Good afternoon and welcome to Novitas Semiconductor's third quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session. If anyone needs assistance at any time during the conference call, please press the start key followed by zero on your touch phone. As a reminder, this conference call is being recorded today, Tuesday, November 3, 2026. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Thank you, and good afternoon. Welcome to Novitas Semiconductor's Third Quarter 2026 Financial Results Conference Call. Joining us today are Novitas President and CEO Chris Allexandre and CFO Tonya Stevens. Thank you for joining us. 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 the company's filings on Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, November 3, 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.navitasemi.com. and now it's my pleasure to turn the call over to Navitas President and CEO, Chris, please go ahead.

Good afternoon and thank you for joining us on today's third quarter 2026 earnings call. We appreciate your continued interest and support as we near completion of our strategic transformation and begin executing as Navitas 2.0. Our third quarter results reflect another period of solid financial performance and accelerated momentum. Total revenue was on the high end of guidance at $14 million, up 33% sequentially and 38% year-over-year, marking the company's first quarter of year-over-year growth since 2024. This revenue growth was driven by high-power markets, which increased more than 50% sequentially and grew by triple digits year-over-year. As anticipated, mobile and low-end consumer continue to decline as a percentage of revenue and remains untapped to becoming insignificant in the fourth quarter. By year-end, Hyper will essentially represent the entire company and we will have substantially exceeded mobile and low-end consumer markets. In fact, as we now delivered multiple quarters of double-digit sequential revenue growth and gross margin expansion, driven by high-power market and an acceleration in AI infrastructure, our co-focus. Gross margin expanded sequentially and was above the midpoint of guidance, reflecting the continued benefits of favorable revenue mix and increasing scale. Notably, third quarter non-GAAP gross margin of 40% was 130 basis points higher than the third quarter of 2025 when we began the Navitas 2.0 journey. Book2Build remains well above one and has been for the last several months, and we currently have solid backlog extending into mid-2027. We also expect continued revenue growth and margin expansion in the fourth quarter, which will represent the fourth consecutive quarter of double-digit sequential revenue growth and margin increase, with the company exceeding 2026 as a high-par company. Briefly stepping back, roughly a year ago, we made a deliberate decision to pivot away from mobile and low-end consumer and focus our resources on the high-power market where GaN, high-voltage SIC, and ultra-high-voltage SIC provide greater differentiation and stronger long-term growth. We labeled AI data center, energy and grid infrastructure, high-performance computing, and industrial electrification high-power market as clear focus and AI Infrastructure as North Star. The success of this pivot is not clearly visible in our revenue mix. At the beginning of 2026, Navitas 2.0 was only a strategy, and now it is a reality. By the fourth quarter, we expect mobile revenue to be effectively gone, as stated earlier, and the company revenue to be essentially all high power. More than upsetting our exit from low-margin mobile and low-end consumer has been the tremendous growth of AI Infrastructure, our North Star. AI data centers plus the grid and energy infrastructure required to power them. We anticipate AI infrastructure to represent more than 40% of our total revenue exceeding this year. And we believe this business is poised to triple in the calendar 2027. Over the last few months, it has become clear and broadly accepted that power is now the number one constraints on AI compute. The question is no longer only how many GPUs or XPUs can be manufactured are deployed, but how many can realistically be powered? In other words, power efficiency is becoming capacity. When access to power is constrained, every watt saved in conversion and delivery can become another watt available for compute. It increases the scale of compute that can be deployed inside a given power envelope, not only the energy cost. Together with our high and ultra-high voltage SIC, Gann and recently acquired Claros IVR technology stack serving both vertical and embedded power delivery architectures further positions us to break the AI infrastructure power wall by addressing these efficiency, power density and performance bottlenecks across the full power chains from grid to XPU. With our strategic acquisition of Claros in early October, Navitas has now a complete platform that is capable of addressing the final stage of delivering efficient power all the way to the XPU. I want to emphasize that there is a growing number of processor sites, CPU, GPU, TPU, XPU, and other custom processors, as well as companies developing them, each requiring a specific power implementation for the last step of power conversion to core voltage. This requires a modular approach, which is one of the key differentiators of Claros IVR's technology stack, as it allows several IVRs to be combined very flexibly in a power array to deliver the required power level and density. Nafitas was already unique by having both GaN and SIC, and now with Claros, we are even more so. We are now an enabler of efficient power delivery from the source of energy, starting in the modernized grid with our ultra-high voltage SIC, then high-density and high-efficiency centralized AC-DC and DC-DC conversion with our high-voltage SICK and GAN, and finally, the power delivery to the XPU with the PLAUS IVR technology stack. Going one step deeper, IVR technology solves a real-world scaling problem. Processor power demands are increasing faster than lateral delivery can support. with packaged power moving from roughly the mid-1 kilowatt range towards several kilowatts at sub-1 volt core and several thousand amps. By moving conversion closer to the XPU with vertical power delivery directly beneath the processor and embedded power delivery ultimately in the PCB package or substrate, the path is shortened from centimeters towards millimeters or even less. This reduces resistance. Inductance, Droop, and Heat. As an integrated IVR platform, not another power set, we are combining digital control, power transistors, high density capacitors, embedded inductors, and packaging in one architecture. The platform is also designed to scale with processor currently through a repeatable building block of the order of 40 amps through larger chips and a modular power array into multiple kilo-amp systems packaged and embedded. In simple terms, the Klaus IVR technology stack with its ability to serve both future VPD and EPD architectures give us a complete power solution platform. Together with the addition of JFETS, it doubles our 2030 SAM to over $8 billion and represents a multi-year content growth opportunity that layers on top of the existing inflection points we are pursuing with our high-voltage SIC and GAN. The ultimate benefit is Navitas' ability to help customers convert more of every available megawatt into useful AI compute. While our transformation to a high-power company is effectively complete, our go-forward strategy remains grounded in multiple key pillars of transformation that we have discussed over the last 12 months. Market focus, technology leadership, operational efficiency, and financial discipline. On market focus and technology leadership, we continue to advance a series of customer and technology proof points. Since our previous conference call, we announced our collaboration with NVIDIA on an 800-volt to 12-volt power delivery board for next-generation AI infrastructure. This builds on our previously announced 800-volt to 6-volt and 800-volt to 50-volt DC-DC conversion boards, further highlighting the breadth of our system knowledge and capabilities. We also license Genesys technology to Magnachip, underscoring the strength of our trench assisted planner process foundation and supporting expanded SIC adoption, particularly in Asia, while also creating long-term potential for additional fund resource. We recently partnered with Microchip to deliver an 800-volt reference design for next generation AI data center. Then in late September, Navitas was selected by the US government to develop Next Generation 10KV SIGPAR Semiconductor reinforces both technology superiority and domestic supply chain resilience. And we also announced the first shipments of our U.S.-manufactured fifth-generation GANFAST technology as part of our long-term strategic partnership with global foundries. Following shipments of the first wafers in September for the initial product family including 650-volt GANFETs, we expect to have strategic customers sampled very soon. On a related note, we previously talked about pursuing a Foundry Plus model. Going forward, we've renamed and we refer to this strategic operating model as Integrated Fabless Manufacturing, or ISM, a deliberate alternative to the traditional IDM approach. The core difference and principles are that we choose what to own, where to invest, and who to partner with, allowing us to retain the capabilities that differentiate product while leveraging partners for manufacturing at scale. Importantly, we remain ownership of critical technology IP, selected manufacturing equipment, together with targeted co-investment, not purely supplier collaboration. For purpose of today's call, I want to briefly take this opportunity to clearly define and lay the foundation of our IFM model, as I expect it to play a strategic role in our go-forward strategy. Looking more near-term, I will also note that we are actively taking advantage of our strengthened balance sheet to strategically build inventory buffers, including raw materials, and secure future capacity to support of unexpected strong and consistent mid- to long-term growth. Turning to an update in our progress towards the four infection points that I introduced in our last conference call, which I intend to keep using to map our growth to architecture change in AI infrastructure. Today, the transition to 800-volt architecture for next-generation AI data center is now certain. The debate is no longer whenever 800-volt is happening, but instead how it will unfold. As previously outlined, the transition will have a series of inflection points that will drive increasing momentum and growing need for higher power solutions. Navitas' unique combination of high power GAN, high voltage SIC, and now IVR capabilities will allow us to capitalize on each of these inflections. I want to emphasize that we are not dependent on one architectural transition and that we are not waiting for the final data center architecture to emerge. These inflection points represent successive opportunities, each of which can increase content per system as the overall market continues to grow and expand. The first inflection, pre-800 volt, is already well on the way. We are seeing an acceleration of silicon replacement for any ACDC above a 3 kilowatt. Product based on our SICK technology addressing this opportunity are in production and driving accelerated growth in the fourth quarter and the first half of 2027 across multiple hyperscalers and OEM ODM. We are seeing an acceleration of demand, in particular for 1.2 kV SICK, where our previously mentioned Gen 5 is gaining strong traction. The second inflection, the sidecar rack and the first rollout of plus or minus 400 volt and or 800 volt is also accelerating. We discussed this in our last earning call and it was clear at the OCP Summit in October that this is coming and now definitely coming in 2027. We are seeing broader design conversion and program across more customers and application. including ACDC, DCDC and battery backup units of BBU, all with modular content. Large orders already in place and slated to ramp in the first half of next year. This will drive growth in 2027 on top of the first inflection point continuing across AI descenters that not yet to adopt high voltage DC. The power level and density acceleration of ACDC PSUs is really stunning and driving this content jump. On the DCDC side, the same is true. We are currently progressing through the final stage of design in and qualification with many customers and orders already in place, which will give us additional programs in support of continued growth over the coming year. What is very interesting about this second inflection point is the variety of application and board, DCDC, ACDC, BDUs and others, and the use of different technologies between SICK and GAN, which reinforce Navita's strategic positioning. The third inflection point, All native 800-volt continues to progress. We all know by now, and it was reconfirmed again at OCP, that this is the only path to achieving really high-density, high-power racks. I mean 500 kilowatt and plus and up to megawatt racks. We are advancing design and preparation for these high-density racks across multiple vendors, depending on the XPU. Everyone is looking at it. We continue to believe native 800-volt solution will be in production before the end of 2027 and be material in 2028. Today, we are sampling and progressing with customers on more than a dozen programs and are currently in final stage with certain leading OEM ODM for 800-volt power DC-DC conversion board. One existing customer's targeting hyperscalers has already placed a large order for significant system tests which reinforce Navitas' strong market position. The fourth inflection point, the complete modernization of energy and grid infrastructure. While further out, it is also moving forward, driven by the speed and energy requirement of AI data centers. We are continuing to work to secure initial design-ins with our ultra-high voltage modules in solid-state transformers, which is really more of a 2028 and beyond growth driver. In the interim, we're also seeing an acceleration of engagement for shorter-term revenue opportunities with battery energy storage system, or BSS, and other power grid-related applications, which are driving high demand for ultra-high voltage SIC. A portion of these opportunities are expected to continue to grow in calendar 2027, layering on top of the first and second inflection points with AI data center. In closing, I'm very pleased with the progress. Navitas 2.0 is no longer a plan, but a reality. The results are demonstrated by the revenue mix, growth, and margin expansion. By year end, we will be a high-power company with mobile and no-end consumer essentially eliminated. The market rationale has sharpened. Power is the immediate constraint on increased compute. Therefore, power efficiency is the solution to expanding capacity. The architecture of AI infrastructure is in the early stage of being rebuilt from the grid to the XPU. The acquisition of cloud's complete Navitas platform and our grid to XPU strategy with SICK, GAN, and IVR, we are positioned not only to participate, but to enable the multi-year transition with more than one motivation point. The timing of our complete transformation is ideal, as we are at the intersection of two secular trends. The growth of AI compute and the re-architecture required to power it. From the grid to the XPU, our end goal is to help customers turn more of every available megawatt into useful AI compute. Specific to the fourth quarter, the midpoint of our guidance represents another consecutive quarter of double-digit sequential growth and more than 100% growth year-over-year, driven by high power and AI infrastructure, and contributing to further growth margin expansion. Our expectations for the fourth quarter also represent a return to growth for the full year, increasing approximately 7% in 26, with high-power growth more than upsetting our exit from the mobile business. We believe this is only the beginning, as we remain committed on the path of delivering continued growth, incremental growth margin, expansion, and ultimately profitability. With that, I'll pass the call to Tonya to review our third quarter financial results and outlook for the fourth quarter.

Thank you, Chris. Before I begin, 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 third quarter of 2026 was at the high end of guidance, increasing 33% sequentially to $14.0 million, an acceleration from the 22% sequential growth we delivered last quarter. This represents an increase of approximately $3.5 million from the $10.5 million in the second quarter. As Chris highlighted, the double-digit growth was driven by increased traction in high-power markets, which grew more than 50% sequentially, and by triple digits year over year, reflecting our nearly complete shift in revenue composition away from our historical mobile and low-end consumer business. We continue to expect revenue contribution from mobile to become insignificant, as in low single digits, by year end. As a result of improved product mix and higher quarterly revenue, gross margin expanded by another 50 basis points sequentially to 40.0%. This represented our third consecutive quarter of sequential gross margin expansion. Our accelerating shift in overall revenue mix toward higher value, high power markets, and away from mobile and low-end consumer remains fundamental to our gross margin expansion strategy. We expect further gradual expansion of gross margin over the coming quarters as we continue to drive top-line growth in high power markets. Operating expenses for the third quarter were $16.5 million compared to $15.5 million in the prior quarter and $15.4 million in the same quarter a year ago. Consistent with the guidance we provided last quarter, OpEx increased by approximately $1.0 million as we began making targeted incremental investments in the business, particularly in new R&D programs, to support accelerated growth. Having diligently maintained effectively flat OpEx through the first half of the year, we are increasingly focused on deploying resources and investments in a deterministic way to support the longer-term success and sustained growth of the transformed company. OpEx for the quarter increased roughly 6% sequentially, which was meaningfully lower than our top-line growth rate of 33%. This and future incremental OPEX, including expenses related to Kleros IVR technology stack and product development, will be allocated to scaling the business, including investments to accelerate new product development, strengthen our engineering and application support for key committed programs, and reinforce operational readiness in advance of expected growth and ramping shipments. Lost from operations for our third quarter was $10.9 million compared to a loss of $11.4 million in the prior quarter and $11.5 million in the third quarter of 2025. In Q3, weighted average basic and diluted shares outstanding were approximately 261.5 million, resulting in a Q3 loss per share of 3 cents compared to a 4 cents per share loss in the prior quarter, and a loss of 5 cents per share in the year-ago third quarter. Turning to the balance sheet, cash and cash equivalents at the end of the third quarter, 2026, were $531.5 million, compared to $557.4 million at the end of the second quarter. The decrease in cash and cash equivalents primarily reflects our ongoing build of TSMC buffer inventory. Also note, the quarter-end cash balance was prior to the payment of the cash portion of the Claros transaction, which closed on October 6th. Our effective pro forma cash balance, adjusted for approximately $126 million payment for Claros subsequent to the quarter-end, would have been approximately $405 million. As a reminder, the company continues to have no debt. Also of note, I want to briefly highlight that we did not utilize any of our ATM facility during the third quarter and are comfortable with our current cash position following the Claros acquisition. Post-Claros transaction, we continue to have ample capital resources to further accelerate and scale as a high-power company. This includes further anticipated strategic investments in support of advancing our integrated fabless manufacturing or IFM model initiatives, potential capacity expansion and supply reservation agreements with our US-based foundry partners, as well as potential pursuit of selective strategic opportunities. With respect to inventory, we ended the third quarter with $32.4 million of inventory, including $11.2 million of inventory classified as long-term on the balance sheet. This compared to $19.5 million in the prior quarter and reflects our previously planned build of appropriate buffers of TSMC wafers to ensure a smooth transition for our customers as well as other supply chain related investments. Similar to the previous quarter, The sequential $12.9 million increase in Q3 inventory primarily reflects our measured investment to support AI Data Center customers' future anticipated long-term growth. More broadly, channel and distributor inventory remains healthy. Moving to guidance for the fourth quarter of 2026. We expect continued sequential growth with revenue increasing 14% to $16.0 million plus or minus $0.5 million. At the midpoint, this represents 119% growth year over year and what will be our fourth consecutive quarter of sequential growth, driven by high power markets and specifically AI infrastructure. Also based on this guidance, we anticipate achieving revenue growth of 7% for the full year 2026 with our core high power business continuing to deliver triple digit growth, even with our mobile business dropping to effectively zero after representing a large majority of total revenue last year. Exiting the year, we expect high power markets to represent almost all of our business with over 40% of total revenue coming from AI infrastructure, which includes both our AI data center business and the grid and energy infrastructure business needed to support AI data centers. Lastly, I would also add that we closed out the third quarter with very strong book to bill ratio, well above one, and we currently have solid backlog that extends into mid-2027. Non-GAAP gross margin is expected to expand to 40.5% plus or minus 100 basis points, which at the midpoint represents a 50 basis point increase reflecting our fourth consecutive quarter of margin expansion and the continued favorable shift in the revenue mix toward high power markets and marginal incremental benefit from improved scale. As previously discussed, OpEx will step up in the fourth quarter as we take on the overhead operating expenses associated with Kleros as well as continue to make incremental investments organically, primarily focused on R&D and operational readiness in advance of our anticipated growth over the coming year. Non-GAAP operating expenses for the fourth quarter, which again will include CLAROS, are anticipated to be $25.0 million, plus or minus $1 million. That concludes our formal remarks. Operator, please open the call for questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, Please pick up your handset and ensure that your phone is not on mute when asking your question. For today's event, we kindly request everyone to please limit yourself to one question and one follow-up only. If you find yourself having additional questions, you may rejoin the queue. And your first question comes from the line of Quinn Bolton with Meadham & Company. Your line is now open.

Hey, guys. This is Shadi Mewali for Quinn. Thanks for taking the question and congrats on the results. I think you guys mentioned that backlog is extending into mid-2027. And as these high-power markets start to inflect, it'd be great to get a sense on how we should be thinking about growth heading into next year. Thank you.

Thank you, Sean, for the question. And I appreciate you giving us a platform to talk about the outlook for next year, right? So as we talked about in the last two earnings, we've seen consistent increase in book-to-bill. as a matter of fact the book to be last quarter or in Q3 was actually two has been consistently way above one for the last two quarters right so the way we see 27 with the inflection point unfolding on top of each other is the path for us to be a double digit growth quarter of a quarter fueled by the Thank you very much. just starting driven by the AI infrastructure will give us multiple years of double-digit quarter-over-quarter growth.

Great, that was helpful. And then maybe just on the Claros acquisition, we see a number of IVR acquisitions get announced over the past few months. So we're just curious, can you guys talk about what you guys saw in Claros and maybe some of the advantage of their technology versus competing IVR technology?

Thank you. Thank you, very good question. So the first thing before I answer specifically your question, what I would say is the fact that other MOSFET and silicon companies are acquiring IVR is a confirmation that what we talked about, which is the architecture has to change. The way lateral power delivery today moving to vertical power delivery using the same technology kind of put together in a vertical package is not going to sustain the density and the amount of current that those processors need, right? What we saw in Karros, and I'll put aside the culture, the very similar to, and the quality of the engineering team, is real IVR technology stack designed for XPUs. Instead of IVR that was designed for computing, converted, okay, to AI data center like we've seen in some of the companies that just got acquired, right? A true 3.3 volt starting point, allowing to do a three to one, everything integrated in the stack, the capacitors, the inductors, the controllers, the FinFET, basically ordering you to do real high density because you don't need external component, right? And that's what we saw. And the modularity, which I mentioned in the webcast, is also important. What we see is, of course, everybody talks about the lead GPUs, but there's as many processors now that we have use case. and all those processors, call it TPU, XPU, NPU, LPU, GPU, Customs, right? They all need super high density, high current type of IVR and power delivery. And I think the flexibility and the modularity that we saw in Klaos is unique and that's why we made that move.

Thank you, Sean, for your question.

Your next question comes from the line of Kevin Garigan with Jefferies. Your line is now open.

Yeah, hey, Chris and Tonya. Congrats on the great results and all the progress. Hey, going off of Shadi's question, can you just give us a sense of how much of the 2027 growth is supported by awarded programs and what is already in your backlog today versus expected design conversions?

I'll start and Tonya can add some comment, right? So we have backlogged way into 27 already. So we cannot say the whole year is done, right? But what I would tell you is we are very surprised, and I mean positively, by the acceleration of the inflection one, which we saw really in Q3 and Q4 this year, but inflection two, right, which is the sidecar where we see an accelerated conversion of the number of programs, across ACDC, DCDC, and BBUs. So more programs converting faster into a higher power, converting from designing into designing into backlog. And last but not least, because we talked about inflection-free in the last call, now we start to see, and we mentioned it in the remarks, right, we've actually got a pretty large order, a million units of GaN devices for an 800-volt DCDC High Density Brick for inflection-free, right? So things are really coming into shape. I would tell you, Kevin, slightly faster than I even expected six months to three months ago.

Yeah, and I would just go on top of that. That's exactly what I see and how I think about it. The inflection one, like Chris talked about, it's in our revenue. We saw it in our revenue last quarter. We see it in our revenue this quarter, accelerating. Inflection two, in our backlog, that's helping us fill out 2027. And even inflection three, we're starting to see that move beyond just high volume orders and sampling. He talked about the one million units. That's a significant amount A volume that we're looking at for inflection three. So that's exactly what we're seeing.

Yep, got it. Okay, that's perfect. And then I'm just on gross margins. Congrats on the continuing expansion. Can you just give us a sense about how we should think about the gross margin profile between silicon carbide, GAN, and IVR as each business scales?

So we don't really kind of give detail on the split on gross margin between the different technology. What I would tell you is, if you look at the gross margin expansion in 26, right? So let's go back. A year ago to this day, we talked about transforming this company from consumer to high power. Basically, the gross margin has increased, if you look at the guidance for Q4, by two points. That was essentially moving from consumer to high power. The next phase of the expansion of gross margin is coming from scale as we continue to grow double digit, but also with the AI infrastructure, which is now 40% of the company in Q4 and poised to triple next year. And that part of the business is actually much also on a higher margin, right? So what you're going to see is You know, I just got the question before, you know, how do we see a growth, right? I mentioned double digit quarter of a quarter with that double digit kind of accelerating over time. I think you're going to see the same on the gross margin, consistent gross margin expansion. Quarter after quarter as we scale and of course as we continue to make fundamental transformation moving to 80 inch on the GAN, continue to work with our foundries on cost reduction and so forth. But I mean look at this as a continuous gross margin expansion organically with the migration to high power and now to AI infrastructure.

Yeah, and I would just confirm that. The way we think about it is not relative to the technology, but complexity. And we've given you sort of the insight before that the higher power, higher complexity, it is the higher the ASPs and margin tend to be. And that includes more difficult technology problems to solve, including the IVR technology stack. Those tend to contain higher margins versus splitting that between GAN and SIC.

Yeah, Kevin, one thing I would add is, I mean, Tonya is spot on, right? Margin comes with value. Value comes from the complexity you're solving the customer problems. What we see is, look at inflection one and inflection two, right? Or even going to inflection three. We are talking about multiple acts of density of power on the AC-DC front, moving from silicon to silicon carbide, then moving to GaN when the adenovol become native. Those complex problems Customers are basically retributing with good margin if we solve their problem with speed. And I think this is what goes back to the core of what we're trying to do as a company.

Yep, got it. Okay, that makes a ton of sense. Okay, perfect. I appreciate the color. Congrats again on the results. Thank you.

Your next question comes from the line of Kevin Cassidy with Rosenblatt. Your line is now open.

Thanks, and I'll echo the congratulations on the steady progress. In the IVR market, that's a new market. How early on in the XPU or GPU design do you have to be to define the IVR? Do you have to work with them as they're designing the XPU?

So it's a very good question, Kevin. Thank you for asking it. So first of all, I think what you need is what we call an IVR technology stack. That's what we got with Klaus, right? So integration of the FinFETs, the controller, the inductors, the capacitors, all together into the same technology. Then you apply that to either vertical power delivery, which is basically a chip, that you put on the backside of the PCB or in the PCB, right? In the form of an array, as we talked about, to deliver the power density to the customer, or even going one step further where it's not a chip anymore. You embed the full system or sub-part of the system into the substrate and the XPU. In both ways, you have to work with the XPU vendors. In both ways, you have to work with the You know, OEM or power OEM that serve the last step of core delivery to the XPUs to basically fit the right architecture. And that's what I got the question from Sean early on, I think it was Kevin, you know, what did we like about Klaus, right? Well, I liked beyond the best density, in my opinion, because there's no caps outside, is this modularity. So every customer needs a different type of shape of the power of VRM and a different level of voltage and current, right? And that's kind of where you have to work with those. The other thing I would say is keep in mind that many customers are becoming vertically integrated. So we used to have GPU companies. Now we have hyperscalers doing their own processors. We also have processor company that become rack company, right? So the answer to your question is the technology stack is the same, but you have to work with the processor company, which are becoming rack company or even high-pressure company to basically deliver the power delivery.

That's great. Yeah, it's getting to be a complicated design cycle. And, you know, which brings me to the, you know, interesting strategy you brought up is a, integrated service manufacturing where you're gonna buy the equipment. And I guess is that gonna be in the back end? Like as you're describing the IVR could all be different shapes and packages for different designs. Is that where you're bringing in the equipment or will it be on the front end too?

So let me just correct you for a minute, right? We talk about integrated fabless manufacturing for IFM, right? This is primary on the foundry side. So the best way to think about this is if you look at both SICK and GAN, We actually own the technology stack, same on the IVR, right? So on the SIC side, we have GENESIC, which is a full-stacked high-voltage, low-high-voltage technology. On the GAN side, we overlay on top of TSMC in the past, now GF, our own IP to differentiate in reliability and other figure of merits, and same with the IVR where we own the full stack, right? So what we want to do is to own the stack but partner with funderies where we invest to basically secure capacity and supply to enable cost predictability and competitiveness. So the best way to think about it is a bit of the similar kind of we announced with GF on the GAN side and other funding we work with. Can we pick the best of both together? We don't want to be an IDM. We don't want to be a Fabless. We're somewhere in the middle and we believe this is the best Capital Effective Way to deliver the high growth while controlling our technology.

Okay, great. Thank you.

Thank you, Kevin.

Your next question comes from the line of John Tan Wanting with CJS Securities. Your line is now open.

Hi, good afternoon, guys. Thank you for taking my questions and congrats on the nice quarter outlook. I was wondering, I think I heard pretty clearly that you expect to grow data center infrastructure revenue by three times going into next year. What do you think the non-data center portion contributes? If you could tell us what's involved there and what the contribution might be.

Yeah. John, thanks for asking that question. You know, as I talked about, we have backlogged way into 27. As a matter of fact, the visibility we have in AI infrastructure is much longer and much extended compared to other markets, right? So what we've modeled for next year is anything non-AI infrastructure is more or less flat. You know, we see some growth in industrial, we see some flatness in the computing. Remember we addressed the super high-end computing market, not the computing market as a whole, right? So we've assumed that flat because we don't have a full year or even a two quarters type of validity. but on the AI infrastructure, as you pointed, because of the VCT we have, because of the accelerated momentum in inflection one, inflection two, because of number of design we're converting, we are clearly seeing a potential for that business to more than triple next year, right? So the best way to think of it is, You know, 26 was a year of high power, basically compensating the exit of mobile. This is done. This even allowed us to get higher than when we started this journey from a revenue standpoint and getting, you know, 26 with 16 million. Next year is really the growth is coming from AI infrastructure, and we assume the rest being flat.

Okay, great. Thank you. And then? More interestingly, as you head into 28, I think you've got multiple accelerations, right? You have the NVIDIA 800-volt products ramping. You have the SST products ramping. You have Kleros ramping. Do you see further acceleration in 28, or is it hard to comp against the growth you're going to see in 27, or maybe it's a small enough base that you can still accelerate from there?

Of course, it's more difficult to predict as you get longer in the horizon, right? What I would tell you is, We see, based on the product we have, the technology we have, the engagement we have, the inflection points, a double digit, and that double digit quarter over quarter is gonna accelerate as each of those inflection overlay with each other. So it's not inconceivable to see the quarter over quarter, you know, compound growth to start to accelerate late 27 into 28 into 29. As each of those technology, you know, SICK, GAN, and even IVR overlay on top of each other and each of those infections come on top of each other.

Great, thanks for that. If I could ask one more just, Tonya, how do you see OPEX scaling with all this revenue growth? Do you have a number as maybe as a percentage of revenue growth or is there another way to think about it over the next year or two?

Yeah, that's a great question. So the step up you saw in Q4 we talked about, that was our normal run rate of our guidance as well as Kleros taking on Kleros. And the way we think about that is still what we've talked about before, OpEx. increasing at a percent of revenue. So after that initial step up, we see that happening in 27, so as a fraction of our revenue growth. We're not really giving the full year out, but that's how we're thinking about that.

John, I think one thing I would add on top of what Tonya said is we've been very clear since the beginning of this transformation that our eyes are on getting to a profitability. Profitability will come from scale. We have two vectors. One is scale and consistently growing double digit the revenue, as we talked about. Number two is gross margin expansion. And gross margin expansion will continue as we just talked about. And when IVR comes in play, we see also a step function in the combined gross margin of the company. but we remain focused on making sure we do that by increasing OPEX at a fraction of the revenue growth so we can get to profitability at the horizon, right? Which remains a very important focus for us.

Great, thank you.

Again, if you would like to ask a question, please press star one in your telephone keypad. And your next question comes from the line of Richard Shannon with Craig Holium. Your line is now open.

Thanks, Chris, for taking my questions. I'm going to follow up on the last question and answer, especially take it to the obvious angle here, which is thinking about a break-even model here. Not asking for the time frame, you might hit this, but what do we think about that model here? And I presume that it would include, or I guess I'd prefer an answer that would include IVR with the gross margin dynamic you described here, but kind of scale and what's the margin structure, or I guess... May I just let you answer of how we can look at the breakeven model? And I'll go follow up.

So thank you, Richard, and good to hear from you. I think the best way to think about this is I think we're going to continue organically to grow the consistent growth margin. We see the company gaining a couple of points over time. And then it's not inconceivable, as I said, once we have IVR, we think that the blend of the growth margin is north of 50%. Once you get there, if you take, you know, OPEX in Q4 this year, kind of multiply by four, annualize it, and increase, you know, apply a yearly increase, which is less than revenue, you're basically getting, you know, OPEX in the low 30s, right, which at 50% gross margin would basically make the break-even point around the low 60s. So that's kind of, if you ask me about a model, that would be kind of the model you have to keep in mind.

Okay, perfect. That's very helpful. Chris, maybe just to ask a very high-level question here since we've seen some activity both with Navitas as well as across the industry, but some patent arguments, I guess we'll call it there, and you're on both sides of this. Maybe you can help us understand where you stood here and how you expect kind of the industry to evolve over the next couple of years in this dynamic.

Okay. Richard, I think I kind of got the question in the last earning about the litigation. I think I was fairly explicit, okay, on the last earning on my view of this. If you don't mind, I would defer to what I said before. We'll continue to defend our IP, and we respect IP, but we'll continue to defend our IP, and I would defer to what I said in the last earning, if you don't mind.

No problem there. Maybe let me ask another question in replacement of that one here, Chris. Maybe you can talk about the inflections here, and obviously you're gaining some real traction and backlog here in inflections numbers one and two here. Maybe you can talk about your share in any kind of qualitative terms here in any way that you think is interesting, like SIC versus GAN or any specific pieces within those inflections. That'd be helpful. Thanks.

It's hard to give you a blended market share, right, of the inflection 1, inflection 2, but a couple of data points, right? Number one is inflection 1 is essentially replacing, as you move to 3, 5, 10, or 8, 10 kilowatt density of PSUs, right? You're replacing silicon with silicon carbide. and the beauty of this is this is replacing with 1.2 KV so the content is pretty nice and usually you have two to three vendors, right? So some program we have first souls, some program we have second souls and you know when you have three vendors, right? One gets 40, the other one gets 30, the last one gets 30. So I would say over time, you know, it trends to a good third to 40% share of the market, of the PSU we participate in. What is interesting in the inflection two is number one, it's a lot more application. So there is ACDC, which is basically now taking it to 15, 18, 25, 27, 30 kilowatt. There is also DCDC with 15, 30 kilowatt DCDCs and BBU, which start to use both SIC and GAN. So the beauty of inflection two is not just a SIC play, it's also GAN play, right? And here we've seen in some cases we are sole source, in some cases we are again sharing, right? So, you know, for me, the way I view it is what you want is to be first on the print, okay? And give customers a secured path from a reliability standpoint and execution standpoint so they can harm the production. Because I talked about it earlier, we see an acceleration. If you would have asked me six months ago, do you see Infection 2 and Sidecar coming that fast? I would have said it's coming. but it's definitely coming faster than we expected. Same with infection one. That's why you saw us kind of coming on top of the estimates that we had set for ourselves that you had set for ourselves. So I think the speed is helping because if you are first and speed is core to our values, if you're first, you can command more share. But it's difficult to give you kind of how much market share of that market we own. What I would tell you is if you remove mobile, We grew in 26, based on the midpoint of the guidance for Q4, right? We grew 125%. I believe this is faster than the market. If you look at GAN and SICK serving, you know, high power slash AI infrastructure, it's faster than the market. So the momentum is there for us to gain share, okay? And we are not here to participate, as I mentioned. We are here to gain share. So I think we have, with our speed and the technology and the focus that we have, we're not a company that does EV on Monday, Industrial on Tuesday, and AI Data Center on Wednesday and Thursday, right? That's the only thing we do. And that focus helps us to secure more share than our competitors.

Great. Chris, thanks for all that detail. I appreciate it.

Your next question comes from the line of John Tanuanteng with CJS Securities. Your line is now open.

Hi, thanks for the follow-up. I was wondering if you could talk a little bit more about Claros. I think you disclosed on the update call you gave a week or two ago that they have an anchor customer for the IVR product. What is the potential scale of that one customer, number one, and number two? What is the pipeline of additional customers behind that, and how quickly could those come into play over the 28 to 29 timeframe? Thank you.

Thank you, John, for that follow-up question. So the anchor customer is a vertically integrated customer that look at processor up to the system level. Klaus has been working with them from the beginning. To Kevin's point earlier, it has helped to shape the technology, because it's not just about the technology stack. It's how do you put that into a chip, into an array, into a system that delivers the density, right? So that customer, as we mentioned at the acquisition, is going to ramp in a meaningful way, really in our late 28 and 29. And Klaus, before the acquisition, was essentially focused on that customer to prove their technology and get scale, right? Since we combine the two companies, we've met pretty much everybody out there doing an IVR program. And we're starting to see good feedback, but also good momentum in the technology that we have. And again, the consistent feedback we have is this is a race for density. And then you're going to get into argument into CLAROS versus FERIC versus Empower versus Power Lattice and others. Who has the best density and who has the best approach? and, you know, I don't want to bore you with details, but, you know, density without caps outside or density with caps outside is different. But this is not what customers tell me. Customers love the modularity of clouds. They say this is something which has been thought through with the system in mind, not even the XPU in mind, with the system in mind. And that is getting a lot of traction. And I think we'll, you know, under Navitas, be able to scale that opportunity to more customers. A bit too early to declare a directory, right? There's a lot of work to do.

Okay, great. Thank you.

Thank you, John.

That concludes our question and answer session. I will now turn the call back over to Mr. Chris Allexandre for closing remarks.

So thank you, everybody, for listening to us. I leave you with something which I said, but I think it's very important that you crystallize that in your mind, right? A year ago to this day, We said we're going to transform this company from a consumer-centric company to a high-powered company. We've done that at the same OPEX, more or less. We gained two points of gross margin, and we have been able to deliver consistent double-digit growth for the last few quarters, despite the headwind of conscious moving away from mobile. Now we're entering into the second phase of the company. We've focused ourselves into AI infrastructure. We have the technology stack that we need from the ultra high voltage SIC, high voltage SIC, GAN, and IVR. AI infrastructure, which is data center and the grid that power infrastructure is 40% of our sales at the end of Q4. It's going to drive the growth in the future. And I think we just got started. And I feel You know, there's a lot of work to do. This market is very demanding in reliability and speed, but I think we have the right team, the right technology, and I think now you have to think about us as a consistent double-digit growing company leveraging the inflection points that come on top of each other. That's what I want to leave you with. And I also want to take this opportunity to thank our employees. It's a lot of work to transform a company, and they've been very... Thank you all for joining, you may now disconnect