Q1 2021 Energous Corp Earnings Call
Good day and welcome to the introduced Corporation first quarter 2021 financial results Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions to ask a question you May press star.
Then one on your Touchtone phone and taught draw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mike Bishop of Investor Relations. Please go ahead Sir.
Thank you Chuck and welcome everyone.
Before we begin I would like to remind participants that during today's call. The company will make forward looking statements. These statements whether in prepared remarks or during the Q&A session are subject to inherent risks and uncertainties that are detailed in the company's filings with the securities and Exchange Commission.
Except as otherwise required by federal Securities laws and are just disclaims any obligation or undertaking to publicly release updates or revisions to the forward looking statements contained herein or elsewhere.
To reflect changes and expectations with regards to those events conditions and circumstances.
Also please note that during this call in or just will be discussing non-GAAP financial measures as defined by SEC regulation G.
Patients of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on the company's website.
Now I would like to turn the call over to Brian Sorretto CFO of N or just go ahead Brian.
Hey, Thanks, Mike Hi, Brian Sorretto, Chief Financial Officer, and joining me today on the call is Cesar Johnston, our chief operating officer and narrowed from the hedge Paul our senior Vice President of marketing and business development at the close of market today, We announced our results and highlights for our first quarter of 2021 ended on March 31.
The team would like to give you an update on several aspects of our business beginning with an update on customers and markets along with engineering and regulatory followed by an update on our operating results before opening the call up for Q&A.
On our last quarterly call. We had stated that we were expecting quarterly revenue growth to occur Accordingly, we recognized 145000 versus $90000 in the prior fourth quarter in combination with this modest growth. We also saw an expansion of interest in our technology, including notable potential customers owing to the release of our Wattup power hub developer kit.
In March this technology continues to evolve in terms of power levels and at a distance charging capabilities and we were excited to see the very potential applications that are being considered by our partners.
Previously announced contacted charging based partners, such as New Zone, Gogo and American Equus continue to progress towards general commercial availability, we and our partners continue to navigate the challenges associated with the direct impact of COVID-19 related closures I see parts shortages and working remotely this is leading to some delay.
But we are excited about these upcoming product releases as they further highlight RF is the next generation and next evolution of wireless charging for both at contact and at a distance or over the other charges.
In addition, we continue to work with these customers as they prepare to bring their respective products to market in the coming months.
We're also working with a number of additional partners, who have not been announced that are looking to implement our RF based contact charging technology due to certain advantages over coil based charging in general interest in and true wireless power as an industry continues to grow, especially regarding RF based charging as evident from the recently announced.
Early and early conceptual demonstrations by the likes of Xiaomi, Opel and Motorola mobility. It is clear the freedom to charge at a distance as the next barrier to overcome and we believe that are just with its portfolio of chips system software and regulatory understanding is uniquely positioned to create the ecosystem of next generation wireless power.
Distance case in point, our power hub technologies value proposition is to allow device manufacturers and consumer medical industrial and other markets to enable over the air wireless charging in the most cost effective and practical way something that we believe is not possible with older first generation coil based charging tech.
Apologies backed by our ability to secure early regulatory approvals using proprietary non beam forming technology, we're seeing various distance charging opportunities evolve at a faster pace than our earlier expectations. In addition, the availability of our power hub transmitter reference kit has brought device manufacturers to the table that needs us.
Gulf at a distance charging requirements that can only be currently solve with RF based solutions and we believe that our first partner product enabled with true over the ear wireless power will be launched later this year.
We also continue to make progress with opportunities in Deerfield, we see three trends emerging in distance based charging.
For one new medical devices, especially wearables are being designed in various sizes and shapes with a clear need for no open contact points that you find with Pogo pins difficulty in embedding coils into these devices, along with a desire or requirement to offer charging at a distance has led to companies to RF charging to solve these in.
We are seeing the same trend in consumer Iot applications that we are working with partners on today number two the industrial segment is also quickly evolving thanks to the introduction of faster communication standards and data gathering via Bluetooth with more display sensor and control applications. We believe this will require charging.
Solutions in difficult environments capable of charging at much longer distances, where batteries cannot be easily accessed.
And third active harvesting is growing especially in commercial and industrial settings and is evolving into applications, where a dedicated charger transmitter is needed to ensure that require amounts of energy are reliably available receivers and this cat or category will most likely not have batteries, but what we need to receive enough energy to.
Powered data gathering sensors in areas, such as logistics and manufacturing.
Our strategy involves bringing in ecosystem together, where more of our partners can enable our transmitter technology, providing a complete range of power and distance solutions. Our announcement yesterday of European regulatory approval is just one example of where energy is leading the worldwide effort to expand the reach of wireless power transfer we are seeing an increase from <unk>.
A number of potential partners with industrial medical applications needing functionality that can't be supported by older first generation wireless charging technologies. Our continued evolution evolution of our power hub technology and future introduction of longer range capabilities with meaningful power at distance is expected to continue to expand our prospects in these.
Areas, and we expect could lead to future higher volume commercial opportunities.
To summarize what is becoming evident with our most recent customer engagements is the scale of the opportunity and the prominence of the customers in their respective applications that are pulling us in our technology into emerging opportunities, especially into markets such as medical devices devices logistics and other potentially high volume opportunities where contact based charging.
Is either not an option for us not ideal. We believe this is a testament to the progress we have made in establishing that are just as the leader in next generation wireless charging solutions.
Now I'll turn the call over to sales or our COO, who will bring you up to date on our innovation technology and regulatory progress Cesar.
Thank you and good afternoon, everyone.
And we're just continues to be the industry leader in radio frequency wireless power transmission.
Driven by our work in developing standards, new technologies, and most important accelerating product development operating within assistant or novel approaches while meeting international regulatory rules and I really want to emphasize the ladder integration develop products that meet regulatory safety.
Rules.
Such weird.
Unique company, whose mission and vision.
Develop second generation wireless charging technology supporting charging at contact.
Well its at a distance or over the air functionality.
Our target is to continue our leadership in the deployment of RF wireless power transmission by increase in transmission power levels and transmission distance, while developing a state of the art semiconductors and systems, which increment our unique IP portfolio.
We are the interest continued to make progress on worldwide frequency Harmonisation and but you know they didn't advance their systems and processes on RF wireless power transmission compliance as part of our R&D model.
Good day, we're happy to report as announced in our press release yesterday that our latest efforts have now resulted in the European regulatory approval.
Our water power hub.
These certification is the first of its kind and.
In the U E U and it opens up the promise of RF wireless power transmission at distances beyond one meter and now well beyond 15 feet.
All of this effort eastern unheard for and a half times increment at 15 feet in distance from our previous one meter records and very well beyond that there's no. There's no limitation on the certification.
This achievement was made while maintaining the wattup Howard have conducted power well within its operations limits.
We pushed the transmission distance and we push the power within the regulatory limits.
And are well within safety limits.
Well, we have accomplished a major achievement that many people thought was impossible.
Our efforts on the regulatory front will continue as we develop our technologies for me I reference safety regulations.
Our current worldwide efforts include contributions from the ICU Etsy, BW have and the FCC, where for instance, a new proposed rulemaking under bought 18 is under consideration to allow higher power and distance for wireless power transmission on regulations.
Our efforts are showing a positive impact as multiple countries have now recognize the need for I read for wireless power transmission dedicated rules.
Now on the technology side.
Our patent portfolio now includes 236 patents with three patents allowed in Q1.
Last quarter, we presented the water what are power hub for creating a work.
Space for desktop charging environment after one meter transmission in distance.
We have seen increased interest on what on what our power hub from a number of potential customers as developer kit orders are being delivered.
The one meter Wattup power hub architecture that uses our D. A 4100 day that he and 39 21 and <unk> 39, 13 devices was re targeted for applications on active harvesting with the goal to support Iot receivers with up to 250, Amelia Watson our broadcasts configuration. This.
Means for simultaneous powered transmission do multiple received devices at a distance and with up to 250 million what delivery supported by each receiver.
Webinar presenting the Wattup Howard harvesting technology was held on March 16th.
The year on a demonstration that this technology using our new partner EPS power management device was shown in a video clip at the same webinar.
The power hub transmitter for the Wattup active power harvesting system is the same product that has now been certified in Europe and was also launch on our side of the water power harvest and developer Kid, which can safely operate 15 feet they'd be called Iot This month requirement.
Thus midfield and far field Wattup power hub can now safely operating Europe opening up a new vertical market, which we are now ready to develop and penetrate.
What about active harvesting guarantees I read for power delivery levels in an Iot environment, where critical devices must be changed to provide time sensitive information and deterministic operation.
Active harvesting also opens up a new level of Iot and smart devices that require more power to operate and we're a typical low power passive harvest and architecture was incapable to support.
Our road map to cover more country certifications and to push the transmission power level continues and we will be updated non informing our progress are sticking a needle in a regulatory progress is achieved.
In the first quarter, we have made many advances for the technology and regulatory fronts and we are now introducing this capabilities.
<unk> customers, so that they may begin to add it into their product roadmaps.
I will now turn the call over to Brian.
Thanks Lisa.
I'd like to remind everybody once again that we issued a press release today at close of market announcing our financial results for the first quarter of 2021.
And now I'll go through our customary review of our financials as I mentioned earlier revenue in the first quarter was $145000 compared to $90000 in the prior quarter and 61 $5000 in the same quarter of last year.
As we've discussed we are seeing strong demand for mid range and longer distance charging solutions on the back of our evolving power hub technology and regulatory progress, we anticipate that we will be sharing additional partnerships.
And technology, plus regulatory progress in the coming quarters on.
On the expense side total GAAP spending increased to $8 7 million approximately $1 $1 million higher than the prior fourth quarter, primarily due to stock compensation costs associated with seasonal employee equity refresh program for the first quarter total GAAP spending in the Q1 was essentially flat to the same quarter of last year or half of our total spending is tied to research and.
And our total head count was $55 at the end of Q1.
Net loss for the first quarter on a GAAP basis was approximately $8 5 million or a <unk> 14 cents loss per share on approximately $61 6 million weighted average shares outstanding. This compares to a $7 $5 million net loss in the prior quarter or 15 net loss per share and an $8 $6 million net loss or <unk> 25 per share loss.
In Q1 of last year on $34 8 million weighted average shares outstanding the.
The increase in share count year over year is primarily due to two at the market or ATM financings completed last fiscal year, raising approximately $60 million. Let me now give you a non-GAAP view of our numbers for the first quarter as we believe adjusted or non-GAAP EBITDA provides a useful comparison for investors for a company our stage when used with.
GAAP information.
Excluding $2 2 million of stock compensation and depreciation from our total Q1 GAAP expense of $8 7 million net non-GAAP operating expenses totaled approximately $6 5 million.
<unk> <unk> 5 million higher compared to the $5 9 million total non-GAAP operating expense in the prior quarter at approximately 145000 higher than the same quarter of last year.
Net of revenue adjusted EBITDA or non-GAAP operating loss for Q1 was $6 3 million or 10 cents per share. This is approximately <unk> 5 million higher than the prior quarter and essentially flat for the same quarter of last year.
We saw minor expansion increases across all areas in line with our expectations non-GAAP engineering expenses increased by approximately 167000 from the prior quarter to $3 4 million and was approximately flat to last year non-GAAP SG&A increased over the prior quarter by approximately <unk> 4 million due to additional head count costs and increasing.
Public company costs compared to the same period last year Q1, SG&A cost increased by approximately 160000.
We ended the quarter with approximately $44 8 million in cash and remain debt free to close we expect our GAAP and non-GAAP cash operating expenses for the full year to trend in the current range with quarterly fluctuations tied to chip development and tape out cycles, and we expect to see approximately a 10% increase in total non-GAAP.
Spending.
Over the last over last year excuse me in acuity as communicated previously.
With that I'd like to now turn it back to the operator, and we'll take some questions.
Thank you we will now begin the question the question and answer session.
I'll ask a question you May press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Draw. Your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
And the first question will come from <unk> Desilva with Roth capital. Please go ahead.
Hi, Brian Neurologist day either.
That's on the progress here.
The European approval sees or if you could talk about what maybe opportunities that's going to open up for you that were not available in the past that would be helpful.
Yeah, what we've been able to accomplish at this time.
Is to get our powerhouse certified.
Basically pushing the limits on the power technically we can go up to five and a half what's with our power hub and there is no distance limitation as opposed to in the past, where we were limited to a one meter distance. So now you pretty much can think of multiple diverse markets, where charging is important and distance is a mess.
Half.
Okay any specific applications.
Highlights for the initial.
Some high level applications, and we actually saw a little bit of that in our previous Webinars video is that the use of sensors.
The use of potentially.
Labels electronic labels with our partner Inc.
We can actually deploy a number of such devices in.
Retail areas or also potentially labels for our retails and so on so there's plenty of obligations there and if you wanted to get closer to the transmitter you can also go into potentially some audio and video are specific applications that allow for surveillance and so on so those are some.
The ones.
Yeah. So we didn't buy me out.
I think it would be primarily due to work that goes without a lot of interest to US are number one is industrial and you can see that a lot of.
Sensors and control devices, which require charging from then very difficult location for Baptist Debater placed and then were also looking into retail but retail other.
It's kind of application similarly, very similar to RFID tags application.
It was acquired at a longer distance the disapproval now all we can do that and I think that's.
That's a really great achievement for the market in Europe, especially.
Okay.
Switching topics to the power hub, you've talked about the Dev kit.
That seems to have kind of opened up some pipeline opportunities can you talk about what the Dev kits, specifically has kind of enabled customers to do and how that might accelerate some of the adoption here.
Yeah.
Go ahead, Brian So Eric.
Do you want to take it go ahead.
Yeah, Okay, I think the Dev kit is a very important if you have seen other webinar in may we talked about at what we included in the debt actually it allows you to see what the technology can do and now our customers can think about how they can integrate this technology into their devices, especially on the receivables side.
They can see what the amount of power they can get what kind of flexibility that can get in front of the power of advanced meter and and the imagination can go anywhere with those kind of application and I also think from a technical point of view is that we are using our state of the art semiconductor devices here, which.
Actually only used for one single P. A.
And it actually opens up the opportunity to have one transmitter to multiple receivers, which is not typically the case to have when you have lets say beam forming in the day.
Given the distance.
And when I say multiple receivers simultaneous receivers and that that's unique on what we have.
Right good.
And then maybe last question for Brian or perhaps anyone who wants to take it.
Late in the second half of 'twenty, you talked about having for top tier customers in the pipeline and yet set at the time you'd expect a lot for those customers to be in the first half of 'twenty. One can you update us from those for top tier customers, where we stand and if perhaps Brian that COVID-19 has impacted which it early earlier expected that'd be great. Thanks.
Well there are top tier customers are definitely in the pipeline are seasoned Eric do you want to do you want to take that towards the first half we are seeing acceleration of customer interest. Thanks to the breakthroughs in distance in the regulatory and technology front.
We do expect to see.
What we would consider a top tier customer introduce power at a distance later in 'twenty one at distance earlier than we expected we didn't expect to see the first at distance necessarily until early.
Early 'twenty two in commercial.
Commercial scale.
There are opportunities in the pipeline I think timing is always been our challenge in estimating and when these will will turn into commercial products.
But we are impressed by the you know as we call them notable customers. The scale of the customers that are that are coming to the table and are interested in our in our solutions contact.
And now distance and various for various applications.
Does that answer the Caesar and Eric do you want to add anything to that.
Well I think the power hub and.
Distance has been a great differentiator for us right as the technology and the fact that we can provide that distance for the very viable product I think that's opening a lot more doors for us lot more in the logic customers are interested in and volatile technology in general and they wanted to see how they can implement into their.
Yeah, and as I said earlier I mean, we're pushing this technology. We're the leader we're the ones moving that roadmap. We are opening up that that that that mile that gets us even closer and closer to hydropower.
And so on and we have an advantage here.
Okay I appreciate the color thanks, guys.
Okay.
The next question will come from Jon Hickman with Ladenburg Thalmann. Please go ahead.
Hey, just a couple of.
Chris.
First of all can you define what you mean by active harvesting.
Yes definitely.
So there is two concepts, there's a concept of passive harvesting and theres. The pulse of the concept of active harvesting. So let's just start first with passive harvesting theirs that is the concept concept by which you use the RF power in the environment to be able to gather energy. When you do that you are basically.
Following up on getting as much power as whoever controls the transmission system. So as far as deploying your receivers you just get whatever you get you know given place so that has limitations on in.
Applications, where you have to guarantee response in quality and timely since essentially this transmission of data you cannot rely on a on a passive system. So what's what is really required in order to have real deployment of a reliable systems is a a deployment of transmitters and these are true.
Meters that can pass regulatory that are safe to be.
Of course people and can actually provide enough power to receiver so that those receivers for providing for their sensitive information that youre looking for in other words, you need to deploy a true.
Once meters similarly to Wi Fi in that sense.
Does that debt is that okay.
That's oh.
Sure.
Then maybe you can help me out here.
You talked about medical.
Medical devices being one of your key areas and you mentioned Wearables like can you give me an example, or you're talking about like a watch that'll monitor my whatever for.
And I don't.
Could you share it.
It can be medical wearable.
Yeah. It can be any kind of device straight it can be available and divest or any other body Buck right that the purpose of that is the measure of the bodily function.
And monitor them on a continuous basis I I think the there are many application Victoria, where would that device where would that device for them that information.
I mean these devices typically are connected through BLE and zone. So so typically what you have is you have an infrastructure that can be a single star architecture or a double star architecture singled to store architecture was pretty much what day you use on Wi Fi. So you have an access point, we have receivers. That's a single to start in the case where now.
So you have to insert power you need to put in a single transmitter and its the function of the transmitter is to just send power to those receivers and the communication channel across those transmitters and receivers as through BLE, So what you're effectively doing through the <unk>.
Let's say Wifi system or other communication system is you're providing the connectivity and bye bye complementing that with our transmitter and in the future.
Together as the market grows you know provide in depth.
The active power for these to provide their sensitive information.
Okay I'm, Brian just for a question for you out of the revenues this quarter was any other chip related.
We don't we don't breakdown our revenues yet John.
Combination of you know.
All of the various things we're doing for our customers we've got referenced kits.
Engineering services, we are shipping ships, but we don't break it down our revenues.
You are shipping chips, though.
Yes.
Okay. Thanks.
At this point in time I would like to turn the conference back over to Brian <unk> for any closing remarks. Please go ahead Sir.
Yeah. Thanks, Chuck in closing we are participating in the LD micro virtual conference on June nine and the Roth Virtual conference on June 20, <unk> 22nd.
We'd like to thank our investors for their ongoing support as we move forward in terms of partner and customer engagements and near field and distance charging we expect we expect our previously announced customer products to hit the market soon along with our first commercial example of distance charging later this year. Moreover, we also expect year over year revenue growth and to announce additional partnerships and regular.
Laurie progress throughout the balance for this year this fiscal year. Thanks, again, and this concludes our call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Sure.
Okay.
For the remainder.
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Your line.
Mike.
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Yeah.