Q4 2021 Summit Wireless Technologies Inc Earnings Call
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You have joined the meeting as an attendee and will be muted throughout the meeting. To bring in consumers continues to do interoperability testing because we believe interoperability is important for some segments of the market.
Uh huh.
[laughter].
You have joined the meeting as an attendee and will be muted.
Okay.
Did the brand consumers continues to do interoperability testing could we believe interoperability is important for some segments of the market.
No one.
One of the benefits of bringing everybody under the Weiss umbrella is we can talk about products that we have not talked with you or other people about. So the industry, by going to the weissassociation.org website in the past, has not seen these products.
One of the benefits of bringing everybody under the Weisman broiler is we can talk about products that we have not talked with you or other people about right. So the industry by going to the wife's Association Dot Org website in the past is not seen these products. There's a lot of really cool significant products to our P&L.
There's a lot of really cool significant products to our P&L that we have not talked about. For example, if you look at the sofa here, this is the Lovesac sofa. Well, the wireless technology in StealthTech is us. That is our first-generation product. That is the one that makes the subwoofer rumble and shake the sofa module.
Now that we have not talked about for example, if you look at the Sofa here. This is the love sack, so sofa with a wireless technology in stealth Tech is us that as our first generation product that is the one that makes the subwoofer Rumble and shake the sofa module.
If you look at the KEF speakers, that is us as well. That's not a home theater system. That's a high quality audio listening.
You look at the cash speakers that is is us as well that's not a home theater system as a high quality audio listening.
Soundbars, we've talked about soundbars with Savant because they were certified.
Sandbox, we've talked about sound bars with savant, because they were certified.
But Harman has a whole line of citation sound bars that use us. Bang and Olufsen.
Our Harman has a whole line of citation sound bars that use us.
Bang in August and has us in every TV.
And if you look at this tall guy on the left, this is a $40,000 lexicon speaker that has
And if you look at this tall guy on the left this is a $40 lexicon speaker.
That has our wireless in it so there's a lot of products that will start to be able to represent under the license technology brand that we have not in the past and this gives a full flavor to the industry for people checking us out in terms of designing with us or not.
So there's a lot of products that we'll start to be able to represent under the WISA technology brand that we have not in the past. And this gives a full flavor to the industry for people checking us out in terms of designing with us or not.
the depth of our design wins and our our partners. So we invested in
The depth of our design wins and are our partners, we invested immediate benefit.
Now our roadmap today and we have the current generation what she has been referred to as <unk> or Gen. One that's interoperable, but we have started pouring our IP onto the expressive and onto the real texture working with real tech.
Now, our roadmap today, and we have the current generation, which has been referred to as WISA or Gen 1, that's interoperable. But we have started porting our IP onto the Expressive chip and onto the Realtek chip, working with Realtek.
And concurrently with that, we have set up an organization team in India.
And concurrently with that we have set up an organization team in India.
to take that same IP and put it into software so it can be embedded into, for example, a TV, or set-top boxes, or ultimately cell phones.
Take that same IP and put it into software. So it can be embedded into for example, a television or set top boxes or where ultimately cell phones.
So while we're launching the modules for speakers and sound bars this year.
So while we're launching the modules for speakers and sound bars this year.
We are in parallel creating the software to license the IP for transmission directly from smart devices to those audio.
In parallel, creating the software to license CIP for transmission directly from smart devices to those audio speakers and they will that will include interoperability, which I'll cover shortly.
And that will include interoperability, which I will cover shortly.
Now, how does it, how do these new products line up? So.
Now how does it how long are these new products lineup. So.
Wysa, the interoperability brand of Wysa, is going to be known as Wysa HT for home theater. It is priced and it has a performance for that audiophile market.
Why is the interoperability brand of Liza is going to be known as <unk> Ht for home theater. It is priced and has a performance for that audio file market high end Tvs. So yes, we.
high-end TVs. So we've been built into the Bang & Olufsen TVs. A select number of models at TCL and Skyworth have us actually built in. So that will continue. There's a performance level that
We have been built into the bank and Olson Tvs, a select number of models at Tcl and Sky worth have has actually built in so that will continue theres a performance level that all other solutions cannot match, but what we're talking about today is addressing the rest of the market right.
All other solutions cannot match, but what we're talking about today is addressing the rest of the market.
And the first product that will come out after this will be based on the expressive model.
And the first product that will come out after this will be based on the expressive module.
Now, there's a lot of advantages to that. It'll be referred to as WISA DS. There will not be interoperability with it. That is designed to be specifically for the low end of the market, albeit a high performance from us, for cost-effective low-end soundbars, Bluetooth subs. We think we can compete very aggressively in that market with the expressive module and RIP loaded onto it.
Now there is a lot of advantage does that is it will be referred to as Weiss of DFS, there will not be interoperability with it that is designed to be specifically for the low end of the market, albeit a high performance from us for cost effective low end sound bars, Bluetooth subs, we think we can compete.
<unk> aggressively in that market with the expressive module and our IP loaded onto it.
Okay.
Okay.
But the purpose of Realtek, and Realtek is the first 5 gigahertz partner, but we're talking with other Wi-Fi vendors, is to port our IP under their chip. It cuts roughly in half our price, and that's applicable to the broad market.
But the purpose of real tax and real tech as the first five gigahertz partner, but we are talking with other Wi Fi vendors is support our IP under their chip it cuts roughly in half our price and thats applicable to the broad market, whether it's Tvs or set top box.
whether it's TVs or set-top boxes or sound bars or home theater or smart speakers.
Or sound bars or home theater of Smart speakers. So when you look at this chart and you think about all of this technology.
So when you look at this chart and you think about all this technology is finished this year or about to be finished this year.
Is finished this year or about to be finished this year.
We've become the only supplier to the immersive wireless audio market.
We become the only supplier to the immersive wireless audio.
Market that can go from the bottom of the market to the top of the market.
that can go from the bottom of the market to the top of the market.
that can provide interoperability or no interoperability. So we think there's an extremely strong positioning for the company. We think it's our performance will continue to excel.
Can provide interoperability.
Now in our Operability. So we think there is an extremely strong positioning for the company.
Think it's our.
<unk> will continue to excel.
Now for what does this mean in terms of brands is positioning. So this is how the audio market has segmented these are our customers up above.
Now for, what does this mean in terms of brands, this positioning? So this is how the audio market has segmented, but these are our customers up above.
So these are speakers that are costing $1,000, $40,000.
Your audio file right. So these are speakers that our cost in a thousand Bucks 40000, Bucks enclave and platinum have reached into the consumer price points.
Enclave and Platinum have reached into the consumer price points, what we're defining as below Sonos.
We're defining as below so knows we think sonus is not an audio file brand, but they are the top of the consumer brands right. They have broad distribution. They have good audio not.
is not an audiophile brand, but they are the top of the consumer brand, right? They have broad distribution, they have good audio, not.
Spectacular audio, they got a great firmware. But really the whole prior to these new products rolling out, we were not able to address the consumer market other than through platen audio and offering those solutions.
Spectacular audio they've got a great firmware, but really the whole prior to these new products Rolling out we were not able to address the consumer market other than through platinum audio and offering those solutions. So we.
With these new ones, now we're able to have conversations with product management and technical engineering teams from all of these brands. And these are the brands that you'll see on a Walmart or Target, Costco.
With these new ones now, we're able to have conversations with product management and technical engineering teams from all of these brands and these are the brands that youll see on a walmart or target.
Costco.
So.
One is to think about the devices, but the other is to think about the brands that we can now work with, right? And this dramatically expands it.
One is to think about the devices, but the others I think about the brands that we can now work with right and this dramatically expands it.
Move an RIP out of a custom chip to go on to IoT modules.
Moving to our IP out of accustomed chip to go onto Iot modules.
does more than open up the brands. It opens up the whole house to opportunities for phone apps, TV apps, to control audio in that space through IoT models.
It does more than open up the brands. It opens up the whole house two opportunities for phone apps TV apps to control audio in that space through Iot modules. So this is it.
So this is, excuse me, this is the market that we.
Excuse me this is.
The market that we start opening up.
We're looking forward to it. If you want to look from a TAM perspective.
We're looking forward to it if you want to look from a Tam perspective.
This is a great chart on how we are dramatically expanding our opportunity, both.
This is a great chart on how we are dramatically expanding.
Our opportunity both for revenue and customers. So why is the Ht the weiser interoperable logo.
So YSA-HT, the YSA interoperable logo that you've seen.
<unk> for the last four years.
is targeted to the home theater speakers, the high end of the sound bars and smart TVs. So you're talking to 50, 60 million.
Is targeted to the home theater speakers the high end of the sound bars, and smart Tvs, So you're talking to.
<unk> 60 million.
Unit annual market.
WISA DS, right, not interoperable, but that expressive module, that comes in and grabs, and we think is applicable to all the smart TVs and soundbars. So, that adds about 250 million unit TAM.
Why is the D S not interoperable, but theyre expressive module that comes in and grabs and we think is applicable to all the smart Tvs and sound bars. So that adds about 250 million unit Tam.
But it's really YSA-E, our IP ported onto the Realtek, that can go out and address all the market segments.
But it's really <unk> E R.
Our IP ported onto the real tech and can go out and address all the market segments.
all the way up to just below the high-end home theater audio file.
All the way up to just below the high end home theater audio file space. So.
So when you look at the product introductions, the reason we're excited is we have spent years developing this stuff. We have spent last year porting it onto the Expressive module. And we'll finish porting it onto the Realtek module this year. But that dramatically opens up the market opportunity for us and positions us as the primary leader for immersive wireless audio.
So when you when you look at the product introductions. The reason. We're excited is we have spent years developing this stuff. We have spent last year porting it onto the expressive module and will finish putting it onto the real tech module this year, but that dramatically opens up the market opportunity for us.
And positions us as the primary leader for immersive wireless audio.
Other <unk>.
enhancements that will be coming this year shortly. We announced the WISA SoundSend app, which has won a lot of industry awards.
The enhancements that will be coming this year shortly.
We announced the <unk> App, which is one a lot of industry Awards.
could be downloaded on Android TVs. You will see us announce later this year that it, and this will be before the Christmas season, that it can also be downloaded on WebOS TVs, which is your LG system and Tizen.
It could be downloaded on Android Tvs, you will see us announce later this year that and this will be before the Christmas season that it can also be downloaded on web OS Tvs, which is your LG system and Tilden.
operating system, which is Samsung. So between Android, LG, and Samsung, we've covered the bulk of the market for the Android, the WISA app to be downloaded onto TV.
Operating system, which is Samsung so between Android LG and Samsung we've covered the bulk of the market for the Android <unk> app to be downloaded onto Tvs.
Alright, so we have talked about why is the DFS.
All right, so we have talked about WISA DS on the expressive module being a low price per solution, but this is a really powerful solution. So when you look at our primary competitor, Skyworth, we offer more
<unk> module.
In a low price per solution.
But this is a really powerful solution. So when you look at our primary competitor skyward.
We offer more audio channels.
We have a stronger wireless performance as measured by Novus Labs. So it's an independent lab that measured us versus them. And yes, they're in 5 gigahertz. We're in 2.4 gigahertz. And we outperformed. And it's.
We have a stronger wireless performance as measured by Novus labs. So it's an independent lab that measured us versus them and yes. They are in five gigahertz, where in two four gigahertz and we outperformed.
And it's at a lower cost solution.
Well, from a consumer's perspective, what's really great about this is.
From a consumer's perspective was really great about this is we can let a sound bar that has a $3 one architecture in the front of the room.
We can let a sound bar that has a 3.1 architecture in the front of the room, so it is with Dolby Atmos, so it has a left and a right.
So it is with Dolby Atmos, so it has a left and right.
floor and ceiling speakers, we can expand that to a true bubble of immersive sound with a 5.1.4 for less than $15 a wireless technology.
Floor and ceiling speakers, we can expand that to a true bubble of immersive sound with a 514 for less than $15 a wireless technology.
So you have front and rear ceiling sounds, you got front and rear floor sounds, and you have a subwoofer.
All right. So you have front and rear ceiling sounds you got front and rear floor.
Floor sounds Andy have a subwoofer.
We think that's a hot architecture. We think the consumer is going to love it, and we are actively pushing that with customers today.
We think Thats a hot architecture, we think the consumer is going to love it and we are actively pushing that with customers today.
How much can that be worth to us? So we went through and talked about billion unit TAMs. But if you just get right down to the SAM and you think about there's 42 million sound bars this year are projected to be sold.
How much can that be worth to us. So we went through and talked about 1 billion unit Tam.
But if you just get right down to the Sam when you think about there's 42 million sound bars. This year are projected to be sold.
5% of that market into that architecture with DS would be another $25 million of revenue.
5% of that market into that architecture with DFS would be another $25 million of revenue. So we are highly focused on that one because it covers the begin to lower end of the market with a highly sophisticated solution.
So we are highly focused on that one because it covers the beginning, the lowest end of the market with a highly sophisticated solution.
So when we.
Where did so if you summarize where do we fit in the in the spatial audio ecosystem, you have the content providers.
So if you summarize where do we fit in.
In the spatial audio ecosystem, you have the content providers.
sending stuff out. You got the wireless people or the cell phone streaming it into the router. You got Dolby and DTS giving you immersive ceiling and floor sound. Final step though is
Then and stuff out you've got the wireless people or the cell phones stream into the router you got Dolby in Dts, giving you a immersive ceiling and floor sounds.
The final step, though is wireless transport and if you think about <unk> that is what we do that is our core we now do it at all levels of the market not just the highest level, we have the highest performance of each level of the market, but we can.
And if you think about WISA, that is what we do. That is our core. We now do it at all levels of the market, not just the highest level. We have the highest performance of each level of the market, but we can.
address the lowest price, the mid-tier, and the broad market, as well as the high performance.
Address the lowest price the mid tier and the broad market as well as the high performance market.
And with that, I'd like to turn it over to George to go through our financials.
And with that I'd like to turn it over to George to go through our financials.
Thank you Brett.
George: So we have been tracking website traffic as a key performance indicator. We were targeting a million unique user visits in 2021. We exceeded two million and we're projecting a target of four million visit visitors in 2022. If you if you look at our revenue 2021, we had 172 percent growth.
So we have been tracking website traffic.
Key performance indicator.
We're targeting 1 million unique user visits in 2021, we exceeded $2 million and we're projecting a target of 4 million visits visitors in 2022.
If you look at our revenue in 2021, we had 172% growth.
George: And our guidance for 2022 is approximately 40% growth year over year.
And our guidance for 2022 is approximately 40% growth.
Year over year.
I want to go to the next slide.
George: So Q4 2021, we hit, we exceeded 2 million in revenue for the first time in the history of the company. That was a 93% increase over the same quarter prior year.
So Q4, 2021 we hit we exceeded $2 million in revenue for the first time in the history of the company that was 93% increase over the same quarter prior year.
George: Our gross margin exceeded 30%, which was our target that we've been talking about. That's up from 24% in Q4 2020.
Our gross margin exceeded 30%, which was our target that we've been talking about it's up from 24% in Q4 2020.
George: Our operating expenses were $3.7 million, which included half a million of non-cash expenses, primarily stock comp expense.
Our operating expenses were $3 7 million, which included half a million of noncash expenses, primarily stock comp expense.
George: That was compared to $3.9 million of which $900K was non-cash exchange.
That was all that was compared to $3 9 million of which 900 K was noncash expenses.
George: The net loss for the quarter was 3.1 million compared to 3.7 in the prior year, same quarter.
Net loss for the for the quarter was $3 1 million compared to $3 7 million in the prior year same quarter.
George: And we ended cash for the year at $13.1 million, which is what we had guided to.
We ended cash for the year at $13 1 million, which is what we had guided to.
George: If you look at guidance, we're off to a slow start this year, but it's a back-ended year. We're going to have between 30% to 50% growth year over year for the full year. So the midpoint is $9.2 million there for 2022.
If you if you look at guidance.
We are off to a slow start this year, but its a back ended year, we're going to have between 30% to 50% growth year over year for the full year.
So the midpoint is $9 2 million there for 2022.
George: The gross margin, there's a lot of issues in the supply chain. Things are going to bounce around, but we're still targeting 30 points, but we could be in the high 20s as well.
The gross margin, there's a lot of issues in the supply chain things are going to bounce around but we're still targeting 30 points, but we could be in the high <unk> as well.
George: And with the 13 million we're starting the year that's enough cash to fund all of our initiatives we're talking about through the rest of the calendar year. And with that, I'll turn it back to Brett.
And with the $13 million were starting the year that's enough cash to fund all of our initiatives, we're talking about through the rest of the calendar year.
And with that I'll turn it back to Brian .
Thank you George.
If you summarize.
With the positioning of the companies and we are in we are repositioning ourselves from the high end audiophile market to the very broad audio market. We have positioned ourselves to have four product lines by the end of this year three modules plus IP.
Brett: With the position the company's in, we are in, we have repositioned ourselves from the high-end audiophile market to the very broad audio market. We have positioned ourselves to have four product lines by the end of this year, three modules plus IP.
Brett: We have positioned significant growth despite supply chain issues in Q1.
We have position significant growth despite supply chain issues in Q1.
Brett: and the balance sheet is strong. But the sum of all this is we are in an explosive audio market driven by the consumer.
And the balance sheet is strong but the sum of all this is we are in an explosive audio market driven by the consumer.
Brett: We have the only comprehensive wireless offering to the industry to address that demand. We have the only interoperability standard that's not only serving interoperability for the market that needs it, but also building.
We are the only comprehensive wireless offering to the industry to address that demand. We are the only interoperability standard not only serving interoperability for the market that needs it but also building.
Brett: the retail market around it with the storefronts. We think we've solidly positioned.
The retail market around it with the store fronts. So we think we are solidly positioned the.
Brett: to the investment last year and this year to drive revenue growth this year and beyond and increase shareholder value.
The investment last year and this year to drive revenue revenue growth this year and beyond and increase shareholder value.
Speaker Change: So with that, I'd like to turn the call over to David. He will moderate questions. I would ask you to state your name, your affiliation, whether you're with, because we can't see it on the Shreks platform. So if you give us your name, your affiliation, whether you're with a bank or investment firm or a private investor.
So with that I'd like to turn the call over to David He will moderate questions I would ask you to state your name your affiliation whether you're with because we can't see it on the <unk> platform.
If you could give us your name your affiliation whether you're with a bang.
Bank or investment firm or a private investor.
Ask your question.
Speaker Change: David? Great. Yeah, thanks, Brett. Again, we'll be conducting the Q&A session. Take a moment to kind of gather the questions. In this format, yeah, you can raise your hand if you're joining via the internet. If you've dialed in to raise your hand, you need to dial star 9. And the way you can unmute your line is hitting star 6.
David Great Yeah. Thanks, Brett.
Gambro.
The Q&A session to take a moment to kind of gather the questions.
This format you can raise your hand, if you are joining via the Internet if you've dialed in to raise your hand.
To dial star nine.
And the way you can mute your line is hitting star six and we will start calling on people.
Speaker Change: And we will start calling on people with that understanding. And, you know, when you come in, do state your name and company affiliation before stating your question, as Brett mentioned. So one moment, please.
With that understanding and when you when you come in.
You State your name and company affiliation before stating your question as Brent mentioned, so one moment please.
And then.
Speaker Change: If you have a question, I'll go to the first question. It's the dial in from the number ending in 884.
We have a question.
The first question, it's the dial in from the number ending at 88 four.
Amit your line.
There it is.
Hello, Hey.
Hey, guys can you hear me.
Jack: Okay. Yes. Great. This is Jack. Jack Vanderarty, Sales Side Analyst at Maxim Group. Brett, great. Great results. And George, thanks for taking my questions. Strong outlook.
Okay, Yes, great. This is Jack Jack Vander already sell side analysts at Maxim Group.
Bret great great results and and George Thanks for taking my.
My questions strong outlook.
Jack: I want to just review, this was a record quarter for you guys in terms of revenue, so it's great to see. And George, looking at your guide as well for the next year, it looks like you have strong growth baked into that. Brett, maybe if you could just help me understand, you know,
I wanted to just review. This this was a record this was a record quarter for you guys in terms of revenue. So it's great to see.
And George looking at your guide as well for the for the next year I think you had strong growth baked into that.
Brett maybe if you could just help me understand.
Jack: how much of a role, you know, what were the key drivers of revenue for this quarter, particularly with the Weissel wave? And then just all the moving parts with these new product launches you have going on for next year, for this year.
How much of a role although.
Were the key drivers of revenue for this quarter.
Particularly with the Weiss a wave and then just all the moving parts with these new product launches you you you have going on for next year for this year.
Jack: What's kind of driving the revenue growth that George outlined? So from, I guess, fourth quarter revenue drivers and then what's driving 2022's revenue growth from a fundamental perspective?
Whats kind of driving the revenue growth that George outlined so from I guess fourth quarter revenue drivers and then whats driving 2022 as revenue growth from that.
Our fundamental qualitative perspective, yes.
Speaker Change: Yeah, so what's driving our revenue growth, Jack, is the wireless module.
So what's driving our revenue growth Jack is the wireless modules.
Jack Vanderarty: So, we do have the platen audio line that we sell. I believe that was roughly 450,000 in Q4 maybe, maybe 400.
So we do have the platinum audio line that we sell.
I believe that was roughly four 450000 in Q4, maybe maybe for 400.
Jack Vanderarty: And, you know, obviously that's always going to be strong in Q4 because of seasonality of the consumer business. But when you look at what's driving 2022, the growth in 2021, this is design wins for wireless technology. I mean, if you if you go back 18 months, the brands we talked about then versus the brands now.
And obviously, that's always going to be strong in Q4 because of seasonality of the consumer business, but when you look at whats driving 2022 the growth in 2021. This is design wins for wireless technology I mean, if you. If you go back 18 months the brands, we talked about Denver.
The brands now.
Jack Vanderarty: just within the certified world is significantly larger. Plus, we just talked about a bunch of brands that we haven't talked about in the past.
Just within the certified World is significantly larger plus we just talked about a bunch of brands.
We haven't talked about in the past so the love sack deal very important deal Harman sound bars very important.
Jack Vanderarty: So the Love Sack deal, very important deal. Harmon's soundbars, very important.
Speaker Change: Yeah, that's, that's helpful. And then, you know, speaking of which, I want to just zone in on the, the new.
Got it that's helpful and then.
Speaking of which I wanted to zone in on the new.
Speaker Change: the second gen opportunity basically with real tech.
The.
The second Gen opportunity basically in.
With real Tech and.
Speaker Change: There was a product in the initial press announcement from, I'm not quite sure, maybe a month or so ago, that the initial product or sample may be in the market by 2022 or like a demo version of it. Can you just provide an update there and when you actually expect a product to be ready for consumers?
There was a product in the initial press announcement.
I'm not quite sure maybe a month or so ago.
The initial product or sample and may be in the market by 2022 are like a demo version of it can you just provide an update there and when do you actually expect.
Products to be ready for consumers.
So we expect.
Speaker Change: So we expect, so we will, so we're today we basically have announced the partner, and we have announced the branding strategy, we will announce the actual first iteration of that product.
So we will so we are today, we basically have announced the partner and we have announced the branding strategy we will.
<unk>.
The actual first iteration of that product.
Speaker Change: itself mid-year this year, so call it sometime in Q3. We expect to sample it shortly thereafter and we expect to release it to production by year end.
Itself.
Mid year this year so call. It sometime in Q3, we expect a sample that shortly thereafter, and we expect to release it to production by year end.
Speaker Change: That's awesome news. Okay, great. That's exciting. And then let me just ask me one more.
That's awesome news, okay, great. That's exciting and then let me just ask me one mortgage.
Speaker Change: The typical question around supply chain dynamics and maybe the impact or visibility of impact that you think it's having on some of your major brands. And how many brands do you have these days? It's still 70 plus consumer brands?
The typical question around supply chain dynamics, and maybe the impact our visibility of impact that you think it's having items from your major brands and how many brands do you have these days and it's still 70 plus consumer brands.
Speaker Change: I believe so. We have started focusing more on how many brands are shipping.
I believe so we have started focusing more on how many brands are shipping.
Alright, because one is members, but more importantly is how many brands are shifting and thats over 30 now.
Speaker Change: Because one is members, but more importantly is how many brands are shipping and that's over 30 now.
Speaker Change: But I think we're still in the same ballpark of brands in the association.
Great.
In the same ballpark of.
Brands also in the association.
But you had a question here and then attack.
Speaker Change: Yep. And then, so of these 30 brands that are shipping, 30 or more brands that are shipping products, how are they, what's your visibility or any color you could provide on potential impact or delays or just given the supply chain environment, any comments there?
Yes, and then so all of these 30 brands that are shipping 30 or more brands that are shipping products.
How are they whats your visibility or any color you can provide on potential impact or delays or just with the just given the supply chain environment.
Any comments there.
Speaker Change: Yeah, so supply chain obviously has been an issue for the industry as a whole for starting, you know, early last year.
Yes, so supply chain, obviously has been an issue for the industry as a whole for starting.
Early last year.
Speaker Change: From our communication out to you folks, it has not been an issue because we've been, we've managed expectations. So prior to supply issues, we thought we had a higher year last year than what we did. Right.
From our communication out to you folks it has not been an issue because we've been we've managed expectations. So prior to supply issues. We thought we had a higher year last year than what we did right.
Speaker Change: but what we are seeing in Q1 is a drop in business because a lot of that product that did get built showed up after Christmas.
But what we are seeing in Q1.
As a drop in business because a lot of that product that did get built showed up after Christmas.
Speaker Change: So, our brands, our consumer brands that are using our technology are sorting through how to clean up their inventory positions before they go to the 2022 Christmas.
So our brands are consumer brands that are using our technology are sorting through how to clean.
Clean up their inventory positions before they go to the 2022 Christmas build.
Speaker Change: So, we have started in post.
So we have started and post.
Speaker Change: Lunar New Year started to see more PO activity that's impacted Q2, which is good. We have not seen any design losses or product EOLs. We're pretty confident this is a short, early in the year phenomenon until our customers get their inventory back in line.
Lunar new year, starting to see more activity that impacted Q2, which is good we have not seen any design losses or product.
So we're pretty confident this is.
Sure early in the year phenomenon until our customers get their inventory back in line.
Speaker Change: We do see POs coming in even in Q1 for new designs.
We do CPO is coming in even in Q1 for new designs.
Speaker Change: So, by the time we get into Q3, we're pretty we're feeling good that.
So by the time, we get into Q3, we're pretty we're.
We're feeling good that.
Speaker Change: all designs whether they were last year's or this year's are going to be needing production in the back half of the
All designs, whether they were last year or this year is there going to be needing production in the back half of this year.
Speaker Change: Okay. Great to hear. I appreciate the update. I'll hop back in the queue. Thanks. Great. Thanks, Jack. I'm going to go
Okay, great to hear I appreciate the update I'll hop back in the queue. Thanks, Okay, great. Thanks Jack.
Then I go to the next call or the question.
Speaker Change: Call over the question ending in 884, that number. Excuse me, actually.
Ending in a need for that number.
Ajay ending in 131.
Speaker Change: Go ahead and unmute your line if you could. There you go.
Go ahead and on mute your line, if you could hey, Joe.
We should be able to hear you.
Hello.
Ill.
Speaker Change: Yeah, hi, it's Marty Elbaum, Horizon Networks. Hey, Brett, how are you? Hello, Marty. The question I have for you, when, could you give us some guidance as to when you see the loss, the company really turning around and either breaking even or showing a profit? Because if you lose $3 million a quarter, you're going to be out of money in a year.
Yes, Hi, it's Marty Elbaum Horizon networks, Hey, Brad how are you.
Hello, Marty.
The question I had for you.
When can you give us some guidance as to when you see the loss the company really turning around and either breakeven or showing a profit because if you lose $3 million a quarter you're going to be.
The money of the year.
Yes so.
Brett: We have not given guidance, but what I will say, Marty, is.
We have not given guidance, but what I will say Marty is.
Brett: If you think about the TAM that we are driving to.
If you think about the Tam that we're driving to.
Brett: We are all in at finishing and launching and introducing these all three technologies to the broad industry this year.
We are all in at finishing and launching and introducing these.
All three technologies to the broad industry this year.
Brett: So when you think about where do we see P&L improvement, we believe that starts next.
So when you think about where do we see P&L improvement, we believe that starts next year.
Brett: I'll say that much, right? Because you're not going after that 50, 60 million high-end market. You're going after the whole market with three different profit price points, three different performance levels, and that's fundamentally opens it up. So we believe.
I'll say that much right because you're not going after that 50 60 million high end markets Youre going after the whole market with three different profit price points three different performance levels and Thats fundamentally opens it up so we believe.
Brett: using that $13 million of cash that we had at year end.
You use a net $13 million of cash that we had at year end.
Brett: is a very critical investment to open up our market so that we can grow revenue beyond the revenue that we've seen in the last three years, that growth.
Very critical investment to open up our markets. So that we can grow revenue beyond.
The revenue that we've seen in the last three years that growth.
Speaker Change: That's great, that's great. Hopefully we'll succeed in that area. I hope it works.
That's great that's great.
Hopefully we will succeed in that area I hope it works.
Speaker Change: We're planning on it, baby. I feel I have a high confidence in our technical engineering team. I got high confidence in the sales team. We've added some.
We're planning on a baby I feel I have a high confidence in our technical engineering team I've got high confidence in our sales team we've added some.
Speaker Change: Very talented people, some of them you guys are aware of being Eric and Steve, so the two ringleaders behind the HDMI launch back in the day. We added a new country sales manager in Korea.
Very talented people some of them you guys are aware of being.
Eric and Steve So the two ring leaders behind the HDMI launch back in the day, we added a new country sales manager in Korea.
Speaker Change: with very high relationships in LG and Samsung. So we're prepared for success. Great. That's wonderful news.
With very high content.
Relationships in LG and Samsung so.
We're prepared for success.
Great. That's wonderful news thank you.
Yeah.
Speaker Change: Okay, we've got another question coming in here from the dial-in ending in 019. You can unmute your line. You've got a star six to unmute. There we go.
Hey, I've got another question coming in here from the dial in ending in 019.
And on mute your line.
Got it fixed on mute.
Yes.
Thank you Anne.
Do we need to mute Marty.
Oh I'm sorry.
Yes, I had mute Marty and then.
Does it start star six.
Speaker Change: That's the unmute or just mute your phone and then we can dial this one here.
That's the <unk>.
Just mute your phone and then you can dial this one here.
Speaker Change: And we have the phone number is 019 ending. I believe that might be David Levine, but I'm not 100% sure. You can unmute by yelling star six. Oh, now you can hear me, I bet. Sir?
And we have the final number is 019, ending believe that might be David Levine.
100% sure.
On mute by Ireland Star six.
Now you can hear me I bet there you go.
I push it three times so it wasn't me.
Okay.
So.
Speaker Change: If I understand this right, as we as we move forward in the product mix, I guess I'll call it, if the product mix shifts more to the embedded
If I understand this right as we as we move forward in the product mix.
I guess I'll call it as the product mix shifts more to.
The embedded solution.
Speaker Change: Do we end up at a point then, or is the goal to end up at a point where you're basically providing?
We ended up at a point then or is the goal to end up at a point where.
You're basically providing a.
Speaker Change: License or a piece of software. I'm not sure what the right term is there either, but that's just kind of a higher margin product.
License or a piece of software or I don't want to screw up the right term is there either but that's just kind of.
Our higher margin product so we.
Speaker Change: you know, is that where we end up is more likely in a kind of a
You know that where we end up it is more likely in a kind of a.
Speaker Change: maybe a lower revenue, much higher margin.
Maybe a lower revenue much higher margin.
Thanks.
No that's a great question David.
Speaker Change: So that's a great question, David. First, I would say I never like to give up revenue, ever. But what it does let us do, so when you think about that TAM ladder that we showed, the thing that the speaker.
First I would say I never like to give up revenue ever.
But what it does let us do so when you think about that Tam ladder that we showed.
The thing that the speakers need is they need a module.
Speaker Change: But what the big brands, if you think about penetrating a Samsung, an LG, let's just take those two big brands, right?
But what the big brands, if you think about penetrating a Samsung and LG.
Let's just take those two big brands right.
Speaker Change: What they need is control of their own destiny.
They need is control their own destiny. So.
Speaker Change: So I look at it as we're expanding our revenue to IP licensing. That's what the team in India is doing.
I look at it is we're expanding our revenue to IP licensing that's what the team in India is doing well.
Speaker Change: But we will never give up the module revenue, because that's not what speaker companies need. They just want to go buy an amp. They want to buy a wireless module. And they want to know it connects to what's getting sent to them. They're not going to go out and design. OK, so I said that wrong. So I mean, maybe lower unit revenues. Yeah.
But we will never give up the module revenue because thats not what speaker companies need. They just want to go buy an app they want to buy a wireless module and they want to know it connects to what getting sent to them right. They're.
We're not going to go out right. So okay. So I said that wrong, so I mean, lower maybe lower unit revenues.
Yeah, but it's a vastly.
Larger market.
No I understand that yeah, so just a sound bar market.
Speaker Change: Yeah, so just the soundbar market, you know, we have.
We have.
Speaker Change: few great designs on YSA-HT.
A few great designs on <unk> H T.
But in fact.
Speaker Change: It's a 42 million unit market this year, and we think there's a ton of upside around just that YCDS and the expressive module.
It's a 42 million unit market this year.
And we think there's a ton of upside around just that Weiss of DFS and expressive module.
Speaker Change: So yeah, it'll be lower ASP sale.
So, yes, it'll be lower ASP sale.
Speaker Change: but it addresses 90% of the market or 95% of the market that we could not address.
But it addresses 90% of the market are 95% of market that we could not address.
And ultimately that will be a higher margin than that.
Speaker Change: And hopefully that will be a higher margin then. Right, and we believe...
Your line is open.
And we believe.
The new products offer a higher margin so george guided to 28% to 30% gross margin. This year and we have been targeting 30 points, but we've seen cost increases on the wiser Ht module.
Speaker Change: So George guided to 28 to 30% gross margin this year, and we have been targeting 30 points, but we've seen cost increases on the WISA-HT module.
Speaker Change: We've made a choice for a couple of points. We have raised prices on those last year, but we're not going to push the price level any higher.
So we've made a choice for a couple of points not to we have raised prices on those last year, but we're not going to push the price level any higher.
With the new and you get to a I'm sorry.
Speaker Change: Well, I was just going to say, so the margin structure we're looking at, whether it's the IP licensing, which is 100% margin or.
I was just going to say so the margin structure, we're looking at whether it's the IP licensing, which is 100% margin or.
Speaker Change: know, the auditors will figure out how to turn it in 95% margin, right? But there's no margin cost, right? The expressive module, the real tech module sales, we think that that is higher than the 30 points that we've.
The auditors will figure out how to turn at a 95% margin rate, but there is no margin cost rate. The expressive module. There realtek module sales, we think that that is higher than the 30 points that we've been guiding to.
Speaker Change: Okay, that's what I was getting to. So, so as I sort of absorbing all of this, and I keep coming back to the term you used in one of the other slides where you said, you know, you're really in the wireless transport business so
Okay. That's what I was getting too so so as I sort of absorbing all of this and I keep coming back to the term you used them on the other slides, where you said you know you're really in the wireless transport business. So.
Speaker Change: I mean, is it fair to say that what you're really...
I mean is it fair to say that that what you are really.
Speaker Change: try to do ultimately is, in terms of audio,
Trying to do ultimately is in terms of audio.
<unk>.
Basically.
Speaker Change: become a better solution to wireless transfer of audio than Bluetooth?
Become a better solution to wireless transport of audio then Bluetooth.
Speaker Change: I know we've tried to stay away from that analogy in the past, but that seems to me.
I know you've tried to stay away from that analogy in the past, but that seems to me.
Speaker Change: I guess that's what that means to me. I mean, tell me if I'm wrong about.
I guess, that's what that means to me tell.
Tell me, if I'm wrong about that I guess.
Speaker Change: So there are some segments of the Bluetooth market that we are expressly, deliberately competing against with the Express app.
So there are some segments of the Bluetooth market that we are expressly deliberately competing against with the expressive module.
Speaker Change: Wi-Fi is a better signal, there's better connectivity applications, there's more things you can do with it. So, yes, now, that's not the same as.
Wi Fi is a better signal theres better connectivity applications Theres more things you can do with it. So yes now that's not the same as <unk>.
Sure.
Speaker Change: I don't think we're at the point where every Bluetooth speaker can become WISA, but we're going to start taking that, going after that business, because certainly those Bluetooth subs, those little Bluetooth speakers that are floating around the TV and the sound bars, those have serious performance issues that we can address.
I don't think we're at the point, where every Bluetooth speaker can become wiser, but we're going to start taking that going after that business because certainly those Bluetooth subs those little Bluetooth speakers that are floating around the TV and the sound bars those have serious performance issues that we can address.
Got it thank you.
Speaker Change: At the moment, I don't show any other questions. If anyone has a question, raise your hand. Otherwise, we'll wait just a minute.
At the moment I don't show any other questions. If anyone has a question raise your hand, otherwise, we'll wait just a minute.
Speaker Change: Otherwise, I'll turn it back to Brett for closing remarks. I think, David, you have to unmute yourself again.
And I'll turn it back to Bret for closing remarks, I think David you have to you have to mute yourself again.
Okay.
Okay.
Now okay.
Okay.
I'd like to thank you for attending today.
David Levine: We think this is, you know, we had an exciting year last year with a lot of revenue growth, with a couple quarters were record revenue growth. We continue to see revenue growing this year significantly, particularly in the back half. So, and we're really well positioned to address the wireless audio market going forward.
We think this is we had an exciting year last year with a lot of revenue growth with a couple of quarters were record revenue growth. We continue to see revenue growing this year significantly, particularly in the back half so and we're really well positioned to address the wireless audio market going forward.
And with that I'd like to thank you and I.
Speaker Change: And with that, I'd like to thank you and have a good day.
Have a good day.
Goodbye.