Q3 2023 Energous Corp Earnings Call
[music].
Hello, Good day and welcome to the <unk> Corporation third quarter 2023 financial results at this time, all participants are in a listen only mode.
We will conduct a question and answer session I would now like to turn the call over to Craig <unk> Investor Relations. Please go ahead.
Thank you Jeremy 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 energy 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 dawn.
GAAP financial measures as defined by SEC regulation G <unk>.
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'd like to turn the call over to Steve Johnston, President and CEO of <unk> Corporation. Please go ahead Cesar.
Thanks, Greg.
Good afternoon.
Thank you for joining us today and welcome to the <unk> 2023 third quarter conference call joined.
Joining me today is Suzanne Kim Duncan, our interim Chief Financial Officer.
Okay.
Let me start first with a short business update.
And it just continues to successfully execute its smart Iot centric strategy that we initiated in early 2022, when we reposition and we targeted the company to develop Iot power charging products at a distance using the intellectual property regulatory knowledge and the Mark.
Experienced that had been built by the company from the previous year, so of operation and which is backed by our to that 200 plus patent portfolio.
The newest strategy has been focused on enabling new high value Iot markets using <unk> wireless power networks, but isn't that works all our customers greater placement freedom mobility security and lower installation costs by removing the need for wires and batteries across Arafat.
Ex electronics smart labels and sensor applications typically within a cloud enabled environment.
So how does the customer rollout of our technology happen.
Typically our customers initiate a wireless power network technology evaluation, and then a POC proof of concept installation.
For their application. This is then follow by a proof of validation or Pov phase, which can result in our highest volume installation and volume purchase of energy products.
Understanding how energy is progressing with its current customers and it's addition of new customers through these poc's and Pov implementation phases is an important indicator of the global adoption of <unk> technology and the timing of future revenue. This is why we update you every quarter.
<unk> on the number of our POC customers.
Okay.
The energy is one what power bridge product is the only advanced and regulatory certified product for wireless power network installations are available on the market today.
Last quarter Q2, 2023, we announced a 10 times growth yeah.
Yes.
Then on network power Rich base wireless network Boc installations with multiple plc customers across the world and across different markets. Since we started reporting on Poc's in Q3, 2022.
Let me mention again that we believe that the best indicators of increased interest in <unk> technology potentially.
Potential revenue in the future quarters is our POC growth status.
During this past quarter Q3, 2023 customer interest in our first accelerated we believe that this was driven by a growing appreciation of the value proposition of wire free charging and energize wireless power networks, which help them to overcome their costs and operational bottlenecks.
As we continue to roll out POC deployments and gain experience and knowledge of the technology system capabilities of businesses in our target markets. We have improved the efficiency of our Iot wireless power network installations by learning from each POC deployment, we are able to leverage our experience.
To shorten the installation times.
We have been reporting a steady growth in POC deployments over the past year to remind everyone. We started with two poc's in Q3 'twenty 'twenty. Two grew to 10 14 in 'twenty from Q4, 2022 through Q2, 2023 now I'm happy to report that.
We have 31 poc's across the U S Europe and Asia across multiple markets government retail industrial medical and as remote offices more home represented a 15 times decrease in just one year.
As an additional note.
I'd like to mention that the majority of our customer trials are for real time asset tracking for digitized multiple of retail or industrial products within large warehouses.
While incumbent warehouses striking technologies have been useful they have seen literally innovation in recent decades, we believe our P. O sees in these environments have generated efficiency and automation improvements.
That largest scale supply chain and logistic companies need nowadays as a result, we're targeting large online suppliers and retail brands as our future customers.
In summary.
<unk> is well positioned as the leader to execute our proprietary smart Iot strategy across wireless power networks within our chosen segments, our year to year growth expectation mentioned in past earnings call. It 20% of revenue growth target for 2023 is now dependent on the POC conversion rate.
Of the 71 Plc's as customers placed purchase orders into Q4, 2023 and 'twenty 'twenty four we will update you at our next earnings call.
Our product roadmap supports both one watt and two watt power bridges with a family of advanced E. M. 40, 132 turn in in 'twenty, two 'twenty three semiconductor devices. Additionally, as we move forward, we will seek to evolve our roadmap to support future fixing what Rick.
Inventory certified market in the U S, which could dramatically open up markets to our wireless power technology.
Yeah.
Our strategic partnerships.
Within the wireless power ecosystem play.
And the important role in the deployment and today, we are working closely with 17 technology partners through distribution partners and for Iot system Integrator partners with more expected to be added in Q4 2023.
Now, let's discuss our recent progress on this front and give you a real example.
In September 2023, we announced our partnership would be a good target of real time asset tracking and inventory control for industrial logistics and retail applications via products simplifies secure compete in in a way that improves responsiveness and bandwidth costs, while off loading central clouded.
Pendency through a full range of connectivity options capable of bypassing government customer limited information infrastructure.
Okay.
As part of the partnership.
The AT&T, Mexico innovation lab combined the <unk> wireless power and via edge computing products to deliver a POC trial installation for real time asset tracking geared towards large customer applications. We continue working with via to enable and add new potential customers in this field.
In October we attended the wireless Iot conference in Wiesbaden, Germany. This conference brought together key companies in the fields of Iot Irish tax and sensors among all others at the conference we launched our low maintenance wireless sensor for Iot industrial applications and a new partnership.
Within play, which was previously announced in September in plays a Fabless semiconductor company developing low power communications technologies and are used in in play demonstrated a temperature and humidity Iot sensor solution using the one what power bridge on the transmit side on the in play 100, SLC low energy Beacon caper.
<unk> on our battery free Iot sensor receiver.
Finally in late October our team installed an important trial POC in Germany with our customer <unk>.
This critical trial Brookdale the other several companies under products demonstrating the <unk> capabilities.
Free Irish tax incentives from wires and batteries in a real time asset tracking logistics application using our wireless power network products.
The companies that were part of this important effort included Identive.
The global U S based digital security and identification leader.
Rondon Group <unk> company a.
Current company managing several logistics related companies in.
In Germany.
<unk>, a digitization expert company, which is part of the Rondon group W. BG fully <unk> company, a lowered carrier management company in Europe also part of the strength in group <unk>.
<unk> cargo Bull AG, a German manufacturer of semi trailers trailers and truck bodies.
And railroad.
Gerald spine, Daryl Steiner Bruno <unk> N V H, a German mineral water firm.
This important trial demonstrates the ability to integrate <unk> technology into a broader system for real time asset tracking in a logistics application across warehouses and trailers using digitized pallets and plastic containers.
This is just one example of a POC that we weren't allowed to disclose.
And as most of our customers preferred to keep such details under NDA, making it possible for us to demonstrate our current capabilities.
And talk about 31 ongoing trials in detail.
However, hopefully. This example gives you an appreciation of a POC application, our competitiveness and the type of customers, we do business with.
To summarize.
<unk>.
That has been executed on making significant progress as we reposition and re target the company on the smart Iot applications, we are working towards enabling newest smart Iot wireless powered network markets.
Finally on the financial side I am pleased to report that in Q3 2023, we recognized revenue of approximately 169000, representing a growth of 44% over the prior quarter. Additionally, we continued to manage our opex tightly making efficiency improvements as we progress and alike.
The company further to our strategy. This resulted in a 15% reduction in opex compared to Q3 2022 in our non-GAAP costs and expenses.
I will now.
Turn the call over to Susan.
Thank you Sir.
Earlier today, we issued our earnings press release announcing the operating.
So let me start with all of our.
Third quarter fiscal 2023, which ended.
September 30th.
Revenue in the third quarter was approximately $169000 and mentioned as mentioned by Cesar.
48, 44% increase.
Prior quarter.
Compared to the third quarter of 2022.
Revenue declined by 25%.
Revenue for the third quarter of 2022.
Plus higher due to one time bulk sale to our partner <unk>.
We moved into that.
Smart Iot centric market.
The quarter over quarter increase compared to the second quarter of 2023 is mostly driven by.
The additional <unk>.
New proof of concept customers in Q3.
For the first nine months of 2023.
Revenues of $383000, a decrease of 43% compared to the same period in 2022.
Cost of revenue was $48000 in.
Q3, a decrease of 34.
Alison.
Compared to the prior period and 372000 decrease.
Compared to Q3 of 2022.
This significant decrease from the prior.
Yeah, it's primarily due to a decrease in.
Sale of higher cost product to the aisle.
Partner as mentioned earlier.
And a decrease in our net realized value.
<unk>.
For the third quarter total GAAP costs and expenses.
Which include the cost of revenue or $5 3 million.
A one 1 million decrease compared to the prior quarter.
As <unk> mentioned decrease in cost of revenue we recorded a 420.
Dollars reduction in R&D expenses.
<unk> 314000 decrease in sales and marketing and a 406000.
Decrease in G&A expenses compared to the prior quarter.
This was offset by a $170000 increase in severance expense in Q3 compared to Q2 of 2023.
Total Q3, GAAP cost and expenses decreased by approximately $1 1 million.
Prior to Q3 of 2022.
The decrease was primarily due to.
The earlier mentioned significant reduction in cost of revenue.
A $426000 reduction in R&D expenses.
$319000 reduction in sales and marketing.
Until I Didnt 33000 reduction in G&A expenses.
This was offset by a $269000 in severance expense in the quarter.
With no severance expense in Q3 2022.
Looking at the first nine months of <unk>.
<unk> total costs and expenses have decreased.
By 14, 8% compared to the first nine months of 2022.
Net loss for the third quarter on a GAAP basis was approximately $4 1 million or <unk> 86 cents loss per share.
On approximately $4 8 million weighted average shares outstanding.
All share and per share numbers provided on this call.
Give effect to the one for 20 reverse stock split of our common stock.
Became effective.
On August 16th 2023.
From our continued efforts in cost containment and improving operations efficiencies, we were able to decrease our quarterly cash burn rate to $3 9 million for Q3 2023.
Compared to the cash bonds.
Approximately cash burn of approximately $5 $7 million, one year ago, which is over 30% improvement over last year.
Our Q3 net loss of $4 million or <unk> 36 loss per share.
$4 6 million weighted average shares outstanding compared to Q3 2022.
The net loss of $6 million or a $1.54 loss per share on 33 9 million weighted average shares outstanding.
The year over year increase in the share count was mainly <unk>.
The sale of the shares under at the market offering or ATM facility.
And a public offering completed in Q1 of 2023.
In the fourth quarter of 2022 during the third quarter of 2000 2023.
<unk>, an additional $4 4 million of cash and added <unk>.
658000 shares.
Okay.
Our continued focused on aligning our operations with our Iot vertical strategy and trimming access expenses.
Has resulted in a positive trend in declining year over year net losses.
Let me now give you a non-GAAP view of our numbers for the third quarter.
As we believe non-GAAP information provides a useful comparison for investors.
Especially for a company at our stage when reviewed in conjunction with GAAP information.
And non-GAAP results exclude approximately 369000 stock compensation.
$47000 of depreciation and amortization $269000 of severance expense.
Q3, GAAP cost and expenses of $5 $3 million.
Okay.
As a result, adjusted net non-GAAP costs and expenses totaled $4 6 million.
This is approximately $1 million less than $5 6 million of total non-GAAP costs and expenses in the second quarter of 2023.
And <unk> 994000, less compared to Q3 of 2022.
Our non-GAAP net loss for Q3 was $4 2 million or <unk>.
89 loss per.
Sure.
Which includes a non-GAAP adjustment for $788000 of other income.
Warrant fair value adjustment in Q3.
This is a decrease in net loss of approximately $1 million compared to the prior quarter and 976000, a decrease compared to Q3 2022.
On the balance sheet, we ended the quarter with approximately $16 6 million in cash and.
Cash equivalents and we still remain debt free.
We realized $788000 reduction in fair value of our warrant liability.
<unk> was accounted for as other income in Q3 of 2019.
Three.
We close to.
To close we expect our GAAP and non-GAAP cash operating expenses for full year to trend downwards, as we continue to find savings in cost and expenses to align.
Our financial operations with our market strategy.
I will now give the call back to operator for the question and answer session.
Brian. Thank you so much if you'd like to ask a question. Please press star one on your telephone keypad now youll be place to Mcewen the order received.
Okay and our first question comes from the line of switching to Silva from Roth capital.
<unk>. Please go ahead.
Hi, Cesar Hi, Susan.
So congratulations on the progress during the POC is Cesar.
The plc is the base of 31, just curious how many customers is that across do you seeing multiple plc's per customer or is it roughly <unk>.
Is it more one.
No. It's not it's not one for I mean, there is a couple of those were actually customers might have.
<unk>, then three or so but in general the majority at this point in time or singles.
Got it okay.
I didn't forget to say Hello.
And then and then the POC as you know which end markets amongst the POC.
Our closest to ramp I know, they probably cover a whole bunch of different applications. So curious, which ones. You think are closest to sort of volume, yes. So last quarter when we talked about this.
I gave a very good example of logistics and real time asset tracking as well.
One of the possibilities on the plc side I thought was important.
I'm happy to report this quarters that actually gave gave everyone a taste and the.
A window of visibility of logistics at real time is attracting so what I'm trying to say is it will be along those lines warehousing asset tracking.
Applications that risk tag applications that we're seeing right now.
We cover a number of customers if you notice on the German plc that for the first time ever we are at least able to give that visibility to our <unk>.
Odeon, because it's always hard to talk about <unk> is we have plenty of NBA. Some customers do not like to share that so we're very thankful to eco buys for allowing us to share those names and for all of those companies that are well known companies and large companies in Germany, and Europe to allow us to stay and they are the ones that actually publicized I'm very happy with our progress.
Okay. Thanks.
And then my last question is really is on the I think there was a partner that you work with that you had a bulk sale I was just curious on the mechanics of those and what.
What causes those bulk sales to happen is that kind of preparing for a ramp or what.
Mechanics are there. Thanks, yeah. So if you remember we've only been focused on the smart Iot strategy since early 2022 ish as being less than two years, certainly as we're getting closer to two years. It is.
Unusual for a technology too.
I'll get to this.
Ramp as fast as we are so I'm very very happy to see products to see certification and so on so so early last year as part of our investment on growing this Iot market, we have a partner that or a couple of partners that we work with and allow us to be.
Basically put together a number of.
Eval kits.
And ways to actually get our technology out there, which by the way was a great investment of onetime investment because as you can see if it wasn't for that I don't think it will be possible to have 32 POC is in no time.
Typically companies take over two to three years to just get a technology that's brand new to these points. So it's very very very happy with what we see so far.
Okay. Thank you Cesar. Thank you soon thank you. Thank you.
All right and our next question comes from the line of Jon Hickman from Ladenburg Thalmann. John. Please go ahead.
Sure.
Hi.
Cesar.
I was wondering if you were still.
Going to hold your guidance for year over year growth for this year.
And revenues.
Yes.
As I mentioned on the call I will give a final update next quarter.
Still looking into.
Converted the conversion ratio of dose.
Plc's.
Those 31 convert into 2024.
Next quarter, we'd be able to update you on that but right now we are.
We are moving forward with what's been said before yes.
So my math says that Youll need revenues look like $400000 to make that happen.
Because that aligns with your math.
Our map.
When we started looking at this look into basically the growth of the POC and definitely I mean, it really considers that otherwise we would not have guided that way.
Okay. Thanks.
But that's no problem.
Alright, we have no further questions at this time I will turn it back over to the team at <unk> for closing remarks.
Great. Thank you.
Introduced the smart Iot strategy is showing very promising results.
And our customers see the value offered by our Iot wireless power networks and evidence of this is the factory.
I believe we just lost future still there.
Awesome.
Still can't hear you came in very briefly.
Can you hear US now, yes, I can yes, I'm, sorry, but the Polycom here was not behaving properly. Okay. So energy smart Iot strategy is showing very promising results.
And that our customers see the value offered by our Iot wireless power networks as evidenced by the 31 POC trial installations as of third quarter of 2023 of particular.
Importantly, this quarter.
We're glad to announce our partnership with <unk>, which we believe provides visibility into the installation complexity and type of customers that we work with which shows an important example of the type of real time asset on logistics applications that we have been talking about in the recent earnings calls.
We continue to focus on increasing our revenue as these POC trials evolve while closely managing our opex spend.
Thank you all.
Our shareholders and stakeholders and managers team members.
We look forward to updating you on the company's progress again next quarter.
This concludes today's conference call. Thank you for attending.
The host has ended this call goodbye.