Netlist, Inc. (PNK:NLST) Q4 2023 Earnings Call Transcript
Netlist, Inc. (PNK:NLST) Q4 2023 Earnings Call Transcript February 13, 2024
Netlist, Inc. beats earnings expectations. Reported EPS is $-0.05, expectations were $-0.07. NLST isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and welcome to the Netlist Fourth Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Mike Smargiassi of The Plunkett Group. Please go ahead.
Mike Smargiassi: Thank you, Rocco, and good day, everyone. Welcome to Netlist's Fourth Quarter 2023 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist's website at netlist.com. Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck.
Chuck Hong: Thanks, Mike, and hello, everyone. We saw a promising uptick in the fourth quarter as product revenue improved to $33 million, an increase of 100% on a sequential basis and a 54% increase over Q4 2020. The memory market continues to rebound, and Netlist is benefiting from the improved demand environment. Pricing has strengthened for DRAM and NAND products, including SSDs, with price increases of more than 100% since the fall of 2023 for some products. These market dynamics are continuing into this year, and we expect to see further gains in product revenue throughout 2024. Fueling this growth is the normalization of customer inventory and the industry's transitions to advanced technologies, which is driving a new server demand cycle.
A technician soldering a semiconductor chip, emphasizing the power of the company's products.
This includes volume production of DDR5 memory-based platforms and the need for high bandwidth memory, or HBM, to power the explosive rise in AI applications. These trends are fundamentally transforming the memory landscape, setting the stage for a new cycle of growth and presenting Netlist with major opportunities from both a product and IP standpoint. As you know, Netlist has been at the forefront of the industry, developing next-generation memory technology and backing its innovations with a strong patent portfolio. This approach is complemented by the strategic supply agreement with SK hynix, which enables us to meet growing customer demand. Together, these product and licensing strategies put Netlist in a strong position to continue to benefit from the memory market turnaround.
On the legal front, Netlist made significant progress from 2023 on its efforts to defend and fairly license its intellectual property including the Eastern District of Texas Jury award of $303 million in the case against Samsung, favorable rulings from German courts in cases against Samsung, and some mixed results at the PTAB. 2024 is set to be another active year with what we expect will be multiple patent infringement jury trials. The case in the Eastern District of Texas before Chief Judge Gilstrap addresses Micron's infringement through the sale of its DDR5 DIMMs and HBM components, some of the same patents and product types that were an issue in our successful April EDTX trial against Samsung. Heading into this trial, we received a favorable claim construction order that provides a strong foundation for Netlist's ability to prove infringement and validity against Micron.
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