Good afternoon, and welcome to Everspin Technologies Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Monica Gould, Investor Relations for Everspin.

Thank you, operator, and good afternoon, everyone. Everspin released results for the second quarter 2025 ended June 30, 2025, this afternoon after market closed. I'm Monica Gould, Investor Relations for Everspin. And with me on today's call are Sanjeev Aggarwal, President and Chief Executive Officer; and Bill Cooper, Chief Financial Officer. Before we begin, I would like to remind you that today's discussion may contain forward-looking statements regarding future events, including, but not limited to, the company's expectations for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successfully bringing to market and manufacturing products in Everspin's design pipeline and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends and market conditions and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward- looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time in which the company may discuss risk factors associated with investing in Everspin. All forward-looking statements are made as of the date of this call. And except as required by law, the company undertakes no obligation to update or alter any forward-looking statement made on this call, whether as a result of new information, future events or otherwise. The financial results discussed today reflect the company's preliminary estimates and are based on the information available as of the date hereof and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments and other developments arising between now and the time that the financial results for this period are finalized. Additionally, the company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to non-GAAP net income, which provide additional details. A copy of the press release is posted on the Investor Relations section of Everspin's website at www.everspin.com. And now I'd like to turn the call over to Everspin's President and CEO, Sanjeev Aggarwal. Sanjeev, please go ahead.

Thank you, Monica, and thanks, everyone, for joining us on the call today. Turning to our second quarter results. We are pleased to report our second quarter results with revenue of $13.2 million and non-GAAP earnings per share of $0.03, with revenue towards the high end of our guidance range. Our performance this quarter was driven by strength across all products, specifically in data center, industrial automation and low earth orbital or LEO applications. We saw high single-digit sequential growth in the data center business. This growth was driven by strong demand on the redundant array of independent disks or RAID from a broad selection of data center customers, including Dell, Supermicro and others. We saw good momentum from our customers who build industrial automation equipment like programmable logic controllers or PLCs, with sequential growth in excess of 20% from the first quarter. Everspin has a significant historical business here, and we are seeing momentum from current customers and recent design wins with our industrial xSPI product. We saw good traction in the space and aerospace segments that continue to value the benefits of MRAM as a reliable, persistent nonvolatile memory for LEO deployments. During the second quarter, we reached a steady state of revenue from the sale of our PERSYST 1 gigabit STT-MRAM into IBM's FlashCore Module 4 or FCM4 for data center applications and continue to anticipate product revenue from this ongoing project to remain consistent for the remainder of the year. We continue to ship and recognize revenue for our PERSYST MRAM solution from Lucid Motors for the Gravity SUV and expect volumes to increase as the automaker ramps production. We shipped engineering samples for the 2 new products we announced last quarter as part of our xSPI family, the PERSYST EM064LX HR and EM128LX HR. These…

Thank you, Sanjeev. Our results reflect the consistency of our execution. During the second quarter, we delivered revenue of $13.2 million at the high end of our guidance range of $12.5 million to $13.5 million, driven by strength across all of our products. MRAM product sales in the second quarter, which include both Toggle and STT-MRAM revenue was $11.1 million compared to $9.9 million in Q2 '24, up slightly from product sales of $11.0 million in the first quarter. Licensing, royalty, patent and other revenue in the second quarter increased to $2.1 million compared to $0.7 million in Q2 of '24. This increase was driven by the ramp in our contract with Purdue. Turning to gross margin. Our GAAP gross margin was 51.3% for the second quarter, down slightly from 51.4% in the first quarter and up from 49% in Q2 '24. The increase relative to the same period last year was due to a larger mix of high-margin licensing and other revenue. GAAP operating expenses for the second quarter of 2025 were $8.7 million, flat as compared to $8.7 million in the first quarter and up from $8.0 million in the second quarter of 2024. In the second quarter of 2025, the company recorded $0.8 million of other income related to the strategic award we won in August of last year to develop a long-term plan to provide manufacturing services for Aerospace and Defense segments. We recorded second quarter non-GAAP net income of $0.7 million or $0.03 per diluted share based on 22.6 million weighted average diluted shares outstanding. This was in line with our guidance range of non-GAAP net income of breakeven to $0.05 per share and a significant improvement from a non-GAAP net loss of $0.6 million or a loss of $0.03 per share in the second…

[Operator Instructions] Our first question comes from the line of Richard Shannon with Craig-Hallum.

I apologize, I jumped in a little bit late in the call, so I may have missed some topics here. But as I typically do, I'd love to ask about product gross margins in the quarter. If I did my numbers right, it seems like they're in line or a little bit lower than last quarter and kind of a bit lower than maybe what the trend we've seen in the last several quarters here. So I want to get a sense of whether there's any yield or mix dynamics going on in here.

They're earlier in the life cycle. So we're always looking for ways to improve those gross margins and working with the foundries and folks in manufacturing to improve -- continuous improvement on the yields.

I guess -- is there a path or a view to getting those product gross margins up above 50% anytime soon?

Yes, that is our target. We expect to be north of 50% in total for product gross margins. But as always, those things take a little bit of time. So we -- but we do expect to be solidly in that 45% to 50-ish percent margin range for products.

Okay. Fair enough. I would love to ask about kind of progress in the new product area here. I think you mentioned a couple of brief comments in this area, but it doesn't sound like we should expect a notable increase here as we exit the year. I think the phrase I heard used was going to full volume production with these products late this year. So if I caught that right, maybe you can help us understand what kind of contributions we should look for as we get into next year.

Yes. I think on those newer products, right, they are ramping, and they are kind of in the burgeoning aerospace segment. That's one of the key segments, key industries for that area. And we definitely are starting to see some uptick and again, some good traction on some of the newer parts and products. So I think we're moving along healthily with those products.

I'll just add some color to that, Richard. This is Sanjeev. Like we said in our prepared comments, we did see a significant sequential growth, right, almost 20% compared to Q1. And a good portion of that is actually attributed to this new products of the xSPI family that we brought to market over the last couple of years. So we are seeing good traction, and we are seeing some volume pickup. As to how much it will be, it's a little bit difficult for us to break that out. But I do think that you'll see some contribution of that in the projection for the revenue that we have for Q3 and going up into Q4.

Okay. Fair enough. And maybe let's ask on the product side here from an end market perspective. You mentioned some nice dynamics here in data center and you called out some stuff in automotive here. Maybe just talk about the dynamics you're seeing in the broader industrial markets and even by geographies, as I think you've talked about from time to time in the past here, what the trends are looking like. I think we're seeing a lot of moving parts, both up and down as we see other companies reporting so far. I'd love to get your sense of what you're seeing.

Yes. So the good news for Everspin -- from Everspin's point of view is that we are actually seeing depletion of inventories at our customers, almost all across the world, specifically in the Asian region, where we were concerned about inventory overbuild. So I think we are actually seeing some good number of orders come in from that region. So that's good. And again, most of these are either in the automation or in the data center. And by data center, I mean the RAID memory or general memory applications. So the Dells, the Supermicros, the Broadcoms. And then as far as automation, those are our traditional customers from across the world that use them for programmable logic controllers. So we're starting to see some uptick in that activity as well.

Okay. Great to see. And my last question, I'm just hunting through my notes here from the call. I believe, Bill, you had mentioned something about a pickup in some specific contract, I apologize, my handwriting here is pretty bad, but something to pick up in the fourth quarter. Maybe you could repeat that and then describe a little bit more about what's going on there, please?

Yes, yes. So that is the other income that we have from the [ Amentum ] contract that we were awarded late last year. And we do expect to see some pickup in activity in that contract in the back half of the year.

Okay. So when you talk about a pickup there, any way you can quantify what we're talking about relative to the third quarter or 2? I think you had a fairly sizable quarter in this contract sometime last year. Maybe you could just kind of size that for us, please.

Yes. We had a strong back half last year. We'll expect to see a strong second half and particularly more toward Q4 as well.

[Operator Instructions] Our next question again comes from the line of Richard Shannon with Craig-Hallum.

All right. Well, I guess I could have just stayed in here. Let's hear, I guess 2 questions for me. First one is, in terms of the QuickLogic relationship there, maybe I caught the language wrong here, but is this something that you're finished the current contract you're waiting for the new one? Or I just want to get a sense of the timing and dynamics where we are with the last announced one, please?

Yes. So as far as the completion of the phase, I was referring to the Frontgrade project, Richard. We did complete the first phase of that project in Q2. And now we are dependent on renewal of the project and that is actually funded -- I think Frontgrade has actually funded through the AFRL. So that's what we are waiting on next. On the QuickLogic, we continue to deliver on the deliverables that we had signed up for in Q2. There's nothing significant to report over there, except that we have met our deliverables and continue to work on future deliverables.

Okay. When do you expect that contract to complete?

The QuickLogic one, I think the total value of the project and the time is almost another 2 years, if I'm not mistaken.

Got it. Okay. My last topic to touch on here is following up on the press release with -- that you did with Lattice Semiconductor as a companion to the FPGA chips they sell there. I wanted to get kind of an update there on the progress. I know this is something that was going to take a number of quarters to come to fruition, but love to get your update on that one, Sanjeev. That's all for me.

Yes. So I mean, as we talked about last time, we do have some activity going on with Lattice, where they're actually doing a co- package solution using our xSPI part of, I believe, it's either 32 or 64 megabit density. And I think that evaluation is ongoing, and I think they are now -- those parts are now available for our customers to evaluate through different distributors. For example, DigiKey, you can get the boards from there for evaluation. And then also on GitHub, we have the drivers available to actually download the drivers to evaluate those parts. So I think the collaboration is going well. It's just like you said, it's going to take a couple of quarters before you see any significant traction.

I am showing no further questions. I would now like to turn the call over to Sanjeev for closing remarks.

Thank you, operator. I just wanted to thank everyone for joining the call today and look forward to giving you guys an update for next quarter. Thanks a lot.

Thank you. This does conclude today's conference. Thank you for your participation. You may now disconnect.