Enovix Corporation Price & Performance (ENVX)

For a discussion of those factors that could affect our future financial results and business, please refer to the disclosures in today's shareholder letter and our filings with the Securities and Exchange Commission.

All of our statements are made as of today 02/19/2025, based on information currently available to us. We can give no assurance that these statements will prove to be correct and we do not intend and undertake no duty to update these statements except as required by law. Which are not prepared in accordance with the Generally Accepted Accounting Principles. You can find a reconciliation of the GAAP financial measures to non GAAP measures our shareholder letter, which is posted on the Investor Relations page of our website. I'll now turn the call over to Raj to begin. Raj? Thank you, Rob.

And thanks to everybody for joining us today. For our format today, I'm going to start with a recap of our recent results and some of our recent milestones before I turn it over Kristina for financials and outlook. I'll have a few closing comments and then we'll take your questions. We had a very proactive 2024. Especially Q4. To recap our recent achievements, First, our revenues in the fourth quarter were $9,600,000 near the high end of our guidance range. For the year 2024, total revenues were $23100000.07600000.0 up from $7,600,000 in 2023. [indiscernible] [indiscernible] our top manufacturing and product objectives for the quarter by completing site acceptance testing of our high volume manufacturing line and shipping our first samples of EX2M to customers. Third, we shipped early engineering samples of our leads to our lead smartphone OEM with the results confirming the critical safety tests are all passing. Additionally, we received the cell dimensions as a continuation of the agreement we made with them. These dimensions are actually of the cell that they expect to be shipping in 2025. Now we don't track now for commercial smartphone launches in 2025, pending successful completion of the customer qualification. [indiscernible] In line with the agreement we announced in June 2024, we also delivered our first battery packs of our first custom cells from Malaysia with packs built in our courier facility.

In addition, we secured a purchase order from a custom battery from a second marquee Smart IVR customer. The ramp of Fab two in Malaysia in 2024 stands out a pivotal accomplishment for the company. We managed to complete SAT of our HBM line in just one year, after our first tools arrived, Yields are now well beyond the final levels we achieved in Fab one, and we have incremental targets in place throughout the year and we believe that we believe will ensure readiness for smartphone mass production the fourth quarter of 'twenty five. We now have multiple customer audits going on, serving as a strong testament to our manufacturing readiness and our customers' interest in using our products. While we remain focused on smartphones, we're also prioritizing segments where major battery constraints or supply chain requirements are creating a strong competitive advantage for our technology. Recently, smart eyewear, emerges one of the segments and we're now in the process of developing custom cells for market customers in this space. Another market that recently emerged as a unique growth opportunity for us is the defense industry. Where we recognize a significant portion for 2024 revenues with conventional graphite battery products.

Since the U. S. Elections last November, we observed an increase inbound interest from drone manufacturers and defense suppliers seeking battery solutions that comply with allied country supply chain requirements. Earlier this year, we secured a sample purchase order from one of these suppliers Veracom was AI Systems. While these developments are still evolving, we're optimistic about the potential upside from these And on the product front, it's also been a very productive 2024 and Q4 for us. We successfully completed testing of EX1M and performance results indicate that we don't track to meet targets of energy density cycle life and fast charging. For EX2M, we delivered early engineering samples to OEMs across both smartphone and IoT markets and we received positive feedback that the E X2M energy density is meeting customer targets. And looking ahead, we have officially kicked off the design phase of EX3M, incorporating feedback from our lead OEMs to ensure alignment with their evolving requirements. Now with that, I'll turn it over to Cristina for the financials.

Thank you, Raj. All the relevant financials are in our quarterly report and our shareholder letter. So I will speak from a high level and then provide outlook. We delivered Q4 twenty twenty four revenue of 9,700,000.0 above the midpoint of our guidance. Non GAAP EBITDA came in at a loss of 11,700,000.0 above our guidance of a loss of $19,000,000 to 25,000,000 And our non GAAP EPS came in at a loss of $0.11 also above our guidance of a loss of $0.15 to $0.21 We ended the quarter with roughly $273,000,000 of cash and cash equivalents CapEx in Q4 was $16,400,000 and cash used in operation totaled 16,000,000 Our balance sheet is strong. Giving us a runway for option and optionality for funding additional HVM lines. Now for our guidance. For the first quarter of twenty twenty five, we forecast revenue of $3,500,000 to $5,500,000 an adjusted EBITDA loss of $21,000,000 to 27,000,000 and a non GAAP EPS loss of $0.15 to $0.21 Now I'll turn back to Raj for close, Raj. Thanks, Krishna. As you can see, 2024 was a big year for us.

We made significant strides by launching new high volume manufacturing line in Malaysia, with custom battery cells already shipping from the Agility line and high volume production slated for 2025. We also focus on building strong customer demand across key markets, including smartphone, and IoT OEMs, while we continue to drive innovation and operational excellence. With that, we can go to the questions. Operator?

Will now begin the Q and A session. Please note that this call is being recorded. Before we go to live questions, we're going to read the two most highly voted questions submitted by shareholders ahead of this call during the call registration The first question is, regarding policies and tariffs implemented by the new administration, what are the potential implications for Inovix's current and future business operations and prospects?

Yes.

Thank you for the question. As I mentioned in the prepared remarks, we are actually getting increased interest since last November for our batteries. From defense and other industrial customers in The U. S. As a reminder, we Our factories are actually in Korea. And also in Malaysia, which is actually very favorable to shipping batteries into The U. S. So it's been a we don't see much effect on metallics at this point.

The second question is, can you lay out the current guidance for adding lines? What is the current capacity? When will you begin ordering equipment? And how long will it take to install any additional lines?

Yes. I'll take a shot at the question and I'll have Ajay add more color to it. Firstly, we are super That's the tea of our high volume manufacturing line. The factory we have in Malay we have the ability to add up to four lines there. And we put in one line and that's the one we completed. As Etion In terms of current capacity, I'll let Ajay comment. And then I'll talk about how to add additional lines. Thanks, Raj. Good question.

The current Line one Gen two Line one, which is installed in our Malaysia fab is running and was bought off in SAT at $13.50 UPH, just as a reminder, which is equivalent of roughly 9.5 to 10,000,000 batteries a year. Now this is fed by what we call farms in zone one, which is dicing. And zone four, which is testing. Now we're adding capacity to zone one as we see the indications from the market as to how much volume do we need to support. So that's where the capacity lies. And the way we are looking at adding lines is basically long lead time items such as various different items in the line, which are on the used as control systems on the manufacturing line. We are ordering and keeping them as inventory at our suppliers. So this makes us gives us the ability to shrink the timeline as to when we can add second, third, fourth lines. So that's how we are looking at this capacity. Yeah. Thank you, Anjay.

Nothing else to add.

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, Our first question will come from Jed Dorchheimer with William Blair. Your line is open. Please go ahead.

Hi, thanks. Congrats on the quarter and thanks for taking my question. I guess, first one, just the the drone purchase order, I'm curious, just trying to get a better understanding of the growth profile of this customer. I think mentioned it's a $1,000,000,000 that they're doing a $1,000,000,000 in revenue. And I think if memory serves, they just hit that. So I just want to make sure that that customer is kind of on that s curve of inflection Am I thinking about that customer in the right way? And maybe you can comment on Is the defense is coming in better than expected? How you're thinking about that? And then I have a follow-up too.

Yes. We can't really comment on which customer. But one thing I can tell you is we are seeing a lot of interest for the batteries that we are making. In our Korea facility because they are high lead batteries and they are very good for these kind of applications where you need the fastest discharge and high rate of discharge. And the market is growing. It's hard to put an exact number on it. It's early stage in terms of qualification, but hopefully as the qualifications go through, we'll be able to add more color on how we see the business going. But we are getting multiple inquiries for those batteries from different customers now in The U. S. Great. And then just as my follow-up, just pivoting to the commercial smartphone, you're now starting to Build a backlog of that in terms of the pipeline and the commercialization stage, if you could just remind us of that? Thanks.

Yes. I mean, we had mentioned that we have sampled seven of the top eight customers. And another one just placed an order for samples from us. Clearly showing interest is building up. In our products and what we can build. We talked about two agreements that we have with two customers, and they're both progressing. One of them, we actually received the After passing the milestones and last time I talked about getting payment for the milestones, we now got a very important next milestone, which is we got the exact dimensions of the battery that will be in the phone this year. So that is a huge step. Now we understand exactly what it is. Just to remind the viewers, what we sampled was a standard battery that we made here of a standard size. But now we got dimensions of the battery and this is north of 7,000 milliamperes, so sizable battery. But again, the space is still constrained in the phone. So our energy density clearly adds a value there. And next stage is we expect that to get qualified with our technology in their phone. And we expect to get other custom cells from the following customers in that order.

And again, this one particular battery that we are making for this customer it could go into multiple models. Typically, these batteries go into multiple models within the segment of the market. So super excited by the progress we are making. It's a study and gradual and thought through. So next question will come from Ananda Baruah with Loop Capital. Please go ahead.

Hey, guys. Yes, thanks for taking the question. Really appreciate it.

I guess Rajnath, Jay is sort of sticking right there. Can you remind us for EX2M and you mentioned REGENEX3M, Two things, like number one, like the capabilities of each each model and And then when do you think each of those models like get into the marketplace and get to volume And anything you can say about the volume that each of those can bring to the company. Would be awesome.

Yes. The way to think about this is we have made a choice of different and cathodes and electrolytes and so on, which is our first EX1M product. Where we got requirements for the customers and we sample them. We're now getting feedback from them on, we like this part, we want you to increase this part, we want you to kind of trade off of I've said this before, trade off of energy density versus fast charge. Versus cycle life, versus temperature performance and so on. We are now optimizing that. To meet the customer requirements. Meanwhile, we make a step forward choosing a newer set of materials that give increased energy density, and that's the EX2M. Both materials and also our architecture in terms of reducing the amount of inactive materials so that we can get more energy density, and that's the EX3M, which we just started. In terms of volumes, it's difficult to comment on volumes at this stage, because it'll depend upon which customers go to production first. How many models we get designed into, how quickly we can ramp that. And that I think towards the later part of the year, we'll be able to comment more because at this stage, they're all in different stage of qualification.

We have visibility into one of the models. But there's a lot more behind that. So it just takes time to be able to answer that question more precisely.

Okay. That's awesome. And I guess just as a follow-up, just Ajay, just make sure we fully understand the context around sort of the four lines is it line one you mentioned 9.5% to 10%. Is there anything implied [indiscernible] And your description of that, that the 9.5% to 10 can get filled in a sort of reasonable amount of time And then you're sort of speaking to the expansion of the lines Then you said you're sort of sort of ramp lines as things progress or is it you can do sort of 9.5, 10 to start per line. I think you'll probably tweak that up from there just with efficiency gains. But even inside of that line is sort of as things progress, is that also wrapped into the Line one as well? Just context around that. Thanks. [indiscernible] a reminder, is what we call the universal line. So it is a line which is capable of running equally efficiently the smaller cells, which we are also feeding into the ARVR market. I think Raj alluded to that in his prepared remarks. As well as the large cell, which we are now working on custom cell, which is more than 7,000 milliamp hours.

So it can handle all of it. The capacity kind of remains the same. Line two, three, four, When we would order that depends on the customer qualifications. Cycles as Raj also said. And whatever improvements we do, actually the focus from line two to four is going to be optimizing the line for also CapEx spend per line. As well as the speed. And we will do the learnings and backward make it backward compatible to also the line one.

So universally, we can ship and make and ship from any of the four lines that Raj talked about.

Yes. And the one other thing, I don't know, maybe just to remind you guys, as Ajay mentioned, when we built the first line, we built what is called a universe line, which can go from very small batteries to much bigger batteries. That's a more expensive line, but gives us the flexibility because not sure exactly where the demand would be when we build that line. As we get more and more visibility into like these kind of custom cells, we can optimize our lines more to that size cells and not have so much flexibility in it which optimize the cost of the line, which increase the throughput of the line, so which is kind of like a natural evolution of how you do manufacturing as you understand the product demand better, we optimize it for both cost and speed, right? And that's kind of how this is going Thank you, guys. Appreciate that.

Our next question will come from Colin Rusch with Oppenheimer.

Just go ahead.

Thanks so much guys. Getting to a 7,000 milliamp hour cell, it seems like a bit of an acceleration on some of the roadmaps. Can you talk a little bit about how quickly those specs are changing? And I've seen that translate into potential pricing appreciation for the company.

Yes. I mean, it's a really good question, Colin. I mean, I mentioned I I probably think 2023 when I mentioned we are seeing a lot of AI coming to the edge that will drive a lot higher demand for battery. Because those applications consume a lot of energy. And I'm pleased to say that that's coming through today. What is happening now is the Gen AI applications consume so much battery and every app in the so many now running on the phone that consume that, the customers are having to put higher and higher capacity batteries much higher than we expected, 7,000 plus that we saw today. That we are working on. I see that getting even larger over time. And clearly, it's a good tailwind for us in ASP because you have to deliver that kind of capacity on a limited form factor because a phone can't get bigger. Which means the energy density is what drives that. And we get a premium for energy density. So this is a good tailwind for us in terms of both ASP premium and and margin expansion as these trends continue.

That's super helpful. And then I guess my follow-up here is really about the competitive landscape. Obviously, there's been a lot of capital invested in materials along with different electrolytes and rebalancing different cell structures. I'm just curious how quickly you're seeing competitors move and how intense that environment is for you guys as you go through this qualification process with all of the smartphone makers.

Yes. I mean, our competition continues to be incumbent graphite batteries, which have kind of doped the graphite with some amount of silicon. I think we mentioned we saw 5% to 10% But in a big cell like 7,000 milliampere is kind of range. If you put more than that, we are seeing that the swelling becomes too much. So you can't really keep doing that. Our constraint and our innovative architecture, we use 100% active silicon and as far as I know, we are the only ones that were able to put 100% active silicon This is validated by our customers and also validated by the people who supply these this silicon material. They do they're excited to work with us because we're able to use 100% of their material. So it's It's a competitive advantage we have with our architectural approach. And I hope to get this into product soon.

Thanks, guys.

Our next question will come from Bill Peterson with JPMorgan. Please unmute and ask your question.

Yes. Hi. Thanks for taking the questions. And recognizing your focus on smartphones and maybe some of these emerging IoT applications, but wanted to come back to this defense opportunity Can you speak more on the format or the size of the batteries? And I guess how much can the Korean site support in terms of I don't know, whether it be megawatts or revenue. Just trying to get a sense for how fast you can grow into this market and I guess if it were to be of interest, how fast could you expand your capacity?

Yes. We have capacity now in our in our Korean factory to support some of these for now. And we have space available nearby, and we can expand that. And build more capacity. I mean, the good news is that as these things start getting qualified, we get visibility into what this demand could be like in next year because it takes a year or to get these things really qualified into production. And as we start getting into qualms, in these opportunities, we will and we can expand in our facility there. It's a very nice site. It's in Nonsan, and we have opportunity to grow there. So excited by that.

Yes. Thanks for that. And you had in your press release about the EV, you're advancing development agreements with two customers. I had a sense that that would have already been done. So I guess what areas remain to be resolved, I guess before anything official happens? And I guess maybe to that point, has any of the joint development work happened thus far? I know these are long dated, but are there any key milestones we should be looking for this year or is the work really going to begin in earnest in 2026 and beyond?

No, absolutely. I mean, work is ongoing. I mean, we have some we are able to now get the materials from these EV makers. In our Malaysia factory because as a rumor, we the factory down here. Originally, we were thinking of doing some of that work here. But we would talk to Malaysia and IJ was able to create some space there because these are different materials. They would handle a little differently. So we have an area there where we are doing the EV work. And we're now able to dice that material and we're working on making those into cells to prove out the advantage of our architecture even in the EV space. So stay tuned for that. I think this year we should have some updates on that. Thanks, Raj.

Our next question will come from George Tanarikas with Canaccord.

Please go ahead.

Hey, good afternoon, everyone. Thank you for taking my questions. I just had a question about the smart glasses business. I think you mentioned in your press release that you expect Commercial shipments to commence mid year.

And in 2024, you had a couple of press releases, one that mentioned a California company where you had a ARVR, I think mixed headset and another one in December was another potential customer with a similar sort of device. So can we confirm that this commercial purchase order is for one of those two companies?

Yes, these are for actually from both the companies. We have purchase orders. And in fact, I do have [indiscernible] I was going to show this to you guys since we are on video. This is actually the the cell that we made that goes into the legs like that. And super exciting, you see in our investor letter, are able to not only make this cell, but we are able to package it with the battery management and so on into a pack. In our Korea facility, we were able to deliver that to the customer. So it's a tremendous progress from the time we got the purchase order to actually get some early samples out from our new factory. So and the results look really good. Like I said, are going to continue to make that. And I'm kind of bullish on this market as a market that that has a lot of potential in the out years. Particularly because of the user interface problem has been really solved well with GenAI. You can speak to these devices It's always clunky how to interact with the pair of glasses before. That problem, I think is resolved pretty well.

And also, I was at this AR conference, I think, last month, earlier this month. You could see the advances made in the waveguide optics and the brightness of the projectors and the miniaturization I've been in this space since I was at Qualcomm, I don't know, maybe a decade ago. But it looks like a lot of progress here, so we are pretty optimistic about that. And also the cells we make are a huge advantage because there is not that much space to put batteries in these glasses. And the applications demand a lot of performance from the battery to go for an all day use That's the reason we are seeing tremendous interest on our technology in this space. It will take some time to get to multiple tens of millions, but but it's a good place to start.

Thank you. And also, on manufacturing, since the last time we spoke, you've Completed your site acceptance test. And you expect to begin production in earnest in the fourth quarter of this year for smartphones, some point this year for the devices you just mentioned. [indiscernible] are the bottlenecks to being confident from here that you can scale that production? Obviously, you've been I'm assuming tinkering with some of the the lines. And so I'm curious as to what has to be solved between now and then to really gain confidence that you can make these the batteries in the millions?

I'll take a quick shot and then I'll let Ajay speak. We are very pleased with the progress that Ajay and his team has made We see sales coming out. We're shipping them to the customer. And now the factory is going through ISO audit, which will be a big step. When it's done in the next few months. I think really The work now is producing these at volume and scale and getting the UPH and yields up Maybe Ajay can comment on that. Absolutely, Raj.

So yes, the proof points obviously are yields and how fast can we ramp on this line. The line is qualified. There's really no technological bottleneck, if you will. We are doing this with different material sets, as Raj pointed out, EX1M, EX2M at the same time, depending on what the customers are needing in terms of performance, which one is more important for them versus the other. And therefore, working with all these materials and getting the yields higher continuously learning and getting into the ramp mode And, yeah, we are well on our way for the ramp to happen in the second half. Which is exactly when we are expecting some of these things to come to fruition in terms of customer qualifications. One other thing I'll add is, as we see this demand now, these are for slightly different shaped cells. So big cell of certain form factor, a small cell like this, So some of the work Ajay's team is doing is how to get the cycle time down so we can quickly make different cells. On the same machine, but what's the tooling to be done? That's going to be something that we'll continue to work on.

Our next question will come from Derek Soderbergh with Cantor. Please go ahead.

Yes. Hey, guys. Thanks for taking the questions. Raj, did you say that you had two purchase orders from AR companies? I know the first one you guys had your going to commence shipments midway through this year. Is the second one for a commercially planned device. Was that for sample orders? And then just given the density benefit that can deliver with these AR devices. What's the average selling price do you think you can get for this form factor?

Yes. Yes, we do have purchase order from both the customers. And again, we are in the process of getting the exact dimensions and making those exact dimensions because they're both slightly different in shape. The ASP premiums are actually very nice in this market. Because of the how much of how important the battery is to the life of the products. I mean, you probably see in the investor deck, we put some material on the advantages of our product versus what's commercially shipping. So you can see that translates to a nice ASP premium. I can't exactly comment on the numbers, but we are quite pleased with the business.

And the other thing is our ability to make full packs. I mentioned this when we acquired a Rauj Jet company that this is going to be important to us. And because when you make a full pack, there's also an ASP premium of just selling the cell. That is something that also is playing out nicely. Which is the reason I think I mentioned at that time why we acquired that company. One of the reasons in addition to the coating capability.

Well, I think that's all And then just related to one of the first questions, you guys want to add say, high volume line number two, can you talk about sort of in months how long it would take to procure and install kind of that second HPM line to It feels like the demand for some of these air devices could be coming in pretty soon here. How fast could you you order a second high volume line and turn it on?

So before we answer that, let me tell you this. The demand will come in in next year, right? So again, we will make some cells and give it to them but the qualification timeline takes the timeline it takes. So it's kind of important to understand We are talking about 26 demand now. And we will plan capacity accordingly, and Ajay is doing that.

Yes. Just Yes. Just to add to that, as I mentioned earlier, we are taking the approach of taking all the long lead time items because not all the components that make up the line have the same amount of lead time. So there are some longer lead time items, which we have told working with our suppliers, we have started stockpiling them at their place on their dime, but, you know, they're taking a risk on us. Which is really good way of handling of how quickly you can set up this line number two and then line number three. So we are trying to always look for ways of shrinking that timeline. The first one, you know, took whatever time it took. Second one will be significantly lesser. And our ability to quickly ramp that into the production is also going to improve over time. Got it. Thanks, Ed.

Our next question will come from with Northland Capital Markets. [indiscernible] Yes, thanks for taking my questions.

Just real quick on the production coming out of Kokum. It sounds like it's tailored to military app applications and highREL. And I'm just curious, is Is it more of a standard lithium ion battery or what sort of sets it apart for the military applications?

Yes. So the ROUDJ acquisition that we made is standard lithium ion battery, except it's high discharge rate battery. So for example, think about something that powers moving things. Like drones and so on. So when you have a mechanical object that's moving, you need to discharge it at a much higher rate, and that's one of the things they can do. This part of company can do for us. And they can also do different shape and size cells that can go into some of the consumer electronics. So they have two, three different variations of products that we can do there. The military ones are high rate, big Got it. Very helpful. And then just on Line one, you said that the UPH is thirteen fifty That's I believe an instantaneous throughput. Can you talk about Capacity utilization with just one line, You can't commit [indiscernible] volume to your customers, how how should we think about the utilization in the first year until line two comes up and you can bring that up.

Yes, good question. That'll depend on how quickly the qualification cycles are running through with several customers now in play. And we did I mean a good manufacturing company would look at it in terms of How much are you filling the line up so that you can start ordering those longer lead time items [indiscernible] followed by the other components to make up the line So it's all a you know, gradual feedback directly coming from our customers' qualifications actually. [indiscernible] That's where I would leave it.

Got it. Thanks so much. Our next question will come from Sean Milligan with Jenny.

Hey, Raj. Thanks for taking my questions. Can you talk to CapEx outlook for this year as it stands today, what do you expect CapEx to be? And then sort of underlying assumptions there in terms of How many lines are you ordering long lead time items for? [indiscernible] We don't really give the full guidance for the year, but maybe Kristina, if you want to comment on that a little bit.

So as Raj said, a lot of the long lead time items are ordered by our equipment vendors and on their dime. Due to relationship and whatnot. But for 2025 CapEx, we We have about between $30,000,000 to 40,000,000 currently [indiscernible] Okay. And then Ajay, on the Next line, like mine two, do those economics fit the slide deck the sixteen fifty UPH that's in the back of the slide deck, is that sort of the expectation on the next slides?

Yes, that's correct. The UPH is always major in equivalent of a cell size. So as Raj alluded, we are now obviously getting cell sizes, which are significantly larger. Which is really good for the value that we bring. And the ASP and everything attached to that. [indiscernible] For a diablo size cell which we have talked about. So it will vary based on which size cells goes through the line.

Okay. And then Raj, I know still qualifying some of those early samples with the cell phone customers. But there's this there's a slide in your presentation that talks about the top cell phone OEMs, the average model size is around 3,500,000 units per year Just curious, like in the two that you're in advanced stages with, Do you have visibility into the potential models that you'd be in and just curious if those programs are expected to be, like, below, at, above that kind of average model size that's mentioned in that slide.

Yes. So one of them, like I said, we actually got the specific spell dimension. So we have a little bit more visibility into where it would possibly go. But one thing to remember is that In the Android market that we're going after, initially, each cell phone model, when you talk about a model, the model has a certain how should I say, features for you, if you will, certain cameras, certain display, certain processor, certain memory configuration, so on. But there are variance within that. For example, the customers may choose to take that model change some software features, and ship that into India, for example, and maybe change a few other things, ship that into Europe, and maybe some other features and ship that into Gulf. So each of so we don't have clarity yet on which exactly product we will be in. And that will come in time as we get closer to production. And that's typical. And I've done this many, many That's quite typical on how it works. So that clarity will come closer to production time.

Okay.

Just one last one. Can you remind everyone like how the The sales cycle works for cell phones. So like you you start to get in qualification kind of early in the year and that's for commercial volumes that ship later in the year. Is that sort of the same thought process for 2026? Also or because you're sampling more cells in 2025, would you be in earlier programs in 2026? I'm just trying to understand maybe cadence in terms of seasonality.

Yes. So good question. So just for I mean, since I get this question quite a bit, just talk one more time about how this works. We typically work with the customers to get from them requirements on what this particular product and the launch timing is. Like for example, in 2024, we talked to them about what's the kind of phone model that would launch in late twenty twenty five, and we get requirements in terms of cycle life, energy density, in terms of size, in terms of fast charge capability and so on. At the same time, they give us these requirements. They're also working on what process they should pick, how much memory should it have, what display they're using, what camera they should use.

And we give them a certain standard sized cell, the cell that we have made internally. They test them and then they extrapolate from that what their performance will look like and what performance they need when they fix all the other components in the phone, right? And then they give us the exact dimensions of the cell, which is what we just got now. And then we make that cell, and we give it to them, and then they test it along with all the other components, which are now frozen. And if everything passes, and everything looks good, then they give us a purchase order to make multiple volume production of that cell. Now that one particular cell could now go into multiple models in '25 and in '26 too.

So it's not like it's only stops at 'twenty five because like I mentioned, there could be different phone models that can be launched in different parts of the world.

And that could continue through 2026, for example. And then when they start thinking about what's going to launch at 2026, if there are some changes to that cell, they'll give us those, and we start working on them. So this is going to be a continuum if you will. It's not like we make this salad, it goes '25, done, make another salad, it goes 26, done. It doesn't work like that. Usually a continuum. There'll be some overlap between the phone launches based on the regions they're launching, based on the volume they're launching. That's typically how this works.

All right, great. Thank you.

Please use the raise hand button, which can be found on the black bar at the bottom of the Zoom interface. This may also be found under more or reactions. And if you've joined by phone, star nine will allow you to raise your hand. There are no further questions at this time. With that, I'd like to turn it over to Doctor. Raj Taluri for closing remarks.

Yes. Thank you very much for your interest and following us. We'll get back to you next quarter. Thank you.