Transphorm, Inc. (NASDAQ: TGAN)—a global leader in GaN, the
future of next generation power systems, announced today its
financial results for the third quarter of its fiscal year ending
March 31, 2024 (“Q3 Fiscal 2024”).
- On January 10, 2024, Transphorm announced that it entered into
a definitive agreement to be acquired by a subsidiary of Renesas
Electronics Corporation. The transaction values Transphorm at
approximately $339 million.
Key Business Highlights
- Reported total revenue of $4.7 million for Q3 Fiscal 2024, an
increase of 4.0% over the same quarter last year and a decrease of
6.8% from the prior quarter.
- Product revenue was $3.2 million in the quarter, a decrease of
20% from the same quarter last year and a decrease of 11% from the
prior quarter, owing to short term demand pushouts. Government
revenue was $1.5 million in the quarter, an increase of 180% from
the same quarter last year and flat with the prior quarter. Gross
margin in the quarter was 1.6%, compared to (59.4)% in the same
quarter last year and 23.4% in the prior quarter - Margins in the
current quarter were impacted by a $250K Consumption tax adjustment
and $170K in non-recurring scrap.
- Raised $3.0 million through the exercise of existing warrants
and $2.1 million of short-term debt.
High Power Segment Update – Continued Leadership of
Transphorm in GaN
- Increased total design-ins for higher power (300 watt – 7.5
kilowatt) to over 120 (with over 35 in production), an increase of
20% from the Company’s previous update in November 2023.
- Announced two new SuperGaN devices in a 4-lead TO-247 package,
a drop-in replacement for SiC FETs and offering a 35 mOhm and 50
mOhm on-resistance and a benefit of more efficient, switching
capabilities with 25% lower energy losses in recent internal tests,
increasing socket penetration opportunities with new and existing
solutions.
- Announced a collaboration with Allegro MicroSystem’s AHV85110
Isolated Gate Driver and Transphorm’s SuperGaN FETs to increase GaN
power system performance for high power applications, using our
just released 650V / 70 mOhm TOLL device.
- Launched three Transphorm FETs in surface mount devices (SMD)
TOLL packages supporting higher power applications for power hungry
AI applications, server power, energy and industrial markets,
positioning GaN as optimal devices for these kilo-watt class power
hungry applications and proving its high voltage-high power dynamic
reliability.
- Launched the SuperGaN TOLT FET, the industry’s first top-sided
cooled surface mount GaN device in the JEDEC-standard (MO-332) TOLT
Package delivering superior thermal and electrical performance for
computing, AI, energy, and automotive power systems.
- Released two battery charger reference designs for electric
vehicle (“EV”) charging applications, ideal for two- and
three-wheeled EVs.
- On track for 1200V engineering samples by middle of calendar
year 2024.
Low Power Segment Update – Transphorm Enables Superior
Performance
- Increased total design-ins for power adapters and fast chargers
(< 300 watt) to over 125 (with over 30 in production), an
increase in ongoing design-ins of 8% from the Company’s previous
update in November 2023.
- Announced with Weltrend Semiconductor Inc., a 100-watt USB-C PD
power adapter reference design, using Transphorm’s SuperGaN
System-in-Package, WT7162RHUG24A, to achieve 92.7% efficiency in a
Quasi-resonant flyback topology.
Primit Parikh, Transphorm’s CEO and Co-Founder, commented,
“While our third quarter product revenue decreased marginally on a
sequential basis, we continued to experience strong momentum in
building our revenue pipeline and securing design-ins. During the
third quarter, we successfully launched several new high power
products and two key reference designs targeted for EV two- and
three-wheeler market.”
Q3 Fiscal 2024 Financial Results
Revenue was $4.7 million for Q3 Fiscal 2024, a decrease of $0.3
million, or 6.8%, compared to $5.0 million in the prior quarter and
an increase of $0.2 million, or 3.9%, compared to $4.5 million for
the same period in 2022 (“Q3 Fiscal 2023”).
Operating expenses were $9.0 million in Q3 Fiscal 2024, compared
to $7.7 million in the prior quarter and $7.2 million in Q3 Fiscal
2023 driven largely by legal expenses related to the definitive
agreement with Renesas. Q3 Fiscal 2024 operating expenses consisted
of R&D expenses of $2.8 million and SG&A expenses of $6.2
million. Operating expenses on a non-GAAP basis were $7.3 million
in Q3 Fiscal 2024, compared to $6.4 million in the prior quarter
and $6.0 million in Q3 Fiscal 2023.
Net loss for Q3 Fiscal 2024 was ($10.0) million, or ($0.20) per
share, compared to net loss of ($7.1) million, or ($0.12) per
share, in the prior quarter, and net loss of ($10.5) million, or
($0.18) per share, in Q3 Fiscal 2023. On a non-GAAP basis, adjusted
EBITDA for Q3 Fiscal 2024 was ($6.9) million, or ($0.11) per share,
compared to non-GAAP adjusted EBITDA of ($5.0) million, or ($0.08)
per share, in the prior quarter, and non-GAAP adjusted EBITDA of
($8.5) million, or ($0.15) per share, in Q3 Fiscal 2023.
Cash, cash equivalents and restricted cash as of December 31,
2023, were $8.0 million.
Conference Call
Given the announcement made on January 10, 2024 regarding
Transphorm’s entry into a definitive agreement to be acquired by a
subsidiary of Renesas Electronics Corporation, Transphorm will not
host a conference call to discuss its financial results for Q3
Fiscal 2024. For further detail and discussion of the Company's
financial performance, please refer to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 2023, which
will be filed today with the Securities and Exchange
Commission.
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
leading 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 move power electronics beyond the limitations of
silicon to achieve over 99% efficiency, 50% 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.
Additional Information and Where to Find It
Transphorm, Inc., its directors and certain executive officers
are participants in the solicitation of proxies from stockholders
in connection with the pending acquisition of Transphorm (the
“Transaction”). Transphorm plans to file a proxy statement (the
“Transaction Proxy Statement”) with the Securities and Exchange
Commission (the “SEC”) in connection with the solicitation of
proxies to approve the Transaction.
Primit Parikh, Julian Humphreys, Katharina McFarland, Umesh
Mishra, Cynthia (Cindi) Moreland, Kelly Smales, and Eiji Yatagawa,
all of whom are members of Transphorm’s Board of Directors, and
Cameron McAulay, Transphorm’s Chief Financial Officer, are
participants in Transphorm’s solicitation. The beneficial ownership
of each such person, as of the date specified, appears in the table
below. Additional information regarding such participants,
including their direct or indirect interests in the Transaction, by
security holdings or otherwise, will be included in the Transaction
Proxy Statement and other relevant documents to be filed with the
SEC in connection with the Transaction. The Transaction Proxy
Statement will also include information on any payments that may be
owed to Transphorm’s named executive officers in a change of
control of Transphorm.
Promptly after filing the definitive Transaction Proxy Statement
with the SEC, Transphorm will mail the definitive Transaction Proxy
Statement and a WHITE proxy card to each stockholder entitled to
vote at the special meeting to consider the Transaction.
STOCKHOLDERS ARE URGED TO READ THE TRANSACTION PROXY STATEMENT
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER
RELEVANT DOCUMENTS THAT TRANSPHORM WILL FILE WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Stockholders may obtain, free of charge, the preliminary and
definitive versions of the Transaction Proxy Statement, any
amendments or supplements thereto, and any other relevant documents
filed by Transphorm with the SEC in connection with the Transaction
at the SEC’s website (http://www.sec.gov). Copies of Transphorm’s
definitive Transaction Proxy Statement, any amendments or
supplements thereto, and any other relevant documents filed by
Transphorm with the SEC in connection with the Transaction will
also be available, free of charge, at the “Investors” section of
Transphorm’s website (https://ir.transphormusa.com/), or by writing
to Transphorm, Inc., Attention: Corporate Secretary, 75 Castilian
Drive, Goleta, CA 93117.
Beneficial Ownership as of
February 6, 2024
Individual
Shares Beneficially Owned
(#)
Primit Parikh
566,849
Julian Humphreys
104,921
Katharina McFarland
97,424
Umesh Mishra
611,210
Cynthia (Cindi) Moreland
73,232
Kelly Smales
81,597
Eiji Yatagawa
Nil
Cameron McAulay
224,670
The amounts specified above are determined in accordance with
the rules of the SEC and include securities that may be acquired
within 60 days of February 6, 2024. Mr. Yatagawa is a member of the
Board of Directors and serves as an executive of one or more
affiliates of Kohlberg Kravis Roberts & Co. L.P. (together with
its affiliates, “KKR”). KKR beneficially owns 24,724,468 shares of
Transphorm’s common stock (which includes warrants exercisable for
312,500 shares of Transphorm’s common stock); Mr. Yatagawa is not
deemed to beneficially own such shares.
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, provision for doubtful accounts and
other [non-recurring] income and expenses.
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
Transaction; the Company’s 5-year pipeline and anticipated future
growth; and the Company’s expectations for future products,
design-ins and market acceptance. 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: (i) the Transaction may not be
completed on anticipated terms or timing, including obtaining
stockholder and regulatory approvals and satisfying other
conditions to the completion of the Transaction; (ii) the
Transaction may involve unexpected costs, liabilities or delays;
(iii) potential litigation and the outcome of any legal proceedings
related to the Transaction; (iv) Transphorm’s ability to implement
its business strategy; (v) significant transaction costs associated
with the proposed Transaction; (vi) the risk that disruptions from
the Transaction will harm Transphorm’s business, including current
plans and operations; (vii) Transphorm’s ability to retain and hire
key personnel; (viii) potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the Transaction; (ix) legislative, regulatory and
economic developments affecting the Company’s business; (x) general
economic and market developments and conditions; (xi) potential
business uncertainty, including changes to existing business
relationships, during the pendency of the merger that could affect
Transphorm’s financial performance; (xii) restrictions during the
pendency of the Transaction that may impact Transphorm’s ability to
pursue certain business opportunities or strategic transactions;
(xiii) that the Company’s current forecasted cash runway, without
any additional financing, may not last as long as anticipated (xiv)
risks related to the Company’s operations, such as additional
financing requirements, access to capital and market acceptance of
its current and future products; (xv) competition; (xvi) the
Company’s ability to protect its intellectual property rights; and
(xvii) other risks set forth in the Company’s filings with the
Securities and Exchange Commission, including under the caption
“Risk Factors” and elsewhere therein. 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)
(Unaudited)
December 31, 2023
March 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
7,951
$
15,527
Restricted cash
—
500
Accounts receivable
1,721
4,396
Inventory
10,005
8,406
Prepaid expenses and other current
assets
1,275
1,859
Total current assets
20,952
30,688
Property and equipment, net
7,679
7,890
Operating lease right-of-use assets
2,311
3,033
Goodwill
1,020
1,079
Intangible assets, net
99
321
Investment in joint venture
—
715
Other assets
601
726
Total assets
$
32,662
$
44,452
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable and accrued expenses
$
9,306
$
7,895
Deferred revenue
10
—
Accrued interest
—
180
Unfunded commitment in joint venture
1,296
—
Accrued payroll and benefits
1,430
1,458
Operating lease liabilities
368
404
Revolving credit facility
—
12,000
Total current liabilities
12,410
21,937
Operating lease liabilities, net of
current portion
2,002
2,670
Other liabilities
—
230
Total liabilities
14,412
24,837
Commitments and contingencies
Stockholders’ equity:
Preferred stock
—
—
Common stock
6
6
Additional paid-in capital
262,319
230,272
Accumulated deficit
(242,146
)
(209,236
)
Accumulated other comprehensive loss
(1,929
)
(1,427
)
Total Stockholders’ equity
18,250
19,615
Total liabilities and stockholders’
equity
$
32,662
$
44,452
Transphorm, Inc.
Condensed Consolidated
Statements of Operations (unaudited)
(in thousands except share and
per share data)
Three Months Ended
Nine Months Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Revenue, net
$
4,670
$
5,010
$
4,493
$
15,563
$
13,319
Cost of goods sold
4,595
3,836
7,162
12,226
14,444
Gross profit (loss)
75
1,174
(2,669
)
3,337
(1,125
)
Operating expenses:
Research and development
2,839
3,022
2,325
8,730
5,895
Sales and marketing
1,745
1,708
1,447
4,935
3,596
General and administrative
4,412
2,942
3,457
11,870
9,818
Total operating expenses
8,996
7,672
7,229
25,535
19,309
Loss from operations
(8,921
)
(6,498
)
(9,898
)
(22,198
)
(20,434
)
Interest expense
—
—
184
8
550
Loss in joint venture
978
721
799
2,559
2,065
Other expense (income), net
102
(90
)
(421
)
(188
)
(1,241
)
Loss before tax expense
(10,001
)
(7,129
)
(10,460
)
(24,577
)
(21,808
)
Tax expense
—
—
—
—
—
Net loss
$
(10,001
)
$
(7,129
)
$
(10,460
)
$
(24,577
)
$
(21,808
)
Deemed dividend related to warrant
modification and issuance of Inducement Warrants
2,721
—
—
8,333
—
Net loss attributable to common
stockholders
$
(12,722
)
$
(7,129
)
$
(10,460
)
$
(32,910
)
$
(21,808
)
Net loss per share - basic and diluted
$
(0.20
)
$
(0.12
)
$
(0.18
)
$
(0.54
)
$
(0.38
)
Weighted average common shares outstanding
- basic and diluted
62,183,843
61,138,691
56,739,450
61,458,945
55,926,828
Transphorm, Inc.
Reconciliation of GAAP and
Non-GAAP Financial Information (unaudited)
(in thousands except per share
data)
Three Months Ended
Nine Months Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP net loss
$
(10,001
)
$
(7,129
)
$
(10,460
)
$
(24,577
)
$
(21,808
)
Adjustments:
Stock-based compensation
1,509
914
1,123
4,425
2,342
Depreciation
225
269
180
691
497
Amortization
74
74
74
222
222
Provision for doubtful accounts
—
263
—
263
—
Impairment of long-lived assets
208
—
—
208
—
Total other expense, net
1,080
631
562
2,379
1,374
Total adjustments to GAAP net loss
3,096
2,151
1,939
8,188
4,435
Non-GAAP adjusted EBITDA
$
(6,905
)
$
(4,978
)
$
(8,521
)
$
(16,389
)
$
(17,373
)
GAAP net loss per share - basic and
diluted
$
(0.20
)
$
(0.12
)
$
(0.18
)
$
(0.54
)
$
(0.38
)
Adjustment
0.09
0.04
0.03
0.27
0.07
Non-GAAP adjusted EBITDA per share -
basic and diluted
$
(0.11
)
$
(0.08
)
$
(0.15
)
$
(0.27
)
$
(0.31
)
Weighted average common shares
outstanding - basic and diluted
62,183,843
61,138,691
56,739,450
61,458,945
55,926,828
Three Months Ended
Nine Months Ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP operating expenses
$
8,996
$
7,672
$
7,229
$
25,535
$
19,309
Adjustments:
Stock-based compensation
1,312
819
1,035
3,997
2,161
Depreciation
53
98
102
250
293
Amortization
74
74
74
222
222
Provision for doubtful accounts
—
263
—
263
—
Impairment of long-lived assets
208
—
—
208
—
Total adjustments to GAAP operating
expenses
1,647
1,254
1,211
4,940
2,676
Non-GAAP operating expenses
$
7,349
$
6,418
$
6,018
$
20,595
$
16,633
Transphorm, Inc.
Condensed Consolidated
Statements of Cash Flows (unaudited)
(in thousands)
Nine Months Ended December
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(24,577
)
$
(21,808
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Provision for inventory
332
2,810
Depreciation and amortization
913
719
Reduction in the carrying amount of
right-of-use assets
396
425
Provision for doubtful accounts
263
—
Impairment of long-lived assets
208
—
Stock-based compensation
4,425
2,342
Interest cost
—
4
Gain on sale of equipment
(48
)
(110
)
Loss in joint venture
2,559
2,065
Changes in fair value of derivative
instruments
169
75
Changes in operating assets and
liabilities:
Accounts receivable
2,404
(1,221
)
Inventory
(2,047
)
(3,956
)
Prepaid expenses and other current
assets
613
401
Other assets
146
(504
)
Accounts payable, accrued expenses, and
other liabilities
300
428
Deferred revenue
10
(346
)
Accrued payroll and benefits
(20
)
486
Operating lease liabilities
(406
)
(392
)
Net cash used in operating
activities
(14,360
)
(18,582
)
Cash flows from investing
activities:
Purchases of property and equipment
(623
)
(5,633
)
Proceeds from sale of equipment
48
110
Investment in joint venture
(807
)
(2,569
)
Net cash used in investing
activities
(1,382
)
(8,092
)
Cash flows from financing
activities:
Proceeds from stock option exercise
—
709
Proceeds from issuance of common stock
9,936
16,000
Cost associated with issuance of common
stock
(123
)
(280
)
Payment for taxes related to net share
settlement of restricted stock units
(374
)
(6
)
Proceeds from exercise of stock
warrants
10,257
—
Loan repayment
(12,000
)
—
Net cash provided by financing
activities
7,696
16,423
Effect of foreign exchange rate changes
on cash, cash equivalents and restricted cash
(30
)
(35
)
Net decrease in cash, cash equivalents
and restricted cash
(8,076
)
(10,286
)
Cash, cash equivalents and restricted cash
at beginning of period
16,027
33,935
Cash, cash equivalents and restricted cash
at end of period
$
7,951
$
23,649
Reconciliation of cash, cash equivalents,
and restricted cash to the condensed consolidated balance
sheets
Cash and cash equivalents
$
7,951
$
23,149
Restricted cash
—
500
Cash, cash equivalents and restricted cash
at end of period
$
7,951
$
23,649
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240220184959/en/
Investor Contacts: David Hanover KCSA Strategic
Communications transphorm@kcsa.com
Company Contact: Cameron McAulay Chief Financial Officer
1-805-456-1300 ext. 140 cmcaulay@transphormusa.com
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