Q3 2021 Energous Corp Earnings Call
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Yeah.
Good afternoon, and welcome to the Energen Corporation third quarter 2021 financial results conference call.
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Please note. This event is being recorded I would now like to turn the conference over to Pat Sullivan of Investor Relations. Please go ahead.
Thank you Anthony 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.
<unk> will be discussing non-GAAP financial measures as defined by SEC regulation G. Reconciliations 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 Cesar Johnston acting CEO of <unk>. Please go ahead Cesar.
Thanks, Matt Good afternoon, and welcome to the <unk> 2021 third quarter conference call joining.
Joining me today is bill Menino, our acting Chief Financial Officer.
The third quarter of 2021 was significant energies for several key reasons.
Number one.
We continue to sharpen our ambition for the company with a focus on far field technologies and the deployment of wireless power networks.
Number two and this is very important we receive FCC approval for our one what what are powered brief transmitter technology for active energy harvesting power transfer at any distance no distance limitation.
Number three we established new partnerships with Iot market leaders that will drive the demand for by wireless power de lever at a distance into 2022 and beyond.
Yeah.
We had introduced are at an important inflection point that we believe will move the company into the next phase of.
Leverage the significant and accelerated investments being made.
By a number of companies in low power edge devices, including electronic shelf labels retail Dax.
Iot sensors.
Low power edge computing.
We are gaining recognition as a leading player in the development of RF power transmission semiconductor it'd be biases for deployment of a new generation of wireless power networks.
Our vision.
If I were if power transmission at a distance within the context of market needs and regulatory constraints continues to evolve and it's driving development and availability of our Wattup power breached transmitter solutions at one one and five on our half watt conducted power.
We recently announced FCC approval for everyone, what solution, which complements our earlier.
European Union regulatory certification for unlimited at distance wireless charging.
Given this positive traction we.
We're pleased to share that we have started production of.
Our one watts water power beachfronts meters to fulfill orders for our first Wattup wireless power network customer would.
The Liberals.
Beginning in Q4 of.
2021.
We believe that our wireless power networks with broadly serve the power needs of the Iot ecosystem, where wireless power networks will support numerous receiver devices in multiple vertical market segments.
From retail to industrial to health care would that have related dax sensors and Cpus.
When receiving power wirelessly from an energy power network. These receivers can be deployed with a smaller batteries and even with no batteries at all leading to greener lower cost and easier to maintain Iot deployments.
As an example, our Iot wireless power receivers good support artificial intelligence processing at the edge of an Iot network for audio or video processing, improving device uptime balling cycles on timeliness of data flows.
Currently many new features of Iot devices struggled to be implemented due to the limits of ambient energy harvesting.
There are power demands and battery depletion cycles injecting power wisely into these environments can greatly improve Iot device performance and deployment feasibility.
Looking at our financial performance.
We are pleased to report that third quarter revenues rose to 200000.
$101000 compared to 61000 and 500000 in the 'twenty.
'twenty 'twenty third quarter.
<unk> third quarter revenues were up from 185000 in second quarter.
Bill will provide a more detailed breakdown of our financial results, including our balance sheet.
Which we recently further strengthened through our previously announced ATM financing.
Now for an update on our operations.
Our search for a CEO continues and we have no immediate updates.
In August 'twenty, 'twenty, one and now going into our agreement with Renaissance. Our readiness has closed the previously announced acquisition of dialog semiconductor.
And as a consequence integers was notified during the quarter that Renaissance wished to Ami Gabelli terminate our assistant agreement with dialogue.
Our agreement provides for an orderly transition who upon notice of termination and we have begun transferring manufacturing operations back to our company for the Ford integers devices that were part of the agreement, namely the E. N 40, 108, which is our transmitter the E. M 32 10 hour.
One what power amplifier the E F 'twenty, two 'twenty three and the yen 20 to attend receivers.
And which are all Cmos devices.
I would like to point out and it is important to note that these four devices, where 100% design and engineered by energies and we own all the all of the IP and we have exclusive rights to them.
Now why it's important to point this out because as designers and the team that actually engineered these devices, we have deep technical knowledge of them and we have a deep understanding also of the dialog processes, which will allow for a smooth transition of battery test back to energy.
We will use our existing production and test capabilities, which we employed today for all their devices in our portfolio and which by the way were not part of the dialogue agreement.
Furthermore.
The production foundry that these devices.
Our our fabricated at a third party company with whom above dialogue and energies have independently had low investing business relations.
Simultaneously on the self support side.
The <unk> team has been deeply engaged with dialog on potential customer opportunities, providing technical sales and business support to our joint customers and the interest theme has no direct ownership of the full customer funnel.
In summary.
We do not expect a negative material impact to our business as we transition manufacturing and sales and as we complete the business transition we expect.
That are working together with the Renaissance dialogue team.
At the trustworthy operations will proceed smoothly.
Now moving on the technical side, we would like to provide you more background of our Wattup power, which transmitters and our vision to be the backbone for Wattup base wireless powered networks, which we believe represents a significant market opportunity for the company and we're very very excited.
Good day.
During the third quarter, we strengthen our position in supporting the application of our active harvesting technology Wattup wireless power networks operating a similar architectural manner as communication networks by deploying multiple transmitters across a given power transmission area.
And here's what our power transmitters merge I was powered network needs with communication networks via our BLE link.
These results in a transmission device in this case once more power bridge that can be deployed in a ubiquitous manner to immediately build wattup wireless power networks supporting the ecosystem of multiple types of Iot received devices simultaneously receiving multiple levels of power.
An example.
Iot connected devices with very empowered needs such as the accident sensors can be installed in retail industrial and health Jordan markets, adding to a potential.
Total addressable market of 30 billion devices by the year 'twenty 'twenty five as stated in the report by is that this space is the internet of things and non I D. I O T active device connections worldwide from 2010 to 2025.
In addition to the first shipments of production of our one what what our power breached transmitter as we mentioned earlier.
We recently announced the Isabela availability, the <unk> developer kit, which allows designers of Iot edge devices to rapidly explored the benefits of deploying analysts wattup based wireless power networks in their solutions.
Furthermore, our what our power hop technology, which has been developed on a common technology platform and approach us our what our power transmitters receive European Union certification back in May 2021.
Where a rep semiconductor devices alone our Wattup software developer kit and advanced antennas are the key ingredients to build our wattup power Bruce transmitters.
Which can be deployed to compliment again as previously.
Discuss any communication infrastructure and allow us to gather Iot receiver data by effectively concentrating valuable and monetize able data into our cloud infrastructure.
For <unk> for example, our water power breaches easily attached to a Wifi access point, leveraging our customers' existing investment to provide rapidly deploy and consistent power coverage even desire.
Our BLE communications interface can be leveraged to provide additional data communication channels, even performing data concentration and data relay into Wi Fi a beef and Iot devices.
Now a quick update on our partners looking ahead are.
We believe that any of US is now positioned to be a significant player in the development of Iot wireless power networks, we continue to productively partner with multiple companies that Sharon complement our revision and technologies. We have previously discussed and announced our partnership with E E.
E ink at mosaic and technology and we are productively.
In our individual efforts to leverage our collective investments.
This quarter and this is a very important and very up.
We're happy to announce that our new partnership with William Blair.
Collaboration positions energies to support Williams as the leader in the deployment of ultra low power smart tags or as they call. It Iot pixels.
Which will revolutionize the instruction of relevant and monetize data into the Willy up cloud.
Willis technology is an important development in the real world deployment of next generation RFID like networks, providing a new emerging market.
On the regulatory side.
We continue to see progress internationally.
And we are opening new markets for wireless power transmission as previously discussed in our previous earnings.
I Wouldnt Kohl's, we see significant advantages in the 900 megahertz band compared to other bands, which are more crowded and suffered from higher propagation losses, which enable introduce wattup solutions substantial technology advantages in both efficiency and range.
Additionally, we're seeing steady progress at the international Telecommunications Union ICU towards full global allocation of wireless power transmission, including the 900 megahertz band.
And in Japan, we're seeing the broadband wireless forum continuing this progress on RF based wireless power transmission.
We continue our engagement and our discussions with the FCC.
And we are with industry collaboration are part of an export tax filing. That's now his focus on obtaining regulatory approval of higher performance Nick next generation systems.
Finally, we're pleased to share with you that earlier today, we announced that we have received two C. S Awards there.
The first four embedded technology.
And the second for sustainability E C O design and Smart home. These awards recognize our Irish wireless power network technology.
And they're just will present at CES 2022 in January demonstrating the award winning water power breached transmitters.
And with multiple partners to display an end to end Wattup energy harvest and ecosystems.
Meters and receivers and all operating.
Iot and edge sensors, Inc.
Including Cpus as well.
We will also include a.
Demonstrations of our power hub and our near field technologies.
In summary.
However, what a power breach at a distance charging transmitters are ready to support the advent of the I O T. H as we opened the U S EU markets for wireless power networks.
I will now turn the call over to Bill many now our acting CFO Bill. Thanks.
Thanks Cesar.
As you saw at the close of the market today, we issued our Q3 earnings press release announcing the operating and financial results for our fiscal 2021 third quarter ended September 30th.
For the third quarter, we recognized 201000 in revenue compared to 185000 in the prior quarter and approximately 62000 in the same quarter of last year.
GAAP operating expense for the third quarter was $12 7 million approximately $1 5 million higher than the $11 2 million of operating expense last quarter, and approximately 5 million higher than the third quarter of last year.
The increase compared to the prior quarter was largely due to a 4 million severance accrual related to the resignation of our former CEO, which was partially offset by a $2 3 million decrease in stock compensation expense.
Together with a small increase in product development expenses severance accrual accounted for most of the increase compared to the same quarter of last year.
Regarding the severance accrual I would like to note that only $1 1 million of the $4 million accrual remain payable at the end of Q3 2021.
Year to date.
Our GAAP operating expense was $32 5 million.
Approximately 7.9 million higher than the $24 7 million of year to date GAAP operating expense in fiscal 2020 the.
The year over year increase was primarily due to the severance accrual for our former CEO and an increase in stock based compensation.
The net loss for the third quarter on a GAAP basis was $12 5 million or 20 cent loss per share on 63 million weighted average shares outstanding.
This compares to an 11 million net loss in Q2 of 2021 or a loss of 18 cents per share and a 7.6 million net loss or a loss of 18 cents per share in Q3 of 2020 our.
Our weighted average shares were 41 9 million shares in Q3 2020.
The year over year increase in the share count was mainly due to the completion of our at the market offering or ATM in the fourth quarter of 2020.
Which raised an additional $38 8 million of cash and added $18 9 million shares.
Now for a non-GAAP view of our numbers for the quarter as we believe adjusted or non-GAAP reporting provides a useful comparison for investors, especially for a company that our stage.
When used together with GAAP information.
Excluding approximately 4 million of severance approximately $1 9 million of stock compensation and approximately 69000 of depreciation expense from our total Q3, GAAP operating expenses of $12 7 million.
Net non-GAAP operating expense was approximately $6.6 million.
A decrease of approximately 263000 compared to the prior quarter and an increase of approximately $1 1 million compared to Q3 of last year.
Non-GAAP operating loss for Q3 was $6 4 million and approximately 279000 lower loss compared to Q2.
And then approximately 930000 higher loss when compared to Q3 of last year.
As a reminder, Q3 of 2020 had reduced spending due to the business disruption lower travel expense.
Etc, due to the Covid pandemic.
Non-GAAP engineering expense was $3 5 million for Q3, and approximately 56000 decrease versus the prior quarter and an approximately 456000 increase compared to the same period last year.
The year over year increase was mainly attributable to higher chip design costs and engineering supplies costs.
Non-GAAP SG&A expense was $33 2 million a decrease of approximately 200000 versus the prior quarter and an increase of approximately 600000 compared to Q3 last year.
The decrease compared to the prior quarter was mainly due to the annual meeting related to expenses in Q2.
The increase over the prior year's quarter prior year's quarter was mainly due to an increase in headcount and consulting costs and sales and marketing and also higher recruiting costs.
Year to date, our total non-GAAP expense was $20 million 1.9 million higher than the $18 1 million of year to date non-GAAP expense in fiscal 2020.
The increase was mainly due to increases in chip design costs sales and marketing personnel costs and recruiting costs.
Turning to the balance sheet, we ended Q3 with $28 3 million in cash and remain debt free also as we mentioned in our earnings release in Q4, we have raised gross proceeds of $27 9 million in cash from our ATM financing.
We announced in our filing with the FCC last month.
We expect our Q4 net non-GAAP operating expense run rate to remain in our current range, averaging approximately $6 6 million per quarter.
Overall, excluding one time items, our 2021 non-GAAP operating expenses should reflect an approximately 10% increase over fiscal 'twenty 'twenty non-GAAP expenses.
I will now turn the call back to Cesar.
Thank you Bill.
Operator, we would like now to open up the call for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question comes from Sushi, they'll see those silver with Roth capital you May go ahead.
Hi, Bill so.
Question on the on the the Renaissance agreement and the transfer of the four products back what are the manufacturing cost and business model implications of this the way you sell the products as that transfer happens just to understand the.
Different go forward model, yeah, so you're asking some details of the agreement that definitely.
As far as the transfer we own test lines with some local partners.
And those are being.
Don as we speak right now and that includes the movement of wafers devices, and the setup and hardware related hardware and to set up of dosing now where this lines, which by the way are in parallel with some of the other pros that we have related to Gan on and Cmos P. A controllers.
Okay now as far as the costs are a concern at a high level are there. There there was an agreement with a dialogue where we sure.
The cost and that extra expense that.
Dialog will share with us is no longer there. So we will pretty much adapt to to our overall revenue.
Revenue.
Okay.
Okay.
Any other questions.
The short answer is yes.
Yeah that does.
And then and look at these two partners you have really out and and technology what I'm. What's the what is the what are the next steps in those partnerships and they go to the go to market for customers and what what do they bring down or just in terms of.
Market reach and traction.
Yes, thanks for that as a very good question.
There are two types of partners that we have they're our.
Partners that are golar.
Integrators.
Okay or systems partners in this case technology, and what they bring and they add as they add the potential too.
Further our capabilities in the engineering side and development side to support other potential customers in specifically here in the in the European Union. So it is an extension of our team our ATM or if a team and they are focused today on.
Training posted potential customers and also helping us find new customers that we will need access to our development kits. So that's the technology side now when it comes to will it will it is a different type of partnership that is a partnership where two companies.
This case introduced in Williams, and Williams with a very specific low powered bags have together.
Partnering in such a way that we have a very unique and very special solution targeted to <unk>.
Active power transmission, okay targeted at being able now to open up a new market of low power attacks that are very very similar to RFID, but our way much more smarter because they have very specific very low power CPU base devices would be elite interfaces at that extreme.
Local so together we are opening up a brand new Iot vertical market that was non existent and we are through our <unk>.
Very special transmitters in this case, our what what when what transmitter we are now able to deploy wireless power networks with no distance limitations across any potential industrial retail or health health care floor and that is being able to piggyback on Wifi networks and deploy together.
Systems of that type now as far as what are the next steps with them. We worked very closely together for months and the development of the technology. We certainly will continue to move forward as we progress on these market on the technology side and on the business side are there are multiple potential.
Customers that were looking at that are we will be opening up and doing bill season, as we move forward.
And as we prove.
And showed that technology those customers will eventually.
Use that to detract devices and being able to find devices anywhere in those three markets that I described to you industrial health care.
And retail.
Okay, Great. Thanks, and then last question on the FCC approval there at any distance what what are the implications of that from a technology kind of differentiation perspective, and what are the market implications of that is it really the energy tags, you can now do across our retail or other setting or any color there would be helpful. Greg.
Question as you as you know we've been pushing the standards for wireless power and of course for years, we've been pushing that technology on that area and in the case of the one what our systems. We have a unique solution that allow us to pass bar 15 in which we have now demonstrated and.
By virtue of that have no distance limitation and by using multiple fronts meters again by spring dose along the lines of Wi Fi access points or even within shelf and different places and in a given plant or industrial site. We can actually have no no limit oh.
Distance.
Okay, alright, thanks, a J.
Thank you.
Our next question comes from Jon Hickman with Ladenburg you May go ahead.
Hey, I have two questions. One is I think you mentioned that you were you were setting yourself up for deliverables for Q4 of this year.
Does that translate into chip sales for this quarter.
Hi, John how are you.
I'm good glad to talk to you today.
<unk>.
Yeah, Yes, and what we're doing is we have chips and we have actually systems that have been integrated into France meters. So are we.
We are ramping up.
Contract manufacturing lines that allow us to build those in such a way that we can.
Fulfill the orders that we have in hand, right now so it's a combination of the trips and that certainly has.
Uh huh.
A value on it but the but we also benefit from the fact that we were putting those pumps meters together, which adds an extra value on top of that.
Okay. So.
We're there.
Were there any product sales in Q3 or was that all like.
Iron Barney.
Definitely definitely I mean, we we have evaluation kits and that that's part of the of the sales that we've done and we continue to do and we've been doing that for a while.
Okay and my last question is so now youre going to have to build the sales and marketing organization.
[laughter], yeah, Okay dialogues out of the picture great.
Great question, we always get to ask questions. So we do have a marketing and sales organization. Okay. It's always been there and they've always been connected and engage with dialogue certainly the fact that dialogue was there added to what we have but the relationship has always been that we operate at similar to our business unit.
Where the the context came through dialogue and our team here took ownership and partnered with them, but we always took the lead as we were the ones that have the knowledge of the technology and the operation and could close though the deals. So we do have that that team and that team is still intact here.
Now the question is when will we need to add a further in the future yeah as we grow the business, we will definitely consider that.
Okay.
So I'm just are you going to look around for another partner like dialog are you going to choose to.
To the manufacturing.
At this point in time, we can do the manufacturing I mean, we've been enabled for years again, if you recall during the presentation I mentioned that only a limited number of devices, where with dialog we have older devices, including our Gan line of brown sand or controllers. So we are perfectly capable.
Of doing that and we will continue to do that and now certainly we will evaluate if other opportunities show up but its a matter of.
Of whether the partnership potential partnership makes sense, we're not too to enter just.
Okay.
Okay. Thank you.
Thank you.
Yeah.
Yeah.
This concludes our question and answer session.
I'd like to turn the conference back over to Cesar Johnston for any closing remarks.
Okay.
Thank you we would like to thank our investors and partners for their ongoing support.
We're making the future of Wattup wireless power networks, a reality and have started ramping up production and delivery. We will continue working to enable new markets via our regulatory efforts. While we will also continue to push our technologies to deliver higher power levels do open up future opportunities, resulting in net new.
Potential revenue streams, we look forward to updating you next quarter.
Thank you.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.