Enovix Q2 Earnings Call Highlights

Key Points

• Q2 revenue reached $9 million, up 21% year over year and 19% sequentially, while Enovix delivered its seventh consecutive quarter of positive GAAP and non-GAAP gross profit. The company ended the quarter with approximately $552 million in cash, equivalents, marketable securities and restricted cash.
• Enovix’s lead smartphone customer confirmed its cells exceeded 1,000 cycles in testing, with accelerated qualification expected to finish by year-end 2026 and potential commercial production in 2027. A second smartphone OEM is also moving toward qualification, with samples expected in the fourth quarter.
• Commercial momentum is expanding beyond smartphones: smart-eyewear shipments are expected to rise to about 19,000 packs in Q3 from 2,100 in Q2, while the South Korea drone and defense pipeline grew 41% to approximately $183 million in estimated peak annual production value. Q3 revenue guidance is $9 million to $10 million, though early eyewear ramp costs are expected to pressure margins.

Enovix NASDAQ: ENVX reported second-quarter 2026 revenue at the high end of its guidance and highlighted progress in smartphone battery qualification, an initial commercial ramp in smart eyewear, and expanding drone and defense opportunities.

Revenue for the quarter was $9 million, up 21% from a year earlier and 19% sequentially, according to Chief Financial Officer Ryan Benton. Defense shipments from the company’s South Korea operations remained the largest contributor, while smart eyewear produced its first product revenue during the quarter.

GAAP gross profit was $1.3 million, representing a 14.4% gross margin, while non-GAAP gross profit was $1.8 million, or a 19.9% margin. Benton said the year-over-year decline in quarterly margin largely reflected the mix of battery products sold through the South Korea business rather than an operational change. Enovix recorded its seventh consecutive quarter of positive GAAP and non-GAAP gross profit.

Non-GAAP operating expenses rose to $30.6 million from $28.8 million a year earlier, reflecting investments in smartphone qualification, product development, manufacturing readiness and the smart eyewear ramp. Non-GAAP operating loss was $28.8 million, better than the company’s guided loss range of $29 million to $32 million. Adjusted EBITDA was negative $18.9 million, compared with negative $20.1 million in the prior-year quarter.

The company ended the quarter with approximately $552.1 million in cash equivalents, marketable securities and restricted cash. Operating cash use was $21.8 million, while free cash flow was negative $31.4 million. Capital expenditures totaled $9.6 million.

Smartphone qualification advances

President and Chief Executive Officer Raj Talluri said Enovix’s lead smartphone customer confirmed that the company’s cells exceeded 1,000 cycles under a 0.2C discharge cycle-life test. The result independently confirmed internal testing that Enovix had previously discussed.

The remaining qualification work centers on an accelerated cycle-life test based on a hybrid protocol developed with the lead customer. Talluri said the test is intended to better reflect real-world smartphone use than the traditional 0.7C approach used for legacy graphite batteries. Several combinations of charge and discharge conditions are being tested, including an enhanced cell design.

Enovix expects to complete the final testing by the end of 2026, followed by customer acceptance and smartphone field testing. In response to analyst questions, Talluri said the next stage after the bench testing would be a small build in which batteries are installed in phones for performance evaluation. The company expects commercial production activity to begin in 2027 if qualification proceeds as planned.

A second smartphone original equipment manufacturer is moving toward a similar qualification framework, and Enovix expects to begin sample deliveries to that customer in the fourth quarter. Talluri said he expects silicon-specific qualification protocols to become more widely adopted over time because silicon anodes behave differently from graphite in accelerated testing.

Smart eyewear begins commercial shipments

Enovix shipped about 2,100 AI-1 batteries to a tier-one smart eyewear customer in the second quarter and recognized its first product revenue from that customer. The company said it completed a key international safety certification for its cells and battery packs, as well as the customer’s reliability testing.

The company has delivery orders for approximately 19,000 packs in the third quarter, a roughly nine-fold increase from second-quarter shipments. Those deliveries are part of a 50,000-pack customer order, with the remaining units expected to ship in the fourth quarter.

Talluri said the smart eyewear market is expected to reach multiple millions of units, though actual Enovix shipment volumes will depend on customer product success and the company’s share of those programs. He said customer feedback has been favorable, particularly regarding energy density and battery life for eyewear devices running artificial intelligence applications.

Benton cautioned that smart eyewear is expected to generate negative gross margin for the balance of 2026 as production ramps and overhead shifts into cost of revenue. He said Enovix expects gross margins to improve as volumes scale, but did not provide a break-even volume target.

Drone and defense pipeline expands

Enovix said its South Korea-made product pipeline increased 41% from the first quarter to approximately $183 million in estimated peak annual production value. More than half of the increase came from drone opportunities, which now exceed $100 million. The company said more than $40 million of the broader pipeline involves customers actively evaluating or testing cells, or designing them into products.

The company’s MX-1-B01 battery is designed for drones and other applications requiring high gravimetric energy density and high continuous and pulse discharge performance. Talluri said the battery offers approximately 360 Wh/kg and could support uses including public safety, interceptor drones and intelligence, surveillance and reconnaissance applications.

Enovix has ordered additional MX-1-B01 production equipment for South Korea and expects it to become operational in mid-2027. Initial commercial shipments and revenue are expected after capacity comes online and customer programs complete qualification. During the question-and-answer session, Benton said the new equipment is expected to support roughly 1 million units of capacity.

The company said its South Korea supply is Trade Agreements Act compliant, while it expects National Defense Authorization Act compliance across multiple product stock-keeping units. Its drone battery completed UN 38.3 transportation testing in July, and Enovix plans to begin sampling numerous customers in the third quarter.

Third-quarter outlook

For the third quarter, Enovix forecast revenue of $9 million to $10 million, representing year-over-year growth of approximately 13% to 25%. The outlook assumes continuing defense and industrial shipments from South Korea and a significant sequential increase in smart eyewear deliveries.

• Expected non-GAAP operating loss: $29 million to $32 million
• Expected non-GAAP net loss per share: $0.13 to $0.17
• Expected capital expenditures: $8 million to $12 million

Management said third-quarter gross margin will be affected by South Korea product mix and early smart eyewear ramp costs. Talluri also cited ongoing manufacturing improvements at Fab2, where cumulative yield improved for a third straight quarter. Zone 1 dicing remained the principal throughput constraint, though yield improved to approximately 84% from 80% in the first quarter.

About Enovix (NASDAQ:ENVX)

Enovix Corporation NASDAQ: ENVX develops and manufactures advanced lithium-ion battery cells with a patented three-dimensional silicon-anode architecture. The company’s core focus is on delivering high energy density, improved safety, and longer cycle life compared to conventional graphite-based cells. Enovix’s technology targets a range of applications, including consumer electronics, wearable devices, electric vehicles and stationary energy storage systems.

Founded in 2011 and headquartered in Fremont, California, Enovix has built pilot production capability and is scaling up manufacturing capacity to meet growing demand.

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