Navitas (NVTS) Q1 2026 Earnings Transcript

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Date

Tuesday, May 5, 2026 at 5 p.m. ET

Call participants

• President and CEO — Chris Allexandre
• CFO — Tonya Stevens

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Takeaways

• Revenue -- $8.6 million, up 18% sequentially from $7.3 million in the prior quarter, primarily driven by high-power markets.
• High-Power Market Revenue -- Grew 35% year over year and now forms a large majority of total revenue as the company pivots away from mobile and consumer segments.
• Gross Margin -- Improved by 30 basis points to 39.0% from 38.7% sequentially, reflecting a higher mix from high-power products.
• Operating Expenses (Non-GAAP) -- Remained essentially flat at $15.0 million, compared to $14.9 million in the previous quarter, with higher R&D spending supported by disciplined SG&A controls.
• Loss from Operations -- $11.7 million, an improvement from a $12.1 million loss in the previous quarter.
• Net Loss Per Share -- $0.04, compared to $0.05 in the previous quarter, on approximately 230 million diluted shares outstanding.
• Cash and Cash Equivalents -- $221 million at quarter end, down from $237 million in the previous quarter, with no outstanding debt.
• Inventory -- $14.9 million, up from $13.3 million at year-end, reflecting investments to support anticipated revenue growth.
• AI Infrastructure Market Growth -- Data center and grid infrastructure combined grew 50% sequentially from Q4, with this segment identified as a primary growth catalyst.
• Q2 2026 Revenue Guidance -- Projected at $10.0 million, plus or minus $0.5 million, for an expected sequential increase of over 16%.
• Q2 2026 Non-GAAP Gross Margin Guidance -- Expected to be 39.25%, plus or minus 75 basis points, as high-power mix continues to increase.
• Q2 2026 Non-GAAP Operating Expense Guidance -- Anticipated to remain flat sequentially, in the range of $14.5 million to $15.5 million.
• Market Focus -- The company is now singularly focused on four segments: AI data center, energy and grid infrastructure, performance computing, and industrial electrification.
• Product Pipeline -- Final samples of 1.2 kV Gen 5 SiC and both 100-volt and 650-volt GaN products have been delivered, and customer feedback highlights up to a 50% power density increase and system efficiencies above 98%.
• Strategic Partnerships -- Progress continues with GlobalFoundries toward planned U.S.-based 8-inch GaN manufacturing in 2027; supply chain is being scaled with TSMC support.
• Mobile Segment -- Revenue contribution from mobile and low-end consumer is rapidly diminishing and expected to become insignificant by year-end.
• Leadership -- New appointments include CFO Tonya Stevens and several senior leaders across operations, engineering, sales, marketing, and business units, all from larger, execution-driven firms.

Summary

Management confirmed the company’s ongoing transformation toward high-power market segments, with high-power products now generating the majority of total revenue. Sequential and projected revenue growth is supported by strong demand from AI data center and grid infrastructure applications, which increased 50% in the quarter and are projected to accelerate further. Expanded product qualifications and deliveries—including 1.2 kV Gen 5 SiC and advanced GaN technologies—are facilitating broader customer adoption. The inventory build aligns directly with expected growth and improved channel health, and the appointment of Tonya Stevens as CFO completes a new leadership team equipped for the company’s scale-up phase. Navitas expects further gross margin expansion, driven by high-value product mix shifts and operational discipline.

• CFO Tonya Stevens described the company as having "$221 million in cash and no debt," providing "a pretty long runway to support our working capital needs and CapEx flexibility."
• CEO Chris Allexandre said, "Q1 was the first clear proof point and the growth in high-power market demonstrate the momentum of our Navitas 2.0 strategy."
• Navitas is leveraging both GaN and SiC technologies, with direct management commentary emphasizing that "having both makes a huge difference" and provides "key differentiation" in customer engagements, especially within AI infrastructure.
• The company is ramping toward U.S.-based 8-inch GaN production with GlobalFoundries in 2027 and is actively managing its supply transition with TSMC to ensure uninterrupted customer supply.
• Demand visibility has improved in high-power markets, resulting in increased confidence in both short- and medium-term outlook.

Industry glossary

• GaN (Gallium Nitride): A compound semiconductor material delivering higher efficiency and power density for integrated circuits compared to traditional silicon.
• SiC (Silicon Carbide): A wide bandgap semiconductor material used in high-voltage, high-power applications for its superior efficiency and thermal performance.
• HVDC (High Voltage Direct Current): An electrical power transmission system employing direct current at high voltages, critical for data center and grid energy architectures.
• GeneSiC: Navitas’s patented silicon carbide technology platform, differentiated through proprietary planar architecture for high-density, high-reliability module applications.
• OEM (Original Equipment Manufacturer): Companies that produce systems or components which are used in another company’s end products.
• ODM (Original Design Manufacturer): Firms that design and manufacture products which may be marketed by another brand owner.
• PSU (Power Supply Unit): An electrical device supplying power to electronic loads, particularly crucial in servers and data centers.
• SST (Solid-State Transformer): Advanced transformer technology using semiconductor components for improved efficiency and reduced size in power distribution.

Full Conference Call Transcript

Chris Allexandre; and CFO, Tonya Stevens. I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm. As such, these results are unaudited and subject to revision until the company files its Form 10-Q for its quarter ended March 31, 2026. In addition, 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 is contained in the Private Securities Litigation Reform Act of 1995.

Actual 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 Forms 10-K and 10-Q. In addition, any projections as to the company's future performance represent management's estimates as of today, May 5, 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.navitassemi.com. Now it's my pleasure to turn over the call to Navitas President and CEO. Chris, please go ahead.

Chris Allexandre: Good afternoon, and welcome to everyone on the call and webcast. We appreciate you joining us on today's call. I'm pleased to report that Q1 is reflecting another quarter of solid progress and growing momentum on our transformation to Navitas 2.0, highlighted by the company's return to top line sequential growth. For those of you that may be new or still coming up to speed on our story, I want to begin with a brief high-level summary of our ongoing strategic transformation and Navitas 2.0 vision.

Over the past 2 quarters, we have meaningfully reaccelerated our pivot away from the company's historical mobile and low-end consumer business to focus the entire organization on high-power markets, where Navitas GaN and high-voltage SiC products can deliver long-term differentiation and value. Today, we are singularly focused on 4 high-growth, high-value market segments, AI data center, energy and grid infrastructure, performance computing and industrial electrification. Our go-forward objectives are to rapidly achieve scale in these higher-value markets in support of driving sustainable and profitable growth. Turning to an overview of the quarter. Our Q1 financial results demonstrated solid quarter-over-quarter improvement, and we observed growing momentum across our high-power markets and expanded customer engagement.

Highlighting the quarter, we achieved the expected return to growth in Q1 with revenue increasing 18% sequentially. The renewed growth was driven by our high-power markets, which also represented a growing and larger majority of total revenue as we continue to reduce reliance on the company's historical mobile and consumer business. Although far too early to declare victory, we effectively completed our realignment of the entire organization, and Navitas is back to growth, driven by our high-power markets. In fact, revenue from our high-power business grew 25% year-over-year with all 4 of our high-power end markets increasing sequentially in Q1.

The increased contribution from high-power market also drove a favorable mix in our overall revenue mix, resulting in improved Q1 gross margin. Consistent with our previously communicated expectation, we anticipate continued sequential top line growth and gradual gross margin expansion throughout '26. The ultimate success of our strategic transformation continues to be grounded in 4 pillars: market focus, technology leadership, operational efficiency and financial discipline. With respect to market focus, we continue to see new technology adoption accelerating across multiple end markets and customers, both of which are increasingly driving towards GaN and high-voltage SiC solutions.

Without question, AI is the primary catalyst driving this momentum and leading to the broadening adoption of high-power solutions across all 4 of our target end markets. Collectively, this market represents a serviceable addressable market of $3.5 billion by 2030, split roughly 50-50 between GaN and high-voltage SiC with combined CAGR exceeding 60%. We are definitely focused on the largest portion of the TAM, which I'd like to refer as the AI infrastructure comprised of unique but related growth opportunity across the AI data center and the grid and energy infrastructure, each of which are fundamental to enabling the AI evolution.

Today, the aggressive increase in compute power density is accelerating GaN and SiC adoption in data centers, while the required modernization of the energy green infrastructure to support these data centers is driving increased need for high-voltage SiC. It is uniquely positioned as one of the very few companies that can claim deep long-term experience in both GaN and high-voltage SiC technologies. We're also agnostic and readily offer customers the ability to choose the optimal solution for their application architecture. As a result of our proven capability in both SiC and GaN, we believe it allows us to address more of the power chain and ultimately capture with content per system.

Briefly providing the trends and opportunities specific to each of our 4 targeted end markets, starting with AI data centers. As a technology leader in both GaN and SiC power delivery, we support all major AI data center architectures with industry-leading power density and efficiency. Again, having both technology is a strategic differentiator and our ability to fully support a given customers' chosen approach translate into more opportunities across more applications and greater potential lower content for Navitas. As conveyed at the recent NVIDIA GTC event in March, AI data center is rapidly evolving towards a HVDC architectures, leading to expanding content opportunity driven by the need for exponential power levels, increased density and top-tier efficiency.

Our immediate focus remains on expanding sampling of our newest GaN and SiC product, enabling qualifications, preparing for scale ramp and supporting hyperscalers and OEM customers in their ongoing design and development efforts, spanning from AC-DC PSUs and DC-DC PSUs and affordable HVDC brick designs at higher power level capacity. In grid infrastructure, we continue to advance active engagement across a series of new and existing customers with notable acceleration in design activity in the United States. AI remains a prominent underlying catalyst as all industry participants increasingly acknowledge the existing energy grid is not capable of supporting the projected future rollout of AI deployment.

This market where technology and scale are equally important, represent a large and long-term secular growth opportunity for our current and future high-voltage SiC products. Navitas GeneSiC technology position us as a leading enabler of the grid and energy infrastructure modernization efforts, providing customers with more reliable and higher density power through our recently introduced 2.3 kV and 3.3 kV modules and a road map to even higher voltage. In performance computing, we are seeing sustained healthy adoption of GaN in higher power chargers solution for high-end laptops and mobile workstations used for gaming and AI development.

Our opportunity in this market continues to be driven by the dramatic increase in power requirements with CPU moving from 15 to 30 watt to 45 to 80 watts in ultra-end AI notebooks with the integration of GPU requiring up to 120, 175 watts. As a result, we expect to benefit from growing demand and momentum in performance computing market application throughout '26 and beyond. Finally, in industrial electrification, we are continuing to see customer traction in both GaN and ultra-high voltage SiC in high-performance applications such as DC-DC converter and megawatt chargers, industrial pump, motor control and heavy equipment electrification.

With respect to our second pillar, technology leadership, we remain fully committed to ongoing innovation in GaN and high-voltage SiC driven by focused R&D investments and demonstrated by expanding customer engagement and co-development projects. On GaN, we have continued to accelerate sampling of our 100-volt and 650-volt devices to more OEMs and ODMs. Customers pursuing the 80-volt HVDC architect today are testing GaN, and we believe most are doing testing with magnetized devices. We are focused on enabling and supporting customers in this transition from silicon to GaN like we have always successfully done in our past. More recently, we have seen some customer internal reality, system-level testing on our newest GaN devices.

During the first quarter, we continue to deepen our collaboration with OEM, ODM and hyperscalers, including demonstration of enabling new GaN architecture that feature high power efficiency and reability, which is leveraging Navitas's more than 10 years of GaN experience and expertise. One of those highlights was our recent release of a 20-kilowatt 800-volt to 6-volt DC-DC platform using our latest 8x8 60-volt GaNFast test aiming at 97.5% efficiency. This platform solution was formally unveiled in March at GDC and showcased at NVIDIA MGX. As a reminder, we also previously released an industry-leading 800-volt to 50-volt AI DC-DC power fully GaN, 60 Volt and 100 Volt, delivering best-in-class efficiency and density.

This respective platform are generating strong interest and prospective customer engagement due to their demonstrated ability to deliver the highest power density, efficiency and performance for next-generation AI data center architecture. Today, our team remain focused on execution, including product delivery, qualification and preparation of targeting growth for GaN-based 800-volt HVDC architecture in 2027. On high-voltage stitch, we continue to strengthen our technology with a focus on high power density and ability, which represent both the primary market drivers and our key differentiators in terms of silicon and packaging. Following the introduction earlier this year of our new industry-leading Gen 5 GeneSiC technology based on our patented French-assisted planer architecture.

In March, we released our 1.2 kV Gen 5 SiC product tailored in packages to address the higher power density DCDC and ACDC unit in PSU application. We have since delivered samples to OEM and ODF, and they are currently being evaluated by most PSU vendors. Initial customer feedback has been excellent with report up to 50% increase in power density and greater than 98% system efficiency and improved cool. Turning to operational efficiency. The prior restructuring action initiated late last year, which I discussed in detail last quarter, have been substantially complete. As previously mentioned, today, the entire organization and its resource are fully aligned to focus on the high-power market.

This represents a substantial strategic repositioning from where the company was just 9 months ago. Our team is moving fast and working very hard and their collective mitigation is impressive. Recognizing the tremendous opportunities ahead, we plan to continue adding selective engineering skills and competencies to accelerate customer support over the coming quarters. Also during the quarter, we completed our leadership transformation with the appointment of our new CFO, Tonya Stevens, who formally joined the team in late March.

We now have the full leadership team in place, including new leaders in operations, engineering execution, sales and marketing, business units and finance, all of whom joined the company in recent weeks and months from larger companies with strong track record in execution and scale. Importantly, this new appointed team and our employees have demonstrated strong buying and excitement for Navitas 2.0, and it's a privilege to lead this transformation alongside each other. We also continue to make progress on our strategic technology and foundry partnership with GlobalFoundries non-GaN. We are confident this will enable our planned 8-inch pivot in 2027 for GaN manufacturing in the United States.

At the same time, we are starting to build appropriate buffers with TSMC to ensure a smooth transition for all existing customers. Additionally, we have begun actively scaling our supply chain to support upcoming growth and demand, and we are leveraging AI internally across design and most of the functions to allow us to scale even faster. Our fourth pillar is financial discipline, which we are committed to as we execute our scale-up plan and transformation to Navitas 2.0, a consistently growing and profitable high-power company. This includes remaining diligent with respect to prioritizing our investment in high-power program, maintaining leverage OpEx and focusing on high-margin, long-term engagement that build multinational customer relationships.

We made significant progress in Q1 with our previous restructuring effort and full mine towards high power market now substantially complete. Going forward, we'll continue to drive efficiency across the organization and are committed to disciplined investments in the business, even as we target a much larger market opportunity. Our focus remains on top line growth and margin expansion, driven by improving scale and mix of our high-power business in support of achieving long-term profitability. In summary, I am very pleased with the continuous progress and great momentum we have achieved in such a short period of time. We're taking further steps towards positioning Navitas as a high-power company.

We anticipate continued sequential revenue growth in the second quarter and throughout the rest of '26. Q1 was the first clear proof point and the growth in high-power market demonstrate the momentum of our Navitas 2.0 strategy. We also anticipate gross margin to steadily improve as volume growth drive better fixed cost absorption and our revenue mix increasingly favors the high-power business. Mobile contribution will continue to diminish this quarter and become insignificant by year-end. At that time, we expect our business and revenue will be defined almost entirely by high-power market, a transformation that positions us well for sustainable long-term growth and profitability.

Before I turn the call over to review our financials, I'd like to take this moment to welcome Tonya Stevens, our newly appointed CFO. I'm thrilled to have her join our executive team. She brings over 30 years of exceptional track record of financial leadership in the semiconductor industry, most recently at Lattice Semiconductor. I look forward to her valuable contribution as we grow the business and scale our operations to a larger, financially disciplined and profitable company. With that, I'll pass the call to Tonya to introduce herself and review our first quarter financials and second quarter outlook.

Tonya Stevens: Thank you, Chris. Before reviewing the financials, I would like to take a moment to introduce myself and share my motivations for joining Navitas. My corporate finance career spans more than 30 years and began with 7 years in public accounting. I've since spent the majority of my career in the semiconductor industry, including 17 years at Intel in Corporate Finance and the last 7 years at Lattice Semiconductor as Chief Accounting Officer and previously Interim CFO. I'm incredibly excited to join Navitas for several reasons. The team is comprised of extremely talented and capable leaders and individuals who are laser-focused on executing the company's strategic objectives in a rapidly advancing and high-velocity environment.

Together with its compelling technology portfolio, the company represents a pure-play GaN and SiC opportunity to scale up and capitalize on the substantial AI-driven secular growth in high-power markets. It's a privilege to be part of the Navitas leadership team, and I look forward to meeting many of you that I haven't met already over the coming weeks and months. With that said, I will now review the financial results for the first quarter of 2026 and then discuss our outlook for the second quarter. Please note, unless otherwise indicated, I will focus my comments on non-GAAP results. A detailed reconciliation of all non-GAAP to GAAP financial measures can be found in our press release published earlier today.

Revenue in the first quarter of 2026 exceeded the high end of guidance, increasing 18% sequentially to $8.6 million on a GAAP basis. This compares to revenue of $7.3 million in the fourth quarter and $14.0 million in the first quarter of 2025. As Chris highlighted, the return to sequential growth was driven by high-power markets, which grew approximately 35% from the first quarter 2025 and now represents a large majority of total revenue as the company continues to reduce its reliance on historical revenue contribution from mobile and low-end consumer business. Notably, we expect high-power markets to continue driving sequential growth throughout 2026.

The higher quarterly revenue and improved revenue mix drove a 30 basis point expansion in gross margin, which improved to 39.0% from 38.7% in the prior quarter and 38.1% in the first quarter of 2025. The shifting mix of total revenue toward higher value, high-power markets and away from mobile and low-end consumer is key to our gross margin expansion strategy. We expect sustained gradual improvements in gross margin throughout the coming year. Operating expenses for the first quarter were $15.0 million compared to $14.9 million in the prior quarter and $17.2 million in the same quarter a year ago.

Operating expenses for the quarter reflect our commitment to focused and disciplined spending, particularly in SG&A, which created the opportunity to invest more in R&D projects quarter-over-quarter in support of our strategic pivot to Navitas 2.0 while keeping total operating expenses flat. Loss from operations for the first quarter was $11.7 million compared to a loss of $12.1 million in the prior quarter and $11.8 million in the first quarter of 2025. In Q1, diluted shares outstanding was approximately $230 million, resulting in Q1 loss per share of $0.04 compared to $0.05 loss in the prior quarter. Turning to the balance sheet.

Cash and cash equivalents at the end of the first quarter 2026 were $221 million compared to $237 million at the end of the fourth quarter, and the company continues to have no outstanding debt. With respect to inventory, we ended the first quarter with $14.9 million compared to $13.3 million at year-end. The sequential increase in inventory primarily reflects our measured investment to support future anticipated revenue growth. With respect to channel and distributor inventory, as a result of previous streamlining actions taken during the latter part of last year, we now have a significantly healthier channel inventory profile.

Going forward, we are committed to disciplined monitoring and management of these inventories to ensure we are well positioned to respond quickly to end market demand. Overall, the balance sheet remains very strong and provides the company with an extensive amount of liquidity as well as ample flexibility in terms of working capital to execute our strategic objectives and anticipated growth. Moving to guidance for the second quarter of 2026. Consistent with the company's previous communications, we expect continued sequential growth with revenue increasing to $10.0 million, plus or minus $0.5 million. At the midpoint, this represents over 16% sequential growth compared to the first quarter of 2026.

Non-GAAP gross margin is expected to be 39.25%, plus or minus 75 basis points, which at the midpoint represents a 25 basis point increase, primarily reflecting the ongoing shift in revenue mix toward higher power markets. Non-GAAP operating expenses are expected to remain approximately flat sequentially between $14.5 million to $15.5 million as we continue to emphasize disciplined cost management. Moving forward, we may choose to selectively invest in OpEx to accelerate growth at a fraction of the rate of revenue growth. That concludes our formal remarks. Operator, please open the call for questions.

Operator: [Operator Instructions]. Our first question comes from the line of Tristan Gerra with Baird.

Tristan Gerra: I know it's still probably a bit early, but would you be able to talk about the dollar content that we could expect per rack for silicon carbide on the first-generation 800-volt architecture? Then what type of ramp in content should we expect with Kyber for both silicon carbide and GaN?

Chris Allexandre: Tristan, this is Chris. Thanks for the question. If you refer to our prior communication, right, we gave guidance in terms of content per megawatt because that's how the best way to kind of define the content we talked about for GaN in the range of $10,000 to $15,000 per megawatt, really driven by the massive 800-volt HVDC when the DCDC gets inside the rack, as we discussed primarily. In the ACDC PSU, there is about $5,000 to $8,000 per megawatt, which is coming from both the higher power of those PSUs.

If you refer to GTC, right, NVIDIA announced that at the end of the year, the PSUs, the ACDC are going to get to 18.5 kilowatts, which is much higher factor is if we look at the power level from today's PSUs, the ACDCs, which are in the range of 5 to 10 kilowatts to 18.5 kilowatt for NVIDIA, but even 25 to 30 for other hyperscalers, there's a ratio of -- when power goes up by 2, the SiC content goes up by 5. There is a non-linear increase, right?

I'm not going to get specific in terms of content because it really depends on the architecture, 1 phase, 3 phase to 3 phase, but refer to the $5,000 to $8,000 of content for the SiC inside the center, which is mostly AC/DC PSUs and the mental model, which I just mentioned, which is when the ADCDC from, let's say, 5 to 10 kilowatts to 18 to 25 to 30 kilowatts, there's about 2.5x content acceleration compared to per rack.

Tristan Gerra: Then for my follow-up, specific to silicon carbide, clearly, pricing has been coming down drastically in '24, '25. Given the ramp that you see, do you expect pricing to stabilize? I know you're going to be in the very high voltage. How different is that pricing dynamic there than in the lower voltage, but also do you expect at some point supply-demand balance in silicon carbide?

Chris Allexandre: We don't participate, as you know, to the low-voltage SiC business in mostly industrial and EV, right? What we see is for inside data center, the ACDC mostly use 1.2 kV and above 65 sometimes and 1.2 kV and above, right? Where the driver today is more speed, reliability and density. Of course, this is a competitive market, and as the hyperscalers are driving more power and more PSUs and more PSUs per rack, there is quite competitive.

Today, what we see is what the customers are pushing us on is how we execute and how we help them to get to the best scalability and the best density of power, which I think save a lot more money at the system level than a cheaper device.

Operator: Your next question comes from the line of Madison DePaola with Rosenblatt Securities.

Madison DePaola: This is Maddie calling on behalf of Kevin Cassidy. You highlighted that GaN and SiC are both playing vital roles in AI power and that you guys are uniquely positioned to win both technologies. I know you mentioned this, but can you provide any more color on how having both capabilities is helping in customer discussions or design win activity in data center over your larger competitors?

Chris Allexandre: Maddie, this is Chris. First of all, I think we focus on the high-power markets, right? We have 4 markets. Each of them have a different flavor of architecture and technology. If I refer to AI data center, it's mostly a GaN and SiC play. If I look at grid infrastructure, it's mostly a SiC play. Of course, high-performance computing is more GaN play and industrial is actually both a SiC and GaN play, right? If you look at the first 2, which is what your question is, right, if you look at the evolution of the architecture, so let's zoom out a little bit, right?

Today, in the current architecture, the traditional architecture is 50-volt bus bar where the voltage from the grid, which is 480, 400-volt ACs convert to 50-volt DC, right? That's mostly use SiC, okay? That's been going forward, right? The first step, and I think I referred to what has been announced at GTC, right? The first step is to the 800 volt is the introduction of 3-phase much higher power, which I referred to in my answer to Tristan. The first phase is most higher power 3-phase AC/DC, right, where you convert the 400-volt, 480-volt AC into 800-volt DC, okay? That's the first phase that's going to start at the end of the year, early next year, right?

That on the AC/DC we use mostly SiC. Now there is a DC-DC conversion to that. If you refer to what NVIDIA announced at GTC, there is a DC-DC top of rack converter, right, at 15 kilowatt for instance, both use either GaN or SiC. I think both is already right there, enabling customers to have a choice depending on the preference. What is very interesting is when you move to the next step, which is the second phase of the 800-volt DC architecture, where you get to, let's call it, high-density rack, megawatt rack will be Kyber for NVIDIA or more other high-density racks for the Googles of this world and the others, right?

That's where you move the DC-DC conversion inside the trade inside the rack. When you do that, you have no choice than to use GaN. Because the level of density, the level of power requirements make it impossible to use silicon, but also silicon carbide doesn't have the switching frequency. That's where you're moving to GaN. The fourth step is when you replace -- that's more on the grid side, when you replace the AC-DC PSU on the side rack basically by SST.

If you think about this is a continuum of architecture change and evolution and having more offset to see the [inaudible] should it to be current generation, next generation, next, next generation and how the guys are evolving from current architecture to next phase of into high-voltage, high density, even down the road with the reorganization and the restructuring of the grid.

Operator: Our next question comes from the line of Quinn Bolton with Needham & Company.

Shadi Mitwalli: This is Shadi Mitwalli on for Quinn. My first question is for Chris, but do you have any big picture takeaways from GTC in APAC in March, especially in regard to the direction of GaN versus SiC in 800-volt data centers?

Chris Allexandre: My takeaway was kind of what I just mentioned to Maggie. First of all, we've talked about 800-volt architecture now for more than a year. It's happening. I think NVIDIA was very clear that they see at the end of the year, early next year, this what I call the first phase of the 800-volt HVDC architecture where you basically do the ACDC at a much higher level of power with SiC and then you do a DCDC where you can use Gan and SiC, but also outlining that as you move to next step, the move to much higher density rack is kind of enabling GaN content to move next.

That's my takeaway from the GTC is 800 volt is happening. Now keep in mind that there is -- we talk about NVIDIA here, but there are other hyperscalers. They might have a different path, they might actually go even faster to the next phase where you get the power, the DCDC part enabling directly on the train and in the rack, which will accelerate the GaN adoption. I would say I come out of GTC with a stronger conviction having both makes a huge difference. I think we talked about this before where I said Navitas is uniquely positioned because we have both SiC and GaN.

I think it's actually very hard for a supplier to sit at the big table if you either have GaN or if you have a SiC. There's only a handful to not say a very few number of suppliers who have both. That's the key differentiation. That's my takeaway on top of the fact that [inaudible].

Shadi Mitwalli: Then my follow-up is just on the product landscape for GaN. As you're sampling with hyperscalers, what are some of the key specs that matter most of them when evaluating GaN products? How does your portfolio measure up against those requirements?

Chris Allexandre: What we said before is we've sampled both high voltage, so 650-volt GaN as well as mid-voltage GaN 100 volt. We've done that in different flavors of package, depending on the level of integration and density that the customers are looking. In the last quarter, we mentioned we've done the initial samples, since then, we've now delivered the final samples, which is basically the samples that will go to production. We are working with customers on -- they move from, I'd say, device level testing to board system level testing. The feedback we get is our technology as well as packaging offering is actually adequate to what they're trying to do.

Operator: Your next question comes from the line of Richard Shannon with Craig-Hallum Capital Group.

Tyler Anderson: This is Tyler Anderson on for Richard. I was just wondering, could you talk about why customers would want to upgrade transformers that aren't connecting to data centers? Have you heard of any talks within the government to force the upgrade of transformers?

Chris Allexandre: I'll start by the last part of your question. We have no knowledge of any forcing function or requirement for the government to move from traditional transformers to SST. What I would tell you is if you look at -- and I think we've made some slide in the past in our investor package, if you look at the transformers today are very kind of old school, so to speak. They are operating at a low frequency, which is in the 60 Hz. They have limited efficiency, which is less than 95%. They are heavy metal. They are very large and very weak.

As you move to an explosion because that's what we're talking about explosion of rollout of AI data center, which basically pull on the grid a lot more energy, you have to install a lot more transformers. That's going to be, at some point, impossible if we keep the convention transformer. The move to SST is a bit of a necessity as we scale up and deploy the hundreds of gigawatts, in the next few years. The other thing I would refer to is we keep referring to SST, but when we talk about grid and energy, this is going beyond the SST. SST is going to be the last step of evolution.

Today, you have much higher level of power of transformers, megawatt converters. You have grid-type solar farms that are being deployed. There's a lot of grid type applications that are being deployed, which we see as a growing driver even in '26 and '27 ahead of the big acceleration of the SST, which will come really in late '27, early '28.

Tyler Anderson: I'm also wondering if there's anything around the switching. I'm seeing something about -- and please, I understand I may be wrong on this or going down the wrong path, correct me if I am. Aluminum conductor steel transformers, I'm seeing things about them wanting to focus on the switching. Would you be able to benefit from that upgrade in the switching?

Chris Allexandre: I mean, yes, you will. I think the grid companies have realized that the only way to make the grid, as I say, compatible with the acceleration of power is really to get to this new form of conversion, less conversion, less steps moving from super high voltage great DC to a form of electronification of the grid for lack of better. I think this will require and isolation transformers basically.

Tyler Anderson: Then have you heard of any conversations around the lack of supply of transformers accelerating anything with your customers?

Chris Allexandre: I have not, but I will not be surprised that the requirement for volume in terms of classic transformers and the dependency on metal and a few other things might actually play also in the expiration of the modernization of the grid.

Operator: [Operator Instructions]. Your next question comes from the line of John Tanwanteng with CJS Securities.

Jeremy: This is actually Jeremy on for John. Can you just talk a little bit more about the sequential improvement you're seeing heading into Q2, if that's mostly data center driven and if you're meaningfully ahead of where you thought you were going to be a quarter or 2 ago?

Tonya Stevens: Yes. This is Tonya. Jeremy, so I'll start and let Chris add. Relative to your point in high markets, if you remember in Q4, we talked about high power being the majority for the first time in the company's history, and we talked about it being greater than 50%, mobile being less than 25% and the vast majority of the company last year. Now in Q1, high power continued to grow. It was a large majority of the company, like you heard us say. Throughout the year, to your point, we expect it to continue to grow as a percent of the company.

We exit the year almost an entirely high-power company and that being driven by what you said, the data center and the grid and infra, the AI infrastructure component of that. You saw in our press release and our discussions, high-power grew 35% year-over-year from Q1 of '25 to Q1 of '26, and we expect that growth to accelerate in the second half of '26. Again, driven by both components, but the key catalyst is that AI component. The momentum is driven by all of the high-power markets, but particularly the AI infrastructure, and that's data center and energy grid.

Chris Allexandre: I add something, Jeremy, thank you for the question. First of all, if you look at Q4 to Q1, when we grew 18%, we said, as Tonya said, that the high-power markets, grew as a percentage of the company, mobile went down. That means that the growth of high power was actually much higher, than 18%, the top line of the company and grew 35% year-over-year. Now we don't break down by markets. We don't -- we referred to kind of high power, but we also said in our script that all markets grew sequentially. As we see, this will continue throughout the year. Now I'll give you one data point.

Tonyia referred to and I referred that also in my script about AI infrastructure. What this means is we are combining within the high power, we're combining data center and grid. The reason why we do that is what I've noticed is the driver of the grid is data center. At the end of the day, you cannot look at AI data center and grid energy as 2 independent markets like computing would be. This is really kind of intertwined. That business grew 50% quarter-over-quarter from Q4 to Q1. That's the only color I'm going to give you. As the company grew 16% -- sorry, 18% quarter-over-quarter, the combination of data center and grid infrastructure grew 50%.

That's stronger than expected. You asked me where I think we were -- we are versus where I thought we're going to be. That's stronger than expected. The reason why it's stronger is that we all see it, it's an acceleration of rollout. We have not seen yet the content going up. I talked about the fact that content is going to go up. The content is going to go up because when you move from a 10-kilowatt PSUs to 18.5 kilowatt PSUs or even a 25 to 30 kilowatt PSUs, the ratio is 2x power leads to 5x content. The stick content and growth is going to accelerate. Today, what we are seeing is just the growth of AI.

Then next year, we're going to see even an acceleration of GaN as power gets -- the DCDC gets inside the rack. I think what we are seeing here with the 50% is that the AI data center is accelerating. I will also tell you, even though we don't guide by market that what we see today for Q2 and as a reminder, we are confident in our guide for Q2. We're seeing that AI infrastructure that grew 50% quarter-over-quarter, Q4 to Q1 is actually going to grow faster. That growth is going to accelerate throughout the year. That's before even the step-up in content.

Yes, I would say we are a bit ahead of where I think we're going to be. I look at Q2 guide with confidence, the benefit of being high power is we have longer visibility. We used to be in mobile where you get -- you're still chasing orders within the quarter. I think the high power market, in particularly data center and grid infrastructure are giving us a much longer visibility. I look at Q2 with confidence. We think, as we said before, that this growth will continue throughout '26.

Jeremy: One last follow-up. Any update on the use of cash this year and next in support of the growth ramp? What are your thoughts on when cash flow breakeven is likely to occur?

Tonya Stevens: Yes. I'll take that one. Coming into Navitas and being new, when you look at the strength of our balance sheet, and I even referenced that in my script, a very strong balance sheet. We have over $221 million in cash and no debt at the company. That gives us a pretty long runway to support our working capital needs and CapEx flexibility. I'm confident we can execute the objectives and the organic plan consistent with what I said in the script. Again, we remain focused on profitability. Like Chris said, we remain on track and maybe a little ahead of where we thought we would be to profitability. We're very focused on that.

Nothing's changed in our thoughts around profitability and in fact, potentially accelerated a bit.

Chris Allexandre: Jeremy, you can make the math. I mean, at today's gross margin, and today's OpEx, it will take us to be in the high 30s from a revenue standpoint to be profitable. Now we're guiding 10% for Q2. We said that we expect that growth to continue throughout the year. There is no reason to believe based on what we just discussed that the momentum that we are seeing in data center, grid infrastructure as well as the other hypermarket will slow down. You can extrapolate that to when we're going to be profitable. I'm not going to guide specific.

What I will tell you is when we look at our business, both Tonya, myself and the leadership team is getting to breakeven is a key objective. We're going to spend what we have to spend to optimize and to drive our growth, but being financially efficient, and make sure that we get to breakeven at some point is a key priority for us.

Operator: Your next question comes from the line of Quinn Bolton with Needham & Company.

Quinn Bolton: Welcome Tonya. Great to have you on board. I wanted to follow up, Chris, you mentioned that at least on the 800-volt GaN opportunity, you've kind of moved from device level testing to board level testing. Kind of can you walk us through what the following steps would be to get to final production and sort of the time line if these higher power racks go to production, say, second half of calendar 2027, when do you think those designs would be sort of fully locked down? Did that happen at the end of this year? Or could that continue into 2027 in terms of the testing process?

Chris Allexandre: Thank you, Quinn. You're very consistent asking the same question in the quarter, so I appreciate that. Nothing has changed really. I would change the answer, as you said, depending if you're looking at the first phase of the DC to the second phase. Again, for everybody to understand, the second phase is when the DC-DC conversion gets inside the rack. The big difference is in the first phase, you're designing AC-DC PSUs, DCDC PSUs. You're working with the hyperscalers, but really the implementation of that is at the merchant power, ODM, OEMs, the Delta, the Flex powers, the Vertiv, [inaudible] and so on. We know where we are with those guys.

We first delivered the samples, both the 1.2 kV SiC that we mentioned, the Gen 5 in the new package as well as the gas devices. We now have delivered the final samples, which I think is the sample that will get to production, which I think is important. For those boards, we are, as I said, moving from component level testing to standard testing. What does it mean? Well, the customers have done a couple of prototypes, they're optimizing the systems, the layout, the ELI performance, the efficiency, we are highly active and supportive of this with our application engineers and our field application engineers. That's kind of where we are.

The next step is once they've done some level of system testing, then they're going to do system reality and system validation at the next level. I would say for the first phase of the 800 volt DC since this is meant to ramp at the end of the year to earlier next year, I mean, we're going to get clarity very quickly. As I told you before, for me, I'm not going to comment on design and engagement with customers unless the customer wants to, but you're going to see the proof point in the backlog and as we go.

Now when it comes to the second phase, which is really driven by the hyperscalers, when the DC-DC conversion gets in the train inside the rack, mostly with GaN because there is no other technology that helps you to do this 800-volt 50 or 800-volt 12, 800 volt 6, inside the rack. I think today, we are still working with the hyperscalers and getting the ODM to be comfortable. One of the reasons why we're spending so much time developing those references that we've announced earlier this year, the 850 or 860 is that it gives comfort to the hyperscalers and the customers on how to deploy. It's only 6 to 9 months behind.

If you ask me when we're going to get proof points of the in-tray GaN-based DCDC current, probably Q1 to Q2 next year. Again, this is a duration. Customers, what I see is I measure my team and the engagement with customers in terms of the number of samples we ship 10 samples or 50 samples. When you get to 5,000 samples, it's not samples. It's quo build. My team on the amount of energy that the customer is spending on testing the technology and putting us in from an apps point of view in terms of helping us. I see that energy, that momentum, that number of samples are going up.

That's why I'm comfortable in the momentum we are building. However, as I said in the past, I think the proof is in the pulling, and we are not going to talk about pipeline. We're not going to talk about customer engagement unless the customer decide to, but we're going to refer to growth and outlook and guidance and backlog, which I think is what you should expect in terms of success.

Quinn Bolton: I guess a follow-up just longer term, do you guys have a view? Or are you seeing customers push the intermediate bus voltage to 48, 12 or 6 in that 800 to step down? Do you think that 800 to 6 ultimately wins? Or do you think there's going to be a mix of different intermediate bus voltages across different hyperscaler platforms?

Chris Allexandre: In the first phase, as we talked about at the end of the year, the bus bar at 50. I think you're referring to the true in-tray 800-volt HVDC. At this point, I would say it depends on the hyperscaler. I think you're going to see different flavors. You have seen that we announced GTC, NGX with NVIDIA and they are going to fix. I think that's kind of one of the trends we see. With that scale back to 12. It's a possibility. Some other hyperscalers might decide to scale 50.

You might see some hyperscalers ramping next year with the in-tray massive volt HVDC keeping 50 volts as a bus bar, but moving the DC-DC conversion from top of rack to inside the rack. The short answer to your question is I think we're going to see multiple flavors. Directionally, I would say the trend is the same, reduced number of conversion as you move to higher density rack, which means that the secondary voltage is going to go down over time.

Operator: With that, I will now turn the call back over to Chris Allexandre for closing remarks.

Chris Allexandre: Yes. Thank you for joining us today. As I said earlier on, too early to declare victory, but what I see is the company is on track and accelerating the pivot and the transformation to Navitas 2.0. We have a lot of work to do still ahead of us. If you look at our momentum in high power, the growth in high power, the growth in AI infrastructure, which I mentioned quarter-over-quarter and the trend that we have ahead of us, I'm confident this will continue. I want to close by thanking our team,s Navitas team a lot of work.

This was a big pivot that we asked the team to go through moving from historical consumer low-end mobile type of business to high power. It's a big shift in terms of geographical coverage and in terms of product mix. I want to thank them for the effort, the reliance and the effort that we are putting into making that happen. Of course, our customers, okay, that are supporting us as well. Thank you.

Operator: Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.