Q4 2022 Energous Corp Earnings Call
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Good day and welcome to the Entergy Corporation fourth quarter 2022 financial results all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
I would now like to turn the conference over to Matt Sullivan Investor Relations. Please go ahead.
Thank you, Dave 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 laws and or just disclaims any obligation or undertaking to publicly release updates or revisions to the forward looking statements.
Herein or elsewhere to reflect changes and expects to patients with regard to those events conditions and circumstances.
Also please note that during this call and are just 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.
C E O a N or just please go ahead Cesar.
Thanks, Matt.
Good afternoon, and welcome to the energy 2022 fourth quarter Conference call.
Joining me is bill <unk>, our acting Chief Financial Officer.
Yeah.
Q4, 2022 is an important quarter.
It is the end of our fiscal year and the culmination of 12 months of significant accomplishments, which also sets. The foundation of an exciting 2023 with a strong partnerships and business momentum.
Let's begin this call by summarizing our 2022 highlights followed.
Nobody discussion of specific achievements in Q4 2022.
I would end this call with an overview of our direction and business goals for 2023.
During the year 2022, we focused the company on our ambition to be the leader in eliminating batteries and cables by unleashing the full potential of Iot through wireless power networks. Our main goal is to enable our customers with the technology elements.
And capability to build Iot wireless powered networks.
In 2022 with people at the company and our efforts to support applications for RF tax electronic shelf labels and Iot sensors with a combined total of total addressable market of $280 billion. According to IDC report data our target Westwood.
Create new active energy harvesting Iot wireless powered network ecosystems for these applications, while adding value to our customers.
Okay.
Today, we are proud to report that our 2022 efforts have now resulted in multiple customers purchasing every well evaluation kids to learn about our technology.
But most important we would like to report that at least 10 customers are now in the process of installing or having stoll, our Iot wireless power networks in proof of concept deployments across their retail.
Industrial.
Health care and automotive markets.
In three different regions, including the U S. The European Union in Asia.
These installations represent important first steps towards driving broader adoption of our technology in the marketplace.
Our customers are aware.
Respected leaders across their respective business feels.
As new customers decide to implement our technologies their installation of status progresses from proof of concept to proof of validation and ultimately to the final production phase.
To give you an example.
Proof of concept phase typically integrates after 100 power bridges, where the proof of validation and a final production space can include hundreds or even thousands of power bridges.
The majority of our customer applications are focused on Iot or if tax for asset tracking with at least one customer in the production space.
These are important accomplishments in two forms first they demonstrate our success in creating a new daily in a new market second the high like the effective execution of our 2022 of short term and long term goals that we shared at the start of the year.
I'll now provide an update on each of these goals.
The first of 2022 short term goals are fulfilling the delivery of one watt power bridges and identifying the beachhead for a rep applications were accomplished we have shipped thousands of our power bridges and now have at least 10 proof of concept and at least one production installation underway.
The company is now positioned for expected revenue generation as our customers transition.
Two the approval of validation and production phases during 2023.
The third short term goal was to develop an electronic shelf labels or ESL end to end system, which we have demonstrated in various conferences, including electronic at 2022 and C. F 2023 here together with our partners.
We focused on.
Collaborating on delivering end to end systems to very large retail outlets that can offer significant volume potential for our power bridges.
I will continue to keep you updated here as we progress with our partners and customers than they were in the next quarters.
With respect to our long term goals for 2022.
The first was to make wireless power network, a standard and that was finalized in December 2022, while the Icu's historic recommendation for 900 megahertz used for wireless power transfer. It was approved in October 2020 to fulfilling our second long term goal.
Wireless power networks are now fully recognized for the first time as an important and emerging technology worldwide.
The third long term goal to certify wireless power networks without distance limitations was accomplished in August 2022, with our 15 Watt power breach FCC certification, our EU certification for greater than one what was accomplished earlier in the year.
These efforts have positioned <unk> as the leader in Iot wireless power networks with 35 capability to charge Iot devices at a distance around the globe.
The fourth long term goal is similar and the status. There are short term goal and we will update you.
The status as we make progress.
Finally, the fifth and final long term goal was achieved in Q3 2022, as we announced our support of sensor market applications with multiple partners and deliver sensor receiver demonstrations in Q4, 2022, we announced a third Iot wireless power.
Work application, demonstrating indoor air quality, and multispectral life sensor capabilities at multiple public conferences.
On the financial side.
On a full year 2022 basis I'm happy to report that we delivered approximately 851000 in revenue demonstrated year over year growth over 2022 off to 12, 5% from these early programs, while setting the stage for sustained longer term growth through the band.
Most of this decade.
Our proof of concept customers move along the path to final production.
This would translate into our power brick product ramps and ultimately increase revenue and cash flow generation for energy is at.
Additionally, we continue to prudently manage our opex demonstrating a significant reduction over 2021 through a number of internal cost cutting initiatives.
Yeah.
Let's now move the discussion to update at our Q4 2022 specific progress.
In Q4 2022, we deliver approximately 179000 in revenue and Bill will cover these in more detail shortly.
We increased the number of our wireless power network proof of concept from two installations in Australia, which we announced in August and September 2022, respectively. Due now.
And customer proof of concept installations across multiple markets and across the world with at least one customer in the production phase.
This is a five X increase in the number of important P. O see installations in just one quarter and demonstrate the growing customer interest and potential of our technologies.
I'd entered is we're constantly identifying and executing in the development of ecosystems based on Iot wireless power network technologies. Our strategy is to build Iot wireless power network ecosystems by complementing our technologies with unique technology partners to open up.
New applications and markets. Some examples here include.
Our relationship with catapult.
A well known as sports performance analytics company based in Australia in partnership with kind of bolt, we announced the American food role of the future.
Which integrates and embedded tracker that charley's charges wirelessly, using our technology without sacrificing precision data or bullet regulations. The new football reports the athletes on ball movements as though we're in the game in real time to the caribou cloud to track and analog.
The results the catapult football is just one product example that benefits from our Iraq power transmission technology, disrupting and advancing the sports performance industry.
Additionally, as part of our new Iot sensor application ecosystem development, we unveil our new Eric qualities C. O two receiver using they say since Syrians device and we also announced a receiver sensor with multi spectral licensor capabilities in partnership with M.
Hey M S false rumor.
Indoor Air quality and light control are just a couple of Iot sensor examples that wireless power networks can support for smart home and Smart office industrial retail and health care markets, enabling real time control and efficiency improvement and the ongoing new Iot digital transformation.
On the product and systems front, we have partnered with SAP. The Holdings Corporation, a Japanese global pioneer in auto I D and labeling solutions to develop next generation, it's smartest store dynamic inventory replenishment applications for Iot Wi there'll be wireless power.
Works.
Our system partners. Our aim is to improve the overall efficiency of tracking and replenishment management for merchandisers and retailers.
Demonstrations of our combined solutions have been recently showcase at the National Retail Federation 2023 in New York I know that retail Japan 2023 States shows great shows.
And finally, we announced a technology partnerships with Capex ex in Q4 capped X X isn't into Australian company that manufacturers Super capacitors, which are energy storage devices that replaced batteries and result in maintenance free Iot receiver devices.
We also partnered with Engie gay in Japan doing for those the use of lithium ion rechargeable batteries.
Batteries in our Iot receiver devices.
Moving on to standardization, we supported and participated in the first industry standard to charge Iot devices over the air. This standard was developed by a global coalition of companies as members of the Air Fuel Alliance. We also participated in.
Leading the process to develop the international Telecommunications Union ITU approval and recommendation for radio frequency based wireless power transfer and the 900 megahertz band.
Andrew just Iot wireless power networks are now a standard based technology grants medium power in the wireless transfer official 900 megahertz band for wireless power network deployment worldwide.
In the regulatory Arena, we announced the certification approval for unlimited wireless power distance transmission in South Korea for our one watt power breached transmitter. This effort expands the original the reach of the energy Iot wireless powered networked global ecosystem that certification.
And in Korea complements previously supported approvals in the U S, Canada European Union U K, India, China, Australia, and New Zealand and continues to position <unk> as the only Iot wireless power leader with 35 technology.
Worldwide.
Yeah.
I would like to now turn to the current year and outline our 2023 goals.
As such our 2023 goals are as follows.
Maintain our technical and growing the market leadership through innovative Iot wireless powered network product development.
Number two work closely with our power bridge production partners to optimize the cost and corresponding gross margin as we move to higher volume production.
Number three continue to identify key technology and system partners to expand our potential markets and facilitate access to new potential markets through our industry, leading technologies number four move our current and future customers are steadily along the path to commercialization.
From POC to prove a validation and then to fool.
Production number five support the rollout of power bridge production ramps with our key customers and partners and achieve expected annual revenue growth over 2022.
Given the assumptions.
We currently anticipate year over year revenue growth of 20% or more which will be weighted towards the second half of the year.
In summary.
2022 was a transition year and in particular Q4 was a quarter of measure achievements at ages, making at the end of the year centered on people in and refocusing the company in Iot wireless power networks at.
It was the result of finding the best intersection of our technology with our certifications and standards to support a growing Iot market across the smart home is my office industrial retail and health care markets.
Throughout our organization, we firmly believe that we have now positioned energies as the leader in the emerging Iot wireless power network markets with tremendous value potential due to its proprietary semiconductor antenna and software products supporting multiple Iot markets.
We now look forward to 2023 as the demand of our solutions gross and we support our customers to achieve success.
I will now turn the call over to Bill.
Thanks Cesar.
Earlier today, we issued our Q4 earnings release announcing the operating and financial results for our fiscal 'twenty, two fourth quarter and full year ended December 31st.
For the fourth quarter, we recognized approximately $179000 in revenue a decrease of 20% compared to approximate 223000 in the prior quarter and a 21% decrease compared to approximately 225000 in the same quarter of last year.
On an annual basis for 2022, we recognized approximately $851000 in revenue.
An increase of 12, 5%.
Compared to approximately 750000 in 2020 one.
This increase was in line with our revenue guidance for 2022.
Okay.
Cost of revenue for Q4 was approximately $383000 a decrease of 37000 compared to the prior quarter.
Q4 cost of revenue included a small inventory write down which was similar to the write down in Q3.
We did not report any cost of revenue in Q4 of 2021.
Total GAAP costs and expenses for the fourth quarter totaled $6 5 million approximately 200000 higher than the total costs and expenses of last quarter.
The increase was mainly due to an approximately 165000 increase in severance expense and a 140000 increase in bonuses, which were partially offset by a 103000 decrease in stock comp expense comps.
Compared to the fourth quarter of last year total GAAP costs and expenses were approximately $3 1 million lower which was mainly due to a $2 3 million decrease in R&D.
Due primarily to an approximate $1.5 million decrease in stock comp expense and a 390000 decrease in payroll expense.
And also a decrease of approximately $1 4 million in sales and marketing.
Due primarily to an approximately 950000 decrease in stock comp expense and a 230000 decrease in payroll expense.
For 2022 on an annual basis, our total GAAP costs and expenses was $27 5 million approximately $14 7 million lower than the $42 2 million of total GAAP costs and expenses in fiscal 2020 one.
Decrease of just under 35%.
The decrease year over year was primarily due to an approximate $9 million decrease in stock compensation expense.
A $3 2 million decrease in severance.
A $2 2 million decrease in payroll expansion.
Expense.
Which were partially offset by a $1 3 million increase in cost of revenue.
The net loss for the fourth quarter on a GAAP basis was $6 1 million or eight cents loss per share on $78 3 million weighted average shares outstanding. This compares to a 6 million net loss in Q3 or eight cents per share and a $9 4 million net.
Loss or 13 cents per share on $72 9 million weighted average shares outstanding in Q4 of 2021.
Now for a non-GAAP view of our numbers for the quarter and fiscal year as we believe non-GAAP information provides a useful comparison for investors.
Especially for a company at our stage when used in conjunction with the GAAP information.
Excluding approximately 595000 of stock based compensation.
Approximately 45000 of depreciation and approximately 165000 of severance expense for our total Q4, GAAP costs and expenses of $6 5 million.
Our net non-GAAP costs and expenses totaled approximately $5 7 million.
An increase of approximately 173000 compared to Q3 and a decrease of approximately 513000 compared to Q4 of last year.
The increase compared to Q3 was mainly due to an increase in FCC testing and prototype costs.
The decrease compared to Q4 of 2021 was mainly due to reduced head count and a decrease in chip development cost engineering supplies and consulting costs again, partially offset by an increase in cost of revenue.
Our non-GAAP net loss for Q4 was approximately $5 3 million and approximately 142000 higher loss compared to Q3, and then approximately 683000 lower loss when compared to Q4 of last year.
non-GAAP research and development expense was $2 6 million, which was consistent with the prior quarter and then approximately 780000 decrease compared to the same period last year.
The decrease compared to Q4 of 2021 was mainly due to a decrease due to decreases in payroll expense chip development costs and consulting costs.
non-GAAP SG&A expense was $2 7 million, an increase of approximately 148000 versus the prior quarter and a decrease of approximately 116000 compared to Q4 of last year.
The increase compared to Q3 was mainly due to an increase in employee bonuses and consulting costs.
The decrease compared to Q4 of 2021 was mainly due to decreases in marketing costs and consulting costs.
On an annual basis.
Our total non-GAAP costs and expenses was $23 8 million.
$2 4 million lower than the $26 3 million of non-GAAP expense in fiscal 2021.
The decrease was mainly due to an approximately $2 2 million decrease in payroll expense.
930000 decrease in chip development costs and engineer supplies.
And a seven year 750000 decrease in consulting costs.
Partially offset by an increase of approximately $1 3 million and cost of revenue.
Turning to the balance sheet, we ended Q4 with $26 3 million in cash and remain debt free. Additionally.
Additionally, we continue to raise cash with our ATM, we raised 800000 in Q4 2022 and.
And year to date in 2023, we have raised an additional $2 7 million from our ATM.
We expect our GAAP and non-GAAP cash operating expenses for 2000 22023.
To trend in the current range similar to 2022 with.
With our normal quarterly fluctuations.
We continue to look for Opex reductions such as rent savings on our headquarters lease that took effect last quarter.
And for cost of revenue, we are signing up with a contract man you manufacture for 2023, which should substantially reduce our cost of revenue on a per unit basis.
Also as mentioned earlier, we currently anticipate year over year revenue growth of 20% or more for 2023.
We expect will be weighted towards the second half of the year.
Yeah.
I will now give the call back to the operator for a question and answer session.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
The first question comes from Sujit de Silva with Roth MK M. Please go ahead.
Hi, Suzanna high Bill Congrats on the progress to date here question on the.
Our retail customers you have with your partners in Australia.
What's the update on the status of the pilots there and what may be the timing of those pilots shifting into production rollouts or you now spreading across more stores.
Hi, Susan how are you.
And thank you for your question are we we continue supporting our partner in Australia, they're a very important partner. We continue finding further opportunities I don't we don't have an update on that.
Yet today that I can share with you, but what I would like to add is that while we have those two we just reported a total of 10 by this quarter.
And what that means is that the interest of.
Of our technologies out there and by the way that's a five X increase compared to those two that you just asked about.
Yeah.
Yeah.
That's great progress there my second question is about the numerous partners you discussed in the press release and have highlighted through calendar 'twenty. Two maybe you could highlight for US maybe the one or two of those partners that has the best near term opportunity to bring in.
Business for analysts I know, they're all fairly interesting, but I'm curious if any one or two stand out for the next 12 months.
Now it is hard to tell you one or two but what I would like to do maybe just look at the different markets and each one of them offer there are unique solutions to each particular market. So if you remember we talked about three applications that we're focused on Irish tax yes.
E S L and sensors right.
So potential important partners in the in the area of.
RF tax definitely we worked with William right and we have as you know deploying retail in Australia with them. So that combination that ecosystem, it's important to us and out of those 10 P. O sees that we've mentioned so far I would say the majority of them are in the retail area. So that's one particular.
Area in one part of it that's important to US second one is in the area of <unk>.
Electronic shelf labels, our transmitters our networks are required to have extremely low power capabilities of the receive side and there in fact, we do have an installation kit that we sell today with our partner E piece. So we see EPS is an important partner as well as E ink, who else you.
No as a low low power display.
The company, well known out there and and leader on displays and the third application happens to be sensors, and we're proud that we finally made that decision to move into sensors and most important partners. There today that have already been announced and by the way demonstrated which is important the technology has been demonstrated at <unk>.
Chronic has willis yes, it's.
Since the Ipsen, Syrian which is considered like the top two companies.
Companies have therefore sensors and of course.
Ams awesome, well with no name out there and we're working with them with Ford light.
Lighting applications. So I would say each one of those is important on each one of their application, but more than that theres others behind that.
And by the way the ones that I've talked to you are effectively technology partners that allow us to build those ecosystems that now add value to customers. But also there are other potential partners that we work with that we're not at Liberty today to disclose and there also system integration partners customers.
Orders are extremely close to customers and can take those things those.
Ecosystem that are solutions that we have developed and get us closer to a potential POC and towards production effectively.
And eventually generating revenue for the company.
Okay and then my last question. Thanks for the guidance for 'twenty three of revenue doubling can you talk about perhaps of the 10 programs you've announced how many of those might you expect to contribute roughly to the twenty-three revenues just to understand which ones are.
Kind of hit revenues versus which ones will be farther out okay. Thanks.
As soon as he gets bill I guess, the only thing.
But.
You just mentioned our guidance our guidance is.
Year over year revenue growth of 20% or more firepower.
Sorry about that.
So in that and that growth in 'twenty three how many of the 10 programs do you expect to contribute roughly just to get a sense of how diversified we are early in the development right now and that is a function of the the willingness and the need of the potential customers.
And it also varies depending on the customer okay. So let me give you. An example, we already today, we announced actually one of them in production right and that particular production happens to be an interesting deployment.
And.
In the in the hundreds of numbers.
And that particular, one was probably done I would say within seven to eight months.
Right.
And just to give you a better answer to your question, perhaps the fact that we are looking into a potential revenue growth.
Our weighted towards the second half of the year.
That can give you a good idea of what we're expecting to see out of that but reality is that why do we have those stand we continue to grow and work on more of those P. O sees that eventually will become production.
Okay, but as we mature it will be used in a better position to give you more specifics about that.
Like what are you thinking there with the year yes.
Great. Thanks.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Cesar Johnston, Chief Executive Officer for any closing remarks.
Thank you.
<unk> is leading the current Iot digital transformation through its advance active energy harvesting Iot wireless power networks, allowing for ubiquitous deployment of our smart Iot components without the needs of batteries or cables.
2022 Watson was a year of important achievements that has now positioned us well into 2023.
He will support and grow our ecosystem of partners and continue to identify new customer opportunities for Iot wireless power network installations, leading to ultimately increase revenue and cash flow generation for images.
Thank you to all our shareholders stakeholders and <unk> team members for their support and we look forward to updating you on that on the company progress on our next quarterly call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.