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Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast, Business Update

Transphorm Announces Fiscal 2023 Second Quarter Financial Results and Provides Business Update


Transphorm, Inc. (NASDAQ: TGAN)?a pioneer in and global supplier of high-reliability, high-performance gallium nitride (GaN) power conversion products, announced today financial results for its 2023 fiscal second quarter ended September 30, 2022.

Fiscal 2023 Second Quarter and Recent Highlights

(All comparisons are to the second quarter of fiscal 2022, unless otherwise noted.)

Transphorm President, COO, and co-founder, Primit Parikh, commented, "We continue to maintain our leadership position in high power GaN which comprised over 65% of our fiscal Q2 revenue, while winning marquee new designs in fast chargers and adapters, enabled by superior and easy to interface SuperGaN® FETs. We are also executing on our stated plan of increasing capacity, with notable improvements from our Japan Epi reactors, giving us confidence we can better address demand."

Mr. Parikh added, "We exceeded our fiscal Q2 revenue target and remain well-positioned to resume revenue growth of 20% sequentially in fiscal Q3, with the opportunity to achieve 25%, despite persistent macroeconomic headwinds. We continue to aggressively pursue new customer wins and are fulfilling our existing backlog, while managing both internal and external supply chain constraints. With our wide range of product offerings and notably high power GaN, we continue to be well-positioned for growth across multiple market segments ? including consumer, data centers, blockchain, and industrial. We also continue to pursue near-term opportunities in two-wheel and three-wheel EVs and longer-term opportunities in the automotive EV market."

"This quarter saw solid execution and lower operational burn despite reduced revenue. The Company remains well-positioned with a solid balance sheet to continue to invest in staffing and capital equipment to realize its short and long-term objectives", stated Cameron McAulay, Chief Financial Officer.

Fiscal 2023 Second Quarter Financial Results

Revenue for the second quarter of fiscal 2023 was $3.7 million, compared to $11.3 million for the second quarter of fiscal 2022. Excluding $8.0 million of one-time licensing revenue in the second quarter of fiscal 2022, revenue for the second quarter of fiscal 2023 was up $0.4 million, or 11%, year-over-year. Product revenue reflected yet another strong quarter from ramping shipments of GaN products for a broad range of power conversion applications, with a 38% increase from the second quarter of fiscal 2022.

Operating expenses on a GAAP basis were $5.9 million in the second quarter of fiscal 2023, compared to $6.1 million in the prior quarter and $5.1 million in the second quarter of fiscal 2022. Second quarter of fiscal 2023 operating expenses consisted of R&D expenses of $1.8 million and SG&A expenses of $4.1 million. On a non-GAAP basis, operating expenses in the second quarter of fiscal 2023 were $5.1 million, compared with non-GAAP operating expenses of $5.4 million in the prior quarter and $4.5 million in the second quarter of fiscal 2022.

GAAP net profit (loss) for the second quarter of fiscal 2023 was ($6.0) million, or ($0.10) per share, compared to GAAP net loss of ($5.4) million, or ($0.10) per share, in the prior quarter, and a GAAP net profit of $6.0 million, or $0.15 per share, in the second quarter of fiscal 2022. On a non-GAAP basis, net loss for the second quarter of fiscal 2023 was ($5.1) million, or ($0.09) per share, compared to non-GAAP net loss of ($4.5) million, or ($0.08) per share, in the prior quarter, and a non-GAAP net profit of $3.6 million, or $0.09 per share, in the second quarter of fiscal 2022.

Cash, cash equivalents and restricted cash as of September 30, 2022 were $34.0 million.

Webcast

Transphorm will host a webcast today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to review the Company's 2023 fiscal second quarter results and provide a business update. The webcast can be accessed at: https://edge.media-server.com/mmc/p/bp5xfkie.

Upon registration, telephone participants will receive a confirmation email detailing how to join the audio version of the webcast, including the dial-in number and a unique registrant ID. The live webcast will be available via Transphorm's Investor Relations website at https://www.transphormusa.com/en/investors/.

About Transphorm

Transphorm, Inc., a global leader in the GaN revolution, designs and manufactures high performance and high reliability GaN semiconductors for high voltage power conversion applications. Having one of the largest Power GaN IP portfolios of more than 1,000 owned or licensed patents, Transphorm produces the industry's first JEDEC and AEC-Q101 qualified high voltage GaN semiconductor devices. The Company's vertically integrated device business model allows for innovation at every development stage: design, fabrication, device, and application support. Transphorm's innovations are moving power electronics beyond the limitations of silicon to achieve over 99% efficiency, 40% more power density and 20% lower system cost. Transphorm is headquartered in Goleta, California and has manufacturing operations in Goleta and Aizu, Japan. For more information, please visit www.transphormusa.com. Follow us on Twitter @transphormusa and WeChat @ Transphorm GaN.

Non-GAAP Financial Measures

This press release includes and makes reference to certain non-GAAP financial measures. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Transphorm believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. Transphorm believes that these non-GAAP financial measures provide additional insight into Transphorm's ongoing performance and core operational activities and has chosen to provide these measures for more consistent and meaningful comparison between periods. These measures should only be used to evaluate Transphorm's results of operations in conjunction with the corresponding GAAP measures. The non-GAAP results exclude the effect of stock-based compensation, depreciation, amortization, change in fair value of promissory note and other income in joint venture.

A reconciliation between GAAP and non-GAAP financial results is provided in the financial statements portion of this press release.

Forward-Looking Statements

This press release contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning the Company's ability to manage supply chain constraints, expand its manufacturing capacity and meet demand, industry acceptance of GaN technology, and the Company's pipeline and future anticipated growth. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "may," "will," "should," "would," "expect," "plan," "believe," "intend," "look forward," and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: risks related to Transphorm's operations, such as additional financing requirements and access to capital; competition; the ability of Transphorm to protect its intellectual property rights; and other risks set forth in the Company's filings with the Securities and Exchange Commission. Except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Transphorm, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

 

 

September 30, 2022
(unaudited)

 

March 31, 2022
(audited)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

33,496

 

 

$

33,435

 

Restricted cash

 

500

 

 

 

500

 

Accounts receivable

 

1,617

 

 

 

2,558

 

Inventory

 

8,966

 

 

 

6,330

 

Prepaid expenses and other current assets

 

2,068

 

 

 

1,971

 

Total current assets

 

46,647

 

 

 

44,794

 

Property and equipment, net

 

5,328

 

 

 

1,649

 

Operating lease right-of-use assets

 

3,312

 

 

 

?

 

Goodwill

 

996

 

 

 

1,180

 

Intangible assets, net

 

469

 

 

 

617

 

Investment in joint venture

 

414

 

 

 

143

 

Other assets

 

784

 

 

 

263

 

Total assets

$

57,950

 

 

$

48,646

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

4,492

 

 

$

3,588

 

Deferred revenue

 

263

 

 

 

346

 

Accrued interest

 

184

 

 

 

180

 

Accrued payroll and benefits

 

1,331

 

 

 

1,171

 

Operating lease liabilities

 

532

 

 

 

?

 

Revolving credit facility

 

12,000

 

 

 

?

 

Total current liabilities

 

18,802

 

 

 

5,285

 

Revolving credit facility, net of current portion

 

?

 

 

 

12,000

 

Operating lease liabilities, net of current portion

 

2,803

 

 

 

?

 

Total liabilities

 

21,605

 

 

 

17,285

 

Commitments and contingencies

 

 

 

Stockholders' equity:

 

 

 

Common stock

 

6

 

 

 

5

 

Additional paid-in capital

 

228,178

 

 

 

211,190

 

Accumulated deficit

 

(189,986

)

 

 

(178,638

)

Accumulated other comprehensive loss

 

(1,853

)

 

 

(1,196

)

Total Stockholders' equity

 

36,345

 

 

 

31,361

 

Total liabilities and stockholders' equity

$

57,950

 

 

$

48,646

 

Transphorm, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands except share and per share data)

 

 

Three Months Ended

 

Six Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

Revenue, net

$

3,670

 

 

$

5,156

 

 

$

11,303

 

 

$

8,826

 

 

$

14,519

 

Cost of goods sold

 

3,232

 

 

 

4,050

 

 

 

2,239

 

 

 

7,282

 

 

 

4,806

 

Gross profit

 

438

 

 

 

1,106

 

 

 

9,064

 

 

 

1,544

 

 

 

9,713

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

1,830

 

 

 

1,740

 

 

 

1,591

 

 

 

3,570

 

 

 

3,414

 

Sales and marketing

 

1,066

 

 

 

1,083

 

 

 

825

 

 

 

2,149

 

 

 

1,512

 

General and administrative

 

3,044

 

 

 

3,317

 

 

 

2,714

 

 

 

6,361

 

 

 

5,457

 

Total operating expenses

 

5,940

 

 

 

6,140

 

 

 

5,130

 

 

 

12,080

 

 

 

10,383

 

(Loss) income from operations

 

(5,502

)

 

 

(5,034

)

 

 

3,934

 

 

 

(10,536

)

 

 

(670

)

Interest expense

 

184

 

 

 

182

 

 

 

220

 

 

 

366

 

 

 

424

 

Loss in joint venture

 

684

 

 

 

582

 

 

 

1,092

 

 

 

1,266

 

 

 

2,582

 

Changes in fair value of promissory note

 

?

 

 

 

?

 

 

 

(1,629

)

 

 

?

 

 

 

(605

)

Other income, net

 

(375

)

 

 

(445

)

 

 

(1,729

)

 

 

(820

)

 

 

(1,999

)

(Loss) income before tax expense

 

(5,995

)

 

 

(5,353

)

 

 

5,980

 

 

 

(11,348

)

 

 

(1,072

)

Tax expense

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

Net (loss) income

$

(5,995

)

 

$

(5,353

)

 

$

5,980

 

 

$

(11,348

)

 

$

(1,072

)

Net loss per share - basic

$

(0.10

)

 

$

(0.10

)

 

$

0.15

 

 

$

(0.20

)

 

$

(0.03

)

Net loss per share - diluted

$

(0.10

)

 

$

(0.10

)

 

$

0.14

 

 

$

(0.20

)

 

$

(0.03

)

Weighted average common shares outstanding - basic

 

56,619,662

 

 

 

54,404,830

 

 

 

41,196,139

 

 

 

55,518,297

 

 

 

40,918,203

 

Weighted average common shares outstanding - diluted

 

56,619,662

 

 

 

54,404,830

 

 

 

41,847,103

 

 

 

55,518,297

 

 

 

40,918,203

Transphorm, Inc.
Reconciliation of GAAP and Non-GAAP Financial Information (unaudited)
(in thousands except share and per share data)

 

 

Three Months Ended

 

Six Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

GAAP net (loss) income

$

(5,995

)

 

$

(5,353

)

 

$

5,980

 

 

$

(11,348

)

 

$

(1,072

)

Adjustments:

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

636

 

 

 

582

 

 

 

511

 

 

 

1,218

 

 

 

1,008

 

Depreciation

 

165

 

 

 

152

 

 

 

134

 

 

 

317

 

 

 

257

 

Amortization

 

74

 

 

 

74

 

 

 

74

 

 

 

148

 

 

 

148

 

Changes in fair value of promissory note

 

?

 

 

 

?

 

 

 

(1,629

)

 

 

?

 

 

 

(605

)

Other income in joint venture

 

?

 

 

 

?

 

 

 

(1,455

)

 

 

?

 

 

 

(1,455

)

Total adjustments to GAAP net (loss) income

 

875

 

 

 

808

 

 

 

(2,365

)

 

 

1,683

 

 

 

(647

)

Non-GAAP net (loss) income

$

(5,120

)

 

$

(4,545

)

 

$

3,615

 

 

$

(9,665

)

 

$

(1,719

)

GAAP net (loss) income per share - basic

$

(0.10

)

 

$

(0.10

)

 

$

0.15

 

 

$

(0.20

)

 

$

(0.03

)

Adjustment

 

0.01

 

 

 

0.02

 

 

 

(0.06

)

 

 

0.03

 

 

 

(0.01

)

Non-GAAP net (loss) income per share - basic

$

(0.09

)

 

$

(0.08

)

 

$

0.09

 

 

$

(0.17

)

 

$

(0.04

)

GAAP net (loss) income per share - diluted

$

(0.10

)

 

$

(0.10

)

 

$

0.14

 

 

$

(0.20

)

 

$

(0.03

)

Adjustment

 

0.01

 

 

 

0.02

 

 

 

(0.05

)

 

 

0.03

 

 

 

(0.01

)

Non-GAAP net (loss) income per share - diluted

$

(0.09

)

 

$

(0.08

)

 

$

0.09

 

 

$

(0.17

)

 

$

(0.04

)

 

Three Months Ended

 

Six Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

September 30, 2022

 

September 30, 2021

GAAP operating expenses

$

5,940

 

$

6,140

 

$

5,130

 

$

12,080

 

$

10,383

Adjustments:

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

583

 

 

543

 

 

472

 

 

1,126

 

 

942

Depreciation

 

165

 

 

152

 

 

134

 

 

317

 

 

257

Amortization

 

74

 

 

74

 

 

74

 

 

148

 

 

148

Total adjustments to GAAP operating expenses

 

822

 

 

769

 

 

680

 

 

1,591

 

 

1,347

Non-GAAP operating expenses

$

5,118

 

$

5,371

 

$

4,450

 

$

10,489

 

$

9,036

Transphorm, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

 

 

Six Months Ended September 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net loss

$

(11,348

)

 

$

(1,072

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Inventory write-off

 

56

 

 

 

194

 

Depreciation and amortization

 

465

 

 

 

405

 

Amortization of right-of-use assets

 

286

 

 

 

?

 

Perpetual licensing revenue from a related party

 

?

 

 

 

(8,000

)

Stock-based compensation

 

1,219

 

 

 

1,008

 

Interest cost

 

4

 

 

 

108

 

Gain on sale of equipment

 

(110

)

 

 

?

 

Loss in joint venture

 

1,266

 

 

 

1,127

 

Changes in fair value of promissory note

 

?

 

 

 

(605

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

941

 

 

 

33

 

Inventory

 

(2,692

)

 

 

(2,745

)

Prepaid expenses and other current assets

 

(97

)

 

 

124

 

Other assets

 

(521

)

 

 

15

 

Accounts payable and accrued expenses

 

904

 

 

 

657

 

Deferred revenue

 

(83

)

 

 

102

 

Accrued payroll and benefits

 

160

 

 

 

37

 

Operating lease liabilities

 

(263

)

 

 

?

 

Net cash used in operating activities

 

(9,813

)

 

 

(8,612

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(4,026

)

 

 

(409

)

Proceeds from sale of equipment

 

110

 

 

 

?

 

Investment in joint venture

 

(1,537

)

 

 

(3,081

)

Net cash used in investing activities

 

(5,453

)

 

 

(3,490

)

Cash flows from financing activities:

 

 

 

Proceeds from stock option exercise

 

56

 

 

 

134

 

Proceeds from issuance of common stock

 

16,000

 

 

 

5,000

 

Cost associated with issuance of common stock

 

(280

)

 

 

?

 

Payment for taxes related to net share settlement of restricted stock units

 

(6

)

 

 

Net cash provided by financing activities

 

15,770

 

 

 

5,134

 

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

 

(443

)

 

 

(44

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

61

 

 

 

(7,012

)

Cash and cash equivalents and restricted cash at beginning of period

 

33,435

 

 

 

9,500

 

Cash and cash equivalents at end of period

 

33,496

 

 

 

1,988

 

Restricted cash at end of period

 

500

 

 

$

500

 

Cash and cash equivalents and restricted cash at end of period

$

33,996

 

 

$

2,488

 

 


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