Energous Corporation Q1 2023 Earnings Call

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and welcome to the Ingenerous Corporation.

First quarter, 2023, Financial Results Conference call.

All participants will be in a listen only mode.

Should you need assistance please ignore a conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on a touchstone phone.

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If you would draw your question, please press star then two. Please note, this event is being recorded.

I would now like to turn the conference over to Craig McSill, Investor Relations. Please go ahead.

Thank you and welcome everyone. Before we begin, I would like to remind participants that 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.

Accept as otherwise required by federal laws, energy disclaims any obligation or undertaking to publicly release updates or revisions to the four-looking statements contained herein, or elsewhere to reflect changes and expectations with regard to those events, conditions, and circumstances.

Also, please note that during this call, Energis will be discussing non-GAAP financial measures as defined by the FCC Regulation G.

Reconciliation of these non- GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on a company's website and SEC filings. Now I would like to turn the call over to Cesar Johnston, CEO of Energes. Please go ahead Cesar.

Thanks Greg. Good afternoon and welcome to the ENERGYS 2023 First Quarter Conference call. Joining me is Bill Manina, our Acting Chief Financial Officer.

Energy has started this year, 2023, with a solid foundation based on partnerships and initial business momentum. As we reported, our first 10 IoT proof-of-concept installations, or what we referred to as POC installations using our WADAP technology.

Our focus on increasing the number of energy technology installations continues to show promising results. And we are glad to announce that we have now expanded that number to a total of 14 in Q1 2023 across the retail, industrial and health color markets. We are glad to announce that we have now expanded that number to a total of 14 in Q1 2021 across the retail and health color markets.

in three different regions, including the U.S., the European Union, and in Asia. We believe that the increase in POCs is a strong product indicator in the adoption of our technologies and solutions. We will continue to report on POCs status in the coming quarters, as we feel it is the best metric.

to track the growth of our business. As the leader in the emerging IoT wireless power network market, we continue to execute our focus strategy to energize IoT devices in our attacks, and it currently shelf labels, and sensor applications across the smart home.

Smart Office, Industrial and retail and health market.

We are focused on energizing a new generation of IoT devices, reducing the need for wires and batteries, and supporting device mobility and freedom of placement. We aim to enable ubiquitous receiver installations which can use the higher levels of available receiver power to support integrated artificial intelligence capabilities.

with the support from the next generation wireless power network infrastructure that our proof of concept customers are installing using Energis power bridges and Energis semiconductor technologies.

Yesterday, we announced the expansion of our portfolio with the availability of a new 2Watt Power Bridge transmitter, pushing our technology and product leadership in IoT wireless power networks to a new level. The 2Watt Power Bridge brings into the industry a level of performance and innovation designed to enable a new generation of charging devices.

using the latest party team regulations in the US and the latest international certification rules that now recognize wireless power networks as an emerging technology across the world.

The new two watt transmitter provides extended range, better coverage and a rough signal penetration and it is built using energy's intellectual property, semiconductor and firmware capabilities.

Customers will now be able to access and optimize their networks with one watt and two watt power bridge transmitters to safely provide them a high-range energy level resolution as required for their specific applications. The energy scheme is executed in the IoT-based business strategy.

within a worldwide IoT market. The strategy is based on three fundamental pillars intended to ignite the wireless power network ecosystem. The first pillar has been a significant focus for our team. It consists of multiple technology-paradise companies that complement our technology capabilities to support the applications that we are focused on.

that is our tags, electronic shape labels, and IoT sensors.

Today, we work with 14 companies that support our technology partnership plans and whose technologies can be used as system blocks for our solutions.

The older business strategic pillars are critical to delivering our products to the hands of potential end customers.

to evaluate, design and build their IoT wireless power network solutions.

As of today, we have announced two partners that are strategic to the markets on which we focus. We continue to identify more potential strategic companies to help us expand our customer reach.

Finally, our third strategic pillar, which will be fundamental to support customers installing our products, is establishing a global network of IoT system integrators with strong technical backgrounds and well-established business relationships. We are expanding our system integrator network, which we hope will lead to a

to future further installations in the field.

Let's now move our discussion to update our Q122-23 specific progress. This past quarter we welcomed three new IoT system integrator partners.

Sato, ThinAir and InnoTractor. Sato is a global IOID solutions provider for leading manufacturing logistics, retail, food and beverage and healthcare companies. ThinAir is a leading provider of IOT and indoor location services that enable organizations to optimize operations.

improve the bottom line and unlock new value from their assets. Inotractor is an IoT company with division of zero-way supply chains. Inotractor implements digital technologies for a better world. It reduces waste and emissions in supply chains by using IoT blockchain

cloud and the latest latest wires technologies. Our newly announced partners have installed our power bridge wireless power networks in proof of concept deployments. For example, SETO announced its dynamic inventory replacement solution aimed at providing real-time on-shelf internal inventory data.

to retailers and brands, following testing at a Japanese convenience store.

Thin Air has also installed a solution for the US DOD designed to monitor assets in secure areas by deploying energy-powered bridges at entrances to classify areas.

has also installed a solution for the U.S. DoD designed to monitor assets in secure areas by deploying energy power bridges at entrances to classify areas. Similarly, the U.S. does not have a solution for the U.S. DoD design to monitor assets in secure areas.

Inno Tractor installed power bridges to track shipments from a supplier in Sweden to a production facility in the Netherlands.

Inno Tractor has also installed energy-spower bridges at a mining company to view information about pallets that carry mine materials to customers and to ensure that those customers are properly charged for each delivery. Finally, Inno Tractor is using power bridges with a company tracking its full of returnable hardware items.

to ensure that they do not go missing and are correctly routed, to prevent any shortages in the RTI supply ecosystem. We believe that installation reports by our partners using our technology are strong product indicators for the future adoption of our technologies.

We look forward to providing additional updates as they become available in the future.

In Q1 2023, we also announced the Japan's regulatory body approve our 1-Watt Power Bridge for unlimited power-distance transmission. As a result, this effort completes a series of significant market approvals for 1-Watt Power Bridge, with similar certifications previously obtained in South Korea.

China, the United States, Canada, the UK, Europe , India, Australia, and New Zealand.

Finally, on the financial side, we recognize revenue of $90,000 for Q1 2023. This is down from the prior quarter. However, the number of proof of concept customers moving along the path to final production has increased.

compared with the prior quarter, and we believe that this is an important indicator of future revenue potential. We have made good progress in the last year with 14 POC installations as of today, and we are working to secure additional POC installations and higher production volumes in the future.

As we move forward with building out these global POC installations, we may see some revenue fluctuations in our business on a quarterly basis. However, I encourage you to look at the growing installations trend, which we believe is an indicator of our future growth potential.

and which I will continue to outline over the next quarters.

which I will continue to outline over the next quarters. I will now turn the coil over to bill.

Thanks, Cesar. Earlier today, we issued our Q1 earnings press release announcing the operating and financial results for our first quarter of fiscal 2023 and in March 31st.

Revenue in the first quarter was approximately $97,000.

The new in the first quarter was approximately $97,000. A 55% decrease.

from the 216,000 we reported in Q1 2022. Sequentially, this compares to 179,000 in Q4 2022. Our revenue guidance for 2023.

is unchanged at this time. Cost of revenue was $139,000 in Q1, a decrease of $244,000 compared to the prior quarter, and a $64,000 decrease in Q1, a decrease of $64,000.

compared to Q1 of 2022. The Q1 2023 cost of revenue included an inventory write down as did Q4 2022.

For the quarter, total gap cost and expenses, which includes cost of revenue, decreased increased by 147,000 compared to the prior quarter down to 6.4 million.

primarily due to a decrease of 244,000 in cost of revenue and a decrease of 165,000 in

Offset by an increase of 117,000 in trade show costs and a 122,000 increase in chip development costs.

Year over year, total gap spending for Q1 decreased by approximately 1 million compared to the same quarter last year.

which is primarily due to a 305,000 decrease in payroll expense.

275,000 decrease in stock compensation expense and a 223,000 decrease in consulting costs.

Net loss for the first quarter on a gap basis was approximately 6.7 million.

or an eight cent loss per share on approximately 81.4 million weighted average shares outstanding.

This compares to a 6.1 million net loss in the prior quarter or an 8 cent loss per share. On 78.3 million weighted average...

compares to a 6.1 million net loss in the prior quarter or an 8 cent loss per share. On 78.3 million weighted average shares outstanding.

and a $7.2 million net loss or a nine cent loss per share in Q1 of last year on 76.9 million weighted average shares outstanding.

Let me now give you a non-GAAP view of our numbers for the first quarter as we believe non-GAAP information provides a useful comparison for investors.

especially for a company at our stage when used with gap information.

excluding approximately 522,000 of stock compensation expense and 46,000 of depreciation expense from our total Q1 gap cost and expenses of 6.4 million, the net non-gap cost and expenses total approximately 5.8 million.

Approximately 90,000 more than the 5.7 million total non-GAAP costs and expenses in the prior quarter, and approximately 682,000 less compared to Q1 of last year. Our non-GAAP net loss for Q1 was $5.5 million. For more information, visit www.nchsoftware.com

expense fluctuations across all areas in line with our expectations.

Non-GAP research and development expense was 2.8 million in Q1.

which is an approximately 206,000 increase compared to the prior quarter and then approximately 309,000 decrease compared to Q1 of last year. NONGAP S-GNA increased over the prior quarter by approximately 130,000 due primarily to increase in trade show costs.

Compared to the same period last year, Q1 non-gap SG&A costs decreased by approximately $307,000 due primarily to payroll compensation.

engineering supplies and trade show costs.

On the balance sheet, we ended the quarter with approximately $26.3 million in cash and cash equivalents and remained debt-free. We also added an approximately $3.1 million in warrant liability, which resulted from the warrants that were issued in our March 2023 financing.

To close, we expect our GAAP and non-GAAP cash-out operating expenses for the full year to trend in the current range with our normal quarterly fluctuations.

as we continue to look for

continue to look for cost savings.

I will now give the call back to the operator for the 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 2. At this time we will pause momentarily to assemble our roster.

The first question today comes from Suji De Silva with Rock Capital. Please go ahead. static

Hi, Caesar, hi Bill. Question first on the numbers. The guidance remains, we're up 20% for the year, 23 versus 22. The first quarter was down. I'm wondering if it's a back-end loaded ramp to that million and if the back-end implies a conversion of a POC to a production customer or whether those are.

Still PLC revenues in the 20% guide. We maintain our...

20% guidance that has not changed and we're looking at PLC's increasing of course which eventually will become production.

Okay. The two-hot product, new one, Cesar, it sounds like you now have the customers of the ability to mix and match two-hot and one-hot. Can you just give me a sense of how the customers might use that for topology of layouts?

to their advantage. And I presume you have higher water products in the future. How that will kind of map out. We'll hybrid the run. Definitely. I want to remind everyone that we are the leader in wireless power networks. We are the only company that has been able to get full certification by the FCC, although we have to 15 watts in the US. And we continue to do that.

The 2-watt transmitter, power bridge transmitter, is a game changer. No other company has that capability. And most important, being able to, with this technology, to be able to effectively get the certification moving forward using PAR-15 in the US. And also really use the latest certification efforts that we contributed.

two-watt capability and the one-watt capability. The two-watt capability power bridge opens up the possibility to actually have more applications for our technology. It opens up also the possibility to support other potential markets that we will be looking into. Now as far as how you use that out there in the deployment, you can see that the two-watt

full visibility, this new transmitter actually can help. And what we foresee for the two watt and our two one watt product line is that both of them will be pretty much mixed and used accordingly depending on the application the customers have. Okay, that's helpful, thanks.

And then for a typical customer, how much are they investing, either in dollars or employees, toward running a POC? Just understand their commitment as these POCs grow to 14 here. I can talk, I can mention in general what a POC might look like. Some POCs can be single numbers, and some POCs are not publicly able to carry the numbers because they can be

have already actually done as a POC, there's the application of large USDOD warehouses where pretty much it is important to have this ability of equipment. So again it's all a function of how is being used, where is being used, and by who is being used.

So it's a mix of both. But I think what I really want to focus on everyone is that if you were to really look at the large deployments out there and go into, let's say, large retail, and you have small, Kernel Replace systems and market a far more Bennet- tooth system and at any point

areas, you're talking about thousands of transmitters deployed not just in the ceiling but also all around the deployment areas as it is important to have penetration, it's important to have energy levels that are consistent and good to be able to have visibility over any of the receivers that are being charged.

Okay, one last clarification for me. The POC is 14. I'm just curious if a single customer has multiple sites like a retailer, do you count that as a single POC or is that multiple POCs? I'm trying to understand if POCs of 14 implies 14 customers or one to many. In general, what we try to do here is to talk about the...

different sites that have been deployed. Most of them are individual. Some of them have multiple sites. Like for instance in the case of some early stuff we did on retail, there were a couple customers each one had a couple of sites. In the case of

Let's say the warehousing hundreds of deployments, that hundreds of deployments is in a large warehouse, but there's a number of other efforts all across the country to actually extend that. So we're seeing data as the really, really the indicator that we should be tracking. It is showing.

that the strategy that we have taken is showing results. And we've gone really from two POCs to course ago to 10 POCs last quarter. And now 14. So it's a good indication of the strategy and the fact that we're getting traction here. Thank you. All right, great. Thanks, Peter.

is showing results. And we've gone really from two POCs to course ago to 10 POCs last quarter. And now 14. So it's a good indication of the strategy and the fact that we're getting traction here. Thank you. That definitely is. All right, great. Thanks, you just thanks, Bill. Thank you.

This concludes our question and answer session. I'd like to send the conference back over to Cesar Johnson for any closing remarks. Great, thank you. Energies continues to progress as we lead in the emergence of active energy harvesting IoT wireless power networks and towards removing the need for batteries and cables.

We continue to innovate in developing novel solutions using our advanced technologies and robust intellectual property, resulting this quarter on the two-watt power bridge transmitter announcement, which positions the company as a leader in power charging solutions.

over the past quarter. It is important to understand that as we move forward and progress in opening up the emerging active harvest in IoT wireless power network markets we expect there to be lumpiness in our results.

Thank you for all our shareholders, stick holders and energy team members, and we look forward to updating you on the company's progress again. The conference was now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

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