Enovix Corporation

11/05/2025 | Press release | Distributed by Public on 11/05/2025 16:01

Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provide information that the management of Enovix Corporation (referred as to "we," "us," "our" and "Enovix") believes is relevant to an assessment and understanding of Enovix's condensed consolidated results of operations and financial condition as of September 28, 2025 and for the fiscal quarter and fiscal year-to-date ended September 28, 2025 and should be read together with the condensed consolidated financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contain forward-looking statements based upon our current expectations, estimates and projections that involve risks and uncertainties. Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.
Business Overview
We design, develop and have started to commercially manufacture an advanced silicon-anode lithium-ion battery using our proprietary cell architecture that increases energy density and maintains high cycle life. This enables us to use silicon as the only active lithium cycling material in the anode whereas industry incumbents have historically combined only a modest amount of silicon with graphite. We have applied an equally innovative approach to develop proprietary roll-to-stack production tools for existing lithium-ion battery manufacturing lines and increase megawatt hour capacity. Our silicon anode battery architecture allows lithium-ion batteries to be produced smaller and more efficiently at scale than current alternatives. With our acquisition of Routejade, Inc. in 2023, we also offer conventional lithium-ion batteries, which expands our suite of battery offerings to our customers. In April 2025, we acquired assets from SolarEdge located in close proximity to Routejade in South Korea, which expands our manufacturing facilities and this acquisition is expected to help position us to meet growing demand in the defense industry.
Enovix is headquartered in Silicon Valley, a region of California, with offices and facilities in Asia.
Key Trends, Opportunities and Uncertainties
As we are a growing global company, we are closely monitoring evolving changes in the macroeconomic environment, including inflationary pressures, tariffs, interest rates, and market volatility, that may have potential impacts to our operations.
We generate revenue from the sale of (a) lithium-ion batteries and battery pack products ("Product Revenue") and (b) engineering revenue contracts ("Service Revenue") for the development of lithium-ion battery technology. Our performance and future success depend on several factors that present significant opportunities, but also pose risks and challenges as described in the section titled "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q.
Q3 2025 Highlights:
Following is a summary of the activities in the third quarter of 2025:
•Revenue:Our revenue for the fiscal quarter ended September 28, 2025 was $8.0 million. The $3.7 million, or 85%, increase compared to the prior year's fiscal quarter ended September 29, 2024 was primarily attributable to strong customer demand for our defense products.
•Independent Validation: AI-1™ smartphone battery performance was validated by an independent testing firm as having the highest energy-density reported for a smartphone battery.
•Commercial Programs:For smartphones, our lead customer will perform additional lifecycle testing following our design revision, which reflects collaborative, multi-year partnership typical of first-of-its-kind architecture.
We continued to expand engagement across the smart eyewear, an emerging category that leverages our smartphone-level energy density in compact form factors. We delivered over 1,000 AI-1™ battery packs to our lead customer and samples to nine other unique smart eyewear original equipment manufacturers ("OEMs") and Original Design Manufacturers ("ODMs"), some of which are expected to have products launched in 2026.
In defense and industrial markets, our South Korea operations have shipped over $20 million of product for the fiscal year-to-date ended September 28, 2025 to our customers, including two of South Korea's major three military contractors.
•Manufacturing and Operations: During the fiscal quarter ended September 28, 2025, we achieved yield improvements across equipment zones at our production facility in Malaysia ("Fab2"). Capacity in our Zone 4 (Formation) increased and now exceeds HVM requirements for an additional line.
In South Korea, we integrated the facilities and assets acquired in the second quarter of 2025, which expanded available floor space and added coating equipment capacity. We commenced building our first South Korea based cell-manufacturing a dedicated line for our 100% active-silicon-anode batteries.
•Warrant Dividend:In July 2025, we declared and issued a special Warrant Dividends to shareholders of record of our common stock as of the close of business on July 17, 2025 (the "Record Date"), and the holders of our 2028 Convertible Senior Notes as of the Record Date. A total of 26,526,344 Warrants were exercised for net proceeds of $224.2 million after deducting commissions and offering expenses. We intend to use the proceeds from the Warrant exercises to support scale-up at Fab2 in Malaysia and for general corporate purposes. Please see Note 10 "Treasury Stock, Warrant Dividend and Warrants" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
•Convertible Senior Notes Due 2030: In September 2025, we issued $360.0 million in our 2030 Convertible Senior Notes. The net proceeds from the issuance of 2030 Convertible Senior Notes were $348.6 million, after deducting the initial purchasers' discounts and commissions and the offering expenses payable by us. We used $45.3 million of the net proceeds from the offering to pay the cost of the capped call transactions related to the 2030 Convertible Senior Notes. We intend to use the remaining net proceeds from the offering of the 2030 Convertible Senior Note for general corporate purposes, which may include to fund a portion of the purchase price for potential acquisitions. Please see Note 8 "Borrowings" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
•Share Repurchase:During Q3 2025, we purchased 5,437,556 shares of our common stock for $58.4 million pursuant to the Repurchase Plan. Please see Note 10 "Treasury Stock, Warrant Dividend and Warrants" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
Market Focus and Market Expansion
We are focused on five strategic market sectors: Smartphone, Internet of Things ("IoT"), Computing, Defense and Electric Vehicles ("EVs").
We prioritize large, high-value markets, such as smartphones and smart eyewear, where the need for higher energy density commands a premium. We believe that the surge in AI-powered devices has validated our strategy and driven significant pull for our products. We believe that our go-to-market strategy positions us on an expedient path to profitability while maintaining a competitive edge in innovation.
Commercialization
Our commercialization strategy involves identifying customer requirements and determining where our battery architecture will offer the greatest value, and pursuing customer engagements that meet our reference design strategy - to partner with leading suppliers and establish our AI-1™ battery products as the baseline design for hardware platforms, enabling broader adoption across multiple device makers that follow the same reference architecture. We continue to be actively engaged with other smartphone OEMs to ensure a rapid ramp once we are established in the market.
In smart eyewear, we continue to make strong progress across multiple OEM programs worldwide. Under our supply agreement with a leading Silicon Valley customer, we delivered over 1,000 battery packs from our AI-1™ platform, which are now undergoing customer qualification. Several additional OEMs have initiated product testing and validation of our AI-1™ augmented reality ("AR") battery, while a leading AR processor supplier has received samples as part of a broader ecosystem collaboration to enable next-generation smart eyewear.
Product Development
In the second quarter of 2025, we finalized and launched the AI-1™ platform with the AI-1™ battery for smartphones achieving an energy density level superior to any commercially available alternative. The AI-1™ product platform incorporates elements of our EX-1M and EX-2M technology nodes. We believe the AI-1™ battery architecture is purpose-built for AI-enabled smartphones and wearables, combining energy density, strong safety performances and
compatibility with high-speed automated assembly. Our product development strategy is in our estimation tightly aligned with the goals of meeting the market needs of higher energy density, cycle life, and fast charge while maintaining safety.
We advanced our own electrochemistry with the AI-1™ smartphone battery, which incorporates elements of our EX-1M and EX-2M silicon battery technology nodes, with greater energy density and fast charge potential. To further extend what we believe is our established leadership position, we have finalized the design of our next battery technology node, which will unlock further improvements in energy density over our previous technologies. During the third quarter of 2025, AI-1™ smartphone battery performance was validated by an independent testing firm as having the highest energy-density battery reported for a smartphone battery.
Access to Capital
Assuming we experience no significant delays in the research and development and manufacture of our battery nor any deterioration in capital efficiency, we believe we will meet longer-term expected future cash requirements and obligations through a combination of available cash, cash equivalents, investments and future debt financings, projected revenues and access to other public or private equity offerings and potential strategic arrangements.
Regulatory Landscape
We operate in an industry that is subject to many established consumer safety and environmental regulations, which have generally become more stringent over time. Additional regulations, if adopted, could result in additional operating costs associated with compliance.
Components of Results of Operations
Revenue
We recognize revenue within the scope of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.Our revenue consists of product revenue, resulting from the sale of lithium-ion batteries. and battery pack products ("Product Revenue"), and service revenue, resulting from payments received from our customers based on executed engineering revenue contracts for the development of lithium-ion battery technology ("Service Revenue"). We did not recognize any Service Revenue during either of the fiscal quarters ended September 28, 2025 and September 29, 2024.
Our Product Revenue is primarily generated from selling lithium-ion batteries or battery packs. Product Revenue is recognized once we have satisfied the performance obligations as defined in the sales agreement, which is generally satisfied upon transfer of control of goods. Control is transferred upon delivery for our products. For certain customized products with customer acceptance criteria specified in the sales agreement, the performance obligations are generally satisfied upon our customer's acceptance. Payment terms can vary depending on the contract and it is generally required within 90 days or less from the delivery date or the acceptance date of our product. The amount of revenue recognized reflects the consideration for the product sold.
Cost of Revenue
Cost of revenue includes materials, labor, depreciation and amortization expense, freight costs and other direct costs related to manufacturing our products and service contracts. Labor consists of personnel-related expenses such as salaries and benefits, and stock-based compensation. We anticipate that cost of revenue will continue to increase as we optimize and bring-up our production line.
Our inventory is stated at the lower of cost or net realizable value ("NRV") on a first-in and first-out basis. Determining net realizable value of finished goods and work in process inventories involves projecting average selling prices. When the estimated net realizable values are below the manufacturing costs, a charge to cost of revenue is recorded.
Capitalization of certain costs are recognized as an asset if they relate directly to a customer contract, generate or enhance resources of the entity that will be used in satisfying future performance obligations, and are expected to be recovered. If these three criteria are not met, the costs are expensed in the period incurred. Deferred costs are recognized as cost of revenue in the period when the related revenue is recognized.
Operating Expenses
Research and Development Expenses
Research and development expenses consist of engineering services, allocated facilities costs, depreciation, development expenses, materials, labor and stock-based compensation related primarily to our (i) technology development, (ii) design, construction, and testing of preproduction prototypes and models, and (iii) certain costs related to the design, construction and operation of our pilot plant that are not of a scale economically feasible to us for commercial production. Research and development costs are expensed as incurred.
To date, research and development expenses have consisted primarily of personnel-related expenses for scientists, experienced engineers and technicians as well as costs associated with the expansion and ramp up of our engineering and manufacturing facility, and materials and supplies to support the product development and process engineering efforts. As we ramp up our engineering operations to complete the development of batteries and required process engineering to meet customer specifications, we anticipate that research and development expenses will continue to increase for the foreseeable future as we expand hiring of scientists, engineers and technicians and continue to invest in additional plant and equipment for product development, building prototypes and testing of batteries. We have research and development teams in the U.S., Malaysia, South Korea and India.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of personnel-related expenses, marketing expenses, allocated facilities expenses, depreciation expenses, travel expenses, acquisition costs, and professional services expenses, including legal, human resources, audit, accounting and tax-related services. Personnel-related costs consist of salaries, benefits and stock-based compensation. Facilities costs consist of rent and maintenance of facilities.
We are expanding our personnel headcount to support the ramping up of commercial manufacturing. Accordingly, we expect our selling, general and administrative expenses to continue to increase in the near term.
Other Income (Expense)
Other income and expense primarily consists of dividend income, interest income, interest expense, foreign currency transaction gain or loss, one-time income resulting from import duty forgiveness, one-time gain from bargain purchase of assets resulting from a business acquisition, and fair value adjustments for outstanding common stock warrants.
Income Tax Expense (Benefit)
Our income tax provision consists of an estimate for U.S. federal, state and foreign income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe the recoverability of the tax assets is not more likely than not. We are subject to foreign statutory taxation for our international operations.
Results of Operations
Comparison of Fiscal Quarter Ended September 28, 2025 to Fiscal Prior Year's Quarter Ended September 29, 2024
The following table sets forth our condensed consolidated operating results for the periods presented below (in thousands):
Fiscal Quarters Ended
September 28, 2025 September 29, 2024
Change ($)
% Change
Revenue $ 7,990 $ 4,317 $ 3,673 85 %
Cost of revenue 6,589 4,959 1,630 33 %
Gross profit (loss) 1,401 (642) 2,043 N/M
Operating expenses:
Research and development 28,180 24,220 3,960 16 %
Selling, general and administrative 20,194 20,744 (550) (3) %
Restructuring cost - 3,661 (3,661) N/M
Total operating expenses 48,374 48,625 (251) (1) %
Loss from operations (46,973) (49,267) 2,294 (5) %
Other income (expense):
Change in fair value of common stock warrants 1,867 29,899 (28,032) (94) %
Interest income 2,540 2,859 (319) (11) %
Interest expense (11,765) (1,718) (10,047) 585 %
Other income (loss), net 140 (2,217) 2,357 N/M
Total other income (loss), net (7,218) 28,823 (36,041) (125) %
Loss before income tax expense (benefit) (54,191) (20,444) (33,747) 165 %
Income tax expense (benefit) (422) 2,194 (2,616) (119) %
Net loss $ (53,769) $ (22,638) $ (31,131) 138 %
N/M - Not meaningful
Revenue
Revenue for the fiscal quarter ended September 28, 2025 was $8.0 million, compared to $4.3 million of revenue for the fiscal quarter ended September 29, 2024. Our revenues were primarily generated from our product shipments to South Korea defense contractors and consumer electronics customers. The increase in revenue of $3.7 million, or 85% was primarily attributable to an increase in our sales to South Korea defense contractors. Of the total revenue recognized for the fiscal quarters ended September 28, 2025 and September 29, 2024, $5.4 million and $1.4 million of revenue, respectively, resulted from sales to one South Korean defense contractor.
Cost of Revenue
Cost of revenue for the fiscal quarter ended September 28, 2025 was $6.6 million, compared to $5.0 million during the fiscal quarter ended September 29, 2024. The increase in cost of revenue of $1.6 million, or 33%, was primarily attributable to an increase in production cost resulted from products mixed sold during the current fiscal quarter as compared to the same period last fiscal year.
Research and Development Expenses
Research and development ("R&D") expenses for the fiscal quarter ended September 28, 2025 were $28.2 million, compared to $24.2 million during the fiscal quarter ended September 29, 2024. The increase of $4.0 million, or 16%, was primarily attributable to a $0.6 million net increase in salaries, employee benefits and stock-based compensation expenses primarily due to lower headcount in the U.S offset by higher headcount in other regions, a $2.6 million increase in depreciation, a $0.9 million increase in equipment repair and maintenance and increases in other R&D expenses. These increases were partially offset by lower common expenses allocated to R&D and other miscellaneous expenses.
Selling,General and Administrative Expenses
Selling, general and administrative expenses for the fiscal quarter ended September 28, 2025 were $20.2 million, compared to $20.7 million during the fiscal quarter ended September 29, 2024. The decrease of $0.6 million, or 3%, was primarily attributable to a $4.9 million net decrease in stock-based compensation expenses, which was mainly due to lower headcount in U.S. resulted from the 2024 Restructuring Plan last fiscal year, which partially offset by increases in professional service fees of $1.7 million, which mainly due to the shareholder's suit, one-time Warrant Dividend costs of $1.4 million, and other miscellaneous expenses.
Restructuring Cost
In May 2024, we initiated the 2024 Restructuring Plan to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. For the quarter ended September 29, 2024, we recorded additional pre-tax restructuring charges of $3.7 million, which primarily consisted of non-cash charges of $3.1 million of loss on disposals of Fab1 long-lived assets in Fremont and $0.2 million of other charges. There was no restructuring cost for the fiscal quarter ended September 28, 2025.
Change in Fair Value of Common Stock Warrants
The changes in fair value of common stock warrants of $1.9 million and $29.9 million for the fiscal quarters ended September 28, 2025 and September 29, 2024, respectively, were attributable to the decrease in the fair value of the outstanding Private Placement Warrants. The decrease in fair value of Private Placement Warrants was primarily due to a decrease in our common stock price for each respective quarter. In addition, the exercise price of the Private Placement Warrants was adjusted to $10.66 per share from $11.50 per share in connection with the Warrants issued during the fiscal quarter ended September 28, 2025 in connection with the Warrant Dividend. For more information on the Warrants and related matters, please see Note 10 "Treasury Stock, Warrant Dividend and Warrants" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
Interest Expense
Interest expense for the fiscal quarter ended September 28, 2025 was $11.8 million, compared to $1.7 million during the fiscal quarter ended September 29, 2024. The increase of $10.0 million or 585% was attributable to one-time charge of $9.2 million for the rights with the Warrants issued to the holders of 2028 Convertible Senior Notes. In addition, there was a $0.8 million increase in interest expense resulting from the issuance of the 2030 Convertible Senior Notes during the fiscal quarter ended September 28, 2025.
Other income (loss), net
Other income, net for the fiscal quarter ended September 28, 2025 was $0.1 million, compared to $2.2 million of other loss, net for the fiscal quarter ended September 29, 2024. The change was primarily related to the strength of U.S dollars against other foreign currencies in the fiscal quarter ended September 28, 2025 as compared to the same quarter of last year.
Income Tax Expense (Benefit)
Income tax benefit for the fiscal quarter ended September 28, 2025 was $0.4 million, compared to $2.2 million of income tax expense for the fiscal quarter ended September 29, 2024. The tax expense or benefit was calculated based on the estimated annualized effective tax rate. The change of $2.6 million or 119% in tax was primarily attributable to a decrease in our estimated annualized effective tax rate for the current year.
Comparison of Fiscal Year-to-date Ended September 28, 2025 to Prior Fiscal Year-to-date Ended September 29, 2024
The following table sets forth our condensed consolidated operating results for the periods presented below (in thousands):
Fiscal Years-to-Date Ended
September 28, 2025 September 29, 2024
Change ($)
% Change
Revenue $ 20,556 $ 13,357 $ 7,199 54 %
Cost of revenue 16,952 16,454 498 3 %
Gross profit (loss) 3,604 (3,097) 6,701 N/M
Operating expenses:
Research and development 82,257 102,073 (19,816) (19) %
Selling, general and administrative 54,613 61,176 (6,563) (11) %
Restructuring cost - 41,807 (41,807) N/M
Total operating expenses 136,870 205,056 (68,186) (33) %
Loss from operations (133,266) (208,153) 74,887 (36) %
Other income (expense):
Change in fair value of common stock warrants 11,778 17,359 (5,581) N/M
Gain on bargain purchase of assets 4,761 - 4,761 N/M
Interest income 7,401 9,745 (2,344) (24) %
Interest expense (15,186) (5,068) (10,118) 200 %
Other income (loss), net 1,501 (1,509) 3,010 N/M
Total other income, net 10,255 20,527 (10,272) (50) %
Income tax benefit (1,445) (2,544) 1,099 (43) %
Net loss $ (121,566) $ (185,082) 63,516 (34) %
N/M - Not meaningful
Revenue
Revenue for the fiscal year-to-date ended September 28, 2025 was $20.6 million, compared to $13.4 million for the prior fiscal year-to-date ended September 29, 2024. Our revenues were primarily generated from our product shipments to South Korea defense contractors and consumer electronics customers. The increase in revenue of $7.2 million was primarily attributable to an increase in our sales to South Korea defense contractors. Of the total revenue recognized for the fiscal years-to-date ended September 28, 2025 and September 29, 2024, $12.3 million and $4.5 million of revenue, respectively, resulted from sales to one South Korean defense contractor.
Cost of Revenue
Cost of revenue for the fiscal year-to-date ended September 28, 2025 was $17.0 million, compared to $16.5 million during the prior fiscal year-to-date ended September 29, 2024. The increase in cost of revenue of $0.5 million, or 3%, was primarily attributable to a non-recurring inventory step-up amortization of $1.9 million recorded for the fiscal year-to-date ended September 29, 2024 in connection with the acquisition of Routejade. There was no similar charge for the current fiscal year-to date ended September 28, 2025. This decrease was partially offset by an increase in production costs in connection with an increase in revenue.
Research and Development Expenses
Research and development expenses for the fiscal year-to-date ended September 28, 2025 were $82.3 million, compared to $102.1 million during the prior fiscal year-to-date ended September 29, 2024. The decrease of $19.8 million, or 19%, was primarily attributable to a $12.8 million net decrease in depreciation expense, which included a $18.3 million of a one-time accelerated deprecation recorded in the fiscal year-to-date ended September 29, 2024 in connection with the 2023 restructuring plan. In addition, there were a $3.7 million net decrease in salaries, employee benefits and stock-based compensation expenses primarily due to lower headcount in the U.S resulting from the 2024
Restructuring Plan, a $3.8 million decrease in material and consumable costs, a $1.1 million decrease in facility and technology costs, and decreases in other miscellaneous expenses, partially offset by a $2.5 million increase in tooling and equipment and increases in other miscellaneous expenses.
Selling,General and Administrative Expenses
Selling, general and administrative expenses for the fiscal year-to-date periods ended September 28, 2025 was $54.6 million, comparing to $61.2 million for the prior fiscal year-to-date periods ended September 29, 2024. The decrease of $6.6 million, or 11%, was primarily attributable to a $12.0 million net decrease in salaries, employee benefits and stock-based compensation expenses, which was mainly due to lower headcount in U.S. resulted from the 2024 Restructuring Plan last fiscal year. This decrease was partially offset by one-time Warrant Dividend costs of $1.4 million, a $1.2 million increase in common expense allocations to R&D, a $1.1 million increase in repair and maintenance costs, a $1.0 million increase in depreciation expense and increases in other miscellaneous expenses.
Restructuring Cost
In May 2024, we initiated the 2024 Restructuring Plan to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. As a result, we recorded pre-tax restructuring charges of $41.8 million for the fiscal year-to-date ended September 29, 2024, which consisted of 1) non-cash charges of $38.2 million of loss on disposals of Fab1 long-lived assets in Fremont and $1.2 million of stock-based compensation expense, and 2) cash charges of $1.6 million of severance and termination benefits and $0.8 million of other charges. There was no restructuring cost for the fiscal year-to-date ended September 28, 2025.
Change in Fair Value of Common Stock Warrants
The change in fair value of common stock warrants of $11.8 million for the fiscal year-to-date ended September 28, 2025 and $17.4 million for the fiscal year-to-date ended September 29, 2024 were attributable to decreases in the fair value of the 5,500,000 Private Placement Warrants. The decrease in fair value of Private Placement Warrants for both periods were primarily due to the decreases in our common stock price during the fiscal year-to-date ended September 28, 2025 and September 29, 2024. In addition, the exercise price of the Private Placement Warrants was adjusted to $10.66 per share from $11.50 per share in connection with the Warrants issued during the fiscal quarter ended September 28, 2025. For more information on the Warrants and related matters, please see Note 10 "Treasury Stock, Warrant Dividend and Warrants" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
Gain on Bargain Purchase of Assets
In April 2025, we acquired battery cell manufacturing assets from SolarEdge Technologies, Inc., located in South Korea for total purchase consideration of $10.0 million in cash. As a result of this business acquisition, we recorded $4.8 million of gain on bargain purchase as the estimated fair value of the acquired assets exceeded the purchase consideration. There was no gain on bargain purchase for the fiscal year-to-date ended September 29, 2024.
Interest Income
Interest income for the fiscal year-to-date ended September 28, 2025 was $7.4 million, compared to $9.7 million for the fiscal year-to-date ended September 29, 2024. The decrease of $2.3 million or 24% was primarily due to the fact that we had lower cash balance for the fiscal year-to-date ended September 28, 2025 as compared to the fiscal year-to-date ended September 29, 2024 together with lower interest rate for the current year.
Interest Expense
Interest expense for the fiscal year-to-date ended September 28, 2025 was $15.2 million, compared to $5.1 million during the fiscal year-to-date ended September 29, 2024. The increase of $10.1 million or 200% was attributable to one-time charge of $9.2 million for the rights with the Warrants issued to the holders of 2028 Convertible Senior Note. In addition, there was a $0.8 million increase in interest expense resulting from the issuance of the 2030 Convertible Senior Notes during the fiscal quarter ended September 28, 2025.
Other income (loss), net
Other income, net for the fiscal year-to-date ended September 28, 2025 was $1.5 million, compared to $1.5 million of other loss, net for the fiscal year-to-date ended September 29, 2024. The increase of $3.0 million was primarily due to the fact that we had a one-time import duty forgiveness of $2.4 million in the fiscal year-to-date ended September 28,
2025 and the strength of U.S dollars against other foreign currencies in the current period as compared to the same period last year.
Income Tax Benefit
Income tax benefit for the fiscal year-to-date ended September 28, 2025 was $1.4 million, compared to $2.5 million for the fiscal year-to-date ended September 29, 2024. The tax benefit was calculated based on the estimated annualized effective tax rate. The decrease of $1.1 million or 43% in tax benefit was primarily attributable to lower income tax benefit on the losses generated from certain foreign jurisdictions.
Liquidity and Capital Resources
As of September 28, 2025, we had cash, cash equivalents, restricted cash, and short-term investments of $560.8 million, long-term investments of $89.5 million, working capital of $528.1 million and an accumulated deficit of $942.8 million. Our cash equivalents and investments primarily consist of U.S. government agency securities, U.S. Treasuries, money market mutual funds, and corporate notes and debt securities.
Material Cash Requirements
We use cash to fund operations, meet working capital requirements and fund our capital expenditures. For the remainder of fiscal year 2025, we expect that our spending in cost of revenues and operating expenses will continue to increase as we ramp up our operations.
For the fiscal year-to-date ended September 28, 2025, we used $17.2 million of our cash to fund our acquisitions of property and equipment and $10.0 million of payment for an acquisition of battery cell manufacturing assets in South Korea. We expect to increase our property and equipment purchases in the near future to support the build-out of our manufacturing facilities and our battery manufacturing production. For more information regarding our purchase commitments, please see the contractual obligations and commitments section below.
In July 2025, we declared and issued the Warrant Dividend to shareholders of record of our common stock and the holders of 2028 Convertible Senior Notes as of the close of business on July 17, 2025 (the "Record Date"). A total of 26,526,344 Warrants were exercised for proceeds of $224.2 million, net of commissions and offering expenses. We intend to use the proceeds from the Warrant exercises to support Fab2 scale-up and for general corporate purposes. Please see Note 10 "Treasury Stock, Warrant Dividend and Warrants" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
In September 2025, we issued $360.0 million aggregate principal amount of the 2030 Convertible Senior Notes with an interest rate of 4.75%, which will mature on September 15, 2030. The net proceeds of the 2030 Convertible Senior Notes were approximately $348.6 million, after deducting the initial purchasers' discounts and commissions and the estimated offering expenses payable by us. We used approximately $45.3 million of the net proceeds from the offerings to pay the cost of the capped call transactions related to the 2030 Convertible Senior Notes. We intend to use the remaining net proceeds for working capital and general corporate purposes, which may include to fund a portion of the purchase prices for future potential acquisition. Please see Note 8 "Borrowings" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
Additionally, during the third quarter of 2025, our Board of Directors authorized the Repurchase Plan. Pursuant to the Repurchase Plan, we repurchased 5,437,556 shares of our common stock for $58.4 million for the fiscal year-to-date ended September 28, 2025 and we may make repurchases from time to time through open market purchases or through privately negotiated transactions. As of September 28, 2025, we had $1.6 million remaining capacity available under the Repurchase Plan. For more details, please see Note 10 "Treasury Stock, Warrant Dividend and Warrants" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
We have incurred operating losses and negative cash flows from operations since inception through September 28, 2025 and expect to incur operating losses in the near future. Based on the anticipated spending and timing of expenditures, we currently expect that our cash will be sufficient to meet our funding requirements over the next twelve months from the date this Quarterly Report on Form 10-Q is filed. We believe we will meet longer-term expected future cash requirements and obligations through a combination of available cash, cash equivalents and future debt financings, projected revenues and access to other public or private equity offerings as well as potential strategic arrangements. We have made our estimates on historical experience and various other relevant factors and we believe that they are
reasonable. Actual results may differ from our estimates and we could utilize our available capital resources sooner than we expect.
Summary of Cash Flows
The following table provides a summary of cash flow data for the periods presented below (in thousands).
Fiscal Years-to-Date Ended
September 28, 2025 September 29, 2024 Change ($)
Net cash used in operating activities $ (68,292) $ (92,675) $ 24,383
Net cash provided by (used in) investing activities (339,204) 14,979 (354,183)
Net cash provided by financing activities 470,733 44,217 426,516
Effect of exchange rate changes on cash, cash equivalents and restricted cash (409) 1,303 (1,712)
Change in cash, cash equivalents, and restricted cash $ 62,828 $ (32,176) $ 95,004
Fiscal Quarter Ended September 28, 2025 Compared to Prior Year Fiscal Quarter Ended September 29, 2024
Operating Activities
Our cash flows used in operating activities to date have been primarily comprised of operating expenses. We continue to increase hiring for employees and materials in supporting the ramping up of commercial manufacturing. We expect our cash used in operating activities to increase before we start to generate any material cash inflows from commercially manufacturing and selling our batteries.
Net cash used in operating activities was $68.3 million for the fiscal year-to-date ended September 28, 2025. Net cash used in operating activities consisted of net loss of $121.6 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include stock-based compensation expense of $38.0 million, depreciation and amortization expense, net of accretion of $26.7 million, non-cash interest expense of $9.2 million related to the fair value adjustment related to the Warrants issued in July 2025 in connection with the Warrant Dividend, the change in fair value of the Private Placement Warrants of $11.8 million, and gain on bargain purchase of assets of $4.8 million resulted from the acquisition of assets in Korea.
Net cash used in operating activities was $92.7 million for the fiscal year-to-date ended September 29, 2024. Net cash used in operating activities consisted of net loss of $185.1 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include stock-based compensation expense of $48.6 million, depreciation and amortization expense, net of accretion of $37.4 million, impairment and disposals of Fab1 long-lived assets of $38.2 million, and the change in fair value of Private Placement Warrants of $17.4 million.
Investing Activities
Our cash flows used in investing activities to date have been primarily comprised of purchases of property and equipment, as well as short-term investment activities. We expect the costs to acquire property and equipment to increase in the future as we continue to build-out and develop our battery manufacturing production capabilities in Malaysia, including our Fab2 facility in Malaysia, and in South Korea. Net cash used in investment activities was $339.2 million for the fiscal year-to-date ended September 28, 2025, which primarily consisted of $17.2 million of equipment purchases, $370.1 million of short-term investment purchases and $10.0 million of payment for an acquisition of assets in South Korea, partially offset by maturities of $58.1 million of short-term investments.
For additional information regarding the acquisition of assets in Korea, please see Note 3 "Business Acquisition" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.
Net cash provided by investing activities for the fiscal year-to-date ended September 29, 2024 was $15.0 million, which primarily consisted of maturities of $106.6 million of short-term investments, partially offset by $59.8 million of equipment purchases and $31.8 million of short-term investment purchases.
Financing Activities
Net cash provided by financing activities was $470.7 million for the fiscal year-to-date ended September 28, 2025, which primarily consisted of $350.1 million of net proceeds from the issuance of the 2030 Convertible Senior Notes,
$226.6 million of net proceeds from the exercise of Warrants, $3.8 million of proceeds from the exercise of stock options and employee stock purchase plan ("ESPP") to purchase our common stock, partially offset by $58.4 million used to buyback shares of our common stock pursuant to the Repurchase Plan, $45.3 million of capped call purchases in connection with the 2030 Convertible Senior Notes transactions, $4.9 million of payroll tax payments for shares withheld upon vesting of restricted stock units and $0.8 million of loan payments.
Net cash provided by financing activities was $44.2 million for the fiscal year-to-date ended September 29, 2024, which primarily consisted of $4.6 million of gross proceeds from the borrowings of loans, $44.3 million of proceeds from the issuance of our common stock through an ATM offering and proceeds from exercise of stock options to purchase our common stock and $1.1 million of proceeds from our ESPP to purchase our common stock, partially offset by $5.6 million of payroll tax payments for shares withheld upon vesting of restricted stock units.
Contractual Obligations and Commitments
As of September 28, 2025, we had $172.5 million aggregate principal amount of 3.0% 2028 Convertible Senior Notes outstanding, which will mature on May 1, 2028 unless earlier converted, redeemed or repurchased. During the fiscal quarter ended September 28, 2025, we issued $360.0 million aggregate principal amount of 2030 Convertible Senior Notes with an interest rate of 4.75%, which will mature on September 15, 2030.
In addition, we had $10.5 million of asset secured loans, of which $10.2 million are classified as short-term debt on our Condensed Consolidated Balance Sheet as of September 28, 2025. Please see Note 8 "Borrowings" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
We lease our headquarters in Fremont, California, our Fab2 production facility in Penang, Malaysia, and offices in India and China. For the lease payment schedule, please see Note 7 "Leases" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.
We expect to enter into other commitments to support our product development, the build-out of our manufacturing facilities, and our business development, which are generally cancellable upon notice. Additionally, from time to time, we enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation. As of September 28, 2025, our commitments included approximately $6.6 million of our open purchase orders, including equipment purchase orders, and contractual obligations that occurred in the ordinary course of business. For contractual obligations, please See Note 9 "Commitments and Contingencies" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities in our consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates. These estimates and assumptions include but are not limited to: depreciable lives for property and equipment and intangible assets, valuation for assets acquired in business acquisition, valuation for inventory, valuation allowance on deferred tax assets, assumptions used in income tax provisions, valuation of goodwill and intangible assets, assumptions used in stock-based compensation, assumptions used in the calculation of earnings per share related to the Warrants as warrant dividend, incremental borrowing rate for operating right-of-use assets and lease liabilities and valuation of common stock warrants. Certain accounting policies have a more significant impact on our condensed consolidated financial statements due to the size of the financial statement elements and prevalence of their application.
There have been no material changes to our critical accounting policies and estimates disclosed in Part II, Item 7 of the Annual Report on Form 10-K, except for the additions to the accounting policies on investments as noted in Note 2 "Summary of Significant Accounting Policies" of the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
See Note 2 "Summary of Significant Accounting Policies" of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.
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