Q3 2022 Energous Corp Earnings Call
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And welcome to the <unk> Corporation third quarter 2022 conference call all participants will be in a listen only mode.
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After todays presentation, there will be no there will be an opportunity to ask questions.
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Please note this event is being recorded.
Now I'd like to turn the conference over to Matt Sullivan and the simulations. Please go ahead.
Thank you this navi 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, <unk> 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.
CEO of <unk>. Please go ahead Cesar.
Thanks, Matt.
Good afternoon, and welcome to the <unk> 2022 third quarter conference call joining.
Joining me today is bill Molina, our acting Chief Financial Officer.
I am pleased to report that in the third quarter of 2022, and then use that lever just over 10% year over year quarterly revenue growth, while continuing to improve our bottom line.
Driven by the demand and fulfillment of orders for our Wattup our bridges.
This is a strong indicator of the increasing demand for our wireless power network solutions as you will know here.
In the third quarter 2022, we made substantial progress.
Firstly, we announced the first two retail deployments of <unk>, what our power bridges through our partnership with flagship and William This.
This retail deployments both in Australia successfully demonstrated installation of multiple wattup power bridges in an active harvesting wireless wireless power transfer network saved.
Safely energizing thousands of William Iot pixels without the need of batteries and they are the software control of flagship installations.
Installation provides retailers with in store merchandise and customer dynamics tracking data.
These installations perfectly showcase the suitability of the Wattup technology system capabilities for new potential adjacent markets, enabling energize rooms, where power can be harvested by Iot devices, eliminating the need for batteries or power cables.
In the third quarter 2022 we also announced FCC approval for our 15, Wattup Tower bridge, increasing regulatory approved distance and power levels.
Leo of over 200 granted patents precision energies as a leader in wireless power transfer.
Images remains committed to the global is standardization of wireless power transferred and we are pleased to note that in October the United Nations International Telecommunications Union ITU approve on recommended the 900 megahertz, a radio frequency ban for wireless power transfer energizing the ice.
Ecosystem. The 900 megahertz band recommendation supports the choice of frequency that we made us energies to develop our technologies and we and our partners and customers believe it is the best option for overall safety and system performance, including transmission rich solution cost and technology.
Footprint.
In a solution focus Iot market.
Forming a strategic partnerships is a fundamental importance to ensure the success of go to market and deployment as such over the last 12 months energy has fallen important strategic partnerships with key technology players to address each a specific market focus where we intend to deploy our technology.
This quarter, we announced a new wireless energy harvesting evaluation, Keith supporting Iot industrial retail and medical applications in partnerships with Ep's. This new Kid. In addition to our previously released wireless power sensory evaluation Keith in partnership with our Nozick consists of a one what what a power bridge and.
Specific receivers that allows customers to evaluate our technology and systems capabilities and fit through their needs.
With international trade shows coming back from a past due to COVID-19, we are excited to be exhibited at electronica in Munich, Germany from November 15th through the 18.
Electronica is one of the world's leading tech conferences, and we will be on hand, demonstrating some of our very best latest technologies in conjunction with our partners and we welcome any of you present to visit our booth.
In summary, our progress inactive energy harvesting wireless power technologies regulatory certifications standardization efforts system deployments for power at a distance over the last three quarters with numerous achievements. During Q3 has clearly position <unk> as a leader in unleashing the Iot market.
It has also helped establish this industry is a recognized technology solution well positioned to enable the current the emergence of the Iot based fourth industrial revolution with their a smaller Iot devices through its application of artificial intelligence.
Turning now to.
General company update on the goals that we set out for 2022.
Our short term goal was to fulfill the commercial delivery of one what our power bridges orders. We noted on our earnings call for the second quarter of 2022 that <unk> had been met in Q3, we continue to shape against orders receive.
Our second near term goal was to identify a beachhead RF tag application and related addressable markets targeting our first production pilot deployment. We met this goal in Q3, and we announced our first two deployments of asset tracking devices with Williams flagship the most recent at Academy.
Brian .
Store in Australia.
Lastly, on our third stated near term goal.
We were us where to complete the development of an electronic shelved label end to end system and target of first Bible deployment, we continued to explore this market and potential partnerships opportunities.
We would also like to read to right, our long term goals and give an update on dose.
Our long term goals are the following <unk>.
Support Air fuel alliance efforts to develop a wireless power transfer standard.
As a board member at the airfield Alliance, we are excited to see the progress of the <unk> Alliance is making towards finalizing the wireless power transfer standard we will give further updates on this goal as the fuel alliance progresses thoughts that is standard.
Our second long term goal was to lead the ITU recommendation to align 900 megahertz wireless power transfer spectrum at the first designated wireless power spectrum worldwide.
As we reported in October of this year, the ITU approve and recommended 900 megahertz for wireless power transfer. This historic achievement has open up a vast number of accessible markets for wireless power transfer using the 900 megahertz band.
Our third long term goal is to certify high power greater than one what conducted power Iot wireless power network power of restraints meters in the U S and the EU without distance limitations with a 15 Watt Wattup Tower Bridge FCC's certification in the U S that we announced in August along with our.
Earlier.
D U a greater than one west certification, we have achieved this objective.
Our goal number four was to identify potential applications of ESL vertical markets and therapies.
Violet deployment as I mentioned earlier, we continued to explore these market and potential partnerships opportunities.
Our long term goal.
Number five was to identify a third vertical market and build in into one system for customer technology demonstrations.
We are in the process of completing this goal.
We didn't identification of Iot's sensors, as our third vertical market with an end to end system currently under development.
Finally, and most important or six the stated goal is to deliver year over year revenue growth driven by expanding Iot wireless power network deployments.
I'm happy to report that through the third quarter of 2022, we have deliver year over year quarterly revenue growth and each quarter of 2022 and achieve approximately 2007% year over year revenue growth for the nine months period ended September 30th 2022.
I will now turn this call over to build my Nina or can CFO .
Thanks Caesar.
Earlier today, we issued our queue three earnings press release announcing the operating and financial results for our fiscal 2022 third quarter ended September 30th.
For the third quarter, we recognized approximately $223000 in revenue a decrease of 4% compared to approximately 233000 in the prior quarter.
And an 11% increase compared to approximately 201000 in the same quarter of last year.
Cost of revenue for Q3 was approximately $420000.
An increase of 149000 over the prior quarter, which was due to product sales, making up a larger percentage of our revenue in Q3.
And also an inventory right down.
We did not report any cost of revenue in Q3 of 2021.
Total gap costs and expenses for the third quarter totaled $6.3 million.
Approximately $1 million lower than the total costs and expenses of last quarter.
Which was mainly due to an approximately 600000 decrease in salvaging is severance expense.
And a 300000 decrease in R&D expense Doom.
Due mainly to decreases in recruiting expense in chip design expense.
Compared to the third quarter of last year.
Total gap costs and expenses was approximately $6.3 million lower which was mainly due to a $4 million decrease in severance expanse of $1.9 million decrease in R&D due primarily to in approximately 900000 decreases stock comp expense and a 450000 decrease in payroll.
Expense.
And also a decrease of approximately 800000 in sales and marketing.
Due primarily to approximately 450000 decrease in stock comp expense and a 200000 decrease in payroll expense.
Year today are total gap costs and expenses was $21 million approximately $11.5 million lower than the $32.5 million Q3 year to date gap expanse in fiscal 2021 a.
A decrease of just under 36%.
The decrease year over year was primarily due to an approximately $6 $2 million decrease in stock cop expense.
$3.4 million decrease in severance and at 1.1 point 9 million decrease in payroll expense.
Which are partially offset by a 900000 increase in cost of revenue.
The net loss for the third quarter on a gap basis was $6 million or an eight cent loss per share on 70, 677 $6 million weighted average shares outstanding. This compares to a $7 million net loss and Q2 or nine per share and at 12.5.
Net loss or 20 cents per share on $63 million weighted average shares outstanding in Q3 of 2021.
A year over year increase in the share count was mainly due to shares added from our at the market offering or ATM facility in the fourth quarter of 2021, which raised an addition on that $27 million of cash and added 12.2 million shares.
Now for a non-GAAP view of our numbers for the quarter as we believe non-GAAP information provides a useful comparison for investors, especially for a company that our stage when used with gap information.
Excluding approximately 698000 of stock based Cobb and approximately 74000 of depreciation expense from our total Q3 gap costs and expenses of $6.3 million.
Net non-GAAP costs and expenses totaled approximately five $6 million.
A decrease of approximately 470000 compared to Q2, and a decrease of approximately $1.1 million compared to Q3 of last year.
The decrease compared to Q2 was mainly due to decreases in recruiting an annual shareholder meeting costs.
Partially offset by an increase in cost of revenue.
The decrease compared to Q3 of 2021 was mainly due to reduced head count in research and development and sales and marketing and also decrease in recruiting fees again parks.
Partially offset by an increase in revenue.
Cost of revenue sorry.
Or non-GAAP net loss for Q3 was approximately $5.2 million and.
And approximately 560000 lower loss compared to Q2, and then approximately $1.3 million lower loss compared to Q3 of last year.
non-GAAP research and development expense was $2.6 million.
And approximately 330000 decrease versus the prior quarter.
And approximately 930000 decrease compared to the same period last year.
The decrease compared to Q2 was mainly due to decreases in recruiting in chip development costs.
The decrease compared to Q3 of 2021 is mainly due to decreases in payroll expense chip development costs and consulting costs.
non-GAAP SG&A expanse was $2.6 million a decrease of approximately 300000 versus the prior quarter and a decrease of approximately 600000 compared to Q3 last year.
The decrease compared to Q2 was mainly due to decreases in recruiting an annual annual shareholder meeting costs.
The decrease compared to Q3 of 2021 was mainly due to decreases in recruiting and consulting costs.
Year to date are total non are total non-GAAP costs and expenses was was $18 $1 million.
One $9 million lower than the $20 million of Q3 year to date non-GAAP expense in fiscal 2021.
The decrease was mainly due to an approximately $1.9 million decrease payroll expense.
500000 decrease in legal expense and a 500000 decrease in chip development costs.
Partially offset by an increase of approximately 900000 and cost of revenue.
Turning to the balance sheet, we ended Q3 with $34 million in cash and remain debt free.
We expect our gap and non-GAAP cash operating expenses for the full year to trend in the current range with our normal quarterly fluctuations also as mentioned earlier, we continue to forecast year over year revenue growth.
I will now give the call back to the operator for the question and answer session.
Thank you.
Now they can the question and answer session to ask a question you need transferred nine one on your Touchtone phone. If you are using a speakerphone piece a couple a handset before pressing the key.
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<unk> <unk>.
At this time, we hope off momentarily to my seminar Austin.
Oh first question comes from C. G to solve all that <unk> Catholic and please go ahead.
I see Sir high Bill.
Progress here so.
Maybe you can talk about.
The geographies you added Australia and now you have several geography's, which are the geography Caesar are you most.
The best in near term opportunity, you're most excited about top two or three out of those near term.
Sure. So we have.
Certifications in the U S B U U K.
India.
China, Canada, and now New Zealand, Australia, certainly from what we have communicated so far we have two deployments in Australia. So that makes us very excited.
And the reality is that we have made that very public now as far as the market certainly.
The us and UK large markets that we're looking into where there's definitely a lot of interest.
We actually are one of those few companies if not the only one to that or we should also owns.
Certification in China in China has opportunity to screw that we're looking into.
Okay. So you're just thinks it's helpful. And then now do you have some stores under your belt and a couple of months with flagship in Australia can you talk about what you might what might be the dollar content up there for <unk>.
And are just per store and how we should think about that as the pilot.
Proof of concepts trying to pilots and then eventual production.
So so we have not discussed in these specific costs here, but where we can talk about is the fact that some of these stores are in the order of let's say 15000 square feet or so.
And the.
The capabilities of our devices are deployed somewhere between 10 to 15 meters. When you. Please those in the ceiling and if there is a need to compliment.
The coverage and.
For the duration of the signals into lower levels of.
<unk>.
Tracking then we can also spread those prints meters around the store somewhere and shelves and other places right. So we're talking about tens.
Tens of devices.
So so you can do your map here given the numbers that are giving you. So you can place.
Transmitters every 10 meters or sell right.
So I'll leave that up to you and then once you have that what you have is you have thousands of relief devices Iot pixels.
And can actually now support.
So we have not comment on specific pricing on this but.
It will just give you a high level of idea, we're not any any more expensive than access points for Wifi, which are commercially available today. So we are in that price range.
Okay very helpful.
Okay, and then maybe for Bill can you talk about the inventory right down Bill what was the nature of that and.
You know what kind of products list.
It was a lower cost or market adjustment.
It it's just dealing with.
The products were selling now with the transmitters.
Okay.
And then lastly, again for Bill the R&D came down sequentially and you talked about on the bed.
The prepared remarks, but is the new sustainable sort of level that the three Q level or where they're sort of chip.
Tape out things like that that might make the stable level higher than the two six for the quarter non-GAAP .
Yeah. There are fluctuations there. This just happened to be just a low quota in terms of some activity and head count and.
We'll still have variability there.
Okay. That's helpful. Thanks, guys.
Really.
Yeah I'll take a reminder, if you have a question.
<unk>.
The next question.
John Hickman with <unk>.
Hi, <unk> can you hear me okay.
Hi, John how are you yes.
Could you elaborate a little bit like what's gonna happen with your.
I guess the market development before we really start to see you know.
Dozens of into appointments, where revenues could really take off.
What's the gating factor here.
Sure. So so we have some revenue, though is not as large as we would like to have it at this point in time, but we're working on basically a process by which we will get to the deployment at this point in time, we're starting with engagements.
Plc levels proof of concept level.
And as customers go and do that proof of concept.
We'll probably have to add more of those deployments and the different stores right and it takes time to evaluate not just our technology.
What do you think that like we'd also.
The software that comes in place.
I would say typically over.
Perhaps nine months to a year they they should work on putting together a plan for further expansion in final deployment at that point in time as these gross there's also a number of other potential.
Boc's or.
Potential customers that get our evolution kids right and as the evaluate that you will see a number of them in a queue and as it comes together that's when even happened.
So.
Can you tell us how many people are at the proof how many accounts for proof of concept.
At this point in time, we have been able to publicly release.
To retailers in Australia.
That's Oh, you consider those guys proof of concept.
Oh, I'd say, a further proof of concept.
I would say.
Second level of proof of concept. The fact is that.
The system is being now deploy at least we want to store, so I would say a call at.
Close to a production level, but.
I would say they need to go and still further.
And get this level of satisfaction that they would expect before they move.
Okay. Thanks.
Thank you.
So it's a question and answer session I would like to turn the conference back over cause he said Johnston C E O for any closing remarks.
Sure. Thank you.
We are grateful for the continued support from our shareholders and stakeholders. This quarter in particular, so substantial progress in many facets of our business, including a regulatory certifications partnership progress technology deployment and company of operational efficiency.
Energy remains steadfast in his commitment to the development of wireless power networks 40 Iot industry.
In summary, we have achieved the majority of the short term and long term goals, we set out for 2022, and we have done that.
Only nine months sort of hotmail expectations.
On the next quarter call, we will detail our plans for 2000, and 2003, including both short and long term objectives with a keen focus on increasing deployments, which will in turn helped drive top line growth in the new year.
We thank you for your support and we look forward to update you on the company's progress on our next quarterly Cole.
Okay.
Okay. Thank you for attending today's presentation Gimme a lot of money.
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