What Enovix (ENVX) Said on Its Q3 Earnings Call

Key Points

• Enovix expects $65 million to $85 million in revenue in 2027, with $37 million in backlog; a separate $216 million pipeline reflects potential opportunities, not booked orders. Third-quarter revenue rose 38% year over year to $11 million, with a 34.5% gross margin.
• The company plans to invest $19 million to double drone-battery capacity in South Korea, where shipments on a 100,000-cell order are scheduled to begin in January 2027. Management said the facility could support nearly $200 million in annual revenue with additional equipment, but expects capacity constraints in 2027.
• Enovix is prioritizing smart-eyewear batteries over smartphones, making smartphone revenue in 2027 likely nominal or nonexistent. It also cut headcount by more than 20% and narrowed R&D projects, targeting $8.5 million in annual savings.

Enovix NASDAQ: ENVX expects revenue to rise to $65 million to $85 million in 2027 as it expands battery production in South Korea and shifts resources toward drone and smart-eyewear customers, executives said on the company’s third-quarter earnings call.

The battery maker reported third-quarter revenue of $11 million, up 38% from a year earlier and 22% from the prior quarter. Gross margin was 34.5%, helped by a mix of smart-eyewear and higher-priced drone and defense products, Executive Chairman T.J. Rodgers said.

Management said the company entered its planning for 2027 with $37 million in backlog, just under half the midpoint of its revenue forecast. Executives cautioned that a separate $216 million sales pipeline, largely tied to drones, represents identified customer opportunities rather than orders.

Drone Orders Drive Expansion Plans

Enovix plans to spend $19 million to double drone-battery capacity at its Nonsan, South Korea, facility, where its Routejade subsidiary produces conventional batteries. The company has received an order for 100,000 conventional battery cells from a drone maker, with shipments scheduled to begin in January 2027, Rodgers said.

The company also booked its first order for its MX1-B01 cell, which blends silicon with graphite, and expects shipments to begin in the first quarter. Chief Revenue Officer and General Manager Steve Bakos said Enovix has sampled that cell to more than 30 companies.

Bakos said demand spans aerial, underwater and ground vehicles, among other applications. He attributed some of the interest to customers seeking batteries manufactured outside China for defense programs. Enovix described its South Korean factory as compliant with Trade Agreements Act sourcing requirements and said it has a roadmap for products that meet National Defense Authorization Act requirements.

Interim Chief Executive Officer Ryan Benton said the company expects to be capacity-constrained in 2027. He estimated that the Nonsan site could support close to $200 million in annual revenue if Enovix adds the necessary equipment and builds onto existing facilities. That figure was an estimate of potential site capacity, not a revenue forecast.

Eyewear Takes Priority Over Smartphones

Enovix is directing development resources for its high-energy-density silicon-anode batteries toward smaller cells for smart eyewear. The company is shipping a 50,000-pack order for a reference design to an unnamed large customer and has sampled its next-generation AI-2 technology to 24 smart-eyewear customers, executives said.

The shift means smartphone revenue is expected to be nominal, if any, in 2027, Benton said. Developing larger smartphone cells is more expensive, while the company has immediate demand for smaller cells, he said.

Rodgers identified Honor as the company’s lead smartphone customer. He said Enovix had passed a key battery life-cycle test internally and expected Honor’s parallel test to pass, but the company was still awaiting confirmation. Honor has raised its energy-density target to 1,000 watt-hours per liter from 900, Rodgers said.

Enovix expects its AI-2 technology to address that target eventually. Benton clarified that AI-2 was being sampled for smart eyewear and that any smartphone qualification work would follow the company’s efforts to meet eyewear demand.

Cost Cuts and Balance Sheet

Enovix reduced positions by a little more than 20% as part of a restructuring that management said would save $8.5 million annually. The company also narrowed its research and development focus to eight projects from 19 and plans to move from Fremont to a smaller facility in Sunnyvale, California.

Benton declined to provide specific 2027 operating-expense or capital-spending guidance, but said operating expenses would be materially lower. Some costs will also move into cost of goods sold as production ramps, he said.

The company repurchased $128 million of debt for approximately $81 million, capturing a $46.6 million discount, Benton said. Rodgers said cash had fallen from $512 million at the end of the prior quarter to approximately $415 million at the time of the call.

Enovix also declared a warrant dividend of one warrant for every four shares held by shareholders of record as of Nov. 13. Benton said the transaction was designed to strengthen the balance sheet and allow holders of its 2028 convertible notes to use those notes as consideration when exercising warrants. He said he hoped the transaction would help address the 2028 notes.

About Enovix (NASDAQ:ENVX)

Enovix Corporation develops lithium-ion batteries using a silicon-based anode and a proprietary three-dimensional cell architecture. Its design is intended to increase energy density while addressing safety and performance requirements in compact devices. The company's batteries are designed for applications including smartphones, wearable devices, laptops, augmented- and virtual-reality products, and other portable electronics. Enovix also targets markets such as defense and industrial technology.

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