Q4 2021 Energous Corp Earnings Call

Good day and welcome to the Energen Corporation fourth quarter and full year 2021 financial results all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.

I would now like to turn the conference over to Matt Sullivan Investor Relations. Please go ahead.

Thank you Andrew 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 companys filings with the Securities and Exchange Commission.

Except as otherwise required by federal Securities laws, and then just disclaims any obligation or undertaking to publicly release updates or revisions to the forward looking statements contained herein or elsewhere to reflect changes in expectations with regard 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 Companys website now I would like to turn the call over to Cesar.

Johnston <unk> CEO of <unk>. Please go ahead Cesar.

Thanks, Matt.

Good afternoon, and welcome to the <unk> 2021 fourth quarter Conference call. Joining me today is bill Menino, our acting Chief Financial Officer.

Yes.

Today, it's a pleasure to deliver my first earnings call as <unk> CEO .

We are very proud to report that during the fourth quarter of 2021, we successfully fulfill our first customer orders for the first Wattup our bridge business charge charging products that can be commercially deployed in real world and potential volume applications.

We are excited for this accomplishment as we noted on earlier calls that this was adopt goal for us to achieve before the end of 2021.

As you have seen and are just focus has evolved in the last year and today, we strive to be a leader in Iot wireless power networks. Our goal is to use our unique capabilities to deliver power at a distance, allowing customers to deploy these systems without.

Power cables and wires.

Alleviating the need and significant costs for cumbersome battery replacement and supporting a new generation of battery free Iot devices.

Our aim is to produce distance charging technology that can power a new generation of Iot received devices given the placement flexibility, while also delivering higher levels of sustained power to support for instance, advanced artificial intelligence processing capabilities.

Our wattup technologies in conjunction with several recent certification achievements and the fast rise of connected Iot devices positioned the company well for the development and deployment of Iot wireless power networks. The wireless power Networks' market opportunity is huge and it includes app.

<unk> 39, 3 billion Iot devices by 2025 as reported by IDC and their worldwide global data sphere, Iot device and data forecast 2021 to 2025.

Also multiple applications can be supported with potential Iot wpn deployments, we have targeted RF tags and electronic shelf labels as the first to focus on with our technology as such we are working with several partners to incorporate it incorporate cloud soft.

Work communications infrastructure, what are power bridges and market specific devices to demonstrate a functional end to end market vertical solution.

The first application is the integration of <unk> with our one watt power bridges, allowing bags to be battery less and power from this bridges that distance is greater than 10 meters. We believe that in the future. These types will be ubiquitous and deployed in multiple markets require and tracking and.

Sensor capabilities.

We have partnered with the emerging Alif Tech leader really yet and we are very happy to report that we have received the first orders for fully certify production already wattup, our bridges to energize to energize Williams Iot pixels for commercial deployment.

This power bridges are currently shipping as part of the window the starter kit.

And partnering with a company like will it allows us to quickly deploy our wattup power bridges capitalizing on the momentum of their product.

The second application is for electronic shelf labels in January at the consumer Electronics show in Las Vegas, we demonstrated at where Wattup power bridges simultaneously charging are supporting the communication exchange between multiple battery less ESL units connected to a Wi Fi communications.

Additional network over a BLE links our focus on the ESL is to continue over development, while identifying potential customer interest in the coming months.

As part of our financial performance. We are pleased to report that our fourth quarter 2021 revenue rose to $225000 for a total of $757000 for the year as compared to the fourth quarter 2020 with that.

Total of $90000 and our full year 2020 total of $327000.

Revenues were up from 2000 and $201000 in the third quarter.

And I want to emphasize that top line growth is a priority for 2022.

Bill will provide a more detailed breakdown of our financial results.

We continue to make good progress on our operational execution with the transfer of our <unk> and 40, 132, 10, and 22, 10, and <unk> and 'twenty two 'twenty three seamless devices supply chain transition and production from our previous partner.

Dialog to energize at this time the <unk> 40, 132 devices have been fully enabled in our production and testing facilities, while we continue to work and complete.

Completing the transfer of the 22 10, and the end of 'twenty two 'twenty three devices.

Although this continues to be a difficult time for fabless companies, securing foundry allocation and testing capacity, we've had little interruption in the supply chain to date as we prepared to support our customers' demand through the next quarters.

On the technical side.

Our engineering team delivered a one what wattup our bridge do production, including the ramp up of manufacturing lines with the capability of delivering thousands of devices.

We are proud to report that our first order of Wattup powered devices was received and delivered in the fourth quarter of 2021 with pending orders expected to be fulfilled in this in forthcoming quarters.

In summary.

The <unk> power breach brought us our customer ready and add to our line of semiconductor devices and positions <unk> as a comprehensive provider for end to end wireless power network technologies.

Customers can procure our semiconductor devices, allowing them to use their engineering expertise to design their own transmitters.

They have the choice to purchase fully functional off the shelf <unk> meter devices from us we believe that we're well positioned to become a leading Iot wireless powered network solution provider.

Also as part of CES 2022.

We demonstrated the world's first Iot wireless power network, leveraging juniper, Ms. Wi Fi access points connected to multiple Wattup our bridge towards meters at 115 Watts <unk>.

Importantly, we show charging receive device interoperability by simultaneously powering our tax from William referred by their sales in our service cloud software.

DSL tax using EPS devices.

In Iot device using it mostly BLE chips and network edge computing, driven by Cynthia artificial intelligence voice recognition technology, all of which were managed by.

The Wattup software.

<unk> is our newly announced Iot partner, who has develop an ultra low power deep learning architecture in the form of northern decision of processors for deep learning and processing at the Iot edge. This partnership was announced on January 15 2022.

To summarize at CES 2022 energy has presented a glimpse of what the future of the Iot Wireless power network World would look like the energy solutions in conjunction with our partners technologies.

We have the potential to deliver power solutions to real world problems, we look forward to continuing developing the critical partnerships and technologies that accelerate the usefulness of Iot deployments.

Moving on to an update on our regulatory efforts in the fourth quarter, we achieved significant regulatory milestones as we were granted approval for our <unk> power, which product in the United States, The European Union, India, and Canada for limited distance charging.

Progress also continues.

International Telecommunications Union Itu towards 900 megahertz global allocation for wireless transfer.

In the United States, we are excited to see that the FCC confirm their efforts to open up high power, which is greater than one what wireless power transfer without distance limitations.

Also during the fourth quarter, we were granted FCC certification for our 10, what Wattup power hub, which nearly doubled the power that could be transmitted wirelessly, our wattup, our bridge and power hub transmission capabilities of one watt five watts and 10 Watts will open up more potential applications in the <unk>.

Future, while also providing the immediate capability to improve the performance and range of our current target applications overall.

<unk> continues to make progress on our ambition to be the leader in Iot wireless power networks in pursuit of that we wanted to share our short term and long term goals.

As part of short term goals, we are looking at fulfilling the delivery of the one what up our bridging rich orders.

We are looking at identifying a roof tag applications into potential markets.

We are targeting our first pilot deployment.

We have completed and.

Our electronic shelf labeling <unk> system, and we are working on identifying a market launch customer.

And as far as long term goals.

It is important for us to support the air fuel Alliance efforts to make WPZ wireless power transfer a standard.

We continue to lead our ICU recommendation to our line 900 megahertz wireless power transfer spectrum as the first designated wireless power spectrum worldwide.

We are.

Working on will continue to work on certifying high power, meaning greater than one what conducted power Iot wireless power network power transmitters in the U S.

European Union without distance limitations.

We.

<unk> identified potential markets or applications of ESL vertical markets and targets first pilot deployment, we will work on identifying third a third vertical market and build an end to end system for customer technology demonstration.

Most important we will deliver year over year revenue growth driven driven by expanding Iot wpn deployments.

I will now turn the call over to Bill Molina, our acting CFO .

Bill Thanks Cesar.

Hello, everyone.

To recap in 2021, we recognized $757000 in revenue compared to 327000 in 2020.

Revenue for the fourth quarter was approximately 225000 compared to approximately 201000 in the third quarter and approximately 90000 in the same quarter last year.

For 2022, as Cesar mentioned, we are forecasting year over year revenue growth.

Total expense for the year on a GAAP basis was $42 2 million, which was $10 million or 31% higher than the $32 2 million of total expense in fiscal 2020.

The higher expense was primarily due to a $4 million severance accrual for executive personnel restructuring of $3 $7 million increase in stock based compensation.

And an increase of approximately 800000 in R&D in chip development costs.

Total expense for the fourth quarter was $9 6 million, which was a decrease of $3 million or 24%.

Impaired to the third quarter, mainly due to the 4 million nonrecurring severance accrual in the third quarter.

Compared to the fourth quarter of 2020, we saw an increase of $21 million or 27, 6%.

Primarily due to a $1.8 million increase in stock based compensation.

Net loss on a GAAP basis for fiscal 2021 was $41 4 million, approximately $9 6 million or 30% higher than the $31 8 million net loss in 2020.

This translated to a net loss per share of <unk> 64.

On $64 9 million weighted average shares.

Compared to <unk> 76 loss per share on $41 7 million weighted average shares in the prior year.

Net loss for the fourth quarter was $9 4 million or <unk> 13 per share on $72 9 million weighted average shares which was $3 million less than the 12 million $12 5 million loss or <unk> 20.

<unk> per share loss of 63 million weighted average shares in the third quarter.

And $1 9 million more than the loss of $7 5 million.

Or <unk> 15 per share loss.

40, $49 2 million weighted average shares in the fourth quarter of last year.

I would now like to review our 2000 2021 results on a non-GAAP basis, as we believe that adjusted or non-GAAP results provide a helpful tool to investors when used in combination with the GAAP information you.

You can also find on our non-GAAP reporting in information in today's press release, which is now available on our website.

Excluding nonrecurring severance and noncash charges for depreciation and stock based compensation expense of approximately $15 9 million in fiscal 2021.

Our total net non-GAAP operating expense for the year was approximately $26 3 million.

Which was approximately $2 3 million or nine 6% higher compared to a net of approximately $24 million of non-GAAP operating expense in 2020.

The difference was largely due to increases of approximately 800000 in R&D in chip development cost approximately 600000 related to sales and marketing head count.

And approximately 500000 related to D&O insurance and recruiting costs.

I would also like to point out that 2020 was an abnormally slow year due to the Covid pandemic.

Our spending in R&D operations, and regulatory represented 53% of our non-GAAP cost structure in 2021 and represented 54% in 2020.

For the fourth quarter.

non-GAAP expenses to increase year over year by approximately 300000 to $6 2 million.

From $5 9 million of non-GAAP expense in the fourth quarter of last year.

Compared to the prior quarter Q3 of 2021.

non-GAAP expense decreased by approximately 400000 from the $6 6 million, we reported in that quarter.

We ended the year with 49 employees compared to 56 at the end of 2020.

Given our company size and as we ramp our revenue we continue to manage our expenses very tightly with the target for 2022, opex to remain flat or slightly reduce our quarterly spend.

Our net loss for 2021 on a non-GAAP basis was approximately $25 5 million or.

Or <unk> 39 per share loss on $64 9 million weighted average shares.

This is $1 9 million or 8% higher than the $23 6 million.

Or <unk> 57 per share non-GAAP net loss of $41 7 million weighted average shares incurred in 2020.

For the fourth quarter, our non-GAAP net loss was $6 million or <unk> <unk> per share approximately 400000 lower than the $6 4 million or <unk> 10 per share non-GAAP net loss in the third quarter, and approximately 200000 or three 3% higher than the $5 eight.

<unk> or 12% loss per share in the fourth quarter of 2020.

Additionally, during the fourth quarter of 2021, we raised cash of approximately $27 million.

Net of commissions and issuance costs with our at the market offering.

This helped to increase our cash balance to $49 1 million at the end of fiscal 2021.

We remain debt free with $45 9 million and working capital as of 12 31 2021.

Let me now turn the call back to Cesar.

Thank you Bill.

We would like to thank our investors and shareholders for their support this was an important quarter for us as our first Iot Wpn product was deliver opening nap of the RF tags, Iot wpn market through our strong partnerships with Williams.

<unk> continues to be a leader in the development of at a distance charging power.

We are now in a good position to grow our business and revenue to participate in the deployment of the future $39 3 billion device markets as described by Abc's market report.

At this time, we would like to open the call for questions operator.

We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

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At this time, we will pause momentarily to assemble our roster.

And your first question comes from Jon Hickman with Ladenburg Thalmann. Please go ahead.

Hi.

Can you.

Out of this first order that you received and delivered were you able to recognize the revenue in Q4.

From that order.

Yes, we were.

Okay.

And so.

Hum.

Uh-huh.

There is no cost of goods sold in your.

P&L statement can.

Can you.

Can you explain how that that's happening.

How are you.

How are you accounting for that the manufacturing cost.

Okay.

Well.

Our initial units were developed in house. So we are transitioning to reporting Cogs.

In 2022, so right now we were still building those initial units. So those are those are in R&D for Q4.

Oh the cost of those are in R&D okay.

And then can you.

Yeah.

Can you be any more specific with your year over year revenue growth.

Okay.

Do you expect 10% or 100% or anything that you can help us with for.

For our model going forward.

Not no not at this time.

We may be we may be able to provide.

More guidance.

During 2002.

But that's the message.

Send it out today.

Say when when might you be able to provide more guidance.

Possibly in 2022.

We are in 2022.

Later in 2022.

Okay.

Okay.

Okay.

So.

Let me ask another question your current cash balance.

Do you expect that to take you through the rest of this year.

Okay.

Well, our current operating levels that that's two years' worth of cash. So yes, yes, we do have.

So.

If if we found it advantageous for further financing.

We could look at that we have we have another shelf on file as well.

Okay, So, but basically you anticipate I mean, if things stay the same you've got two years of our correct, yes and.

And that's with no revenues right.

We do have some lower revenue reported yes.

No I mean, but minimal I mean.

Okay.

Okay. That's it for me thank you.

Okay. Thanks, a lot. Thank you.

Yeah.

Yeah.

This concludes our question and answer session I would like to turn the conference back over to Cesar Johnston CEO for any closing remarks.

We're looking forward to.

We developed a new Iot wireless power networks, we are well position.

We have looked into those applications, we have new partnerships as we reported and we do have.

Products that are being shipped in the form of modules and semiconductors.

As John ask we will be reporting on revenue Cessna.

Markets mature and we have indications of growth. So thank you very much.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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