it in a very short order. Particularly because we have a well-established manufacturing facility that we own, we were able to quickly make that. You know, the product actually is extremely competitive with what's in the market today and is made totally within our factories. It's not contract manufactured. Actually, I have the phone battery here with me. You know, we have a bunch of these cells now.

There is a lot of interest, and I just got a call from our sales team who's at the Detroit, you know, drone show right now about the tremendous interest they're seeing, because this is also a NDAA compliant cell, which is actually, you know, big deal for many of our customers. The go-to-market of this works this way. Typically, there are people who take this and put them in packs and put the BMS around it and the system around it, and that goes into multiple drone makers. It's hard to call the volumes right now, but the market is so fast and growing really fast that we think that, the cycle times, the qualifications time will be, you know, shorter than things like smartphones because they have such a demand.

A cycle life doesn't have to be that long in these. Our cell goes to 300 cycles, but even shorter cycles are okay in some of these markets.

Maybe I'll chime in. You know, Mark, you asked about volumes. You know, again, we've talked about in the CapEx forecast and prepared marks, we're already spending dollars to add equipment to one of the existing buildings in the Nonsan facility. You know, one of the great strengths, advantages that we have sitting on our balance sheet is we have multiple empty buildings in that facility as well. We have, you know, numerous stages of additional expansion capacity there, and we're just gonna do that in a methodical way as demand presents itself.

That's great. Thanks for the color, guys.

Your next question will come from Colin Rusch with Oppenheimer. Your line is open. Please ask your question.

Thanks so much, guys. You know, could you talk a little bit about the mix of silicon material that you have in the new drone batteries, and the pathway from the 360 to 400, how much of that is being driven by increased thickness or, you know, different form factor or increased concentration of silicon in the anode?

Yeah. A great question, Colin Rusch. When we did this one, the way we did it was to, there's an existing requirement for a cell that's in the market today that many of the customers wanted us to provide something that is with the fully NDAA compliant, you know, made within our factories. We made that one, and we quickly got it to that performance. It actually performs really well. The cycle life is really good, and the capacity holds. We have about 60% SiC in that cell, but we now believe that we can get that to much higher percentage. You know, in this market, some amount of swelling is okay because it's inside a drone, and you could put pressure and put it in there.

It's not a space constrained situation like a smartphone. Also the discharge rate, and the pulse discharge, and the number of cycles are variables we can keep tuning. You know, we mentioned, you know, 400 watt-hours per liter as something that we could produce. I believe we can go much higher than that by just making the right trade-offs between cycle life and discharge rate and the amount of swelling we allow. You know, I think the good news is we've been working on silicon for a long time, we know exactly what electrolytes work well with silicon. We're working with graphite for a long time in Nonsan. We have that know-how, we have a factory that's been supplying for defense for a long time.

Our quality of the products that we actually supply to defense is very, very high bar, and that factory is actually qualified for that. That's why I think that, you know, you'll see a pretty competitive roadmap from us for this market very quickly.

Great. Then, you know, looking at the laser cutting, I just wanna understand kind of the cadence of learning cycle on yield improvement and how we should think about kind of the engineering work that you're doing and how quickly you can implement that to start getting a little bit better, you know, output on the overall facility.

As I mentioned, from last quarter to this quarter, we've improved our yield across multiple zones, you know, well into the 90% range now in most of the zones. The laser light is kind of in the 80% range, that's improved quite a bit from last time. As you guys saw in the video, we've been working on this for a while, and today I thought was a good time to show you a combination of laser and mechanical dicing that actually cuts much faster and much cleaner. When you laser dice, there are also some challenges that we've been working on for a while, which is, you know, how to get to the yield and the throughput and so on.

It's an expensive way to do things, so we've always You know, right when I started, we've been working on a different way to actually do this, and you saw the mechanical dicer now. We have enough lasers, and we have enough throughput to, you know, meet the demand for this year, and we will get the mechanical dicer, our plan is to get it online this year. For the next year's demand, we can use the mechanical dicer with some combination of laser finishing it up. Really exciting results. I hope you guys saw that video also, the throughput that we can produce with that.

Okay. Thanks so much, guys.

Thanks, Colin.

Your next question will come from Jeff Osborne with TD Cowen. Please unmute your audio and ask your question.

Yeah. Thank you. maybe just a quick, 2 questions, but one quick follow-up on Colin's. can you get to 90% yields without that machinery intact, or do you need to add the lasers to get there, and that's more of like a 2027 event getting to 90%?

Maybe I'll take first.

Yeah, please. Yeah.

Yeah, I think we're capable of getting to nice 90% yield. Again, it goes hand in hand with throughput. I mean, again, you saw the video. Really, the mechanical dicer is just able to operate so much faster. Ultimately all this, you know, I'm the finance guy, ultimately it's about cost. We just think it's the most economical way eventually in some of the sub-process steps to operate.

Perfect. Thanks, Ryan.

Yeah, cost of the machines, right?

Yeah.

It's a less expensive way to get throughput.

Yeah. Perfect. My, my 2 questions is, one, Ryan, I was just wondering if you can update us on the M&A pipeline. I think you've been out there searching for 2 quarters now. Just Raj, a clarification. You mentioned providing packs to Honor to put in a phone, small quantities in the second half of the year. You mentioned something about getting a second design. It was unclear, is there a second SKU that they've given you, or is the SKU that they gave you what they intend to produce in 2027? I'm just trying to get a sense if your relationship is deepening with them and they're giving you a glimpse of what they intend to commercialize after the first product launch.

It's exactly the latter. We actually have SKU that'll launch in 2027, so which is actually a fairly large deal and shows the relationships we have with them.

In terms of the packs to Honor, the quantities, any comments on that?

Yeah, it'll be small volume. Again, it'll be just to test and make sure that the system level stuff works okay and we get small initial launch. I think that's, you know, again, that's fine with us to just to make sure everything is good before we get into high volume.

Does that- And then- like thousands, friends and family type stuff?

Yeah, yeah. That's probably what you should think of.

On the first question, in terms of M&A pipeline, I'm really pleased with the pipeline that we have multiple opportunities that we're pursuing. Again, as we said and repeated time and time again, we're gonna be disciplined, it has to meet a strategic fit, and we're gonna be disciplined on price. It's fair to say that we've looked at quite a few opportunities that we just didn't like the price tag, and we've moved on from. I think we're excited about some of the opportunities we're pursuing but again, we're not gonna waiver.

We think we're gonna be disciplined stewards of the capital and make sure it makes sense, and it's something that Raj really sees the strategic fit and benefit, and it's something that I can, you know, be here on an earnings call and be proud of the price we paid for it.

Perfect. Thank you.

Your next question will come from Wamsi Mohan with Bank of America. Your line is open. Please ask your question.

Hi, thanks for taking my questions. Raj, I wanted to ask the first question on smart eyewear batteries. I think the press release says that you expect 50,000 units in 2026. How should we think that that scales as we head into next year, and how should we think about the revenue progression from smart eyewear over the next few years?

Yeah. The $50,000 is, you know, this year. Firstly, I wanted to say that, you know, with the way where the yields are and the throughput is and the way it's working, we're now able to manufacture this cell in our lines, and the customer delivered to the customer, they're testing them, it looks good. Firstly that's, I think, a great result. We, you know, as I mentioned, it is a huge market growing rapidly. It should be in the millions next year. It's hard to tell exactly how much. We have sampled to many different customers now because what we have is a battery that really makes the product, you know, because energy density.

You know, right now, as you know, many glasses out there, they don't last the whole day. This one actually continues to improve on that. Now that's why we decided to launch the next product using our AI-Class-2 in that space first, you know, because the market was really asking for even more because it's just very difficult to have the product last all day without that. We do think the first product will launch this year. The next product, you know, AI-Class-2, we're going to sample this summer. That'll go into production next year. We expect it to be in the $ millions next year.

Thanks for the details there. For a follow-up, can I ask Ryan, as you ramp the smartphones later this year and next year, the smartphone batteries, how does that impact gross margin? I think some OpEx might move into COGS, can you just help us understand how we should think about gross margin progression as smartphones become a bigger part of the mix?

Yeah, certainly. Certainly as we ramp the smart eyewear and the smartphones, you're gonna see some change in, and you will see some of the costs right now that we have in operating expense will move up above the line into the cost of goods sold line. Really whenever you think about our cost structure, the majority of our cost of sales is materials. It's really about continuing to drive the bill of materials cost down and those will be materials that we purchase for those orders as we prepare to ship them. That's the vast majority of our COGS.

When you talk about direct labor, variable overhead, and even fixed overhead to some extent, although we have some, you know, material costs as it relates to the cost of the factory, as we get to a decent amount of volume it ends up being a very small percentage of our, of our costs.

Okay, thanks for all the details. Appreciate it.

Yep.

Your next question will come from Derek Soderberg with Cantor Fitzgerald. Your line is open. Please ask your question.

Yeah. Hey, guys. Thanks for taking my questions. I was wondering if there's any way you can segment that $130 million Korea pipeline, you know, drones and defense opportunities. How much of that is sort of legacy Routejade, and how much of that is drones?

Well, firstly, this is future looking revenue, not, like, so it is actually a lot of it is new designs that we are, that we are working with customers to get. So in some sense, some of it is continuation of the defense business that, Routejade had, but majority of it is actually new stuff that we are winning. Drones is, like, you know, over 60% of that.

Got it. That's helpful. Just curious on the NDAA compliance piece, I was wondering how unique that is. I know there's a couple others that have that, not too many at this point. You know, might it be difficult for others to sort of achieve that over the next couple years, you know, within drones, what kind of drones are you getting interest in? You know, there's a wide variety of, you know, sea drones, air drones, heavy and light.

Yeah

Where do you guys think you can build, you know, a nice business in drones?

Yeah. An AI-Class compliance is actually not that easy to achieve because there's multiple elements to that on the way the cost of the things that are sourced, what percentage of them have to be from this FIOC and non-FIOC countries, and then where the cells are actually manufactured. For us, you know, we manufacture them in Nonsan, South Korea, which is in a non-FIOC country, which is very, very good there. Most of the material we have in there, majority of it is actually not sourced there either, from FIOC countries either. In that sense, it's a big advantage for us, in that we own our factories and we have the material.

You know, in terms of drones, we are seeing it in like, training, you know, public surveillance, inspection, public safety, multiple markets like that. What varies between these drones is, you know, kind of like a discharge rate, then it also depends upon how many cycles. The first product we made is, as I showed, you know, 300 cycles, high discharge rate, this one that I talked about. But we have the technology and we have the know-how, and we have the factory now to make different products optimized for slightly different, you know, lesser cycles, but more energy density and so on. We'll have a roadmap of products addressing various parts of the market, you know, as we, as we start building out that roadmap.

It's an opportunity that really grew very fast and came quickly, you know.

I'll chime in. I apologize if you already men-

Yeah

mentioned it, but obviously, we've got a lot of, a long history of sub C drones.

That's right.

That's something that I think will continue to be a strength for us as well.

Perfect. Thanks, guys.

Your next question will come from Alek Valero with Loop Capital.

Hey, guys. Thank you for taking my question. Just on smartphones, what impact is memory cost inflation having on your lower-end phone volumes?

We're not shipping much volume right now, right? I think not so much impact right now. We do see that the number of units shipped this year will probably be much lesser in terms of the total number of smartphone units shipped. Hopefully, that'll normalize over the next couple of years. By the time we get into higher volume, it may be less of, hopefully, it'll be less of an impact. Right now, not too much impact.

Okay. Thank you for clarifying that.

Yeah

Another clarification question. Did you say that the 0.7C testing requirement was removed or you're hoping to remove it? If so, what impact does that have on your smartphone qualification timeline?

It's, our customers agreed to remove that as a must-do. They've agreed to actually have a variation of the 0.2C and 0.1C, so on, which is actually how the phone is actually used as the gating requirement. That does help. You know, in terms of timelines, it'll probably take a little bit longer because the 0.1C, 0.2C take longer to run. The 0.7C is a faster discharge. It's an accelerated test, it hurts the battery. They realized it's hurting the battery, it's not really helping. In that sense, it may take a little bit longer to do 0.1C, 0.2C discharge because the time it takes to qualify is a little longer, at least on the first launches.

Once we get to it, we understand what it is, we understand the trend, it should become normalized.

Got it. Thank you.

Your next question will come from Bill Peterson with J.P. Morgan. Your line is open. Please ask your question.

Yeah. Hi. Good afternoon, and thanks for all the details on the call thus far. For AI-Class 2, the 20% increase in energy density, you know, using this sort of the next generation platform, can you speak about the trade-offs of this, including cycle life that we can consider? I realize this, at least in the first stages, for eyewear. I'm assuming that AI-Class 1 will be your focus for your initial and second smartphone customer. Do you have a plan to sample AI-Class 2 for smartphones next year, or is this longer dated? I'm basically trying to get a sense for what needs to be solved for the next gen to be used in smartphones.

You know, basically, it's a question we've asked in the past, but how should we think about your roadmap for smartphones beyond AI-Class 1?

Yeah, absolutely. I mean, look, I think the advantages we showed with the 20% increase on, you know, on the smart glasses, that's why we showed a little bit of color on how we got to that. We increased the cathode voltage, we reduced the amount of inactive materials in there. We will put those, we'll absolutely put those things into our smartphone battery, and you will see us improve it similarly. There's a few other things that we're continuing to improve. Packaging efficiency is one of them, how we actually package this. They're slightly different electrolytes. We have a strong roadmap that'll keep increasing energy density.

I mean, the thing you got, I mentioned to you, Bill, is that as I mentioned before, we use 100% silicon. We're not getting the full potential of the energy density increase 100% silicon could and should provide because we've been trying to solve these other problems like cycle life, 0.7C, you know, accelerated testing, fast charge, and so on. Once we now work with the customers to get those things, you know, understood and how exactly to do the qualification, we'll continue to improve our energy density. First installation of our improvement energy density will be showed in the AI-2 in the smart glass, we'll quickly roll that into smartphones for next year.

I'll chime in as well here. You know, the finance guy's happy to report that some of these key things on the roadmap not only improve the energy density but also reduce cost out of the bill of materials and reduce the cost of manufacturer. It's really kind of magic time when that happens.

One other thing, Bill, maybe since you asked about the energy density roadmap, I know it's a question that's come up. Our batteries swell very little. The existing batteries, even with the ones with silicon-doped, still swell, most of the smartphone OEMs actually leave a space in the phone to allow the battery to cell at end of life. We actually don't need that space. When if we get that space also, that's what we're working with our customers, they allow us to use that, our energy density will be even higher. We will be, once we get to qualification, we will be able to take advantage of that piece also.

All right, thanks for that color. On the timeline to, for shifting or the general trend to move towards mechanical dicing, are there any new challenges that we need to be mindful of? I'm wondering about, you know, particles or mechanical stress or other technical issues you need to overcome. Or maybe even said another way, why wasn't mechanical dicing the primary path for this relative to laser dicing?

Well, I mean, again, as you saw in the video, I wanted to show you guys a little bit of the machine. This is a complex machine that we've been working on building for a while. It's not like we just take a roller and put a roll in it, right? We have to build roll-to-roll roller, we have to ablate, we have to dice it. We have to find the right kind of binders and materials to actually make the right kind of coating and electrolytes so that, as you said, when you do it mechanically, it still holds. There's a lot of R&D, a lot of know-how has gone into it. We've been working on it for since I joined. In that sense, I'm very excited by it.

It's a great technology that our teams have advanced. There's still, you know, again, there are still issues to be solved, right? We have to finish the dicing of it, we have to finish the anode, finish the cathode, and put it in a full cell. We're gonna take this year to actually do that because we have enough lasers to, you know, meet all the demand we have for this year. Absolutely next year is when we'd like to roll that out.

Great. If I could sink one more in. It's on the part that T.J. wrote. 75, 72-75 tests, two of likes, life cycle and 1 below freezing power test.

I think the power, I'm not sure about the freezing power test, but is there any insights to how your, you know, expectations? I think you feel more confident about the light, the cycle life, but what about this freezing power test, something that I don't think I've heard much about in the past?

Yeah, it's one of those corner use cases because what happens is silicon behaves differently than graphite at very low temperatures. If you have a phone with a silicon battery at extremely cold, when you start using the phone and you suddenly have a use case where you pull a lot of energy out, it's very quickly, you know, there are some challenges to how much energy can battery put out. These are the kind of situations where we're working very closely with our customers to see at what use cases does this happen, how much does it pull in, and which parts of the world, and so on. It's again, like the 0.7C test, silicon is different from graphite, so the tests you had before don't quite work exactly the same.

You know, that's one of those things that we are working with them. I do believe that we will slowly get past that also as we continue with the journey.

Thanks, thanks, Raj, and Ryan for the details.

Thanks, sir.

Your next question will come from Gus Richard with Northland Capital. Please unmute your audio and ask your question.

Yes, thanks for taking the questions. You mentioned the $130 million in pipeline for military product, projects. Is that an annual number, or is that, you know, a lifetime opportunity? You know, how much currently, how much capacity in Korea do you have to support that?

Yeah. It's a total we keep in terms of what are the new designs that we are talking to customers and they're coming. We, you know, we can update that every quarter. It's not like annual, it's lifetime of those designs we have. They may take 1 year, they may take 2 years, you know, time to launch. We have enough capacity right now, but we are adding capacity now. As Ryan mentioned, we are building out that factory more. Fortunately, in the last acquisition we made, we got almost 300,000 square feet of factory with lots of buildings and power and dry rooms and so on. Very good acquisition we were fortunate to get from SolarEdge.

We are now fitting it to keep increasing the capacity in line with the demand. The qualifications take a little time. We are going to work on the capacity increase in line with that demand.

In, on a relative basis, of course, this is, you know, relatively standard equipment.

Yes.

It's just blocking and tackling.

Got it. When you mentioned the eyewear customer, I believe you said it was a reference design, and I was wondering if that's an OEM or a chip company's reference design.

Yeah. Well, I, you know, again, because of confidentiality, I can't really exactly comment more than who that is. I, one thing I'll say is eyewear, maybe I'll add a little color to it. If you actually think of things like eyewear, they are things people wear on their, on their personality, so it's a very style based thing. Most of the eyewear things we buy, as you know, are, comes from fashion brands, right? Like, I mean, you can think of Guccis and Pradas and Ray-Bans and, you know, and so on that you buy from Sunglass Hut. Most of the tech companies or even chip companies and so on will actually make a reference platform so the ultimate product is actually branded as a fashion product, right?

That's why it's very key to get a reference design, you know, with one of those leading technology providers so that then the channel to market can be through the fashion brands.

Got it. Thanks so much.

Thanks, Gus.

Yeah.

There are no further questions at this time. With that, I'd like to turn it over to Dr. Raj Talluri for closing remarks.

Yeah, I mean, thank you everyone, and thank you for your, all the questions. You know, over the past year, much of the discussion has been on validation of the technology and its commercial readiness. You know, we believe this quarter we provided additional evidence, and the conversation can increasingly shift towards, you know, disciplined execution against commercialization milestones. The markers to watch over the coming quarters are clear, right? A continued progress on qualification, targeted system-level deployments, initial smart frame production ramp, and conversion of this drone pipeline into revenue. We view these as tangible operational milestones that we expect will demonstrate progress methodically over time. Thank you all for your support.

Thank you for standing by, and welcome to the Enovix Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's program will be recorded. And now I'd like to introduce your host for today's program, Robert Lahey, Head of Investor Relations. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to the Enovix Corporation's Fourth Quarter and Full Year 2025 Financial Results Conference Call. With me today are President and Chief Executive Officer, Dr. Raj Talluri; and Chief Financial Officer, Ryan Benton. Raj and Ryan will provide remarks followed by Q&A. Before we begin, please note that today's call contains forward-looking statements that are subject to risks and uncertainties. These statements are based on current expectations and may differ materially from actual future results due to various factors. For a discussion of these risks, please refer to the disclosures in today's press release and our filings with the Securities and Exchange Commission. You can find these materials on our website at ir.enovix.com. All statements made on this call are as of today, February 25, 2026, and we undertake no obligation to update them, except as required by law. Additionally, during the call, we may reference non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP measures in the materials posted on our Investor Relations website. With that, I'll turn the call over to Raj.

Good afternoon, everyone, and thank you for joining us. The fourth quarter represented continued progress as we transition from qualification into early commercialization across multiple end markets. First, we continued advancing smartphone qualification for the AI-1 platform with our lead mobile customer. Second, engagement expanded across smart eyewear and other AI-powered devices. We view smart eyewear as an earlier commercialization pathway for AI-1 due to lower qualification barriers and thresholds. We are currently preparing production to support initial high-volume demand from our lead smart eyewear customer. Third, defense and industrial programs continue to provide revenue, operational validation and manufacturing execution experience as we prepare for consumer scale production. Finally, we ended the year with a strong liquidity position, giving us flexibility to execute our commercialization road map while maintaining disciplined capital allocation, including recently authorized share repurchase program. Overall, we believe 2025 positions us well for the next phase, moving from qualification towards commercialization across smartphones, smart eyewear and additional defense applications, and we'll walk through that progress today. For the full year 2025, revenue grew 38% year-over-year to $31.8 million, with the defense shipments remaining our largest contributor and batteries for naval munitions specifically being our top product in Q4. Full year non-GAAP gross margin improved to 23%, reflecting higher production volumes and improved mix shift towards higher-margin defense batteries following our April 2025 asset acquisition. We ended the year with $621 million in cash, cash equivalents and marketable securities, supporting qualification completion, commercial scale-up and additional potential strategic transactions. To support this next phase, we strengthened our operational leadership. Kihong Park, or KH, as he prefers to be called, now leads our global manufacturing organization, bringing decades of battery production experience and deep operational knowledge from our South Korea platform to our Malaysia scale-up efforts. We also welcomed Ed Casey to lead advanced manufacturing engineering, adding significant expertise in scaling complex high-volume manufacturing environments across global networks. Together, this leadership alignment reinforces our focus on manufacturing execution as we prepare for high-volume production. We continue to improve yield and throughput across Fab2. As we discussed in our previous call, Zone 1 laser dicing remains the primary rate limiting factor, and we are methodically addressing that constraint through process optimization and alternative dicing approaches. We believe in our ability to unlock higher production rates as we transition towards commercialization. In 2026, we are capable of qualifying other new products and customers in the very production line they will use and meeting demand for smart eyewear customers. Our overall company focus remains on disciplined execution, advancing smartphone qualification while expanding into adjacent markets that support earlier revenue and manufacturing scale and leading in smart eyewear markets with our silicon battery shipment. You'll see how these pieces come together through today's presentation. Now let's talk about markets. Last quarter, we introduced this framework for outlining the end applications where our technology can create a durable moat. The smartphone market represents the fastest path, the large scale and is ideal for our technology. An independent study from Polaris Labs previously validated our energy density leadership in smartphone batteries. And this quarter, we extended the validation through a second apples-to-apples comparison against the leading competitor using identical methodologies. The results confirmed that AI-1 delivers a meaningful volumetric density advantage versus commercially available silicon-doped lithium-ion batteries. We expect AI-2 and AI-3 to further expand our technology lead with performance gains well beyond historically industry advancement rates. This quarter, we updated this slide by breaking out smart eyewear and drone applications as distinct growing addressable markets where our engagement has progressed. Smart eyewear adoption is presently accelerating as AI workloads migrate to compact always-on devices. We expect to ship our first smart eyewear batteries for use in AI/AR devices in the second half of 2026. Exceptional growth in this market is expected to continue throughout this decade with display-enabled architectures that significantly increase power demand and require higher energy density for constrained form factors. We believe smart eyewear battery TAM could exceed $400 million by 2030, and we are targeting meaningful participation based on early engagement with key partners and strong technical suitability. Drones represent another priority area of focus where we see an attractive TAM and a strong competitive advantage. Western drone platforms, both defense and commercial, are increasingly prioritizing higher energy density, extended flight time and supply chain diversification. This battery segment is projected to be approximately $1.5 billion this year. Breaking these markets out reflects growing conviction that we are well positioned across multiple high-growth platforms. With that context, let me walk you through our smartphone qualification progress and the defined pathways we see towards commercialization. Turning to our smartphone commercialization plan. We remain engaged with 7 of the top 8 global smartphone OEMs by market share and validation efforts have expanded this year with multiple leading OEMs, including those serving the U.S. market. Our near-term focus, though, remains on 2 Asia market leaders with Honor being our lead customer. We commenced their formal product qualification process in the third quarter of 2025. Most of the requirements have now been met, and cycle life testing remains the primary gating item to complete qualification and move into system integration and production planning. Because cycle life testing is often misunderstood, particularly for silicon anode batteries, let me spend a minute explaining what these tests actually measure and why they matter for real-world smartphone usage. The key point, and what we want to clarify next is that cycle life results are complex and depend heavily on test protocols, which is especially important when evaluating next-generation silicon anode technology. When we say cycle life testing, we are referring to multiple tests based on different charge and discharge rates, or C-rates. This is a standardized measure how quickly a battery is discharged relative to its total capacity, where a 1C rate means the battery can be fully discharged in 1 hour and a 0.2C rate means battery discharge in 5 hours. This slide illustrates relative C-rates across common smartphone applications. The highest power consuming activity is video recording, which requires approximately 0.17C discharge rate. We include a host of other popular consumer applications as well as scenarios for running multiple applications simultaneously to account for use cases such as using ChatGPT while also playing a Netflix movie. When we refer to our lead customers' primary qualification requirement of 1,000 cycles, that is based on a rate of 0.2C. As you can see that everything below this level, which is why smartphone as well as smartware OEMs rely on this test to ensure batteries provide a positive experience for a wide range of consumer usage patterns. A test purely based on this rate would take a year to complete though. So most companies compress the test time to 4 months by using an accelerated 0.7C rate for a majority of the cycles where the battery is fully discharged in 1.4 hours. Smartphone OEMs also included in their qualification process, a secondary requirement of 800 cycles for just the 0.7C cycles, though this C-rate is well beyond any single app consumption we are aware of. For the parts shipped in December, customer qualification testing for cycle life began in January. This testing is progressing in parallel under customer control protocols. On this slide, you can see how batteries we send to our lead customer perform in our 0.2C cycle test. We made improvements over our initial version submitted in July, and our internal test indicates we are now likely to exceed the requirement of 1,000 cycles at 0.2C rate. This is a significant achievement that is indicative that our product is approaching readiness for integration into commercial products. However, these same batteries are not currently on track to exceed the accelerated 0.7C target. As it is the first time a 100% silicon anode smartphone battery has been brought to the market, we are working closely with our customer on alternative pathways for testing that is more suitable for silicon anode batteries. So while customer testing ultimately determines qualification, this internal data set gives us increasing confidence that the current batteries are tracking towards the required performance. Because there has been no 100% silicon battery qualified in a smartphone, there are no defined testing protocols for qualification. Based on current test results, we're discussing multiple pathways to qualification with our lead customer. The first scenario is approval based on our 0.2C results and acceptance of the 0.7C cycle life below their current requirement. A second scenario involves adoption of new accelerated testing protocol tailored for silicon anode batteries. Finally, we're also continuing to develop improved electrochemistry variation to hit the 0.7C target. While we believe our battery platform is ready for deployment, we also understand that we are entering the largest consumer electronic market in the world. Customers appropriately maintain a high qualification bar for new entrants. We look forward to meeting all the necessary standards in 2026 and transitioning into commercial production. Initial smartphone-related revenue in 2026 is expected to support system integration and launch preparation, positioning us for a larger scale commercialization in late '26 or beginning in 2027. Now let's turn to smart eyewear. We view smart eyewear as an earlier commercialization pathway for AI-1 due to shorter qualification cycles and lower durability thresholds. We believe this market represents a compelling near-term expansion opportunity for the platform, where our high energy density architecture is well aligned with product requirements. Our engagement in this category began early, and we're working with partners we believe are well positioned to lead in this market as it scales. Compared to smartphones, where an incumbent is deeply entrenched, this creates a more direct path to initial adoption. Our focus now is execution as we prepare for initial volume shipments to lead smartware platform later this year. Today, the eyewear market is dominated by products without displays, largely focused on audio, connectivity and basic AI assistance. However, over the balance of this decade, we expect more than 5x unit growth as display-enabled ecosystem emerge, which translates to even higher battery TAM expansion as ASPs increase over the same time frame. Display-enabled eyewear materially increases the power demand. Always-on AI processing, image capture and augmented reality overlays create sustained energy draw in highly constrained form factor. That combination, compact design and higher sustained power consumption is precisely where volumetric energy density matters most. Based on current engagement, which has accelerated rapidly, we expect smart eyewear to represent an earlier commercialization pathway for the AI-1 relative to smartphones. As this market matures, we estimate the smart eyewear battery TAM could exceed $400 million by 2030, and we believe AI-1 is well suited to participate meaningfully in this market. This slide illustrates how our platform aligns with smart eyewear cycle life requirements. Importantly, in this segment, customers typically require less than 1,000 cycles durability at 0.2C rates and do not have a pure 0.7C cycle test. Our energy density architecture is optimized for constrained space and sustained power draw. And because we architected AI-1 first for smartphones, the segment which has the highest technical qualification standards in consumer electronics, we believe extending the platform into smart eyewear is comparatively more straightforward from a performance standpoint. Once we designed for the most demanding use case, adjacent applications become natural extensions of the same core architecture. That allows us to prioritize energy density and power efficiency while comfortably meeting eyewear durability thresholds. In addition, we expect this market will have a mix of smaller customers who address a wide range of fashion preferences and use cases that are also enabled by the budding Android XR ecosystem. This means our future sales mix may include meaningful percentage of off-the-shelf products in addition to customized products for the market leaders. We are seeing this dynamic play out already with multiple wins we announced at CES earlier this year. Let me now turn to defense. Defense continues to provide both revenue and operational validation of our technology and manufacturing capabilities. We operate 2 differentiated defense-focused platforms across our global footprint. In Malaysia, we're advancing our 100% silicon anode architecture, our largest format AI-1 variation optimized for high energy density applications. These batteries are well suited for next-generation soldier systems, including augmented reality headsets and wearable power systems. We have supported U.S. Army programs since 2021 and recently provided deliveries under the conformal wearable battery program. In Korea, we have a conventional architecture platform utilizing graphite and silicon anodes. This facility has an extensive operating history in Korean defense markets and supports a wide range of battery sizes and configurations optimized for high discharge rate applications, including drones, subsea systems and munitions for several Korea's large defense contractors. Naval munitions specifically were the largest growth driver in 2025, and our pipeline is increasingly focused on expanding our presence in the aerial drones market. In 2024, we kicked off a campaign to introduce our technology to U.S. and European military contractors who are attracted by our diverse supply chain and internal manufacturing capacity. Establishing initial programs and building a pipeline has required time, but it is starting to pay off. We enter 2026 with a global pipeline of approximately $100 million, including opportunities with multiple Tier 1 defense contractors. Recent design win traction in Q4 has strengthened our confidence in pipeline conversion. As programs progress, we expect to provide greater visibility into customer engagements as we convert pipeline to backlog. Aerial drones represent a compelling battery growth opportunity with an estimated $1.5 billion TAM this year. Next-generation drone platforms require higher energy density to extend flight time and strong discharge capability to support power intensive missions. As autonomy and AI capabilities expand, power requirements will continue to increase. Our platform aligns well with these needs, enabling longer flight times, sustained high discharge performance and diversified supply chains through our manufacturing in Korea and Malaysia. We are building on deployed defense cells and existing customer relationship to expand into next-generation silicon anode drone applications. This segment demonstrates how our architecture scales beyond smartphones and supports a diversified growth strategy. This slide highlights our energy density progress in drone applications. Today, we have deployed defense cells supporting high discharge drone programs. We are now advancing a higher energy drone cell in development with internal testing achieving approximately 342 watt hours per kilogram. Looking ahead, our next-generation silicon anode road map targets energy density above the 400 watt hours per kilogram to support increasingly autonomous platforms. The road map shows clear progression, deployed cells today, higher-energy product launches next and next-generation silicon anode performance that expands mission capability. Now I'll turn it over to Ryan to talk about our financials. Ryan?

Thanks, Raj. First, a few highlights on the fourth quarter results. Fourth quarter revenue was $11.3 million, a record for Enovix, up 16% year-over-year and above the top end of our guidance range of $10.5 million. This performance was driven by continued strength in defense and industrial shipments out of Korea. Non-GAAP gross profit was $2.9 million for a non-GAAP gross margin of approximately 26%. While margins can fluctuate quarter-to-quarter based upon product mix, Q4 benefited from higher volumes and operational improvements in Korea. Non-GAAP operating expenses were consistent with our planned investment levels, reflecting continued investment in smartphone and smart eyewear qualification programs as well as Fab2 readiness. Non-GAAP loss from operations was $28.9 million, modestly better than the guidance range of $30 million to $33 million. Non-GAAP net loss per share attributable to Enovix was a loss of $0.14, also better than the guidance range of a loss of between $0.16 and $0.20. With respect to the balance sheet, we ended the year with approximately $621 million in cash, cash equivalents and marketable securities, providing substantial liquidity to execute on our commercial plans as well as enabling us to evaluate strategic opportunities from a position of strength. Additionally, the Board authorized a share repurchase program, reflecting confidence in our long-term strategy and adding another tool to our capital allocation framework as we focus on long-term shareholder value. Turning to the full year results. For the full year 2025, revenue totaled $31.8 million, a record for the company, representing 38% year-over-year growth. This growth reflects sustained execution in defense and industrial markets, while new products in the smartphone and smart eyewear markets advance towards commercialization. Full year non-GAAP gross margin improved to 23%, benefiting from higher volumes and demonstrating substantial progress in manufacturing execution. Capital expenditures for the year were disciplined and aligned with our staged manufacturing expansion plans. Overall, we exited 2025 in a stronger financial and operational position than we entered it, with growing revenue, improving margins and substantial liquidity to execute upon our road map. Now turning to Q1 2026 guidance. For Q1, we expect revenue in the range of $6.5 million to $7.5 million, reflecting normal seasonality and program timing of defense shipments. We expect non-GAAP loss from operations between $29 million and $32 million, reflecting continued investment in product qualification and manufacturing readiness. We expect capital expenditures between $9 million and $11 million, primarily related to Fab2 equipment. Actual cash payments in Q4 were lower than previously guided due to the timing of equipment and vendor payments. The majority of those payments are expected to occur in the first half of 2026. This is primarily timing, though we also made a couple of intentional near-term adjustments. Coincident with the operations leadership transition, we made 2 adjustments to our capital plan. First, we deferred initiation of the NPI line in Korea to allow KH time to fully evaluate priorities and sequencing. Second, given the high demand for products from our Korea factory, we are accelerating adding incremental capacity there. This is a relatively modest investment supported by high customer demand and opportunities. On the M&A front, to provide a little bit more color there, we continue to actively evaluate a range of opportunities, both smaller and larger, that could accelerate commercialization or strengthen our manufacturing and technology position. We will only deploy capital with a focused and disciplined approach, especially with respect to strategic fit and price. And with that, I think we're ready to take questions. Operator?

[indiscernible] Q&A session. Please note that this call is being recorded. Before we go to live questions, we're going to read the 2 most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is, how does your current strategy differentiate Enovix from competitors?

Thank you for that question. So Enovix, we use 100% active silicon anode. Most of our competitors use graphite for the anode. Silicon anodes can store much more lithium. So we are able to provide much higher energy density because of that. One of the problems with replacing graphite with silicon is that the silicon tends to swell when using a battery when doing a charge and discharge. We've got an architectural advantage where we figured out how to enable the silicon anode from not swelling while maintaining the energy density advantage. That is our main advantage, and that is how we differ from most of our competition because we provide much higher energy density due to using 100% active silicon anodes.

Thanks. The second question is, at our current burn rate, how long is our cash runway? And under what conditions will we need to raise additional capital?

I'll take that one, of course. First, we ended the year with approximately $621 million in cash, cash equivalents and marketable securities. So we're operating from a position of strength, in my opinion. Second, I'd caution against thinking about runway purely in terms of static burn rate because our spending is tied to a very specific qualification and commercialization milestone set. As those programs progress, the working capital and capital expense profiles will evolve as well. As we said in the prepared remarks, we believe we have sustained liquidity -- substantial liquidity to execute on our commercialization strategy without needing to raise capital in the near term. That said, as we've discussed before, beyond that, we will always evaluate capital allocation options such as strategic M&A opportunistically but with process rigor.

[Operator Instructions] Our first question comes from Mark Shooter with William Blair.

Can you hear me?

Yes, go ahead.

Great. So I appreciate you getting into the details and geeking out with us a bit on the smartphone C-rates test requirements. The 0.7C rate life cycle test is definitely overkill for smartphones, but it's an incumbent standard, and they're notoriously sticky and difficult to change once established. So I'm wondering in your engagements with Honor, how receptive were they when you suggested the change? And given that cycle life and energy density are always paired to trade-offs, would Honor take a formulation that hits that 0.7 rate cycle life spec with a slightly lower energy density?

Yes. Thanks, Mark. Thanks for the question. Yes, I think the first thing is to -- the reason I showed some of the material in this talk is to actually show that most of the use cases in the smartphones, as the batteries get bigger and bigger and more and more capacity, are under 0.2C discharge, which basically means that we have a battery that now we believe under 0.2C average discharge rate, goes over 1,000 cycles. So we essentially -- we feel we have a battery that meets the requirements of the smartphone market. Now as I said, one of the challenges is if you want to test if the battery meets the requirements at the -- how the normally battery is used in the phone, it's going to take a year to at least to run that because if you run at 0.2C, it takes a long time. So customers typically use a higher rate of discharge, like 0.7C, to cut the amount of time it takes to test. This is very similar to people used to use a burn-in test, for example, for chips, high-temperature ovens, try to find the early failures. When you change technology from graphite batteries to silicon anode batteries, silicon anode batteries behave differently when you discharge them very fast, in this 0.7C. So Honor and our other smartphone customers, we've talked to them, they understand that. They realize that this test is a proxy and an accelerated test and not a true test. But, like you said, this is a test they have been using. So we are in discussions with them. We see 3 pathways forward. One is, we're able to convince them that this is not a real-life test and the real-life test is really 0.2C, and we can get a waiver on less cycle life for 0.7C, for example. By the way, this has got nothing to do with energy density. It's purely about cycle life testing. So it's not like they need to take a lower energy density. They just have to take a lower cycle life on 0.7C, which is not a real test, an accelerated test. The second one is we have to find together with them another accelerated test that is more representative, if you will, for silicon anodes. And we have some ideas on what that is, and we are discussing with them on that. The third one is we'll just have to modify our electrochemistry just to pass this test at 0.7C. So we are working on all 3 of those. Ultimately, there is a lot of interest from our customers in wanting to use our batteries because of the higher energy density we provide. And the road map, even higher energy densities because of 100% silicon anode. And those conversations are going well. But ultimately, we need to solve this passing of this test to a way where they and us both are comfortable, that in the real-life use case, when ultimately the battery is put in the phone, it's going to do really well and everyone is happy with the performance.

I appreciate all the color there. If I can switch over to the opportunity in smart glasses. In the presentation, you gave a lot of information there on the TAM as well. The performance advantage with Enovix's cell and technology goes up, but the battery application requirements get easier. So I can see this is your faster commercialization path. But you did mention an initial production demand in your -- in the release statement. So I mean, should we think about that as a purchase order? Or is that a next step? And can you frame what the revenue opportunity might be for '26? Or is this a '27 story?

Yes. Good question. So as you alluded, when the battery gets smaller but still the energy requirements or capacity requirements are high, we have a disproportionate advantage because the smaller it is, the efficiency we have is more -- better compared to our competition because the additional stuff we put in there for holding the cell from not expanding is not as much of a penalty, right? So that's why I think it's much -- we are much more competitive there. And also the cycle life requirements are much, much lesser. They don't need to do 1,000 cycles because people probably change their glasses much quickly. So those 2 are very good. And also, the battery in smart glasses is the limiting factor. I mean, if you guys actually buy some of the smart glasses in the market today and start using them, you'll find that almost none of them come all day. Smartphones come all day, but most of these things will die in multiple hours. So a better battery makes the product. That's why there's a lot of interest from our customers on using our battery. And also, there's lots of different kinds of applications, lots of different kinds of products. This is what I mean by -- there could be sport glasses, there could be utility glasses, there could be fashion glasses. And as I mentioned, when Android XR ecosystem comes, there will be even more products using that. So that's why the TAM is now suddenly much larger we expect it to be in the next few years than we ever thought before. So I think that's why we are very excited by this market and the fact that we can get there. Yes, you absolutely should think of the question you asked as a purchase order, and we are manufacturing them now to our lead customer. We are very excited by that. The whole team -- I was in Penang last week. The whole team is focused on executing that and building those products and setting it out. Initial volumes will be lower just because they're just starting. But I think that '27, '28, we expect the market to really grow and be meaningful for us. So we're excited by that.

Yes. If I can just jump in and chime in. Had an old boss, used to say, "All dollars are not equal." It's a very important order for us.

The next question comes from George Gianarikas with Canaccord Genuity.

Incredible level of detail in presentation. Appreciate it. So maybe first question, you pointed to sort of a little bit of an issue with the electrode dicing and the manufacturing process getting yields up there. How much have you been talking with your potential future customers around fixing that issue maybe together in anticipation of ramping production towards the end of this year?

Yes. I think, firstly, as I mentioned, the yields on almost -- on all steps are above 80%, as you saw in our -- 80% or above, as I mentioned. On the dicing side, they're close to 80% but not quite there in fourth quarter. But this quarter to date, we're at 80%. So we feel confident that as we make progress, it will sort itself out. But that's because we just started making 2 batteries, right? We just started making the smartphone battery and smart eyewear battery. We've been sampling a lot of batteries last year. We're now focused on 2 of them, one on Agility Line, one on H-volume line -- high-volume line, and we'll continue to work on each state to get it better. Our customers have visited our factories. They have seen it. We've got man through multiple customer audits. We have enough supply to meet all the requirements for 2026. And we're looking at various options to increase the throughput and get even more cost-effective than laser dicing methods to actually get the volumes up. So yes, a lot of focus on that, and we are working with our customers on that.

And maybe with regard to the drone opportunity, can you sort of talk about the different variations of chemistries that you have to work with them? I'm assuming these are silicon-doped cells, not 100% silicon that you're approaching the market with first. And so how many different chemistries do you need to approach that market? And do you need, like, any additional salespeople to sort of attack it?

Yes. Great question. This, we have been making. We haven't really talked about it too much in the past. We have been making very high performance, high rate of discharge cells because we were selling into -- a lot into the Korean military from our Nonsan facility. And some of the requests came from drone batteries, and we started making those. What we find now is, with the market expanding fast, because as you guys have seen in the more recent political situations, there's lots of drones being deployed, both in commercial and also in military, we have now combined -- used some of our knowledge on using 100% silicon anodes with our Nonsan team. And now we dope those batteries also with silicon anode -- with silicon -- the graphite with silicon and to increasing amounts. As I mentioned before, when we put more and more silicon, the cells, the batteries swell. So that problem hasn't gone away. But since they are inside things like drones, even if those cells swell 10%, 15% or more, there's space inside to accommodate that. So we have now found that we can make high gravimetric energy batteries that do swell a little bit, but still good within the application. Whereas in a smartphone, if you swell, it's not acceptable because it's very space constrained. So they are both -- so in that sense, I think it's been a really good thing for us. As I mentioned, we have a strong road map now, and you will see us sampling much higher watt hours per kilogram cells this year and just continuing to increase that through next year. And we have a lot of customers now helping us with that, too.

Our next question comes from Colin Rusch with Oppenheimer.

Can you guys hear me okay?

Yes, sir.

Yes, Colin, go ahead.

So guys, exciting that you're moving into the drones. Can you talk a little bit about the form factors that you're working on there as well as the diversity of electrolyte and binder materials and binder processes that you can -- you feel comfortable talking about at this point? Just want to get a sense of the full ecosystem here and potential product diversification that you might see within that opportunity.

Yes, sure. Again, like I said, it's a pretty big market and all of them are not same, right? There are subsea drones. There are aerial drones. There are big aerial drones that carry a lot of weight. There are smaller ones that carry some munitions and maybe onetime use and just used for a few times. So we have different chemistries and different electrolytes to address that market. Here, this is one of those areas where we can trade off cycle life for energy density, for weight and so on because you don't need to charge them 1,000 cycles, right? So that's really not a requirement here. 300 is plenty. So suddenly, a lot more opportunities open up for us in terms of the electrochemistries we use. And our team in Korea has been doing this for a long time. So we have multiple chemistries going after that, some purely graphite, some graphite doped with silicon, a different kind of cathodes. So multiple form factors, multiple products. But we understand this market pretty well. And the other important thing is, in this market, having your own factory is really a big deal because manufacturing -- that's something that our customers tell us that the fact that we own our factories and we can make them in Korea or Malaysia is a big advantage compared to some of our competition who actually have to use contract manufacturing in China and other places. So these are sensitive areas where having our own captive manufacturing helps us quite a bit.

And I'll add to it. I think I was going to say part of the question, I do expect that we'll add to the sales and business development organization to support that. So it's kind of the time to build that group out.

That's right, yes.

Great. And given what's going on in the U.S. in terms of trying to migrate manufacturing and secure supply chains back into the U.S. over the next few years, even from Korea, can you talk about some of your capital planning on a multiyear basis as you enter that market in terms of having to have some localized or regionalized supply in the Western Hemisphere to serve some of the [ U.S. military ]?

Yes. I mean, at this point, as Ryan mentioned, we were fortunate to acquire this facility in Korea last year from SolarEdge that added 300,000 square foot of total capacity we have -- factory we have in Korea now, with a very capable team that's been building batteries for defense for like 20 years and industrial applications. So we have a large footprint there, and we are now going to invest more into that this year to get more capacity there. And again, so far, I think manufacturing in Korea, our manufacturing in Malaysia seems perfectly acceptable. We'll continue to see if it makes sense to bring something into the U.S., but we are quite -- our customers are quite comfortable right now with those 2 facilities.

The next question is from Jeff Osborne with TD Cowen.

I appreciate all the detail on the call so far. I wanted to know, Raj, relative to the last earnings call, 3 months ago or so, the 0.7C metric that you mentioned, is that new? Because you referenced sort of a 4-month testing period. I'm just curious like when the parameters changed? And then when that -- I think you referenced a 4-month sort of shot clock to proceed through the testing process and procedures. Did the 4 months start 3 months ago and you'll know next month? Or did you get that new homework assignment, so to speak, in the past few weeks?

No, that's always been there as a requirement. And our thinking was that we will figure out a way to -- I mean, we will pass that requirement also. But I think what we find now is with 100% silicon anode batteries, 0.2C requirement is something we can pass because that's -- we have data now that shows that. When you discharge a battery like 100% silicon anode battery at 0.7C rapidly, which is not a real use case, as I mentioned, you just do it for convenience. It doesn't behave like the graphite batteries do. It behaves differently. So in that sense, it's one of those cases where the accelerated test itself has to be adapted a little bit for the kind of battery we are using. And we showed this to our customers, and they understand it. So we're not discussing what the right way to resolve this is, right? So it's not a new homework assignment. The results is what we have now, is we've solved the 0.2C problem, which I believe is a real problem in terms of how a battery is used in the phone. Now we are working on how to resolve the 0.7C accelerated test in a way that both us and our customers are comfortable.

And do you think that can still be done in a 4-month window that started at some point this quarter? I'm just trying to understand like when do you expect, knowing what you know now, to pass the Honor test, so to speak?

Yes. Like I said, I think there are 3 pathways for us. One is, we have results now on 0.7C that don't go all the way to the cycle life that they want. But we are talking to them about how real is this, like it's a proxy test, can we get comfortable? And for example, get a waiver that you pass these many cycles, it's okay as long as the 0.2C is holding 1,000 cycles. That's one pathway. That may be the shortest one. The second one, maybe we come up with a different accelerator test, which we believe is more representative or better -- makes them comfortable that silicon anodes, if we accelerate test like this, they behave like how they would in real-world use case. We are working on that, which is a different testing protocol. And the third one is they say, "No, you just got to pass this." In which case, we'll have to change the electrochemistry and find a way to pass this, which we have some ideas on how to do. The team is working on that. That might take longer. So depending upon which one we are able to convince them, we'll gate how much the time is. So we do believe that one of these things we'll be able to convince them before the end of the year and get some volume.

Got it. And then maybe for Ryan, just given Raj's answer on the 3 different outcomes there, as it relates to sort of modeling the business over the next few quarters, I know you only give formal guidance 1 quarter out, but I assume we should think about eyewear as the main driver outside of the Routejade facility for the next 6 months or so? That is part A of the question. And part B, can you just remind us of what you expect seasonality to be for defense? You've got a pretty precipitous decline in Q1. How should we think about that rebounding in Q2 to through the rest of the year?

Yes. Thanks, Jeff. The first part of your question, the answer is yes. So for the first -- the near term, that's -- you heard it right. So smart eyewear is the more near-term opportunity. And then the second part of your question in terms of seasonality, exactly right. So if you look at the same pattern in terms of revenue that we had last year, Q1 tends to be soft based on the order pattern of these long-term defense contracts and then the back half of the year tends to be much stronger. Kind of evidenced by our Q4 that we just printed, which was record quarterly revenue.

Got it. And then maybe last one quickly for you. Just CapEx for the year, should we think about $50-plus million? Or what's the expectation?

We don't give -- apologies, we don't give guidance beyond the quarter. I think we gave guidance for just Q1 and just speak broadly about Q1 in general, we talked about the HVM-2 line. We've already started placing some orders for some of the long lead, but we'll reevaluate all of our plans now with KH, who's in this new role of Head of Operations, who's wonderful to work with, and we'll just be smart and prudent how we phase those orders out over the year.

The next question comes from Will Peterson with JPMorgan.

I wanted to come back to the question about your Korean operations. Can you give us a sense for what the combined, the 2, Routejade and the other one, can support in terms of megawatt hours or revenue? Just trying to get a sense of the run rate you could support at sort of max capacity? And then how much capacity do you plan to add? And what -- can you give us any sort of sense on what investment you're considering?

Do you want to take that or me?

Go ahead.

I'll go. Again, with that, we haven't given out specific numbers in terms of megawatts, but we -- I think we've talked publicly about how this is a facility that will support significantly higher revenue streams, maybe 2x, and we're investing -- we're making decisions in terms of deploying capital right now, which would incrementally add to that. Again, I don't want to quote an exact number, but it's -- we recognize what a great opportunity we have here in some of these markets that we've talked to, and we've got a great team to support. So we're starting to invest dollars. But again, the -- I think you can see the type of numbers that we've invested in Korea over the last couple of years compared to the dollars that we're investing in PEP-2, they're relatively small, but they're really important in terms of the ROI that they can return both in terms of dollars and strategic return.

Yes. One other color I'd add is, we have a much larger facility now. Like I said, we have a fairly large facility that we acquired with a lot of machines. So we will be adding incrementally and in a scalable manner. So some of it that we acquired is usable. For example, we have a huge coater that we acquired from there that the coating -- we don't have to add new capacity, and coater is very expensive. But then we can add more to the dicing and stacking in a scalable manner. So we don't have to do it all at once. The facility is there, so we can prudently add it as and when we see the demand and the qualifications materialize. So it's been very fortuitous that we got this facility and now the demand is coming to us.

I appreciate that. And then coming to the key, I guess, your first smartphone customer, trying to get a sense for the key learnings from the chemistry reformulation process. And how many more, I guess, options do you have with this customer? And you gave, I guess, a pretty clear example of cycle life. I guess is there differences in requirements between the various customers? Anything you can kind of give us to better understand what, I guess, opportunities you have ahead?

Yes. I mean, look, the learning here is this for me, right? I think the learning is we wanted to give a lot more color on this call and our report on exactly what it is. And what we have learned over this is the smartphone requirements are very, very difficult because this is the largest market for portable batteries and consumer electronics, great margins because they provide clear value, huge TAM. But when you make a battery for that, the rest of the markets are much easier because this is the toughest one. And to replace an existing graphite battery and existing graphite battery ecosystem with 100% silicon anode battery, one is, meeting all the requirements. Second is, helping and learning with the customers on accelerated tests or other tests that they have put together, have to be updated a little bit for this particular kind of technology. It was kind of like thinking about when you started to add -- I don't know, I remember in my past, we added fingerprint sensors to phones. So now you've got to face ID. It's completely different, right? So it's still a biometric authenticating system, but the test cases are different and the way you use is different. So whenever you introduce a new technology, you have to work with the customer in enabling that. The reason that the customers are interested in, although it's different, is because we can provide an energy density road map that's not possible to do by just graphite batteries. And that is an absolute requirement. As I mentioned when I first took this job, the AI use case is only getting more and more and the demands are getting higher and higher. And now as I mentioned, I think a few calls ago that I expect these batteries to go to 10,000 milliamp hours, and now you see that. And they can't keep getting bigger because the phones can't get any bigger. So the customers are highly motivated to help us get this technology to market. But when you totally change the graphite anode to silicon anode, here, we have to work with them to make that to qualify. So if you look at the progress we've made, it's tremendous. I mean, I think we showed -- we have specs of like 75 different specs, and we passed most of them. So we are converging, and it's been a fantastic learning. But at the same time, other markets like eyewear are much easier to do because of this. And there are so many other markets like that, that are much easier, like if you think about wearable cameras and so many other markets where AI at the edge is really creating, there are great opportunities for us once we get this smartphone battery done or even before as we've gained a lot of technology advancements in the last few years working with our smartphone customers.

Our next question comes from Derek Soderberg with Cantor Fitzgerald.

I was curious if switching out the dicing technology sort of resets any part of the battery qualification process. Obviously, your customers want to make sure you guys can scale and putting aside any of the cycle life testing, might the change to the dicing technology push back that qualification process at all?

Look, any time you have a customer qualify one particular product, if you change some steps within it, we will need to communicate what those steps are and what it changes, and we will need to run some form of qualification again. That's just the way it is. Even when you move from one fab to the other, you got to do that. But the way we would do it is, these are all by different zones. For example, dicing is Zone 0 and then Zone 1 and then stacking is Zone 2. So there's many ways in my experience, we've done this. We established equivalents. We show similar performance. We can do a subset of the qual. So there's many different ways to do it, but it's still a little bit early. Right now, we are doing laser dicing on all of them. When we do some other form of dicing, we'll work with the customers to gradually phase it in.

Got it. And then just a quick follow-up. Are there any remaining technical milestones to shipping commercial volumes in the back half of the year for the augmented reality market?

Any technical milestones was your question?

For smart eyewear.

Yes. So I mean, look, we now have seen the products from our customers with our battery in them. Very exciting. We saw a few at CES. We saw a lot more in private demos. The performance is fantastic. They really like it. They really like what it's able to do and what the AI is able to do. We don't see any big technical obstacles. But this is a new market. It's a new application. So the applications are evolving. So they are doing testing of different applications. And as and when they find them, we'll figure out how to adjust it. We did learn about one thing after we first sampled in terms of how to -- different rates and different pulses and so on, and we quickly adapted that, and now we have a new battery that meets that. So my team is very capable of quickly reacting to those now. But right now, the battery we have, we feel meets all the requirements. That's why we got a production PO, yes.

The next question is from Alek Valero with Loop Capital.

This is Alek on for Ananda. So my first question is, what is a good way to think about the cadence of testing and production over the next few years for smartphone, eyewear, PCs and drones? Additionally, what do the capacity needs look like over that time frame? I have a quick follow-up.

Cadence of testing, how do you mean by that? Maybe you can ask a little bit better. In terms of timing you mean, how long it takes or...

Yes. I guess what's the timing of the phases of the testing?

Yes. So my experience in the last 3 years has been that typically, we provide a standard size cell to the customers that one we have. And they give us a set of requirements in terms of cycle life, energy density, rate of charge, discharge, swelling requirements and so on. And they'll do a bench level test of that. That takes a few months. When they're comfortable with that, they come back to us and ask us, hey, we want a particular -- if they are happy with that particular size and then they put it in a product and then there's a product level testing that takes a few more months. But if they want us to change the size, it will take us multiple months to come up with a different size, like when I say size dimensions, X, Y, Z and so on, to fit in that. That becomes a long pole, maybe 3 to 4 months to build that. And then they will put in the product and do the testing again. And then when all of them have passed, they place the PO. And they do system-level testing now. They put it inside a product, test to make sure the product is performing like it's always supposed to perform, and then they go to production. So if you -- and that whole cycle can take anywhere between 1 year to 1.5 years for a brand-new customer starting from scratch. Now if the requirements are not as stringent and we already have a technology that meets those requirements, for example, it can be much shorter because we don't really have to change anodes and cathodes and electrolytes and so on. Like, for example, when we have a product that meets the smartphone requirements, we were able to quickly react and make small adjustments and meet the smart glass market -- smart eyewear market. So that -- so now it's much shorter. Now if your cycle life is 1,000 cycle requirement, well, that testing takes like 4 months. But if your cycle life is only 300 cycles, it takes much shorter time. So it depends based on the end application, whether you need a custom cell or not, whether you can use a standard technology or not. So it's -- the question -- maybe a little long-winded answer, but that's just the nature of these lithium-ion batteries in custom applications.

And drones?

And drones I think can be much shorter. Yes, sorry, go ahead.

No, sorry, go ahead. Apologies.

No, I was just saying drones, very similar. But like I said, the cycle life requirements are much shorter. And the space requirement is not as bad in the sense that there's more room there, so you don't need to exactly make this exact dimension of the cell. Sometimes they stack multiple cells to get the performance. So they may be able to use the cells that we have and stack multiple of them to meet the power. So that time of making a custom cell will come down.

I appreciate the detail. Super helpful. And actually, just a quick follow-up and on that same note. So you mentioned the drones, and I believe you said that's one of the products that could handle a little bit more swelling. Can you speak to other markets besides drones that are maybe similar like this where you could get a little bit more swelling? Is there any markets there that seem attractive that you may want to penetrate in the future?

Yes. I mean I would say industrial markets that have large space, for example, I don't know, think about forklifts, stuff like that, where there's a lot more room to put the batteries in and you put it inside a big pack and you can design the pack to enable some amount of room inside that, right? That -- those are the kind of markets. But if it's a small form factor like earphones or smart glasses or cameras or consumer, they're a lot less forgiving. I would say industrial and defense are probably a little bit more forgiving.

There are no further questions at this time. With that, I'd like to turn it over to Dr. Raj Talluri for closing remarks.

Yes. Thank you. Thank you all for your attention today to listen to the call. I really appreciate all the support, and we look forward to talking to you guys next quarter. Thank you.