Enovix Corp (ENVX) FY 2025 MD&A

Results of Operations

Comparison of Fiscal Year 2025 to Prior Fiscal Year 2024

The following table sets forth our consolidated operating results for the periods presented below (in thousands, except percentages).

N/M - not meaningful

Revenue

Revenue for fiscal years 2025 and 2024 were $31.8 million and $23.1 million, respectively. Revenue in both years primarily resulted from the product shipments from our facility in South Korea, which was acquired in October 2023. Revenue for fiscal year 2024 and 2025 revenue reflected product shipments to South Korea defense contractors and industrial and consumer electronics customers.

The $8.7 million, or 38%, increase in revenue compared to fiscal year 2024 was primarily attributable to higher shipment volumes to South Korean defense contractors, partially offset by changes in customer mix. Of the $8.7 million increase in revenue, $7.3 million of that increase was derived from higher shipment volumes to a South Korean defense contractor, and the remaining increase was attributable to higher shipment volumes to industrial and consumer electronics customers.

Cost of Revenue

Cost of revenue for the fiscal year 2025 was $25.7 million, compared to $25.1 million for the fiscal year 2024. The increase of $0.6 million, or 2%, was primarily attributable to higher production volumes in fiscal year 2025, including increased labor costs of $1.3 million and additional manufacturing costs associated with higher revenue. With no production in Fab1 and minimal production in Fab2 in fiscal year 2025 and 2024, a majority of the factory expenses

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associated with Fab1 and Fab2 were classified as research and development expenses instead of cost of revenues in fiscal year 2025 and 2024. The transition from Fab1 to Fab2 was a part of the 2023 and 2024 Restructuring Plans (as defined in Note 15 “Restructuring Costs” of our Consolidated Financial Statements included in this Annual Report). These restructuring plans also included U.S. workforce reductions in the fourth quarter of fiscal year 2023 and the second half of fiscal year 2024. These increases were partially offset by the absence of a $1.9 million non-recurring inventory step-up amortization recorded in fiscal year 2024 related to the Routejade acquisition.

In addition, we anticipate our factory expenses will increase as we continue to ramp up our Fab2 manufacturing operations.

Research and Development Expenses

Research and development expenses for the fiscal year 2025 were $110.3 million, compared to $124.5 million for the fiscal year 2024. The decrease of $14.2 million, or 11%, was primarily attributable to a $23.5 million decrease in depreciation expense, reflecting the absence of accelerated depreciation recorded in fiscal year 2024 in connection with the Fab1 decommissioning, as well as lower salaries, payroll taxes and benefits resulting from reduced U.S. headcount.

These decreases were partially offset by higher research and development spending in Asia, including a $29.3 million increase in research and development expenses in Malaysia, driven by a $3.2 million increase in salaries and benefits due to higher headcount, increased materials and tooling costs, higher depreciation associated with equipment placed into service, and increased information technology and facility related costs.

There were no executive departure-related charges recorded in fiscal year 2025 comparable to those incurred in prior years.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the fiscal year 2025 were $73.0 million, compared to $74.3 million for the fiscal year 2024. The decrease of $1.3 million, or 2%, was primarily attributable to a $9.4 million decrease in stock-based compensation expense, a $6.4 million decrease in salaries, payroll taxes and benefits resulting from reduced U.S. headcount, a $2.4 million decrease in professional fees, a $1.2 million decrease in facilities and equipment related costs, a $1.1 million decrease in insurance expense, and a $0.5 million decrease in depreciation expense related to the discontinuation of Fab1 operations.

These decreases were partially offset by a $7.9 million increase in legal fees, $1.4 million of warrant dividend transaction fees incurred during fiscal year 2025, $0.7 million of costs related to the SETK acquisition, a $1.2 million increase in information technology expenses related to software subscriptions and hardware, and higher selling, general and administrative expenses in Malaysia of $4.7 million, primarily driven by higher salaries and benefits due to increased headcount, higher depreciation expense from assets placed into service, and higher facility, utilities and general office expenses.

Restructuring Cost

There were no restructuring costs recorded during fiscal year 2025, compared to $41.8 million of restructuring costs recorded during fiscal year 2024. In May 2024, we initiated the 2024 Restructuring Plan (as defined in Note 15 “Restructuring Costs” of our Consolidated Financial Statements in this Annual Report) to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. The restructuring charges recorded during fiscal year 2024 consisted primarily of non-cash charges related to the disposal of Fab1 long lived assets, stock-based compensation expense, and cash charges for severance, termination benefits and other exit-related costs.

Change in Fair Value of Common Stock Warrants

For fiscal year 2025, the change in fair value of common stock warrants of $21.8 million was mainly attributable to a decrease in the fair value of the 5,500,000 Private Placement Warrants (as defined in Note 4 “Fair Value Measurement” of our Consolidated Financial Statements in this Annual Report). The decrease in fair value of Private Placement Warrants was primarily due to a decrease in our common stock price during the current year. In addition, there was a decrease in the number of warrants outstanding at the end of fiscal year 2024 as there was a warrant exercise of 500,000 shares during the fiscal year 2024.

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For fiscal year 2024, the change in fair value of common stock warrants of $12.2 million was attributable to a decrease in the fair value of the 5,500,000 Private Placement Warrants. The decrease in fair value of Private Placement Warrants was primarily due to a decrease in our common stock price during the year 2024.

Interest Income

Interest income for fiscal year 2025 was $13.0 million, compared to $12.3 million during fiscal year 2024. The decrease of $0.7 million was primarily attributable to higher yields earned on short term and long term investments, partially offset by lower average cash balances during fiscal 2025.

Interest Expense

Interest expense for fiscal year 2025 was $21.6 million, compared to $6.8 million for fiscal year 2024. The increase of $14.8 million, or 218%, was primarily attributable to a one-time charge of $9.2 million related to the issuance of warrants to holders of the 2028 Convertible Senior Notes, as well as higher interest expense resulting from the issuance of additional convertible senior notes during fiscal year 2025.

Liquidity and Capital Resources

We have incurred operating losses and negative cash flows from operations since inception through December 28, 2025 and expect to incur operating losses for the foreseeable future. As of December 28, 2025, we had cash, cash equivalents, restricted cash, and investments of $620.8 million, working capital of $477.2 million and an accumulated deficit of $977.8 million.

Material Cash Requirements

We currently use cash to fund operations, meet working capital requirements and fund our capital expenditures. In fiscal year 2026, we expect that our spending in cost of revenues and operating expenses will continue to increase as we ramp up our Fab2 operations.

During the fiscal year 2025, we purchased $18.2 million in property and equipment. We will continue to increase our property and equipment purchases in the near future to acquire our battery manufacturing equipment and support the build-out of our manufacturing facilities. Please see our discussion of contractual obligations and commitments in the section below for further information.

In July 2025, we declared and issued the Warrant Dividend to holders of record of our common stock and the holders of 2028 Convertible Senior Notes as of the close of business on July 17, 2025 (the “Record Date”). A total of 26,526,344 Warrants were exercised for proceeds of $224.2 million, net of commissions and offering expenses. We intend to use the proceeds from the Warrant exercises to support manufacturing scale-up and for general corporate purposes. Please see Note 12 “Treasury Stock, Warrant Dividend and Warrants” of our Consolidated Financial Statements in this Annual Report for further information.

In September 2025, we issued $360.0 million aggregate principal amount of the 2030 Convertible Senior Notes with an interest rate of 4.75%, which will mature on September 15, 2030. The net proceeds of the 2030 Convertible Senior Notes were approximately $348.8 million, after deducting the initial purchasers’ discounts and commissions and the estimated offering expenses payable by us. We used approximately $45.3 million of the net proceeds from the offerings to pay the cost of the capped call transactions related to the 2030 Convertible Senior Notes. We intend to use the remaining net proceeds for working capital and general corporate purposes, including potential future acquisitions. Please see Note 9 “Borrowings” of our Consolidated Financial Statements in this Annual Report for further information.

Additionally, during the third quarter of 2025, our Board of Directors authorized the Repurchase Plan. Pursuant to the Repurchase Plan, we repurchased 5,437,556 shares of our common stock for $58.4 million for the fiscal year ended December 28, 2025 and we may continue to make repurchases from time to time through open market purchases or through privately negotiated transactions. As of December 28, 2025, we had $1.6 million of remaining capacity available under the Repurchase Plan. For more details, please see Note 12 “Treasury Stock, Warrant Dividend and Warrants” of our Consolidated Financial Statements in this Annual Report for further information.

Based on the anticipated spending and timing of expenditures to support operational development and market expansion, we currently expect that our cash will be sufficient to meet our funding requirements over the next twelve months from the date of this Annual Report on Form 10-K. We believe we will meet longer-term expected future cash requirements and obligations through a combination of available cash, cash equivalents and future debt financings, and access to other public or private equity offerings as well as potential strategic arrangements. We have made our estimates

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on historical experience and various other relevant factors and we believe that they are reasonable. Actual results may differ from our estimates, and we could utilize our available capital resources sooner than we expect.

Summary of Cash Flows

The following table provides a summary of cash flow data for the periods presented below (in thousands).

Comparison of Fiscal Year 2025 to Prior Fiscal Year 2024

Operating Activities

Our cash flows used in operating activities to date have been primarily comprised of operating expenses. We continue to ramp up our Fab2 operations. We expect our cash used in operating activities to increase significantly before we start to generate any material cash inflows from commercially manufacturing and selling our batteries.

Net cash used in operating activities was $95.3 million for the fiscal year 2025. Net cash used in operating activities consists of net loss of $156.6 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include a decrease in fair value of the Private Placement Warrants of $21.8 million, stock-based compensation expense of $49.4 million, depreciation and amortization expense of $35.1 million and non-cash interest expense of $9.2 million.

Net cash used in operating activities was $108.6 million for the fiscal year 2024. Net cash used in operating activities consists of net loss of $222.5 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include the change in fair value of common stock warrants of $12.2 million, stock-based compensation expense of $58.8 million, depreciation and amortization expense of $45.0 million and impairment of equipment of $38.3 million.

Investing Activities

Our cash flows used in investing activities to date have been primarily comprised of purchases of property and equipment. We expect the costs to acquire property and equipment to increase in the future as we continue to build-out our Fab2, evaluate additional or alternative manufacturing capacity options and develop our battery manufacturing production lines in Malaysia.

Net cash used in investing activities, which were primarily related to equipment purchases, were $18.2 million and $76.2 million for the fiscal years 2025 and 2024, respectively.

During the fiscal years 2025 and 2024, we purchased $584.9 million and $31.8 million of investments, respectively. In addition, we had $74.9 million and $106.6 million of investments mature during the fiscal years 2025 and 2024, respectively. In April 2025, we used cash, net of cash acquired, of $10.0 million to acquire battery cell manufacturing assets located in South Korea.

Financing Activities

Net cash provided by financing activities was $467.4 million for the fiscal year 2025, which primarily consisted of $360.0 million of proceeds from the issuance of convertible senior notes, $232.1 million of proceeds from the exercise of warrants, $3.3 million of net proceeds from issuances of common stock upon exercise of stock options, and $1.3 million of proceeds from our employee stock purchase plan (“ESPP”) to purchase our common stock. These cash inflows were partially offset by $58.4 million of repurchases of our common stock, $45.3 million of payments for capped call

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transactions, $11.2 million of debt issuance costs, and $6.5 million of payroll tax payments for shares withheld upon vesting of restricted stock units.

Net cash provided by financing activities was $150.7 million for the fiscal year 2024, which primarily consisted of $107.2 million of proceeds, net of paid issuance costs, from issuance of common stock, $44.8 million of proceeds from the exercise of stock options to purchase our common stock, $4.6 million of proceeds from the borrowings of short-term loans and $1.5 million of proceeds from our employee stock purchase plan (“ESPP”) to purchase our common stock, partially offset by $7.1 million of payroll tax payments for shares withheld upon vesting of restricted stock units.

Contractual Obligations and Commitments

As of December 28, 2025, we had $172.5 million aggregate principal amount of our 2028 Convertible Senior Notes outstanding bearing interest at 3.0%, which will mature on May 1, 2028 unless earlier converted, redeemed or repurchased, and $360.0 million aggregate principal amount of our 2030 Convertible Senior Notes outstanding bearing interest at 4.75%, which will mature on September 15, 2030 unless earlier converted, redeemed or repurchased. Please see Note 9 “Borrowings” of our Consolidated Financial Statements in this Annual Report for further information.

We lease our headquarters in Fremont, California, our Fab2 in Penang, Malaysia, and offices in India and China. For the lease payment schedule, please see Note 7 “Leases,” of our Consolidated Financial Statements in this Annual Report for further information.

The lease for our Fab2 manufacturing facility is currently scheduled to expire in July 2026. While renewal discussions are underway and management believes continued occupancy is probable, there can be no assurance renewal will occur on acceptable terms or without potential operational disruption. The Company is also evaluating facility purchase and alternative manufacturing site options to support long-term operational continuity and future growth.

We expect to enter into other commitments to support our product development, the build-out of our manufacturing facilities, and our business development, which are generally cancellable upon notice. Additionally, from time to time, we enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation. As of December 28, 2025, our commitments included approximately $5.3 million of our open purchase orders, including equipment purchase orders, and contractual obligations that occurred in the ordinary course of business. For contractual obligations, please See Note 10 “Commitments and Contingencies” of our Consolidated Financial Statements in this Annual Report for further information.

Off-Balance Sheet Arrangements

As of December 28, 2025 and December 29, 2024, we did not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities in our consolidated financial statements and accompanying notes. We base these estimates on historical experience and other various assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

Our critical accounting estimates include estimates related to the valuation of the Private Placement Warrants (as defined below), the valuation of warrants issued from the warrant dividend (as defined in Note 12 “Treasury Stock, Warrant Dividend, and Warrants” of the notes to our Consolidated Financial Statements in this Annual Report), the impairment of long-lived assets, the net realizable value of inventory, stock-based compensation relating to performance-based restricted stock units (“PRSUs”) and income taxes. We believe that application of these critical accounting estimates involves our subjective judgments and assumptions, which have had, or are reasonably likely to have, a material impact on our consolidated financial statements.

A summary of our significant accounting policies is included in Note 2 “Summary of Significant Accounting Policies” of the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

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Valuation of Private Placement Warrants

In connection with the 2021 business combination with Rodgers Silicon Valley Acquisition Corp., we issued warrants in a private placement to the sponsor and members of Rodgers Capital LLC (the “Private Placement Warrants”).

Valuation of any financial instrument depends on the underlying characteristics of the instrument, which generally dictate the valuation model to be used. For the Private Placement Warrants, we have used the Black-Scholes-Merton (“Black-Scholes”) option pricing model using various inputs, including management’s estimates of expected share price volatility, term, risk-free rate and future dividends. We have elected the simplified method to determine the expected term of the Private Placement Warrants. The most significant assumptions impacting the fair value of the Private Placement Warrants are the fair value of our common stock as of each re-measurement date and expected price volatility of our common stock, which includes consideration of our historical observed volatility and other additional factors that were deemed relevant. Future changes to these assumptions could result in significant volatility in our other income (expense) in subsequent periods.

Valuation of Warrants Issued from the Warrant Dividend

Valuation of any financial instrument depends on the underlying characteristics of the instrument, which generally dictate the valuation model to be used. For the Warrants issued from the Warrant Dividend, we have used a Monte Carlo simulation model to determine the fair value. This methodology captures the probabilistic nature of mechanisms for our future exercise of the instrument, share price volatility, and contractual constraints, providing a reasonable estimate of the put option’s expected economic benefit over its remaining term. Monte Carlo simulation is a numerical method used to estimate the value of uncertain outcomes by repeatedly generating random variables to mimic the behavior of a stochastic (i.e., random) process. The most significant assumption impacting the fair value of the Warrants issued from the Warrant Dividend are share price volatility and contractual term as of the date of the Warrant Dividend.

Impairment of Long-Lived Assets

We evaluate the recoverability of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indicators of impairment include, among other factors, significant underutilization or idling of equipment, changes in business strategy, or decisions to cease the development or automation of certain equipment.

The recoverability assessment is based on a comparison of the carrying value of the asset to the estimated separately identifiable, undiscounted future cash flows expected to be generated by the asset. If the carrying value exceeds the undiscounted cash flows, the asset is considered impaired, and an impairment loss is recognized for the amount by which the carrying value exceeds the asset’s fair value. Fair value is generally determined using discounted cash flow models, which require management to make significant estimates and assumptions regarding future cash flows, useful lives, and discount rates. Changes in these estimates or assumptions, or changes in operating plans that result in underutilization or abandonment of equipment, could result in future impairment charges.

Stock-Based Compensation

We issue stock-based compensation to certain employees in the form of PRSUs. Stock-based compensation related to PRSUs is recognized based on the grant date fair value and the expected performance achievement percentage of meeting the performance milestones. At each reporting period, we assess and determine the expected performance achievement percentage. Changes in the expected performance achievement percentage could have a significant impact on the stock-based compensation expense until the end of each performance periods. For further information, see Note 14 “Stock-based Compensation” of our Consolidated Financial Statements in this Annual Report.

Income Taxes

Our deferred tax asset balance is currently subject to a valuation allowance that substantially offsets the deferred tax assets. In evaluating the need for a valuation allowance, management considers both positive and negative evidence, including historical operating results, forecasts of future taxable income, the reversal of existing temporary differences, tax planning strategies, and the length of carryforward periods. The weight given to each piece of evidence depends on the extent to which it can be objectively verified. The most significant factor in this assessment is management’s projection of future taxable income, which inherently involves estimates and assumptions regarding future business performance, market conditions, and other factors that may affect profitability. Should actual results differ materially

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from our estimates of future taxable income, or should there be a change in the weighting of available evidence, our conclusion regarding the need for, or amount of, a valuation allowance could change significantly in future periods.

While accounting for income taxes involves several areas of judgment, the valuation allowance represents the most significant estimate subject to material variability in future periods. Management reviews the realizability of deferred tax assets at each reporting date and adjusts the valuation allowance as appropriate based on updated information and revised forecasts.

Recent Accounting Pronouncements

See section “Recently Adopted Accounting Pronouncements” of Note 2 “Summary of Significant Accounting Policies” of our Consolidated Financial Statements included in this Annual Report.