Q1 2020 Earnings Call
Greetings and welcome to the summit wireless technologies first quarter Twentytwenty update call.
At this time, all participants had in listen only mode.
A question answer session will follow the formal presentation.
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I would now like to turn the conference over to your host Ms. Kirsten Chapman.
H E Investor Relations. Please go ahead.
Thank you Claudia good afternoon, everyone and I'd like to pardon me. Good morning, everyone would like to welcome you to that summit wireless technologies first quarter 2020 update call with US today are somewhat what wireless T O President Brett lawyer fees, So George Olivia.
Well, it's Tony owes trim, the president of twice the wireless Speaker in audio Association before I turn the call. It's Brad I'd like to remind everyone not the safe Harbor statement referenced in the FCC filings.
Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward looking statements, including statements made during the course of today's call statements contained.
Herein are not based on current or historical facts are forward looking in nature and constitute forward looking statements within the meeting at the section 27, Ada Securities Act Nike 33, and the section 21, either Securities Exchange Act like a dirty for such forward looking statements reflect the company's expectations about future operating results performance it opportunities.
Forward looking statements are based on information currently available to the company are subject to a number of risks and uncertainties and other factors, including current macroeconomic uncertainties associated with it 'cause it 19 pandemic and others that could cause a couple <unk> actual results.
Performance prospects and opportunities to differ materially from those expressed or implied by the fourth looking statements.
For a more detailed discussion of some of the ongoing risks and uncertainties at the company's business I'll refer you to the company's various SEC filings now it's my pleasure to turn the call over to submit C. O Prepped Moyer. Please go ahead.
Thank you Kirsten and welcome everybody to the summit wireless technology call.
Just a worry and everybody I know we have some.
New investors or potential investors to the story. So I'll go through for quick slides to.
Oh catch them up.
And then we're going to talk about some pretty exciting activity going on with the watch the team.
How we're positioning wise to sort of blood products for the fall selling season.
And I'll do a brief overview on co bid and George I'll do finances.
If you think about summit there is a we were in the business developing wireless I P. We've implemented that into a couple custom chips those get out into onto a wireless module and we sell those the speaker companies or.
Avi receiver companies or dongles, but if a products been why so certified.
That means somebody has purchased.
Module from summit.
We've made nine or 10 bucks on that and build it into that product if its weiser ready that means they have provided user interface. So that it can recognize why so certified products and make the consumer hearing enhance the consumer experience.
We are exclusively support the wise so.
Oh interoperability standard is run by Tony Oesterle, There is more than 60 brands are involved in that is growing quite.
Quite a bit I think.
My time, we'd get to September 1st you will see a steady stream of brands being added right. So that number 16, she will be reported out in Q2 substantially higher.
I would that is the company wireless multichannel high resolution hyper foremost highly reliable.
Well to install wireless technology.
For members that are in Weiser right and again why says role as the standards organization is to make sure that consumer ultimately can see your weisel logo on a TV box on a P. C. On the Navy receiver and know that will connect to anyway. So.
Certified speakers right.
That's something that's the mission much like.
Today, you have HD or my cables and most consumers know this Ht am I gave it goes into that space do you mind cable input and it connects the TV with anything that needs to run audio video signals through it.
So we weren't why should it be that wireless signal.
For high resolution multi channel.
There is a broad range of Oh brands.
But if you're new to store. These are the primary ones, we talked a lot about these only because they're active with.
Designs or project your valuations or shipping.
And so you'll see these are the ones that you'll hear most about this year.
[noise] no.
Just eight weeks ago, we had our yearend call.
I don't want to go through all those again, but if you're new to the story.
If you heard that call Oh, we have expanded DAK TV line. So we picked up a third brand. So for this fall Christmas season, we expect to seek to rebrand.
That are working with summit and selling for Christmas.
We have a broad list the transmitting devices.
Particularly most excited about the Weiss HD your my hub and told me all she wants to talk about that today.
And there's also a very broad rollout of Swyft a certified speakers a good number them have not been named yet and as they pass certification.
They will be named.
I am getting emails from investors that are starting to find those names and find them being marketed as why so.
But our policy is not to announce.
Products until they have completed membership and until they have completed certification.
So if you see brands out there I know well at least two there maybe as many as for that our marketing way. So that they are still in the membership certification process. So that's why you're not who's also announced them.
Uh huh.
So coated certainly the big topic for most companies.
Universally retail had a huge drop would think I saw yesterday, a 15% drop.
That was more severe.
If you take out the L. survival stores, so grocery stores target and Walmart.
And if you take out the home depot blows type stores, where people sitting at home have nothing to do but improved our house.
No.
What does that mean for consumer electronics in general or more than twice a processor applied products.
There's a survey out in variety magazine, which is a big media.
Uh huh.
They surveyed a thousand people 70% of those people.
Said they are most likely watch a first one movie from the couch.
Now because of cobot, so we believe.
That there's a good opportunities. This fall is people finish their home improvement to the physical structure, having just spent 812 10 weeks locked down under house, they will be evaluating during the holiday season, how much entertainment they want to have at home and how to spend that money.
But certainly the surveys are coming out as recently as last week or indicating that process is starting to happen.
We are fortunate and we're thankful for the government, we did receive $846000 the P.P.B. money.
In line with that the wage concessions that we talked about.
Last call had been restructured so if you're under 100000.
The P. P. P. P. P money will bring you back to your original base, if you're part of the core team senior management or or myself. Your wage concession will be cut in half and will run through September thirtyth currently.
From an impact on the supply chain.
We saw a few orders moved from.
In March into April.
And we had indicated that we've seen two or three week slips.
Now what we we'll see is as we ramped back up with production in Q3 will there be any downstream.
Supply issues, we don't see any currently but certainly the factories are back to work the engineering teams or have been designing for months now in China, New product launches, we are seeing peos come in for Q3 around those new product launches. So we're still anticipating.
Q3, as Oh really good corn for us.
Basically if you're in the consumer electronic business and you're shipping Tvs or speakers.
Ken Airfreight dose. So you have to decide latest ended June you have to have your production running in Q3 to support your Christmas forecast.
Right.
No I'm Gonna, we've talked about what's our Tam what's our market size you know, there's a big opportunity long term around all the T.V.'s, but this year, we're highly focused on the opportunity around converting soundbar sales.
Two.
Why so certified products, it's the premium guys a mid tier guys. The entry level price points, we think there's a differentiation.
Oh so.
We we see.
Converting 5% of the Soundbar market into why so certified home theater type products as an opportunity to grow our revenue $200 million.
There's a gun to be about 35 million Soundbar sold worldwide. This year.
And just the U.S. that should be 10 to 12 million sound bars and home theater in the box type solutions.
For this year alone. So this is this is our focus get our leg up get the revenue going Tony is going to walk us through how weiss's positioning Weiss a certified products around the sound bar, where they fit in and do some competitive analysis analysis for you.
As I don't like to turned over to call the Tony.
Thanks, Brett Thanks, everyone.
So what brought set really addressing.
The the sound bar consumer for a couple of really good reasons.
What has happened with Pvs has been great for our industry, they've gotten bigger and bigger they've gotten thinner and thinner, but the ability for them to produce any any decent found has has diminished considerably I had the same time. They are now the centerpiece of most home theaters.
With respect to how we now aggregate content and accessing control it [noise].
The issue now is that these big screens have small town in sound bars have have.
Risen in popularity so much of an over the last several years because they are better than a TV sound and they are extremely easy to install.
So we want to leverage those two customer needs a as we move forward with with Weiss and if we were right now looking at is these big Tvs with very small soundbars, sometimes not even as why does the TV itself.
So if we move we move on here.
We're looking at what we call the wallet sound is what we're providing so we're taking that narrow soundstage provided by the sound bar and work, we're widening get considerably to create I've got a much more immersive realistic cinema like audio experience. So that's really what people want to do as Bret mentioned, 70% of people want to watch first rent movies.
Their home the biggest difference right now is that audio cinema like experience that we can provide oh, we make it easy for people to set up that great soundstage separating left center and right because we're not putting them on one you know small black plastic tubes, we're actually providing the opportunity to spread them out and create a wall.
Sound with just as much ease of install and the same price point as some of those maybe talk to your sound bars.
Additionally, what we can do is allow the consumer to add speakers behind them and again, if we go back that professional cinema.
We know that speakers are just in front of us, but herbicide lessons and <unk> and behind US really you know in developing and found in creating a great soundstage, we make that easy so not just separating left center and right and making a wall of sound that creating a room of sound I buy surrounding listener with you know.
Five speakers after seven speakers plus the sub woofer for up to eight channels.
And if we look at kind of the progression.
Of what's possible now for consumer you started at the very basic with just the TD sound. Obviously, you know sound our market is showing us that people want to upgrade that and sound bar is marginally better still doesn't give you the wet doesn't give you the depth.
It doesn't really give you amazing frequency response and or volume. So sometimes you out of sub woofer that increases frequency response, but still as far as output.
With and the entire soundstage still not quite where we want to be more comparing ourselves to a pro cinemark you can speak some of those around affects a you know there there are simulated Dolby digital and Atmos ER products out there and they do a slightly better job. A then a sound bar with a sub woofer they do improve the experience, but still what we're really try.
And to do there's isn't the full green system at the top.
Create a truly immersive audio experience and we're trying to do it and we're allowing our consumers that are our partners to do it at the same price points, a sound bars and with the same leveling of installation and quite frankly, if your mounting that somewhere on a wall, we could actually be easier than a sound bar installation, because you're actually just setting the speaker in front of the TV.
He out left outright behind you in the sub woofer plugging them all in and we want that set up to take less than 15 minutes.
Now if we look at traditionally what that.
Cost an opportunity looked like no previously before why so you know you were looking out the attachment of audio to whatever that annual TV volume was right. How many teams are being sold that's how many systems you can sell but the complicated connectivity or dealing with the navy are a wire.
During the speakers up if you wanted to do it yourself and take a weekend you know you could be one of those bread souls or you could actually hire somebody do it in the cost of that you know is north of Grand 1500, Bucks or more and then on top of that you'd have to go procure all media.
Then we introduced Weiss of certified and it was primarily a component of a higher end system or at a higher NTD or the price points for the the component that transmitted the audio which was typically a weiser hub or likes it sound bar or what you know the price points to those were 300 $800. So again tying that to the the more.
Elite TV is probably as well so looking at probably about a three at about a 30 million TV a connect opportunity.
Then we came out with weiser ready.
Which was a far simpler way to connect a single U.S. be connector inside of the TV any weiser ready TV lowered the price point of entry so that transmitter in the 199 to 225 range, but we were just dealing with weiser ready TB and although that was you know 15 to 20 million Tvs.
Still wasn't it.
A huge number of TV. So we can connect to.
Now what Brett was talking about with the HD am I connected Weiss of transmitter.
Number one we maintain that low price point and it could even get down to 99 to $149 to two connects to any TV with HD am I.
But now we're not relying on them to just be weiser ready.
So all of the Weiss of components out reside in the transmitter not just the TV. So now we're talking about any TV that has HD am I in an audio return channel, which just this year will be somewhere estimated 200 220 million TV is on the global basis, and we're not just talking about new T. These now.
Because those eight that H. do you mind. They are seeing standards had been around four years. So we can actually go back to and attached to legacy TV that are already installed in People's homes. So we don't have to just rely on new TV purchases and those people being our consumers. So now we have lower price point.
And how far greater feel that P.D.. So we can connect too and it's still just as easy as it ever was with with a power plug in it and an HD my connection.
[noise] the product [noise] is called the Weiss. It sounds then its the wireless audio transmitter that's connected via HTM I trends are decodes after Dolby Atmos and it is weiss of branded so now we are conducting a wise to device getting our brand out there to approximately 800 million smart Tvs.
That are installed and coming up this year.
And we are beer, allowing people to connect those TV used to any weiser certified speakers. So any of our speaker brands or can leverage this product to move to move their products and that same time, well busking into distribution without having to take on the process of creating their own transmitter, which quite frankly, a lot of speaker guys don't want that.
You do.
We are lowering the price and the customer again that 99 to $149. So instead of an extensive HDR Ah. This is now your new your new abiotic next year to year, TV, which is where all the contracts coming in and allows you know up to eight speakers to surround you in immersive audio available for retailing Q3, and we will distribute this so we will we.
Distribute it and we will rely on our speaker members to distribute it along with their speaker systems. So that we know that we're aligned at retail we know that we're thinking about how we're merchandise at retail were trained everybody's going to use the weiser language the wife the training.
So the story is consistent at all touch points for the consumer and we will take care of the customer service. So we will get a direct feedback loop from lead users taking this product into their home and using it will know who's using it where they're using how they're using it what their connecting it to I and we get all that direct feedback. So that we can number one processes internally make ourselves better.
And also pass that on it you are speaker brands and other brands are members that once you create something similar in the future. We're in association and its you know where it's a it's a it's a group effort and we want to share all this intelligent the will be gathering with our membership.
Well, if you look at where this will set in a competitive landscape right. We're looking at that mid to high end Soundbar market summer market, that's been growing and growing we are not just hovering above it as a step up in price point, we're right in the middle of this shows a lot of leading audio systems in that 799 to 800 dollar price point.
That are billed as multichannel home theater type systems, and if you look at where the the four weiser systems plot in this group we're right in the middle I ranging from 899 to 14 95, or we are not the highest end product from a price point perspective, but if you look at the stats we are.
The ones that say five dot one we are the ones that say rear speakers are included we are the ones that say discrete front speakers for that nice wide stage and where the one that's associated with THX. So we have PHXC has been working with our membership.
To create tune by DHX and THX certified solutions, that's very difficult to do with Soundbar, but because we are discrete speakers and we're creating a nice like soundstage with great frequency response and hit those those THX criteria are either either when there were tuned to buy them, we get better or when were certified with them. It's about.
Badge of honor for our Prime members. So we are now playing in the same price points with the same ease of connectivity and far superior performance is and this is where we can really get some velocity going.
Some of the market research that we've been doing we've been really digging into now understanding who our customer is and what components of the Weiss experience do they gravitate toward because we can talk about a lot of different things. We can talk about a number of channels. We can talk about the cinema like experience, we can talk about quality of audio.
Ah we can talk about simple connectivity, we can talk about the fact that you can hear the dialogue better because there's a discrete center channel I'm talking a lot of them things and we can talk about it to a lot of different people because everybody has been pretty much everybody has a smart TV and now with content coming in with Hulu, and and you know Amazon and Netflix.
Everybody has you know that content coming in there there used to absorbing it so our market potentially is huge but we want to make sure. We're hitting the key targets that are really most interested in what we're doing and building a good home see on theater system. So we're looking at consumer benefits in creating messages around those targeting to those profiles emerge.
I've been special sound affordability simplicity is set up in high fidelity are coming to the top as the key lead attributes that people are most gravitating towards we're driving industry awareness through wed and podcast and interviews. Most recently we've been on power sounds we've been on dealer scope and we will continue.
To do this both with lead users and reviews and with and with podcast. Another interview opportunities and then we're testing a direct to consumer ads. We've been testing those in Q2, a and you're looking at those responses and cycling through them and making sure that our message is getting to the right people and how they're responding and what those best.
Opportunities are and we're seeing that opt for around $2 and in many cases less than a dollar we can generate a bind alcoholic are going to a home page for a product a and potentially driving another by now click for a purchase so when you're talking about $699 to $999.
Systems.
That dollar to $2 to get somebody to pay attention is is a pretty a pretty low marketing budget. So we're really excited with that we think we can continue to refine that to the point, where we get the HD My transmitter out we really know who we're talking to what message, we're sending them and were able to really get them aware of the product and get some brake systems and people's homes.
We're also going to share all that information.
With our membership on because while we are bringing this product lysa, we want as many of our brands to sell this product as possible and many of them have shown interest in.
Learning from this experience and then building their own product later, because maybe they want a slightly different feature set or a different industrial design or whatever we will help them by giving them. All the feedback that we learn from these tasks ads and this process to bring this product to market to help them down the road.
Outside of all of that we continue to work with other technology leaders in our space in several different joint efforts are good examples and from from the past last couple of years few years had been X. box and THX, both of which have joined why so.
Xbox wanting to make sure that their exports one one Essen onex was working with a weiss of transmitter that transmitters the exome link or the reason we spent time with that that axiom helped to bring that product to market with X. box in mind was because you can't just connect anything to an x. box you have to be X. box certified.
And so the accident because actually the only product in the market. That's why is the certified and X. box certified.
And now all of those X. box units, which not only are gaming systems, but in many cases or the center if somebody's home entertainment system can easily connect to the link and then any why certified speakers THX also advice and member has been working with as I mentioned earlier some of our speaker members to create either tune by THX or THX sorta.
Thanks, They love what we're doing a they understand that you know convenience and a wireless approach to two home theater is isn't a big part of the future of our category and they are they are technology is is at a level that can be used in a THX certified system, which.
It's good for them because more people can other systems and good for us because it shows the quality of audio that were actually dealing with.
The latest and very exciting for US is a company out of Barcelona, Spain, Cold brew backs and broom acts.
Is the the whole room or the room virtual reality company and these guys. I mean this is this kind of world's fair type stuff, they're creating multi person room virtual reality experiences and they realize what we were doing from an immersive audio perspective, they wanted to take their immersive.
Video and blend it with immersive audio so really create these amazing experiences for people and so the opportunities our homes. So tells businesses retail a you know what you could do with gaming what you can do with different you know a different environments and atmospheres and create no both visual and Sonic.
Immersive experiences its it's pretty amazing stuff they want to work with several of our speaker brands or two to create these experiences in various locations and those are just type the types of technology entities. They gravitate towards what we're doing we're really excited worked with guys like that so we continue to seek out those opportunities as well to get our.
Brand out there and to get the experienced out there and share where we can do with immersive audio.
Are we on mute.
Sorry, I was on mute [laughter] well start over good color, let me [laughter] and thank you.
All right. So we're going to go through an update on where we are with the IP development. We've made a lot of progress from showed preliminary.
2.4 gigahertz solutions at CES that was well received.
From from a market perspective.
This opens up Weiss a technology to your cell phones, you're all your smart TV news I O T devices your tablets your game console and smart speakers.
From a marketing perspective, when you think about the direct.
Pricing that Ah Tony just walked through on the competitive matrix this substantially lowers the cost module.
There is some performance give what is certainly a above the good enough line and we think it will ultimately drop 100 $250 off about 5.1 Weiss's certified system in the marketplace. So if you flip back to Ah Tony Slide when you're doing your analysis, you'll see that that.
Changes price points quite a bit.
On the competitive landscape.
We think we get up to 12 channels. We think there's a very intuitive connects us a button a we demonstrated for set up where the consumer simply touches the front speaker the center speaker or Soundbar hovers configured and you did it go do you see quickly walk around the room touched the button and.
Your set up that's how fast it can be we have filed patents around that set up sequence and we think this is we've made enough progress that starting in Q1, we will have design activity with design partners and you know this is the next step to really what Tony is walking you through to build wisely establish the Lysa brand is the most.
Hi channel solution on the market not the brand of the speaker, but the solution technology solution like HD are by and we moved to the IP version, which allows Ah why some members and certified products to be substantially cost reduced.
Now I'd like to turn.
The call over to Georgia briefly give you some financial updates.
Thanks, Brett.
So revenue in Q1 was in line with historical run rate of over 402 quarter.
Q2, we started the quarter sops as the shelter in places cause retailers be close and we're anticipating that that would be lifted and as retail opens we'll see a orders resume will ramp. So Q3 is the main holiday production corridors. So we're we're.
Expecting a ramp to read to resume there.
In terms of operating expenses, we have been on a belt tightening or.
Mission here since Q4 and cutting expenses on outside services.
We mentioned, we got a payroll and payroll cost and reduce all expenses that we could possibly reduce travel was limited because of the sheltered play so Q2, you'll see the full impact.
Of the cost cutting where we will have.
Reduced spending a billion dollars from Q4 to Q2.
In terms of financing, we raised a quite a lot of money in a very difficult environment. We raised over 9 million from investors and 800 Kaye from the payroll protection plan.
We've been able to clean up the balance sheet, we paid off the bridge loan or $2 million vendors are all caught up and we've got a long term lead items on orders that we prepaid so we're in pretty good position going into the second half for the year.
In launching all these products are have been talking about a we also were able to regain compliance with NASDAQ both on the minimum share price and on the minimum shareholders' equity with the money that we raised and the reverse stock split that we did.
So I'm feeling pretty optimistic with the second half here.
Okay. Thanks George.
So with that we're going to open up the call the questions operator.
Thanks.
Yes at this time, a will be conducting a question answer session. If you would like to ask a question. Please press Star then one on your telephone keypad.
Confirmation Tony will indicate your line isn't the question Q.
You May press Star too if you would like to remove your question from the Q.
For participants using speaker equipment, you may be necessary to pick up your hands said before pressing the star Keith.
One moment please.
For questions.
Our first question is from Ed Woo with Ascendiant capital. Please go ahead.
Yeah. Thank you for taking my question. My question is on you know international roll off versus domestic Oh, well you'd be focusing on all markets. The same time always be focusing mainly on the U.S. domestic market.
So if you.
So depends which part of the business from a sales perspective and design in perspective, we're focusing worldwide.
If you're and there's quite a bit of activity with the premium speaker brands in Europe.
There's there which you know was initially led by Harman. So Harman as a brand has a a stronger brand in Europe and stronger brand in Asia than in the U.S.
But there's you between now and September you'll see a number of brands come out that our European brands.
You've seen a cup already that we have announced so certified this year.
From a a direct marketing or test messaging.
Primarily we're testing to U.S. for response and effectiveness, there's one big ecosystem now how well why some members take the data from our test marketing and use it you know I would expect it gets used across Europe as well.
Oh sounds a great and then my next question as you know it's great to see you got your price points have you know come down pretty.
Pretty much onto the broad.
Market, but how.
Much lower BP going what do you think it's a real sweet spot for your products.
Well so.
I think there are certainly.
On the occurring set of modules there certainly room to continue to chip away at the list price, but when you look at the competitive matrix. We just showed you.
No you're talking about premium sound bars, and mid tier sound bars that are marketing 3.15 0.1.
LG has a 7.1 0.2, soundbar all coming out of a too.
No we are in the sweet spot worth the lower end so.
I think truly the big next step is the design to start in Q1 around our Gen. Two.
Because that knocks you know that's not NAPW and you know 20 cents off a modular 50 cents, that's knocking three four or $5 off the module, depending what price you on.
Right and you multiply that times for six or eight.
Modules in the system that's starts dropping S. P is no hundred $150.
So I I would argue for mid tier premium audio we're in the sweet spot.
You need more brands to help build the wise the ecosystem of platinum and enclave are out there. There's a big presentation. We out tomorrow hopefully that's a third brand and then there's several others that are a little farther away in her decision, making but.
No I I think it's really a brand count right now and then Gen. Two drops your whole another level of pricing.
No I was getting such entry was.
Coming out next year.
Yeah, we showed a first round of modules at CES in the 2.4 Gigawatts Hertz space.
But with a five gigahertz, we can get more channels and get that theater experience. We just talk walked you through so that'll be a we expect to start designs with customers in Q1.
Right and then my last question and now you had obviously you know have a very broad or you know Networkone company in the white system a lot RPV brands are not that you would it still want to law you know bringing into the we saw a substation.
Well.
In the wife Association.
If you're talking about commonly recognized brands in the western hemisphere.
You know.
Sony and Samsung would be the top too.
All right.
If you're talking about Asia, China, there is a half dozen.
Right that are primarily Asian, China based brands.
Okay and your goal is obviously to get them all onboard.
So our goal is to get them all on board in one form or another right. So you can have weiser ready, which is the easy as cheap as simple solution for the consumer.
But as Tony just walk you through the H. do you my dongle.
You know we are not treating that as an exclusive product anyway, so well why so we'll go out and.
Sell it into the retail to make sure. It's there so speaker companies know that they can connect to any of the 800 million smarttv than the market.
There's no problem with any of those TV brands.
Sourcing it from one of two Oems that I've developed these dongle. So one is tone winter and one of the Samsung and branding that themselves.
So when we look at engaging with the TV it can be internal with hardware as you know did.
It can be Weiss are ready with user interface as LG and sharp had done or can be engaged in terms of their own speaker brands that almost all of TV guys have audio brands with the H. do you my hub.
Great. Thank you and good luck.
Thank God.
Once again, if you had a question. Please press Star then one on your telephone.
Our next question is from Daniel cost. So no we stay wins research. Please go ahead.
Thanks, Thanks for taking my questions guys.
Tony It's a question for you about the penetration and the Soundbar market and you know you target 5%.
Have any sense on how long it'll take to get to that level.
Well the stepped step one is going to be you know to get more of these products that are coming out in that and those price ranges into a more distribution.
And couple of the brands are working towards that right now.
So it's tough to gauge I think this fall will be a really good first step because if some of these products are already out and they're working on getting those interest into distribution like they're launching this fall their launch and so they're they're kind of matriculating through various distribution right now and then getting the training out there.
During that process. So we'll know a lot more you know kind of after Q3.
So it's kinda tough to gauge I would hope that you know we would be able to capture a good chunk of that market. You know this year and then hopefully get to that going and you know Brett can chime in but hopefully get to that goal you know sometime maybe mid next year.
Yeah, So, let's just stick to have a better idea in the fall and yeah.
Well, we expect the a with more brands coming into that price point, though you showed in the competitive matrix will get a good chunk of our goal no.
Whether we get 1234 or 5% Nextshares, we're not prepared to forecast.
Got you. Okay. That's helpful. The thank you and then in the past you guys had a similar slide talking about catch rates for surround sound systems on on high end TV is.
I don't remember the exact numbers around that but I think as like you said 25% of.
Hi, Mtvs had external sound et cetera. So I'm just wondering if maybe you could talk about how you've been progressing towards getting I mean, you're not there yet, but getting that penetration rate and just sort of how the market's been accepting it and what the biggest or hurdles are and do you still see.
You see an impediment towards reaching those potentials at some point as Americans change those technologies changed around or is it still something you're targeting.
Well look I think.
So if you go back to those slides.
We have said, there's a 25% to 35% external audio attach rate.
If you think about.
35 million sound bars on 200 million T.V.'s worldwide and you take two thirds of the low end Tvs or half a T.V.'s out.
Are you you know right, there's your attach rate right.
If you think about.
What were what we're doing this is a game now I'm just not technology rollout.
Strictly executing out designs and we talked last call and you know briefly cover to this call. There's a lot of speaker designs out. So I think the two biggest things too.
To solidify market share for weiss's, one the speaker designs and to that HD in my hub that lets any the speaker plug into any of the TV.
Yep, Okay, Tony do you have any sense on what the total.
Advertising budget is by your partners on Weiser related products.
The total budget I I I wouldn't want to guess I know that are they continue to put more money toward these this type of category because a they see the natural expansion of the soundbar customer into this type of products and you know.
If you look at some of the the web site work that our members have done and some of the awareness on retailer sites I know theres a lot of that going on as well as trainings no. The at the way people advertisers kind of shifted and there's a lot of advertising on Facebook and.
Trying to drive people you know it's more direct sales. So I don't have I don't really have a number I just see increased activity.
I mean it Dan.
The data we showed in the last call for Q1 website.
This unique visitors on Weiss Association I mean Q1.
Let me get the yes, Q1, 19 or 1100 unique visitors to Weiss Association.
Q1 2020.
There was almost 40000.
Unique visitors to the Weiss Association and they spent almost two minutes.
On the site.
So that that activity is driven through the.
The money that our brands are put into it. So when you. If you go down to the LG website and you go to the OLED TV section or the nano sell you know they have for home pages that rotate.
And one of them is the weiser ready page.
I don't think that cost them anything but from a exposure perspective is enormous right and that's what you're starting to see show up in in web traffic.
Gotcha, and then I'm looking at Q4.
This year.
And maybe I mean, if you're years you ship in Q3, so but just just in terms of unit volume as a waste the system. So you have any sense of <unk>.
And they're not looking for guidance here, but just sort of that.
The number systems out there.
Are you seeing dramatic year over year road in unit sales assuming.
It doesn't people actually allowed us shops again, you have any sense on what that could look like.
Well look we think that affiliates.
Obviously, we think the value proposition the number brands out there is.
It's going to indicate that.
Covert is the wildcard, but you know traditionally the C.E. build cycle is June to October we think the I think that will be.
We will slide I think there will be.
I would put in place for Q3 that are maybe 80% of what they want and I think the brands will push.
Production for into October as well as November. So I think you know Q3 in Q4 should be good no how high the water level. This is you know to be determined by everybody around cobot right.
But from just a share speaker and count from the share price position of the you know marketed systems like the enclave audio which.
Enclave autos Joseph Fabulous system for either 99, or 14 95, if anybody thinking about it you ought to look for Ah you ought to go online by one it's just a great system, but when you look at that value in the brands of the premium, but it's all coming together for us This fall.
Yeah, well you know I have the enclave system and love it so [laughter] I'm a congress, but one last question Brett just.
Can you sort of.
Looking at a market cap.
$8 million are so.
The value players there is ridiculous how what's the total.
Invested in R&D in developing the technology data I think there just sort of quantify that I'm wondering if any strategic people are coming around talking to you because it seems like.
The bargain so just trying to.
Dan that discount there.
So.
The engineering into this technology is probably about 50 million.
So that's just R&D effort, not counting sales and marketing and et cetera right.
R&D generally is about half our opex.
A from a strategic perspective.
You know we're not.
We're not in the business to discuss.
Anything that's going on <unk>.
Unless you know there's something to definitively mouse, if there's if you're talking about the valuation from a strategic perspective.
No.
Odd to me optimistically.
I would prefer to have those discussions in the fall.
Assuming that were out of this valuation zone.
Oh, My God I, clearly don't think devaluation of reflective of the valuation of the company in anyway.
So you know the challenge of being public in those type of discussions is.
Your valuation isn't always related to the valuation of your IP and and.
And business value.
Oh, there's lots of things that drive stocked up and down right.
Yeah, well that's it for me thanks for taking my students and the team.
No comment on strategic prefer to think about the fall through valuation.
We're seeing yet but.
Okay. Thanks, Thanks for taking my questions guys in the field.
Flexion point.
In may so I'm excited to thank you very much.
You're welcome thanks to.
[noise] there no further questions registered this time I would like to turn the conference back over to Brett Moyer for any closing remarks.
Well I'd like to thank people for a attending this morning.
And listening a under Webcasts over the next couple of days I think there's a lot a really good information here in terms of what we're currently doing this yes. The next phase two establishing wife says that wireless multichannel a standard and the consumers mine at retail and we look.
Forward to giving you an update in a late July early August.
Oh, I feel free to reach out to be up more questions. Thank you.
This concludes today's conference call you may disconnect. Your lines at this time, thank you for participating and have a pleasant day.
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