Business Overview and History

Everspin Technologies, Inc. (NASDAQ:MRAM) is the world's leading developer and manufacturer of Magnetoresistive Random Access Memory (MRAM) persistent memory solutions. The company's innovative MRAM technology is revolutionizing the semiconductor industry, offering unparalleled performance, reliability, and energy efficiency across a wide range of applications.

Everspin Technologies, Inc. was incorporated in Delaware in May 2008 as a spin-out from Freescale Semiconductor, Inc. (now a wholly-owned subsidiary of NXP Semiconductors N.V.) in June 2008. Over the past 15 years, Everspin has developed a portfolio of MRAM technologies, including Toggle MRAM and Spin-transfer Torque MRAM (STT-MRAM), that deliver superior performance, persistence and reliability in non-volatile memories. The company has established itself as the leading supplier of discrete MRAM components and a successful licensor of its broad portfolio of related technology and intellectual property.

In October 2014, Everspin entered into a joint development agreement with GLOBALFOUNDRIES to jointly develop advanced STT-MRAM technology. This strategic partnership has allowed Everspin to expand its manufacturing capabilities and product offerings. Additionally, in October 2014, the company entered into a manufacturing agreement with GLOBALFOUNDRIES Singapore Pte. Ltd. to produce wafers using Everspin's STT-MRAM technology.

Throughout its history, Everspin has faced challenges, including the cyclical nature of the semiconductor industry and navigating supply chain disruptions. The company has had to match production with customer demand, which can be difficult given the short-term nature of customer commitments. Everspin has also had to continuously develop new and enhanced products to stay competitive in a market characterized by rapid technological change.

Despite these challenges, Everspin has maintained its position as a leader in the MRAM market. The company has leveraged its broad IP portfolio to enable licensing, royalty revenue streams, and patent sales from non-core applications. Everspin has also expanded its customer base, selling its products directly and through its established distribution channels to industry-leading OEMs and ODMs.

Financial Overview

Everspin's financial performance has been marked by steady growth and profitability, despite the cyclical nature of the semiconductor industry. In the fiscal year ended December 31, 2024, the company reported total revenue of $50.4 million, a decrease of 21% compared to the prior year's $63.8 million. This decline was primarily due to lower product shipments, particularly into the company's distribution channels.

However, Everspin maintained a strong gross margin of 51.8% in 2024, down from 58.4% in 2023, driven by a shift in product mix and lower volumes. The company's GAAP net income for the full year 2024 was $0.8 million, or $0.04 per diluted share, compared to $9.1 million, or $0.42 per diluted share, in the prior year.

In the fourth quarter of 2024, Everspin reported revenue of $13.2 million, exceeding the guidance range of $12 million to $13 million. GAAP net income for the quarter was $1.2 million, or $0.05 per diluted share, at the high end of the company's guidance range.

The company's performance varied across geographic markets in 2024. Revenue by region was distributed as follows:

• APAC: $28.7 million
• North America: $10.7 million
• EMEA: $11.0 million

Everspin's operating cash flow for the fiscal year 2024 was $7.1 million, while free cash flow stood at $4.0 million.

Liquidity

Everspin's balance sheet remains strong, with $42.1 million in cash and cash equivalents as of December 31, 2024, up from $36.9 million at the end of the prior year. The company is debt-free, having paid off its 2019 Credit Facility in full in March 2023, providing it with financial flexibility to continue investing in product development and strategic initiatives.

Key financial ratios further illustrate Everspin's solid financial position:

• Debt/Equity Ratio: 0.07
• Current Ratio: 6.48
• Quick Ratio: 5.56

These ratios indicate that Everspin has a strong ability to meet its short-term obligations and maintain financial stability.

Product Innovations and Market Opportunities

Everspin's product innovations have been the driving force behind its success. The company's product portfolio is divided into two primary segments: MRAM-based products and licensing, royalty, patent, and other revenue.

MRAM-based Products Segment: Everspin's MRAM-based products segment generates revenue from the sale of MRAM products in discrete unit form. The company sells these MRAM products directly to OEMs, ODMs, and contract manufacturers, as well as through a network of distributors.

1. Toggle MRAM: Everspin's Toggle MRAM products have been in production since 2008 and are currently shipping in densities ranging from 128kb to 32Mb. These high-performance, non-volatile memories are designed primarily for applications in the industrial, medical, automotive/transportation, and data center markets. The Toggle MRAM products offer industry-standard interfaces such as Parallel, Serial Peripheral Interface (SPI), and Quad SPI (QSPI), enabling customers to easily replace legacy memory components like SRAM and FRAM with Toggle MRAM.

2. STT-MRAM: Everspin's STT-MRAM technology can be tuned to deliver products targeting DRAM, SRAM, and NOR Flash applications. The company's STT-MRAM products targeting DRAM replacement started production in 2017 and are currently shipping in 256Mb and 1Gb densities. These high-density, high-performance persistent memories are delivering significant value to applications in the data center market, such as SSDs, Persistent Memory Cards, Fabric Accelerators, and others. Everspin offers these STT-MRAM products with DDR3 and DDR4 derivative interfaces, enabling the replacement of battery-backed DRAM.

In 2022, Everspin started production of high-density 4Mb to 128Mb STT-MRAM products on a 28nm CMOS node with standardized SPI, xSPI, QSPI, and Octal SPI (OSPI) interfaces. These products are targeting industrial IoT, AI, network/enterprise infrastructure, process automation, avionics, medical, and gaming applications, where data persistence, low power, low latency, and security are paramount.

Licensing, Royalty, Patent, and Other Revenue Segment: In addition to product sales, Everspin generates revenue from licensing its MRAM and magnetic sensor technology, receiving royalties based on customer sales, and providing backend foundry and design services to third parties. The company has licensed its MRAM technology to GLOBALFOUNDRIES for the manufacture of embedded MRAM solutions, as well as to customers for use in radiation-tolerant aerospace applications and 3D magnetic field sensing. Everspin has also executed agreements for the development of strategic radiation-hardened FPGA products, consisting of technology and design licenses.

In recent years, Everspin has placed a renewed focus on its STT-MRAM offerings, which are designed to address the growing demand for high-density, high-speed persistent memory solutions. The company's STT-MRAM products have found application in a wide range of markets, including data centers, industrial automation, and aerospace.

One of Everspin's key strategic initiatives has been the development of its PERSYST MRAM family, which offers a DDR-like interface and delivers the performance and persistence of MRAM. These products have been adopted by industry leaders, such as IBM, in their data center solutions, showcasing the versatility and advantages of Everspin's technology.

Furthermore, Everspin's MRAM solutions are gaining traction in the emerging field of Field Programmable Gate Arrays (FPGAs), where their reliability and fast configuration capabilities are highly sought-after. The company's recent collaboration with Lattice Semiconductor to enable MRAM-based configuration across all of Lattice's FPGA families is a testament to the growing importance of MRAM in this market.

Looking ahead, Everspin is well-positioned to capitalize on the rising demand for persistent memory solutions across a diverse range of industries. With its robust product pipeline, strategic partnerships, and deep-rooted expertise in MRAM technology, the company is poised to play a pivotal role in shaping the future of the semiconductor industry.

Risks and Challenges

While Everspin's outlook remains promising, the company faces several risks and challenges that investors should be aware of:

1. Competitive Landscape: Everspin operates in a highly competitive semiconductor industry, where it faces competition from both established players and emerging startups developing alternative memory technologies. The company's ability to maintain its technological edge and market share will be crucial to its long-term success.

2. Macroeconomic Conditions: As a supplier to various industries, Everspin is vulnerable to fluctuations in global economic conditions and customer demand. Downturns in the semiconductor industry or specific end markets could adversely impact the company's financial performance.

3. Supply Chain Challenges: The global semiconductor supply chain has faced significant disruptions in recent years, which could impact Everspin's ability to procure critical components and meet customer demand. The company's reliance on third-party foundries and manufacturing partners adds an additional layer of risk.

4. Regulatory and Geopolitical Risks: Everspin's operations and customer base span multiple geographies, exposing the company to regulatory changes and geopolitical tensions that could affect its business activities and access to certain markets.

5. Technological Advancements: The semiconductor industry is characterized by rapid technological change, and Everspin must continuously invest in research and development to maintain its competitive edge. Failure to adapt to new trends and customer requirements could hinder the company's long-term growth.

Despite these challenges, Everspin's demonstrated track record of innovation, strong customer relationships, and prudent financial management suggest that the company is well-equipped to navigate the evolving semiconductor landscape and capitalize on the growing demand for its MRAM solutions.

Future Outlook and Guidance

Everspin's management has provided guidance for the first quarter of 2025, reflecting the company's expectations for the near-term future:

• Total revenue is expected to be in the range of $12 million to $13 million

• GAAP net loss per basic share is expected to be between a loss of $0.10 and $0.05 per share
• Non-GAAP net loss per basic share is expected to be between $0.05 to break even

The company anticipates that 2025 will be more heavily weighted towards the second half of the year, due to typical seasonality and continued inventory consumption in Asia. A key factor affecting the expected loss in Q1 2025 is the reduction in other income from the $14.6 million Department of Defense (DOD) contract compared to Q4 2024.

It's worth noting that Everspin is shifting its non-GAAP metric from adjusted EBITDA to non-GAAP EPS starting in 2025 to align with industry standards, providing investors with a more standardized measure of the company's performance.

The broader MRAM market is expected to experience significant growth, with projections indicating a compound annual growth rate (CAGR) of 13% from 2022 to 2029. This growth is anticipated to expand the market from approximately $10 billion to $23 billion, presenting substantial opportunities for Everspin to capitalize on its technological leadership and expand its market share.

Conclusion

Everspin Technologies is a pioneering force in the semiconductor industry, driving the adoption of MRAM technology through its innovative product portfolio and strategic partnerships. The company's focus on delivering high-performance, energy-efficient, and persistent memory solutions has positioned it as a trusted partner for customers across a diverse range of industries.

As the semiconductor industry continues to evolve, Everspin's MRAM technology is poised to play an increasingly pivotal role in powering the next generation of electronic devices and systems. With a strong financial foundation, a robust product pipeline, and a deep-rooted commitment to innovation, Everspin is well-positioned to capitalize on the expanding market opportunities and solidify its position as the industry's leading MRAM provider.

While challenges remain, including navigating a competitive landscape and managing macroeconomic uncertainties, Everspin's strategic focus on high-growth markets and its continued investment in cutting-edge MRAM solutions provide a solid foundation for future growth. As the demand for persistent memory solutions continues to rise across various industries, Everspin stands ready to meet these needs and drive the next wave of innovation in semiconductor technology.