Thank you for standing by and welcome to the Enovix Corporation Second Quarter 2022 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. As a reminder, today's program will be recorded. Now I'd like to introduce your host for today's program, Charles Anderson, Senior Vice President of Investor Relations. Please go ahead, sir. Thank you. Hello, everyone, and welcome to Enovix Corporation's Second Quarter 2022 financial results conference call. With us today are President, Chief Executive Officer, and Co-founder, Harrold Rust, and Chief Financial Officer, Steffen Pietzke. We will also be joined today by Chief Commercial Officer, Cam Dales, and Chief Technology Officer and Co-founder, Ashok Lahiri, for the Q&A portion of our call. Harrold and Steffen will review the operating and financial highlights, and then we'll take questions. After the Q&A session, we'll conclude our call. Before we continue, let me kindly remind you that we released our second quarter 2022 shareholder letter after the market closed today. It's available on our website at ir.enovix.com. A replay of this conference call will be available later today on the investor relations page of our website. Please note that the shareholder letter, press release, and this conference call all contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are based on current expectations and may differ materially from actual future events or results due to a variety of factors. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's shareholder letter and our filings with the Securities and Exchange Commission. All our statements are made as of today, August 10th, 2022, based on the information currently available to us. We can give no assurance that these statements will prove to be correct, and we do not intend and undertake no duty to update these statements except as required by law. During this call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. You can find a reconciliation of the GAAP financial measures to non-GAAP financial measures in our shareholder letter, which is posted on the investor relations page of our website. I will now turn the call over to Harrold to begin. Harrold. Thank you, Charlie. The second quarter was a great quarter for Enovix and a major milestone in our evolution as a company. I want to start today by going back to the beginning. When we started Enovix in 2007, we did so with the belief that there must be a better way to make the modern battery, one that advanced architecture over materials. On paper, we felt we can improve energy density by as much as 100% and deliver the best product in an industry that would have enormous strategic importance. We knew we had the people that could pull it off from prior companies where the architecture of our product was our core competency. We also knew it wouldn't be easy to change the fundamentals of how something had been made for over 50 years. In the spring of 2020, we started ordering the equipment for our first production line and gutted the building I'm sitting in to prepare for the production of our battery. A few months later, COVID brought the world to a stop. We could have used that as an excuse for failure. We didn't. We just figured out how to get the job done, knocking down one challenge at a time. Resilience is one of the core values of our people. In February 2021, when we announced plans to become a publicly traded company, we set an ambitious goal to bring up and qualify our first-of-a-kind battery production line in the U.S. at what we call Fab-1, and then to deliver our first commercial products and recognize product revenue in the second quarter of this year. Today, I'm pleased to report that we accomplished that goal and have since delivered batteries from Fab-1 to multiple customers and distributors. It turns out that we were right about batteries becoming strategically important. Industry leaders have taken note of Enovix moving into production with a revolutionary product and have become increasingly aggressive in moving forward. Specifically, in the second quarter, we completed tech qual with three mega cap technology companies, which we refer to as strategic accounts. Two of these are the same companies that told us we have the best advanced battery they have tested, and a third told us their goal is to move our technology across their product portfolio quickly. We all know that in this business, the best product wins. On top of that, we completed the initial phases of a product development program in the second quarter with a fourth strategic account after shipping commercial cells from Fab-1 and recognized $5 million in revenue from this customer. Equally important strategically is the U.S. Army, who has a critical need for high-energy batteries manufactured in the U.S. I'm proud to announce that we received a follow-on evaluation contract in the second quarter to build and test custom cells for wearable battery packs U.S. Army soldiers carry into the field. This opportunity is very large. Our estimate is that the total U.S. wearable military battery market is approximately $350 million annually based on currently established military programs. We believe our battery can deliver considerable operational advantages for our soldiers while at the same time providing resiliency of domestic supply. While we continue to work on moving customers through our funnel towards orders, we are focused on improving the output of our factory to meet future demand. We made solid improvement in output and yield during the quarter, but we need to increase our manufacturing yield metrics. There is no easy path when bringing up a first-of-its-kind manufacturing line. It is a relentless effort of continuous improvements. I'm an operations person at heart. I have ramped multiple high-volume factories in my career, and I'm super confident we'll get the job done. We are prioritizing Fab-1 improvements in the third quarter. This includes taking the line down for portions of the quarter to improve individual process modules and install planned battery conveyance. Our goal is to do the needed work in Q3 to position us for the start of our production ramp to close the year. We're putting all this learning into our Gen2 production line design. Major portions of Gen2 are designed to be half the footprint of Gen1 with increased output. We had hoped to have finished our Gen2 ordering in Q2, but we extended the design activities to incorporate all the latest learnings Fab-1, as well as our BrakeFlow technology. We now expect Gen2 to be installed in Fab-2 in the second half of 2023. As previously discussed, we expect to have both a domestic and an Asian fab location over the next several years. I also want to re-emphasize that we have multiple paths to grow the company, including capital-light options such as JV or licensing. This is the likely path for the electric vehicles market, and it may also be a viable path to support the capacity requirements of our roster of strategic accounts. Now let me turn the call over to Steffen, who will discuss our financials, and after that, I'll make some closing remarks. Thank you, Harrold. Our detailed financials can be found in our shareholder letter. I will spend my time covering a few high-level topics. We recognized $5.1 million of total revenue in the second quarter, with one customer accounting for $5 million of service revenue as a result of us completing the initial phases of a product development program. Our Adjusted EBITDA loss in the second quarter was $18 million compared to an Adjusted EBITDA loss of $19.4 million in the first quarter of 2022. Excluding stock-based comp, our non-GAAP operating expenses in the quarter were $19.5 million, up from non-GAAP operating expenses of $19.4 million in the first quarter of 2022, which also excludes stock-based comp. We closed the second quarter of 2022 with net cash of $385 million, down from $408 million in the first quarter of 2022 due to $20.6 million of cash used operationally and $4 million of cash used on capital expenditure due to the timing of capital equipment purchases. We expect higher capital spending the rest of the year as we make initial payments for our Gen2 production line and continue to outfit Fab-1 for higher output. Now let's discuss our guidance. For full year 2022, we now expect to use between $160 million and $180 million of cash, of which we expect roughly half will be CapEx. As Harrold mentioned, we have extended our timeline to complete the design of our Gen 2 line, which impacts the timing of our cash use. For revenue, we now expect to recognize between $6 million and $8 million for full year 2022. We have lowered the top end of the range, given we are prioritizing improvements in Fab-1 over shipments in the third quarter. We are also incorporating our latest view on the cadence of service revenue. To summarize, we achieved our target of recognizing product revenue in the second quarter. We are being thoughtful about spending and continue to possess a very strong balance sheet. I will now turn it back to Harrold for closing remarks. Harrold? Thanks, Steffen. You know, what excites me about our future is not just the massive growth opportunity that lies ahead of us with our breakthrough energy density. Equally exciting to me are other attributes and features we can deliver that we didn't really fully realize when we started Enovix. Because we changed the battery architecture so radically, problems that are difficult for others are not for us. Having a 100% active silicon anode with good cycle life is an example of this. But there are other advantages that could be equally, if not more valuable. We announced several of these over the past quarter. Our architecture, by its design, delivers exceptional rate and thermal performance, important in portable electronics and critical in EV applications where fast charging is a major care about. It also enables compelling safety advancements, the first of which we announced earlier this year called BrakeFlow. Today, we announced that our BrakeFlow cells passed the nail penetration test at Inventus Power, our partner on the US Army program. Safety is critical for our soldiers, who typically carry 15-20 lbs of batteries into the field. The Inventus Power CTO stated that, quote, "Enovix batteries are the only next gen high energy density cells to pass our nail penetration test." End quote. These are just the start of what we can do with architecture. Stay tuned to see what else we can do. As a final note, as many of you are aware, our chairman, TJ Rodgers, is legendary in Silicon Valley for his love of technology and explaining it in layman's terms. If you really want to understand why BrakeFlow is so important, we invite you to check out a video we posted today on our website featuring TJ's explanation of BrakeFlow. Check out the fireworks at enovix.com/fromthelab. With that, I'd like to turn it back over to the operator for your questions. Operator? Certainly. As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question will come from Gabe Daoud of Cowen. Your line is open. Hey, afternoon, everyone. It's Gabe Daoud here. Thanks for all the prepared remarks, guys. Just, you know, I know maybe what you do in revenue next year isn't really all that important in the grand scheme of things, but could you maybe just talk a little bit about the Gen2 equipment and just kinda elongating that design process and I guess expecting that equipment to arrive now in the second half of next year. When should we expect that line to be, you know, I guess, generating some revenue? Is it really like the first half of 2024? Just trying to think through the timing there. Yeah, thanks, Gabe. This is Harrold for that question. You know, just kind of some perspective, right? I mean, we're very focused on improvements around Fab-1 this year. That line will be the workhorse of our output next year. We have made sure we put all of the learning from Fab-1 and our Gen 1 lines into Gen 2. I mean, the way we think about Gen 2, it's really the innovation of kind of profitability and growth for this company. We got to make sure we get that exactly right. We've actually been working on those tools pretty deep in design for over six months, so they progressed a long ways. We wanna make sure we capture kind of that last learning on Fab-1. You're right. I mean, our current outlook is that those tools will land in the second half. There's a chance those could come into production at the end of the year, but I think the safer assumption is they start producing revenue in the, you know, the first half of 2024. That's kind of our current view. Obviously, we'll be working as much as we can to try to pull that in, but I would think about next year as really being more of a Fab- 1 event from a revenue standpoint. Got it. Thanks, Harrold. That's helpful. Then, maybe just shifting gears a bit, obviously looks like there's a lot of demand for EV batteries, which is obviously a great thing. You mentioned you completed the Tech Qual with those three strategics. Could you maybe just give us a little bit of a color or visibility into, I guess, what happens next with those three strategics? When can we maybe see that kind of move into the active design or design win bucket? Yeah, sure. I'll talk a little bit and then maybe have Cam comment. I mean, you know, one of the things that's maybe been a bit startling to us as kind of Fab- 1 has come up is how strongly these large strategic companies have been wanting to push the ball forward. So we've been really thrilled with that progress, and, you know, engagement at the highest levels with some of these companies. And you know, during the quarter, we actually shipped cells from Fab- 1 to 2 of those large strategics, which we think is a great omen. And, you know, each one of these in principle could generate enough demand to kind of fill us up for a number of years. It's a tremendous opportunity. It's great to see them really pulling, and then, you know, also in their mind, kind of getting through the Tech Qual part and then realizing we got a functioning factory. It really puts us in a whole new conversation with them. I'll let Cam talk a little bit about kind of how he thinks those kind of relationships move forward. Yeah, sure. Thanks, Harrold. Yeah, so Gabe, you know, if you recall last quarter, we announced, you know, pretty important announcement with one of these strategic accounts. I think the story with the other three is similar. I mean, these companies are, I would say, very sophisticated about how they evaluate technologies, the hurdles they set up to then move forward into product and then ultimately, you know, into production. We view these tech quals as being essentially the major technology validation point for these companies. You know, what that means is that they've been testing our cells, some of them for years, actually. We've reached a point where we meet the requirements and essentially their requirements and their business process to move forward into kind of product development. As you follow those, you know, the progress of those accounts forward, we expect those to move into the active design win categories over time. Then ultimately, if we're successful there, into production. You know, just kind of a note on the overall environment, I mean, Harrold alluded to this in his comments, but you know, there's definitely been a real acceleration in the urgency of you know, these potential customers and how they're behaving with respect to the programs we're working with them on. We think that's probably triggered by those commercial milestones that we've met because, you know, to reach that stage, you have to really go through essentially all the different pieces of your business. The technology has to work, the product has to work, it has to be reliable. You have to meet certifications, you have to meet quality, you have to be able to manufacture it. As they see that happening here. You know, it makes them move with increased urgency towards capturing the value that a battery like this can produce. We're definitely seeing a mentality shift where these large companies are thinking about battery as being a strategic lever in their businesses. It can affect essentially everything that their products ultimately do in terms of performance, in terms of form factor, et cetera. For the longest time, there hasn't really been a way to compete on battery, and we think it's an exciting time for us because you know, this is really, to our knowledge, kind of the first real breakthrough battery to make it to market and it's being recognized as such by these companies. Awesome, Cam, really helpful. Thanks, everyone. Thanks, Gabe. Our next question will come from Bill Peterson of JP Morgan. Your line is open, Bill. Yeah, hi. Thanks for taking my questions. If I could first start off with the, you know, the throughput and yield improvements that you have going on. I guess, can you shed some more light on what's going on? Is it, for example, you know, cell-to-cell repeatability, reliability or meeting, I guess, consistency, consistently metrics such as energy density or cycle life? Just trying to get a feel for what's needed to be improved. I guess maybe most importantly is do you know what the issues are so that we have a good line of sight that, you know, maybe just here in the next quarter or so you can get past these issues? Sure. Thanks, Bill. Yeah, let me talk about that. Some of you may or may not know, I'm kind of a manufacturing guy at my core. It's kind of what I've done my whole life. Kind of because of that, I've got pretty high expectations for what I think manufacturing, where it needs to be. I'll be frank, we're not to those expectations yet. That said, I'm encouraged at our trajectory. You know, we've been making good progress. You know, if you think about our line, first of all, I wanna start off by saying we don't have reliability problems with our devices. We have in-line yield issues that we're working on, right? These end up being primarily things where you're working on tweaking equipment throughout the line to make the product run better and to reduce fallout throughout the line. The stuff that we get out is 100% meets customer specs. Let me maybe give a little bit of color just as an example on that. You know, there's a point in our process where we apply what we call our constraint on our cell. That's a critical thing that makes the silicon work. That's a welded part of our device. I would say when we started up that equipment last year, that equipment was running somewhere below 80% in terms of yield. 20% of the parts at that step didn't make it through because we have a very high threshold for all those welds looking good. Over the last several quarters, we successfully have driven that in up to 90%, 95%, and then the current quarter to 98%, right? I've you know, in some ways, maybe I'd love to tell you it was just one thing. In the end of the day, it was ending up probably being 20 small incremental things we had to do to make that process better. None of which were magic, none of which were science. It's just a bunch of, at the end of the day, kind of tweaking. That's really what yield improvement in manufacturing is like. I mean, my experience in manufacturing before through several companies that were very high volume is that it's kind of this long game of just fixing one thing after another. I'm seeing we're making those improvements. It's just gonna take, you know, several quarters time to get that stuff done. I'm super optimistic. I don't see anything out there I'd say is a showstopper. We just have to keep our heads down and make those improvements. You know, it's something that I pay a lot of personal attention to because it's just kind of in my DNA. I think we've got exactly the right people here that are gonna get that pulled off. I'm super bullish on that path forward, and I think, you know, we'll see, you know, quarter- over- quarter improvement in those things as we move forward. Yeah. That's helpful color. It sounds more, you know, I don't know, blocking and tackling versus discovery or development. That's encouraging. I guess the second part is, you know, if we look at the next sort of, call it a year and a half, we'll be relying on Fab-1 to, you know, to support these strategic customers, of which, you know, it obviously sounds like there's strong demand. I guess, how do you balance that demand across these customers with you know, clearly limited supply here in the next, like I said, maybe, you know, year plus? Then how should we think about the potential? I don't know if it's unit opportunity or you know, kilowatt hours or revenue, but try to understand what you could supply in this interim phase before the next two fabs. Yeah. I mean, you're right. I mean, we're very focused on Fab-1 and improving its output as we get into next year. That's one of the reasons we're, you know, super focused on it now when it's early days. I think you know, you had a couple questions in there in terms of kind of balancing customers. You know, these are kind of early days, so we're trying to engage with customers that are the customers we wanna grow with, right? There's always some balancing there. You know, we kind of consciously look at it on a day-to-day basis. I think at this point, we're able to make those engagements we want to. There may be some point in the future we have to do some down selection, but I don't think we're there yet. Your second question is kind of what does that output look like. You know, I think we'll give some kind of official guidance as we get into our Q4 call about next year. Our current thinking is, you know, Fab- 1 on its own, between the couple lines we have here, is producing something in the single-digit million units, you know, this next year, and depending on the product that is, there's a range of revenues that could be. We'll give some more clarity on that in the future, but we're gonna maximize Fab- 1, get that learning into Gen2 and get that Gen2 in line up as soon as we can. Okay, thanks for the additional color. Thanks, Bill. Thank you. Our next question will be coming from Colin Rusch of Oppenheimer. One moment, Colin. Guys, can you talk a little bit about the impact of the BrakeFlow technology on pack cost, volume, weight, and safety, and especially what that means for your entrance into the EV market? Yeah, sure. Maybe I'll start on that and then hand it over to Shok for some comments. You know, we're super pumped about this BrakeFlow thing. I think the industry is starting to catch on as well as investors. You know, one of the big highlights this last quarter is we sent cells with a BrakeFlow to our partner for the U.S. Army program. You can imagine, they're experts at abusing cells, right? They subjected ourselves to a nail penetration test, which is a proxy for other types of impalements, I would say. I don't remember the exact quote, but the basic quote from them was, "This is the only high energy density cell they've ever tested that passed this test," which is a pretty compelling statement. Obviously, in that field where people are getting shot at, features like that are super important. I think also if you think about even consumer space and some of the history there, BrakeFlow is also super valuable and, I think our customers are very excited about that, certainly the military is. You know, we posted this video on the website so that people can get a little sense of how that works, that TJ kind of narrated for us. I'd encourage people to look at that. I'll let Shok talk a little bit about kind of the technology piece of that a bit more because it's one of these features of our battery that we can uniquely do, which I think is very exciting to us, and it's really a function of our different architecture. Shok, why don't you add some color to that? Yeah. Thanks, Harrold. You know, Harrold talked about the impact on the consumer and the Army. Of course, safety is of primary consideration in other markets, and I think your question was specifically about EV cells. Yes, this technology is really interesting to EV customers also because as everybody knows, I mean, that is a primary factor in consideration on how these customers look or how these OEMs look at safety. They are, I think, equally interested in this technology. Really it is something that is uniquely enabled by our technology, by our architecture. To answer another part of your question, you know, it has really a negligible impact on the cost and the productivity of the line. There is some minor modifications that have to be made. Okay. Yeah. So- My question was really wondering about cost reduction at the pack level, but we can take that offline. I'm assuming that you're gonna be able to save your customers some cost at the pack level. So that's helpful, but thanks for that. You know, just in terms of the things that you guys are balancing and the timeframes around this, so if I understand right, it sounds like you're working through some engineering, re-engineering on the line. You're also talking to a number of customers and looking at, you know, how you serve the relatively large volume of demand and thinking about what those contract terms are. I guess as you look at identifying the final locations for the capacity expansion and work through timing on some of those engineering plans as well as some of those contractual elements which may include some prepayments, you know, how should we think about, you know, getting that information? Is that something that you'll make an announcement on? Is that something you'll just give updates on around the quarterly call, and kind of when can we expect things to get, you know, a little bit clearer here? Is that kind of a 3Q event or is that more by the end of the year? Colin, this is Steffen. Thanks for the question. You need to think about it on a product revenue side. These are early days, and we are living with PO arrangements, which we really like because obviously that gives us a lot of flexibility. From the service revenue perspective, these are complex development programs which we typically don't disclose terms. As we progress through our strategic accounts, we will update you as we go along through those terms when we get to more substantive contract arrangements there outside of like a PO-based arrangement. The timeframe for finishing the engineering, for the following plans, is that something that you guys feel like you're closing in on the wrapping that up, or is that gonna be more closer to the end of the year? No, I think, Colin, this is Harrold. You know, we've been kind of in detailed design mode on some of the Fab- 2 equipment probably for at least a quarter, so they're pretty far along. I mean, maybe you say we're kind of polishing the apple, but we wanna get some of these last improvements in from Fab- 1 into that. So I mean, I would view that we're gonna move forward with Gen 2, you know, in the next, you know, several weeks. It's not that far off. And, you know, that would allow us to land that equipment in the second half of next year. So it's pretty mature already, but we wanna make sure this is perfect, right? It's really our engine of growth going forward. Perfect. Thanks so much, guys. Our next question will come from Gus Richard of Northland Capital Markets. Yes, thanks for taking my question, and congratulations on the, you know, tremendous progress you made in the quarter. My first question is on the revenue split in the quarter. Was that $5 million milestone payment from your first strategic customer that's using your battery in the watch? And, you know, how many other customers made up the other $100,000 of revenue? Steffen, why don't you take that? Thanks for the question, Richard. From a product revenue perspective, that amount is immaterial, pretty small. We ship to a couple of customers. The majority is service revenue. From a design perspective, we finished design. We delivered production units, and that closed out that large development program for that one strategic customer. Sure, I can jump in a little bit, too, on that, Gus. You know, total, we shipped to 10 different customers and 4 distributors. Gus, sorry. Among those, two of those were two strategic accounts. One of those strategic accounts was the one that was closing out the $5 million. If that answers your question directly. Got it. Is the $5 million from the watch company? No. We announced last quarter, you know, a strategic, right, that you're pointing out that their first product with us will be a smartwatch. The $5 million is a separate company, separate project. We're actually not at liberty to really talk about what the application is there. You know, based on the kind of how we define a strategic, each of these companies has multiple applications that they could put our battery into. Got it. I understand that. Thank you very much. Then, Harrold, as you think about getting the 1 million units, exiting 2023 run rate, you know, how do you think about that ramp? Is it gonna be a linear ramp? Is it gonna be exponential? Is it gonna be a little start-stop? You know, how do you think about ramping up the volume and sort of what that looks like as you progress? Yeah, I think I would view that, you know, Q4 it starts, but it's still early days on the ramp. I think if you look throughout next year, I wouldn't view it as exponential. I would view it as kind of linear but through the year. You know, you'll see it, I think you'll see, you know, some slope there, but not nothing I would call exponential throughout the year, I don't think. Okay, that makes complete sense. If I could just sneak one more in, you know, given some of these major strategic customers will need a lot of volume, have you guys had any discussions with them in terms of licensing or JVs? You know, where might that be? I think it's still pretty early days in that. I think, you know, for all of these guys, what's critical to them initially is validating the technology, convincing themselves we have a production line that's working. We're kind of through that. You know, our view is the first step for a lot of these guys is gonna be putting our product in one of their products, our battery, right, as the first point. You know, we'll see where that takes us. I mean, some of those things may happen in the future. Right now, you know, we're trying to be a product company. Cam can give a little bit maybe more color on that as well. Yeah, Harrold, I think that's about right, in terms of the stage. It's certainly fair to say that, you know, pretty much across the board with these types of strategic accounts, that is part of the discussion with them. It's part of. You know, they view that as a fairly normal course of business. We've positioned ourselves both from a technical and a production, you know, sort of how we've designed our manufacturing process. We've specifically positioned ourselves to be in a situation where we can enable that to happen. I mean, if you think about, you know, large runner smartphone or laptop, I mean, these are hundreds of millions of units, and none of those large products really have a single source ever. We expect that. In fact, it's part of our long-term business model. It's not necessarily in our financial projections, but it's strategically in our model. We think it's a great option for us going forward. We think it can really leverage the technology we built. Perfect. Thank you so much. Thank you. Our next question will come from Anthony Stoss of Craig-Hallum. Your line is open. I'm sorry, Operator. You cut off, hopefully. It's Anthony Stoss, Craig-Hallum. Harrold, just to follow up on your comment about ordering the equipment in the next several weeks, kind of give an indication that you think the tweaks you're gonna do here in Q3 in the production line will be over. Should we assume that there will be some production revenue in Q3 or kind of zero it out and just assume it's in Q4? Then second question is, you know, lots of traction with potential customers. Where are you seeing the most traction? Is it watch size batteries, phones, laptops, across the board? Any color would be appreciated. Yeah. Thanks for that question. On your first question, you know, I would view that, you know, the production output is pretty low in Q3. We really are focused on getting all the improvements done to, you know, start the ramp in Q4. You know, what we're shipping out of fab run right now is kind of our— We have a wearable cell that we've designed to kind of fit into a lot of sockets. That's what's out there. I think that's what you're gonna see early in the year that's gonna get traction. I think there's a lot of interest. We ship that cell out to 10+ customers in the second quarter. That said, we're also working on larger cells out of our second line, and Cam can talk a little bit about kinda how some of those things are progressing. Yeah, sure. Happy to do that, Tony. Yeah. You know, we've always sort of thought about how the business grows, going from wearable cells to mobile communication to laptops. That's kind of the logical progression in terms of our product development and launch, and I think that's how we'll see it roll out. You know, Harrold's correct. I think in the near term, in terms of numbers of companies and products, it's heavily weighted towards wearables today because that product is ready to go. It's on the market, it's qualified. We're seeing a lot of activity there. You know, as we think about and as I think about the strategies that the strategics are taking with us, they really all are kind of taking a similar approach where they start with one product category to essentially prove, not so much the technology, but you know, our ability to scale it and produce it with quality. Each of the companies we're working with, interestingly enough, has chosen kind of a different product to go after first. We like that approach. We think it's great. It really diversifies where the business is going. You know, in the long run, we expect and our goal is to develop multiple products with these guys, and they could all, each one of them could probably take essentially all of our volume for, you know, the foreseeable next couple of years, if they, you know, if they wanted to do that and if we allowed that to happen, which probably wouldn't be in our direct interest to be so concentrated, and so we're trying to spread it out. Thanks, Cam. If I could actually direct a follow-up, last question to you. Are you still able with, you know, the pausing of the plant, the optimization here in Q3, are you still able to satisfy demand for your customers for both Q3 and Q4 units? No, we can't satisfy demand for customers at all now or even next year or the year after, right? I mean, there's definitely an allocation that has to happen. That said, can I meet my goals out of what I need to do in Q3 and Q4? Yes. My goals really are around, primarily around quals and setting us up for volume as the production capacity comes online. All right. Thanks, guys. One moment. Our next question will come from Ananda Baruah of Loop Capital. Your line is open, Ananda. Hey. Yeah, thanks. Good afternoon, guys, and congrats on all the good news today. Yeah, just a couple, if I could. Going back to the remarks you guys have made about strategic accounts seeing a real acceleration and urgency. The commercial milestones that you said were the catalyst for that, are those their own commercial milestones in the work with you, or does that also include you guys doing commercial milestones in non-strategic accounts? Are they now seeing the sort of efficacy of the product? Yeah. I think there's probably some of both of that. I'll let Cam kind of give some color. Yeah. Hey, Ananda. That's a good question. The way we see it is, you know, each of these companies have their own rigorous process for testing our cells and convincing themselves of the validity of the technology and the products, right? That's kind of its own, let's say, business process that moves along. What we mean by an acceleration is it's kind of a trigger for them when they see the company go commercial. You know, that was the big milestone for this last quarter, commercial product going out of the factory. When they see that, it's a trigger for them, and it makes them realize that this thing is gonna go, and then everybody's worried about, you know, maintaining a competitive advantage. You know, you get into this competitive dynamic, where people start to get a fear of missing out because there's a limited amount of capacity, you know. Relative to the opportunity there, that's gonna be true for, I think, some time now. That's kind of what we meant by it being a trigger. It's really I think, look, battery technology is always very difficult to understand all the little nuances and caveats and details of how does it work and whether it works. When you actually get commercial units out the door to real customers, you've essentially answered all of those questions. It's a big deal. That's absolutely how our, you know, many of our customers view, you know, view the achievement of those milestones. Okay. That's helpful context. I guess, would it be based on what you guys have experienced internally in conversations sort of in the context of that, probably like acceleration and urgency, you know, would it be also your opinion that there's a possibility that they sort of like, I don't know what the right description is here, but like move at a faster pace now, given that urgency to complete some of these production qualifications? Yeah. That's what we're saying by acceleration. We think that the, you know, the engagements are moving at a faster pace. You know, I think we also mentioned maybe in the prior call that or we had a press release where, you know, one of these large strategics said they wanna try to move us across their entire product line as soon as possible, right? They're gonna be probably pulling on us pretty hard, I would say. Yeah. Definitely a sense of urgency now. That said, of course, none of those companies will short-circuit their, you know, their quality and, you know, process for developing quality products. You know, there's motivation to go as fast as possible. That's helpful. Understood. Just a quick follow-up here. On the Army announcement, congrats on that. What would be now the key milestones remaining from where you are right now to going into production volume with them? Yeah, sure. You know, what we announced today was what's called phase III and phase IV of the overall program. Phase I and II, we announced that, I guess about a year ago. The purpose of phase I and II was for the Army to test, you know, our standard products, verify our claims on, you know, on performance in terms of energy density, cycle life, safety. Harrold mentioned the, you know, the nail penetration testing that they do. Given the results of those tests, they chose to move forward with this follow-on contract. The purpose of this contract is for us to configure basically ourselves in the right form factor and design to fit into the existing CWB, the conformal wearable battery pack. This is the multi-cell pack that goes into a soldier vest. Build cells that fit into that, then do the integration with the pack, and then do some pack-level testing. Okay, that's kind of this phase. Next, we would move into essentially field trials with, you know, real packs going out in the field on a trial basis, you know, with soldiers. Next beyond that would be, you know, essentially volume production. Awesome. Any care to guess what the next two phases, the next few steps, how long that could take, roughly? Our expectation is that, you know, it's a few years. You know, it's the Army, you know, has a rigorous process of going through. We'll start to see what we consider to be, you know, meaningful revenue, though, and before we're in full scale production, because there's a lot of work that goes into the field trialing and, you know, there's some volume associated with that. Now, that all said, it's not necessarily normal times, I would say, with respect to this type of a program. You know, part of the reason why they're really excited about what we're doing is the product. Another part of the reason is that this would be domestically produced, and there really are very limited choices for companies, battery cell production companies in the United States. We're very well positioned there. If you just kinda think about what's happening in the world around security of supply and, you know, where our current supply chains for lithium-ion batteries are coming from, that's not necessarily the most stable part of the world today. You can rest assured that there's smart people on both sides of the aisle at the highest level who are really worried about this and trying to figure out ways to accelerate it. That's super helpful context. Thanks. Thanks a lot. I'll see you before there. Thank you. Thanks. Thank you. Our next question comes from Marc Cohodes of Alder Lane. Thanks for taking my call. Marc, your line is open. Well, thank you. I have a couple of comments and throw a few questions in there. First of all, probably one of the best calls I've heard from anyone in a couple of years, and given how trying and difficult the world is, unlimited demand is a pretty good thing to have. I talked to a couple of these customers, these mega guys. Harrold, can you comment on this? One of them said that without the Enovix battery, our product would not exist. Can you talk about that concept, are you seeing this with others? To me, when I look at these greater than $200 billion enterprises, that would be Apple, Samsung, Facebook, Tesla, and maybe another one I'm missing. Do those names, do they fit the bill? That's one. Question two. Finally, Cam, can you talk about the bake off in auto that's going on? When can we expect to see something? What that business model looks like? Finally, just really well done, guys. I mean, this is just a substantial improvement of prior calls, and I'm very proud of you and proud to be part of this deal. Hey, thanks for that, Marc. I appreciate the nice comments. You're right. I think if you think about these large strategics. They all have products, some of which we probably know about, some of which we don't, which are sitting in back closets, waiting for a battery that's good enough to make them happen. I mean, there might be other challenges as well, right? You know, if you think about the last 20 years, product designers have been, you know, told time and time again, "You can't do this 'cause you don't have enough battery power," right? Having a battery as good as ours unlocks a lot of those things and make them possible. You know, some of these we probably ourselves don't even know about. These are pretty cagey companies. I would say that there's obviously, you know, one emerging, you know, market, kind of the next computing market of AR, where that product itself is just massively challenged from battery life. What we've mentioned in the past and we've heard from a number of players in that space is that the only battery that they see that really makes that product work is ours, right? That's a pretty strong endorsement for how critical we are to something that's kind of really not out there yet. We feel excited to be, you know, a company that has something that can make that happen and be that powerful in the world. I think that's one example of that. I'll let Cam kind of talk about your second question. Yeah, okay. Hey, Marc. Yeah, I think your question was pertaining to, you know, what's happening on the EV front and how do we view that. No, no. Question two was Apple, Facebook, Tesla, Samsung. Do those names fit that greater than $200 billion? Is that am I guessing in that neighborhood properly? I know you can't mention customers, but I can. Am I Yeah. Am I guessing in the right lakes there? That's my question two. Then question three is about the auto. Sorry. Question two, what we've said is that we are working with a number of what we call strategic accounts, and we've defined them to be market caps over $200 billion and capable of using our battery in multiple product categories. It's pretty easy to Google what that means. I think, you know, there's a handful of companies that fit that bill. On the EV side, actually it's kind of exciting times. You know, we launched Enovix Mobility, which is its own business unit and team, I guess last quarter officially. You know, that team is chartered with essentially converting the success we've had in this technology development in the consumer market to a real product that we think is extremely well-positioned technically to help move the electric vehicle mission forward. As part of that, as you can imagine, we're very actively meeting with worldwide OEMs all over the world. You know, we think we're gonna have an opportunity to be able to kind of choose the right partner for us. There's a whole, you know, number of considerations that go into that, from technical fit to their strategy to culture to what our judgment is of their ability to win. I think things are moving along there quite nicely. When can we expect to see something on that, you think? Cam? That one's harder to say just because there's lots of different things that go into our ability to say something publicly. Just rest assured that we're having very interesting discussions now that we hope will play out. Finally, you know, to the sell side out there, you guys don't have an easy job, but some of you can't even see the forest through the trees, and you're so myopic and focused. Look a little broader on what can happen here, 'cause best product for what these guys do wins. It always has won, and it will win. Some of your guys' questions are just beyond insane. Just be a little more broader in scope, I would suggest. Thank you. Thanks, Marc. Thank you. I'm showing no further questions. This concludes today's conference. Thank you for participating. You may now disconnect.