NVTS Q3 2026 earnings call transcript, November 3, 2026

Good afternoon and welcome to Novitas Semiconductor's 3rd 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 star 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 Navitas Cine Conductor's Third Quarter 2026 Financial Results Conference Call. Joining us today are Navitas President and CEO, Chris Alexander. And CFO, Tanya Stephens. I'd like to remind listeners that 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's contained in the Private Securities Litigation Reform Act of 1995. Additional 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 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... ...from 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 continued to decline as a percentage of revenue and remained... ...to becoming insignificant in the fourth quarter. By year-end, high-power 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 core focus. Gross margin expanding 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. Book2bill remains well above one and has been for the last several months, and we currently have solid backlog extending into mid-20.

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-power 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, 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 rally. 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 offsetting our exit from lower-margin mobile and low-end consumer has been a 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 exiting 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 constraint on AI compute. The question is no longer only how many GPUs or XPUs can be manufactured and deployed, but how many can realistically be powered. In other words, power efficiency is becoming capacity. When access to power...

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 SICK GAN and recently acquired Klaros IVR technology stack, serving both vertical and embedded power delivery architectures, further positions us... to break the AI infrastructure power wall by addressing this efficiency, power density, and performance bottlenecks across the full power chains from grid to XPU. With our strategic acquisition of Klaros 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 sizes... 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 Klaros 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. Navitas was already unique by having both GAN and SICK, and now with Klaros, 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 SICK, then high density and high efficiency centralized ACDC and DCDC conversion with our high voltage SICK and GAN, and finally, the power delivery to the XPU with the Klaros 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 package 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, 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 Clouds IVR technology stack, with its ability to serve both future VPD and EPD architectures, give us a complete power solution platform. Together with the additional 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 SIG 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 is 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 and 800-volt to 50-volt DCDC conversion boards, further aligning the breadth of our system knowledge and capability. We also licensed Genesic technology to Microsoft, underscoring the strengths 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 U.S. government to develop next-generation 10KV SIC power semiconductor, which reinforces both technology superiority and domestic supply chain resilience. And we also announced the first shipments of our U.S.-manufactured fifth-generation

and fast 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'll refer to the 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 managing at scale. Importantly, we remain ownership of critical technology IP, selected manufacturing equipment, together with targeted co-investment, not purely supplier collaboration. For the 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 strengths and 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 to 800-volt architecture for next-generation AI data center is now certain. We'll 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 SICK, 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-800V, is already well underway. We are seeing an acceleration of silicon replacement for any ACDC above a few kilowatts. The products based on our SIG technology addressing this opportunity are in production and driving accelerated growth in the fourth quarter of the year. 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.

We submit in October that this is coming and now definitely coming in 2027. We are seeing broader design conversion and program across more customers and applications, including ACDC, DCDC and battery backup units of BBU, all with more dollar content. Large orders already in place and slayed 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 death centers that have 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 designing 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 DCDC, ACDC, BVUs, and others, and the use of different technologies between SIC and GAN, which reinforce Navita's strategic positioning. The third inflection point, or 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. We are advancing design and preparation for this high density rack 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. for 800-volt power DCDC conversion boards. One existing customer targeting hyperscalers has already placed a large order for significant system tests, which reinforce Navita's 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 our initial design needs with our ultra-high voltage modules and solid-set 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 opportunity with Battery Energy Storage System, or BSS, and other power grid-related applications, which are driving high demand for ultra-high voltage sick. A portion of these opportunities are expected. We 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 low-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 SIG, GAN, and IVR, we are positioned not only to participate, but to enable a multi-year transition with more than one. 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 to 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. 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 resource 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 in ramping shipments. Loss 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 $0.03, compared to a $0.04 per share loss in the prior quarter, and a loss of $0.05 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 TSMC. Of the cash portion of the Cleros transaction, which closed on October 6th, our effective pro forma cash balance adjusted for approximately $126 million payment for Cleros 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 facilities. During the third quarter, and are comfortable with our current cash position following the Cleros acquisition. Post-Cleros 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, potentially capacity expansion and supply reservation agreements with our U.S.-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 and 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... 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 Cleros, 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 Cleros, 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... If you 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 by a 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.

Great. That was helpful. And then maybe just on the Claros acquisition, we've seen a number of IVR acquisitions get announced over the past. 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. Okay, 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 Klaros, and I'll put aside the culture, the very similar to and the quality of the engineering team is real IVR technology stack design. 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 3.2.1. 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... 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 Klaros 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 Garrigan with Jeffries. Your line is now open.

That's what we're saying. Yep. Got it. Okay. That's perfect. And then on 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 IVR. Basically, the gross margin has increased, if you look at the guidance for Q4, by two points. That was essentially moving from consumer to IVR. 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 also on a higher margin. So what you're going to see is, I just got the question before, how do we see a growth? I mentioned double digit quarter to 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 of the 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 ACDC front, moving from silicon to silicon carbide, then moving to GAN when the head-on-the-volt become native. Those complex problems, customers are basically attributing with good margin if we solve their problem with speed. And I think this is what kind of 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 caller. Congrats again on the results. Thank you.

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

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 hyperscaler 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 interesting strategy you brought up is integrated service manufacturing where you're going to buy the equipment. And, you know, I guess, is that going to 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. We talk about integrated fabless manufacturing, or IFM, right? This is primary on the frondery 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 SICK side, we have Genesick, which is a full-stacked high-voltage or high-voltage technology. On the GAN side, we overlay on top of TSMC in the past, now GF, our own IP. 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 foundries where we invest capital to basically secure capacity and supply, to enable cost, predictability, and competitiveness.

So the best way to think about this is, you know, 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...

From the line of John Thun-Wanteng with CJS Securities, your line is now open.

Hi, good afternoon, guys. Thank you for taking my questions, and congrats to the next quarter in 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? And what the contribution might be. Yeah. Hi, John. Thanks for asking that question. You know, as I talked about, we have backlog 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 industry. We see some flat 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 visibility. But on the AI infrastructure, as you pointed, because of the visibility 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, 2026 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're, 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, you know, it's more difficult to predict as you get longer. 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 going to 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. Each of those technologies, you know, SIC, GAN, and even IVR overlay on top of each other and each of those inflections 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 CLEROS, taking on CLEROS. 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 them. 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 revenue, as we talked about. Number two is gross margin expansion. And the 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, which remains a very important focus for us.

Great. Thank you.

Again, if you would like to ask... If it's a question, please press star 1 in your telephone keypad. And your next question comes from the line of Richard Shannon with Craig Holliam. Your line is now open.

arguments, I guess we'll call it there, and you've been 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. Richard, I think I kind of got the question in the last earning about the litigation. I think I was fairly explicit 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 on the last earning, if you don't mind. No problem there. Maybe let me ask another question in the replacement of that one here, Chris. Maybe you can talk about the inflections here, and you obviously are 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 SICK 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 one and inflection two, but a couple of data points, right? Number one is inflection one 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 source, some program we have second source. And, you know, when you have three vendors, right, one gets 40, the 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 PSU we participate in. What is interesting in Inflexion 2 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 SIG and GAN. So the beauty of Inflexion 2 is not just a SIG play. It's also a GAN play, right? And here we've seen in some cases we're 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 run to production. Because I talked about it earlier, we see an acceleration. If you would have asked me six months ago, do you see Inflexion 2 and sidecar coming that fast? I would have said it's coming, but it's definitely coming faster than we expected. Same with Inflexion 1. That's why you saw us coming on top of the estimates that we had set for ourselves that you had set for ourselves. 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 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 have 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 Tanwanteng with CJS Securities.

Klaros versus Feric versus Empower versus, you know, PowerLattice and others, you know, who has the best density and who has the best approach, right? 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 looked 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.

This concludes our question and answer session. I will now turn the call back over to Mr. Chris Alexander for closing remarks. So thank you, everybody, for listening to us. I'll leave you with something which I said, but I think it's very, 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-park company. We've done that at the same OPEC. More or less. We gained two points of gross margin, and while 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 sick, high-voltage sick, 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 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 thank our employees. It's a lot of work to transform a company. And they've been very resilient and determined to do this. And now we are just can scale Navitas to the next level. So my closing remark goes to them and all the work they've done for the last 12 months and what they're going to do in the future. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining.