Thank you for joining us for Enovix Corporation's Third Quarter 2025 Earnings Conference Call. Today's program will be recorded. I would now like to introduce your host, Robert Leahy, Head of Investor Relations. Please proceed, Robert.

Thank you. Hello, everyone, and welcome to Enovix Corporation's Third Quarter 2025 Financial Results Conference Call. With me today are President and Chief Executive Officer, Dr. Raj Talluri; and Chief Financial Officer, Ryan Benton. Raj and Ryan will provide remarks followed by Q&A. Before we begin, please take note that today's call contains forward-looking statements that are subject to risks and uncertainties. These statements are based on current expectations and may differ materially from actual future results due to various factors. For a discussion of these risks, please refer to the disclosures in today's press release and our filings with the Securities and Exchange Commission. You can also find these materials on our website at ir.enovix.com. All statements made on this call are as of today, November 5, 2025, and we undertake no obligation to update them, except as required by law. Additionally, during the call, we may reference non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP measures in the materials posted on our Investor Relations site. With that, I'll turn the call over to Raj.

Good afternoon, everyone, and thank you for joining us. Enovix is expanding the limits of battery capabilities and transforming how the battery industry will evolve over the coming years with a silicon battery. During this quarter, our team made significant advancements in developing a silicon battery while strengthening our key partnership alliances. Today, I'll highlight our progress in Q3 and then provide updates on our initiatives in smartphones, smart eyewear, defense, and strategic initiatives before turning it over to Ryan for a financial update. We delivered strong execution and financial progress in Q3. Revenue grew 85% year-over-year to $8 million. We achieved a non-GAAP gross profit of $1.7 million or 21% margin compared to a loss in the prior year. We also secured long-term funding, which is expected to finance Fab2 and enable our path to positive cash flow. Completing a shareholder-friendly warrant dividend and issuing new convertible notes due in 2030 brings total cash and marketable securities to $648 million at the end of the quarter and allows us to execute from a position of strength. Our AI-1 smartphone battery was validated by an independent testing firm, Polaris Labs, as the highest energy density battery reported for a smartphone battery in the industry and, in addition, having leading fast charge capabilities. Our lead smartphone program with Honor, a top 8 mobile OEM, has entered the final validation phase ahead of a planned 2026 smartphone launch. Honor has been an outstanding partner, and we appreciate their cooperation as we work tirelessly to bring this breakthrough technology to the mobile phone industry. Honor's feedback on our product development and inputs into mobile battery needs has been instrumental in the execution of our roadmap as we advance towards commercialization. Besides Honor, our second smartphone OEM development program is also accelerating with this additional customer also now in qualification. And we are continuing to sample to other top mobile OEMs. Our mobile partnerships offer us key market insights and reflect the strong commercial relationships we have today in this market. In smart eyewear, we delivered over 1,000 battery packs to our lead customer under our supply agreement. These packs are now undergoing customer qualification. Furthermore, we have delivered samples to 9 other unique OEMs and ODMs, and we expect to have some of them launch products using our batteries in 2026. On the manufacturing front, we made significant progress in yield, throughput, and cost optimization. We achieved yield improvements in Fab2 in Malaysia across all production zones, notably in Zone 1 laser dicing. We optimized our battery formation process in Zone 4 to increase the throughput materially. We believe Zone 4 capability now exceeds the volume requirements for the second and potentially the third high-volume lines, significantly reducing future CapEx requirements. Shipments from our Korean factory accounted for the majority of our year-to-date revenue, with the largest contributions coming from defense and industrial customers, where we continue to benefit from strong demand. We completed the integration of our Q2 acquisition of SolarEdge assets, adding cell capacity, incremental coating equipment, and room for future expansion. Additionally, leveraging the capabilities of this team, we began building our first cell manufacturing capability for our 100% active silicon anode technology in Korea also. This will serve as a new product introduction line, our NPI line. Finally, I want to welcome Dan McCranie to our Board of Directors and Srikanth Kethu as Head of Enovix India, expanding our leadership team as we scale globally. Dan is a high-impact operator, sales executive, and a broad leader with deep experience scaling complex technology businesses. His track record at onsemi and other global semiconductor companies adds immediate strength to our Board as we expand commercialization and manufacturing in 2026 and beyond. Our new Head of India, Srikanth, will strengthen our world-class R&D center in Hyderabad, which accelerates our R&D efforts and helps ensure the success of scaling our Malaysia facility. Now let's talk about smartphones. Since I started in 2023, I focused the company on smartphones as the most financially attractive market for our batteries. After visiting key OEMs in April 2023 and getting an understanding of the key product requirements from them, we started developing our smartphone batteries to meet these stringent performance targets. As we developed our technology to meet these requirements, we entered into a development agreement with Honor as a lead customer in September 2024. Over the last year, we made significant progress both in our product development and meeting their product qualification milestones. We passed the vast majority of Honor's qualification requirements and in several cases, exceeded them. In order to consistently achieve 1,000 charge-discharge cycles with their components, we have agreed to a design iteration, which is already underway. We're on track to ship these samples in Q4, enabling Honor to complete full life cycle testing. This additional cycle is part of a thoughtful, collaborative qualification process that's typical when introducing breakthrough battery technology into flagship smartphones. This rigorous collaborative process of building a leading-edge smartphone battery with Honor, we believe, enables us to launch products with the rest of the smartphone industry in a relatively seamless fashion. Our second smartphone customer is now validating the AI-1 performance. The next milestone for this customer will be to provide us with the precise mechanical dimensions of the battery we need to supply and move to qualification and an expected commercial launch in 2026. Additional smartphone customers have similar requirements to our lead customer, and we expect their qualification process to go much faster. What's exciting about AI-1 is that it's not just a smartphone battery. It's a platform. Providing this level of performance can open the doors to a much wider set of markets. We started in smartphones, a $12 billion opportunity where our 900 watt-hour per liter performance gives us a clear edge for on-device AI. From there, the same technology moves naturally into smart eyewear, AR/VR, and IoT, about an $8 billion market today, where success depends on getting high energy into the smallest possible space. In defense, roughly a $3 billion market opportunity, customers are choosing Enovix for a rugged, safe, mission-ready design and diversified supply chain with manufacturing in Korea and Malaysia. And longer term, our silicon anode architecture scales across EVs and computing markets that should exceed $500 billion by 2040. Now let's turn to smart eyewear specifically, which is proving to be a faster-moving adjacent market than we previously expected. We currently have 2 cell designs for this market as we see 2 distinct product classes emerging: display-less smart eyewear designed for lightweight, voice-driven experiences and display-enabled AR eyewear, which carries much higher compute and battery demands. We expect this to be a broad market with many different consumer electronics and fashion brands launching products in 2026. The AI-1 platform enables significantly longer runtime in this space-constrained application. We now have sampled the AI-1 platform to 10 unique smart eyewear OEMs and ODMs, and we expect to showcase the first end product with an OEM publicly in CES 2026 in January. Turning to defense. Momentum continues to build this quarter across multiple geographies. In Korea, we combined seasoned manufacturing capabilities for conventional lithium-ion batteries with our expertise in silicon anodes. Our leading products now include silicon-doped anodes and the customer response has been encouraging. Year-to-date, our Korea facility has shipped roughly $20 million of products, the majority of which went to domestic defense and industrial customers, including two of the major three contractors in the Korean military. With customers outside Korea, we are seeing strong progress in both aerial and subsea drone markets. These customers are increasingly diversifying their supply chains, and our manufacturing footprint has opened doors with them. Based on customer feedback, our products are meeting the demanding requirements of this segment, including high-pressure tolerance, long cycle life, large capacity formats of up to 60 amp hours that operate reliably in low temperature environments. We have a robust pipeline of opportunities in this segment growing to over $80 million globally. Before I turn it over to Ryan for the financials, I want to provide an update on the M&A front. Our mission remains unchanged, commercializing our 100% active silicon anode architecture for space-constrained high-volume devices. Our conviction drove us to strengthen our balance sheet, giving us optionality to accelerate growth organically and inorganically through strategic M&A. This quarter, we began evaluating several opportunities that could advance commercialization through vertical integration and accelerate entry into complementary markets. A select few that meet our strategic financial criteria are under consideration, and our funnel of opportunities continues to grow. While we continue to evaluate opportunities that fit our strategy and financial filters, we have not entered into any agreements at this time, and there is no certainty that any such opportunities will result in completed transactions. Now I'll turn it over to Ryan to give a financial update.

Thanks, Raj, and good afternoon, everyone. Before I get into the financial results, I want to highlight the capital markets activity we executed during the third quarter. On the left side of the slide, you can see the summary of our warrant dividend program. We completed the program at the end of August with all warrants either exercised or expired. Roughly 26.5 million warrants were exercised, generating about $224 million in proceeds, net of fees and expenses. During the third quarter, we repurchased approximately $58 million of common stock. The net of these 2 programs resulted in $166 million in net liquidity, strengthening our cash position, enabling the funding of our Fab2 build-out and other strategic initiatives. On the right side, we show the convertible notes offering completed in September. We issued $360 million of 4.75% notes due in 2030, which after purchase discounts and capped call costs added about $303 million in net liquidity. The notes convert at $11.21 per share with a redemption trigger at approximately $14.57 per share. The capped call overlay has the ability to substantially offset potential dilution. As shown on the slide, we structured the cap call using multiple tranches, which provides several interim payoff opportunities during the term rather than the typical all-or-nothing settlement at maturity. If Enovix's stock price meets or exceeds one of these price thresholds, there is a substantial payout. If we meet all of the targets specified, the company could receive cash proceeds of over $200 million. We believe that this structure lets us capture value as we execute while managing dilution responsibly over time. The net result of all this is that we closed the quarter with $648 million in cash, cash equivalents, and marketable securities. The goal wasn't just to raise capital. It was to remove what we perceived as a financing overhang to give Raj and the team the confidence to execute upon our strategy without distraction and to give our customers comfort in our financial strength. I believe to a large extent, we have achieved these goals, and it's been impactful. We now have the resources we expect will allow us to fund Fab2 to pursue select strategic opportunities and to operate with confidence. It's exactly where a company at our stage should be. Now turning to the Q3 results. This was another strong quarter of execution for Enovix. Revenue came in at $8 million, up 85% year-over-year as we continue to deliver solid growth across defense and IoT programs while simultaneously advancing sampling activities with our lead smartphone and smart eyewear customers. Non-GAAP gross profit was $1.7 million, representing a 21% gross margin compared to a loss in the same period last year. The improvements reflect higher sales, favorable product mix, and continued cost discipline. Non-GAAP operating expenses were $31.5 million, up year-on-year. The majority of the increase was driven by higher depreciation and amortization with modest increases in R&D and manufacturing readiness investments. As a result, non-GAAP loss from operations came in at $29.8 million versus $26.9 million in the same period last year. Adjusted EBITDA, however, which excludes depreciation and amortization, improved by $2.3 million, a 10% improvement year-over-year. Non-GAAP net loss per share attributable to Enovix was $0.14, an improvement of $0.02 from Q3 2024. Overall, we delivered against our plan and continued building the foundation for scale and profitable growth. You just saw the detailed walk-through of our Q3 results, so I'll focus here on guidance for Q4 and some context. For the fourth quarter, we expect revenue between $9.5 million and $10.5 million, up 25% sequentially at the midpoint. We expect non-GAAP loss from operations between $30 million and $33 million, reflecting continued investment in manufacturing readiness and product launch preparation as we scale towards volume production. For non-GAAP net loss per share attributable to Enovix, which includes the impact of interest expense on the new convertible notes, we expect between $0.16 and $0.20. And finally, we've added a new metric for guidance. We are forecasting capital expenditures, which for the fourth quarter, we expect to be between $9 million and $12 million, primarily tied to Fab2 equipment as well as the build-out of the NPI production line in South Korea. Note, our guidance does not include mass production for any commercial smartphone shipments to Honor in Q4 2025. Importantly, however, we believe that the customer commitment and launch plans remain firmly intact. Our second smartphone OEM program is also progressing well in parallel. While we're not giving 2026 guidance today, investors should expect a more back-weighted revenue profile next year following end customer qualification and product launches. With $648 million in cash, we believe we are well positioned to continue executing on our plan, and we remain prepared to pursue strategic opportunities where they meet both our strategic and financial criteria. And with that, operator, we're ready for questions.

We will now begin the Q&A session. Please note that this call is being recorded. Before we go to the live questions, we're going to read two of the most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is, do you have just 1 or 2 smartphone battery customers at this point? And do you have enough capacity to satisfy their needs?

Thank you for the question, and thank you all for listening. We have agreements with two smartphone manufacturers, and both are at different stages of qualification. Additionally, we have sampled our batteries with seven of the eight leading smartphone manufacturers recently. We are receiving positive feedback from all of them regarding their experience with the batteries and the various safety tests they are conducting. In terms of capacity, as I mentioned, we have a production line that, when fully operational, can produce up to nine million batteries a year starting next year. We have also begun making initial investments to enhance Line 2 and related operations. Therefore, we are fully equipped to support our customers as they increase their production. We anticipate that 2026 will be a significant year for us, and we will keep expanding our capacity to meet customer demand in 2027 and beyond.

Thank you. And the second question is, will Enovix pursue rapidly evolving drone manufacturers requiring improved batteries?

Yes. Thank you for that question. So this is a market that, as you mentioned, is rapidly evolving. We are getting a lot of interest from many drone OEMs, both in aerial and subsea, like 2 classes of drones that we are finding. And we have been shipping batteries, high-performance, high-rate batteries from our Korea facility to many defense customers in South Korea. We are now able to satisfy and sample those to other drone manufacturers that are asking us for those batteries now. And in fact, we just got another purchase order today from a high-tech defense manufacturer here in the U.S. to provide more samples for evaluation of their programs. So yes, this is a fast-moving market, and we're getting a lot of interest in our already existing commercial batteries that we're making in Korea.

Okay. We will now go to the queue. Our first question comes from Mark Shooter from William Blair.

Congrats on naming Honor as your lead smartphone customer. This is a big name in China. Unfortunately, though, it looks like they want 1,000 cycles now. Is this correct? And how much of this was a surprise to the team? And what's required in the design front to achieve that?

Yes, the requirement has always been 1,000 cycles. As I mentioned in the last earnings call, we are working on a development program together, and we provided samples in July. We conducted cycle life testing while they were testing the same batteries we supplied. During this process, we realized that we needed to make one more small design change to achieve the full performance they want. We have validated that change internally and are confident it will meet the 1,000 cycles requirement. We are now producing batteries to that specification, and we expect to send them to Honor this quarter for further testing. As you know, when introducing a new design iteration for batteries, we need to restart the cycle life testing, which takes 3 to 4 months due to the nature of the process. We anticipate completing that by 1Q next year, followed by commercialization. We are pleased with the collaborative progress we've made, and they have permitted us to mention their name, highlighting the progress and quality of the batteries. I am very confident in what the team has accomplished, and I expect the batteries shipped in 4Q will meet all the requirements.

That's great. I appreciate that. You mentioned the timeline, and I'm curious if you could provide more details. You mentioned 3 to 4 months. Should we expect the first regional testing purchase order in Q1 with a possible follow-up in Q2? How is your team viewing this now?

We want to ensure that we launch a fully tested, reliable, and safe battery that fulfills all the requirements. It's important to us that the first battery goes into production correctly. As I stated, it takes about 3 to 4 months to validate the battery after it has been shipped. Following that, it will need to be incorporated into their phone, timed with the next model's release. If everything goes smoothly, we should anticipate some developments in the first half of next year.

And our next question will come from George Gianarikas from Canaccord.

I'd like to just continue on the path of the questions around Honor. Again, congratulations. And just trying to understand the cadence of production and orders that we should be expecting. You mentioned the first quarter, we should get more detail around an order and then maybe ramping production in the second. Just your level of confidence that this is sort of the last design change before achieving order status and then production.

I'm very confident in my team, who have done exceptional work in collaboration with the customer. We are closely monitoring progress together and receiving strong feedback. Our goal is to launch a fully active silicon anode battery into a smartphone, which is unprecedented from a new factory. We've made significant strides, and that's why I shared the timeline with our investors to illustrate the complexity and our achievements. I have full confidence but emphasize that we won't launch anything unless it's absolutely solid. We're collaborating closely with our customers, and if the testing goes well, we anticipate a fantastic launch next year. Another customer is also testing the same design iterations and has provided feedback indicating a benchmark in energy density. There's considerable interest, but we want to ensure everything is solid before production. Additionally, as Ryan mentioned, our balance sheet is strong, and we are well-capitalized, giving us the necessary resources and a well-functioning factory to achieve full production at the right time next year.

And maybe as a follow-up to switch gears regarding an acquisition. Obviously, you've built up an incredibly strong balance sheet. I'm curious as to where you're looking? In other words, what opportunity set are you looking to explore from an M&A perspective just because you have this enormous opportunity in front of you just with the cells that you plan to manufacture soon. What could you add to the tool set that will make that addressable market even bigger?

Yes. First, I want to clarify that our mission is to integrate our 100% active silicon anode battery technology into smartphones, AR/VR, IoT, computing, and some electric vehicles. That's our primary objective, and we are focused on it. However, as we pursue this, we see additional opportunities to enhance our growth in terms of distribution channels, time to market, and other components that could facilitate faster adoption of this technology. We will approach this carefully, ensuring our strategies are financially sound and do not divert us from our main objective. That's about all I can share for now. We are receiving significant interest due to our strong financial position, and we will be deliberate in our approach to utilizing it. Ryan can provide further insights.

I mean I can't say it better. I mean, I think we'll pride ourselves on being good stewards of capital. It will have to make sense from a strategic standpoint, from a technology standpoint in order to further the core mission, and then we'll apply discipline, financial and diligence filters to it.

Our next question comes from Jeff Osborne from TD Cowen.

Just two on my side. You mentioned, Raj, the yield improvements in Malaysia. I was wondering if you could just level set us where were things, where are things? Where do you need to be? I think TJ touched on sort of a risk ramping up aggressively next year to meet the customer demand. So relative to maybe where his expectations and yours are, what's left to do? And what have you achieved so far?

Yes, great question, Jeff. This year, we've experienced a significant amount of inbound interest across various markets. We've developed agreements with two cell phone OEMs for battery production, and the batteries are currently being sampled by customers. Additionally, we have two smart eyewear customers for whom we’re shipping batteries from our factory in two different sizes. We also have another potential high-volume IoT customer with a different battery size, along with a defense contract battery. Essentially, we are producing a variety of battery cells, around five to six different types. The point I want to make is that with so many different sized cells, we need to continuously adjust the lasers, stackers, and tooling to accommodate each one. These are sample productions, involving hundreds and thousands of units. Therefore, we haven't focused much on optimizing yields since each completed unit requires retooling for the next. Now that we have distributed samples to customers, we are concentrating on two markets and products that aim for shorter-term production in 2026: a larger smartphone cell and a smaller AR/VR cell. These two cells are our current focus. We have an Agility line and a high-volume manufacturing line, and over the last couple of months, we have seen significant yield improvements. I review this weekly and am very pleased with the progress, especially regarding laser and stacking performance, which is meeting our expectations. We anticipate that high-volume production will ramp up in the middle to late next year, positioning us well for benchmark yields at that time. Overall, I feel optimistic about our direction and current focus.

Great to hear. Maybe just as my second question, to follow up on Mark's prior question. Can you just be more specific as it relates to was there a scope change with Honor as it relates to their expectations? Or was there a form factor change or chemistry change? I'm just trying to understand better the tweak that you made that then now has to go through this new validation testing cycle. I get that there was a change, but what was it driven by? And what was the nature of the change?

When we sent the samples, I mentioned previously that we were conducting cycle life testing while they were also performing their cycle life tests. This process involves charging and discharging the battery repeatedly, aiming for 1,000 cycles. However, we had not finished our cycle life testing before shipping the battery; we had only completed some tests. Once we sent it to them and they began their testing, we observed that in order to exceed 1,000 cycles, a chemistry change was necessary, rather than adjusting the form factor or scope. We initiated validation of this chemistry change and now have samples that we believe can achieve all 1,000 cycles. We are currently producing batteries using this new chemistry, which we expect to release in the fourth quarter. This is a typical process when developing a battery for the first time; the initial stages may take longer than anticipated, but once the first one is finished, subsequent developments become much easier as our smartphone customers have similar requirements.

Our next question will come from Colin Rusch from Oppenheim.

Could you talk a little bit about the supply chain and preparedness? Certainly, there's been a lot of innovation around some of the anode materials that you guys could potentially use. And can you talk a little bit about what that opportunity set looks like as you work to advance some of the advanced applications that you're talking about here, both in the phone and the military markets?

Yes, definitely. What we're discovering is that, for a broader audience, we are an architecture-first battery manufacturer. This means we can utilize higher capacity or higher voltage cathodes and various types of silicon anodes, along with the latest advancements in electrolytes, to create superior batteries. As materials improve, so does the performance and energy density of our batteries. We manage the swelling and possess intellectual property on how to blend these different materials. To your point, Colin, we are seeing a number of silicon anode suppliers emerging. Previously, we used a silicon anode known as SiOx, which is a type of silicon oxide. Now, we are utilizing SiC, or silicon carbon, with various options available. For instance, differences in the particle size and shape of the carbon, as well as variations in manufacturing processes, exist. We're actively testing several options and sampling one while having second and third sources for others. It’s an exciting time to be in battery manufacturing, as we can leverage these significant material innovations to produce increasingly better batteries.

And can you talk a little bit about the laptop opportunity? You've heard a lot about the phones and eyewear. But certainly, you guys have a fairly sizable opportunity in laptops as well. And as you get through some of the validation on the phones, how quickly could you transition into some of these other opportunities given that it seems like once you get the first one done and dusted, a lot of folks are going to line up real quick for incremental demand?

Yes, that's a great question. We can see the impact of AI on various edge markets, particularly with the new AI PCs being introduced. We've mentioned AI applications in smartphones, and the augmented reality market is evolving thanks to generative AI, allowing for interaction with these devices. As a result, the demand for batteries in these end markets is on the rise, alongside increasing performance and battery needs. The laptop market is indeed exciting; however, as a smaller company in the early stages, we must maintain focus. My primary focus has been on smartphones because I believe they present the toughest battery challenges. We have established strong relationships with customers who provide us the specifications we need to fulfill. Once we successfully develop that battery, we will be able to transition swiftly to other markets. For example, our capability to quickly enter the smart glasses market showcases our smartphone technology. I anticipate a similar trajectory for computers; once our smartphone battery is ready and in production, we should be able to move into the computing market easily, as it's essentially a combination of several smartphone batteries. We consider packaging and battery management systems crucial, and we collaborate with partners to integrate our battery technology into those markets. We're already in discussions with potential customers. However, I'm currently cautioning the team against distributing too many samples because we lack the capacity to support them all at once. I prefer to focus on doing one or two well before expanding further.

Our next question comes from Ananda Baruah from Loop Capital.

Yes, I guess a couple of clarifications for me. Raj, was it that you said first half 2026, expect initial production volumes with Honor?

Yes. Again, it depends on how well the testing goes with them. I'm confident that what we're gaming this time will be really good in the sense of meeting the 1,000 cycle requirement. And if that goes really well, we'll find the right phone intersect for first half.

Got it. Awesome. And then the second smartphone customer, was it production in 2026 is the goal? And then part B of that question is, you had mentioned that you're able to sort of go through the process more quickly with the second smartphone customer. Can you just give some context around that? How much more quickly, what parts of the process like that? And I got a quick follow-up.

Yes, it's aimed for production next year, likely in the later half. We are waiting for some specific dimensions from them to start production. We have provided them with some cells, but they are not yet in testing. Once we receive the exact dimensions for the cells, which typically happens in the fall, we will have time to create batteries to those specifications in the first half of the year. After that, they will test these in their phones to ensure they qualify. For instance, we have determined the requirements to achieve 1,000 cycles, and we have the necessary chemistry ready to sample by the end of this quarter. The next customer will receive these validated samples that can achieve 1,000 cycles. Thanks to our first customer, we have learned a great deal about battery testing processes, such as drop tests, cycle life tests, fast charging, battery management systems, storage temperatures, and swelling tolerances. This knowledge is aiding us with the second customer, whose requirements are surprisingly similar to those of the first. As a result, we can meet their needs more quickly. I anticipate that other market players will have comparable requirements since they are all targeting similar markets. This is why I believe the initial customer was the most challenging, with subsequent ones being significantly easier.

Our next question will be from Derek Soderberg from Cantor Fitzgerald.

So Raj, on the chemistry change, my understanding is the chemistry reformulation can take maybe multiple months, depending on how big of a change it is, I guess. Can you share like the timeline from when you notice the issue to actually solving and integrating the new chemistry? And I guess what's maybe the risk that the new chemistry doesn't quite interact with the rest of the battery and you might need to reformulate it again?

Yes, we operate by continuously running various chemistries as backup options. If one doesn't perform as expected, we immediately look for alternatives. My engineering team has been researching these options for the past year. We selected one that appeared to have the best potential, while also running backups simultaneously to prepare for any challenges. We've refined the backup, and early results are promising. I'm confident that the batteries we shipped this quarter will perform well, but we also have additional backups ready in case adjustments are needed. Although I don't anticipate needing further changes, it's wise to be ready with multiple options. The unfortunate aspect of this process, Derek, is that battery development isn't like chip manufacturing, where simulations can predict outcomes. In chip design, we'd use models to analyze and would be confident after tape-out. With batteries, we have to conduct extensive tests over 1,000 cycles to determine success, which is just how it works. The positive news is that once we achieve the right result, it's established. The initial development can be challenging, but I feel optimistic; we’ll need to monitor the results as we proceed.

Got it. No, I appreciate that. And then as my follow-up, Ryan, as you're looking into some of these potential agreements, I think ASPs have maybe changed since you guys have kind of last spoken about maybe a revenue breakeven point for the company. So as you guys sort of start to ramp to multiple customers, can you maybe share what that revenue breakeven point is for you guys or anything else maybe on the near-term profitability model, if you need to update margins or anything like that, can you share any of that detail now that you guys are sort of moving towards commercialization here next year?

Yes. No, I think, look, fundamentally, I think we like where the market is going in terms of valuing our technology in our product. I'll stay consistent with what we've said in the past that an important milestone for us is to get multiple HVM lines in place build out in Fab2, and that's why we've started that process. In addition to getting lots of operational benefits of being able to switch over lines and run multiple products, it helps get to a certain level of scale. And it's really beyond that point. So Line 2, Line 3 that we think gets us to where we're gross margin positive and able to absorb the overhead. This is on a non-GAAP basis. And then really, it's as we march towards filling Fab2 with equipment and getting full utilization there that we see as being adjusted EBITDA positive or a proxy for cash flow positive.

There are no further questions at this time. With that, I'd like to turn the call over to Dr. Raj Talluri for closing remarks.

Yes. Thanks, everyone, for the thoughtful questions and joining us today. To close, I want to bring it back to the big picture. Enovix is entering one of the most important phases in our company's history, which is taking our breakthrough technology and scaling it to commercial production. We have a clear line of sight to that goal. Our AI-1 platform has been validated by third-party Polaris Labs as the highest energy density battery ever reported in a smartphone. Our lead smartphone and smart eyewear programs are progressing towards launch. Our manufacturing capabilities at Fab2 are ramping steadily. And we've strengthened the balance sheet, and we secured the capital we need to execute. And we built a team that knows how to deliver. While qualifications and ramp cycles take time, what matters most is that we are on the right path, with the right partners, with the right technology and with the resources to see through. I am incredibly proud of what the team around the world has accomplished, and I'm confident in the road ahead. Thank you once again for your continued support and for your interest in Enovix. We look forward to updating you on our progress next quarter. Thank you.