Enovix (ENVX) and Intapp (INTA) Deliver
Enovix (ENVX) is trading higher this morning after the company surpassed Q3 expectations last evening and gave a business update that shows it’s on track to pursue the large opportunity that supports our investment thesis. Revenue isn’t significant, just $200K in the quarter thanks to the Army contract. Cash has been going out the door more slowly than forecast. Adjusted EBITDA (a measure of earnings) was -$25.6 million versus -$29.3 million consensus. The company ended the quarter with $371.3 million in cash, equivalents and short-term investments and spent $17.3 million on CapEx in the quarter.
Looking forward, management guided for $3 - $4 million in Q4 revenue thanks to the Routejade acquisition (Korean-based electrode coating and battery pack maker), which will function as a separate business entity for the time being.
The main takeaway from the call is that the path to high-volume battery production in the second half of next year is intact. More specifically, the Gen2 Autoline is on track for factory acceptance testing (FAT) by this coming January, with site acceptance testing and sample production starting in April 2024. High-volume production should begin shortly thereafter, maybe mid-2024, with batteries slated for IoT applications, followed by smartphones in 2025.
My take is that analysts are in favor of the strategy shift to focus on a smaller number of really large customers that will require millions of units for each of their products. This is sensible – go for the big kahunas and not a zillion little guys (which can come later, if desired/needed).
Stepping back, the big-picture timeline here looks something like $20 - $30 million in revenue next year (2024) then $110 - $120 million in 2025 ramping up to roughly $350 million in 2026 and $700 million or so in 2027. Obviously, a lot can change depending on the number of production lines, mix, etc. But that’s the general goal, and if it works out, shares of ENVX should be trading multiples higher than they are now. Keeping at hold while we see how the market digests this report. HOLD
Intapp (INTA) reported Q1 fiscal 2024 results after the close yesterday that beat on both the top and bottom lines. Revenue grew 27.7% to $101.6 million (4.6% beat) while EPS of $0.06 was up from a penny last year and beat by $0.03. Cloud average recurring revenue (ARR), a metric Wall Street LOVES, grew 38% to $242.5 million and now accounts for 69% of total ARR. The company now has 626 customers spending over $100K in ARR, up 20% from a year ago. That’s great. It sounds like interest is high, the sales teams are doing well and the partnership with Microsoft (MSFT) is bearing fruit, especially now that those salespeople are incentivized to sell INTA solutions. While it’s early in the year, management just boosted full-year guidance, calling for 21% revenue growth to $422.5 - $426.5 million (about 1% higher than previous guidance) and adjusted EPS Of $0.25 - $0.29 (roughly 140% higher than last fiscal year). This earnings leverage is a big plus. The company is working intently on the AI front to bring more features into the platform. This could lead to more customer wins/expansions as well as higher selling prices. Investor Day will be in February. The trends are good, and shares are +10%. BUY
