Enovix Corporation — Q3 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue was $11.0 million, representing a 38% year-over-year increase from Q3 2025 and a 22% sequential increase from Q2 2026, marking the sixth consecutive quarter of year-over-year revenue growth.
• Non-GAAP gross margin reached a record 34.5% in Q3 2026, an increase of 13.5 percentage points compared to 21.0% in Q3 2025.
• Non-GAAP net loss per share for Q3 2026 was $0.15, compared to $0.14 in Q3 2025.
• The company ended the quarter with $512.2 million in cash, cash equivalents, marketable securities, and restricted cash ($2.35 per outstanding share).
• Year-to-date 2026 revenue totaled $27.7 million, up from $20.6 million in the prior year period.
• Year-to-date non-GAAP loss from operations was $86.7 million, compared to $84.3 million in the prior year period.
• Free cash flow for Q3 2026 was $(33.1) million, compared to $(28.5) million in Q3 2025.
• Capital expenditures for Q3 2026 were $3.9 million.

Guidance and Future Outlook:

• Fiscal year 2027 revenue guidance is set at $65 million to $85 million, with the midpoint nearly double the expected 2026 revenue.
• Q4 2026 revenue guidance is $9.0 million to $10.0 million, a 20% to 12% decrease compared to Q4 2025.
• Q4 2026 non-GAAP loss from operations is guided at $(28.0) million to $(31.0) million.
• Q4 2026 non-GAAP net loss per share is guided at $(0.13) to $(0.17).
• Q4 2026 capital expenditures are guided at $5.0 million to $8.0 million.
• Management expects nearly half of the FY2027 revenue midpoint to already be in backlog.

Business Segments and Product Lines:

• Drone and defense customers drove the quarter, with the drone, defense, and industrial pipeline growing 18% to approximately $216 million, up from $183 million in the prior quarter.
• The drone pipeline includes $150 million in value and spans unmanned aerial vehicles (UAV), unmanned underwater vehicles (UUV), electric vertical takeoff and landing (eVTOL) aircraft, and unmanned ground vehicles (UGV).
• Enovix received an initial 100,000-battery purchase order from a multinational dual-use drone systems provider for conventional cells.
• An initial production order was received for the new MX1-B01 high-energy aerial drone cells from a U.S. drone manufacturer, with initial deliveries scheduled for early 2027.
• The MX1-B01 has been sampled by more than 30 industry-leading aerial drone accounts.
• A $19 million expansion to double drone battery capacity at the military-qualified South Korean facility is underway, expected to come online in Q2 2027.
• Smart eyewear shipments year-to-date reached approximately 19,000 units against a 50,000-unit backlog expected to be completed in the first half of 2027.
• AI-2 units are being sampled to smart eyewear customers requiring second-generation energy density.
• Smartphone AI-1 cells passed internal cell-level qualification testing; a lead OEM customer is expected to finish parallel qualification soon.
• Enovix decided not to proceed with system-level field testing of pre-AI-2 units for smartphones as they did not meet the latest energy density target of over 1,000 watt-hrs/liter.
• Silicon-anode development is now concentrated on smart eyewear, where backlog exists, rather than smartphones.

Market and Competitive Landscape:

• Customers require high-performance cells from a qualified, non-Chinese source in volume.
• The company serves customers globally with facilities in India, South Korea, and Malaysia.
• The company notes intense competition and the need to keep up with rapid technological change in the battery industry.

Risks and Challenges:

• Smartphone qualification delays and failure to meet energy density targets have led to a strategic shift away from immediate smartphone system-level testing.
• Risks include potential modification, delay, reduction, or cancellation of purchase orders or backlog.
• Manufacturing process excursions could delay deliveries or require further corrective actions.
• Concentration of development resources on small cells may not produce expected energy-density gains or customer adoption.
• The company faces risks related to scaling manufacturing operations, achieving production capacity and yields, and bringing expanded South Korea capacity online on schedule.
• The company has a history of losses and expects continued losses.
• Liquidity constraints and the ability to service existing debt remain a risk, though recent debt retirement has improved the capital structure.

Management Commentary and Tone:

• Steve Bakos, Chief Revenue Officer, stated that new orders reflect the ability to convert pipeline into orders and emphasized customer demand for high-performance cells from non-Chinese sources.
• Ryan Benton, Interim CEO, noted that Enovix is aligning resources and cost structure with its strongest near-term opportunities, specifically concentrating silicon-anode development on smart eyewear and directing more resources to Korean operations.
• T.J. Rodgers, Executive Chairman, stated the report represents a move toward more candid and transparent reporting to investors, fulfilling a prior promise to reduce expenses.
• Management expressed confidence that the growing backlog and Korean capacity expansion support the new revenue outlook.

Other Key Points:

• The company retired $128 million of its 4.75% Convertible Senior Notes due 2030 for approximately $81 million, capturing a 36% discount and reducing debt by $46.6 million more than the cash paid.
• A warrant dividend was declared, distributing one warrant for every four shares of common stock to stockholders of record on November 13, 2026.
• Each warrant allows the purchase of one share at $3.00, payable in cash or in 2028 Notes at full face value, expiring April 28, 2028.
• The company repurchased $6.2 million of common stock in Q3 2026 and an additional $15.5 million in October 2026.
• A restructuring plan in early November included a 220-position reduction, cutting approximately $8.5 million in annual costs and rebalancing resources toward Korean operations.
• The remaining 2030 Notes stand at $232.0 million.
• The company declared a dividend of one warrant for every four shares to holders of 2028 Notes and 2030 Notes on the record date without converting.
• Warrants are expected to begin trading on Nasdaq as ENVXW on or about November 18, 2026.