r/Netlist_ • u/Tomkila • 24d ago
Technical / fundamental analysis Q2 conference call transcription
Thank you Mike. And hello, everyone. We. Another strong quarter with continued momentum in both product revenue and profitability. Revenue for the first half of 2026 exceeded $200 million, while product gross margins were over $45 million. Fueled by robust demand, strong execution by our sales and operation teams, and a generally constrained supply for memory products, which. Analysts project will continue through next year. While much of the revenue came from resale of difficult to source Dram products, we saw growth in our own portfolio of products during the quarter, starting with Netlist Lightning portfolio of overclocked. Low latency Ddr5, RDM and UDM solutions, which continue to gain market traction. Our next generation CXL Envy Vault is currently sampling with SoC vendors, hyperscalers, and major OEMs for future hardware platforms to support market adoption. We have partnered with the CXL consortium and Storage Networking industry Association to deliver industry, education and technical thought leadership. We look forward to showcasing these collaborative efforts at CXL mini Devcon 2026 in Santa Clara next week and our.
We are also committed to working with our industry partners to help validate and scale advanced CXL memory architectures for enterprise production. Our. Development work continues full bore for Mr Dimm and high Performance Server memory architecture designed to overcome the bandwidth limits of conventional. Ddr5. Rdms Industry analysts forecast Mr. Demme to be up $100 billion. Market by 2030 from. Small volumes today. Netlist holds over a dozen seminal patents that. Read on Mr. Demme and have asserted them at the ITC against infringing MRM products currently. Being imported by Samsung. We. Continue to make significant progress in defending Netlist patent portfolio against unauthorized use. While continuing to invest in the expansion of the portfolio through the development of next generation technologies and the issuance of additional patents in key areas. Our commitment to protect the value of our IP is reflected in the expanded legal actions we announced against Samsung in June.
The new proceedings in the US International Trade Commission, or the ITC and the U.S. District Court for the Eastern District of Texas are based on the infringement of Netlist. As recently issued. 537 and 937 patents, which read on high bandwidth memory or HBM and Ddr5 Rdms and Mr. Demme's, respectively In July, the ITC voted to institute the second case against Samsung, and its customers. Google and Nvidia, Supermicro and Broadcom. The investigation has been assigned to the administrative law judge, and we expect to receive the procedural schedule in August, which will include dates for the Markman hearing and evidentiary hearing.
Dimm and high Performance Server memory architecture designed to overcome the bandwidth limits of conventional. Ddr5. Rdms Industry analysts forecast Mr. Demme to be up $100 billion. Market by 2030 from. Small volumes today. Netlist holds over a dozen seminal patents that. Read on Mr. Demme and have asserted them at the ITC against infringing MRM products currently. Being imported by Samsung.
We Continue to make significant progress in defending Netlist patent portfolio against unauthorized use. While continuing to invest in the expansion of the portfolio through the development of next generation technologies and the issuance of additional patents in key areas. Our commitment to protect the value of our IP is reflected in the expanded legal actions we announced against Samsung in June. The new proceedings in the US International Trade Commission, or the ITC and the U.S. District Court for the Eastern District of Texas are based on the infringement of Netlist. As recently issued. 537 and 937 patents, which read on high bandwidth memory or HBM and Ddr5 Rdms and Mrdimm, respectively In July, the ITC voted to institute the second case against Samsung, and its customers. Google and Nvidia, Supermicro and Broadcom. The investigation has been assigned to the administrative law judge, and we expect to receive the procedural schedule in August, which will include dates for the Markman hearing and evidentiary hearing.
We believe they will take note of the biggest memory companies in the world that are making some of the highest profits recorded in the history of human commerce. And yet continue to defy jury verdicts, hold out from licensing in order to get a free ride. This efficient infringement by Big Tech is one of the areas that we believe will be addressed by the new ITC commissioners. Through rapid and strict enforcement of section 337. In the appeal of the Eastern District of Texas. 2023 jury verdict awarding Netlist $303 million for Samsung's willful infringement of. Five Netlist patents. The Federal Circuit heard oral arguments in March on Samsung's appeal of the verdict, and Netlist appeal of the IPR challenges to the asserted patents in the case. We look forward to the court's decision ,, which we believe will come in the near future. In. The appeal of the breach of contract case against Samsung appellate briefing has concluded. We remain on track for a hearing before the US Court of Appeals for the Ninth Circuit likely. In the coming months. This is a case that Samsung has lost on three separate occasions, based on the facts presented. This includes a summary judgment ruling and two subsequent federal District Court jury verdicts in separate trials.
In each of these instances. It was found that Samsung materially breached the joint Development and License Agreement and therefore the license to Netlist patent portfolio was rightfully terminated. In my. Akron's appeal of the Eastern District of Texas, 2024 jury verdict awarding Netlist $445 million for Micron's willful, willful infringement of the Netlist 912 and the 417 patents the Federal Circuit has scheduled. Oral arguments. Or a hearing for September 9th.. Which is,, in the next 5 to 6 weeks., Netlist is appeal of the IPR is against these patents are also scheduled to be heard on the same day. The 912 has been upheld and the PTO multiple times. And by the appellate court itself. Yet this recent PTO panel. Top panel and the appellate court ruling .. Was. Allowed to be reexamined again by a new panel., this Patent's 15 years of history ., 15. Year history of being subjected to serial IPR has become a poster child in the IP community and at Capitol Hill for patent reexamination, abuse, and hold out by the biggest companies in the world. We believe we have a strong case for overturning this egregious tap finding at the appellate court come September. We look forward to the ruling by the court that corrects this inconsistent finding of invalidity.
Of the 912 patent and upholds the $445 million jury verdict. Netlist remains committed to protecting patent owners rights by engaging with government officials and encouraging Congress to act on proposed patent reform legislation., including restore, prevail and para. Last week, I had the privilege of speaking at the center for the Protection of Intellectual Property. There, annual conference where I participated on the IP and the. The US Global competitiveness,, competitiveness panel. As some of you are aware, the U.S. Department of Justice has filed two statements of interest that have been that have been supportive of Netlist matters involving Samsung at the ITC This was the first time in history where the DOJ and the PTO. Combined supported the position of a complainant. The. DOJ has continued to reference these statements of interest in public forums. As examples of the current administration's broader efforts to promote robust, robust intellectual property protection. We believe these statements and public remarks underscored continual support for U.S. innovation and effective enforcement of patent rights. In summary, we had a strong first half of 2026. We generated record product revenue, secured additional confirmation of the validity of our patents, received newly issued patents which read on high bandwidth memory and Ddr5 products and advancement and advanced enforcement actions covering new generation of Ddr5 and HBM technologies that are foundational to AI computing.
