ATOM earnings call analysis

NASDAQ:ATOM Q4 2025 Earnings Call Transcript Generated on 6/9/2026 Mike Bishop | Investor Relations: Hello, everyone, and welcome to Adam Ayers' fourth quarter and fiscal year 2025 update call. I'd like to remind everyone that this call and webinar are being recorded, and a replay will be available on Adam Ayers' IR website for one year. I'm Mike Bishop with the company's Investor Relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in a listen-only mode. We will open with prepared remarks from Scott Bebo, Adam Ayers' president and CEO, and Frank Lorenzio, Adam Ayers' CFO. Then we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the events and presentation section of our investor relations page on our website. Before we begin, I'd like to remind everyone that during today's call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 10-K filed with the SEC on March 4, 2025. Except as otherwise required by federal securities laws, Adam Ayer disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, I would like to turn the call over to our President and CEO, Scott Vivo. Go ahead, Scott. Scott Bebo | President and CEO: Thanks, Mike, and good afternoon to everyone. In Admiral's fourth quarter, we made great progress moving existing customers forward in our targeted segment, achieving very strong technical advancements, commencing new customer engagements in non-traditional areas, and made our first foray into the world of government-funded collaborative developments, all positioning us strongly for commercial execution in 2026. Today, I'll give you an update on all of our activities as we set the table for our business prospects in the new year. Technology news recently has been dominated by the rapid advancement of artificial intelligence and the associated semiconductor challenges that AI entails, from the allocation of limited GPU supply, the enormous stresses put on our energy infrastructure, and the associated surge in memory prices. Atomera's technology is positioned to assist with each of these industry issues as we deliver materials which help to relieve each pain point. So let me start off with our recent exciting progress on gate all around transistor technology, which is the foundational architecture used in AI GPUs, CPUs, and bleeding edge network components. The challenges with manufacturing these next generation transistor devices at two nanometer and below are widespread. And a concerted effort by the full ecosystem of industry players is required to manufacture them at scale with economically viable throughput and yield. This has been the focus of our recently announced strategic partnership with a large equipment OEM. Target customers are TSMC, Samsung, and Intel, who are in production, and Rapidus, a new Japanese manufacturer which is deep in development. Atomair's MST technology delivers some very compelling solutions in this space, in particular for diffusion blocking. These tiny gate-all-around transistors require extremely high phosphorus doping levels constrained to a very small area in the source and drain of the nanosheet. Under the intense semiconductor manufacturing environment, It's difficult to keep these dopant atoms in their proper positions, and just a small amount of migration into the channel can severely impact performance, efficiency, and yield. AtomAres MST is uniquely well-suited to hold these roving phosphorus atoms in place. Although this MST characteristic is well proven in older technologies, implementing MST in devices that are around 2 nanometers while maintaining its efficacy is something that industry players insist must be validated on silicon at real-world scale, and we've been working hard to do so. Our target customers have been looking into two results to prove high-volume manufacturability. First, that MST can be effectively deposited into the actual nanosheet structure. And second, that the diffusion blocking characteristics are better than other methods the industry is currently evaluating or using. Obtaining these results is not straightforward and requires access to advanced structures that are not generally available, are very expensive, and frequently proprietary. but we've been able to make steady progress with the help of a gate all around customer and our strategic partner. Just in the last month, we obtained very exciting silicon results in both targeted areas, which we believe provides the definitive proof to drive adoption of MST at all four of the world's gate all around customers in the future. Not only can MST be deposited into those structures using existing tools and standard gases, But it is a far superior diffusion blocking material than those currently used by the industry. We anticipate that we will be able to implement this technology with leading industry players over the next few quarters. Of course, we're quite excited by these recent results since our advanced node, our gate all around business segment, has extremely high revenue potential. But we're also making convincing progress in our other customer areas. So let me provide a short update there. In DRAM, the technology roadmap is at a key inflection point as DRAM finally follows other logic and memory architectures in making better use of the vertical dimension. We are getting involved in offerings to enhance the performance of next-generation architectures, in addition to solutions for products currently in production by the major memory suppliers. During the last few months, we have had two major solution offerings that we're working hard to validate since their market potential is very high. Notably, these are both wafer-based solutions, which are easier to adopt and test, avoiding many of the integration complexities required in some of our other applications. And with the current robust market for memories, we believe our potential customers will have a generous R&D budget to pursue these ideas. Atomera is currently conducting many wafer runs with our various customers. Most of these are processing through their fabs, so we will expect more information soon. But one customer has just gotten preliminary results which look promising. But we will get a better view when the final data is available in about a month. If the results look good, we'll be pushing for a joint development agreement and a license to advance this technology to production. In the RF-SOI space, our offering is very strong, considering that it can provide performance improvements for multiple important areas, including for the RF switch and the low noise amplifier. Because we are working with so many of the key players in this industry, including foundry and fabless suppliers, we hope to drive adoption broadly. Again, in this space, our solution can be implemented with a wafer-based solution, meaning our customers can choose to deposit it on wafers themselves before starting their full manufacturing process, or they could even buy RFSOI MST wafers from a third-party supplier. Our license structure supports both of these approaches. In power, we are working with some very large players to ultimately be incorporated into their product offerings. Although we had a setback with ST last year, we continue to work with them on MST solutions across multiple business units. In addition to our traditional BCD business opportunities, this quarter we had several other inbound interest emerge for power applications. Through our own internal analysis and modeling, we have uncovered an opportunity for MST in trench vets, which are an important component in optimizing energy efficiency in AI data centers. Our simulations show the potential for MST to improve performance by more than 40%. We got this result after Christmas and already have a customer interested in kicking off development. Similarly, using our MST CAD simulation capability, we have demonstrated how MST can improve HVT devices, which are high-speed transistors frequently used for amplifying and switching signals in RF communication systems. Discussions are underway with a potential first customer in this application as well. In GAN, I'm happy to report that our first commercial customer has now started running wafers for GAN on silicon with MST technology. For many reasons, this is exciting. This large customer can grow their own GAN wafers and manufacture electrical devices on them, which means they can move even faster than our in-house work with Sandia National Labs and Texas State. So we expect that we will actually move ahead of our own internal development efforts over the next few quarters. Second, they are exploring GAN in both RF and power technologies. These independent efforts by multiple industry and scientific partners frequently can accelerate time to revenue, which is what we're hoping to accomplish. Last month, we announced that our GAN on silicon concept paper had been approved to move to the proposal stage for a project with Power America to advance the state-of-the-art on wideband gap materials. We announced this for a variety of reasons. First, we wanted to show the widespread interest from customers, the science community, and industrial organizations for an MST solution for GAN on silicon. Indeed, we've already received several letters of support from multiple future customers showing interest in this solution. Second, this concept paper was our first application for outside development funding. And although the funds sought for this first effort are modest, they put us in the pathway for a variety of future material development funding opportunities, which can provide us assistance going down a path we were planning to travel anyway. By engaging in these joint development opportunities, we are promoting our technology, receiving financial assistance, and assuring a customer base all in one project. To summarize, the past few months have been an incredibly productive time in terms of technical development and the buildup of a variety of new customer opportunities that I believe will lead to business deal announcements later this year. Finally, as we close up 2025, let me give you a few thoughts on our accomplishments. Last year, we took our early development and simulation results on gate all around and converted it into what I now believe is our greatest company opportunity. We did that through working with a lead customer and with a strategic partner who's also a major equipment OEM. This is a significant departure from how we've approached the market in the past. The industry has a long history of relying on this OEM to deliver them material solutions for their problems. So we truly believe that their influence will help us to convert our recent strong technical results to licenses and revenue. We make technical breakthroughs in our other core markets to enable killer applications like LNA for RFSOI, a new architecture for BCD, and next-gen DRAM solutions. Using AI, our development team has gotten better results more efficiently than ever before. We kicked off a record number of wafer runs with our leading customers, initiated several new projects, and solidified the business talent on our team, which should lead to further contract announcements over the course of this year. And much of this work was done emphasizing wafer-based products, which we believe will result in faster time to revenue. In short, 2025 efforts have set us up well for commercial announcements later this year. With that, I'll turn the call over to Frank to review our financials. Frank Lorenzio | Chief Financial Officer: Thank you, Scott. At the close of the market today, we issued a press release announcing our fourth quarter and full year results for 2025. This slide shows our summary financials. Revenue in 2025 was $65,000 and consisted of NRE fees for wafer deliveries and MST CAD licensing. Our gap net loss for the year ended December 31, 2025 was 20.2 million or 65 cents per share compared to a net loss of $18.4 million or 68 cents per share in 2024. On a non-GAAP basis, 2025 net loss was $16.1 million or 52 cents per share. And 2024 net loss was 15.4 million or 57 cents per share. GAAP operating expenses were $20.9 million in 2025, which was an increase of approximately $1.5 million from $19.3 million of GAAP operating expense in 2024. The main driver of the increase in GAAP operating expense was a $1.1 million increase in stock compensation expense due to a change in our executive equity-based compensation. In Q1 2025, we implemented PSUs for executives, which vest based on the performance of our stock price as compared to the Russell 2000 Index. These PSUs vest over three years, whereas the options and time-based RSUs that had been granted to executives in prior years vested over four years. Although the vesting period is shorter, executives only vest in PSUs based upon our stock price performance. With the exception of stock compensation expense, the drivers of GAAP and non-GAAP expenses are substantially the same. And therefore, the rest of my remarks will only refer to non-GAAP results. Please refer to the slide presentation for a reconciliation between GAAP and non-GAAP expenses. Total operating expenses in 2025 were $15.9 million, an increase of $429,000 from $15.4 million in 2024. R&D expenses increased by $794,000 from $9.4 million in 2024 to $10.2 million in 2025, primarily due to a $676,000 increase in outsourced engineering as we utilize various new device fabrication vendors replacing TSI Semiconductor. G&A expenses decreased by $272,000 from $5.1 million to $4.8 million, primarily due to a $421,000 decrease in compensation expense, offset in part by $118,000 increase in professional fees for legal, IP, and audit fees. Sales and marketing expense decreased by $94,000, reflecting lower headcount, but offset by some recruiting fees. Company-wide, our compensation expense, again, on a non-GAAP basis, excluding stock compensation, declined by $582,000 in 2025 compared to 2024. The reduction in compensation expense reflects our board's pay for performance discipline. While we achieved important technical milestones in 2025, the compensation committee determined that payout of the full executive bonus was not justified by commercial progress made during the year. Therefore, the committee withheld approximately $669,000 in executive bonus compensation affecting the full executive team. The withheld amount may be earned in 2026 based on achieving rigorous commercial objectives. Turning to our quarterly results, Fourth quarter 2025 non-GAAP net loss was $3.3 million or 10 cents per share compared to a net loss of $4.4 million or 14 cents per share in Q3 and a net loss of $3.9 million or 14 cents per share in Q4 2024. Non-GAAP operating expenses decreased by $1.1 million to $4.3 million sorry, from 4.3 million in Q3 2025 to 3.2 million in Q4, primarily due to the reversal of our bonus accrual, which occurred in Q4. Our balance of cash, cash equivalents and short-term investments on December 31 was $19.2 million compared to 26.7 million at the end of 2024 and 20.3 million at the end of Q3, 2024. We used $14.9 million of cash in operating activities during 2025, 3.2 million of which was used in Q4. During 2025, we sold approximately 1.6 million shares under our ATM facility at an average price per share of $5.15, resulting in net proceeds of approximately $7.6 million after commissions and offering expenses. As of December 31, 2025, we had 32.4 million shares outstanding. After year end, we've raised an additional $3.2 million of net proceeds by selling approximately 1.3 million shares at an average price of $2.47. For Q1, we expect to recognize revenue in the range of 50 to $100,000 from shipment of MST wafers to customers. Consistent with our usual practice, we are not providing revenue guidance beyond this quarter. Our 2025 non-GAAP operating expense was $15.9 million, which is well below the guidance range I provided last quarter. That's primarily due to reversing $669,000 of accrued bonus. For 2026, we will continue to aggressively control costs And we've limited our expense growth to those areas directly related to revenue and near-term commercial progress. Those increases mainly consist of adding two senior go-to-market leaders. The first of those was our VP of sales, who came on board in October. And the next will be a new head of marketing. The comparison of our planned spending in 2026 versus 2025 looks distorted by the potential payout this year of the executive bonus withheld from 2025, because the withheld amount will have to be accrued this year on top of accruing 2026 bonus. As a result, we expect our non-GAAP operating expense to be approximately $18.5 million in 2026. Now on paper, this is a 17% increase, but if normalized for the timing of the executive bonus accrual, it is more in the range of 8%. I would point out also that earning back deferred executive bonuses, as well as earning 2026 bonus will require us to execute against aggressive, commercially focused milestones. With that, I will turn the call back over to Scott for a few summary remarks before we open the call up to questions. Scott Bebo | President and CEO: Scott? Thank you, Frank. The entire focus of our efforts in 2025 is getting to commercial agreements. The work we've done up to now has positioned us well to close on those opportunities, and I look forward to sharing our successes with you as the year progresses. Mike, we will now take questions. Mike Bishop | Investor Relations: Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the Zoom window, then feel free to type in your question. I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button and we may call on you to ask your question live. And right now, our first question comes from Richard Shannon of Craig Helm. Richard, go ahead. Great, Mike. Can you hear me? Yes, yes, we can. Richard Shannon | Analyst, Craig-Hallum: Okay, great. I'm in the airport here. A little bit of noise, so apologies for that. I don't have a ton of time before I got to run to my plane here, but let me ask just a few questions here. Scott, some really interesting statements regarding gate all around here. If I caught your comments correctly here, you said that you're expecting some, I forgot the exact language you used, but some sort of important next steps here in the next few quarters. Typically, you've been reticent to give somewhat definitive timeframes for getting to major milestones, and yet you are here. So maybe give us a sense of why you're saying this. Your confidence level is clearly quite high. So help us understand this level of confidence and why. Scott Bebo | President and CEO: Yeah, I would say on the gate all around technology, do you mind if I just share the slide to answer your question, Richard? Richard Shannon | Analyst, Craig-Hallum: Please do. Scott Bebo | President and CEO: Okay. Can't seem to share. Okay, here's the slide. On the right hand side, you can see where MST is deposited around these source and drain structures. that is an incredibly hard thing to do we've been talking with our our gate all around customers about using mst to block the dopant diffusion like where these little red arrows go in one of the biggest problems that people have is that the phosphorus dopants get into these channels here and the channels can only handle a couple of phosphorus atoms before they really start to grade very very significantly which affects yield and performance and so forth so All along, they've been saying, okay, that's interesting. We know MST can block phosphorus. But first of all, can you even deposit it in these tiny little structures that are, you know, they're two nanometers. And just to give you an idea, it takes about, 100 000 nanometers to get to the width of a hair that's how small these are and so we had to prove that and we spent a long time in the lab building uh devices like this to show that we can deposit mst with high quality there and we have done that second thing is when we put that tiny layer of mst does it really still block the phosphorus in that very very small space Because they're using something else right now that isn't very effective at blocking it, but are we better than that other thing? And the answer to that question is yes, as well. We've recently just gotten the technology gotten the test data to prove that. And so, you know, it's early days, we've gotten that in the last month, we haven't been able to get out and talk to each of the data all around customers yet. But with our partnership with our strategic partner, we really think we're going to talk to those guys, and they're going to immediately want to start testing this and trying it out. So I'd say that's why my confidence is much higher, we I would say we've rarely been as excited about some technology results inside the company as we are by what we have right now. Richard Shannon | Analyst, Craig-Hallum: Okay, great deal. I'm sure I'll follow up a little bit on that one. Second question here is, you mentioned two things you have to prove you're better than alternative solutions. We haven't really heard you talk about what your potential customers are considering here. Anyway, you can describe what those are, whether they're internal developments or something looking from other research organizations and to what degree you have visibility into how well those are doing as well. Scott Bebo | President and CEO: Yeah, so we're not really talking about some lineup of other technologies, but what the industry has tried using in the past is silicon arsenic. And silicon arsenic is effective at just putting a spacer between the phosphorus and the channel, but it doesn't really prevent the dopant diffusion very well at all. And so we've actually done a lot of testing of our MST technology against silicon arsenic. and proven that we have vastly better diffusion blocking results. And the second thing is that the industry does not like to use arsenic in its manufacturing process, but it can help it. It's expensive to use and dangerous, and therefore offering a solution that removes that material is probably considered good by the industry. Richard Shannon | Analyst, Craig-Hallum: Okay, fair enough. Very interesting there. My last question before I've got to run here, Scott, is you talked about a number of inbound calls here in the power space, which I know it's a space that you've been pushing for for a while. And obviously STMicro was aiming towards that before it's, we'll call it a setback. You characterized this in the RFSOI space a few years ago about having significant coverage, I think more than half of the market share of the space here. Any way to characterize how much of the power space you're covering with when you add up all these new companies that are coming to you? Any way you characterize that? Scott Bebo | President and CEO: Yeah, it's a little bit harder. I think on the RFSOI, it's a pretty compact space. group of companies and we feel very confident that we're working with the vast majority of them on power. It's a much bigger market. It's a much more diverse customer base. So I wouldn't say we're working with most of the people. Of course, we talked a little bit about the work we've done on TrenchFed when we did do some work on TrenchFed. We reached out to the leaders in TrenchFed and some other folks that we know are interested in advancing their technology and started talking to them. And that worked well and the same thing with HVT. And so, yeah, I think we're expanding. And then, you know, a lot of the GAN work that we're doing is in power as well. So we're talking to a lot of companies working in the power space, but I can't really give you, I can't really say it's the vast majority in that case. Okay. Richard Shannon | Analyst, Craig-Hallum: I wasn't expecting the vast majority, but since the power space is very large, well, I thought if there was, I mean, if you even had 10 or 20%, that'd be pretty good coverage there. But appreciate that characterization. I've got to jump out of line, Scott. Thanks a lot. All right. Thank you, Richard. Mike Bishop | Investor Relations: All right. Thank you, Richard. We have some questions coming in on the Q&A line. I will start with one, Scott. Can you give an update on the progress for your vice president of sales, Wei Na? Scott Bebo | President and CEO: Sure. Wade joined in October and he's been coming up to speed and generally very, very helpful. I'm super enthusiastic about having someone that's pushing the team as hard as he is on the sales side. He's not only driving our ethics very specifically with existing customers and helping us find some new ones. He's also uh you know targeting a bunch of relationships that he's had in the past that he's bringing in with us and that does allow him to uh you know for us to engage with customers from kind of a different angle and that's been very positive so i think uh so far so good Mike Bishop | Investor Relations: Great, and thank you. And a number of questions about wafer activity at the fab and as it relates to general activity level, how would you characterize that? Scott Bebo | President and CEO: Yeah, so I think just starting earlier in the middle of 2025, we started to get a lot of customers coming in with wafer runs simultaneously, which is quite busy for us to get them into our fab and deposit the MST. on a very high quality basis and they get it back out so they can start running the wafers. Today, we're still running things in our own fab, but for the most part, we've shipped out a lot of that stuff out to our customers. And now we're kind of in a waiting game. It takes six to nine months for customers to run their wafers once we've sent them back to them and then get the test results. And then we'll review those and we'll figure out the next steps from there. But we really feel confident that what we have done in these runs is is good stuff we use mst cad simulation software to figure out what we expect the outcome of these runs to be and we're you know we're really hopeful that our tcad has been accurate and if we get the results that we hope for that our customers will want to move forward into a productization effort Mike Bishop | Investor Relations: Okay. And generally speaking, I had a question here and I think we've covered it on prior calls, but can you describe why selling blank wafers makes it easier to go to market? Scott Bebo | President and CEO: Yeah, absolutely. Okay. I just showed this graphic of a gate all around device, and that is a really, really hard device to integrate into. But you can imagine when, if we're trying to integrate into that device, the customer starts a starting wafer, they build up a whole bunch of structures. then at some point they make a hole in those structures and they say okay put your mst in here and then we'll have to figure out how to fill around it and all of the different layers that surround it affect it right that's that's called integration engineering it's very challenging but for many of our applications when we talk about wafer based products that would be when the customer buys a wafer And they put MST on immediately, the blank wafer. And then they start processing all of the rest of that process on top of it. Therefore, we don't have to work through all those challenging integration issues that we would have for something where MST gets deposited in the middle. So today I talked about a couple of applications we're looking at for DRAM that would be wafer-based products where we're shipping them the wafer. I mean, obviously, we won't be wafer manufacturers, but we would help them with a solution that would go right in the wafer. RFSOI are solutions that are wafer-based products, and also our gallium nitride, our GAN solutions are wafer-based products. So we've talked about it before. We're excited about those because they're easier to integrate, and therefore, we think faster time-to-revenue solutions. okay great uh here's another one can you please explain more about power saving in ai than how mst can help achieve that yeah so it's a lot of ways i just showed you the um the gate all around transistor so fundamentally in uh in semiconductor manufacturing like that, if you can bring a performance improvement, you could also probably trade that off to get lower power if you chose to do so. So that's one way. Another way is with our power solutions, like on our BCD products or our trench fed products or our GaN products. Those are targeted for the type of electronics that will be developed that go into an AI data center. to help lower the power in the racks. So I'll give you one industry dynamic that we're tracking in AI data centers. They have historically used the 12 volt power supply on the rack, but recently the industry is moving away from 12 volts and they're moving to 48 volts because 48 volts is four times more efficient That's saving power when you're providing power to the racks for all of those servers. The 48-volt power supplies use a lot of trench-fed devices. That's the primary device that they use in there. And so we are trying to offer solutions for trench-fed so we can help to address that. The other thing is gallium nitride is obviously a very power-efficient device. uh, devices, those of you who have the small power supplies that go into your, uh, backpack or, or suitcase, like they weren't able to do before you understand that those are much more efficient. And that's why we're trying to engage in gallium nitride. Mike Bishop | Investor Relations: Interesting. Thank you. Okay. Um, can you give us an update on, uh, your JDA one and JDA two? Scott Bebo | President and CEO: Yeah. So, uh, JDA1 and JDA2, JDA1, I have to be careful that I'm not kind of divulging too much about what they're working on, but, you know, we continue to be working with JDA1, and I'm hopeful that some of the technologies that I talked about today will kick them into high gear. in a business unit to kind of move that forward towards a production development effort like we've been waiting for, honestly, for a little bit too long. JDA2 is one of the customers that is currently running wafers with us. And so I can't say too much about exactly where they are right now, but they're running wafers. Mike Bishop | Investor Relations: Great. Great. And going back to the gate all around, is MST being evaluated at the customer's fab at this point? Scott Bebo | President and CEO: Yeah, so we mentioned that we're working with one gate all around customer today who helped us. So when I showed that structure and I showed that we had to do deposits inside there, You really need to work with someone to get access to those wafers, to try out things on those structures. And the good news is we have been working with one of the gate all around potential customers to evaluate MST today. So yes, we are in one of them. I hope to be in all four of them. Mike Bishop | Investor Relations: Okay. And when do you expect, you know, an evaluation to be completed of, of the waivers? Scott Bebo | President and CEO: uh for gate all around or yeah for for gate all around ah okay for gate all around uh it's very hard to say with some of the customers we uh you know we're planning our visit to show them all this data that we have we believe that the data that we have is good enough that they may not even require us to do deposition inside their gate all around structure because we've proven that we can physically do it. And then what we'd be trying to do is to convince those customers to install MST in their fabs and have their R&D team take over and start implementing this. How fast that will happen is hard to say, but I will say the people that are working on Gait all around are working very fast. And if they adopt, they're going to be pushing us as hard as we've ever been pushed by a customer in the past. Mike Bishop | Investor Relations: OK, great. And just one last question here is on how MST can help or improve quantum computing. Scott Bebo | President and CEO: Uh, you know, it's interesting. That's something we're working on right now. I don't really, I can't really talk about the, uh, the way that our MST technology will, will address quantum, but I can tell you that's something we're working very hard on right now. Uh, in the past we had a theory about MST's ability to, um, improve the, the, uh, purity and availability at a cheaper price of silicon 28 which is a critical wafer type that's used for uh quantum wells but we yeah that really just didn't pan out so we're we're uh working on other technologies right now and i hope to be able to talk to you guys about that later this year thank you and scott you can uh proceed with with any closing comments All right. Well, I guess, thanks. I want to just thank you all for joining us to hear the progress being made here at Atomera. Continue to look for our news articles and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop, who will be happy to follow up. Thanks again for your support, and we look forward to our next update call. Mike Bishop | Investor Relations: Thank you. This concludes the Atom Air fourth quarter conference call. jsPDF 3.0.3 D:20260609232101-00'00'

NASDAQ:ATOM Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Mike Bishop | Investor Relations: Hello, everyone, and welcome to Adam Ayer's third quarter 2025 update call. I'd like to remind everyone that this call and webinar are being recorded and a replay will be available on Adam Ayer's IR website for one year. I'm Mike Bishop with the company's investor relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in a listen-only mode. We will open with prepared remarks from Scott Bebo, Atomera's President and CEO, and Frank Lorenzio, Atomera's CFO. Then we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the Events and Presentations section of our Investor Relations page on our website. Before we begin, I would like to remind everyone that during today's call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factor section of our filings with the Securities and Exchange Commission, specifically in the company's end report on Form 10-K filed with the SEC on March 4th, 2025. except as otherwise required by federal securities laws. Atom Air disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, I'd like to turn the call over to our President and CEO, Scott Bebo. Go ahead, Scott. Scott Bebo | President and CEO: Thanks a lot, Mike, and good afternoon, all. This has been a quarter of both challenge and validation. one that underscores the reality of bringing a new material technology to market and the opportunities that come when you solve fundamental problems for the semiconductor industry. I'll start by addressing our update with SE Microelectronics, then depart from our regular format to review the broader picture, the momentum we're building with new customers and the different market opportunities that Atomer's technology is being used to address. As many of you have seen in our announcement, our work with SU Microelectronics on their smart power platform reached an inflection point this quarter. During this program, we were tackling a very difficult performance trade-off for their 200 millimeter platform. We achieved what we set out to do, significant performance improvements in key device metrics. However, that higher performance came with a corresponding reduction in device lifetime, often referred to as reliability, which failed to meet all of ST's specifications. Over many months, our two teams worked closely to resolve this trade-off. Then ST, as part of a reshaping of its manufacturing footprint, announced they would discontinue development on 200 millimeter wafers to focus exclusively on 300 millimeter for the next generation BCD110 platform. At about the same time, Adam Ayer discovered a new MST implementation validated through our TCAD simulations that doubled our performance improvement without the associated reduction in device lifetime. In other words, we found a way around the trade-off, an improvement only made possible by using MST. Over the last few months, ST validated our findings for the new implementation. However, because this new version required a device architecture change that would take multiple learning cycles to validate, they determined that they could not incorporate it and still meet their aggressive BCD 110 launch schedule. Therefore, ST informed us that they will take BCD 110 to market without MST, and currently they have no plan for a future variant that includes it. That means we no longer have a line of sight to royalty revenue at ST for this particular program. While that outcome is certainly disappointing, there are several important positives I want to emphasize. First, at STMicro, we demonstrated significant performance gains and proved MST's integration capability inside a tier one production fab. Second, we've now developed a very high performance solution that eliminates the performance reliability trade-off, which is a significant new differentiator for us going forward. One that we are already actively discussing with other players in this market. And third, ST has reiterated their intent to continue working with us in other technology areas where MST could add value. Under their license with us, they continue to run experiments across several different businesses. This chapter with ST underscores that moving a new material into mass production is rarely linear. The learning from this effort gives us a stronger foundation as we engage with others in the same power market segment, including with a very large existing customer and even a new engagement that began this past quarter. Customers are now evaluating MST for power devices between 5 and 48 volts. It's important to keep in perspective that ST is only one of many large customers we're working with today to take MST into production in the power area. We also have three other very active technology focus areas. In the gate all around space, there are three large competitors and one that's still emerging. We're working with or in discussions with all three of them. I mean, all four of them. In the DRAM space, there are three large manufacturers and we are engaged with two of them right now and have a good relationship with the third. In the RFSOI area, we're doing integration work with four different fabs and a fabless player right now with many of them running wafers. So you can see that we have no lack of opportunities across several different segments. Indeed, during the last three months, we processed a record number of wafers for our customers. When we look at all these opportunities, it's helpful to understand how we prioritize our business in terms of revenue potential. The first being the fastest time to market, second being the highest return on investment, and the third being breakthrough long-term growth. One of the fastest ways to get Atomera's technology to market is through applications which use MST deposited on top of the starting wafer rather than inserted into the middle of the manufacturing line. There are many reasons why this can accelerate revenue. First, customers can simply acquire an MST starting wafer and run it through their standard production flow with very few process modifications for an easy experiment. They don't have to install MST, deal with the complications of wafers being transferred in and out of their fab, make major changes to their process to integrate it, or complete a license agreement. The price of MST can be built into the cost of the starting wafer, which gives Atomera the same revenue, but the customer will not view the cost as a royalty. And it's certainly faster to get MST starting wafers qualified than something integrated into the middle of the process. Today, we use MST starting wafers in our work in RFSOI, in GAN, and possibly soon in next generation DRAM. we actively seek out these implementations because of the relatively easier integration and shorter path to revenue. The second set of applications have enormous revenue potential, but the development process can be more demanding because MSD is inserted into the middle of a complex set of production steps. It is worth it though, because the upside represents a massive return on investment, including in the areas of data around logic, DRAM, power devices, and other memory products. One design win here will ensure the future success of the company. And as I mentioned earlier, we have at least six or seven of those efforts underway today. In GATE All-Around and Advanced Memory, our partnership with a leading capital equipment company announced earlier this year is showcasing our competence at advanced nodes. Using their test infrastructure, we've been able to validate MST's ability to reduce contact resistance, improve channel reliability, and be deposited in the tiny structures of nanosheet transistors. We are very excited by the deep cooperation and customer interest generated through this partnership. This quarter will be hitting the road on joint visits with our customers to persuade them that issues in the manufacturing process can be solved using MST. The weight of our partners endorsement cannot be overstated. Finally, we have an abundance of new breakthrough materials enabled by MST under development in the background through commercial partnerships and university collaborations. For many of them, we've already filed fundamental patents and we're now in the process of making prototypes and understanding their capabilities. This is the type of program, for instance, which launched our GAN work. We have a dozen similar initiatives in early investigation, several of which might become near-term disruptive technology announcements in areas like quantum computing, AI server power, high bandwidth memory architectures, piezoelectric devices, optical networking, and a variety of other areas which have the potential to enable entirely new applications. Farming out the early R&D whenever possible allows Atomera's core team to keep a laser focus on the nearer-term revenue opportunities and apply more resources only when we see the potential of these innovations coming to fruition. Our gallium nitride initiative continues to deliver exciting progress. In collaboration with Sandia National Labs, we're in the process of completing device fabrication to highlight our improved electrical performance. Prior results have confirmed MST's ability to enhance GAN growth on silicon substrates, a major barrier for high-volume production, and have garnered interest from our first commercial customers. We hope to release a complete dataset publicly later this year, which will be the precursor to a full-scale rollout. As we continue our GAN work with Sandia, they are now seeking to expand the areas of R&D engagement on a range of Atomera technologies, corresponding to their highest priority development areas. The semiconductor industry is clearly entering a new materials innovation cycle. Across logic, memory, power, and RF, engineers are hitting the limits of conventional scaling. They're searching for material solutions that can boost performance, improve reliability, and reduce variability, exactly where MSD delivers value. This is particularly true in AI infrastructure and data centers. where the demand for power efficiency and thermal management is driving renewed focus on device-level innovation, which MST can deliver. One of our principal challenges is to ensure that potential customers know about MST, and that is why I'm so excited to welcome Wei Na as our new VP of Sales. Wei has had experience growing a semiconductor technology licensing business, very much like Atomera, from scratch. selling to the exact same customers we are addressing, and we believe his leadership will help us both grow sales and convert existing opportunities into licenses. Our priorities remain clear. Emphasize MSD starting wafer products like RFSOI and existing engagements to get to production and revenue as quickly as possible. Two, leverage our strategic OEM partnership to advance active engagements in gate all-around logic memory, and power through our comprehensive silicon test results and early licenses. Three, bring MST for GAN technology to a customer-ready stage with shareable electrical data. And four, maintain fiscal discipline as we transition from R&D validation and integration to revenue-generating licenses. Our mission hasn't changed. It's to enable better, faster, and more efficient semiconductors through advanced materials engineering. That mission remains as relevant as ever. I want to thank our employees, our customers, and our shareholders for their continued confidence and support. Every quarter, we move closer to the point where MST's impact will be felt across multiple product lines and foundries worldwide. With that, I'll turn the call over to our CFO, Frank Lorenzio, to review our financials. Frank Lorenzio | Chief Financial Officer: Thanks, Scott. At the close of the market today, we issued a press release announcing our results for the third quarter of 2025. Our summary financials are shown on this slide. Our gap net loss for the third quarter of 2025 was $5.6 million, or 17 cents per share, compared to a net loss of $4.6 million, which was also 17 cents per share in Q3 of last year. Gap operating expenses in the third quarter of this year were $5.7 million, an increase of $857,000 from $4.8 million in Q3 of 2024. This was due to a $544,000 increase in R&D expenses, reflecting both higher outsourced device fabrication work and increased compensation expenses, and a $353,000 increase in G&A expenses, primarily consisting of higher stock compensation expense. Sales and marketing expenses were basically flat. Non-GAAP net loss in Q3 2025 was $4.4 million compared to a loss of $3.9 million in Q3 of last year due to a $423,000 increase in non-GAAP operating expense, primarily reflecting the higher R&D expenses I just discussed. Stock compensation expense, which is the main difference between GAAP and non-GAAP operating expenses, was $1.3 million in Q3 of 2025 and $907,000 in Q3 2024. The increase in stock compensation expense, which is non-cash, reflects the adoption of performance-based RSUs or PSUs for executive equity-based compensation in March of last year. PSUs vest over three years rather than four years, as is the case for time-based RSUs. However, PSUs will only vest if we deliver shareholder returns that meet minimum targets relative to the Russell 2000 Index. Sequentially, Q3 2025 non-GAAP net loss of $4.4 million compares to a $4 million net loss in Q2, primarily due to higher R&D expenses. Our balance of cash and cash equivalents as of September 30th, 2025 was $20.3 million compared to $22 million as of June 30, 2025. We used $3.4 million of cash in operating activities during Q3 compared to 3.5 million in the second quarter of this year. During Q2, sorry, during Q3, we raised approximately $2 million under our ATM facility net of commissions and expenses by selling approximately 393,000 shares at an average price of $5.23. Since the end of the quarter, we've raised an additional $836,000 from sales of approximately 171,000 shares at an average price of $5.03. As of today's date, we have 31.7 million shares outstanding. In Q4, we expect to recognize between $75,000 and $125,000 of NRE revenue from wafer shipments to customers running the demos that Scott mentioned in his remarks. Those shipments and the associated revenue recognition will happen in Q4 as well as into next year. Gross margin was negative this quarter because a portion of the cost for MST deposition on those wafers was incurred during this quarter, but the revenue will be recognized as we ship the wafers going forward. Moving to expenses, I expect our non-GAAP operating expense for the full year 2025 to be in the range of 17 and a quarter to 17 and a half million dollars. Sales and marketing expenses ticked up last quarter in connection with recruiting for both sales and marketing leadership roles. The compensation expenses associated with those roles are built into our plan. Our recruiting efforts have started to pay off with the hiring of Wei Na as our VP of sales. With that, I'll turn the call back over to Scott for a few summary remarks before we open the call up to questions. Scott? Scott Bebo | President and CEO: Sorry, a little trouble with the Zoom controls here. Thanks, Frank. Across all of our technology focus areas, we have strong developments underway with the leaders of the industry. I hope today we've given you a sense of our wide and deep potential to deliver important material solutions that will ultimately make Atomera a financially successful technology provider across many different semiconductor segments. I appreciate you taking the journey with us. Mike, we will now take questions. Mike Bishop | Investor Relations: All right. Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the Zoom window. Then feel free to type in your question. I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button and we may call on you to ask your question live. Right now, our first question comes from Richard Shannon of Craig Helm. Richard, if you would kindly unmute and you may begin. Richard Shannon | Analyst, Craig-Hallum: All right, great. Hopefully, am I muted here, Mike? You got it. Thanks. All right, excellent. Thanks, Scott. Frankfurt, let me ask a few questions here. Scott, maybe let's do a redux on STMicro. So I guess my first question here is, so it sounds like you did a new design on 300 millimeters that you validated in your simulations, but there would have been multiple cycles of learning to validate for ST. So is that trying to match your simulation to, you know, the real world and to their simulations to make sure that it worked and that cycle time was just too much, uh, to fit within their timeframe and getting to 300 millimeter. Is that the kind of the dynamic here that led them to their decision? Scott Bebo | President and CEO: Yeah. So first of all, the work, the, uh, the new implementation we came up with, uh, would have worked on 200 millimeter or 300 millimeter. Um, um, And actually, if you let me digress one second here, Richard, because I've gotten a number of questions that have come in where people were asking, you know, when did you know about this trade-off between the reliability and performance? Every time you do a development, it's about trade-offs. you're doing a trade-off on one thing. I mean, you get, that's why we always talk about cycles of learning. You get some big improvement in one area, it breaks something else. And then you have to go in and you have to work to fix the other thing and try to get to a point where it's all balanced out. So this trade-off work that we were doing is not at all unusual. It's what we do with every customer all the time. What is unusual is that because they made the transition from 200 to 300, we lost the ability to bring in that ultimate solution and get it done for them in time. Because the 300 delayed their development efforts and then they needed to get into production fast. And so they just didn't have time to run the validation runs to get our new thing proven out. I'm not sure that answered your whole question. Let me know. Richard Shannon | Analyst, Craig-Hallum: You know, I guess the point here is that it sounded like they were confident that this solved not only the performance, but the reliability issue that you discovered in 200 millimeter. And it was just the timeframe that was too tight for them to want to continue right now. Scott Bebo | President and CEO: Yeah, that's right. Originally you asked about the simulation work. So we do simulation based on what we believe a customer's process needs manufacturing processes, but that's usually very secretive. They don't give anybody that information exactly. We can make our best approximation. And so we made a TCAD simulation that showed, yeah, we really got this great improvement. And we gave it to them in this summer. And then they spent the next two months running their own simulations. Their simulations are very exact to their own manufacturing process. And so what they did was they put in all the improvements we saw, we proposed, and they came back and they said, you know what, when we run our simulation, it also brings that level of improvement. So ultimately, I mean, the good news here is that they confirmed it. It makes us feel very confident to bring it out into the market as a new product. And it also makes us confident that at some point in time, we're hopeful we can re-engage with SD on that particular product and have them uh you know take it forward and make it put it into their uh process Richard Shannon | Analyst, Craig-Hallum: All right, fair enough. Let me follow up on one other comment you made related to STMicro and then we'll move on to some other topics here. So what seems obvious and you just commented on is the ability to take some of the learnings from the process with ST and take it to other customers in the power space here. What have you been able to do so far? Can you use similar kind of structures that you've built with ST and use those with other power customers? Maybe just kind of give us a sense of the benefits you can see from the situation. Scott Bebo | President and CEO: Yeah. Sorry. Exactly. So what we did with ST, there's a technique in architecture that the industry has known about for some time, but it hasn't been implementable. When someone builds it, it causes too many things to break, and nobody's ever been able to get it to work. But because of the way MST works, because of the way it prevents dopants from diffusing uncontrollably, we believed that we could get that process to work so this is not like something no one's ever heard of it's it's something that one of those theoretical things that no one has been able to get work working well and now we can get it to work well and so yeah it's we're not taking anything from like any proprietary st information this is like a standard tech design technique that we can suddenly make work because of mst and so yeah we can take that out to other customers and they kind of understand the concept immediately Richard Shannon | Analyst, Craig-Hallum: All right, fair enough. Let's move on here. The last number of quarters, you've talked about transformative customers here. And unless I missed something, you didn't use naturally use that phrase here today in your prepared remarks. But I think you did mention a large demo run, which I think refers to one of them. And I think it's also contributing to some of the revenues this year. I will ask a question of Frank on the revenue side here in a second here, but maybe it's kind of detail where we're sitting with the transformative customers. And I do want to hit on one specific point that I had a question on actually asked Mike Bishop offline early today. And he said to ask this question of you, which is you've talked about. two or maybe three of these customers i want to make sure how many we're talking about and which ones are still ongoing versus any ones that may be stalled so if you can if you can enumerate that first and then discuss uh what's going on with this large demonstration you talked about last quarter and i think you briefly mentioned today that would be great okay yeah uh i know everybody is frustrated with the code words and i am too but we so in Scott Bebo | President and CEO: In January or February, we unfortunately had to announce that one customer that we had called transformative had discontinued our, we were negotiating a deal and they had backed out of the deal. And that customer, we continue to have good relations with them. We talk with them regularly, but we are not on an active engagement with that customer right now. In that same call, which I think was early, was in February, we mentioned two new transformative customers that were getting underway. And yes, we are working very actively with them. When we talked about a record number of wafers that we're processing, it includes those two customers that we called transformative back then. And so... Now, today, I mentioned these four different segments and how we're working with a lot of customers. And then I broke it down by revenue potential. And the folks in the middle, folks that are doing gate all around, folks that are doing DRAM, the really big players who are doing power and other memory architectures, they are all massive. And they're all customers that I would call transformative and So we're working with more than just those two that I mentioned on the call. Richard Shannon | Analyst, Craig-Hallum: More than just the two that you would refer to as transformative? Is that what you're saying, Scott? Yeah. Scott Bebo | President and CEO: To discontinue the term transformative, these two customers I spoke about as transformative in February are just very, very large revenue potential customers with very big processes that we hope to get going on. But we're also working with other customers who are also very large and have the potential to be transformative. Richard Shannon | Analyst, Craig-Hallum: Okay. Well, let's talk about the specific transformative customer you talked about last quarter that you're doing a large demo run here. What's the update on what's going there? And is that leading to at least some contribution to the revenues you're guiding to this quarter? Scott Bebo | President and CEO: Yes. Maybe I'll let Frank answer that. But so one of the there's some trickiness about about when we book revenues. And so we have a lot of customers, the revenue that we're putting out this quarter is based on several customers. I can't answer whether that specific one is, is in Q3 or it will be in the guidance that Frank gave for Q4, but it's, but it's, you know, we're getting revenue from wafer runs with that customer. Frank Lorenzio | Chief Financial Officer: Yeah, that's right. I mean, the revenue guidance actually covers multiple customers, three different customers, and it's spaced out over time. And while I don't like to... show negative gross margin, the timing issue gives a little bit more visibility in the sense that we do a bunch of the deposition work, which is when we incur the costs of our tools, the metrology, and the labor associated with it. And oftentimes, these can get matched up pretty quickly with the revenue because it's a small number of wafer runs. And that's been true in the past. But we've been talking now for a couple of calls that we've been working with a very large customer on the largest wafer run that we've ever done. And we also have other customers. So now what you're seeing is we do a lot of that work. We don't ship all of those wafers out. We don't necessarily do all the deposition because the nature of these engagements is it can be iterative. You may do some wafers for setup. You run a series of tests, the customer validates those, you get some feedback, you then do another run with slightly different conditions, either, you know, on the MST or how the customer processes it with implants and things of that nature. So you can get, you know, a lot of activity in one quarter and then the wafers will ship out, you know, over time. And, you know, one of the challenges in sort of giving guidance is it isn't set in a schedule of we're going to ship, you know, 25 wafers this month and 25 wafers two months after that. Sometimes it really depends on what the customer learns in the process of evaluating that, setting up a new set of experiments, and then we ship out more. So yeah, there's multiple customers here, and these are important engagements in different application areas. Richard Shannon | Analyst, Craig-Hallum: Okay. All right, that's helpful, Frank. I'll probably follow up with you a little later on that one. Maybe two more questions, I will jump out of line here. First of all, Scott, in your prepared remarks here, and I'm sure we'll review these in detail when the transfer comes out here, but you talked about kind of segmenting your opportunity based on where in the stack your MST is applied here, and you're talking about on top of the wafer versus somewhere in the middle. Certainly, it's layers in the middle, or I think it's fairly understood, especially for me who's not a device guy per se, that that's very complicated, but vice versa, if you can apply just on the top, That seems to be a much simpler process, which also implies it might be an area whereby which you might expect to see or hope to see your first license here just from a time to market perspective. So two questions for you is, I think I miss the applications areas that that specifically applied for. And B, would you agree that that's a very... a somewhat likely or very likely situation by which you first reach, first, you know, manufacturing, licensing, commercial production? Scott Bebo | President and CEO: Yeah. So first of all, yeah, you're right about being deposited on top of the wafer makes it much easier. The applications that we specifically spoke about that do that is RFSOI and gallium nitride and also In the future, we have some ideas on next generation DRAM that could use it. So one thing to understand very briefly is when we deposit MST in the bottom layer, it has to be on a process that doesn't use incredibly high heat for long periods of time. So if, if we deposited if it was on a MST starting wafer, and then someone put the wafer into an annealing step that was 1100 degrees for an hour, then that would really damage the MST itself, and it wouldn't work. So the only time we use MST on the starting on the start of a wafer is on manufacturing processes are going to be lower temperature. And there's a lot of those, like RFSOI is run at very low temperatures. The new gate all around lys processes, they're trying to run them at very low temperatures. So in theory, MST could be on the base, on the starting wafer for those. Gallium nitride, we put MST on bottom before it grows the gallium nitride on top of it. That one isn't quite as low temperature, but it doesn't matter. The MST still works as a starting wafer. So I think... A layman might say, well, why don't you just do every process as a starting wafer if it's much easier and faster time to revenue? Well, it has to fit a certain dynamic, which has to do with this temperature range. You had a second half of your question and I've talked all this time and forgotten it. Richard Shannon | Analyst, Craig-Hallum: You hit the applications. I think you've answered most of it. So I think that's very helpful. Last question for me, I'll jump out of line. You talked about this large capital equipment partner. And I think today you mentioned about going on a roadshow here. Maybe just kind of give us a sense of how broad the engagements are with this company. I think in the past you've mentioned too, I don't know if that was the limit or there were more you just didn't mention, but how do we understand the scope and breadth of your interaction with customers through or with them? Scott Bebo | President and CEO: Okay, so the stated aim of our partnership is in the gate all around market. And that was what we announced in our press release. However, I have to say that there's great value in this partner working with us in everything. And there's value in us working with them in everything. So we have talked to them a lot and done some work on DRAM as well. So basically, yeah, I would say our primary focus right now is gate all around and DRAM. And when we go out on the road, that's who we'll be really targeting most closely. Richard Shannon | Analyst, Craig-Hallum: OK, fair enough. That makes sense. I will jump on the line, guys. Thank you. Mike Bishop | Investor Relations: OK, thanks, Richard. A number of questions have come in on the Q&A line, and I will aggregate them and ask some of the more common ones. So first one is about the gate all around projects and when, you know, there's a number of current projects underway that are expected to launch soon. And how many years do you expect the target process you are currently collaborating on to enter production? Scott Bebo | President and CEO: Yeah. So first of all, working with a few different customers, so there might be a different answer for each customer. In general, The guys working on GATE all around, the great news is it's amazing working with them because they have armies of people working on this stuff, lots and lots of resources to test out your material. And the bad news on that is that they come back with a ton of requests for more information and more testing. But they're almost always working towards some kind of a launch that you would be built into. Some of them, I would say the the majority are looking at a launch that's still a few years out. There's some of them that are actually looking at using MST to improve yield on processes that are in production today. I can't exactly say, well, if or how long it would take to get into production on those processes, but my guess is if they integrated MST, they would have to do some qualification work on it. But if it did indeed improve their yield, which I think is what the majority of them are looking at for the current timing processes, they would try to move it into production very quickly. As long as it didn't break anything in the specifications of their production wafers, they would have every incentive to get it into production as soon as possible to improve yield. Mike Bishop | Investor Relations: All right. In the past, you've talked about JDA1 and the Fabless RF licensee. Have you been doing wafer runs for those? And what do those results look like? Scott Bebo | President and CEO: Yeah. So the answer is yes, we are doing wafer runs with them. Unfortunately, we don't have the results yet. I can't really commit that I'll be able to give you results from each customer. But generally, what happens is when the results come out, that's the timing when we'll be able to start driving towards licenses and transitions to production. Generally speaking, we have a number of different customers with wafers underway right now. None of them are coming out in the next few months. I would say we might have some coming out at the end of the year, but more likely into the first quarter before we'd start seeing a lot of results from those runs. Mike Bishop | Investor Relations: Okay. And one for Frank. So the InSize partnership for GAN testing, can you talk about the economics there of who's paying for the runs or for the testing? You shed a little light on that. Frank Lorenzio | Chief Financial Officer: Yeah. I mean, at this stage, this is a... an arrangement with RFN says where we're each bearing our own costs and we'll, you know, hopefully achieve a result that would lead us to some, you know, further activity. But right now it's, you know, we're not paying them to run testing, nor are they, you know, paying us for wafers. So it's, you know, it's early stage. And I think our hope right now would be to generate good RF data because that's something notoriously difficult. RF testing is complex. It's not something that we can typically do ourselves. So a lot of the work on RF SOI that we can do is kind of physical characteristics of, you know, our film. But when you get into, you know, some of the testing of actual devices on, you know, kind of RF feed, different figures of merit, then those are more specialized tests. And so getting more insight into that is very helpful from a marketing standpoint. And, you know, our view is, you know, there's some question on, you know, work with soy tech and wafer based products. The more information that we have to market to, you know, the ultimate customers of RFSOI devices, you know, the better it is in terms of building a relationship with SoyTech, who's a wafer manufacturer. So, you know, the more end demand that they see, the closer the collaboration is with us. So I kind of see it as a means to an end there. Mike Bishop | Investor Relations: Okay. And then, Scott, going back to a topic we've touched on in the past, but is there an update on JDA2? Scott Bebo | President and CEO: JDA2 is running way first with us. And they're one of the ones that I talked about that we, you know, we'd hope to get some results at the beginning of the year and hopefully see if we can turn that into a license and then plan to go to production. Mike Bishop | Investor Relations: Okay. And then with regard to the STM news, we had a number of questions on Disclosure Channel. And can you talk about, you know, why you chose to put the news out on a blog post? Scott Bebo | President and CEO: Yeah. Um, yeah. And we, we, we went back and forth on that. So I just want to be clear, you know, we, we were in discussions with, uh, with ST all through, um, you know, August, September, and into October about, about implementing this new, uh, uh, version of new architecture we had. and moving forward on 300 millimeter. And we were waiting to find out from them what the plan was, when that work would start, when they planned that it would be tried to take it to production. And it was really just a week and a half ago that we had a call with them. And that's when they told us that they did not have a plan in place to use MST to do that new architecture. So immediately after that call, we got off the phone and we started talking about, okay, we have an earnings call in a week and a half, but it seems too long to wait for a week and a half before we notify investors. And so on the following Monday, we actually started speaking with ST to make sure that when we disclose this, we would be following their internal guidelines on what we could say and couldn't say. And then on Tuesday, we put out the blog post. We could have put out a press release, but press releases tend to be, at least in our opinion, much more black and white about news that you're giving. In this case, we see it as a much more nuanced message. STU is telling us we don't have a plan to use you guys on this next run. Yeah, very bad news because I know all the investors want to know when the royalties will start flowing, and so do we. But they didn't say they'll never use us. And they also reassured us again and again that they are continuing work using our technology on other projects. on other process areas. So we felt that using a blog would allow us to give a little more nuance than a press release. And we know that the channels of communication that we have with a blog, we push it immediately out to all of our investors that are at least registered with us. And so we felt it was a good channel of communication in this particular case. And the most important thing to us was to get it out there as soon as we can within the restrictions of making sure we were working everything out with ST and so forth. Mike Bishop | Investor Relations: All right, thanks. And one more question here. Is there any chance of government funding now that Atomair has been working with Sandia for a while? Scott Bebo | President and CEO: You know, I talked a little bit on this call, which I've never done much about in the past, about all of the different R&D efforts that we have underway. And You know, many of them are, as I mentioned, through academia, through outside commercial partners so that we don't have to burden our internal team with too much of it. But Sandia is very interested in many of those technologies, and they have government programs that are interested in implementing things that would use those. So, yes, there's a lot of interest through Sandia. And we also continue to work with the government and with the CHIPS Act, infrastructure such as it is to see what we can do to kind of deliver some of our technology in through that channel and get some near-term revenue that way as well. Mike Bishop | Investor Relations: Okay. Thank you, Scott. At this time, we'll turn the call to Scott for closing comments. Scott Bebo | President and CEO: Oh, gee, thanks, Mike. Okay. Yeah, thanks for joining us and listening to our progress that we've been making here at Atomera. Next month, we'll be attending the Craig Hallam Alpha Select Conference in New York, and we look forward to seeing some of you there if you'll also be attending. Please continue to look for our news articles and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop, who'll be happy to follow up. Thanks again for your support, and we look forward to our next update call. Mike Bishop | Investor Relations: Thank you. This concludes the conference call. jsPDF 3.0.3 D:20260606085956-00'00'

NASDAQ:ATOM Q2 2025 Earnings Call Transcript Generated on 6/6/2026 spk00: Hello, everyone, and welcome to Adam Ayers' second quarter 2025 update call. I'd like to remind everyone that this call and webinar are being recorded, and a replay will be available on Adam Ayers' IR website for one year. I'm Mike Bishop with the company's investor relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in the listen-only mode. We will open with prepared remarks from Scott Bebo, Atom Air's president and CEO, and Frank Florencio, Atom Air's CFO. Then we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the events and presentations section of our investor relations page on our website. Before we begin, I would like to remind everyone that during today's call, we will make forward-looking statements. These forward statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factor section of our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 10-K filed with the SEC on March 4, 2025. Except as otherwise required by federal securities laws, Atom Air disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G, Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, I would like to turn the call over to our President and CEO, Scott Vivo. Go ahead, Scott. spk02: Thanks, Mike. Right now, there are a number of macro factors in the semiconductor industry that are in favor of our product initiatives. For this reason, wafer activity at Atomera and customers is currently running at a much higher level than we typically experience, which reflects the number of ions Atomera has in the fire. On today's call, I'd like to give you a flavor of our activity and how new applications of MST are driving our business. Let me start with a review of our work with licensees. A few months ago, SCMicro announced a new initiative to reshape their manufacturing footprint to 300mm silicon production. It was not entirely clear to us how this would affect the smart power segment. Originally, the first BCD110 process with MST was to launch using 200mm wafers, and later the process would be ported to 300mm. We just heard recently, as part of their reshaping initiative, that ST has changed plans and decided to go directly to 300 millimeter, which will delay the rollout of BCD 110 with MST. We do not have a revised schedule, but it's now clear that we will not enter process qualification in 2025. While the delay is disappointing, ST's ambitions for advanced BCD are definitely very aggressive, targeting a significantly higher 300mm wafer capacity at full belt out than we initially expected. We are very excited by the revenue potential represented by those numbers. The move to 300mm wafers is logical since they are fundamentally less expensive than 200mm, which hopefully should assist adoption. As mentioned on our last call, ST has continued to support the adoption of MST and multiple other applications, with more BU's expressing new interest this past quarter as well. We've reached a new high watermark on customer wafer runs at both our facility and our customers' fabs. Many of our licensees are in the process of doing demo runs with us that we hope would lead to production decisions. And during the last quarter, we were able to deliver to them new insights into incremental improvements they can get with MST. Let me provide a few updates on some important customers. At JDA1, meetings with a new senior level management team in conjunction with support from our capital equipment partner, makes us believe that the wafers we are working on for them will drive a decision to use MST in a new application. Both JDA2 and our Fabless licensee are in the process of doing wafer runs with us. We believe these will be critical in reaching a production decision once they've been able to test the final devices. At our foundry licensee, we are currently in a TCAT exercise to define our next steps as well. Two calls ago, I spoke about a couple new, potentially transformative customers we had started working with. Each of these customers is now running wafers with MST, one in a large-scale demo plan encompassing two business units, and the other engaged on multiple wafer runs to test out different MST applications. Several other customers are in various stages of investigating MST for their products as well. As I said at the beginning of the call, our team is very busy right now, and this is a real positive for our future business. A substantial part of our activity is targeting the advanced gate-all-around and DRAM areas where our source drain diffusion blocking capabilities are particularly interesting, but by no means the only solution we are offering. In these new nodes, everyone is focused on yields, and MST is a tool that can help improve yields. In the power area, our ability to simulate different architectures and integration techniques using TCAD and our own internally developed AI tools has allowed us to propose solutions to customers which we do not believe are possible to implement without MST and have led to potential breakthrough levels of performance. Our work with Sandia and other partners on gallium nitride is making great progress. This past quarter, we've come to understand Even better, how MST can benefit GAN devices, causing us to expand our focus from exclusively GAN for power to also include GAN for RF. To accelerate this work, during the last quarter, we announced a strategic collaboration with Insize, a well-recognized and respected RF test house. They will help us characterize this technology in terms that the market will appreciate, making it easier for designers to translate our process changes to RF electrical spec improvements. We believe RF will be an important growth area for GAN in the future, and several potential customers have already stepped forward expressing an interest in our work. Finally, in RF SOI, we have expanded our offerings to also include the key devices for low-noise amplifiers, or LNAs. I'd like to take a few minutes to give some background on why this LNA offering is so important. Historically, we've worked with RF SOI customers primarily on RF power switches. Last year, many of those customers started asking if we could help improve LNAs in their mobile phone front-end products. LNAs are the technology used by cellular phones to receive and amplify small signals. There are a number of reasons why LNAs need further improvement at this time. Carrier aggregation was introduced in LTE Advanced to increase peak data rates and network capacity by combining multiple spectrum chunks, or component carriers, into a single data channel. Manufacturers have been aggregating up to four carriers, but in the future we expect to see six carriers, which means that more LNAs must be turned on to receive these signals, significantly increasing power consumption. New frequency bands associated with the evolution of 5G and 6G cellular are also driving the need for more active LNAs. The net result is that to bring features that customers are demanding for new phones to market, a solution to lower LNA power consumption must be found. That's where MST comes in. We took existing MST RFSOI transistor components silicon test data, and then use TCAD to re-optimize implants for the LNA devices. We determined that MSD can significantly improve the performance of LNAs by lowering the circuit bias current, and hence the power consumption. We believe based on market reaction, we have started promoting this capability just at the right time. Recently, we presented our findings at an RF technical conference and it has generated lots of inbound interest. Indeed, during the last few months, we've worked with several different RFSOI manufacturers to start new wafer runs using our partner, Soitec's special ultra-thin RFSOI wafers to prove out those LNA benefits. We'll be working hard to shore up this evidence with more data to entice customers to take it to market quickly. What is particularly exciting is that we can provide this LNA benefit in addition to the power switch benefit on RF front ends with a single deposition of MSD on a wafer. So our customer can get two much-needed solutions for the cost of one, which should make it even more attractive. We expect that this type of high-visibility solution with end-customer pull should go to market more quickly than a general performance improvement. I'm always impressed by the amazingly high levels of creativity and innovation demonstrated by Atomera employees across many diverse fields. And today I've spoken about some of the solutions we found for industry problems. You can also measure this innovation by the number of patents we file and have approved. This past quarter, our tally of issued and pending patents exceeded 400, which is quite a milestone for a company of our size. We are definitely punching above our weight. In the last month, we also joined the National Semiconductor Technology Center, which has a goal of extending U.S. leadership in semiconductor technology. There, we expect to provide important contributions, but also benefit from the NSTC focus on reducing the time and cost to prototype new semiconductor technologies like the ones Atomair is bringing to market. We believe this organization will help create the ecosystem necessary to continue the advancement of Moore's Law. Finally, I'll just reiterate how many active engagements we have underway at Atomera and how we feel on the brink of several of them turning into commercial agreements. The team is working hard. Indeed, we are looking to hire several additional team members, but morale is high and we're excited to see our innovations getting into production. When that happens, we continue to believe that Adam Miller will see increased adoption rates and shorter time to market as competitors race to catch up with those who are already using MST to get market advantage. We are working hard to make that day come as soon as possible. Now, Frank will review our financials. spk03: Thank you, Scott. At the close of the market today, we issued a press release announcing our results for the second quarter of 2025. Our summary financials are shown on this slide. Our gap net loss for the second quarter of 2025 was $5 million, or 17 cents per share, compared to a net loss of $4.4 million in Q2 of last year, which was 16 cents per share. GAAP operating expenses in the second quarter of this year were $5.2 million, which was an increase of $565,000 from $4.6 million in Q2 2024. The increase in OPEX was due to a $415,000 increase in R&D expenses, reflecting both higher outsourced device fabrication work and increased payroll costs, and a $215,000 increase in G&A expense, primarily due to higher payroll costs. These were partly offset by a decline in sales and marketing expense due to lower headcount. Non-GAAP net loss in Q2 2025 was $4 million, compared to a loss of $3.6 million in Q2 of last year, due to a $275,000 increase in non-GAAP OPEX, reflecting the same factors I just discussed. Stock compensation expense, which is the main difference between GAAP and non-GAAP operating expenses, was $1.3 million in Q2 2025 and $1 million in Q2 2024. Sequentially, Q2 2025 non-GAAP net loss of $4 million compares to a $4.4 million loss in Q1. primarily due to lower payroll expenses reflecting lower headcount in sales and marketing, as well as 401k timing issues. Our balance of cash and cash equivalents as of June 30, 2025, was $22 million, compared to $24.1 million as of March 31st. We used $3.5 million of cash in operating activities during Q2 compared to $4.8 million in the first quarter. The first quarter of every year has higher cash outweighs for items that are expensed throughout the year. During Q2, we raised approximately $800,000 under our ATM facility, net of commissions and expenses of filing our shelf registration. by selling approximately 185,000 shares at an average price of $5.21. Since the end of the quarter, we've raised an additional $2 million from sales of approximately 392,000 shares at an average price of $5.23, putting our current cash balance higher than at the end of Q2, which will allow us to be selective in accessing the market going forward. For Q3, we expect to recognize a small amount of NRE revenue from wafer shipments to our faultless licensee and to the customer running a large-scale demo that Scott mentioned in his remarks. Timing of that revenue will depend on when wafers are shipped out to those customers. Given FST's shift to rolling out BCD 110 only on 300 millimeter wafers, we do not expect that milestone payments for process qualification will happen until next year. Moving to expenses, on our last call, I narrowed our expected range of non-GAAP OPEX for 2025 to a range of $17.25 to $17.75 million. I'm maintaining that guidance, though we are tracking to the low end of the range. We've spread our outsourced fabrication work over multiple vendors to enable us to address the range of technology areas we're working on, and this spending should trend back to our prior spending levels with TSI Semiconductor. We're also making solid progress in adding new leadership in sales and marketing and bolstering our engineering staff to support our unprecedented level of customer activity. With that, we'll turn the call back over to Scott for a few summary remarks before we open the call up for questions. Scott? spk02: Thanks, Frank. Today, Atomera is offering the market several innovative solutions to problems that are difficult to solve without MST. I believe we're in a better position than ever to enable new capabilities for today's challenging electronic devices. With the amount of engagements we have today with top semiconductor manufacturers, it's only a matter of time before that effort turns into the commercial success that will make Atomera a semiconductor technology licensing powerhouse. I appreciate your support as we work hard to turn this vision into a reality. Mike, we can now take questions. spk00: Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the Zoom window. Then feel free to type in your question. I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the Raise Hand button, and we may call on you to ask your question live. And right now, our first question comes from Richard Shannon of Craig Hallam. Richard, you may go ahead. spk01: Great. Thanks, Mark. And thanks, Scott and Frank, for letting me ask a few questions here. I guess I'll ask the first one on STMicro. Certainly a disappointment to see this delay, but obviously a need for STMicro here. I guess my first question is, to what degree is the work you've done with the material millimeter will be useful and be leveraged to 300 millimeter, or to what degree do we have to kind of restart things? Frank, in his comments, said something about not expecting a milestone payment this year, but next year. So it doesn't sound like it's necessarily two years, initial two years, but maybe characterize that somehow, please. spk02: Yeah, I think it's important to know that – When we started working with STMicro, they had to learn a lot of things. They had to learn how to deposit MST using EPI and get that working really well and looking very good, and then the manufacturability efforts they've been going through and trying to figure out how to deposit it at, you know, faster speeds so that they can have higher throughput in production. All of that work is – is useful for going to 300 millimeter as well. So at this point, STMicro is an expert on depositing MST, analyzing the results, figuring out how to optimize throughput with that. Manufacturability in general, I should say. On the other side, there's the integration work that has to happen with MST. That's also work that kind of started fresh at the beginning of the contract, and we've done a number of different wafer iterations with them. where they've simulated the MST and then run it and got the electrical results. And at this point, they're quite good at that as well. So I don't think it's at all, I mean, I should say, I think they have got a lot of learnings under their belt that will help them move to 300 millimeter relatively quickly and painlessly. Now, there are some impediments to moving to 300 millimeter. They have to put MST on a 300 millimeter tool. In the past, they've had it installed on 200 millimeter tools, and so they have to obtain that, get it done, and then tune that up, and then be ready to stop making wafers with it. And then I'm sure they're making other changes to the BCD110 technology when they're moving to 300 millimeter, and there will be some integration changes that have to happen, but nothing close to the amount that they were having to do when they started from scratch at the beginning. So, yeah, I'm hopeful that we can move pretty quickly. spk01: Okay, but just to be clear, Frank's comments were about expecting the milestone payments next year. That sounds like a fairly high level of confidence in that statement. Is that accurate, Seth? spk02: Well, I feel confident. I mean, what I can tell you is that we have shown ST some performance levels that I think would be you know, very, very compelling for them to take to production next year in this 300. And so I think they're going to move as fast as they can to make that happen. And, yeah, I think it'll – Yeah, I hesitate to make any kind of a statement about when they will get into process qualification, because I'm restricted on that. But I don't if they can get access to the 30 millimeter tool. And by the way, we have 300 millimeter tools, and we've offered to them already that we can do the work of depositing on wafers until they have it ready. And if they can do all that quickly, then I think yes, we we have a chance of doing that. You know, relatively quickly. spk01: Okay. Fair enough. Thanks for that detail here. Maybe another question related to STMicro, which is, as we have sort of expected in the years we've been covering you, getting to that first licensee who's committed to it and perfecting it and taking it to production is obviously the really hard move here. and a lot of companies are risk-averse and would rather see somebody else do that first. To what degree have you had conversations in the two years since you announced this partnership with STMicro to move what seemed like a pretty far down the road here with them so far? Have you had any other conversations with potential engagements saying, as soon as you get that done with STMicro, we're willing to go forward? spk02: Yeah, I think – People don't say it quite as explicitly as that, Richard, but they say things that are similar to that all the time. And it's definitely true that since we started working with ST and people can see we were getting very close to the end, we've had others that have kind of joined in and said, yeah, okay, we've got to do this as well. So you're talking about kind of the domino effect that I've been talking about for a long time. Once we get with one guy, we'll get with others. And we've seen real evidence of that in the past, yes. spk01: Okay, fair enough. Scott, I would love for you to maybe restate and describe a little bit more about this dynamic with one of the transformative customers. I didn't catch the language you mentioned about two – where did I put it here? Two large-scale demos with two different business units and different applications. Maybe explain or restate that and explain a little bit more about what's going on. spk02: Yeah, so we – I think in the call in February – I mentioned that we had two new customers who are put in the category of transformative. If they can get to production with us, it will be a very, very significant event. So one of them is doing a very large demo run, the biggest we've ever done, meaning more wafers, more different splits and things that they're trying to test out. And that's fantastic. If they're doing a lot of wafers, what that means is they can get – they can get a lot of cycles of learning. So you take a certain subset of those wafers and you run some tests, and even maybe before you get, you may not even have to wait until those wafers come out at the end before you start running new tests. So if you have a big pile of wafers at your disposal, you can keep doing those and get more and more cycles of learning in a shorter period of time. And so that's what they're planning to do. So we're excited about that. And they're also doing the same type of thing with two different business units at the same time. So, yeah, both very exciting. spk01: Okay. When do you expect, you know, you know, I don't know, some sort of conclusion about how successful these runs have been. Maybe we'll hear it on the next call or just take a little bit longer. I know some of these sweepers can take much longer. spk02: I think it'll take longer than the next call. We're doing the runs right now. We probably – I think maybe we might see first results if everything goes really well by the end of the year. And then, you know, these things are frequently iterative, so we don't know if they'll get those first results and say, okay, we've got to do another one because we, you know – We need to try something different. But, yeah, I'm hopeful that they'll get something relatively quickly. And it's not like we're just starting from fresh, either. We've been working with these guys for some time on a TCAD level, and so they've got simulations, and we think we're guiding them in a path that will make them successful pretty quickly. Okay. Fair enough. Yeah, the other transformative customer you asked about also with them, they also are, they're working on multiple wafer runs in multiple different application areas. So definitely different than the first, it's an entirely different area that they're in. And we've proposed a number of things they could do with MST. And so they're trying out a few of them. And so That's pretty exciting as well, and we're giving them a lot of support. spk01: Okay. Sounds great. We'll look forward to more updates there. Scott, let me ask about something I think we talked about in the last call about this unnamed equipment vendor partner that you've been working with. And I think specifically you mentioned, I think it's related to JDA1, where they've been helping you there. Maybe just talk a little bit more broadly about what kind of engagements you've been working on with them. And I'm not sure if I – I don't think I asked this last quarter of you, but what kind of application areas are we talking about here? Is this leading edge, wireless, or RF, or just any way you can characterize where they're focused with you? spk02: Okay, so a number of questions there, which I'll be happy to dive into. So first of all, the applications areas. We announced a strategic partnership with them – for gate-all-around devices. And so that's where ostensibly the focus was supposed to be. But now that we're getting deeply involved with them, it's natural that we're kind of expanding into other areas because once you start talking to someone about trying to, you know, work on a customer and you need help, you can pull them in. to help you in a number of different ways. But the strategic collaboration is around GATE all around, okay? So I think the first part of your question was how is that going? Is that right? spk01: Yes, yeah, and maybe describe the breadth of the engagements in any way. spk02: Yeah, so shortly after our announcement, we started having management-level meetings with them to talk about exactly – How do we want to try to focus on addressing this segment? We've done a lot of work in that area, so it isn't like we're starting from ground zero. As a matter of fact, we've done some work with them. They've also done a lot of work. And so we defined a number of different areas where we're going to work together to develop the test data that's necessary to really convince customers to use this and to take it to production. And we're doing a lot of work with them, since then. As a matter of fact, we have weekly meetings and constant updates to what we're working on and how the progress there is going. Separately, we're also talking with their executive management about kind of customer relationship type of engagements, like who do we need to talk to at what customers? How can we jointly go in there and offer a better solution together than we could separately? And so those discussions are underway. We've had a few meetings with customers. I hope to have a lot more as we come out of the kind of summer slow season. spk01: Fair enough. Let me ask one question of Frank, and I'll jump out of line here. Frank, I think you mentioned for your OPEX guidance that you're keeping the same but kind of angling towards the low end here, yet you're talking about a number of hires here. Maybe, A, can you kind of describe some of the needs here from an OPEX point of view, especially, I guess, more on the engineering side, what do you need there? And then does this extrapolate into a noticeable or meaningful growth as we look into calendar 26? spk03: Yeah, I think that the reason I'm kind of keeping the guidance where it was but also talking about new hires is really just on the timing. We're into the second half of the year. You know, obviously when our VP of marketing left, that wasn't anticipated, and we had, you know, planned on adding an additional headcount in sales and marketing. So now we're sort of, you know, still doing that and backfilling that person who left. And so those are two hires that were kind of planned, you know, from the beginning, and now we've sort of spent less in the first part of the year, and we'll kind of trend back to that. You know, in engineering, this is just consistent with the amount of customer activity that we have. You know, some of the folks that are supporting, you know, our customers, you know, Our, you know, the teams are a little bit lacking in depth on the bench. And so we just, you know, we're kind of overwhelmed with the work that we need to do. And so we need to add there. But I wouldn't read into that to say that we're going to, you know, you can draw a line there and that we'd continue to grow, you know, in years going forward. I think this is really just, you know, catching up to the demand and on the sales and marketing side, we're really backfilling on positions that we used to have full if you sort of turn the clock back a year ago. spk01: Got it. Okay. That is helpful, Frank, and that's all for me, guys. Thank you. Thanks, Richard. spk00: Thank you, Richard. And some questions coming in on the Q&A chat here, Scott and Frank. spk02: um the first one is do you anticipate other existing customers moving from moving on from current 200 work and instead focusing on 300 million um yeah i don't i wouldn't say uh it's necessarily an industry-wide trend it's not a bad trend for us i think it uh the Setback with ST is primarily because we had initially started doing work in 200 and are going to transition to 300. But I would say for the majority of our customers today, we start working on 300 from the beginning. Our technology works perfectly fine in both of them. And, yeah, I would say the threat that some of our others move from 200 to 300 is relatively low. spk00: And, you know, you mentioned to Richard a little bit about, you know, the hoarding of MST to 300 millimeters at ST. Is that a heavy lift to move? Or, you know, can you talk a little bit more about or expand on what you said to Richard about moving? spk02: Yeah, I don't think – so as I always explain to Richard, there's two pieces to the – to the move one piece is changing is moving the epi side which i really don't think is a is a heavy lift from an engineering perspective now the challenge there is that you need to have a tool that you can convert over to run mst And so for some people who don't have a tool that can be an impediment, you know, I'm not going to comment on ST's capability, but they're a very big company with lots of resources. And so if they could get a 300-millimeter tool, they could convert it over very quickly to be able to run MST, and their EPI engineers are already fully trained. On the other side, the integration – Again, I don't think it's a heavy lift. They understand MST. They know how it works. They know how to integrate it into their devices. The only question there is whether they're planning some other changes to the 300 millimeter that we need to make some changes to MST to react to. I'm not sure what's happening there. This is kind of all new and new information, and we will – but I don't – on balance, I would say – these guys understand what they need to do and there's no major impediments. spk00: Great. Thank you. And can you provide, and you touched on this a little bit with Richard, but can you provide an update on the collaboration with the equipment partner that was announced last quarter? And are you seeing synergies from the partnerships and specifically in GATE all around? spk02: Yeah, I mean, we're already getting some benefit from, so first thing, that we did with this partner after the announcement was to get together and start thinking about what customers do we want to go after and what are the key applications that need, that the customers are looking for and how can MST help in those. We did identify a prioritized list of application areas that we wanted to address, some of which I would say the most important ones we were already working on, but then there are some others they raised that we hadn't really started too much work on. The good news is we immediately set out to create an engineering plan where we would do the testing and process development to be able to test those things out and give the data to the customers so we can win the customers. So I think that's been something we've already done quite a bit of work on and will continue to. That's going to be the long-term trend of how a partnership works here. And on the other side, we need to do more on the business side. I think the business side is lagging a little bit, the technical development, which is natural because we need to have the kind of the data to do a marketing pitch to a customer, and we're working on that together. But I think very soon we'll start to do a lot more at the kind of senior level customer relationship. spk00: Great. Thank you. And given the explosive demand for data centers, what's the market demand for MST, SPX, and what are Atomair's plans to capitalize on the trend? spk02: Yeah, I mean, everything we're doing in power, which is MST-SVX and gallium nitride, all the gallium nitride power work we're doing is definitely well targeted at the data center. And both of those technologies will help to seriously reduce power consumption, make our customers' power products much more efficient, and we think that's a big opportunity. We also – I may have mentioned this on an earlier phone call, but we have some early stage work on 48-volt power devices, which is – what the new AI data centers are moving to as the standard for the rack power supply voltage. And we think we might be able to provide some real benefits to the trench vets that are used to make those type of devices. And so, you know, we're talking to a number of customers about that now as well. Great. spk00: Thank you. And here's another question. They'd like an update on the progress of contract discussions with memory customers for DRAM and high bandwidth memory. And any recent patents seem to suggest you're proposing a new memory architecture interconnect architecture. So he asks if he's curious if this is part of a process to create new IP for memory device structures beyond MST. spk02: So first part of the question about the contract, so we won't comment on, you know, contract discussions until we actually have a contract closed. So I'll probably pass on that part of the question. But, you know, the second part, Yes, we're constantly looking at important market needs and then trying to figure out how to create IP to take advantage of those needs. So if we figure out a Customer has some demand, and MST can help to support that. The first thing we do internally is we do some development efforts and try to come up with a solution, and then we patent that solution, and then we bring it out to the market and start pitching it to customers. And so... If you really go in and analyze our data, you can see some of the ways that we've looked at different markets. In this case, you're asking about the memory market. We have been offering solutions in the memory market for sense amps for several years. We also have some of the same technologies that are advantageous for gate all around. We'll also be advantageous for some of the new the newest DRAM nodes that are coming out. We also have some technology around new architectures that are either enabled by MST or are just great ideas in general that we may have patented. And all of those are things that we'll be out marketing to the customers in the future. And I don't know if you want to add anything to that, Frank, but spk03: No, no, I think that you've covered it. I mean, there are a number of recent patents, both on specifically MST-enabled solutions for DRAM that we've been talking to customers about for a while, and there are a set of patents. new technologies that we have patented. You know, those do offer, you know, potential other revenue streams in the future beyond just sort of the MST film, but that's very early days. And it's important in those kinds of technologies to get the patents completely filed and issued before we'd be ready to talk to customers because, you know, In our business model, what's the real kind of core IP for us is the MST film. But when we start getting out into other kind of architectural type patents, you really need to have those completely filed and issued before you talk to customers. So, you know, the person asking the question is right to sort of focus on the patents. I think that's important, but that's more of a future activity. spk00: Okay, thanks. Another question. Does becoming an official member of the NSTC increase the possibility of receiving CHIPS Act subsidies? spk03: I think the answer is yes, but one of the primary reasons for it is not necessarily the chips act directly in terms of getting direct funding on it. One of the issues that you face in our business is when we had TSI Semiconductor, it was great because we could run a lot of test chips, but it was on a very old technology, 180 nanometers. Now that we see that we're working with a lot more kind of advanced transistor structures, gate all around, DRAM, et cetera, one of the biggest challenges that we have is finding places where we can affordably test MST on those kinds of structures. And historically, there have been very few labs, and access to them is extremely expensive. With NSTC, and particularly in the current phase of the CHIPS Act, which is more around R&D and prototyping of new materials and new devices, our hope is that we will get access to... more testing and metrology that's required to test MST on those kind of structures. That being said, it also puts you much more in the conversation of where – it does give you a look at where there are funding opportunities coming up that we could apply for. So I do think it increases the chances of getting chipset subsidy, but I think indirectly the ability to get access to prototyping and those kinds of services is almost more important. spk00: All right. Well, thanks, Frank. Scott, at this point, we'll turn the call back to you for closing comments. spk02: All right. Well, thanks. Thanks, Mike. And thank you all for joining us to hear the progress being made at Atomera. Please continue to look for our news, articles, and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop. We'll be happy to follow up. Thanks again for your support, and we look forward to our next update call. spk00: Thank you. This concludes the Atomera conference call. jsPDF 3.0.3 D:20260606085958-00'00'