Intevac, Inc.

Q3 2024 revenue was $28.5 million versus guidance of $10.5 million to $12 million, with roughly $15 million tied to a customer inventory obligation settlement. Reported Q3 gross margin was 24.8%, while underlying gross margin was about 45% excluding the pass-through and inventory adjustments; the inventory-related items reduced gross margin by about 20 percentage points and added $0.04 to earnings. Q3 operating expenses were $8.8 million, net other income/expense was $500,000, interest income was $800,000, and net loss was $0.08 per share. Cash and investments including restricted cash ended at $72.1 million, or $2.67 per share, and cash increased by nearly $1.7 million from Q2. For Q4, management guided revenue to $9 million to $10.5 million, gross margin to 30% to 32%, OpEx to $8.4 million to $8.6 million including about $900,000 of cash restructuring costs, and net loss to $0.19 to $0.21 per share. For 2024 HDD revenue, the company raised its forecast to $46 million to $48 million excluding the inventory pass-through. For 2025, management expects a HDD revenue baseline of $50 million, gross margins of at least 40%, and cash flow neutral to cash flow positive results.

Nigel Hunton said the quarter reflected improving HDD industry conditions, stronger upgrade demand, and better gross margin performance in the core business, which increased confidence in the HDD outlook. He emphasized that TRIO did not clear qualification because it could not prove enough advantage versus existing coating solutions, so Intevac is stopping further development and redirecting resources to HDD. His tone was firm but constructive: he framed the TRIO decision as disappointing but necessary, while stressing that the company will preserve cash and focus on the most assured near-term opportunities.

Cameron McAulay highlighted that the quarter’s revenue upside was largely a $15 million pass-through tied to a customer obligation, but underlying demand still exceeded the high end of guidance. He said Q3 gross margin was 24.8%, underlying gross margin was roughly 45%, OpEx was stable at $8.8 million, and cash and investments finished at $72.1 million, up nearly $1.7 million from Q2. He also guided Q4 revenue to $9 million to $10.5 million, gross margin to 30% to 32%, OpEx to $8.4 million to $8.6 million, and noted about $900,000 of cash restructuring costs; for 2025 he said the reduced OpEx run rate should be $7.0 million to $7.2 million by Q1.

Analysts focused on the size of the next HDD cycle, the timing and scale of 200 lean upgrades, and whether cash flow neutrality implies a mid-50s revenue level. Management said the 2026-2028 period could be as strong as the prior cycle and that a few 200 leans could occur in 2026-2027, but most revenue should still come from upgrades. Questions on TRIO made clear that the product failed on yield, with management citing a need for 97% particle-free performance and saying there is no additional pursuit of high-volume TRIO customers, though small R&D-level evaluations and some polymer applications may still be pursued to monetize inventory.