Cigna earnings beat by $0.04, revenue topped estimates
Netlist Inc. (NASDAQ:NLST) reported its financial results for the first quarter of 2025, revealing a revenue of $29 million, slightly below the forecast of $32 million. While earnings per share (EPS) were not explicitly reported, the company had projected a loss of $0.02. According to InvestingPro data, Netlist posted a diluted EPS of -$0.21 over the last twelve months, with analysts forecasting continued losses for 2025. Following the release, Netlist’s stock price decreased by 1.21% to $0.86, reflecting investor concerns over the revenue shortfall and broader market conditions.
Key Takeaways
- Netlist’s Q1 2025 revenue was $29 million, missing the $32 million forecast.
- Stock price fell by 1.21% post-earnings release.
- Operating expenses declined 44% year-over-year, indicating cost management efforts.
- The company is sampling new MRDIMM products targeting the AI memory market.
- Ongoing patent litigation with major competitors remains a focus.
Company Performance
Netlist’s performance in Q1 2025 showed mixed results, with a revenue decline to $29 million compared to expectations. Despite this, the company managed to reduce operating expenses by 44% year-over-year, highlighting its efforts to streamline operations. The memory industry, driven by AI advancements, presents growth opportunities, which Netlist aims to capitalize on with its innovative product offerings.
Financial Highlights
- Revenue: $29 million, down from the forecasted $32 million.
- Operating expenses: Decreased by 44% year-over-year.
- Cash and cash equivalents: $25.6 million, down from $34.6 million in Q4 2024.
- Working capital line of credit: Maintained at $10 million.
Market Reaction
Following the earnings announcement, Netlist’s stock saw a 1.21% decline, closing at $0.86. This movement reflects investor apprehension over the revenue miss and the company’s ability to navigate current market challenges. InvestingPro analysis indicates the stock is currently fairly valued, with a beta of 1.2 suggesting moderate market sensitivity. The stock’s performance is within its 52-week range, with a high of $2.97 and a low of $0.63, while showing a -27.4% return over the past six months.
Outlook & Guidance
Looking ahead, Netlist expects Q2 2025 revenue to be similar to Q1, indicating a cautious outlook amid industry uncertainties. The company is preparing to launch a Netlist-branded product line later in 2025, aiming to capture a significant share of the AI memory market.
Executive Commentary
CEO Chuck Kong emphasized the potential of the AI-driven memory industry, stating, "The overall memory industry is expected to grow significantly over the next few years, mainly driven by AI." He also highlighted the company’s strategic focus on high-capacity memory products, saying, "MRDIMM is the highest capacity, highest performance memory."
Risks and Challenges
- Ongoing patent litigation with Samsung and Micron could impact financial performance.
- Price increases due to tariffs may affect competitiveness.
- Soft demand in the consumer PC and laptop market could limit growth.
- Cash flow constraints as cash reserves decrease.
- Dependency on the AI memory market’s growth trajectory.
Q&A
During the earnings call, analysts inquired about the ongoing patent litigation with Samsung, the potential impacts of tariffs, and the market potential for MRDIMM products. The company provided insights into its strategies to mitigate these challenges and leverage growth opportunities in the AI memory sector.
Full transcript - Netlist Inc (NLST) Q1 2025:
Conference Operator: Good day, and welcome to the Netlist First Quarter twenty twenty five Earnings Conference Call and Webcast. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead.
Mike Smargiassi, Investor Relations, Netlist: Thank you, Michael, and good day, everyone. Welcome to Netlist’s first quarter twenty twenty five conference call. Leading today’s call will be Chuck Kong, Chief Executive Officer 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 website at netlist.com. Before we start the call, I would note that today’s presentation of Netlist results and the answers to questions may include forward looking statements, 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 Kong, Chief Executive Officer, Netlist: Thanks, Mike, and hello, everyone. It’s been a little over a month since our last call. And as such, our update today will be relatively brief. First quarter financial result was in line with our expectations. While The U.
S. Tariffs have created some disruptions in the memory market, the majority of netlist sales are shipped to locations outside of The U. S, thereby minimizing the direct impact of tariff on our business. That said, in early April, memory manufacturers withheld pricing information and leading computer hardware producers pause shipments from Asia into The U. S.
The entire industry grappled with the impact of the tariffs. At the moment, memory and other semiconductor products are exempt from tariffs, but we expect a separate tariff scheme on semiconductors to go into effect in the months ahead. We have seen some price increases in April and would expect additional adjustments as tariff impacts the supply chain. There continues to be significant uncertainty as the business environment remains fluid and subject to change. Taking the longer view, however, the overall memory industry is expected to grow significantly over the next few years, mainly driven by AI.
As I mentioned on our last call, Netlist is well positioned to capitalize on rapidly increasing demand for high bandwidth memory or HBM and on the industry’s transition to DDR5 including MRDIMM, the highest end server memory that will go to market later this year. We’ve recently started to sample select customers with high capacity, high performance MRDIMM products for the AI memory market and plan to go to market later this year with a Netlist branded product line. Moving on to intellectual property. In the breach of contract case against Samsung, the Federal District Court for the Central District of California entered a final judgment on April 8. The parties have twenty eight days from that date to file their respective post trial motions.
We estimate that the court will rule on those motions within ninety days. When the judge issues the order on post trial motions, the case will officially conclude at the District Court. Samsung would then have thirty days to file a notice of appeal with the U. S. Court of Appeals for the Ninth Circuit.
Samsung has lost this case three times now and it is unclear on what basis they might appeal. If Samsung does appeal and loses for the fourth time, their only option is to take the case to the Supreme Court. We believe the odds of the Supreme Court taking up this kind of case are very remote. In the Eastern District Of Texas, 1 case against Samsung, where Netlist secured an order finalizing the $3.00 $3,000,000 damages award in July 2024, the appeals process continues to advance at the Federal Circuit Court of Appeals. The netlist patents in this case cover both HBM and DDR5 memory that are foundational to AI computing.
Samsung filed its opening appellate brief in December with Netlist filing its response brief in March. Samsung’s reply brief will be due in mid May. A date has not been set for the appeals hearing at this time, but we estimate the case will be heard and decided early next year. In the Eastern District Of Texas II case against Samsung, where Netlist was awarded $118,000,000 in damages in November and the court issued a final judgment in December, we are in post trial briefing phase. Once the final order is issued, both parties will have thirty days to file an appeal, which would go to the Federal Circuit Court of Appeals.
The $445,000,000 damages award case against Micron in the Eastern District Of Texas, which took place in May 2024, is in the post trial process. We expect this case to follow the same course as the other cases in the Eastern District Of Texas. We await the court’s final order and commencement of the post trial briefing phase. With regard to the IPRs, we entered 2025 with eight appeals involving 11 netlist patents pending before the Federal Court of Appeals. In January, Samsung filed its notice of appeal of the PTAB’s December twenty four decision in the six zero eight IPR in which Netlist had prevailed.
In March, the Federal Circuit issued a judgment affirming the USPTAB’s inter parties review decision upholding the validity finding of patent. As a reminder, this IPR followed a preemptive legal action by Samsung against Netlist. Samsung has ninety days from this decision to file a petition to the Supreme Court. We expect oral arguments for Netlist’s three fourteen and five zero six patents to be heard later this year and the remaining IPR appeals to be heard in 2026. I would note that the appeal of the Samsung EDTX-one case and the three IPR appeals involving the five asserted patents in that case have been designated as companion cases by the Federal Circuit.
So the oral arguments on all four appeals will be heard on the same day before the same panel of Federal Circuit judges. As I mentioned earlier, we estimate that oral arguments will take place in early twenty twenty six in this case in this consolidated case. Therefore, in the months ahead, we expect to be quite busy with these appeals that are in the pipeline and we look forward to securing positive results. Now I’ll turn the call over to Gail for the financial review.
Gail Sasaki, Chief Financial Officer, Netlist: Thanks Chuck. For the quarter ended 03/29/2025 revenue was $29,000,000 which was in line with our expectations and reflected short term softness in the consumer demand environment. While we do not formally guide given booking and shipping for the second quarter of twenty twenty five to date and subject to the visibility we have today while waiting on clarity on the tariffs, we currently expect second quarter revenue to be similar to the first quarter of twenty twenty five. Operating expense for the first quarter twenty twenty five declined 44% compared to the prior year’s quarter, driven mainly by reductions in IP legal fees. We currently expect further reductions in legal costs in 2025 as we enter the final phase of litigation for current actions and the completion of the jury retrial in the first quarter.
We ended the first quarter with cash and cash equivalents and restricted cash of $25,600,000 compared to $34,600,000 at the end of twenty twenty four with minimal debt. With a $10,000,000 working capital line of credit and approximately $74,000,000 available on the equity line of credit, we continue to maintain significant financial flexibility and liquidity. As always, we manage the operational cash cycle very carefully with days in inventory improved by thirty two days over last year and the overall cash cycle improved by fifty four days over last year’s Q1. Operator, we are now ready for questions.
Conference Operator: We will now begin the question and answer session. The first question comes from Suji Desilva with ROTH Capital. Please go ahead.
Suji Desilva, Analyst, ROTH Capital: Hi, Chuck. Hi, Gail. Maybe I’ll start with the litigation question then move to product ones. Maybe on litigation side, Chuck, just correct me if this is wrong, it sounds like there’ll be twenty eight days to file a motion that’ll be kind of right about now and then the judge will rule on the case within ninety days that sounds like July. At that point I guess Samsung has thirty days to appeal.
So I’ll make sure all that’s right and then I guess the question would be like is there a reason that Samsung may not be able to appeal or they would absolutely be able to go through the appeal process?
Chuck Kong, Chief Executive Officer, Netlist: Yes. They’ve appealed before, Nell. They will appeal this time around Suji. So but they’ve lost the case now multiple times and we don’t believe there is a path to a straight faced reasonable argument that they can make to try to reverse the outcome.
Suji Desilva, Analyst, ROTH Capital: Chuck just to be clear if that appeal process happens how long would that take?
Chuck Kong, Chief Executive Officer, Netlist: What you just said the days that you went through those dates are correct. And from that once the appellate process starts it could be six months to a year. But I realistically, I think both parties believe that the license issue, the breach of contract issue, the two topics that were dispositioned by the District Court that is likely very high probability that will not change.
Suji Desilva, Analyst, ROTH Capital: Got it. Okay. And then just to switch over to the Micron case. Is there any reason the timeframe would be different from what we’ve seen with the Samsung case or could it be compressed for any reason because it’s the second one to follow? Any thoughts there would be helpful.
Chuck Kong, Chief Executive Officer, Netlist: No. It’s so just to recap there are two the cases we just talked about is the basic breach of contract license case, which determined that Samsung does not have a license. And then Samsung had two cases in Eastern District Of Texas, 1 for $3.00 $3,000,000 which covered mostly AI memory, HBM and DDR5. That was the $3.00 $3,000,000 damages to the date of trial, which was April of twenty twenty three. And then the $118,000,000 verdict that was last year that cover mostly DDR4 and some DDR5 memory.
So those are now going through the appellate process. And then we have the $445,000,000 verdict against Micron that was also last year. And that is already and that is also will be going through the appellate process. So once it’s in the appellate pipeline, a lot of the briefings that go in and it will take probably about a year for to reach oral hearings in front of the Federal Circuit Court of Appeals at which point their decision will for all practical purposes is final because none of these cases will go to the Supreme Court. So those appeals, there’s a bunch of them.
There’s all together maybe a dozen separate patents along with the three cases. Those will all see appeal get in front of the appellate court and that panel starting later this year and on to next year. And so we finally after some four, five years we’ll get to finality on these cases.
Suji Desilva, Analyst, ROTH Capital: Right. And I appreciate all that detail Chuck and your patience giving it. So on the product side, you talked about some memory price increases. What kind of magnitude are you seeing? Are these sort of minimal bump ups or are people trying to kind of really kind of manage the supply situation aggressively?
Chuck Kong, Chief Executive Officer, Netlist: Yes. Think we’ve seen and it’s been reported that April prices are up. They expect that it’s low double digits. It will May that is expected to go up. There is expected to be a separate tariff scheme to be introduced in May for semiconductors.
Although it’s hard to know whether they’ll follow through with that. If there are negotiations, things may change. There is some buying ahead obviously. Yes, stocking ahead. On the other hand, demand in general is down.
So especially with consumer PCs and laptops, AI servers that continues to be relatively strong. So the spending on the AI front, the large investments that have been announced since last year by the big hyperscalers. They seem to be continuing to follow through with that. So therefore, the demand of how that impacts the semi world is obviously the GPUs and the HBMs. And HBM demand continues to remain robust and that is expected to year to year growth has been significant.
For example, Hynix has gone from just a few million dollars worth of HBM sales a few years ago to now on path to maybe doing $25,000,000,000 in HBM sales. So we expect to take advantage of that growth trend because we have several patents in the HBM area that have been asserted and we continue to work on additional patents in that area. DDR5 also is AI memory and that continues to grow as well and we’ve got many patents in that area as well.
Suji Desilva, Analyst, ROTH Capital: Yes, thanks. Can’t remember when HBM was just a few million dollars. And so lastly, on looking ahead to your products for MRDIMM in the second half and exciting to see those coming. What do you think is penetration among AI servers? What percent will be needing that level of performance?
And then what’s the content opportunity in those servers? If those questions are you can give any color there at this early juncture?
Chuck Kong, Chief Executive Officer, Netlist: Yes. MRDIMM is so LRDIMM was the highest end memory module for the last fifteen, twenty years. But LRDIMM went end of life at DDR4. AI memory really starts at DDR5 and MRDIMM is the replacement for LRDIMM from a product category standpoint. MRDIMM is the highest capacity, highest performance memory.
And we expect that to become 10% to 20% of the overall server memory market in the next couple of years and MRDIMM will start to get it be adopted starting at the end of this year. NVIDIA AI servers will likely not use MRDIMM, but AMD and Intel servers both enterprise servers and AI servers will adopt MRDIMM.
Suji Desilva, Analyst, ROTH Capital: Thanks, Chuck. It will be interesting to watch that. Appreciate all the color. Thanks.
Gail Sasaki, Chief Financial Officer, Netlist: Thanks, This
Conference Operator: concludes our question and answer session and today’s conference call. Thank you for attending today’s presentation. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.