Shares of Enovix (NASDAQ: ENVX) were up by 14.8% as of the close of trading Wednesday after the battery technology company announced stronger-than-expected quarterly results Tuesday afternoon.
For its third quarter, Enovix had revenue of $200,000, up from nominal revenue in the year-ago period. Revenues were primarily from the delivery of custom cells under its U.S. Army program using its BrakeFlow technology. That translated into an adjusted (non-GAAP) net loss of $30.1 million, or $0.19 per share, compared to a loss of $0.15 per share in last year's third quarter. Analysts, on average, were expecting a net loss of $0.23 per share on revenue closer to $131,000.
Another quarter of encouraging progress for Enovix
More importantly for this early-stage business, Enovix made significant strides toward commercialization of its technology. It commenced factory acceptance testing (FAT) of Gen2 manufacturing equipment in August, and expects to complete that testing for all four zones of its full production line by January. Enovix also began transitioning away from 24/7 manufacturing in its California facility and toward R&D and customer qualification from the site, reducing its cash burn by $22 million annually.
Enovix's battery was also selected to power the Accurate Meditech "Mini," a device that monitors multiple vital signs. That device will be sold at CVS, Walgreens, and Walmart in 2024. Meanwhile, Enovix says its engagements with leading automotive OEMs, as well as leading smartphone OEMs (including Xiaomi, Vivo, and Lenovo), have "continued to strengthen."
Finally, just last week, Enovix completed its acquisition of Korean battery manufacturer Routejade. That strategic purchase provides it with vertical integration of electrode coating and battery pack manufacturing, as well as an established lithium-ion battery business with two factories in Korea.
What's next for Enovix stock?
For the fourth quarter, Enovix is guiding for revenue to climb to between $3 million and $4 million -- well above the $530,000 most analysts had been modeling -- driven by a partial-quarter's contribution from Routejade and continued shipments of silicon batteries for the U.S. Army program. In addition, Enovix reduced its 2023 outlook for operational cash use from $120 million to $110 million, and lowered its forecast for capital expenditures in 2023 from $70 million to $65 million.
Overall, Enovix made several obvious strides toward broadening commercialization and scaling up the manufacturing of its technology, all while meaningfully reducing its cash burn and expenses. The company still has plenty of work to do before it can achieve sustained profitability and consistent growth. But I think investors were right to bid up shares of Enovix in response to Tuesday's report. If all goes as planned, these gains could be just the beginning as its longer-term growth story plays out.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
