Q2 2021 Summit Wireless Technologies Inc Earnings Call
Greetings and welcome to the summit wireless technologies second quarter 2021 financial results call at the.
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And it's now my pleasure to introduce Kirsten Chapman L. A L. H a investor relations. Thank you you may begin.
Thank you Daryl and good morning, everyone I'd like to welcome each of the summit wireless technologies second quarter 2021 financial results call with US today are summit wireless CEO and President Brett Moyer and CFO, Georgia, Lee that before I turn the call to Brett I'd like to remind everyone of the safe Harbor statement referenced in the SEC filing.
The private Securities Litigation Reform Act of 1995 provide the safe Harbor for certain forward looking statements, including statements made during the course of today's call.
Statements contained herein that are not based on current or historical facts are forward looking and nature and constitute forward looking statements within the meaning of the section 27, a of the Securities Act of 19, and 33 and section 21 E. The Securities Exchange Act of 19 and 34 <unk>.
Such forward looking statements reflect the company's expectations about its future operating results performance and opportunities. These 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 the COVID-19, pandemic, our ability to predict the timing and design wins entering production and the potential future revenue associated with their day Simons our growth rate, our ability to predict customer demand for our existing and future products to secure adequate manufacturing capacity.
Man and consumer demand conditions affecting our customers and markets our ability to hire retain and motivate employees the effects of competition, including price competition technological regulatory and legal developments and developments in the economy and financial markets and others that could cause the company's actual results performance prosper.
And opportunities to differ materially from those expressed in or implied by the forward looking statements for a more detailed discussion of some of these ongoing risks and uncertainties of the company's business I refer you to the company's various SEC filings.
Now it is my pleasure to turn the call over to the summit CEO and President Brett Moyer. Please go ahead Brett.
Thank you and.
Good morning, ladies and gentlemen, and I like the welcome and to our second quarter earnings call.
And we had a pretty excited and quarter with a lot of accomplishments and looking forward the going through with everybody.
And we'll highlight the accomplishments both from a few slides to catch up new investors on this.
And once bottle and then we'll go into more detail on the initiatives for revenue growth.
So we have guidance out there and we'd have 6 TV brands, using our technology and even though.
And I'll announce the fifth 1.
And so our last call, which is Toshiba and the market in Japan and Asia.
And they have adopted the wife's of Samsung standard certification, so that the it sounds and that can be downloaded onto their TV and the consumer you can set up the entire wise the system optimize the audio preferences like from the what the TV remote on the television screen.
And the market will be hearing about partnerships marketing partnerships with the.
The <unk> later this year.
Who has a licensor of 5 system out of as well.
Also we announced the under the Samsung certification program any of the Android Tvs, which.
Which are marketed by Sony Toshiba Sharp iphones and the Cigna, which is the best buy brand and several other brands are able to download the app loaded up and drive Samsung and the likes of system from the TV just like the fever.
Yeah.
Big component of our plan. This year is the increased Weiss of awareness with the consumers. So we have guidance out of the $1 million and.
And announced.
Announced the yep.
The increase that guidance now to 2 million per this year.
We have approximately just under a millions of people that have visited the wise the websites.
And that's important.
The increase of consumer awareness.
No.
And with launching the first of what will be a handful of stores this year and whilst the storefront on Amazon and this will allow us to wear and consumers to the wise at the site.
And you keep them on the white, so educate them and all the brands and they're shifting the wife's of products premium audio mainstream entry level price points and then let them go to 1 store that covers a lot of the branch and so when we direct traffic off the website rather than directing traffic.
2 of pumps specific pieces of speaker brand.
Of a specific retailer will send them to these weiss of stores as they open up and Amazons of the first 1 I'll show you what it looks like and a minute.
But if you wanted to get online and Amazon Dot Com Backslash weisser.
We also joined the Russell Microcap index, and the $10 million in July.
Our 2 big growth metrics.
I'll, let the people and the pay attention to as I mentioned.
And you did start pivoting last year the wife the association from the technical standard to our consumer facing organization and.
And with that the growth of the visit and the sudden b and educated on why so has gone from 26000, the 360000 too.
More than 2 million people this year.
Revenue growth. So we have said why is the membership the leading indicators to designs designs and those leading indicators to revenue growth consumers of the leading indicators to sell through on revenue growth to drive further leverage of growth and as you can see with our guidance for 2002.
And the 1 and our results and Q1 and Q2.
We are experiencing significant use of your revenue growth.
And if the plan's working.
For new investors.
Got and if you're looking at investing and summit, there's really 2 pieces to the investment. The 1 is the technology side and the know how the build.
High performing multi channel wireless audio.
Both of them chips and IP and then there's the standard for lifestyle, which has more than 70 brands and it that helps build the ecosystem all of those products and.
And if you look at the role of lifestyle.
You know just like with HDMI and.
And you're sending of highly sophisticated signal from 1 source to another and we need to know what the send out and the receiver and needs to know what the regime. So why is that it has the technical spec around the transmission so that T V's a b receiver it's Ken.
Can transmit to speak of the speakers and know how to understand and the process that audio right.
Yeah.
This year not all of these products are and market yet, but the other either in market and production or about the go into production. So we'll have a broad range of products and the fall for the consumer the loved it too and the total that was more than 25 brands all of them using our technology and we look for.
The continued building out the ecosystem.
4.
The people that are thinking about what is the market the <unk>.
Dressing is really the deficiency and the TV market and the deficiency and the Wi Fi technology, So the TV and Sydney and Tvs have pretty low audio quality.
And with a sound bar.
Out of sub it's better and with Wi Fi you can add a couple of your speakers.
Now with why so you can actually add all of the speakers and get the full impact gone to the the movie theater with <unk>.
And speaker of the center speakers, where the speakers Dolby Atmos speakers and.
And.
Still have the simplicity of a sound bar set up right, so not install and without pain and the store the plug and some devices and the wall outlets and an HDMI cable into achieving just like the sound bar just the simple so from a consumer experience you're getting better sound same simple installation.
And if you look at enclave audio of plotting the audio you're actually getting a considerably lower price solution for better sound field day to say some of these premium sound bars from Bose and so no sudden and Sony which just the sound bars are running at 800 Bucks a subgroup of Louisiana and the 1300 dollar per.
Rice.
So that is the market opportunity to get full cinema sound around those smart Tvs, because almost all of the streaming services 1 of the <unk>.
<unk> hi.
The high resolution.
Multichannel audio for the consumer to use.
Right. The 3 growth initiatives are sound and send the Weiss of wave, which is impacting and built the retailers and brands and consumers and our net.
Next Gen technology.
So it sounds that it was important program. This quarter you announced that you can of T. V Ballroom can now certify that your Samsung are compatible.
And this let's keep both the TV guys communicated that they are ready to support lifestyle as well as the speaker guys know that they can support waters and for the.
The consumer they know how the simple out of that can be loaded onto their TV and the T. V's turns into an effective a b and C. A b receiver right.
We're getting good product and awards for a product that's been out just 6 months, the consumer traction and and we think this is a big catalyst for us going forward.
A couple of new things for the long term investors that we're going to talk about now so we have talked about driving consumers to wife's of educating them on the benefits of lifestyle benefits of full surround sound with Dolby without Dolby Atmos.
Versus the sound bar of the stimulated and everything.
Well.
And the benefits the entire ecosystem by driving this 1 of the brands get the products out marketed as a category.
To the consumers get the lung and here what we're doing.
3 of.
And as markers, we can actually identify who's engaged as a consumer and end market the buy audio who's in market the buy oil while level. So 2003 thousand and above systems Who's looking for just a great audio out of at a better price.
The new too.
2 the program is helping the resell it.
So 1 way is the open up Weiss of storefronts like you saw with Amazon and we'll talk about of the minute, but the other thing is when you look at our data analytics.
We can take all of that information and whether it's geography time on site pages.
And looking for a high end or are lower and the entry level price premium.
We are making that data available to the wife's of certified resellers. So if you have 2 brands of.
Tvs if you have 2 brands of speakers and you want to create a waste of the storefront the.
And we'll also make available that are those analytics. So you can re market directly to these engage consumers.
Your wife's of offerings and bring them to your wife's of website.
We think visit of great enhancement to the likes of wage campaign.
What's the store look like look I'm proud of the marketing team I think the wise of the store looks Fabulous and I think the does exactly what you'd want it to do right by the consumer quickly on 1 page.
Let's see.
Certified speaker category of certified transmitters Tvs, and Tvs and audio of bundled together.
Right. So consumers see that this is a full category. They can collect and now you will not see all brands on Amazon and there's a lot of premium brands that want the premium brands that are the only ship and in Europe, and China et cetera, but when we open up the stores whatever it is and why so certified is able to come into.
And those store pages and the consumer will see the whole category.
And if you think about it that was part of why we launched the plot and audio brands.
Simply to create a bigger category for all consumers right.
And the enclave is of great mainstream product really high performance and safety.
The audio files of course of you got 3000, 5020 thousand and great products.
But when you think about what you can do with a cost effective design.
We can really go out and market of great founding system for 800 Bucks of 900 Bucks and so we wanted to create that entry point for the wise the ecosystem.
All of them.
The platinum audio.
Alright, Gen 2 and so I get lots of questions on the market size and they get lots of questions on the Gen..2.
This we have launched our first product that is our IP and software loaded onto the an Iot device Wifi device. It is specifically targeted to sound bars and rear speakers and subwoofers.
Well the plan here is the bring out of 5 gigahertz, which has more than full of channels and that product is out of the global smart Tvs and smartphones.
<unk> speakers tablets headphones and the whole smart the wireless connected market.
No.
We define this as our strategy and.
We will continue to talk about it as we get closer to 1 of it.
And the designs the park when there is revenue the recognized the right now the $2.40 megahertz. There is absolutely a bolt the sound bars that we're marketing.
In terms of market size in other parts of the question we get.
We think the Gen 1 and that's really applicable to and that's the current product and shipping the top third of the market for the industry.
But when you look at 270000, smart Tvs being shipped and you look at IP, the things there'd be loaded onto the T V.
A very cost effective transmitter.
The substantially.
Substantially lower than the sounds and then we can see a 30% share of for the whole market and when combined the 85 million Tam for Gen..1 and 205 hundred 54 Gen..2 this is the 650 million market Tam not considering what.
Available and headphones and the other smart devices that the gen..2 ultimately would be applicable to.
Alright with that I'd like to turn the call over to Georgia update you on revenue guidance George.
Thank you.
So our revenue continued to grow sequentially in the June quarter was approximately a million and 6 and revenue that's over 350% growth over the same quarter prior year.
The gross margin was approximately 29% compared to $3.4 per cent and Q2, 2020 and up several points sequentially from the prior quarter.
Opex was $3.3 million, which included about 400 K of non cash expenses, primarily stock compensation expense.
Compared to 2 million and the prior year of which of 100 day was stock compensation expense.
And you recall Q2, 2020.
It was the height of uncertainty around Covid we.
You know we had sat.
Allergies and pet spending while we were the markets are and a bit of the.
The uncertainty.
So that was our low point in terms of spending.
The net loss for the quarter was $3.4 million.
That was after about 600 K of other expense, which was non cash expenses relating to a warrant exercise inducement.
And that compared to $3.4 million loss and the prior year Q2 of which are about a million 4 was interest expense that was related to.
The bridge funding that we did in Q2 prior year.
In terms of guidance.
And the year, we feel comfortable giving guidance for the for the full year.
We think we're going to come in between 6 and a half and $7 million of revenue for the year that will represent about 180 per cent increase year over year.
The gross margin and well continue to trend around our target of 28 to 30 per cent.
We are looking at a full year of opex around $12.8 million of which a million or will be non.
Noncash stock compensation expenses.
And that's also with that and hand, it back to the breath.
But George was a recap of the balance sheet.
Yeah.
Okay. The June cash was $10.3 million.
We raised a net $9.2 million in July.
And.
We expect year end cash to come in between 13 and $15 million.
So with that financing, we feel that the company is well capitalized for for 2020.2.
Keep in mind and you still have warrants outstanding that are in or near the money and that could be.
It could be exercise, but we feel we're in pretty good shape now.
Alright, Thanks George.
And so with that the 4 would take our questions you know the.
Summarize we're actively building of wireless standard around why so we've got both trademarks and IP.
We think the HDMI models of good.
The model for us to emulate that.
And that's kind of a large market out there with smart devices headphone and sound bars.
Adoption is being is increasing both with brands and consumers.
And we think of this.
Working with the retailers and the titer of passion the it really helped drive revenue growth. The this.
This year and beyond and with.
Of that operator, I'd like to open it up for questions.
Thank you we will now be conducting a question and answer session. If you would like to ask the question. Please press star 1 on your telephone keypad and.
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And please while we poll for your questions.
Our first questions come from the line of Jack.
Jack Jack Bernardi with Maxim Group. Please proceed with your question.
Great Good morning, guys.
Congrats on the solid results strong guidance.
I'll start with a question for maybe maybe both Brett and George.
So you guys introduced 2021 full year guidance parameters from the first time the guidance itself appears to be positive relative to expectations.
But what is perhaps.
More encouraging and my view is the is the fact that you provide for your guidance at all.
Given the semi.
Conductor industry environment, we're in but maybe just 2 questions.
Can you talk about whatever factors are at play that give you that confidence or incremental visibility to provide 2021guidance and then 2 maybe can you talk about your revenue expectations for the third quarter and the fourth quarter kind of how you expect that to Directionally trend.
Yes.
Alright so.
You're absolutely right the semiconductor the world is and challenging in terms of supply.
We have secured our supply and provide modules for our customers, but we have seen.
Our customers pushed back production and waiting for other components to arrive.
We saw orders move out of Q2 into Q3.
And in terms of why we guided to the year and we think the at this point and the year It and August given the the orders that are on the book and the lead time for our orders we have of prudent.
Clear side on the bulk of our revenue.
Certainly.
And there's always upside or downside.
Downside of products get pushed because of shortages.
We're sitting there thinking this is really where we're going to be.
And we've properly hedged the.
Under you know any minor changes to the plant.
Okay, Great. That's helpful. Bret I appreciate the color and then maybe just a follow up as it relates to.
And the Gen 2.
Opportunity in general is there any impact of similar impact or kind of and maybe a nuanced impact.
And in terms of the how the semiconductor and <unk>.
Industry impacts your Gen..2 plants is there any anything there of note.
So the.
We believe the IP that we've developed and the software we've developed.
It can be.
Easily loaded on most Wi Fi chips.
And we are not looking too and a more expensive solution we have.
The ongoing semiconductor conversations with potential partners.
Good.
Let's just say.
I'll offer a broad selection of channels to use for the audio and.
And the significantly lower cost and what we're shipping today.
But until those partnerships are finalized.
That's that's the directional statement and we'll leave it at that.
Got it that's helpful and then just maybe another.
And kind of growth catalysts, I imagine something that could ramp up over time and to have material growth drivers is your new Amazon storefronts, So any and your initial expectations from a you know what that means for your your revenue or the sales momentum.
As you kind of like go from 3 cute and the fourth quarter of you're already getting inbound interest more so than without it and he can provide there would be interesting.
So.
I think the Amazon store and the ones that are to come.
Have a fundamental long term impact on building why is that as the trademark that consumer of recognize as the universal wireless standard per multichannel number 1 right in terms of to how does the impact Q2, how does the impact Q3 and Q4 sales.
And I'm, a believer that it will and significantly impact the sales of our customers right. So if you go in there and you'll see L. G. T V and you'll see high since Tvs, and you'll see enclave and you'll see clips you'll see flattened.
You'll see transmitters from the.
And I ask him and I believe and the consumer traffic's been significant already I think moving.
Close to having collected 10000 consumers into Amazon already.
Well that's okay at the helpful data point I appreciate again strong results I'm going to jump back in the queue I appreciate the time.
Yeah. Thanks, Jeff.
Thank you our next questions come from the line of David Levine with Trickle Research. Please proceed with your questions.
Hey, guys.
Hi day so.
The brick and you just give the the or give us the.
The current number of brands with products in the market now and then maybe a little bit of color on those that are coming but not quite there yet and maybe their third quarter things can you give us that number or something close to that.
So.
And we're not going to comment on what brands are bringing out and the third and fourth quarter that's their job.
Okay.
And that would be.
That would not be appreciative of our customer base.
In terms of.
Who's in the market and I can run through real quick and.
Well as Florida.
Harm and banging olson onto the old clips of Mondo Premier Savant.
And on.
Enclave Bouchard.
And some.
I think <unk> and the market E C livings and the market.
The agenda and the market.
The system audios and the market.
And as well as the 5 TV guys.
Can you give us the number just of a number on what you expect and the third quarter that aren't there today.
Is this list on slide Oh, and the brand slide.
And we're saying 25, plus brands will be shipping her technology.
Okay.
So.
And I know this is our job, but I'm going to ask you anyway.
It.
Are you starting to see or develop any comfort level with correlations between the website traffic and.
And your actual business I mean, you you sort of talked about those the sort of the leading indicators.
Are you starting to develop any sense that we might get to a point, where we can sort of look at website traffic and think about how that might translate into sales and they know that's the big yes, but just sort of curious how you view that.
Well.
I think you absolutely should be right on and I'm not.
And now my team laughs at me Furby and quantitative I'm not doing it for my health right and I'm, a absolutely believer that the point of educating consumers and shown of multiple products and shown in the category and the wife the site and then I'll deal with them to a retailer to see a category.
Be it virtual fundamentally.
Only changes are the sales growth.
I see the weakness of the week before the week of father's day.
Traffic went up to I think it was actually 25 per cent of all of the traffic was return visitors.
And does that tell you that tells me that the consumers that were coming in you know a week before or a month before 6 months before came back shopping right.
It's a highly educational we saw that and Christmas season last year, and we're just getting started on the program that.
From Thanksgiving weekend until mid December we were running and the low 20 percents of return and visitors.
So.
People have valuable time, I don't think people come back to a site they thought was worthless.
Alright, so to the extent that you can see that type of consumer behavior, you can see a lot of people being directed to the wife the store. There's some initial good.
Metrics coming out of the Amazon that we like that only leaves can only lead to the higher sales for the ecosystem.
Yeah, I mean, I don't know how necessarily to at this point out of.
Sort of.
You know put it all in the numbers, but it certainly seems to me that why is the way this is bill.
Becoming quite constructive to you that's kind of it seems so I'll leave it at that thanks.
Youre welcome.
Thank you. Our next question is come from the line of pad room with the certainty of capital. Please proceed with your questions.
Yeah, congratulations on the quarter and thank you for providing us a full year guidance. You mentioned that you have visibility for this year what about visibility into next year do you think that the.
The challenges in the semiconductor industry will ease up forget to be able to have no issues next year.
So we're not ready to guide next year.
Just got to the point of guiding this year.
But for the semiconductor space.
Hum.
Can't say and I can truly the affinity and.
And say what will happen right.
And I, what I do think is pretty common thought among a lot of executives.
That it will ease I think there are several components of that easing 1.
Supply of expanding.
The 2.
And there may be some.
Protective of inventory buying that dissipates.
Almost like what you saw a year ago with the consumer buying.
Volume toilet paper and paper talk of the Skywest.
Following.
You know there may be a component of that.
We don't see it because we know.
Where our customers and line no the a number of our customers.
Not in terms of new regional markets because of their part shortages.
And I. Thank all of those can be factors.
And yes, it'll it'll work itself out over time, but whether its Q1 or Q4 next year.
And I don't know enough to say that.
Alright. Thank you and then the other question I have is what do your retail partners C for the holidays I mean, obviously.
And if theres a lot of the spending on the stay at home.
Moving up the house last year.
Do people feel as confident that consumer demand will increase and we'll have a good holiday season for consumer electronics this year.
I believe the trend continues strongly.
Yes.
And I believe the trend is cat <unk>.
Supply.
Great well, thank you for the time and good luck.
Yes, Thanks Ed.
Yeah.
Thank you our next questions come from the line of Spencer personally with H C. Wainwright. Please proceed with your questions.
Hi, Brett and George Congrats on the quarter.
And we just had a quick question.
If you were able to provide some color on the percentage that the Amazon web store and makes up of your sales mix as well as any color on.
And those future storefronts that you talked about earlier.
And we'll take the last.
Part of that question first so we're targeting the 4 of 5 store fronts for the holidays.
So this year.
First 1 is up at Amazon and.
Hmm.
And we are actively working with you all again.
Handful of other retailers to create those.
Storefront and however, the however, there oh.
E presence allows it to be done.
In terms of what was the other part of your question.
Oh, the percentage that the Amazon Appstore made up of the sales mix.
Yeah.
Well if you represent if you look at Amazon just from the brands that are in there those are only the U S brands.
And it's the only the.
Entry level of mainstream.
Up the clips type brands.
Harman has a very small presence and the U S. The inventory constrained.
So part of most of their volume goes.
To China and Europe.
So I don't think.
It's.
I think the wife of stores critical.
Especially getting a handful of.
And we'll will ultimately look at how to replicate that in Europe and China.
But how it responds to each individual brand and that store.
How it impacts of the bundles that are in that store with some of the resellers already or impacts of the T. V lines. We don't know yet we do know like I said and the we'd probably have about 10008 to 10000 consumers and have already gone to that store shopping.
And that's very helpful. Thank you.
And in terms of.
Second half revenue.
You mentioned that some of orders had been pushed back from the second.
Second quarter to the third quarter and do you think that might impact any of the manufacturing that might take place and preparation for the holiday season.
No I think the from a manufacturing line and there's capacity.
Everybody's fighting their short.
The part shortages.
Yeah.
Okay. Thank you.
And that's all the questions I have.
Alright, thank you.
Thank you as a reminder, if you would like to ask the question. Please press star 1 on your telephone keypad.
Yeah.
There are no further questions at this time I would like to hand, the call back over to Brett Moyer for any closing comments.
Well look I'd like to thank you for taking the time to Oh the BARDA.
The team has been doing a great job of executing a pretty exciting time for Wassa and we look forward to updating you throughout the rest of the quarter. Thank you.
Thank you.
This concludes today's teleconference. Thank you for your participation you may disconnect. Your lines at this time of a.
Great day.