Navitas' Q3 2025: Contradictions Emerge on Strategic Shift to High-Power Applications, Data Center Growth, and Infineon Partnership

Date of Call: November 3, 2025

Financials Results

• Revenue: $10.1M in Q3 2025 (midpoint of guidance); company guides Q4 revenue $7.0M ± $0.25M; expected sequential reduction driven by China tariff risk and mobile pricing pressure
• Gross Margin: 38.7% in Q3 2025, up sequentially from 38.5% in Q2 2025; Q4 guidance ~38.5% ± 50 bps

Guidance:

• Q4 revenue expected to be $7.0M ± $0.25M (company expects Q4 to be the bottom)
• Q4 gross margin expected ~38.5% ±50 bps; company expects progressive margin improvement as high-power mix increases
• Q4 operating expenses targeted at $15.0M (approx. 24% year-over-year reduction); weighted average shares ~214M
• Company will de-prioritize low-power/mobile China business, reduce channel inventory and reallocate resources to AI data center, performance computing and energy/grid; expects gradual QoQ growth in 2026 and material AI contribution in 2027

Business Commentary:

* Navitas' Transformation and Market Focus Shift: - Navitas announced a strategic transformation to a high-power focused company, pivoting from consumer and mobile markets. - This shift is driven by strong demand in high-power markets like AI data centers, performance computing, and energy infrastructure.

• Impact of China Tariff and Mobile Market Challenges:
• Revenue in Q3 2025 was at the midpoint of guidance at $10.1 million, impacted by China tariff risk in the silicon carbide business and pricing pressure in mobile segments.

• Navitas is strategically deprioritizing lower profit, short-term projects in mobile to focus on high-power markets.

• Operational Efficiency and Cost Reduction:

• Navitas executed operational efficiencies that reduced operating expenses from $16.1 million to $15.4 million.

• This reduction aligns with cost reduction targets and supports the pivot to higher-value markets.

• Data Center and High-Power Market Growth:

• The company is expecting growth in data centers and high-power markets, with material P&L contribution anticipated in 2027.
• The growth is driven by adoption of Navitas' GaN and high-voltage SiC technology in AI data centers and grid infrastructure projects.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly framed a confident strategic pivot to "Navitas 2.0" focusing on high-power markets, saying "Q4 will represent the bottom" and forecasting gradual revenue and margin improvement in 2026 with material AI/data-center contribution in 2027; balance sheet cited as healthy with $151M cash and no debt.

Q&A:

• Question from Kevin Cassidy (Rosenblatt Securities Inc., Research Division): How long of a tail is the mobile market and when will high-voltage/higher-power become more than 50% of the business?
  Response: Mobile was the majority in Q3 but will be under 50% in Q4; future growth will come from AI data center, performance computing and grid infrastructure as mobile declines.

• Question from Kevin Cassidy (Rosenblatt Securities Inc., Research Division): For AI data centers, do you work with end users to pull power-supply vendors or work behind power-supply customers?
  Response: They do both but are increasingly orienting engagement toward OEMs and hyperscalers to drive architecture change and pull power vendors along.

• Question from Ross Seymore (Deutsche Bank AG, Research Division): With many names on NVIDIA's collaboration list, what is Navitas' true competitive differentiation—GaN, SiC, or both?
  Response: Differentiation is the combined GaN + high-voltage SiC portfolio plus a proven GaN track record, speed and execution capability with customers.

• Question from Ross Seymore (Deutsche Bank AG, Research Division): Why are you confident Q4 is the bottom and what will drive growth off the $7M Q4?
  Response: Confidence stems from proactively walking away from lower-margin mobile revenue to focus resources on high-power markets; growth will be driven by AI, performance computing and energy/grid demand.

• Question from Shadi Mitwalli (Needham & Company, LLC, Research Division): Has anything materially changed in the last 90 days causing a larger-than-expected impact from moving away from China mobile?
  Response: The CEO's customer meetings accelerated the decision to pivot faster; the market accelerated modestly but the company chose to reallocate resources more aggressively.

• Question from Shadi Mitwalli (Needham & Company, LLC, Research Division): Is the solar microinverter (GaN BDS) ramp still on track and how is the ramp progressing?
  Response: Yes—GaN BDS ramp remains on track and is expected to ramp in 2026 with the lead energy/green infrastructure customer.

• Question from Jack Egan (Charter Equity Research): What cultural or operational changes from your prior large-company experience will you implement at Navitas?
  Response: Introduce clarity, speed and execution focus—prioritize profitable opportunities and move faster on strategic shifts.

• Question from Jack Egan (Charter Equity Research): Could pricing/competitive pressure eventually migrate into higher-voltage, higher-value mobile segments?
  Response: Management believes high-power markets remain innovation-driven and are far from the commoditization seen in low-end mobile, so pricing pressure is less likely near-term.

• Question from Jonathan Tanwanteng (CJS Securities, Inc.): What are data center prospects in 2026 before 800-volt products ramp?
  Response: They are shipping into AI data centers today but revenue will remain non-material in 2026; 800-volt-driven, material growth is expected in 2027.

• Question from Jonathan Tanwanteng (CJS Securities, Inc.): What is your cash position and burn rate; is it sufficient to ramp to meet 2027 demand?
  Response: Cash was $151M at quarter end, no debt, burning roughly $10–11M per quarter—sufficient for ongoing operations.

• Question from Tyler Bomba (Robert W. Baird & Co., Research Division): How much of your silicon carbide output is insourced and what is the target for insourcing?
  Response: They never initiated in-house epitaxy; all SiC substrates and epitaxy are outsourced today.

• Question from Richard Shannon (Craig-Hallum Capital Group LLC, Research Division): Is engagement with Infineon as a second source still part of the strategy and when will you disclose wins/ramps?
  Response: They continue communications and cross-licensing with Infineon and are aligned strategically; system-level interactions with hyperscalers are high but specific wins/ramps are not being disclosed now.

• Question from Richard Shannon (Craig-Hallum Capital Group LLC, Research Division): How should we think about GaN vs SiC contribution and calendar 2026 sales—will 2026 grow year-over-year?
  Response: They view revenue by end-market segment (mobile down; high-power computing and energy/grid up); expect quarter-over-quarter growth starting Q4 as high-power offsets mobile, with data-center materiality mainly in 2027—2026 not expected to show strong YOY growth.

• Question from Jonathan Tanwanteng (CJS Securities, Inc.): Are incremental margins in high-voltage data-center opportunities different from existing high-power businesses?
  Response: Yes—high-power and data-center markets are expected to have higher, more sustainable margins than the current mobile/consumer business.

• Question from Jonathan Tanwanteng (CJS Securities, Inc.): How are you accelerating development to produce scalable products for these markets?
  Response: By pivoting R&D, application and system engineering resources away from mobile toward high-power roadmaps and deeper customer co-design.

• Question from Jonathan Tanwanteng (CJS Securities, Inc.): What is the capacity to ramp should you win significant share (TSMC/Powerchip partnerships)?
  Response: TSMC remains a primary partner for the next several years and TSMC ramp is underway; company is transitioning high-voltage GaN in 2027 and seeking additional foundry partners to scale capacity.

Contradiction Point 1

Transition to High-Power Applications and Mobile Market Focus

It highlights a shift in strategic focus, which could impact revenue projections and investor expectations regarding the company's growth in high-power applications and retreat from the mobile market.

How long is the tail of the mobile market? Are there higher-voltage applications in the mobile market that could crossover to high-voltage power supplies? - Kevin Cassidy (Rosenblatt Securities Inc.)

2025Q3: Mobile represents the majority of Navitas' business, but it will be less than 50% in Q4. The growth will come from AI data centers, performance computing, and grid infrastructure. - Todd Glickman(CFO)

What portion of the mobile business are you exiting, and what impact will transitioning to Powerchip have on revenue? - Blayne Peter Curtis (Jefferies LLC)

2025Q2: We are refocusing on ultrafast chargers above 100 watts, reducing involvement in 45 and 65-watt mainstream markets. - Eugene A. Sheridan(CEO)

Contradiction Point 2

Growth Expectations in Data Centers

It involves differing expectations for growth in the data center market, which is a critical component of the company's strategic shift towards high-power applications.

What data center growth do you expect before the 800-volt product ramp? - Jonathan Tanwanteng (CJS Securities, Inc.)

2025Q3: Revenue will grow in data centers, but material growth will occur in 2027 with the adoption of 800-volt DC. - Todd Glickman(CFO)

How should we model revenue as you transition to AI data centers, and what's the margin structure for the business? - Ross Clark Seymore (Deutsche Bank)

2025Q2: AI data centers will ramp significantly in late '26, with 800-volt being a 2027 play. - Eugene A. Sheridan(CEO)

Contradiction Point 3

Mobile Market Significance

It highlights a shift in the company's strategy and expectations regarding the mobile market, which is a significant segment for Navitas.

How long is the tail of the mobile market? Are there higher-voltage applications in the mobile market that could extend into high-voltage power supplies? - Kevin Cassidy (Rosenblatt Securities)

2025Q3: Mobile represents the majority of Navitas' business, but it will be less than 50% in Q4. - Todd Glickman(CFO)

Which markets will disproportionately contribute to growth next year? - Richard Shannon (Craig-Hallum Capital Group)

2025Q1: Growth is expected from mobile, EV, AI data centers, and solar microinverters. - Gene Sheridan(CEO)

Contradiction Point 4

Data Center Revenue Growth

It involves differing expectations for revenue growth in the data center segment, which is a key market for Navitas.

What growth do you expect in data centers before the 800V product launch? - Jonathan Tanwanteng (CJS Securities)

2025Q3: Revenue will grow in data centers, but material growth will occur in 2027 with the adoption of 800-volt DC. - Todd Glickman(CFO)

Can you share more details on traction in the data center segment? - Madison de Paola (Rosenblatt Securities)

2025Q1: We are making significant progress in data centers, reaching a 12 kilowatt design this quarter. GaN and silicon carbide are crucial for high power and efficiency. - Gene Sheridan(CEO)

Contradiction Point 5

Infineon Partnership Status

It underscores a potential change in the company's strategic partnerships, which can impact market positioning and technology adoption.

When do you expect to secure data center market wins, and is Infineon still part of your strategy? - Richard Shannon (Craig-Hallum Capital Group)

2025Q3: Infineon remains a partner, and the focus is on enabling the adoption of high-power technologies. - Chris Allexandre(CEO)

Which markets are expected to drive growth disproportionately in the next year? - Richard Shannon (Craig-Hallum Capital Group)

2025Q1: Navitas is pursuing partnerships with global leaders like Infineon to deliver next generation power conversion solutions that are smaller, lighter, more efficient and eco-friendly. - Gene Sheridan(CEO)