Navitas Semiconductor Aktie

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Navitas Semiconductor Q1 2026 Earnings Call. [Operator Instructions].

It is now my pleasure to turn the call over to Leanne Sievers. You may begin.

Good afternoon, and welcome to Navitas Semiconductor's First Quarter 2026 Financial Results Conference Call. Joining us today are Navitas President and CEO, Chris Allexandre; and CFO, Tonya Stevens.

I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10-Q for its quarter ended March 31, 2026. In addition, management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995.

Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, May 5, 2026. Navitas assumes no obligation to update these projections in the future as market conditions may or may not change, except to the extent required by applicable law.

Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Navitas website at www.navitassemi.com.

Now it's my pleasure to turn over the call to Navitas President and CEO. Chris, please go ahead.

Good afternoon, and welcome to everyone on the call and webcast. We appreciate you joining us on today's call. I'm pleased to report that Q1 is reflecting another quarter of solid progress and growing momentum on our transformation to Navitas 2.0, highlighted by the company's return to top line sequential growth.

For those of you that may be new or still coming up to speed on our story, I want to begin with a brief high-level summary of our ongoing strategic transformation and Navitas 2.0 vision. Over the past 2 quarters, we have meaningfully reaccelerated our pivot away from the company's historical mobile and low-end consumer business to focus the entire organization on high-power markets, where Navitas GaN and high-voltage SiC products can deliver long-term differentiation and value.

Today, we are singularly focused on 4 high-growth, high-value market segments, AI data center, energy and grid infrastructure, performance computing and industrial electrification. Our go-forward objectives are to rapidly achieve scale in these higher-value markets in support of driving sustainable and profitable growth.

Turning to an overview of the quarter. Our Q1 financial results demonstrated solid quarter-over-quarter improvement, and we observed growing momentum across our high-power markets and expanded customer engagement. Highlighting the quarter, we achieved the expected return to growth in Q1 with revenue increasing 18% sequentially. The renewed growth was driven by our high-power markets, which also represented a growing and larger majority of total revenue as we continue to reduce reliance on the company's historical mobile and consumer business.

Although far too early to declare victory, we effectively completed our realignment of the entire organization, and Navitas is back to growth, driven by our high-power markets. In fact, revenue from our high-power business grew 25% year-over-year with all 4 of our high-power end markets increasing sequentially in Q1.

The increased contribution from high-power market also drove a favorable mix in our overall revenue mix, resulting in improved Q1 gross margin. Consistent with our previously communicated expectation, we anticipate continued sequential top line growth and gradual gross margin expansion throughout '26. The ultimate success of our strategic transformation continues to be grounded in 4 pillars: market focus, technology leadership, operational efficiency and financial discipline.

With respect to market focus, we continue to see new technology adoption accelerating across multiple end markets and customers, both of which are increasingly driving towards GaN and high-voltage SiC solutions. Without question, AI is the primary catalyst driving this momentum and leading to the broadening adoption of high-power solutions across all 4 of our target end markets.

Collectively, this market represents a serviceable addressable market of $3.5 billion by 2030, split roughly 50-50 between GaN and high-voltage SiC with combined CAGR exceeding 60%. We are definitely focused on the largest portion of the TAM, which I'd like to refer as the AI infrastructure comprised of unique but related growth opportunity across the AI data center and the grid and energy infrastructure, each of which are fundamental to enabling the AI evolution.

Today, the aggressive increase in compute power density is accelerating GaN and SiC adoption in data centers, while the required modernization of the energy green infrastructure to support these data centers is driving increased need for high-voltage SiC. It is uniquely positioned as one of the very few companies that can claim deep long-term experience in both GaN and high-voltage SiC technologies.

We're also agnostic and readily offer customers the ability to choose the optimal solution for their application architecture. As a result of our proven capability in both SiC and GaN, we believe it allows us to address more of the power chain and ultimately capture with content per system.

Briefly providing the trends and opportunities specific to each of our 4 targeted end markets, starting with AI data centers. As a technology leader in both GaN and SiC power delivery, we support all major AI data center architectures with industry-leading power density and efficiency. Again, having both technology is a strategic differentiator and our ability to fully support a given customers' chosen approach translate into more opportunities across more applications and greater potential lower content for Navitas.

As conveyed at the recent NVIDIA GTC event in March, AI data center is rapidly evolving towards a HVDC architectures, leading to expanding content opportunity driven by the need for exponential power levels, increased density and top-tier efficiency. Our immediate focus remains on expanding sampling of our newest GaN and SiC product, enabling qualifications, preparing for scale ramp and supporting hyperscalers and OEM customers in their ongoing design and development efforts, spanning from AC-DC PSUs and DC-DC PSUs and affordable HVDC brick designs at higher power level capacity.

In grid infrastructure, we continue to advance active engagement across a series of new and existing customers with notable acceleration in design activity in the United States. AI remains a prominent underlying catalyst as all industry participants increasingly acknowledge the existing energy grid is not capable of supporting the projected future rollout of AI deployment. This market where technology and scale are equally important, represent a large and long-term secular growth opportunity for our current and future high-voltage SiC products.

Navitas GeneSiC technology position us as a leading enabler of the grid and energy infrastructure modernization efforts, providing customers with more reliable and higher density power through our recently introduced 2.3 kV and 3.3 kV modules and a road map to even higher voltage.

In performance computing, we are seeing sustained healthy adoption of GaN in higher power chargers solution for high-end laptops and mobile workstations used for gaming and AI development. Our opportunity in this market continues to be driven by the dramatic increase in power requirements with CPU moving from 15 to 30 watt to 45 to 80 watts in ultra-end AI notebooks with the integration of GPU requiring up to 120, 175 watts. As a result, we expect to benefit from growing demand and momentum in performance computing market application throughout '26 and beyond.

Finally, in industrial electrification, we are continuing to see customer traction in both GaN and ultra-high voltage SiC in high-performance applications such as DC-DC converter and megawatt chargers, industrial pump, motor control and heavy equipment electrification.

With respect to our second pillar, technology leadership, we remain fully committed to ongoing innovation in GaN and high-voltage SiC driven by focused R&D investments and demonstrated by expanding customer engagement and co-development projects. On GaN, we have continued to accelerate sampling of our 100-volt and 650-volt devices to more OEMs and ODMs. Customers pursuing the 80-volt HVDC architect today are testing GaN, and we believe most are doing testing with magnetized devices.

We are focused on enabling and supporting customers in this transition from silicon to GaN like we have always successfully done in our past. More recently, we have seen some customer internal reality, system-level testing on our newest GaN devices. During the first quarter, we continue to deepen our collaboration with OEM, ODM and hyperscalers, including demonstration of enabling new GaN architecture that feature high power efficiency and reability, which is leveraging Navitas's more than 10 years of GaN experience and expertise.

One of those highlights was our recent release of a 20-kilowatt 800-volt to 6-volt DC-DC platform using our latest 8x8 60-volt GaNFast test aiming at 97.5% efficiency. This platform solution was formally unveiled in March at GDC and showcased at NVIDIA MGX. As a reminder, we also previously released an industry-leading 800-volt to 50-volt AI DC-DC power fully GaN, 60 Volt and 100 Volt, delivering best-in-class efficiency and density. This respective platform are generating strong interest and prospective customer engagement due to their demonstrated ability to deliver the highest power density, efficiency and performance for next-generation AI data center architecture.

Today, our team remain focused on execution, including product delivery, qualification and preparation of targeting growth for GaN-based 800-volt HVDC architecture in 2027. On high-voltage stitch, we continue to strengthen our technology with a focus on high power density and ability, which represent both the primary market drivers and our key differentiators in terms of silicon and packaging.

Following the introduction earlier this year of our new industry-leading Gen 5 GeneSiC technology based on our patented French-assisted planer architecture. In March, we released our 1.2 kV Gen 5 SiC product tailored in packages to address the higher power density DCDC and ACDC unit in PSU application. We have since delivered samples to OEM and ODF, and they are currently being evaluated by most PSU vendors. Initial customer feedback has been excellent with report up to 50% increase in power density and greater than 98% system efficiency and improved cool.

Turning to operational efficiency. The prior restructuring action initiated late last year, which I discussed in detail last quarter, have been substantially complete. As previously mentioned, today, the entire organization and its resource are fully aligned to focus on the high-power market. This represents a substantial strategic repositioning from where the company was just 9 months ago.

Our team is moving fast and working very hard and their collective mitigation is impressive. Recognizing the tremendous opportunities ahead, we plan to continue adding selective engineering skills and competencies to accelerate customer support over the coming quarters. Also during the quarter, we completed our leadership transformation with the appointment of our new CFO, Tonya Stevens, who formally joined the team in late March.

We now have the full leadership team in place, including new leaders in operations, engineering execution, sales and marketing, business units and finance, all of whom joined the company in recent weeks and months from larger companies with strong track record in execution and scale. Importantly, this new appointed team and our employees have demonstrated strong buying and excitement for Navitas 2.0, and it's a privilege to lead this transformation alongside each other.

We also continue to make progress on our strategic technology and foundry partnership with GlobalFoundries non-GaN. We are confident this will enable our planned 8-inch pivot in 2027 for GaN manufacturing in the United States. At the same time, we are starting to build appropriate buffers with TSMC to ensure a smooth transition for all existing customers. Additionally, we have begun actively scaling our supply chain to support upcoming growth and demand, and we are leveraging AI internally across design and most of the functions to allow us to scale even faster.

Our fourth pillar is financial discipline, which we are committed to as we execute our scale-up plan and transformation to Navitas 2.0, a consistently growing and profitable high-power company. This includes remaining diligent with respect to prioritizing our investment in high-power program, maintaining leverage OpEx and focusing on high-margin, long-term engagement that build multinational customer relationships. We made significant progress in Q1 with our previous restructuring effort and full mine towards high power market now substantially complete. Going forward, we'll continue to drive efficiency across the organization and are committed to disciplined investments in the business, even as we target a much larger market opportunity.

Our focus remains on top line growth and margin expansion, driven by improving scale and mix of our high-power business in support of achieving long-term profitability. In summary, I am very pleased with the continuous progress and great momentum we have achieved in such a short period of time. We're taking further steps towards positioning Navitas as a high-power company. We anticipate continued sequential revenue growth in the second quarter and throughout the rest of '26.

Q1 was the first clear proof point and the growth in high-power market demonstrate the momentum of our Navitas 2.0 strategy. We also anticipate gross margin to steadily improve as volume growth drive better fixed cost absorption and our revenue mix increasingly favors the high-power business. Mobile contribution will continue to diminish this quarter and become insignificant by year-end. At that time, we expect our business and revenue will be defined almost entirely by high-power market, a transformation that positions us well for sustainable long-term growth and profitability.

Before I turn the call over to review our financials, I'd like to take this moment to welcome Tonya Stevens, our newly appointed CFO. I'm thrilled to have her join our executive team. She brings over 30 years of exceptional track record of financial leadership in the semiconductor industry, most recently at Lattice Semiconductor. I look forward to her valuable contribution as we grow the business and scale our operations to a larger, financially disciplined and profitable company.

With that, I'll pass the call to Tonya to introduce herself and review our first quarter financials and second quarter outlook.

Thank you, Chris. Before reviewing the financials, I would like to take a moment to introduce myself and share my motivations for joining Navitas. My corporate finance career spans more than 30 years and began with 7 years in public accounting. I've since spent the majority of my career in the semiconductor industry, including 17 years at Intel in Corporate Finance and the last 7 years at Lattice Semiconductor as Chief Accounting Officer and previously Interim CFO.

I'm incredibly excited to join Navitas for several reasons. The team is comprised of extremely talented and capable leaders and individuals who are laser-focused on executing the company's strategic objectives in a rapidly advancing and high-velocity environment. Together with its compelling technology portfolio, the company represents a pure-play GaN and SiC opportunity to scale up and capitalize on the substantial AI-driven secular growth in high-power markets. It's a privilege to be part of the Navitas leadership team, and I look forward to meeting many of you that I haven't met already over the coming weeks and months.

With that said, I will now review the financial results for the first quarter of 2026 and then discuss our outlook for the second quarter. Please note, unless otherwise indicated, I will focus my comments on non-GAAP results. A detailed reconciliation of all non-GAAP to GAAP financial measures can be found in our press release published earlier today.

Revenue in the first quarter of 2026 exceeded the high end of guidance, increasing 18% sequentially to $8.6 million on a GAAP basis. This compares to revenue of $7.3 million in the fourth quarter and $14.0 million in the first quarter of 2025. As Chris highlighted, the return to sequential growth was driven by high-power markets, which grew approximately 35% from the first quarter 2025 and now represents a large majority of total revenue as the company continues to reduce its reliance on historical revenue contribution from mobile and low-end consumer business. Notably, we expect high-power markets to continue driving sequential growth throughout 2026.

The higher quarterly revenue and improved revenue mix drove a 30 basis point expansion in gross margin, which improved to 39.0% from 38.7% in the prior quarter and 38.1% in the first quarter of 2025. The shifting mix of total revenue toward higher value, high-power markets and away from mobile and low-end consumer is key to our gross margin expansion strategy. We expect sustained gradual improvements in gross margin throughout the coming year.

Operating expenses for the first quarter were $15.0 million compared to $14.9 million in the prior quarter and $17.2 million in the same quarter a year ago. Operating expenses for the quarter reflect our commitment to focused and disciplined spending, particularly in SG&A, which created the opportunity to invest more in R&D projects quarter-over-quarter in support of our strategic pivot to Navitas 2.0 while keeping total operating expenses flat.

Loss from operations for the first quarter was $11.7 million compared to a loss of $12.1 million in the prior quarter and $11.8 million in the first quarter of 2025. In Q1, diluted shares outstanding was approximately $230 million, resulting in Q1 loss per share of $0.04 compared to $0.05 loss in the prior quarter.

Turning to the balance sheet. Cash and cash equivalents at the end of the first quarter 2026 were $221 million compared to $237 million at the end of the fourth quarter, and the company continues to have no outstanding debt. With respect to inventory, we ended the first quarter with $14.9 million compared to $13.3 million at year-end. The sequential increase in inventory primarily reflects our measured investment to support future anticipated revenue growth.

With respect to channel and distributor inventory, as a result of previous streamlining actions taken during the latter part of last year, we now have a significantly healthier channel inventory profile. Going forward, we are committed to disciplined monitoring and management of these inventories to ensure we are well positioned to respond quickly to end market demand. Overall, the balance sheet remains very strong and provides the company with an extensive amount of liquidity as well as ample flexibility in terms of working capital to execute our strategic objectives and anticipated growth.

Moving to guidance for the second quarter of 2026. Consistent with the company's previous communications, we expect continued sequential growth with revenue increasing to $10.0 million, plus or minus $0.5 million. At the midpoint, this represents over 16% sequential growth compared to the first quarter of 2026. Non-GAAP gross margin is expected to be 39.25%, plus or minus 75 basis points, which at the midpoint represents a 25 basis point increase, primarily reflecting the ongoing shift in revenue mix toward higher power markets.

Non-GAAP operating expenses are expected to remain approximately flat sequentially between $14.5 million to $15.5 million as we continue to emphasize disciplined cost management. Moving forward, we may choose to selectively invest in OpEx to accelerate growth at a fraction of the rate of revenue growth.

That concludes our formal remarks. Operator, please open the call for questions.

[Operator Instructions]. Our first question comes from the line of Tristan Gerra with Baird.

I know it's still probably a bit early, but would you be able to talk about the dollar content that we could expect per rack for silicon carbide on the first-generation 800-volt architecture? Then what type of ramp in content should we expect with Kyber for both silicon carbide and GaN?

Tristan, this is Chris. Thanks for the question. If you refer to our prior communication, right, we gave guidance in terms of content per megawatt because that's how the best way to kind of define the content we talked about for GaN in the range of $10,000 to $15,000 per megawatt, really driven by the massive 800-volt HVDC when the DCDC gets inside the rack, as we discussed primarily.

In the ACDC PSU, there is about $5,000 to $8,000 per megawatt, which is coming from both the higher power of those PSUs. If you refer to GTC, right, NVIDIA announced that at the end of the year, the PSUs, the ACDC are going to get to 18.5 kilowatts, which is much higher factor is if we look at the power level from today's PSUs, the ACDCs, which are in the range of 5 to 10 kilowatts to 18.5 kilowatt for NVIDIA, but even 25 to 30 for other hyperscalers, there's a ratio of -- when power goes up by 2, the SiC content goes up by 5. There is a non-linear increase, right? I'm not going to get specific in terms of content because it really depends on the architecture, 1 phase, 3 phase to 3 phase, but refer to the $5,000 to $8,000 of content for the SiC inside the center, which is mostly AC/DC PSUs and the mental model, which I just mentioned, which is when the ADCDC from, let's say, 5 to 10 kilowatts to 18 to 25 to 30 kilowatts, there's about 2.5x content acceleration compared to per rack.

Then for my follow-up, specific to silicon carbide, clearly, pricing has been coming down drastically in '24, '25. Given the ramp that you see, do you expect pricing to stabilize? I know you're going to be in the very high voltage. How different is that pricing dynamic there than in the lower voltage, but also do you expect at some point supply-demand balance in silicon carbide?

We don't participate, as you know, to the low-voltage SiC business in mostly industrial and EV, right? What we see is for inside data center, the ACDC mostly use 1.2 kV and above 65 sometimes and 1.2 kV and above, right? Where the driver today is more speed, reliability and density. Of course, this is a competitive market, and as the hyperscalers are driving more power and more PSUs and more PSUs per rack, there is quite competitive.

Today, what we see is what the customers are pushing us on is how we execute and how we help them to get to the best scalability and the best density of power, which I think save a lot more money at the system level than a cheaper device.

Your next question comes from the line of Madison DePaola with Rosenblatt Securities.

This is Maddie calling on behalf of Kevin Cassidy. You highlighted that GaN and SiC are both playing vital roles in AI power and that you guys are uniquely positioned to win both technologies. I know you mentioned this, but can you provide any more color on how having both capabilities is helping in customer discussions or design win activity in data center over your larger competitors?

Maddie, this is Chris. First of all, I think we focus on the high-power markets, right? We have 4 markets. Each of them have a different flavor of architecture and technology. If I refer to AI data center, it's mostly a GaN and SiC play. If I look at grid infrastructure, it's mostly a SiC play. Of course, high-performance computing is more GaN play and industrial is actually both a SiC and GaN play, right? If you look at the first 2, which is what your question is, right, if you look at the evolution of the architecture, so let's zoom out a little bit, right?

Today, in the current architecture, the traditional architecture is 50-volt bus bar where the voltage from the grid, which is 480, 400-volt ACs convert to 50-volt DC, right? That's mostly use SiC, okay? That's been going forward, right? The first step, and I think I referred to what has been announced at GTC, right? The first step is to the 800 volt is the introduction of 3-phase much higher power, which I referred to in my answer to Tristan. The first phase is most higher power 3-phase AC/DC, right, where you convert the 400-volt, 480-volt AC into 800-volt DC, okay? That's the first phase that's going to start at the end of the year, early next year, right? That on the AC/DC we use mostly SiC.

Now there is a DC-DC conversion to that. If you refer to what NVIDIA announced at GTC, there is a DC-DC top of rack converter, right, at 15 kilowatt for instance, both use either GaN or SiC. I think both is already right there, enabling customers to have a choice depending on the preference. What is very interesting is when you move to the next step, which is the second phase of the 800-volt DC architecture, where you get to, let's call it, high-density rack, megawatt rack will be Kyber for NVIDIA or more other high-density racks for the Googles of this world and the others, right? That's where you move the DC-DC conversion inside the trade inside the rack.

When you do that, you have no choice than to use GaN. Because the level of density, the level of power requirements make it impossible to use silicon, but also silicon carbide doesn't have the switching frequency. That's where you're moving to GaN. The fourth step is when you replace -- that's more on the grid side, when you replace the AC-DC PSU on the side rack basically by SST. If you think about this is a continuum of architecture change and evolution and having more offset to see the [inaudible] should it to be current generation, next generation, next, next generation and how the guys are evolving from current architecture to next phase of into high-voltage, high density, even down the road with the reorganization and the restructuring of the grid.

Our next question comes from the line of Quinn Bolton with Needham & Company.

This is Shadi Mitwalli on for Quinn. My first question is for Chris, but do you have any big picture takeaways from GTC in APAC in March, especially in regard to the direction of GaN versus SiC in 800-volt data centers?

My takeaway was kind of what I just mentioned to Maggie. First of all, we've talked about 800-volt architecture now for more than a year. It's happening. I think NVIDIA was very clear that they see at the end of the year, early next year, this what I call the first phase of the 800-volt HVDC architecture where you basically do the ACDC at a much higher level of power with SiC and then you do a DCDC where you can use Gan and SiC, but also outlining that as you move to next step, the move to much higher density rack is kind of enabling GaN content to move next. That's my takeaway from the GTC is 800 volt is happening.

Now keep in mind that there is -- we talk about NVIDIA here, but there are other hyperscalers. They might have a different path, they might actually go even faster to the next phase where you get the power, the DCDC part enabling directly on the train and in the rack, which will accelerate the GaN adoption. I would say I come out of GTC with a stronger conviction having both makes a huge difference. I think we talked about this before where I said Navitas is uniquely positioned because we have both SiC and GaN. I think it's actually very hard for a supplier to sit at the big table if you either have GaN or if you have a SiC. There's only a handful to not say a very few number of suppliers who have both. That's the key differentiation. That's my takeaway on top of the fact that [inaudible].

Then my follow-up is just on the product landscape for GaN. As you're sampling with hyperscalers, what are some of the key specs that matter most of them when evaluating GaN products? How does your portfolio measure up against those requirements?

What we said before is we've sampled both high voltage, so 650-volt GaN as well as mid-voltage GaN 100 volt. We've done that in different flavors of package, depending on the level of integration and density that the customers are looking. In the last quarter, we mentioned we've done the initial samples, since then, we've now delivered the final samples, which is basically the samples that will go to production. We are working with customers on -- they move from, I'd say, device level testing to board system level testing. The feedback we get is our technology as well as packaging offering is actually adequate to what they're trying to do.

Your next question comes from the line of Richard Shannon with Craig-Hallum Capital Group.

This is Tyler Anderson on for Richard. I was just wondering, could you talk about why customers would want to upgrade transformers that aren't connecting to data centers? Have you heard of any talks within the government to force the upgrade of transformers?

I'll start by the last part of your question. We have no knowledge of any forcing function or requirement for the government to move from traditional transformers to SST. What I would tell you is if you look at -- and I think we've made some slide in the past in our investor package, if you look at the transformers today are very kind of old school, so to speak. They are operating at a low frequency, which is in the 60 Hz. They have limited efficiency, which is less than 95%. They are heavy metal. They are very large and very weak. As you move to an explosion because that's what we're talking about explosion of rollout of AI data center, which basically pull on the grid a lot more energy, you have to install a lot more transformers. That's going to be, at some point, impossible if we keep the convention transformer. The move to SST is a bit of a necessity as we scale up and deploy the hundreds of gigawatts, in the next few years.

The other thing I would refer to is we keep referring to SST, but when we talk about grid and energy, this is going beyond the SST. SST is going to be the last step of evolution. Today, you have much higher level of power of transformers, megawatt converters. You have grid-type solar farms that are being deployed. There's a lot of grid type applications that are being deployed, which we see as a growing driver even in '26 and '27 ahead of the big acceleration of the SST, which will come really in late '27, early '28.

I'm also wondering if there's anything around the switching. I'm seeing something about -- and please, I understand I may be wrong on this or going down the wrong path, correct me if I am. Aluminum conductor steel transformers, I'm seeing things about them wanting to focus on the switching. Would you be able to benefit from that upgrade in the switching?

I mean, yes, you will. I think the grid companies have realized that the only way to make the grid, as I say, compatible with the acceleration of power is really to get to this new form of conversion, less conversion, less steps moving from super high voltage great DC to a form of electronification of the grid for lack of better. I think this will require and isolation transformers basically.

Then have you heard of any conversations around the lack of supply of transformers accelerating anything with your customers?

I have not, but I will not be surprised that the requirement for volume in terms of classic transformers and the dependency on metal and a few other things might actually play also in the expiration of the modernization of the grid.

[Operator Instructions]. Your next question comes from the line of John Tanwanteng with CJS Securities.

This is actually Jeremy on for John. Can you just talk a little bit more about the sequential improvement you're seeing heading into Q2, if that's mostly data center driven and if you're meaningfully ahead of where you thought you were going to be a quarter or 2 ago?

Yes. This is Tonya. Jeremy, so I'll start and let Chris add. Relative to your point in high markets, if you remember in Q4, we talked about high power being the majority for the first time in the company's history, and we talked about it being greater than 50%, mobile being less than 25% and the vast majority of the company last year.

Now in Q1, high power continued to grow. It was a large majority of the company, like you heard us say. Throughout the year, to your point, we expect it to continue to grow as a percent of the company. We exit the year almost an entirely high-power company and that being driven by what you said, the data center and the grid and infra, the AI infrastructure component of that. You saw in our press release and our discussions, high-power grew 35% year-over-year from Q1 of '25 to Q1 of '26, and we expect that growth to accelerate in the second half of '26.

Again, driven by both components, but the key catalyst is that AI component. The momentum is driven by all of the high-power markets, but particularly the AI infrastructure, and that's data center and energy grid.

I add something, Jeremy, thank you for the question. First of all, if you look at Q4 to Q1, when we grew 18%, we said, as Tonya said, that the high-power markets, grew as a percentage of the company, mobile went down. That means that the growth of high power was actually much higher, than 18%, the top line of the company and grew 35% year-over-year. Now we don't break down by markets. We don't -- we referred to kind of high power, but we also said in our script that all markets grew sequentially. As we see, this will continue throughout the year.

Now I'll give you one data point. Tonyia referred to and I referred that also in my script about AI infrastructure. What this means is we are combining within the high power, we're combining data center and grid. The reason why we do that is what I've noticed is the driver of the grid is data center. At the end of the day, you cannot look at AI data center and grid energy as 2 independent markets like computing would be. This is really kind of intertwined. That business grew 50% quarter-over-quarter from Q4 to Q1. That's the only color I'm going to give you.

As the company grew 16% -- sorry, 18% quarter-over-quarter, the combination of data center and grid infrastructure grew 50%. That's stronger than expected. You asked me where I think we were -- we are versus where I thought we're going to be. That's stronger than expected. The reason why it's stronger is that we all see it, it's an acceleration of rollout. We have not seen yet the content going up. I talked about the fact that content is going to go up. The content is going to go up because when you move from a 10-kilowatt PSUs to 18.5 kilowatt PSUs or even a 25 to 30 kilowatt PSUs, the ratio is 2x power leads to 5x content. The stick content and growth is going to accelerate.

Today, what we are seeing is just the growth of AI. Then next year, we're going to see even an acceleration of GaN as power gets -- the DCDC gets inside the rack. I think what we are seeing here with the 50% is that the AI data center is accelerating. I will also tell you, even though we don't guide by market that what we see today for Q2 and as a reminder, we are confident in our guide for Q2. We're seeing that AI infrastructure that grew 50% quarter-over-quarter, Q4 to Q1 is actually going to grow faster. That growth is going to accelerate throughout the year. That's before even the step-up in content.

Yes, I would say we are a bit ahead of where I think we're going to be. I look at Q2 guide with confidence, the benefit of being high power is we have longer visibility. We used to be in mobile where you get -- you're still chasing orders within the quarter. I think the high power market, in particularly data center and grid infrastructure are giving us a much longer visibility. I look at Q2 with confidence. We think, as we said before, that this growth will continue throughout '26.

One last follow-up. Any update on the use of cash this year and next in support of the growth ramp? What are your thoughts on when cash flow breakeven is likely to occur?

Yes. I'll take that one. Coming into Navitas and being new, when you look at the strength of our balance sheet, and I even referenced that in my script, a very strong balance sheet. We have over $221 million in cash and no debt at the company. That gives us a pretty long runway to support our working capital needs and CapEx flexibility. I'm confident we can execute the objectives and the organic plan consistent with what I said in the script.

Again, we remain focused on profitability. Like Chris said, we remain on track and maybe a little ahead of where we thought we would be to profitability. We're very focused on that. Nothing's changed in our thoughts around profitability and in fact, potentially accelerated a bit.

Jeremy, you can make the math. I mean, at today's gross margin, and today's OpEx, it will take us to be in the high 30s from a revenue standpoint to be profitable. Now we're guiding 10% for Q2. We said that we expect that growth to continue throughout the year. There is no reason to believe based on what we just discussed that the momentum that we are seeing in data center, grid infrastructure as well as the other hypermarket will slow down. You can extrapolate that to when we're going to be profitable. I'm not going to guide specific. What I will tell you is when we look at our business, both Tonya, myself and the leadership team is getting to breakeven is a key objective.

We're going to spend what we have to spend to optimize and to drive our growth, but being financially efficient, and make sure that we get to breakeven at some point is a key priority for us.

Your next question comes from the line of Quinn Bolton with Needham & Company.

Welcome Tonya. Great to have you on board. I wanted to follow up, Chris, you mentioned that at least on the 800-volt GaN opportunity, you've kind of moved from device level testing to board level testing. Kind of can you walk us through what the following steps would be to get to final production and sort of the time line if these higher power racks go to production, say, second half of calendar 2027, when do you think those designs would be sort of fully locked down? Did that happen at the end of this year? Or could that continue into 2027 in terms of the testing process?

Thank you, Quinn. You're very consistent asking the same question in the quarter, so I appreciate that. Nothing has changed really. I would change the answer, as you said, depending if you're looking at the first phase of the DC to the second phase. Again, for everybody to understand, the second phase is when the DC-DC conversion gets inside the rack. The big difference is in the first phase, you're designing AC-DC PSUs, DCDC PSUs. You're working with the hyperscalers, but really the implementation of that is at the merchant power, ODM, OEMs, the Delta, the Flex powers, the Vertiv, [inaudible] and so on.

We know where we are with those guys. We first delivered the samples, both the 1.2 kV SiC that we mentioned, the Gen 5 in the new package as well as the gas devices. We now have delivered the final samples, which I think is the sample that will get to production, which I think is important. For those boards, we are, as I said, moving from component level testing to standard testing. What does it mean? Well, the customers have done a couple of prototypes, they're optimizing the systems, the layout, the ELI performance, the efficiency, we are highly active and supportive of this with our application engineers and our field application engineers. That's kind of where we are.

The next step is once they've done some level of system testing, then they're going to do system reality and system validation at the next level. I would say for the first phase of the 800 volt DC since this is meant to ramp at the end of the year to earlier next year, I mean, we're going to get clarity very quickly. As I told you before, for me, I'm not going to comment on design and engagement with customers unless the customer wants to, but you're going to see the proof point in the backlog and as we go.

Now when it comes to the second phase, which is really driven by the hyperscalers, when the DC-DC conversion gets in the train inside the rack, mostly with GaN because there is no other technology that helps you to do this 800-volt 50 or 800-volt 12, 800 volt 6, inside the rack. I think today, we are still working with the hyperscalers and getting the ODM to be comfortable. One of the reasons why we're spending so much time developing those references that we've announced earlier this year, the 850 or 860 is that it gives comfort to the hyperscalers and the customers on how to deploy. It's only 6 to 9 months behind. If you ask me when we're going to get proof points of the in-tray GaN-based DCDC current, probably Q1 to Q2 next year.

Again, this is a duration. Customers, what I see is I measure my team and the engagement with customers in terms of the number of samples we ship 10 samples or 50 samples. When you get to 5,000 samples, it's not samples. It's quo build. My team on the amount of energy that the customer is spending on testing the technology and putting us in from an apps point of view in terms of helping us. I see that energy, that momentum, that number of samples are going up. That's why I'm comfortable in the momentum we are building.

However, as I said in the past, I think the proof is in the pulling, and we are not going to talk about pipeline. We're not going to talk about customer engagement unless the customer decide to, but we're going to refer to growth and outlook and guidance and backlog, which I think is what you should expect in terms of success.

I guess a follow-up just longer term, do you guys have a view? Or are you seeing customers push the intermediate bus voltage to 48, 12 or 6 in that 800 to step down? Do you think that 800 to 6 ultimately wins? Or do you think there's going to be a mix of different intermediate bus voltages across different hyperscaler platforms?

In the first phase, as we talked about at the end of the year, the bus bar at 50. I think you're referring to the true in-tray 800-volt HVDC. At this point, I would say it depends on the hyperscaler. I think you're going to see different flavors. You have seen that we announced GTC, NGX with NVIDIA and they are going to fix. I think that's kind of one of the trends we see. With that scale back to 12. It's a possibility. Some other hyperscalers might decide to scale 50. You might see some hyperscalers ramping next year with the in-tray massive volt HVDC keeping 50 volts as a bus bar, but moving the DC-DC conversion from top of rack to inside the rack.

The short answer to your question is I think we're going to see multiple flavors. Directionally, I would say the trend is the same, reduced number of conversion as you move to higher density rack, which means that the secondary voltage is going to go down over time.

With that, I will now turn the call back over to Chris Allexandre for closing remarks.

Yes. Thank you for joining us today. As I said earlier on, too early to declare victory, but what I see is the company is on track and accelerating the pivot and the transformation to Navitas 2.0. We have a lot of work to do still ahead of us. If you look at our momentum in high power, the growth in high power, the growth in AI infrastructure, which I mentioned quarter-over-quarter and the trend that we have ahead of us, I'm confident this will continue.

I want to close by thanking our team,s Navitas team a lot of work. This was a big pivot that we asked the team to go through moving from historical consumer low-end mobile type of business to high power. It's a big shift in terms of geographical coverage and in terms of product mix. I want to thank them for the effort, the reliance and the effort that we are putting into making that happen. Of course, our customers, okay, that are supporting us as well. Thank you.

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.

Great. Welcome back, everybody. I'm Joe Moore, Morgan Stanley Semiconductor Research. Very happy to have with us today, Chris Allexandre, CEO of Navitas. Thank you for joining us.

Thank you, Joe.

So first time we've done this as a fireside, you've been CEO for about 6 months. What have you learned? What are your priorities? How do you think about sort of Navitas 2.0?

So yes, as Joe said, I've been now CEO for the company for the last 6 months. The first thing I've learned is, and I think we all see it, is the size of the opportunity, okay? So the high-power market, AI data center, grid infrastructure and other markets are moving to a much higher level of power and density and efficiency, which we have never seen before. So it was very clear for me that we had to pivot the company to mobile. And that came and drove some of the pivot we've done, which mobile was historically where the focus and the revenue of the company was, and I wanted to prove it that even quicker. The other thing I've learned, which did -- was not clear to me before I joined is the importance of the grid, okay? You heard me talking about the grid.

Everybody talks about AI data center, which is very important, right? But without a change of the grid infrastructure, you cannot enable the size and the magnitude of the AI data center rollout that we're going to see in the future. And the last thing I've learned is the importance of where we're coming from. We talk about Navitas 2.0. I'm going to give you a bit of a sense of the priorities we have. But 2.0 doesn't mean 1.0 didn't matter, okay? In 1.0, we pioneered GaN in the mobile space, which was really kind of taking the mobile chargers to much higher power, okay? And we've learned a lot about this, okay? And we apply this learning into the data centers and other applications. And we had a very kind of very specific high reliability SiC technology. And now as we take it to much higher voltage for the grid, we kind of [ roll this out. ] In terms of priorities, we use -- when I rolled out the new strategy of the company, I used 4 pillars, which I'm going to keep using, okay, in the future to give kind of investors a bit of consistency on how we make progress.

Number one is the market focus, and I'm going to come to that in a second. Number two is the technology innovation, okay, and technology enablement. Three is operational efficiency and, of course, financial discipline. Market focus, I talked about the 4 markets we go after, okay, AI data center, grid infrastructure, performance computing, which is not to be ignored, and industrial electrification, right? The -- when we guide our Q1 and closed our Q4, I said that the revenue of mobile was now less than 25% of the company and high power is now the majority of the company. And as we're going to grow throughout '26, the growth will come from high power and mobile will go down to an insignificant level. That's something we are focused on in '26 to make sure that we pivot every resource we have in the company. Every dollar we spend is on the high power, but of course, we have to pivot the revenue.

Number two is technology innovation and enablement to the customer, right? And this is technology, GaN technology and SiC technology. This is product. We've sampled our 650-volt GaN for the 800-volt HVDC. We've sampled the 100 volt as well. We've sampled the new super high-voltage SiC modules that will enable the grid. It's also a system, okay? We've introduced 800-volt, 50-volt HVDC board, we announced a few weeks ago that was in partnership with one hyperscaler. This is all about enabling the transition, right? Operational efficiency is important. We are in the transition of moving our GaN foundry partnership from TSMC to GF. I think we'll talk about that later. I'm sure you have a question about this. This is very important. And last but not least, it's my eyes on getting this company profitable, okay? And to be profitable, you have to grow the top line and of course, grow the gross margin, which we will do with the mix, but keep the OpEx in a controlled way, right?

So those are kind of the priorities. That's what defines 2.0. 2.0 is clarity of what we go after, those 4 markets, clarity of who we are. We are a GaN and high-voltage SiC company. It's how we do it. We do it with speed because the customers we talk to, they want everything by us today and capitalizing on the 1.0 and all the experience we have to deliver value to the customers.

And the first indication of how decisive you are is this decision to exit mobile so quickly. Like it was tempting at all to sort of -- it's been clear for a while that there are headwinds in that market, but it's tempting to hang on to that revenue and use it for gross profit generation? Or what led you to the decision to do it that way?

So I would lie if I would tell you that on day 1, we made that decision to move that fast. But very quickly -- so what I did when I joined the company, the first thing I did is to take my backpack and go around the world, meet our employees and our customers. And everybody told me the same. They said, we need GaN because we can't do the AI data center without GaN, okay, partly the 800-volt DC. We need a grid and we need high-voltage SiC. We talked about that. And we need yesterday. And we're a small company. So every cycle we spend on mobile, every cycle we replace ourselves with the new mobile without innovation, which is just basically keeping what we have was a waste of engineering cycle.

So the decision was we're going to pivot faster. That's why we kind of slash the outlook. And today, I look back, this is what, 6 months ago, I look back, and this is probably my best decision because what's happening is, first of all, Mobile is now less than 25% of the company, will be insignificant by end of '26. People ask me what is the French English meaning of insignificant? I say less than 10%, okay? That's in my language -- that's translation.

What it means is it doesn't make or break the company. But the most important is the engineering and the time we spend. We flipped the company. So by moving away from mobile, the entire team is now obsessed and focused on getting the road map, the technology, the support, pivot from China to the U.S. We hired more people. We reduced also where we didn't have the right skills. So I would tell you, Joe, it was like doing it in a smooth way would have been missing the opportunity of growing faster down out of the gate. And it's proven by the guide to Q1. Q1 is up, okay? And it's all driven by [indiscernible].

And you're now in a position where you can grow potentially each quarter this year. Your confidence around that. And I think the company had a history of sort of having a tough time hitting expectations, your thoughts around that going forward?

So I mean -- so first of all, we're not in the business of guiding multiple quarters. We guided Q1. We're in a quiet period, but I would say -- what I would say today is we are confident in our guide and very confident in our guide. We also said that we're going to grow quarter-over-quarter multiple quarters in a row to give investors a perspective on how we are transitioning away from mobile and with mobile going down. So we're confident in that. And why we're confident? Number one is Mobile gives you 4 weeks visibility if you're lucky, okay? High-power gives you multiple weeks and longer visibility. So the customers we are dealing with now are giving you kind of midterm to longer-term visibility. So we have backlog in place for Q2, and we know what Q2 is going to look like. That's number one. And we have ramps coming up in Q3 and Q4.

Number two, I think the challenge that the company had is, to your point about the pivot is to spend too much time trying to rescue, okay? The anchor, okay? And an anchor is going to go down. You can scream as hard as you want, it's going to go down, right? So there was so many cycles trying to save the mobile [ soldier ] and that was very hard. So I think that led to the miss, always trying to think we're going to do better. I think by pivoting, walking away from backlog in Q4, as I said, was the wisest decision because now we are basically focused on this, on the right thing to do. So I'm confident we are not going to give a model to '27 before later in this year, but we reiterate our messaging in the last 2 earnings, okay? We're going to grow quarter-over-quarter throughout '26. The mix of mobile going down, high power going up and the scale will improve gross margin gradually, which I think will be the best proof points for investors looking at how we change, okay, and becoming a different company.

So you've given us a SAM, a 2030 SAM. I think $3.5 billion unless that's changed across the 4 markets. Can you give us an overview of your comfort level around that sizing? Pretty big number for a company.

Yes. Well, what's interesting is when I talk to many investors, they tell me I under call the SAM. So because rightfully so, some of our competitors, they call for $5 billion, okay, wide band gap SAM in the 4 markets we're talking about. For me, I don't want to spend too much time on it $3.5 billion or $5 billion doesn't matter, right? It's growing fast. It's a 60% CAGR for the next few years. The most important here takeaway is, number one, the make or break of that market is AI data center and grid infrastructure. If you look at the $3.5 billion, 3 of that is AI DC and infrastructure or grid infrastructure. Computing is going to be $400 million. It's a good business. We'll talk about that later, and industrial will be another $600 million. But 2/3 of that SAM is those two markets. And by the way, you can argue it's one market because what is driving grid? I mean grid, we've talked about since I was in high school.

We know grid...

We talked about upgrading grid, right? Edison would come back today would see the same transformers than we've seen 50 years ago. AI is a complete different use case. It's a catalyst that drives -- you cannot deploy the 250-plus gigawatt of AI data center in the next 5 years with the grid we have today. So for me, AI data center and grid is -- it's the same thing. It's inside data center or outside of data center. The other thing that is an important takeaway is -- and we have both GaN and SIC, okay? That might not be applicable to other companies that only do SiC or only do GaN. We have both, and we think it's important to have both is that the SAM is split in half between GaN and SiC, which is very counterintuitive. You asked me what I've learned. This is something I've learned, like I didn't expect that when I came on board. And the reason why it's the case is, number one, GaN is mostly outside of computing and industrial.

GaN is mostly 800-volt HVDC play. As you move to high integration, high-density GPU racks, you need to move to GaN, that's the 800-volt HVDC. That's a GaN play. SiC is playing also before that. So today, you have in the traditional AI architecture, you have to convert high-voltage AC to DC. Today, 50 volt, tomorrow 800 volt, right? That needs AC-DC, either inside data center or as what they call the side car. that needs SiC, okay? So SiC is in business today of AI, if you prefer. But what is interesting is it's insignificant today. We are sampling today. We're shipping today actually in that market, but it's not that significant. But there is a growth with the AI going. But what's happening is today, everybody shipped 5-kilowatt, 8 kilowatt, maybe 12-kilowatt type of PSUs.

In 6, 9 months, whatever we have 30-kilowatt type of PSUs because as you get more power inside the same rack, you cannot just increase the number of PSUs. And the content per kilowatt is not linear. So if you think about a couple of dollars of SiC content in a 5-kilowatt PSUs, you're talking about $200 per kilowatt of SiC content in a [ 30-kilowatt ] PSUs. So that drives SiC growth. And of course, the grid. What is also interesting thing to think about is -- and of course, nobody looks beyond 2030, but how much of the grid will be upgraded by 2030, not the vast majority. So SiC is half of the SAM in 2030, but the grid re-architecture is just the beginning. This is going to be -- and think about AI being a 5 years to 10 years build-out, grid is a 50 years build-out. So for me, and that came to me as a surprise, SiC has a long leg because of the grid infrastructure as well and playing on both sides, inside and outside data center.

And how -- there are a lot of competitors in each silicon carbide and gallium nitride. There's a smaller subset that have both. And there's obviously relevant ones, but how important is an advantage to have both of those technologies?

First of all, my -- I've been in 25 years plus in semiconductor. I always believe it's better to give the customer a choice than projecting your own religion. So I hear people -- 2 years ago, people said GaN is not going to make it in data center, oops, okay? That was the wrong call. Then people said it's going to be a SiC play, oops, okay? It's a GaN play. Then people said, well, SiC has no market outside of EV, oops, okay? So my point is we don't know what the customer wants. So I don't want to push SiC because I have SiC. I don't want to push GaN because I have GaN. We go to customer and say, what do you want? And we enable -- so that drives a completely different conversation. If I come to you, Joe, and say, what do you want? I have both. That drive a different conversation if I come and say, well, I have water, so you better drink water, right? So for me, this is very good to have both. That's number one.

So we are not challenged to be religious, okay? Number two is it's a continuum. You can look at grid, which is how you convert hundreds of watts -- hundreds of volts of AC into 50 volt or even 800-volt DC. And then you can look at how you convert this to 50-volt DC all the way down to GPU. It's a continuum, okay? You -- it's different customers, but they all talk to each other. And I think NVIDIA, in particular, has driven a complete ecosystem to make sure that you have to think about this as a continuum, right, because it's the same power chain. So I think both is actually very helpful. And as you said, there are not many vendors that have both, in particular, the ultra-voltage SiC. SiC, I know SiC got bad press, okay, because of the EV and it's hard to make money in the low-voltage SiC. That's why we don't participate. But it's a different game to do 1.2 kV, 1.7 kV or even 2,000, 3,000 volt, SiC for the grid. It's a different spot. So I think both is actually helpful.

Okay. Great. So maybe we could look a little bit more of each of the end markets, starting with the biggest AI data center. Can you talk about the shorter-term opportunities that you see there? And then longer term, the focus running 800 volt?

So everybody wants to talk about AI DC, right? So -- but I'm not surprised you start with that. So as I said, there is -- everybody talks about this change, which is the 800-volt HVDC. And this is not a GPU play. This is a rack play, okay? Most people ask me, are you attached to this GPU or this GPU or this [ TPU ] or this [ X DPU? ] I said it's not about the [ TPU or X DPU. ] It's about the rack. So if you look at NVIDIA as an example, right, the Oberon to Kyber. What is the difference? It's not just the GPU. It's number of GPU per rack. When you get to a point where you're compounding so many GPUs in the same rack, you cannot use traditional way of converting power. Too many conversion means more loss. More loss means less efficiency, okay? And the whole system doesn't work and you have less space. So the #1 big transition is the transition to Kyber for NVIDIA or any form of high-density rack, XPU.

And I say XPU because we talk about GPU, but you can talk about TPU and any form of XPU, right? So that's one. And that will drive the 800 volt all the way down to GPU. So here, you basically convert the grid to 800-volt DC, that's the entrance into data center. And then you go all the way. And you can go to 50 volt first, maybe you go down to 6 volts later, okay? Or maybe you go all the way down to 6 volt because it's -- it's obvious less conversion means less loss. So that's number one. And that's really a GaN play. The other thing is the grid is still AC. You still need to convert AC to DC. Two ways to do that. One is through the grid upgrade, which is the SSTs and all the things we're going to talk about. The other one is what some of the hyperscalers have called to replace the PSUs, the side car, okay, which is those rack of PSUs that convert, let's say, 480-volt AC to 800-volt DC, right? That's full load of SiC, right? So I don't want people to think that data center is just a GaN play, okay, both. But the 800-volt HVDC is a GaN play, in my opinion, and the PSU is a SiC play. That's for data center, right?

And if you're me, how do you pick winners? So there's 14 suppliers to NVIDIA power supply business on 800-volt. How do we go about? What are the milestones along the way that show us that Navitas is going to play there?

So first of all, revenue is the source of truth, okay? That's how I grew up in my 25 years. You're never going to hear me talking about pipeline and all this what I call monkey money, right? So because on Saturday, when I go and do grocery shopping, they only take dollars, okay? They don't take pipeline. So outlook, revenue guide, this is what matters. But you're right, how do we know where we're going to win business? So it's a multi-doors type of approach. Number one, you have to validate that you know what you're talking about. I hear some of my competitors, and I respect everybody, they say, we're going to have GaN. Well, okay, we're going to have GaN, but the customers need GaN today. And I'm not leaving a company that's been in GaN for 10 years.

I can tell you the last 10 years of experience makes a difference, okay? We're not going to develop a new super high-voltage SiC. We have it today. So validating that it works helps when you have it today instead of having in the future. Number two, once you prove it works, and it's a system play and it's a device play, you have to basically get chewed by the customer, okay? They're going to take high temp, low temp, they're going to go all the corners. That's validating that the device works. And then you have to go to rack level validation, okay, which is not like device level, but rack level. And then you get to supply chain and where you produce and do you have like a reliable multi-source, good Tier 1, Tier 2 OSATs and foundry. So it's a multistep approach. People ask me, when do we have the ChatGPT moment of Navitas that you have won 800-volt DC.

I said we're going to see it in the order book. It's hard to tell you when -- and by the way, it's not me who's going to comment, it's the hyperscalers and the OEM, right? I don't like long-term planning like this about business. But I would tell you, people underestimate how much having done that before makes a difference. If you think about GaN has always been this esoteric technology that nobody is comfortable with, right? It's hard. It's not as simple to drive than silicon. And we're helping customers. When we released the 800-volt, 50-volt board a few weeks ago, which was the highest efficiency at 10 kilowatt. This is to help customers. This was done with a hyperscaler to help customers to see how to do it, right? If you've never done that before, good luck. That's my point.

Yes. Okay. And then you mentioned the similarities between grid infrastructure and AI, but can you talk about that opportunity as well?

Yes. So the similarity is what's driving the use case, okay? So I joke -- I mentioned Edison, but if you would come back and look at the grid today, it's the same grid we had 50, 100 years ago. Huge transformers made of coil and metal and operating at 60 hertz. I mean it feels like my first year of college, okay, in electrical engineering. This doesn't work, okay, with AI workload. So -- why they are driven is because the AI is the use case. EV was not even the use case, okay, to change it. AI is the use case. You cannot deploy remotely half of what we're trying to deploy with the -- so first thing I would tell everybody is don't think grid is slow. That was slow, okay? That's not slow, number one. Number two is that it's really a U.S. play. And we will come to U.S.-centric and focus on national security. Europe, energy is very regulated, okay? U.S. is deregulated or more -- less regulated.

And I think the hyperscalers are involved in how the grid gets redefined. I talked about necessity being the force of nature, okay? If you have to change the grid. So I think we see an acceleration of investment development of battery energy system, which is going to be a large market, SST, kind of moving those huge transformers, weighing 2 tons and made of coil to electronification of the grid for lack of better terms. We see solar -- grid-level solar farms like huge stadium level type of thing. We see megawatt chargers and [ DC-DC ] converters, see many applications and they need super high voltage SiC, okay? This is -- you don't go there with silicon. You don't even go there with your 650-volt SiC that you use in an EV, right? That doesn't make the cut. But what is interesting is those guys are moving super fast.

And you're going to see interim step. You're going to see first couple of megawatt SSTs, bundled with battery energy systems. Then you see high single-digit megawatt type of SSTs coming up. And as I said, it's going to take 2, 3, 4 decades before every transformer that we hear blowing up every other day in San Francisco is going to be replaced.

Yes. Okay. Great. Third category, industrial electrification, I guess, more of a catch-all around robotics and things like that. But what opportunities are you excited about there?

Yes. It's -- catchall is a bit of -- I know it's not dismissive, but...

I don't intend to be dismissed.

I don't know. I always use it with my team and my team say, don't say it -- it's -- the reason why we call it industrial, it's a mixed bag of many applications, okay? And the one thing I would tell people, which is also a surprise to me is -- we've talked about power efficiency for the last 20 years. Everybody always said we're going to be more efficient, but nobody cared. Now this is table stakes. So we have customers doing pumps. They want to get the next level of efficiency. We have customers doing high-power converters. They want to be more efficient. So it's almost like the energy has become the currency like one of our famous leader in the base said, and I woke up everybody that says, you cannot continue to waste power. And how do you waste power is heat.

How do you basically get it out by being inefficient. So the table stake has moved -- being 90% efficient is not good enough. So we have customers coming out of the woodworks, doing, as I said, high-power pumps, not something I would have guessed GaN would go, right? And they come and say, oh, we need to use 650-volt GaN in this super high power couple of kilowatts type of pumps, right? So it's a catch-all, but it's -- the message is, I think we see the beginning of a transition to high-power technology. Customers have been reluctant because it's reliable, it's difficult to implement. They're not ready. They could get done with silicon. And now I think this is changing, right? And I think that's what's happening.

Okay. Great. And then the fourth market, performance compute. Is there a risk that you see some of the same stresses that you saw on the mobility side in that market?

Everybody asked me that question, okay? So first of all, I would say you're right, but we'll deal with that in the future. So in 2030, the SAM that we talked about, $3.5 billion, computing is $400 million. It doesn't make or break the company. But in the short term, and I think in the next 3 to 4 years, what we see is -- and I'm talking about the high-end computing. I'm not talking about your $300 notebook. I'm talking about high-end portable workstation, high-end game consoles, AI notebooks, okay, that are like $1,500, $2,000 and above. They need high power because unless you have a big backpack, you're not going to carry a 250-watt or 300-watt charger made of silicon. I mean we all got used to carry those big bricks, but it's painful.

So -- and those are 100, 200 watt, 150-watt chargers. It's not going to work at 250. customer we talk to, they want 250, 300, 350 watts. That's just enough to drive the move to GaN. So what drove the commodity decision of mobile? Mobile was good up to a point where the customers say, okay, I have 100-watt charger. It's small enough. I don't want it smaller. I don't want it to be higher power, so it's going to be cheaper.

Computing is not at that place. Today, when we do a 250-watt charger, they say, okay, can you do 350 in the same footprint? And now they say, can you make it smaller? So go back to what mobile had seen in the past. It's much higher content. It's higher margin, too. I think it's in 3, 4 years when every charger out there is tiny and then we'll see commoditization, but I don't think it's relevant today. And they do, it was basically a call I made. I said we're not just going to talk about how big things are going to be in the future. As long as we can make good money at good margin and we serve customer innovation with GaN, why not?

Okay. Great. So your long-term growth rate, you've talked about sort of a 60% to 75% SAM growth. If I have the numbers right, I know they've changed a little bit. But is that kind of in the right ballpark? And how are you framing that opportunity?

Yes. So it's the right ballpark. As I said, some of my competitors, I talked to one big competitor on Monday, say, why do you under call the SAM? I'm like, okay, $3.5 billion is big. So for me, it doesn't matter, okay? It's going to grow. What matters is what makes or break the SAM, right? The one thing I would call out to everybody is if you look at the SAM, people ask me, why do you call SAM and a TAM? I said, the reason why I exclude TAM is exclude EV, I exclude mobile. I don't want to confuse anybody. I mean the SiC TAM today is in the $6-plus billion. Remove EV, low-voltage industrial for SiC, you're down to the hundreds of millions. So for me, I call about the super high voltage, ultra-high-voltage SiC in the context of what we do. That's the $1.7 billion to 2030. Same with GaN.

I want -- we're working away from mobile. I'm not going to include mobile in the SAM. That was misleading. We don't want to support EV with GaN. I mean GaN will have a life in EV, mostly in OBC. No offense to everybody in EV. We have customers in EV today that we support, and we're going to continue to support them. But it's not where I put the R&D because it's a long to revenue. And what I would say is the pain to revenue ratio is very high, too high. So I think we have our hands full, okay? So we just removed that from the SAM, and that gives team the clarity of what we go after.

Okay. Okay. Great. You mentioned on the supply side, partnerships with Powerchip, GlobalFoundries, TSMC's decision not to build GaN. Just how do you think about that supply chain? How robust do you think that is?

So we've been -- and we're still in business with TSMC on the GaN side. They've been our partner. We pioneered GaN with them, a great partnership. It was my first partner meeting when I flew -- I took the job a week later, I was in Taipei, winning TSMC. And they are helping us in the transition. So I give them great partners. Actually, as a matter of fact, I'm sure you've seen that they licensed their technology to GF, okay, as part of the GF deal that we've done, right? My predecessor and the team had started a partnership with TSMC. We sampled the first mid-voltage GaN with TSMC. It's in the end customer. We'll continue that, okay? We don't want to create more disruption for the customers. But this is a big business we go after. It requires scale. It requires 8-inch. It's not a nice to have to have a fab in the U.S. in national security application like grid and AI data center.

So we quickly met with Tim and his team. They have GaN capabilities. They have GaN technology. They invested in GaN. We have long experience in process, in device, in application, in systems. So combining both was for us, the best thing of accelerating GaN production in the U.S. That's why we called it a strategic partnership. It's not a buzz word, and we call it a technology partnership more than a manufacturing partnership, right? So there's no direct flight between my site and Burlington, but there's a lot of back and forth between the -- between the 2 sides and the team are working around the clock. We'll sample to customers at the end of the year. We are open book with the customers, large customers on when they're going to get samples, what they're going to get. We're going to be in production next year.

And you always look at what are the best decisions you've made, right? You asked me about mobile. This was probably one of the best decisions I've made. This is one of the best decisions I've made. I feel like it's going to be giving U.S. foundry [ COUS ] like we have in SiC, okay, for the -- and Tim and his team have a great team and a great fab.

Well, Tim will be here on this exact stage tomorrow, so we'll have a conversation. Yes, I will. Maybe we could pause there and see if there's questions from the audience.

If not, the move that you made to consolidate your distribution around Avnet and WT, how are you thinking about that? How do you pursue -- you have this narrower focus now. How do you pursue those opportunities?

So I mean, Avnet and [ Wintech ] are great partners, okay? I worked with Phil and the team in the past. I worked with Eric Chang and his team in the past. it's kind of not the most important. What is the symbol of this is the pivot we've done from a go-to-market point of view. So if you think about 70% of the company was mobile. What does it mean? Well, that means your company center of gravity is in China and Korea, okay? Because I don't consider the other large company in the U.S. to be a mobile company. They are a computing company. So we work with them. We continue to work with them, but they are a computing company.

So distributors kind of tend to gravitate where the business is. When you move to serving the hyperscalers, the Deltas, the Eatons, the big ODM in Taiwan or across the world, this is a different go-to-market, right? You need more people. The center of application is to be in the U.S. and less, okay, in China. You don't need one distributor per customer, okay? I think in mobile, you tend to have one distributor per customer. I mean, we've said it publicly, when I came on board, we had 40 distributors, 4-0. For the size of our company, this is one distributor per customer. So that was a bit too big.

And no offense against the choice that we made before, but it made sense in the context of many ODM, OEM mobile guys. But when you go to a few hyperscalers, a few OEM, a few ODM and the grid guys, they also kind of different play, right? So it's a go-to-market change that we simplified. And I talk about speed all the time, which is, I believe, the foundation of our culture. As a small company, we have to be more innovative and we have to be faster. If we come after the big guys, it's not acceptable, right? And for me, Michael and the team were an aspiration. I was in TI when we look at those guys coming out of nowhere. And everywhere was going, they were first, okay? And we looked at them still with a form of they are too small. But when you're small, you have to be fast, okay? And to be fast, you have to have less baggage, okay? So having less distributors, a simpler go-to-market is a way to simplify what you carry and get faster.

Great. Well, I don't know if you have any final remarks, but we can wrap it up there. I mean, a very impressive view of the things you've done with the company and the decisiveness that you've approached this...

No, the one thing I would say is I talk about the 4 pillars, okay? And this was what I wake up in the morning, I look at those 4 pillars, okay? And we're going to continue to update how we make progress. It's a marathon at the speed of a sprint, okay? It's a marathon because it's -- it's a multiyear transition. What the AI guys and the grid guys are trying to do is a complete revolution, but they are trying to do it at consumer speed.

So I'm very clear to the team, let's walk before we run. Let's be clear, let's execute one step after the other. And quarter in, quarter out, we make progress, and that's why we're going to keep telling investors and you guys and everybody to show that we are walking the talk. And that's what we paid for.

Great. Well, thank you so much. It's great conversation.

Thank you.

Good afternoon, and welcome to Navitas Semiconductor's Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday, February 24, 2026.

I would now like to turn the conference over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Thank you, operator. Good afternoon, and welcome to Novitas Semiconductor's Fourth Quarter 2025 Financial Results Conference Call. Joining us on today's call are Navitas President and CEO, Chris Alexandre, CFO, Todd Glickman. I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company's finalizing its closing procedures and customary quarterly review by the company's independent registered public firm. As such, these results are unaudited and subject to revision until the company files its Form 10-K for the year ended December 31, 2025. In addition, management's prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions.

Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the Securities and Exchange commission, including Form 10-K and Form 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, February 21, 2026.

Navitas assumes no obligated to update these projections in the future as market conditions may or may not change, except to the extent required by applicable law, Additionally, in the company's press release and management statements during this conference call will include discussions of certain measures and financial information in both GAAP and non-GAAP terms, included in the company's press release of definitions and reconciliations of GAAP to non-GAAP items, will provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Navitas' website at itassemi.com. And now it's my pleasure to turn the call over to Navitas President and CEO. Chris, go ahead.

Good afternoon, and we appreciate you joining us today. I'm pleased to be hosting my second quarterly conference call as Navitas CEO. We closed out the year with a positive fourth quarter as we continue to accelerate our [indiscernible] to Navitas 2.0 and align the entire organization to focus on addressing high power markets. In fact, it has been energizing 5 months as I joined the company, and my conviction in our industry-leading GaN and high-voltage 6 solution has only grown stronger and our strategic pivot is on the right path to [indiscernible] the company to the next level. Before providing comments and update specific to the quarter, I will briefly reiterate several key events on our previously communicated strategic transformation and our vision to what we call Navitas 2.0. First, we're accelerating our pivot away from the company's historical mobile and lower consumer business to focus on high for markets, where GaN and high-voltage IC products can deliver real penetration and value through higher at least [indiscernible], efficiency and availability.

We are laser-focused on 4 high-growth, high-value market segments, AI data center, energy and green infrastructure performance computing and industrial electrification. Collectively, this segment represents a service addressable market of EUR 3.5 billion by 2030, split roughly 50-50 between GaN and high voltage 6 with a combined CAGR of more than 60%. although the largest portion of this $3.5 billion time are within AI data centers and grid and energy infrastructure, I want to emphasize that AI is a shared underlying catalyst across our 4 target markets. driving a rapid acceleration in terms of reactor infrastructure, customer expectation and the adoption of the new high-voltage technology.

While leveraging our proven 10-year track record as a pioneer of Ghana scale, having shipped over 300 million net gain devices, coupled with the deep expertise in system and application as well as our leadership in high reality, high-voltage sick to our genetic technology. The end goal of Navitas strategic transformation is straightforward to rapidly penetrate secure expanded customer engagement and achieve scale, resulting in a more sustainable, consistent and future profitable growth for Navitas.

Turning to a brief recap of our fourth quarter results. As initial progress of our pivot to Navitas 2.0, we've completed a realignment of the entire organization, both in terms of skills and geography to focus on addressing high power markets. This includes fully redeployed organizational resources, or roadmap and focus accordingly. Revenue in the fourth quarter and at the high end of our guidance range at $7.3 million, coupled with the fourth quarter being the first time that high power market represents the majority of our total revenue.

We remain confident that the fourth quarter was the bottom. Notably, our mobile business declined sequentially from the majority of revenue in Q3 to less than 25% of total revenue in Q4. We expect mobile to continue going down as a percentage of quarterly revenue and become insignificant by the end of '26. Also consistent with our comment last quarter, guiding to quarter-over-quarter growth for Q1 and anticipate continued sequential growth throughout 2016, driven by increasing sales traction in the high role market. Over the last several months, as part of expanded needs with customers and partners, have seen numerous proof points that the new technology adoption is [indiscernible]. AI is a catalyst changing the game across markets. Existing technologies and architectures are no longer sufficient. The industry is moving faster than it ever has in terms of technology adoption with customers clearly moving to take advantage of gun and high-voltage technology.

As previously mentioned, AI is a primary catalyst that's driving momentum and borrowing the adoption of high-power solutions across all 4 of our target high power markets. Every interaction with customers has confirmed the market is undoing secular change, and that AI is sparkling revolution we're focused on. This impelling inflection point in architecture design and technology adoption is highly favorable to GaN and high-voltage Tech, putting Navitas 2.0 at the center of this revolution. As outlined in our last call, the Navitas to transformation to a hyper company is being backed by decisive actions and grounded in 4 pillars that include market focus, technology leadership, operational efficiency and financial discipline. Let me now review with you the measure of progress that we've made in each of these areas since our last earnings call. Starting with market focus. As I mentioned earlier, we're sharply focused on the high-power market of AI as center, energy and green infrastructure, performance computing and industrial extrication. In AI as centers specifically, Navitas is uniquely positioned as one of the leaders in GaN and high-voltage SEC, supporting all major AI data center architectures. The density of compute power which required a higher efficiency and poor obesity.

It's driving the acceleration of CAM in next-generation data center. During the quarter, we've accelerated samplings of product and solution delivery with our on Volcan and 6 Valgan targeted at AI glass center, onefold HVDC and 48-volt IBC HD box architecture. Samples are currently available in different package sites, and are being evaluated by more than a dozen customers. More recently, on February 9, we announced our breakthrough 10-kilowatt DCDC design platform. This is an all game 10-kilowatt, 800-volt to 50-volt DCDC platform, which employs advanced 650-volt and onboard a fast in a 3-level average architecture with synchronous actification. This platform has delivered a 98.5% peak efficiency, which we believe is the best in the industry so far. This full [indiscernible] package design platform achieved leading power density and support plus or minus 400-volt BDC standard for AI [indiscernible], this is a great example on how Navitas is able to leverage our 10 years of GaN and system expertise. We're setting the benchmark for scalable, high-performance AI infrastructure. Our product portfolio enables unprecedented power density to support rapid large-scale expansion of Aida center, while also allowing hyperscalers an OEM, the ability to maximize compute density and reduce energy loss in the top of the [indiscernible] AIU club.

On the 6 front, we are very active customers in their ACDC PSU designs for current AI dacite architecture with our latest 2.2 KV [indiscernible] devices, leveraging our latest fifth generation genetic technology announced earlier this month. This product brings improved filed merit and best-in-class thermal behavior, the [indiscernible] QD pack packages that are being well released by customers. In the grid and energy and paper market, the energy grid is in the process of a major transformation and modernization to support the AI catalyst, but also overall growth in segment. This is not a short cycle, but rather a multi-decade secular and sustainable trend that will transform grid and energy infrastructure. As a result, we are seeing an acceleration in the design cycle here as well.

We are leading this effort with our new ultra-high voltage 2.3 kV and 3.3 kbits module and road map to even higher voltage. We are not in evaluation with over 15 OEMs globally, mostly in U.S. and Europe with notable acceleration in the U.S. In percent computing, we continue to see increased gun adoption in high-power chargers and 4 units for high-end computing and AI notebooks. The placing silicon. We have more than 15 projects in production, and [indiscernible] twice that in designing across 1200-watt 2041 and up to 360-watt with leading global contain companies. We expect to continue gaining momentum in the performance complete market through opens. And lastly, in industrial explication we're starting to see GaN and high-voltage secation in high-performance applications, spanning industrial pumps and heavy equipment electrification like DDC converts and megawatt orders. Turning to our second pillar, technology leadership. We continue to prioritize ovation across GaN and high-voltage fit technology. including both product and solutions, supported by expanding customer engagement and core development project.

One example of this innovation and system expertise with our breakthrough 10-kilowatt DC/AC platform that I just discussed previously. Another highlight was our announcement during the last quarter of our and 3,300 volt ultra-high-voltage SiC module portfolio, which we have accelerated simply to more customers. These modules feature providence assisted planar technology for [indiscernible] balance robustness and performance in mission clinical application across grid-tied infrastructure, energy storage and the [indiscernible] scale fast charging.

This structure available in six-pack G+ power modules, discrete packages and nongood [indiscernible] by point with extended AACs lalability testing. As mentioned earlier, we announced last week our Gen 5 technology and upcoming new 1.2 kV security pack product again PSU CDC for AI as centers. Our new Gen 5 technology continues to improve the figure of merit of our leading genetic technology. It leverages our trench assisted plan or TAP architecture best-in-class thermal behaviors and top 5 cooling unpack.

We're now somnour first new 1.2 Ken product to multiple OEM and ODM designing high-power and AC/DC or AI [indiscernible]. On our third pillar, operational efficiency. We have taken actionable steps to create a more streamlined and rebalance erotic deploy organization. We have been leasing strong employee buying and resin tangible benefits from this [indiscernible]. Also, on November 20, we were pleased to announce long-term strategies technogy and manufacturing partnership with Global Foundries to accelerate an technology design and manufacturing in United States. This partnership enables secure scalable solution for our target high power market and ensures that Navitas can deliver the performance efficiency and scale our customer demand. It also provides Navitas the opportunity to manufacture our solution in critical and national security applications in U.S. Development began a few weeks ago, and both companies are duly collaborating with production expected to begin later in the year and accelerate in 2027.

Over time, we expect to transition to [indiscernible] in order to lower products and increased scale. Also, during the quarter, we executed actions to restructure and optimize our go-to-market rate. This included significant consolidation of distribution channel partners from approximately 40 to less than 10 [indiscernible] we have the ability to scale and are well suited for serving high-power market while removing previously mobile-centric distributors. And our fourth pillar, financial discipline centers and resource realignment in support of our focus on high power markets. This includes very targeted 90% reduction in head count in the fourth quarter. offset by alignment actions to support the Navitas 2.0 shift, including hiring new employees well equipped for high-power markets, in particular within the United States. As evidenced by our fourth quarter revenue mix we have made tremendous progress. We also brought in new additional leaders with skills in sales and marketing, R&D and operations with a focus on enabling stronger execution. These collective actions focused the entire company on high power market and provide a foundation for efficient and effective execution going forward. Even with a larger market opportunity, our resource alignment allows us to efficiently focus our quarterly spend on the high-power market. As a result, we're targeting to maintain operating expenses flat throughout the coming year. We also expect to drive gradual margin expansion throughout '26 through improving scale and mix of high power business.

Lastly, to further strengthen our balance sheet and fund future operations, we completed a private placement of common stock in November with net proceeds of approximately $96 million. contributing to a quarterly end cash balance of $237 million. These proceeds further support our Navitas 2.0 strategy axing our transformation and funding working capital for scalable growth and long-term value creation. In closing, I am very pleased with the overall progress we achieved in a relatively short period of time. Speed is a financial element of our company's culture and it's clearly working. We are positioning Navitas 2.0 as a high power company, sharpening our focus on execution to enable scalable growth. Looking ahead, we anticipate a return to top line sequential growth starting in the first quarter, fueled by increased revenue from high-power markets. When combined with the benefit of our optimized cost structure, streamline go-to-market approach, an accelerated product road map, we also positioned to achieve gradual improvement in gross margin and bottom line results over the coming year. I'm incredibly proud of the team's dedication, hard work and agility in platination vision. I also want to thank our customers for their support to our new strategic dilation as well as ongoing contribution to mature beneficial collaboration partnership.

With that, I'll turn the call over to Todd to review our fourth quarter and full year results as well as our first quarter guidance.

Thank you, Chris. In my comments today, I will take you through our fourth quarter and full year 2025 financial results. And then I'll walk you through some of the important Q4 achievements and market dynamics as well as our outlook for the first quarter 2026. I will then return it to Chris for final remarks before we take questions. Revenue in the fourth quarter of 2025 exceeded the high end of guidance at $7.3 million compared to $10.1 million in the third quarter of 2025. As expected, revenue for the quarter reflects our strategic decision to deprioritize our low-power, lower-profit China mobile and consumer business, as well as our efforts to streamline our distribution network to align our focus on high power markets. .

As Chris mentioned, our high-power markets represented a majority of our quarterly revenue for the first time in the company's history, with mobile declining to less than 25%. This is a very important milestone and representative of our strategic shift. As mentioned before, we believe that Q4 represented the bottom for revenue as our strategic actions support driving increased contribution from our high-power business going forward. Before addressing gross profit and expenses, I'd like to refer you to the GAAP to non-GAAP reconciliations in our press release. In the rest of my commentary, I will refer to non-GAAP measures. I would also like to point out that our GAAP results for the fourth quarter included a $16.6 million restructuring and impairment charge that consisted of approximately $10 million of distribution contract terminations, $4 million of fixed asset impairments and $2 million of workforce reduction expenses associated with realigning the entire organization and distribution channel to focus on addressing high power markets.

Of the $16.6 million restructuring and impairment charge in the quarter, $3.8 million was noncash related items. Gross margin in the fourth quarter was $38.7 million, which was flat sequentially with the prior quarter, reflecting the ability to maintain our margin profile despite the lower quarterly revenue. At these revenue levels, we do not yet have the leverage to overcome our fixed costs. but we expect this to improve as we further grow revenue from high-power markets. As mentioned in our last earnings call, we expect to deliver expanded margins as we pursue a mix change towards higher power markets and away from mobile and low-end consumer. During the fourth quarter, we executed on a 19% workforce reduction, mostly deployed to mobile and consumer, and an organizational realignment towards U.S., high-power customers and markets, thereby reducing operating expenses sequentially from $15.4 million to $14.9 million. This is part of our strategic plan to realign company's resources to the Navitas 2.0 focus. Operating expenses were comprised of SG&A expenses of $6.8 million and R&D expenses of $8.1 mine.

These expense levels align with our cost reduction targets. The fourth quarter of 2025 loss from operations was $12.1 million compared to $11.5 million in the third quarter of 2025 as the reduction in operating expenses did not fully offset the decrease in revenue. Our weighted average share count for the fourth quarter was approximately 222 million shares. For the full year 2025, revenue was $45.9 million compared to $83.3 million in 2024. Gross margin for the full year was 38.4% and compared to 40.4% last year. 2025 operating expenses were $63.6 million compared to $83.4 million in 2024. The full year loss from operation was $46 million versus $49.7 million last year. As Chris mentioned, the fourth quarter represented the bottom in quarterly revenue, and we expect to return to top line sequential growth throughout 2026 as we continue our transition to high power markets.

Turning to the balance sheet. Accounts receivable was down to $3.6 million from $9.8 million in the third quarter, reducing our DSOs to 45 days. Inventory decreased to $13.3 million from $14.7 million last quarter. Cash and cash equivalents at quarter end were approximately $237 million, reflecting net proceeds of approximately $96 million from our completed private placement of common stock in November 2025. The company continues to carry no debt. Our balance sheet remains very strong as we exit the year with a high level of liquidity and improved working capital position. Moving to guidance for the first quarter of 2026. We expect revenue to increase sequentially to between $8 million and $8.5 million.

This represents the first quarter-over-quarter growth since the company's pivot. As I just mentioned, we expect sequential growth to continue throughout the year, driven by increasing revenue contribution from high power markets. Gross margin for the first quarter is expected to be 38.7%, plus or minus 25 basis points. We continue to anticipate the technological innovations to bring to high-power high-growth markets will result in progressive expansion of future gross margins. Turning to operating expenses. We anticipate operating expenses to remain approximately $15 million for the first quarter. We expect to continue to allocate resources and expenses as we redeploy company resources towards higher power customer and markets, particularly within the U.S. This redeployment of resources is expected to offset the strategic downsizing of our facilities to result in flat operating expenses. For the first quarter, we expect our weighted average share count to be approximately 230 million shares.

In closing, we are pleased with our initial progress and accelerate Pivot to non-top 2.0. As evidenced by high-power products representing the majority of our quarterly revenue for the first time, we expect to increasingly benefit from the broadening adoption of our GaN and high-voltage tick products. in targeted high-power markets. Together with our recent actions to reallocate resources, optimize operational efficiencies and and restructure distribution channels, we believe that Navitas is on a path to deliver improving margins and bottom line results. I'd now like to turn the call back to Chris for some final comments before opening the call to questions.

As we close today's call, I want to address 1 additional matter. After an extraordinary 10 years of dedicated service, Todd has decided to step down as CFO to push other opportunities. He has been an invaluable partner to every 1 company. bringing financial discipline, strategic insight and weathering integrity that help steer us through pay of both growth and challenges. Todd has been a great partner over the last 6 months, helping to pivot and furnish the company to agitate 2.0. On behalf of the entire Board and executive team, I want to extend our grategic for all of this solution over the past decade. We have true financial organization in place and [indiscernible] fully committed to assisting in a seamless transition until a successor has been made. We expect to communicate in the coming weeks regarding [indiscernible] replacement and Navitas new CFO. We enter in this chapter with confidence in our strategy, our momentum and our ability to continue delivering long-term value for our shareholders. Thank you again for joining us today. Operator, we might now open the call to questions.

[Operator Instructions] And our first question comes from the line of Kevin Garrigan with Jefferies.

Congrats on the results. Can you guys just walk us through how each of the high-power end markets performed in Q4? And how we should think about the trajectory for each of those markets in Q1?

Yes. Well, our quarter-on-quarter growth in revenue was due to the high power markets. So they are performing well. We're not going to sort of break out the high power market at this time. But we do expect all of them to be performing on a go-forward basis as mobile becomes immaterial as we move through the year. .

Okay. Got it. And then as a follow-up, can you just update us on the progress of the 800-volt architecture opportunity? And can you give us a sense of a time line on customer decisions?

Kevin, this is Chris. As we talked last time, there's a lot of work going on between us and the hyperscalers not only one, but multiple of them on the adoption of the 800-volt AC/DC. We sampled, as we mentioned in the press release and in the script, some of the new products that will be used in this type of architecture. We also announced a leading-edge 800-volt to 50-volt AC/DC brick that demonstrates the performance we can get with those products. So there's a contingent of collaboration. It's a bit too early to kind of tell you when this will be confirmed, but I think we are getting closer and closer with our customers. .

Congrats again on the results.

And the one thing I would add, given is everybody refers to the 800-volt HVDC as a step function for power content in the AI data center, and this is true, especially with the adoption of GaN replacing silicon as you move to the [indiscernible] HVDC, right? But I would outline that in IDC, and you've heard it from multiple vendors, is that there is an acceleration of demand also in using the classic architecture, which is ACDC, right, using SiC and we see a growth throughout the year ahead of the step function with GaN in HVDC. .

Our next question comes from the line of Kevin Cassidy with Rosenblatt.

Congratulations on the progress. Just as you mentioned, you're working with the hyperscalers. Is this -- are you working directly with them? Would they be building their own power supplies or is that going to be a pull from the current power suppliers to the hyperscalers.

Kevin, it's actually all of you above, okay? So the hyperscalers, partially are driving the new architecture, right, both in terms of what they expect in terms of density and power level in the AC/DCs as well as the 800-volt and the 50-volt or even lower voltage HVDC architecture. Now we don't work only with the hyperscalers. If you think about PSU, which is clearly designed in OEMs and ODMs that are serving those hyperscalers. And if you look at the HBDC is that our classic merchant power company serving the scales also doing designs on these new architectures. So we work with everybody. I would tell you that the driver of the change of the acitecture comes from the U.S. and hyperscalers. But a lot of the OEM and ODM in Taiwan, in China, but also in the U.S., are driving that. And as you know, we just announced this Board, right, which I mentioned, which was basically a co-development with the customer. And that's basically to showcase the level of efficiency you can get by using GaN on the primary side and gain on the secondary side in 800-volt to 50-volt AC/DC brick. And you're going to see more of those reference implementation in the future as well.

Okay. Great. And many of your customers are the hyperscalers giving you an idea of when that inflection point would be when they start doing the installations.

I mean the thing I would say, as I said just earlier on Kevin's question, there are 2 stream, if you prefer, of the AI [indiscernible] growth. Number one is more data centers, more power, and that drives more PSUs, higher power PSUs and that drives the growth in SIC, which we are seeing throughout '26. When it comes to the 800-volt HVDC, which I think is your question, when there is a discontinuity and you cannot use silicon anymore on the reside because you're 800-volt and you have to move to high-voltage GaN. This is really driven by not the GPU change, but the rack architecture change. As you compact more GPUs into a seal rack, and you get to a megawatt rack, you cannot get the power density and the efficiency with silicon.

And that's this discontinue. I would say, as we said before, this is really about '27. Can be used slightly earlier it could. There is a case where you can use GaN in the 48-volt IBC replacing silicon. As I mentioned in the script, where GaN brings higher efficiency, you can do it with silicon, but you get higher efficiency. And this might be the first time you see GaN in data center [indiscernible] the real step function is really coming from the 800-volt DC, which is really kind of linked to the [indiscernible], okay, which is the higher integration of GPUs in 7.

Next question comes from the Nathaniel Quinn Bolton with Needham.

Congratulations on the progress on the transformation to Navitas to and gestations to you, Todd. I guess, Chris, I wanted to come back on the 800 HBDC solution, especially if you think about the primary side of that 800-volt rail, there still a lot of folks in the industry that I think are talking about using silicon carbide in that 100-volt conversion step you guys are obviously pushing the GaN solution. But I guess can you say what are you seeing from the leading GDU and hyperscaler vendors that are looking at the 800-volt for the 400 plus/minus rack architecture. Are they pushing more for GaN? Are they open to begin and silicon carbide solutions. Just how do you see this playing out from a technology perspective between GaN and silicon carbide?

It's a very good question, actually, because I think there is some level of confusion. First of all, I would tell you that we are not pushing anything both SiC and GaN and we welcome stick being used on the primary side if it's needed and GaN being used on the primary if that's needed. So we're not pushing anything. We are being pulled. We've not seen any significant use case our Board implementation of customer evaluation using SIC on the primary side. SiC is being used widely at 1 to 2-kilovolt I mentioned in the classic AC/DC, right, which is basically prior to the and. But when it comes to Eden DC, we've been pulled by customers, and I'm talking about hyperscalers to Kevin's question here that are driving the adoption because it's more efficient and more driving higher density.

And then, Chris, you also talked about your 10-kilowatt all GaN BRIC solution. Can you give us a sense, is that more of a reference platform? Or would that be a solution that Novitas would look to source that entire brick level product? Because I imagine it includes a fair amount of additional componentry. And so just thinking about to the extent you're selling the full brick solution, I imagine that might be pretty high [indiscernible]. So could you just talk about whether you sell the GaN solutions [indiscernible] Portet brick would you sell the entire brick? And if you did sell the entire brick, what would the margin inflation stay?

It's a very good question. Thank you, Quinn. We view this as enabling solution enabling technology for the customer. So first of all, as I mentioned, this is something we've done with [indiscernible]. We have not done that in a vacuum on our own, right? This is something that we could develop with a leading customer. Number one. Number two is we don't compete with customers, okay? At this stage, we don't see a path where we're going to sell the modules. Now that design is shared with our customers and the hyperscalers as well as the ODM and OEM that are looking at how we've been able to achieve that high level of efficiency, right, 98.5%, which we believe, based on what we've seen and some of our competitors' feedback on top of customers are 1 of the best in the industry, right? So I would tell you, this is for us. This is what we've done in GaN historically. We pioneered GaN in mobile by demonstrating and helping customers to get to a higher level of efficiency, lower EMI, highest level of density. And we are doing the same in AI data center.

And this is what I talk about when we talk about -- we're leveraging the benefit and the skills of 1.0, right? And this system expertise makes a difference. At the end of the day, we are in the business of selling GaN and silicon carbide and enabling our customers. As a matter of fact, on that board, we're using some of our competitors in our silicon and other technologies and products that we don't have. But the focus is how to show and help the customers to accelerate the adoption of GaN in HVDC.

Next comes from the line of John Tanwanteng with CJS Securities.

if you could start, maybe talk a little bit about the competitive landscape in supplying the 800-volt data center. What are you seeing just in terms of who you're bidding against in these sockets if they're outpricing you or we're doing better in technology. And on top of that, how is your partnership with [indiscernible] and evolving in that space as well?

So thank you for your question, John. So I'll start with the end. We continue our partnership with Infineon. We have a cross license, as you know, and we share the same vision, which is to enable the accelerated adoption of GaN and silicon carbide in the IDC, right? So sick as the traditional accenture and GaN in the 80s, right? So there's a lot of dialogue between the 2 companies on that front, right? Number two, you will have seen that there are multiple vendors having been listed on the 800-volt AI factory kind of ecosystem.

As a matter of fact, I think it's up to 13 vendors relay. But we don't see all of them in each of the socket we target. So I would recommend that you look at how many of those 14 are actually in the high-voltage game. So how many of them have a 650-volt gain in the right package to be able to enable donor HVDC. How many of them have been voltage GaN to enable the 50-volt secondary side. Some of them are listed as a silicon vendor, okay? We are listed as a gun vendor. The other thing is, as we talked about seeing used on the AC/DC as well, there is a natural pool and more sick as we get to a higher voltage and also outside of data center.

To do the 800-volt HVDC, you need to enable a change of the grid architecture. This is a pure, high voltage, ultrahigh-voltage sticky. So I will tell you is there's a lot of competition, but not everybody is feeling on the same thing. And there are not many of the vendors being listed that have both high voltage SiC or Ultra voltages and the competing in the AC/DC with 12 kV or in the grid with 2 KV and above and adding high-voltage and [indiscernible]. So this competition pool is actually being reduced. That's why we are very clear about what we do, we play in the silicon, we play in the again, high-voltage mid-voltage and in the high voltage and high voltage [indiscernible]

Got it. And then second, could you us on the incremental margin of either this 800-volt data center products or high-power products in general, especially as you roll out new suppliers?

So first of all, as Todd said, right, we expect continued gross margin expansion. So remember that the growth this year is coming from all high power markets and basically mobile going down, right, being less than the 5%. What I would tell you is the scale is going to help more gross margin as we grow revenues for our fixed costs, so that and that drives margin expansion. Number two is the HIBOR product in the high-power market are coming at higher margin than mobile work, okay? And that mix is going to change. And the third one is we are very active in ramping new suppliers, partially on the package side that will help us to reduce cost, right? So there is multiple aspects of our we are confident to see gross margin expansion as we clearly outlined for the rest of '26, right?

And as we scale further in '27, we expect to continue.

[Operator Instructions] Next question comes from the line of Jack Egan with Charter Equity Research.

I had kind of a follow-up on the gross margin question before me. So as mobile is getting smaller and smaller, I'm kind of curious of the longer-term outlook. Are your gross engines more so going to be driven by mix as in data center or nondata center end market mix? Or is it more kind of the technological innovation, I guess, that Todd mentioned that -- it sounds like it's referring to new products with higher ASPs. I guess I'm trying to look at what the driver of the margins -- that margin expansion is whether it's end market mix or better product margins?

So it's actually going to be a combination of both. So definitely end product mix, right, as mobile decreases, the high power markets are going to give us higher margin. Those are more reliability and performance. But then on -- as we sort of scale and have these new products come into the high-power markets, we do expect like further expansions through like optimized process yields and packaging costs, which will help drive our product cost down, thereby driving our margins up as well.

The one thing I would add, Jack, is scale cost reduction and basically higher margin product, right, as Todd said. But the one thing I would say is that, again, the growth this year, and I think we've been very clear that we are very confident that Q4 at the bottom, we are guiding up for Q1, and we said we're going to grow quarter-over-quarter throughout the year with margin expansion. I would reemphasize again that the growth is coming from whole high-power market. .

Yes, AI data center is a big part of the future outlook. And if you look at the SAM that we shared just a few weeks ago. It's nearly half of the SAM that we see for us in 2030. But I would outline that performance computing is growing this year, okay, and will continue to grow and also help on the margin mix. Grid infrastructure is really accelerating. And I think you're going to see higher ASP product, higher-margin product coming in play there, where it's more about reliability and performance and less about cost, of course, cost matter. And then as we talked about in [indiscernible] AI Center, which is a cost-sensitive market, it's all about efficiency right now, okay? And I think you're going to see all those markets contributing to the growth expansion in gross margins, right? So I just wanted to kind of calibrate a little bit your question to make sure that we don't see the gross margin expansion only coming from AI center.

Sure, Chris. No, that's super helpful then. And then I guess kind of from a higher level, I know you're not supplying as much into some of the automotive and industrial type markets. But silicon carbide has gone through just broadly speaking, has gone through a period of pretty significant oversupply. And so I was just kind of curious, what are your expectations on when that supply and demand in some of the other markets might balance out whether for Navitas or whether the industry as a whole. I know that you're dealing with some large volume wins that, so it might not apply to you as much, but just any commentary there would be helpful.

I mean, to be honest with you, John, I think, first of all, as an industry -- I would say it's going to take some time, but I think you should that to the vendors that are supplying to EV, we don't. We don't play in the same league of SIC, okay? You've seen me being very clear, but the fact that we compete and focus on 2 kV for the PSUs for AI data center and 2 KV and above up to 5 kV and even more for the grid. This is where -- this is not about scale of supply, this is about how reliable and efficient and high performance is your technology. So I think for some of the SI vendors operating at 450-volt 650-volt 80-volt focusing on EV, that's a valid concern. For us, it's about scaling with the Ultra voltage, okay, which is nothing really related to supply at this stage. .

Next question comes from the line of Richard Shannon with Craig-Hallum.

Apologies, the ambient noise just jumped off a plane here and I missed a bit of the call here. So I hope I don't repeat your question here. But Chris, one thing I'd love to ask you is in the data center opportunity here. To what degree are your opportunities coming from your partnership and kind of drafting behind, if you will, from Infineon versus other ways? And then also, are there any -- is there any cross-fertilization of wins within the rack between point of load and the 800-volt down, did those kind of cross-fertilize and give you additional benefit at all? .

So a very good question. As I mentioned, we partner with Infineon. We have a cross license. We've done that a couple of years ago. We continue to drive collaboration to enable GaN adoption, both high voltage and mid-voltage I would say that we don't leverage or benefit from [indiscernible] what you will see is, I think I got a question earlier from Kevin, who are you bumping into most of the time, I would say, it's fully Infineon and surely Infineon because they have the same vision. They have the same technology, high-voltage GaN, [indiscernible] voltage GaN and SiC and Ultra voltage as well for the green infrastructure. So very similar [indiscernible]. So we bump into each other. We follow each other, but I would not say that we leverage Infineon, right? Now interestingly enough, when we release the package, we found that we -- because we talk to the same customers, we think the same way is we end up seeing the technology the same way. That's what I would say. On your question about expansion of portfolio, that's something we are looking at. My focus right now was to pivot the company, okay? And put every eggs we have, every engineer we have, every focus we have on the 4 high power markets and high voltage GaN in hybrid SiC, but we are looking at opportunity to expand the portfolio as you get higher voltage in the data center, you're going to need circuit protection, and that's something we're going to look at in the future, right? But for now, we are laser-focused on execution with the product we have and we just released.

Okay. Fair enough. And the second question, probably for Todd. Just on the gross margins. If I caught the end of his prepared remarks talked about not having enough scale to really drive leverage on gross margins quite yet here. Is there a revenue level by which that happens here? And kind of what's that fall-through margin when you start to see that trajectory?

Yes. That's a great question. As our mix changes, obviously, our margins will grow. But right now, we have that scale issue. We do see margins starting to expand again in Q2 and beyond. So that's sort of the tripping point right now. What I would tell you, Jack, is the high power markets and the high-power product in the high -- are coming at higher margins. The mobile is going down. We said that in Q4, it was 25%, and we said it's going to continue to go down and get insignificant by the tone, right? So I think we are very confident that the mix of the mix of the mix change, the higher power product in the high-power market increase as a percentage of the company and the new product and the cost reduction we have will yield to gross margin expansion. So you'll see it light and clear, okay, starting not very far from now.

Our last question comes from the line Quinn Bolton with Needham.

Chris, you spent a lot of time talking about the 800-volt data center opportunity, but you also talked about needing to rearchitect the grid. And I just wondering if you could spend a second talking about the opportunity for the high-voltage silicon carbide and the solid-state transformers from where are you in the design process for some of those solid state transformers. And is there a way you can ballpark like what's the dollar content opportunity? I don't know if it's on a per megabasis or a per unit basis. But is there a way to size what the amount high-voltage sick that goes into a solid-state transformers that start to be deployed as the grade is rearchitected.

Thank you, Quinn, for this follow-up on. Actually, I'm glad you asked that question because everybody focus on AI data center. [indiscernible] focusing on the 800-volt HVDC architecture, which is important because it's a discontinuity in the architecture. It's a replacement of silicon by GaN or by high-voltage technology. But none of this is possible if the grid is not changing. And this is not just about getting a more efficient grid. It's a change of the architecture. And you refer to SSEs, which is basically getting from 35,000 volt A, super high-power, high-voltage lines down to 800-volt DC at the highest level of renability. That drives the change.

And I tell you, I've never seen the grid structure changing that fast. So you asked me, and I think we in the script and in the press release, we are accelerating the sampling of our 2.3 kV and 3.2 applications are any greed side application. SST, of course, but battery energy system, megawatt chargers, solar farm at the grid tide level. Any of those applications are in accelerated designs. We are very busy talking to all those customers. That's why I said it's 2 legs, okay? We have 4 high-power market. But if I look at the future, it was 2 legs, the IDC and the grid are equally important. And this is a pure high-voltage sick play. And to the earlier question about EV, this is not the technology because what you have to deliver is high-reliability technology, high reliable modules, so it's a different play. So I'm glad you asked the question. We see an accelerated design momentum. Of course, it's going to take time. This is a longer design cycle than computing. It's longer design cycle than AI DC, but I think you'll start to see a significant revenue growth starting with 7. To your question about content. In the last investor meeting we had, we basically referred to $25,000, $35,000 per megawatt of total content for Navitas as a SAM, which is based again on ultra-high-voltage, high-voltage 6, 12 kV and 2 KV and above and GaN. And about 10 to 12 is actually outside of data center. So if you think about 25 to 45, 10 to 12 is outside of the center, which is purely SST, BSS and all those applications, right? So -- and again, inside data center, you have a share between sick for PSUs and GaN as you move to it on a DC, but we should not underestimate the importance and the potential of the grid infrastructure. As a matter of fact, we released a couple of weeks ago, details some analysis that shows that both gain and sick of 50%, 50%, okay, in 2030, have of the potential for -- in terms of the [indiscernible] for Navitas to the [ $3.5 billion ] that we referred earlier. And you can see that the grid is not far off the SAM of data center. And the other thing I would say is this is just the beginning. So if you think about grid, this is a multiple decade transformation that will drive higher voltage continuously.

We start with 2 KV, we get into 3 KV. We're going to get to 5 KV and above, and that's going to drive transformation for the next multiple decades.

That concludes the question-and-answer session. I would now like to turn the call back over to the management team for closing remarks.

Thank you, everybody, for attending this call. As you could tell, we are very proud of the progress we are making. The first 5 months and 6 months since I joined was about pivoting the company and being clear about where we are going. I think we've done that. We are focusing on accelerating samples of our technology. We have 4 pillars of the transformation, which I mentioned, market focus, technology leadership operational efficiency and financial discipline. And we'll continue to update you on how we make progress. And I think we have a bright future ahead of us.

Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Navitas Semiconductor Third Quarter 2025 Earnings Call. [Operator Instructions] I'd now like to turn the call over to Lori Barker, Investor Relations. You may begin.

Good afternoon, everyone. I'm Lori Barker, Investor Relations for Navitas. Thank you for joining Navitas Semiconductor's Third Quarter 2025 Results Conference Call. I'm joined today by Chris Alexandra, AI President and CEO; and Todd Glickman, CFO. A replay of this webcast will be available on our website approximately 1 hour following this conference call and available for approximately 30 days. Additional information related to our business is also posted on the Investor Relations section of our website.

Our earnings release includes non-GAAP financial measures. Reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our third quarter earnings release and also posted on our website in the Investor Relations section. Non-GAAP expenses and operating margin excludes stock-based compensation, amortization of intangible assets and other nonrecurring items. In this conference call, we will make forward-looking statements about future events, our future strategy or the future financial performance of Navitas.

We may make predictions or describe trends in our industry and markets. You can identify some of these statements by words like we expect or we believe or similar items. We wish to caution you that all such forward-looking statements are subject to assumptions, risks and uncertainties that could cause actual events or results to differ materially from expectations expressed in our forward-looking statements. Important factors that can affect Navitas' business include factors that could cause actual results to differ from our forward-looking statements are described in our earnings release. Please also refer to the Risk Factors section in our most recent 10-K and 10-Q. Our actual performance may differ from our projections and our estimates, assumptions and strategies may change.

Navitas assumes no obligation to update forward-looking statements to reflect actual results, changed circumstances or other events that may occur except as required by law. And now over to Chris Allexandre, CEO.

Good afternoon, and thank you for joining us. I am very excited to have the opportunity to address you today. I have now been in my role for approximately 60 days, and I would like to take this opportunity to share with you my vision for the future of Navitas. I will start by saying that I feel incredibly proud to be leading the Navitas team, a world-class team that has been at the forefront of both gallium nitride or GaN and high-voltage silicon carbide or SiC since the very beginning of their development. Today marks a crucial moment for Navitas as we enter a transformation of our company. Over the last 60 days, I've been on the road meeting and collaborating with customers, employees, suppliers and partners.

That strategic tour gave me a clear view of our strengths and challenges and most importantly, the opportunity ahead. The conclusion is straightforward. Navitas is a company with enormous potential, underpinned by strong foundational elements already in place in both GaN and high-voltage SiC. And we have a tremendous opportunity to win in high-power, high-growth markets such as AI data centers, performance computing, energy and grid infrastructure and industrial electrification. Customers are eager to adopt those technologies into their application, and we have the experience and track record of delivering those technologies in scale and volume, and they want to collaborate.

Simply put, we are in the right markets with the right technologies, and we can win with focus on strong execution. We will accelerate, pivot and double down on those high-power markets and customers as we move away from consumer and mobile. I call this Navitas 2.0, a transformation to a high-power sharp focused company serving grid to the GPU to drive more consistent, profitable and sustainable results. Before we dig into what we are doing, let's quickly cover what is happening in the market right now. Across the entire market, electrification is accelerating and moving up in power demand. AI data centers necessitate accessing power distribution to achieve higher efficiency and density, and they are doing so exponentially.

In parallel, the energy grid is transforming with storage, solid-state transformers, utility scale renewables and megawatt charging to support the AI catalyst, but also the overall growing energy demand. This is not a short cycle. It is a durable, multi-decade sustainable trend that will reshape power architecture at rack, system and grid type levels. This requires fundamental change in customer system architecture, design and technologies and simply means the total market size Navitas is addressing has increased multiple folds. It opens immense opportunity for high-power players such as Navitas 2.0.

I spoke to a variety of customers over the last 60 days. Every single customer I met in those segments from leading U.S. hyperscalers and AI GPU vendors performance computing OEM and ODM to the many and very innovative customers [ in having a complete architecture ] in the energy grid told me the same message. GaN and high-voltage SiC technologies are the solution to the problem they are trying to solve and the revolution they are driving, and they view Navitas at the center of this transformation given our long history and track record in shipping those at scale. We have heard that message loud and clear, and therefore, will immediately accelerate accordingly.

We are one of the few companies with a complete high-power portfolio, GaN, GaN integrated with IC and high-voltage SiC. This combination, along with very strong system expertise built over the last many years, offers more value to customers. 10 years ago, Navitas was looking ahead at global energy demand, which was projected to grow by 200% to 300%, doubling to tripling over the next decade. EV, wind turbine, cloud computing, data centers, solar power, climate change, quantum computing, all those energy platform requiring significant reformats to consume efficient high-voltage technologies, which did not exist at that time. This enormous forecasted demand made it clear that power electronics would need a transformative leap in efficiency and power level.

Standing back, it was obvious even 10 years ago that existing silicon-based chip and technology would simply not get us there. And we didn't even consider AI and its power hungry implication back then. Navitas led the introduction of GaN into power electronics, leapfrogging established silicon players. Then we acquired and merged with GeneSiC, the leading advanced technology in high-voltage SiC. We've shipped over 300 million GaN units with proven quality and reliability over the last seven years, and GeneSiC brought leading-edge high-voltage SiC technology, both together enabling power architecture evolution in AI data centers, performance computing, energy and grid infrastructure and industrial electrification. GaN is now mainstream for AI data centers, performance computing and industrial electrification.

The NVIDIA 800-volt DC AI factory ecosystem announcement is the first proof point, and we expect it to be adopted across many other players. High-voltage SiC is also supporting and enabling the energy grid transformation necessary to enable AI and the associated demand for more power. Both markets are intertwined. Underneath our portfolio are long-standing partnership with leading fabs, back-end and module partners, a deep co-design with customers and a very advanced solution and system architecture understanding with more than 300 patents issued or pending. Our team has been on the forefront of GaN and high-voltage SiC from the early days, now reaching over 2 decades combined, and that experience matter when customers move fast and execution is critical.

Going back to Navitas 2.0 and the transformation from a mobile and consumer-focused foundation to a high-power company, that pivot is backed by decisive actions that we have begun to take. Number one, resource realignment. We are reallocating engineering, commercial and application support and R&D program towards high-power platforms and customers. We're ensuring we have the right people in the right markets and the right geographies, led by a renewed global high-performance leadership team. Number two, road map acceleration. We are accelerating the release of new products tailored to high-power markets targeted at rack, system and grid type nodes. We expand medium-voltage GaN devices, high-voltage GaN devices and IC and high-voltage fixed module. Number three, go-to-market restructuring.

We are focusing on hyperscalers, GPU vendors, Tier 1 OEM and ODM and leaders in our focus markets, AI data centers, performance computing, energy and grid infrastructure and industrial electrification. We intend to streamline our distribution network to align with those high-power focus markets. This also means a change in geographical resource deployment, including creating a stronger presence in the U.S., where we have growing and promising engagement. Number four, portfolio and customer pruning. We are deprioritizing lower margin, short life cycle projects, transactional markets and customers such as mobile and selected China-based segment to redeploy capacity and attention to durable high-power program. Our focus is on the long-term engagement where technological innovation makes a difference. We believe this will ultimately drive high-quality business with greater predictability, consistency and higher margin. Overall, this change will impact our business model. High-power engagement are indeed deeper, longer-lasting and multigenerational. We may often engage across multiple subsystems within the same customer, some served by GaN, others served by high-voltage SiC.

That breadth is expecting to increase win rates, raise the blended margin and produce more predictable, repeatable revenue compared with transactional, lower-margin segments such as mobile. This is the foundation for Navitas 2.0, a scalable, profitable and sustainable enterprise. At the OCP Global Summit, NVIDIA named Navitas a power selector partner for its next-generation 800-volt DC AI factory power architecture. That validates our ability to serve the entire power path from the grid to the GPU. In support of this ecosystem, we announced our first 100-volt GaNFast alongside our portfolio of 650 GaN discrete Fast and our GaN Safe IC and expanded high-voltage SiC products. This is our first formal entry into medium voltage GaN, the critical range for AI server power stages and rack level distribution. We're sampling now 2.3 kilovolt and 3.3 kilovolt high-voltage SC module to leaders in battery energy storage system, solid-state transformer program and megawatt charging. The strategy and opportunity are clear.

To get there, our plan is grounded in 4 pillars: number one, market focus, AI data centers, performance computing, energy and grid infrastructure and industrial electrification. We will stay sharply focused on those high-power markets only. Number two, technology and manufacturing leadership, continuous innovation in GaN, GaN IC and high-voltage SiC informed by customer requirements and co-design. We have a strong foundation in technological innovation, and we'll continue to lead the industry. We will also expand our manufacturing footprint to better serve our high-power customers. You may also see us doing more partnership to enable faster adoption. Number three, operational efficiency, a streamlined and rebalanced geographically deployed organization, a scalable foundry and packaging and module partnerships.

Number four, financial discipline, prioritized investment, leverageable OpEx and a shift towards high-margin program. In the near term, this transformation will have an impact, including a reduction in guidance before returning to growth. We expect Q4 to mark the bottom as we take decisive actions, including reducing channel inventory, consolidating distribution channel and adjusting our inventory to better align with our new high-power markets and customers. By deprioritizing lower-margin revenue and redirecting our road map and investment away from non-high power businesses, we believe we will accelerate our transformation and gradually improve the overall quality and profitability of our business throughout 2026.

This is expected to yield more consistent growth and margin expansion. We'll continue to provide transparent updates on our progress throughout this transition to ensure accountability at every step. AI data centers and performance computing are already shaping product [ requirement and designing ] and design wins. On the AI data center front, we expect material P&L contribution starting 2027. Our work with NVIDIA and other hyperscalers, GPU vendors, OEM and ODM, however, established already in 2026, a durable design win foundation for long-term growth. On performance computing, we continue to make progress in engagement as GaN technology is gaining rapid adoption in higher power, and we expect this to drive growth already in 2026.

In parallel, energy and green infrastructure are multibillion-dollar markets with multi-decade opportunity where high-voltage SiC is exceptionally well suited to our customer road map. As we embark in this transformation and execute this transition, we will share information for you to track our progress through transparent and clear update in the following area. First, a sharper focus on high-power account and program, which will be seen in growing importance and weight in our revenue, driving a change in mix. Second, operating expense, financial discipline and return on investment-driven road map decision solely focused on Navitas 2.0 North Star. Third, gradual gross margin improvements as we reduce lower-value shipments, grow more higher power engagement and overall improve the mix.

In conclusion, our GaN and GaN IC built a strong presence in mobile fast charging, and we are very proud of the 300 million units shipped. This gives us an in-depth understanding and [indiscernible], and this is the business that brought us to where we are today. We have complementary high-voltage SiC technology, products and modules, enabling us to cover more of this high power chain. High power markets are different and more rewarding. Engagements are deeper, the past cycles are longer and the value we deliver is measured in system-level performance and efficiency over multiple generations. This is where Navitas 2.0 will focus on.

We're executing a clear pivot to high-growth, high-power markets focusing on AI and data centers, performance computing, energy and grid infrastructure and industrial electrification, anchored by a complete GaN plus high-voltage SC portfolio with long-standing customer relationship and disciplined operation. We're aligning our organization, resource allocation, road map and channels to the markets that matter. We firmly believe that the change we are making will improve the quality of our business and position us for sustained growth and margin expansion throughout '26 and beyond. From the grid to the GPU, Navitas 2.0 is a high-power company built for scale and profitability.

Thank you to our employees, customers, suppliers and partners for their support during this transition. I look forward to deepening our partnership with stockholders, analysts and investors with transparent updates as we execute. With that, I'll turn the call over to Todd to review our third quarter results and our guidance. After Todd's remarks, I'll return for Q&A, including detailing our high-power Navitas 2.0 strategy, the actions behind the transformation and what it means for our business. Thank you.

Thank you, Chris. In my comments today, I will take you through our third quarter 2025 financial results, and then I'll discuss the financial implications of Navitas 2.0 with our accelerated transition to a high-power company with focus on AI data centers, performance computing, energy and grid infrastructure and industrial electrification markets. Also, I will outline how we plan to reallocate our resources with our new, more focused approach designed to grow revenue and seek profitability. Revenue in the third quarter of 2025 was at the midpoint of guidance at $10.1 million. While the industry environment remained relatively static compared to the second quarter of 2025, the expected revenue reduction reflects both adverse impacts from the China tariff risk for our silicon carbide business and pricing pressure in our mobile business, particularly in China.

Before addressing gross profit and expenses, I'd like to refer you to the GAAP to non-GAAP reconciliation in our press release. In the rest of my commentary, I will refer to non-GAAP measures. Gross margin in the third quarter was 38.7%, which was up sequentially compared to 38.5% in the second quarter, primarily due to a slight favorable change in end market mix. In the third quarter, we executed on further operational efficiencies, and we reduced operating expenses sequentially from $16.1 million to $15.4 million. Operating expenses were comprised of SG&A expenses of $7.1 million and R&D expenses of $8.3 million. These expenses align with our cost reduction target. Adding all this together, the third quarter 2025 loss from operations increased sequentially to $11.5 million from $10.6 million in the second quarter of 2025 as cost reductions did not fully offset the sequential decline in revenue.

Our weighted average share count for the third quarter was 213 million shares. Turning to the balance sheet. Accounts receivable was down to $9.8 million from $12.5 million in the second quarter. Inventory was relatively flat since last quarter at $14.7 million. Our balance sheet remains very strong as we exit Q3 2025 with high levels of liquidity and an improved working capital position. Cash and cash equivalents at quarter end were $151 million, and we continue to carry no debt. Moving on to guidance for the fourth quarter. We currently expect revenues at $7 million, plus or minus $250,000. This expected revenue reduction reflects our strategic decision to deprioritize our low-power, lower-profit China mobile business as well as our efforts to level set channel inventory and streamline distribution network to align ourselves with our high-power directive.

We believe that Q4 will represent the bottom for revenue as these actions will allow us to move faster to concentrate on the high-power business and customers that will, in turn, enable consistent gradual revenue growth throughout 2026. Gross margin for the fourth quarter is expected to be relatively flat compared to the third quarter with our guidance at 38.5%, plus or minus 50 basis points. However, we anticipate the technological innovation we bring to high-power, high-growth markets will result in a progressive increase in gross margins going forward.

Turning to operating expenses. We anticipate continuing to trim expenses to $15 million in the fourth quarter, reflecting a 24% year-over-year reduction. We expect to continue to reallocate resources and expenses as we redeploy the company towards higher power customers and markets, notably U.S. customers. The redeployment and an appropriate downsizing of our facilities will result in a lower quarterly operating expense level, and we believe we will be well positioned with our personnel and resources to execute on our pivot to higher power, resulting in quarter-over-quarter quality sales and margin growth and route to profitability.

For the fourth quarter of 2025, we expect our weighted average share count to be approximately 214 million shares. In closing, it is an exciting time at Navitas 2.0 as we leverage our leadership in GaN and high-voltage SiC to pivot to a high-power company and capture the exponential growth expected to come from AI data center, performance computing, energy and grid infrastructure and industrial electrification. We are moving fast to transition from consumer and mobile markets to more sustainable, higher power segments where Navitas is well positioned as the leader in GaN device shipped and high-voltage SiC to deliver a high-quality, scalable business. We are confident these strategic moves position the company for its next wave of more profitable growth. Operator, let's begin the Q&A session.

[Operator Instructions] Your first question comes from Kevin Cassidy from Rosenblatt Securities.

Welcome, Chris. Looking forward to working with you. Maybe just to understand a little better the shape of this transition. How long of a tail is the mobile market? Do you have some higher voltage applications in the mobile market that could continue on and then cross over to the power supplies, high-voltage power supplies. When do you expect that would be more than 50% of the business?

Yes. No, that's a great question. Maybe I could start there and Chris can add color. So when we're looking at the business today, right, I think as we look at Q3, mobile represent the vast majority of our business. And as we move into Q4, it's going to actually represent less than 50%. And all the growth going forward in our company as we go quarter-on-quarter, as we discussed, the gradual growth is going to come from these new markets of AI data center, performance computing and grid infrastructure.

[ Ralph ], nice to meet you and a very good question. As we move towards '26, what we see is as mobile continue to decline, we see an acceleration of the high-power market that Todd just listed. And we believe this is going to enable us to drive the quarter-over-quarter gradual growth that we talked about. When it comes down to mobile, I think you have to differentiate the high end of the mobile to the low end of the mobile. The low-end side has quickly commoditized over the last year or 2. The high end, however, we've reached a plateau. And if you think about 100-watt chargers today, there is less and less differentiation, and we anticipate an acceleration of the commoditization. That's why we decided along with the speed and the opportunity in the hyper market that Todd mentioned, we decided to accelerate that pivot that we have planned for a while.

Okay. Great. And just as a follow-up, just to understand the AI data center, I see it as 2 stages. One, you have the power supply companies that tend to be more conservative, we'll say, in making transitions and compared to the AI data centers that are starving for more power and would probably want to switch over more aggressively. So what is the strategy there? Do you work with the end users and pull the power supply customers along with them? Or do you work behind the power supply customers?

It's a very good question, [ Ralph ]. It's actually -- we do both. But as we pivot, the orientation of our engagement is definitely more towards the OEM and the hyperscalers. Let's start by AI because everybody talks about AI. AI is really a catalyst that drive change across all the markets we talked about, data centers, of course, but we'll talk about performance computing that is also disrupted by AI as well as the grid energy infrastructure. So as we ship today to AI, we ship to the, as you said, the power companies, mostly sitting in Taiwan. However, as the hyperscalers are taking control and driving the disruption of the architecture, we see engagement is pivoting towards the U.S. And the announcement made by NVIDIA with the 800-volt DC AI factory is really just an amplified example of how the hyperscalers are now trying to drive from the grid to the GPU and driving the architecture change at all stages. So we talk to those hyperscalers on all level of the stages.

We, of course, work with their partners to implement those solutions, but the system-level discussion that we have and that we had had over the last few weeks and months are really kind of enabling this transition that NVIDIA talked about, both for GaN as well as high-voltage SiC.

Sorry, I called you -- I didn't use the proper name Kevin.

Your next question comes from the line of Ross Seymore from Deutsche Bank.

Chris, welcome aboard, and you can call me, Kevin, if you want. So I guess a bigger picture question just to start. So when you guys were added to the collaboration list for the 800-volt data center stuff at NVIDIA, there were 10 names. The line at the time was you were the only one with GaN and silicon carbide. Now there's 14 names and the incremental 4, a bunch of them do have the GaN side, maybe not as much silicon carbide. So I guess the question is, when you look at 14 potential competitors or whatever subset you align to, what do you think the true competitive differentiation is for Navitas? And is it more on the silicon carbide or the GaN side?

Thank you. Very good question. I would say -- I would start by saying that the fact that we have both high-voltage SiC and GaN has not changed. And this is truly, as you said, a differentiator and not many of our competitors are having that. The other thing, and I've spent over the last 8 weeks, a lot of time with those customers, right? They all told me the same. When it is about enabling that pivot that technology disruption, that adoption of GaN track record matters. And we have through the pioneering of GaN into the first market that got GaN at scale, which is mobile charger, developed expertise, deep technology understanding and experience that really matter. So I would say beyond the technology understanding, the fact that we have both speed and track record is going to be a key differentiator.

And as I talked to NVIDIA and a few other of the hyperscalers, they all told me the same. It's about speed and support to have them enabling that transition with safety and execution. And that's where we're going to differentiate against our competitors.

And I guess whether it be you or Todd, it's nice that the fourth quarter is the bottom. When you think about growth going forward, I thought I heard, and forgive me if I missed out a little bit on this, but I thought I heard a significant portion of the data center side would be more in 2027. So just not putting absolute numbers around it, but the tailwinds sequentially in 1Q, 2Q, et cetera, of '26, what gives you the confidence this is the bottom? And just kind of conceptually, what are the areas that are going to grow off of the $7 million in the fourth quarter?

Yes. I think what gives us confidence that this is the bottom is we actually proactively are walking away from revenue in mobile. We want to make sure that there's not a distraction in the business and we can concentrate on the long-term goal here, which is data center performance computing and grid infrastructure. So that's how it gives us the confidence. And going forward, the growth is going to come out of those markets and not mobile. And with today, mobile represent a large majority going forward, that's going to continuously go down as we move through 2026. So that gives us confidence not only the better revenue, but it will be more sustainable and more profitable.

Let me add just one comment. First of all, as Todd said, by walking away from short term, less long term, less innovation-based engagement with customers and applications, we are pivoting our resource a lot faster to drive this new growth. Number two, there's a clear acceleration in those markets. Should it be the growth in data centers itself, even in the form of the traditional, should I call it this way, traditional power implementation before we move to the 800-volt DC, and we benefit from that through the power vendors. If you look at the impact of AI in performance computing with those notebooks and other high-end computers getting more powerful, they also require a lot more power. And we see an acceleration of that demand to higher power in '26 is going to drive a lot of growth.

Last but not least, we also see an acceleration of demand in any form of energy and green infrastructure. So we have a lot of pull from midsized to large-sized customers really trying to accelerate how they can enable the AI revolution. So long story short, the AI is a catalyst across multiple markets. And yes, data centers itself through the 800-volt DC will drive a lot of accelerated growth, but we see that catalyst already [ yielding ] the fruit in '26.

Your next question comes from the line of Quinn Bolton from Needham & Company.

This is Shadi Mitwalli on for Quinn. Obviously, the move away from China Mobile is having a bigger impact than expected. But I just want to get some more color on the puts and takes here. And just overall, has anything new changed over the last 90 days?

You know, nothing's new changed besides the fact that Chris has been on the road talking to customers, and they've asked us to go faster. And so instead of focusing and sort of allowing mobile to still represent a large majority of our business going forward, we did a more proactive approach to walk away from that. And so that's really the key difference in the last 90 days that's happened just because the growth in these new sectors is extraordinary, and we want to make sure we're in the best position to take advantage of that.

[ Sean ], let me add some color because I joined 8 weeks ago. So if any change, I'm probably the one behind the change, right? I would say the market itself has not changed, okay? There is a clear acceleration, and it is faster than it was just a few months ago. But what has changed is the clarity that we have that we can't continue to transition smoothly. I come from a background where if you double down on the greatest opportunities, you have more chance to capture it. Again, as I said, I have met a lot of customers, all of them in data centers, computing, infrastructure, all told me the same. They want to move faster, they want to enable the transition. So it was very clear for me after a couple of weeks on the road that we cannot transition this keeping some of our resource maintaining the past. So we have to double down and move our entire resource or most of our resource into enabling the future so that we can capitalize on the opportunity we have and maximize our chance of winning.

So I would say the one thing that has changed is the clarity and the pivot. I think historically, we've been trying to manage the past and the future. And with the amount of resource we have, we just have to accelerate that transition, in my opinion.

Great. That was helpful. And then my follow-up is on the solar end market. I believe in Q1, you guys talked about ramping a solar microinverter win in the second half of this year. And I was just curious if this is still on track? And if so, how is the ramp going?

Yes, nothing has changed. I mean you're referring to the GaN BDS, which will ramp in '26 with our lead customer, which is part of the energy and green infrastructure segment that we talked about.

Your next question comes from the line of Jack Egan from Charter Equity Research.

Chris, congrats on being appointed CEO. So Navitas, I mean, I guess kind of a high-level question. Navitas certainly has some exciting opportunities ahead of it. You came from Renesas, you had experience with quite a few large companies in the analog and power space. And so obviously, one big difference is going to be the culture of moving from a company with 10,000 employees to a few hundred. So yes, just from a high level, what are some of maybe the cultural or operational characteristics, I guess, from your prior experiences that you might plan to install at Navitas?

Thank you for the question. Of course, we are transitioning the culture as we speak. I come from a culture of strong execution and pivot with clarity, and that's what we are bringing here. What I would say as well is have learned very well some of the pitfalls of big companies that do not always move the fastest. So the culture that we are building in Navitas and what you are seeing in the choice we've made walking away from our historical business is, number one, clarity and being solely sharply focused on what's going to make us more profitable and more sustainable from a result point of view in the future. Number two, speed -- speed so we can transition faster and execute the plan for our customers in a faster way. And number three, execution, which I think was probably missing in the culture that we had here so far.

Great. Okay. That's helpful. And then for the mobile business in China, you are sticking with the longer term, some of the higher voltage, higher value opportunities. Is there any reason why the competitive and pricing pressures won't eventually kind of move up to that side of the business, like kind of like what's happening with the lower value chargers now?

I think it's a very good question. What I would say is what's happening in mobile today is the fact that innovation has stopped bringing any value. We've been in the last few years about how do we basically get more power into a smaller form factor. Today, we've reached a plateau. 100-watt charger is fairly small, and it's all about getting it cheaper. When you look at data centers, even if you look at performance computing, we are not at that point. At this point, this is about how do we basically accelerate the efficiency? How do we accelerate the transition, the adoption of high-voltage SiC, the adoption of GaN. And we are at complete different power level. So if I give you an example about high-performance compute with AI going to the client, we are talking about how do we get those super high-end computers into multiple hundred watts. And this is a complete different ball game compared to what we've seen in mobile, where content is much higher, expertise and ability to execute is much harder.

And I think this is going to benefit companies like Navitas who have mastered GaN for the last few years into the first market that took it to scale. So I think the answer to your question is yes. Ultimately, when power level will plateau, and innovation will not make a difference. You're going to get there. But what I see is we are very far away from this in any of the market that we're talking about, in particularly anything that touch AI. We're talking about 10x, 100x every generation after generation [ in power ] delivery.

Your next question comes from the line of John Tanwanteng from CJS Securities.

My first one is, could you just talk about the data center prospects in '26 before you ramp the 800-volt products? Just what kind of growth are you expecting in the next year with the legacy servers and ecosystems that are out there currently?

Yes. That's a great question. So Jon, I mean, today, we do -- we are shipping into AI data centers today. It's not material. As we look into '26, we'll continue to grow that revenue. But at the end of the day, the materiality when this is going to become a larger portion of our business is going to wait until 2027 when 800-volt becomes prime time. So that's when we really expect the exponential growth happening from data centers.

Sorry, do you mind if I just add a few color? The way I view it is, again, there is a disruption in the adoption of GaN and high-voltage SiC coming with this new concept of basically breaking the traditional way the data centers were built, okay, moving from the super high voltage going through AC/DC and then converting it down to lower power. With the NVIDIA announcement, we are talking about volt down to GPU. So that will drive a lot more content and the rapid adoption of GaN. In the interim, as I said, AI is a catalyst. There's more server and AI deployment out there that drive ultimately growth for anybody serving power, right? So that's what Todd said. If you look at we are shipping today in data centers, that revenue will grow. It's not material, and it will not represent a material impact. But in '27, as we pivot to the new architecture, this is where the content in GaN, mid-voltage GaN and high-voltage GaN is going to drive to a complete different level.

Great. And then I was wondering if you could talk about your cash position and your burn rate, and if that leaves enough for you to ramp growth to meet that next-gen data center demand as you enter '27?

Yes, absolutely. So we finished the quarter at $151 million, and it's a very healthy balance sheet with no debt. Right now, we're burning around $10 million to $11 million a quarter, and that should be plenty to give us ongoing -- for ongoing operations. So that's where we stand today.

Your next question comes from the line of Tristan Gerra from Baird.

This is Tyler Bomba on for Tristan. Navitas was initially planning on starting to ramp silicon carbide [ epitaxy ] internally mid-2024. How much of your silicon carbide output is currently in-sourced? What is your target for that either in terms of dollars or percent of revenue?

Yes, that's a great question. So yes, we did initially when the market was tight, and we wanted to generate some epitaxy in-house. But however, given the market has loosened, we no longer do that. So we never initiated that project. And we are -- all of our substrates and epi as it relates to high-voltage silicon carbide is outsourced today.

The next question comes from the line of Richard Shannon from Craig-Hallum.

Chris, welcome to Navitas. I look forward to working with you as well. Let me ask my first question on data center here and talk about the engagement and how things are going here and ultimately when you expect to get to wins here. I think the kind of one of the part of the engagement model, which we didn't hear about any in your prepared remarks is working with Infineon as a second source into this area. Wondering if that's still part of the strategy here. And then ultimately, when do you expect to be able to talk about getting wins and having visibility on when they ramp?

Thank you for the question. So first of all, I'll answer on the Infineon. We continue to communicate with Infineon. You know that we have a cross-licensing going on. We continue to be aligned on the vision that we want to enable the adoption of GaN and high-voltage SiC into those hyper markets. When it comes to the engagement with NVIDIA, and I would say broadly with the hyperscalers because we don't only spend time with NVIDIA, but we also spend time with a lot of the other hyperscalers, OEM as well as ODM, right? For me, '26 is about enabling the transition. First of all, we are not focusing only on the mid-voltage and closer to GPU. We are focusing on the whole chain.

We talked about energy and grid infrastructure. If you think about the first stage of the 800-volt DC, it requires to basically move from transformers to solid-state transformers where high-voltage SiC is a prime technology. Then you have to go to multiple stage of power conversion. So -- if I -- your question is when can you basically give us color on the engagement. We'll continue to give you in a transparent way how we expand our partnership. We can't be specific on any form of engagement. But what I can tell you is the number of interaction at system level, product level, technology level with some of the hyperscalers that you mentioned is all-time high.

Okay. Great. Second question, I really just kind of looking at calendar '26 here, and it's kind of a multipart question here. Please bear with me here. wonder if you could give us some sense of the relative contribution of your lower voltage GaN here and also silicon carbide? And then ultimately, I think the question we're going to get asked a lot tomorrow morning is, can you -- how do we think about calendar '26 sales? It seems like it's almost no chance it's going to grow year-on-year based on the dynamics you've discussed here. But if you could make any comments about how that looks, that would be great.

So I'll start by answering your question about GaN versus SiC, right, and the growth towards '26, and I'll let Todd add some comment with a bit more detail. First of all, we don't look at the business at GaN versus SiC. As I mentioned early on, we are focusing on enabling this low power to high power. And we look at revenue really from a segment point of view, okay? That's number one. Now if you want a bit more color, and we talked about the fact that starting Q4, which is the bottom, we're going to grow quarter-over-quarter gradually as the high-power markets are offsetting the decline in mobile. Both GaN and SiC will grow in high power markets. That's the fact for '26.

Now if you look at segment level, mobile will be down. Mobile consumer will be down. But high-power computing and energy grid infrastructure will be up. And data centers will grow even though not material throughout '26 and really kind of accelerate the growth in '27.

Great. And I think one of the other questions was on when was low voltage going to go into revenue? Is that's correct, Richard?

Yes. and some characterization of what kind of contributions you'll see for next year.

Yes. So low voltage, we went to market with low voltage, as you saw, PSMC. That's designed right now for the 800-volt data center. So when that ramps, you're going to see material revenue from low voltage taking place.

Yes. We just announced a couple of weeks ago, our first -- it's actually a mid-voltage GaN 100 volt, which was the first outcome partnership with TSMC that we had for a couple of years. That's really tailored towards the last stage of power conversion into the AI 800-volt DC, and we expect that to start to ramp in 2027.

Your final question comes from the line of John Tanwanteng from CJS Securities.

I was just wondering if you could talk about the incremental margins in the high-voltage data centers and the great opportunities, if they're any different from the existing high-voltage businesses that you have for high-power businesses?

Yes. I think both those margins, we expect those markets to have higher margins and more sustainable than our current mobile and consumer business, which is what is contributing to our guide to basically go quarter-on-quarter growth as margins as revenue picks up in 2026.

And Jon, what I would say is the high-power markets are very different in nature. First of all, as we talked about, they are at the beginning of the adoption of those high-voltage technologies, so be GaN and high-voltage SiC. Number two, it's about innovation. It's about speed, it's about execution. Yes, all those customers want us to be cost competitive. Yes, cost is part of the criteria that they make decision. What I can tell you, having met many of them over the last 60 days is that they don't lead with that, very different from mobile, where we've plateaued from an innovation standpoint. And now it's about how can you make my charger cheaper. When we talk to the OEM, ODM, hyperscalers, they are asking us, how do you do what you do faster. So I think margin and value that we bring and value that we extract will help us to uplift the margin as the high-power portion of our revenue increase over time.

Got it. And actually, the second question is a follow-up to that. How are you planning to accelerate that development? Is it -- what are the remaining things that you need to do to produce products for these markets that work and do you have -- you can scale?

Well, this is why we've decided to basically move faster away from mobile, right? It's application engineering, it's support to customers. It's system engineering. It's R&D. It's basically moving most of the R&D, if not the entire R&D towards making road map for those markets instead of maintaining generation over generation presence in the low-end mobile market. So it is basically pivoting -- and I think I've heard the word pivot and transformation. It is pivoting the entire resource level to capture on that growing opportunity moving forward.

Okay. Great. Last one for me. Can you just talk about the capacity to ramp for these customers? I know you have that new agreement with Powerchip. Just help me understand what the capacity there is to meet the demand if you do get a significant amount of share there.

So what I would say is, first of all, TSMC has been a great partner, and they are helping us to transition for the next few years. We expect to continue to ship from TSMC for the next multiple years. Number two, we are ramping TSMC. We are in transition. We announced the first product from mid-voltage GaN. We're going to transition the high-voltage GaN in '27. And last but not least, we continue to look for new foundry partners to be able to capitalize on the opportunity that we have, either from a geographical supply chain point of view or a cost point of view as well as volume point of view.

That concludes the Q&A session for today's meeting. You are now able to disconnect. Everybody, have a great day.

Thank you for standing by, and welcome to the Navitas Semiconductor Q2 '25 Earnings Call. [Operator Instructions]

Now, I would like to turn the call over to Lori Barker, Investor Relations. Lori, please go ahead.

Good afternoon, everyone. I'm Lori Barker, Investor Relations for Navitas.

Thank you for joining Navitas Semiconductor's Second Quarter 2025 Results Conference Call. I'm joined today by Gene Sheridan, our President, CEO and Co-Founder; and Todd Glickman, CFO.

A replay of this webcast will be available on our website approximately 1 hour following this conference call, and available for 30 days. Additional information related to our business is also posted in the Investor Relations section of our website.

Our earnings release includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our second quarter earnings release, and also posted on our website in the Investor Relations section. Non-GAAP expenses and operating margin excludes stock-based compensation, amortization of intangible assets, and other non-recurring items.

In this conference call, we will make forward-looking statements about future events or about the future financial performance of Navitas. You can identify these statements by words like "we expect" or "we believe" or similar terms. We wish to caution you that such forward-looking statements are subject to risks and uncertainties, that could cause actual events or results to differ materially from expectations expressed in our forward-looking statements.

Important factors that can affect Navitas' business, including factors that could cause actual results to differ from our forward-looking statements, are described in our earnings release. Please also refer to the risk factors sections in our most recent 10-K and 10-Q.

Our estimates or other forward-looking statements may change, and Navitas assumes no obligation to update forward-looking statements to reflect actual results, changed assumptions or other events that may occur except as required by law.

And now over to Gene Sheridan, CEO.

Thanks, Lori. And thanks to all of you for joining our Q2 2025 earnings call. I am pleased to announce Q2 revenues of $14.5 million which are in line with our guidance, despite a number of headwinds that continue to challenge near-term results.

Our industry is in a classic semiconductor downturn with a slowdown in projections for solar, industrial, EV sectors, the continued impact of tariff conflicts, and now, the removal of tax credits for the solar and EV industry. Despite these short-term industry headwinds, Q2 was a very strategic quarter for our company.

We have decided to more aggressively transition and invest in a leadership position for AI data centers. AI data centers represents an extraordinary opportunity and one that Navitas is uniquely positioned to capitalize on. In Q2, we announced that NVIDIA has selected Navitas to support their vision for next-generation 800-volt data centers.

We also raised nearly $100 million of new capital in the quarter, providing additional cash flow to support our plans for growth, including investments needed to execute on development milestones over the coming quarters to support a significant ramp expected in late '26.

Furthermore, in Q2, we announced our new GaN foundry partner, Powerchip, which is enabling our next-generation 8-inch, low-cost manufacturing platform to support our cost and capacity goals for this expanded AI data center opportunity. Our existing high-voltage GaN supplier is TSMC, which is utilizing 6-inch wafers.

Over the next 2 plus years, we expect our high-voltage customers to transition to Powerchip's 8-inch factory, which can produce nearly 80% more chips per wafer compared to 6-inch for little incremental cost. We expect this will yield more attractive price points for our customers and higher gross margins for Navitas. We are already planning to ramp our medium voltage 80- to 200-volt GaN from Powerchip's 8-inch line.

Last, we made the decision to sharpen our focus on the high-end performance applications of the mobile, consumer and appliance sectors. Subsequently, going forward, we will reduce our focus, investment and revenue expectations around the more mainstream, price-sensitive applications in these sectors.

We expect this transition will allow Navitas to maintain its spending discipline, with operating expenses at or below current levels, while shifting significant customer acquisition and R&D investments to next-generation AI data centers and the related and critically needed energy infrastructure markets.

With that in mind, I'd like to share much more detail around the opportunities that we are targeting with this increased focus. AI is about to transform everything in our lives and on our planet. The impact will be felt in all sectors, but it starts with the cloud. The world's most powerful AI processors are rapidly being developed and deployed in the cloud, and with this massive processing capability, we are also seeing an explosion in power requirements that has never been seen before.

While we now have AI processors that are rapidly approaching the intelligence of a human brain, we should also consider that the energy consumption of the human brain is believed to be less than 20 watts, while AI processors may require over 1 billion watts to generate a similar level of intelligence.

So this presents a very large-scale power problem for our industry. In particular, total AI processor power consumption is projected to go from 7 gigawatts in 2023 to over 70 gigawatts by 2030. That 10x increase is creating a number of power challenges for our industry, but will also generate significant commercial opportunities for the suppliers that deliver leading solutions to these major power problems.

In power electronics, when any system requires a significant increase in power capability, one of the most effective strategies is to increase the operating or system bus voltage. Since power distribution losses are inversely proportional to the square of operating voltage, a 4x increase in voltage translates into a 16x reduction in power loss and a very dramatic improvement in energy efficiency.

Before AI, traditional data centers operated with a 12 volt bus and achieved overall energy efficiencies in the 70% range. In the last 2 years, with the deployment of the first AI chips, the data center industry has quickly transitioned to a 48-volt bus architecture, reducing power distribution losses by up to 16x and targeting overall efficiencies in the 80% range.

These 48-volt data centers are also supporting a major upgrade from 10 to 20 kilowatts in a traditional server rack, to a 100-200 kilowatt rack in a 48-volt data center. While such a change is dramatic, it is far from adequate to handle the exponential growth in AI power requirements.

Thankfully, NVIDIA has announced their intentions to enable 800-volt data centers in the future. With a 15x increase in operating voltage, overall data center efficiencies should improve significantly while targeting rack power that can achieve 1 megawatt or more.

This is an important step and vision for the data center industry, but also poses significant challenges and opportunities for the power electronics industry and semiconductor suppliers such as Navitas.

Traditional 12 volt data centers had moderate power semiconductor content and little or no demand for the ultra-efficient gallium nitride or silicon carbide technology that Navitas is producing.

The near-term move to 48-volts has increased that power semiconductor content to around $10 million to $20 million per gigawatt of power demand, which may represent over $1 billion per year power semiconductor market opportunity globally over the next 5 years, but GaN and silicon carbide will be required only selectively in these lower voltage and lower power systems.

However, as we look at 800-volt systems, these super-charged data centers will require 3 different stages of power conversion, all of which, we believe, will need a combination of gallium nitride and silicon carbide technologies to meet their power, efficiency and density requirements.

As a result, we expect power semiconductor content of AI data centers to expand to $30 million to $50 million per gigawatt of power delivered, with the majority demanding gallium nitride or silicon carbide. When combining this growing content with the 10x increase in AI power projected in the future, we believe this could translate into a $2.6 billion per year opportunity by 2030 for gallium nitride and silicon carbide.

Let me break down this opportunity further and explain Navitas' capability and plans. There are 3 power conversion applications or stages for the 800-volt data center opportunity. The first stage starts with the power grid itself, which is not well prepared to handle this significant surge in energy demand. The existing grid was designed over 100 years ago and is antiquated, inefficient and lacks the stability needed to electrify our planet.

The existing grid is built on low-frequency transformers or LFTs, which have no semiconductor content and don't offer good flexibility to deal with the growing instability of the grid itself and the fast charging power requirements of data centers and our planet. The answer is in solid-state transformers, or SSTs.

SSTs enable up to 75% reduction in size and weight and offer an inherent robust ability to efficiently deliver more power under a wide range of operating conditions. SSTs require the most efficient power semiconductors, like silicon carbide, and require silicon carbide that withstands ultra-high voltages to interface directly to the grid which operates at 10,000 volts or higher.

Our GeneSiC technology is a leader in ultra-high voltage or UHV silicon carbide technologies, with voltage ratings up to 6.5 kilowatt. This positions Navitas to support this mega-trend to upgrade the grid with robust, efficient solid-state transformers. In the process, we expect to participate in creating a brand-new $1 billion per year market opportunity for Navitas.

We have completed initial sample evaluations with positive customer results. We are now developing engineering samples, initially at 2.3 and 3.3 kilowatt in our new SiCPAK package optimized for these ultra-high voltages and designed for very high reliability. We expect to deliver these final samples to customers in Q4 this year.

Our target customers include major power system integrators such as Schneider, Eaton, Vertiv, among others. We expect first customers will create system designs during 2026, with many targeting 2027 for mass production ramp-up. We currently see limited competition in this exciting new market, and we are aggressively investing in expanding our technology lead and forging strategic relationships with the early leaders that are creating these SSTs.

These SSTs convert the grid power from over 10,000 volts down to 800-volts needed for next-generation data centers. We estimate this stage requires about $8 million of power semis per gigawatt of power delivered, which translates to about $0.5 billion per year opportunity for our silicon carbide technology in the next 5 years.

But this is only the estimate for grid-powered data centers. We see the same trends and opportunities to upgrade the grid to connect with large-scale renewable energy and storage systems and also to power the rest of our increasingly electrified planet. In total, we estimate SSTs and grid power reflects well over a $1 billion per year total market for Navitas silicon carbide technology by 2030.

This takes us to the second stage, which converts that incoming 800-volts from the grid down to 48-volts. This second stage requires 800-volt to 48-volt DC-to-DC converters that are integrated directly onto the server motherboard, where real estate is at a premium and thermal management is critical. As a result, this second stage will require the highest frequency, efficiency and density technologies which GaN and silicon carbide can offer.

While the 800-volt input of this stage can utilize high-voltage GaN or silicon carbide, the 48-volt output of this stage is a perfect fit for our new mid-voltage 80- to 200-volt GaN, which we expect to introduce beginning later this year. Our target customers for this stage include Flex, LiteON, and Delta, among others.

Similar to the first stage, initial engineering samples have been evaluated by our early customers with positive results, and we are now developing final engineering samples for lead customers in Q4 and supporting them to finalize their system design and supplier selections in advance of early production ramps expected to start in late 2026.

We are 1 of only 2 suppliers that can offer the full range of high-voltage GaN, high-voltage silicon carbide, and the mid-voltage GaN for this application and we believe we offer the best performance versions of each. We estimate this application represents a $1 billion per year TAM given $15 million of power semis per gigawatt delivered.

And, finally, we come to the third stage, which takes the 48-volts from the second stage and converts it down to 12 volts or less to eventually power the AI processor itself. This 48-volt DC-to-DC converter has the most critical demands for high efficiency, density, and reliability given it is the closest to the AI processor on the motherboard.

For this stage, Navitas will use our new 80- to 200-volt GaN technology. This technology offers industry-leading frequency, efficiency and density, and does it in an innovative new package which efficiently removes the heat from the top and bottom of the package, all in a very tiny 5 by 6 millimeter footprint. Initial customer evaluations are complete with positive results.

As with the other stages, we plan to deliver final engineering samples in Q4 and expect customers to finalize their system design and supplier selections in advance of early production ramps in late 2026. We estimate this stage represents the largest of the 3 stages with a $1.2 billion per year TAM, given $20 million of power semis per gigawatt of power delivered.

In aggregate, we believe the AI data center and related energy infrastructure opportunities represents a very sizable $2.6 billion per year market opportunity for our industry and for our company. We are pleased that our years of collaboration with industry leaders like NVIDIA have led Navitas to be recognized among this sector's key ecosystem partners.

We are excited by the positive initial customer evaluations and look forward to developing the final technology for each of the 3 stages I described. We believe we are at the right time, in the right place, with the right leading-edge technology to establish a leadership position in this fast-emerging AI data center and energy infrastructure market.

While some of the market headwinds and our decision to sharpen our focus within the mobile and consumer segments will constrain our near-term financial performance, we believe we are making important decisions and investments to capitalize on this exciting opportunity.

We recognize that a lot of important information and updates have been shared today. To assist investors to better understand Navitas plans and opportunities for AI data centers and related energy infrastructure, we are posting a short PowerPoint on our investor website today that further explains many of the opportunities I just covered. In addition, we will be holding a live presentation and Q&A event open to the public later in the week.

Now, let me turn it over to Todd to expand further on the financial implications of the strategies and initiatives that I have described.

Thank you, Gene. In my comments today, I will take you through our second quarter 2025 financial results, and then I'll walk you through our outlook for the third quarter and explain further on the financial implications of some of the important Q2 achievements, market dynamics and announcements that Gene has described.

Revenue in the second quarter of 2025 was at the midpoint of guidance at $14.5 million. As expected, revenue and the industry environment remained relatively static compared to the first quarter of 2025. The decline compared to a year-ago quarter was primarily the result of lower revenues in the China EV and industrial markets as semiconductor customers wait for improved economic indicators.

Before addressing gross profit and expenses, I'd like to refer you to the GAAP to non-GAAP reconciliations in our press release. In the rest of my commentary, I will refer to non-GAAP measures.

Gross margin in the second quarter was 38.5%, which was up sequentially compared to 38.1% in the first quarter, primarily due to a slight favorable change in product mix. In the second quarter, we executed on further synergies and operational efficiencies associated with prior acquisitions as we reduced operating expenses sequentially from $17.2 million to $16.1 million.

Operating expenses were comprised of SG&A expenses of $6.9 million and R&D expenses of $9.2 million. Expenses were slightly higher than projected as we incurred additional second quarter only R&D expenses related to our high power GaN development.

Consolidating certain support groups and sites, and further streamlining day-to-day functions has allowed us to significantly reduce SG&A by 17% or $1.4 million from the first quarter, while we continue investing in next-generation GaN and SiC technology platforms to serve the increasing power consumption across AI data center and energy infrastructure markets.

Adding all this together, the second-quarter 2025 loss from operations improved sequentially to $10.6 million from $11.8 million in the first quarter of 2025 by leveraging SG&A cost reductions.

Our weighted average share count for the second quarter was 199 million shares. Approximately 20 million shares were issued, yielding net cash proceeds of $97 million through our at-the-market offerings that we concluded during the quarter.

Turning to the balance sheet. Accounts receivable was relatively flat since last quarter at $12.5 million. Inventory is $15.1 million down from $16.1 million in the first quarter. We took an approximately $3 million China SiC inventory reserve on U.S.-produced SiC products given the impact of the unstable tariff environment on our sales into China.

Ultimately, we believe our U.S. manufacturing location for SiC wafers will provide Navitas with a significant strategic advantage with our U.S. customers for AI data center and energy infrastructure over time.

Our balance sheet remains very strong as we exit Q2 2025 with high levels of liquidity and an improved working capital position. Cash and cash equivalents at quarter end were $161 million and we continue to carry no debt.

Moving on to guidance for the third quarter, we currently expect revenue of $10 million plus or minus $500,000. This expected revenue reduction reflects both adverse impacts from China tariff risks for our silicon carbide business and our strategic decision to de-prioritize lower margin China mobile business while we accelerate our investment and leadership in AI data centers and associated new energy infrastructure.

These applications have ever-increasing power demands ideally served with Navitas' differentiated GaN and SiC technologies that we expect to yield strong growth potential and higher margins over time. We believe this transition toward AI data center and energy infrastructure markets will take multiple quarters, and we have set up our balance sheet accordingly.

In addition to the completion of our $97 million net capital raise, we have reduced operating expenses 25% from second quarter 2024. We believe we are well-positioned with the resources and runway to execute on opportunities for our next wave of growth driven by increased scale and profitability.

Gross margin for the third quarter is expected to be flat compared to the second quarter, with our guidance at 38.5% plus or minus 50 basis points, as our expected mix remains consistent in the near term.

Turning to operating expenses, we anticipate operating expenses of $15.5 million in the third quarter, down from $16.1 million in Q2 2025 as we continue to execute on our plan of focusing on fewer markets to drive capital efficiency across the business through the transition. For the third quarter of 2025, we expect our weighted average share count to be approximately 214 million shares.

In closing, we are pleased with our Q2 results, particularly around the recognition of our technology attracting fresh investment, the announcement of strategic ecosystem partnerships and the acceleration of our focus and investment in data centers and energy infrastructure.

Looking forward, while some industry headwinds continue and we will expect to further lessen our reliance on mobile revenues, we are confident these strategic moves position the company for its next wave of significant growth.

Operator, let's begin the Q&A session.

[Operator Instructions] And your first question comes from the line of Ross Seymore with Deutsche Bank.

Gene, in this transition, I guess let's get the bad news out of the way first. How do you expect the revenues to behave between now and the time in, it sounds like, second half of next year where the bigger ramp will occur in the data center side. So as we drop down first before we go back up on the other side, how should we think that shape looks?

Yes. Thanks, Ross. Good question, the obvious question, right? So as we make the transition, we're going to both reduce dependency on mobile, as Todd and I described, which does involve reducing some revenues being more selective in that market. At the same time, we're layering in all new design wins from other sectors and even the 48-volt data centers. So I think those net out to some softer quarters over the next 1 or 2 quarters, but sets us up well as we shift all of our investment or heavy investment into the AI data center, first 48-volt, but much bigger as we described with the 800-volt. So it will be a transitionary period, but some softer quarters in the near term, but setting us up well for big growth as we get into '26.

And then I guess that's the perfect transition to the good side of the equation. When you get into '26 and you say most of these ramps are late '26, are you talking second half or fourth quarter?

And then looking even further beyond that, what's the sort of margin structure you think this business could offer? Especially on your gross margin line, it seems like it would have significantly less pressure from competitors perhaps, but inherently a more performance-centric market. So what sort of gross margin do you think that could deliver?

Yes. Let me, so covering the first part, recognize the 800-volt data center is heavily a 2027 play. That's a pretty extraordinary one with really high content, we believe, GaN and silicon carbide across those 3 stages we talked about. 48-volts are still ramping, right? We previously announced 70 customer projects, over 40 wins. They're not as big. They're not as significant, but those will be contributing and layering into growth and help offset some of that reduced mobile dependency we talked about throughout '26. So I think that's the dynamic for '26 on the top line.

I think on margin, we still have our same long-term margin model north of 50 points. As you point out, the AI data center and the energy infrastructure markets should be very high-value markets. They're really driven around performance, efficiency, density, Cost is secondary, even supply chain output is a higher issue than cost. And that's also, obviously, part of what we're doing with mobile and reducing that dependency being more selective. So I think all that sets us up well.

I'd add in another factor, which is a big announcement in the quarter, Powerchip, low-cost 8-inch, that's also going to be layering in over the next 12 to 24 months. That's going to drive great cost reduction for us, better price points in the market, better upside on growth, but also add to the incremental gross margin as we go from high 30s, low 40s and head towards that longer-term model of 50% and beyond.

And your next question comes from the line of Blayne Curtis with Jefferies.

Maybe just following up on Ross. I just want to understand the -- what portion of your mobile business historically are you deeming that kind of lower gross margin business you're walking away? You said a continued headwind. I'm just trying to understand, does the absolute amount per quarter go lower from here? Or is the remainder stuff you'll stick with for a little bit longer?

Yes. Yes. Good questions, Blayne. And so we've often highlighted how the value of GaN in chargers and in other application goes up as you go up in power. Ultrafast chargers we've talked about in the past are really north of 100 watts. We participated in things below that 45 watts, 65 watts. Those are popular power levels even with silicon chargers. There's a lot of volume there. A lot of that volume is in China, but we don't love the price points, we don't love the margin profile, and we don't love the price kind of profile going forward.

So we're going to really refocus on those ultrafast chargers, 100- watt and plus. Case in point, we just announced a 90-watt Xiaomi aftermarket charger. That's a great. One in China that's with a great brand and a great partner and an incredible power density. It's the power that is on the upper end of most notebooks, but in the size of a typical 12-watt silicon charger. So that's the kind of things we'll keep going with. We're going to like that margin profile better. But admittedly, it's going to be less revenue base. The mainstream where we're reducing is more China, more 65-watt and 45-watt, and we see that being far more than offset as we start to ramp AI data centers later in '26.

And then I just was curious on the transition to Powerchip. I guess, can you just walk us through in terms of your ability to get any kind of volumes before Powerchip ramps? Is that -- is there any impact from that transition in your revenue outlook?

Yes. And you can kind of break it into 2 pieces. We've actually got the, what we call, the mid-voltage GaN that's brand new, 80- to 200-volts. That's very important for 48-volt data centers today and 800-volt data centers tomorrow in this, what I call, the Stage 3. That's starting out straight away from Powerchip. We're already sampling that next quarter from Powerchip. That will start ramping production in early '26.

The high-voltage GaN, we're already shipping today from TSMC, we'll start sampling that to customers, if not late this year, early next year. That will start ramping in late '26, and we expect a lot of our customers to migrate quite quickly from TSMC to Powerchip given the big advantages in technology cost and capacity.

Okay. So I guess in short, there's no supply issue. This is more -- the revenue headwind is purely because of where pricing and margin went in mobile.

Yes. Yes, exactly. Yes. Thanks for clarifying. No supply at all. In fact, by bringing up 8-inch, that gets you 80% more die per wafer. We'll have a lot of capacity. No shortages or supply chain issues on our mobile decisions in the short term.

And your next question comes from the line of Kevin Cassidy with Rosenblatt Securities.

Since the announcement from NVIDIA, have you seen any adoption increase just in the 48-volt data centers today for moving to gallium nitride? It seemed like they were a little hesitant in the past, but is this -- does that help break a logjam?

Yes. It's a good thought, Kevin. And I think -- well, it's a little too early to call it fully, but it brings up an important point. While we see GaN designs already underway for the 48-volt system of an 800-volt data center, that same, what I was calling Stage 3, that 48-volt converter using GaN can also be used in 48-volt data centers.

So we're hopeful that as we prove it out with an eye towards 800-volt, we could get some upside next year, putting it in place even before the 800-volt ramp-up with 48-volt data centers. But it's a little too early to call it, and we'll sort of see how that plays out and obviously do what we can to support it.

Okay. I see. And then also on the transition from TSMC to Powerchip, should we expect to see inventory build? Are you going to get a safety supply of TSMC wafers before making the transition?

Yes. Yes. So TSMC is committed to at least a 2-year supply through mid of '27. That might get extended. But even if it doesn't, we can do additional last time buys as you're implying. So our message to our customers, if it takes them a little bit longer to transition to Powerchip, we can supply them through all of '27, probably even into '28 if it's needed. I don't think it will take anybody that close. And there are so many big advantages on cost capacity and tech to make that move, but that gives us a nice cushion and a high confidence on supply chain.

And your next question comes from the line of Jack Egan with Charter Equity Research.

So just on the near term, I was hoping you could kind of go through the drivers for the big sequential decline in September. So I mean, you have a weaker demand environment, some tariff headwinds and then the narrowing of your products portfolio. So how much did each of those kind of contribute to the guidance for September?

Yes. That's -- you summarized it really well, Jack. And so they're almost equal weight. In the short term, we knew silicon carbide was a risk for us in China on the tariffs. We're one of the few guys that does U.S. manufacturing. And that's a risk that is turning into reality.

That same risk of having U.S. manufacturing, of course, becomes a great strength as we look at AI data centers and energy infrastructure over time because our customers, which are heavily U.S.-based, love the idea of a U.S. supply chain.

But in the short term, that's caused us some impact. I think that's mostly a Q3 impact, maybe a little bit Q4. The other is the intention to be more selective in mobile, reduce our dependency. That's going to be a multi-quarter effort, as Todd applied.

And then we've not seen ramp-ups of new design wins given the industry slowdowns continuing, I think, for a couple of quarters more. It's a little hard to predict even by our larger competitors. So I'd kind of give them equal weight on driving some of the sequential decline in Q3.

Okay. That's helpful. And then on the data center side, has the 800-volt announcements with NVIDIA led to more engagement with other data center customers? And I mean, would Navitas have the design and support resources to handle those additional products? Or I mean, would NVIDIA really just take the bulk of your focus for the foreseeable future?

Yes. It's definitely open doors. We thought we're well positioned already. There's -- a lot of these customers, we know very well around the world. Many of them are doing power supplies in markets where we're already serving, whether it's notebook or desktop or even early server work that we've already done. So we know the customers well, especially on SST, that's the newest field, solid-state transformers. So we've had a lot of inbound there, and it's opening up a lot of doors, which is exciting.

To your point about opening doors, too, we should mention NVIDIA is hugely influential, and we're super excited about their vision. They're not the only guys looking to drive this move towards higher voltage data centers. And those are opportunities that are also emerging. Nothing really to announce yet, but I think there's other players that are going to be pushing in the same direction, expanding the market opportunity.

And your next question comes from the line of Joe Moore with Morgan Stanley.

I wonder if you could talk about the competition for these NVIDIA products. I mean, you've had 10 different companies announce their participation in this partnership. Obviously, you guys have a wider range of wide band-gap products to address it with. But can you just talk about -- when you talk about that SAM, your position within that SAM?

Yes, definitely, Joe. And you touched on the first point, which is, this is a pretty extraordinary challenge from grid power at tens of thousands of volts to step it all the way down to GPU power at sub 1 volt. And each of these 3 stages has a big demand on high efficiency and high density. So you're going to need the best high-performance, high reliability and high-efficiency technology in each stage.

We feel like we're starting from a great place, having it, not just having the range, but on the silicon carbide, what we call ultra-high voltage, 2.3 kilovolt, all the way up to 6.5 kilovolt, very few suppliers in that space. We have the best performance, the best reliability, in our opinion, gives us a great starting point. And we're investing aggressively to expand that lead generationally and in packages and portfolio.

You go to that second stage of high-voltage GaN, which companies have high-voltage GaN, high-voltage silicon carbide, and it may take a combination of those 2 in the second stage and the output of that, the mid-voltage GaN, 80- to 200-volt. Very, very few, even of the named suppliers that are participating have that combination. And then that third stage is all mid-voltage GaN, 80- to 200-volt GaN with a 40-volt converter, demanding the highest efficiency, highest density.

And part of our strategic decision to defocus and reduce some of our dependency on mobile is shifting aggressively to accelerate that R&D, push that technology advantage, push the focus, and increase the customer intimacy. So I think those are all positives.

Another big positive for us is our size. While we're up against some big guys, I think our small size is our advantage, speed, flexibility, innovation, risk taking and focus. It all comes back to focus. And so a lot of what you heard today is us really doubling down and increasing the focus in this critical fast-moving market.

And your next question comes from the line of John Tanwanteng with CJS Securities.

I was wondering, since there's, obviously, no design wins as part of the announcement, there's a long time until you get there. You're announcing this transition away from your core bread and butter markets. Are you getting any design and engineering revenue along the way? Or is it really just risking it all with the knowledge that you do think you have a performing product before we get there? And how should we think about the cash flows along the way as well? Obviously, nice to see that you do raise the capital, but what should we expect before the cash flows start ramping again?

Yes. Yes, it is an important point. And I don't -- as much as the 800-volt is exciting, and there's a lot to do, and we're off to a good start, and we think we're well positioned. And it's -- but it's mainly a 2027 play. 2026 is still ramping on 48-volt data centers. We've already announced the 40 design wins, over 70 in total customer projects that will be ramping. Yes, those are being offset by some of this reduction in mobile dependency, but you're going to see those shine through as we ramp up in '26.

So you're going to see those, I think, great announcements, great design wins. We didn't put a big spotlight on pipeline this quarter just because we had so much else to cover to better explain the AI data center opportunity. But you'll definitely see those design wins and see those growth sort of proof points along the way throughout '26.

And then there was another, I think, question, Todd, for you.

Yes, John, I think you mentioned something about cash flow. Yes, this last quarter, our operating cash flow was around $11 million. With the $106 million on our balance sheet today, we expect to maintain cash flow usage of around $10 million to $11 million going forward. So that's our profile going forward because we expect to also keep operating expenses pretty flat.

Okay. Great. And just to clarify, Gene, when you say things improving through '26, are you talking about just data center? Or are you expecting other markets to recover as well?

Yes. I think that depends somewhat on the markets. We did enter this year with a strong pipeline, strong design wins. Some of those forecasts have come down or delayed a bit with the continued softness in the market. But I would certainly expect to see recovery, as I think most do going into '26, and that's going to add to some tailwinds for us.

[Operator Instructions] And your next question comes from the line of Richard Shannon with Craig-Hallum Capital Group.

A couple of questions here. Gene, curious to understand kind of the change in focus here and what's driving this. Have we had a material change in pricing trends in certain markets here? I know you've got a fairly aggressive competitors, specifically in China with mobile, but wondering if there's been any change here in the last quarter or 2 that's dictated this? Or is it just a continuing trend that's been made it harder?

Yes. No, I think you nailed it on the head, Richard. No big announcements here. We've seen this trend for a while. We've talked about the importance of ultrafast charging and where we bring the real value. We participated in some of the more mainstream price sensitive, as I said, 45, 65-watt, decent volume there in China. But those trends continue. And when the market is soft, people kind of get more aggressive on price, it's sort of normal. But we don't like that pricing trend. We don't like the margin profile. And frankly, we're getting ready for a much more attractive pricing margin profile and where we really want to put our investment and focus as you're hearing throughout the call.

Okay. Fair enough. And if I missed this, I apologize. But I just want to get a sense of how you're thinking of the trajectory in gross margins over the near term. I think it was an earlier question about what to expect from a revenue perspective, which seems kind of maybe bumping along the bottom or whatever phrase you'd like to use. But how do we think about gross margins here, particularly as we deemphasize some of these lower-margin markets? Will we get up to bump above 40% here fairly soon? Or does that really take the revenue inflection to make that happen?

Yes. It's actually going to take the revenue inflection to make that happen. To your point, we've delivered 38.5%. We're guiding to 38.5% in Q3, and we expect it to remain that level as some of the other businesses are experiencing some tariff pressure on their margins, mainly in our silicon carbide business. So you're not going to see that gross margin profile increase until the other sectors kick in.

There's no further question at this time. That concludes today's call. Thank you all for joining. You may now disconnect.