UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 6, 2023
(Exact name of registrant as specified in its charter)
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(Address of Principal Executive Offices) (Zip Code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 7.01 | Regulation FD Disclosure | |||||||
Attached as Exhibit 99.1 is a presentation that Movella will use in connection with the Stifel 2023 Cross Sector Insight Conference on June 6, 2023.
The information in this Current Report on Form 8-K (the “Report”) furnished pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and they shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. By filing this Report and furnishing this information pursuant to Item 7.01, the Company makes no admission as to the materiality of any information in this Report, including Exhibit 99.1, that is required to be disclosed solely by Regulation FD.
Cautionary Statement Regarding Forward Looking Statements
This Report contains “forward-looking statements” regarding Movella Holdings Inc. (the "Company" or "Movella"). Statements in this Report that are not historical in nature may constitute forward-looking statements. In addition, any statements that refer to Movella’s future expectations, beliefs, plans, objectives, financial conditions, assumptions, performance, projections, forecasts, or estimates, including with respect to financial or other performance or valuation metrics or market size or opportunity, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are based on various assumptions, whether or not identified in this Report, and on the current expectations of Movella’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. The words “anticipate,” “believe,” “continue,” “could,” “enable,” “estimate,” “expect,” “extend,” “future,” “intend,” “may,” “might,” “opportunity,” “outlook,” “plan,” “position,” “possible,” “potential,” “predict,” “project,” “see,” “seem,” “should,” “will,” “would,” and similar expressions, or the negative of such expressions, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Report include, but are not limited to, statements regarding the following: Movella’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Movella’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Although Movella believes that it has a reasonable basis for each forward-looking statement contained in this Report, Movella cautions you that these statements are based on a combination of facts and factors currently known and projections of the future, which are inherently uncertain. These risks and uncertainties include, but are not limited to, the following: (i) Movella’s success in retaining or recruiting, or changes required in, officers, key employees, or directors; (ii) the lack of a market for Movella's securities; (iii) general economic conditions and Movella’s financial performance; (iv) the impact of the COVID-19 pandemic, macroeconomic conditions, and geopolitical crises; (v) the ability to maintain the listing of Movella's shares on a national securities exchange; (vi) changes adversely affecting the businesses in which Movella is engaged; (vii) management of growth; (viii) Movella’s ability to execute on its business strategy and plans; (ix) the result of future financing efforts; and (x) risks related to regulatory matters, as well as the factors described under the heading “Risk Factors” in Movella Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022, Movella Holdings Inc.'s registration statement on Form S-1 (File No. 333-271458), and other documents filed by Movella Holdings Inc. from time to time with the SEC.
If any of these risks materialize or the underlying assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Movella does not presently know or that Movella currently believes to be immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Movella’s expectations, plans or forecasts of future events and views as of the date of this Report. Movella anticipates that subsequent events and developments will cause Movella’s assessments to change. However, while Movella may elect to update these forward-looking statements at some point in the future, Movella specifically disclaims any obligation to do so, except to the extent required by applicable law. These forward-looking statements should not be relied upon as representing Movella’s assessments as of any date subsequent to the date of this Report. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Non-GAAP Financial Measures
1
Movella Holdings Inc. has provided financial information in this Report that has not been prepared in accordance with GAAP. Adjusted EBITDA, non-GAAP gross profit, and non-GAAP operating loss exclude net loss attributable to non-controlling interests, preferred stock dividends, share-based compensation expense, loss on debt extinguishments related to the consummation of the business combination agreement, debt issuance costs, change in fair value of warrant liabilities fair value adjustments on debt instruments for which we elected the fair value option under ASC 825, and impairment of acquired intangible assets. Adjusted EBITDA also excludes interest expense and income, taxes, depreciation and amortization, other income (expense), and certain non-recurring transaction expenses related to the business combination agreement.
Adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin, and non-GAAP operating loss are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool and are not intended to be used in isolation or as a substitute for net loss, gross profit, operating loss or any other performance measure determined in accordance with GAAP. We present these non-GAAP financial measures because we consider each to be an important supplemental measure of our performance.
We use these non-GAAP financial measures to make operational decisions, evaluate our performance, prepare forecasts and determine compensation. Further, we believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new incentive award grants issued to both current and new employees, the number of such grants forfeited by former employees, and changes in our stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP financial measures, we exclude certain non-cash and one-time items in order to facilitate comparability of our operating performance on a period-to-period basis because such expenses are not, in our view, related to our ongoing operating performance. We use this view of our operating performance for purposes of comparison with its business plan and individual operating budgets and in the allocation of resources.
We further believe that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that the use of these non-GAAP financial measures also facilitates a comparison of our underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.
Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool. Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures contained within this Report with our GAAP financial results, which is available within Movella Holdings Inc.'s Quarterly Report on Form 10-Q for the three months ended March 31, 2023.
| Item 9.01. | Financial Statements and Exhibits. | |||||||
(d)Exhibits
Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Movella Holdings Inc. | ||||||||||||||
| June 6, 2023 | ||||||||||||||
| By: | /s/ Stephen Smith | |||||||||||||
| Name: | Stephen Smith | |||||||||||||
| Title: | Chief Financial Officer | |||||||||||||
3
Investor Presentation Q2 2023
Disclaimer This information contained in this presentation is confidential information regarding Movella Holdings Inc (“Movella” or the “Company” ). Such information is being provided on a strictly confidential basis and may not be published, reproduced , copied or disclosed to any other party without the prior written approval of Movella. The information contained herein does not purport to be all-inclusive and this presentation is made solely for information al purposes and delivered to assist interested parties in making their own evaluation with respect to investing in Movella, and no representation or warranty, express or implied, is made by Movella or any of its representatives as to the information contained in these materials or disclosed during any related presentation or discussions. By accepting this presentation, each recipient acknowledges that it will be solely responsible for making its own investigations, including all costs and expenses incurred in connection with such investigations or its investment , if any, and forming its own view as to the condition and prospects of such investment, and the accuracy and completeness of the statements contained herein. This presentation has been provided solely for information purposes and does not constitute investment , legal, tax or other advice and nor is it to be relied upon in making an investment decision. This presentation should not be considered a recommendation by Movella or its affiliates, advisors or representatives to invest in Movella, and recipients interested in investing are recommended to seek their own independent financial, legal and other advice from persons authorized and specializing, as necessary, in investments of the kind in question and should rely solely on their own judgment, review, and analysis in evaluating the investment. Recipients should be aware that any investment activity exposes them to risk of losing some or all of their investment. The information contained in this presentation is provided only as of the date on which this presentation is made and is subject to change. Movella is not under any obligation to update or otherwise revise the information after the date of presentation. Neither the Company or its affiliates, advisors or representatives shall have any liability whatsoever for any loss arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. Cautionary Note Regarding Forward-Looking Statements This presentation contains statements which describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate,” “should,” “could,” “potential,” “projection,” “forecast,” “plan,” “trend,” “assumption,” “opportunity,” or similar terminology. Statements other than historical facts, including, but not limited to, those concerning (i) the Francisco Partners financing, (ii) market conditions, (iii) the revenues , earnings , performance, strategies, prospects, anticipated product development timing, market opportunities, and other aspects of the businesses of the Company or (iv) trends, consumer or customer preferences or other similar concepts with respect to the Company, are based upon management’s current expectations, assumptions and estimates, and are not guarantees of future results or the timing thereof and should not be relied upon as such. Actual results may differ materially from those contemplated in these statements due to a variety of risks and uncertainties related to the business of Movella, including, but not limited to, (1) changes in domestic and foreign business, market, financial, political, and legal conditions, (2) risks relating to the uncertainty of the projected financial information of the Company, (3) the effects of competition on the Company's business, and (4) other risks discussed in Movella’s Annual Report on Form 10-K under the heading "Risk Factors" and other documents that Movella has filed or will file with the Securities and Exchange Commission. The Company does not commit to update or revise the forward- looking statements set forth herein, whether as a result of new information, future events or otherwise, except as may be required by law. Performance, Statistics and Use of Non-GAAP Financial Measures Past performance is not indicative of future results. This presentation includes certain management estimates or predictions that are not intended to predict the Company's future results, including expected future revenue and revenue growth, expected gross profit margins, expected operating expenses, expected EBITDA, EBITDA Profitability and EBITDA Margin. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any projections, modeling or back-testing or any other information contained herein. Unless otherwise specified herein, performance figures included herein are presented on a forward-looking and do not reflect any events subsequent to the date hereof. These estimates have been developed based on a variety of estimates and assumptions about future events that rely significantly on management's judgment and that, while presented with numerical specificity and considered reasonable by management, are inherently subject to significant business, economic, competitive, regulatory and other uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the Company's or any other person's control, and on estimates and assumptions with respect to future business decisions that are subject to change. The Company's independent auditors have not audited, reviewed, compiled or performed any procedures with respect to any projections for purpose of their inclusion in this presentation, and accordingly, has not expressed an opinion or provided any other form of assurance with respect thereto for the purpose of this presentation. The delivery of this presentation shall not under any circumstances, create any implication that the presentation is correct in all respects, including as of any time subsequent to the date hereof, and the Company does not undertake any obligation to update such information at any time after such date. Certain information in this presentation may be based upon information from third-party sources which we consider reliable, but the Company does not represent that such information is accurate, complete or sufficient for any purpose and it should not be relied upon as such. Some of the data contained herein is derived from information provided by various third -party sources and is included herein for illustrative purposes only. This presentation includes certain financial measures of Movella not presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), including, but not limited to, gross profit, operating expenses, operating income, EBITDA, EBITDA Margin and EBITDA Profitability in each case presented on a non-GAAP basis. These non-GAAP measures of financial performance may exclude items that are significant in understanding and assessing the Company's financial results. Therefore, these measures should not be considered in isolation or as an alternative to revenue, gross profit or net income or other measures of profitability, liquidity or performance under GAAP. You should be aware that the Company's presentation of these measures may not be comparable to similarly-titled measures used by other companies. The Company believes these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company believes that the usage of those non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in comparing the Company's financial measures with those of similar companies, many of which present similar non -GAAP financial measures to investors. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income items are excluded or included in determining these non -GAAP financial measures. Trademarks This presentation contains trademarks and tradenames of Movella and of other parties. Third-party logos included herein may represent past customers, present customers or may be provided simply for illustrative purposes only. Inclusion of such logos does not necessarily imply affiliation with or endorsement by such firms or businesses. There is no guarantee that the Company will work, or continue to work, with any of the firms or businesses whose logos are included herein in the future. Distribution, No Offer or Solicitation The distribution of this presentation may also be restricted by law, and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. You acknowledge that you are (a) aware that the United States securities laws prohibit any person who has material, non-public information concerning a company from purchasing or selling securities of such company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities, and (b) familiar with the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the "Exchange Act"), and that you will neither use, nor cause any third party to use this presentation or any information contained herein in contravention of the Exchange Act, including, without limitation, Rule 10b-5 thereunder. This presentation is being distributed to selected recipients only and is not intended for distribution to, or use by any person or entity in, any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Neither this presentation nor any part or copy of it may be taken or transmitted into the United States or published, released, disclosed or distributed, directly or indirectly, in the United States, except to a limited number of qualified institutional buyers ("QIBs"), as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), or institutional "accredited investors" ("Institutional Accredited Investors") within the meaning of Regulation D under the Securities Act.
Introduction
Movella Digitizes Movement 4 Our full-stack platform (sensors, software, data analytics, and AI) enable a wide range of existing and emerging high-growth markets by generating insights from the data. Movella is a global leader in digitizing movement of the human body and of automatons that mimic human movement. Customer benefits include accurate avatar and automaton movements, immersive movies and games, improved athletic performance, and unique health insights.
Attractive financial profile with growth acceleration, high gross margins and operating leverage Experienced leadership team with track record of scaling global businesses organically and inorganically Proprietary technology protected by rich patent portfolio and decades of trade secrets & know-how Critical, scalable enabling technology for multiple high-growth emerging end markets and applications A global leader in digitization of movement with highly differentiated and integrated full-stack solutions Investment Highlights 8 Capital-efficient financial model and near-term path to profitability(1) (breakeven expected by Q3CY23) Profitability is on an Adjusted EBITDA basis. Adjusted EBITDA is a non-GAAP financial measure that represents Movella’s net loss adjusted to exclude (1) deemed dividends from the accretion of Series D- 1 preferred stock (2) stock-based compensation expense (3) amortization of acquired intangibles (4) loss on debt extinguishment (5) change in fair value of warrant liabilities (6) debt issuance costs (7) revaluation of debt, net (8) impairment of intangible assets (9) interest expense (10) interest income (11) income tax expense (benefit) (12) depreciation and amortization (13) other expenses (income) and (14) non-recurring transaction expenses.
The Explosive Potential of Movement Digitization 9 Critical for Next-Gen Entertainment, Gaming, and Live Streaming Applications Mass-Market Potential for New Metaverse Social Media Applications Enable New Frontier of Monetizable “Motion IP” for Content Creators Actionable Movement Insights for Digital Health & Sports Applications
Visionary and Experienced Leadership with Compelling Partnership with Leading Technology Investors 10
Company Overview
Movella at a Glance 12 Key Business StatsKey Financial Stats 64% Q12023 Non-GAAP Gross Margin $9.2M Q12023 Revenue Q3CY23 Adjusted EBITDA Breakeven Target CY2022E Revenue Growth 2,000+ Customers – no greater than 5% of revenue 226 Employees Globally 176 Patents Issued and Pending 125+ Channel Partners $62.1M Cash and Equivalents Movella has a diverse customer base, established leadership presence and path to profitability in its current markets 34% 30% 36% EMEA Americas APAC Q1 2023 Revenue by Region Q1 2023 Revenue by End Market 41% 33% 26% Entertainment Health & Sports Automation & Mobility
Enabler of New Applications in Massive “Megatrend” Markets 13 Digitization of Movement $29B(2) 2022E Special Effects $21B(5) 2022E Sports Technology $11B(6) 2022E Warehouse Robotics $217B(3) 2022E Video Games $88B(7) 2025E Autonomous Robots $20B(4) 2025E Worker Health $457B(1) 2025E Next-Gen Gaming $480B(10) 2025E Digital Health $50B(8) 2022E Work-Related Ergonomics $33B(9) 2022E Drones $856B(1) 2025E Metaverse Note: Market size estimates provided utilize information from the sources listed below, and in some cases, are calculated based on the implied cumulative average growth rates expected to occur in the target years 1) Bloomberg Intelligence, Metaverse may be $800B market, next tech platform (Comprised of Social Media Ads, Gaming, AR & VR Hardware, Live Entertainment, Gaming Software, and Service Ads) 2) Vantage Market Research, Global VFX Market 3) Mordor Intelligence, Gaming Market – Growth, Trends, COVID-19 Impact, and Forecasts 4) MarketsandMarkets, Workplace Safety Market by Component 5) MarketsandMarkets, Sports Technology Market with COVID-19 Impact by Technology 6) Mordor Intelligence, Warehouse Robotics Market – Growth, Trends, COVID-19 Impact, and Forecasts 7) Research and Markets, Autonomous Mobile Robots Market Research Report 8) CDC, Work-Related Musculoskeletal Disorders & Ergonomics 9) Grand View Research, Drone Market 10) ReportLinker, Digital Health Global Market Report 2022
Movella Offers a Full-Stack Solution Suite 14 Sensor Fusion Proprietary algorithm determines orientation, position, and movement with sensors • consumers experience mixed reality Motion Capture Patented system and software with centimeter-level motion capture accuracy Visualization Software Desktop and mobile tools, graphics, and animation provide data visualization AI Cloud Analytics Motion Cloud analytics provide holistic human body and kinematics insights
Overview of Current End Markets 15 Representative Customers Select Use Cases Entertainment 41% of Q1 2023 Revenue Health & Sports 33% of Q1 2023 Revenue Representative Customers Select Use Cases Automation & Mobility 26% of Q1 2023 Revenue Representative Customers Select Use Cases Note: CY2021A revenue by end market and other statistics as of 1/29/23
Customer Case Study: Electronic Arts Leading game developer with renowned and award-winning titles such as FIFA, F1, and Battlefield • High-quality production-ready: recorded data goes directly in the pipeline with minimal data clean up • Ease-of-use: light, portable solution that can be quickly set up, calibrated, and used stat • Flexibility: easy to scale, outdoor and on-location recording, no studio required, recording anywhere, anytime Movella currently supports 10+ EA studios globally. EA originally chose to work with Movella in 2010 for its unmatched inertial motion capture solutions, which were utilized to develop the award-winning FIFA video game franchise. In 2021, Movella captured high-quality motion data for 22 players simultaneously as they played a real match on a regulation soccer field. Movella provides solutions to EA to facilitate motion-based game development by capturing and digitizing actors’ movements for 3D character animation. Titles that Movella has directly provided support for include FIFA, F1, APEX Legends, Star Wars, Battlefield, and Dirt. Currently, Movella is working with EA to expand the FIFA use case of full team motion capture to other sports. 16 Overview Why Movella? Background of the FIFA Relationship
Emerging Markets Represent Massive Upside to Already Large Addressable Market 17 Cloud / Data Analytics Emerging Markets Sensors & Software ($ in billions) Large and Growing Total Addressable Market Source: Cloud / Data Analytics and New Markets market sizes based on management estimates; Sensors & Software market size based on estimates from Yole Development Emerging Markets includes Metaverse, Vtubers, and B2C Health Applications & Services $3.6 $4.2 $4.8 $10.3 $12.3 $14.8 $31.8 $43.9 $76.2 $45.8 $60.5 $95.8 2021A 2023E 2025E Chart Title
OBSKUR Early Access Oversubscribed: Summer 2023 Launch Capital purposefully utilized to maximize operational growth Events and characters for viewer engagement Interactions Marketplace Virtual platform where creators can purchase digital assets Live-Streaming Software Platform Real-Time Avatar Movement Digital Avatars & Live Streaming Monetization • Movella’s new real-time multimedia complete solution for live streaming influencers • Real-time avatar movement enabled by Movella’s new Xsens mocap solution for OBSKUR • Opportunity for live streamers and vTubers to generate increased revenue OBSKUR Enabling Live Streamers and vTubers to interact with their audiences, monitor engagement, and generate revenue 18
Highly advanced proprietary sensor and sensor fusion technology 19 Strong IP Portfolio and Know-how Provide Competitive Moat Core Technology Areas Covered by IP and Know-how Rich Sensor Heritage 10+ Years of Technology Development In-House Know-how and IP 161 Issued, 15 Pending Patents Magnetic Immunity
Full-Stack Movement Digitization Leadership 20 Optical Motion Capture Competitors Inertial Motion Capture Competitors Inertial Sensor Module Competitors Full-Stack Inertial Motion Capture AI / Data Science Cloud / Analytics Visualization MoCap Sensor Fusion Sensors Sensor IP None Leader Note: Based on Movella management assessment, June 2023
Growth Strategy Driven by Multiple Growth Vectors 21 Growth of Established Products Ramp of Newer Products New Markets(1) Channel / International Expansion Selectively pursue acquisitions across all growth vectors 1) New Markets growth vector is not accounted for in revenue projections
Financial Summary
Financial Highlights 25-30% Long-Term EBITDA Margin Range Attractive, expected long-term EBITDA margins achieved through high growth, high gross margins, and increasing operating leverage High expected gross margins driven by increasing SaaS software and high sensor margins protected by strong IP and know-how 64% Q1 2023 Gross Margin Strong cash position following NASDAQ listing in February 2023$62.1M Q1 2023 Cash and Equivalents 23 Q3CY23 Expected Adjusted EBITDA Breakeven(1) Adjusted EBITDA breakeven expected by Q3CY23 with modest capital requirements Upside Opportunities Incremental step function upside opportunities from emerging Metaverse, next-gen gaming, streaming, digital health, and other high-growth applications Note: The financial highlights reflect the Company's estimates solely as of 4/10/23. As these are estimates only, they are subject to assumptions and risks which could cause this information to change and, accordingly, you should not place undue reliance on such information. The Company does not intend, and undertakes no obligation, to update any such information 1) See adjusted EBITDA definition on slide titled Investment Highlights
Business Model Summary 241) Sales into Automation & Mobility applications are only comprised of sensor systems Sales Channels (65% Q1 2023) Land-and-expand strategy with existing customers Direct Sales: (35% Q1 2023) 100% channel partner growth in CY2021A Indirect Sales: • Movella’s products are sold as integrated sensor / software solutions(1) • Full-stack non-GAAP gross margins 64%+ including sensors and software • Sensor revenue recognized upfront • Attractive and sustainable sensor gross margins driven by proprietary sensor technology and know-how • Transitioning from one-time license to annual subscription model Integrated Full-Stack Solutions
Attractive Long-Term Financial Model (non-GAAP) 25 2023 Q1A Long-Term Model Gross Margin 64% 75% OpEx % 91% 40-45% Adj EBITDA Margin (27%) 25-30% Key Growth Drivers Key Profitability Drivers • Growth of Established Products • Channel / International Expansion • Ramp of Newer Products • New Markets (vTuber, Metaverse, Digital Health) • Scaling with revenue growth at high gross margins • Capital-efficient, capex light financial model • Breakeven(1) expected starting Q3CY23 Note: Projected figures reflect the Company's non-GAAP estimates solely. As these are estimates only, they are subject to assumptions and risks which could cause this information to change and, accordingly, you should not place undue reliance on such information. The Company does not intend, and undertakes no obligation, to update any such information 1) See adjusted EBITDA definition on slide titled Investment Highlights
Attractive financial profile with growth acceleration, high gross margins and operating leverage Experienced leadership team with track record of scaling global businesses organically and inorganically Proprietary technology protected by rich patent portfolio and decades of trade secrets & know-how Critical, scalable enabling technology for multiple high-growth emerging end markets and applications A global leader in digitization of movement with highly differentiated and integrated full-stack solutions Investment Highlights 26 Capital-efficient financial model and near-term path to profitability(1) (breakeven expected by Q3CY23) Profitability is on an Adjusted EBITDA basis. Adjusted EBITDA is a non-GAAP financial measure that represents Movella’s net loss adjusted to exclude (1) deemed dividends from the accretion of Series D- 1 preferred stock (2) stock-based compensation expense (3) amortization of acquired intangibles (4) loss on debt extinguishment (5) change in fair value of warrant liabilities (6) debt issuance costs (7) revaluation of debt, net (8) impairment of intangible assets (9) interest expense (10) interest income (11) income tax expense (benefit) (12) depreciation and amortization (13) other expenses (income) and (14) non-recurring transaction expenses.
Thank You