Q3 2024 WiSA Technologies Inc Earnings Call
Good day and welcome to the wife Technologies Q3 results and business update.
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Speaker Change: I would now like to turn the conference over to David Barnard with Alliance Advisors Investor Relations. Please go ahead.
David Barnard: Thank you Megan.
David Barnard: With us today are Brett Moyer, CEO, and president of <unk> technologies, and Nate Bradley C. E O O data both holdings before turning the call over to Brett I'd like to remind everyone that today's conference call will include forward looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these stay.
David Barnard: Any such forward looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors discussed in our filings with the SEC why is it assumes no obligation to update any of these forward looking statements except as required by law. We also refer you to slides two and three of today's accompanying presentation.
Speaker Change: For more detailed information with that I'll turn the call over to Brett. Please go ahead.
Brett Moyer: Thank you David and good morning, ladies and gentlemen, so it's been an Ah Ah Ah and eventful three months since our last update starting with the announced submitted in early September of our purchase of assets from data boat holdings for the IP and trademarks around data vault and audio.
Brett Moyer: So with such a significant transaction and transformation of the company, we have Nate Bradley on the call today.
Brett Moyer: And I'll turn it over to him shortly because during the interim since that announcement, we have had several.
Brett Moyer: Press releases about new products and new markets.
Speaker Change: Data vaults IP is being entered into and he's going to walk us through that today, but first if we look at what's going on with why shouldn't YC E, which you know we've invested heavily over the last three years on and have roughly 26 patents were filed around it right.
Speaker Change: So our results in Q3 financially improved.
Speaker Change: We had $1 2 million in revenue, which is up from up 100% to 240%.
Speaker Change: Our gross margins improved oh driving that was it.
The decision to take the small platinum audio speaker line that we have out of retail so we're strictly direct to consumer.
Speaker Change: And we reduced inventory by 17%.
Speaker Change: We ended the quarter with $3 9 million of cash from our operational milestone.
We did announce in our pre announcement, but.
The teams so that they don't leave.
Speaker Change: <unk> started shipping why so I P. Four transmit and I've set top box with the customer and that product is expected to be on the shelf by for the Christmas season. So it's working through the logistics that'll be on the shelves in Europe initially.
Speaker Change: And it'll go worldwide in 2025.
Speaker Change: No that's an Android OS system.
And the team has already started developing.
Speaker Change: Developing YC E transmit software to work on Linux.
Speaker Change: Operating system, which will impact our 2025 revenue.
Speaker Change: Or new.
Speaker Change: People on this call I'm going to briefly review the transaction again that we announced at the beginning of September worked out about holdings right and that was to acquire the patents trademarks in the I P for their subsidiaries of data vault and patio.
Speaker Change: The terms were $200 million in stock at $5, a share and $10 million in our unsecured promise Terry three year note.
Speaker Change:
Speaker Change: As we if we raise money from a strategic or financial partner.
10% of that will go back to paying off that note over the next three years.
Speaker Change: Major milestone this morning, we filed a preliminary proxy for both the annual shareholder shareholders meeting and.
Speaker Change: The purchase of this IP, so oh will clear.
Speaker Change: C C comments and should be mailing that so that we can close out both the annual shareholder meetings and the transaction with Dow default this year.
Speaker Change: Post closing Nate will become CEO of the company will change the name to data vault and I'll become CFO.
Speaker Change: Now with that brief summary on wife's and their transaction I'd like to turn it over the call over to Nate.
Speaker Change: He's going to walk through both his history, which is long successful track record of taking the IP and monetizing it in in both public companies as well as financially.
Speaker Change: And with that Nate I'm going to turn it over to you.
Nate Bradley: Sure. Thank.
Thank you very much Bret appreciate your time this morning, and joining US are we have obviously, a very exciting time here my background for those that don't know me is centered around invention I I have successfully taken our products from our invention to commercial.
Nation and into the public markets you know over my life span I've had various oh timing that I I have figured out with respect to that you get better in life or at least you intend to end.
Nate Bradley: This current opportunity follows a really a career that is highlighted by our solution of.
Nate Bradley: The internet for people with disabilities.
Nate Bradley: Audio why previous company ticker H E Y E. A NASDAQ traded company, we solved for making mobile and Internet site accessible for those with disabilities and in doing that and in my subsequent experience around intellectual property patents have protected our process.
Nate Bradley: In both filing in and receiving patents from the United States and international.
Nate Bradley: Bodies, but also reducing the practice in here, we've got the timing right with why the discovering you know there are 26 patents and their incredible traction in the marketplace combined with our own we've got a very exciting company moving forward.
Nate Bradley: And so really are these these inventions have been targeted at two our primary vertical markets are if you look at blockchain in artificial intelligence these represent high growth markets and.
Nate Bradley: The growth rates are.
Passive but the utility of these technologies is probably a wow why we're all here why that has a strong data infrastructure that we found along with their patented audio systems and technologies we.
Nate Bradley: We have a blockchain in artificial intelligence play.
Nate Bradley: At date of all that is harnessed in our flagship technologies data vault and <unk> Adeel is really the overlap that we have with why the and why we're so excited about the collaboration is that we have eight and ultrasonic technology a system that.
Uses a quick response mobile quick response technology that rides over sound I think of it like a invisible QR code, we have the ability to over these ultrasonic anchors deliver data and connect real world objects with their virtual counterparts in meta.
Nate Bradley: Form and so this is where we enter into the data vault system, but the benefits of this addy O platform allow us to perfect system in events and venues we have a number of pilots under our belt and just completed one in the M&A space over this past weekend.
Where we prove the model that had a very high visitor engagement improving upon what we did last year with the Katy Perry a concert at resorts World. We've also deployed there that's our largest convention center the largest casino floor in America the eye lids.
Nate Bradley: Sure we've been on M&A bytes, we'd been at art Basel, we were the first to arrive there with the N F. T technologies. So we have a number of big event, then you pilot under our belt, including Major League baseball, where we proved their ability to use these ultrasonic sound I forget.
Nate Bradley: Nitpicky in increases in mobile response, and mobile marketing at these venues. We've also perfected and AD network over these networks that we patented and protected with respect to its high margin delivery of advertising data to consumers and so working with some of the largest event venues we've been able to perfect.
Nate Bradley: These system and and also work with wide the home these technologies to control better our ultrasonic signals are using Wifi technologies, we can make spatial and other very specific tuning available on site at these venues I'd also point out that our technology.
He goes over broadcast so it's a very successful technology that first it addresses and event venue, but can also be broadcast for the out home audience, I, which is a significant breakthrough because.
Nate Bradley: The next slide.
Nate Bradley: We've also announced the.
Nate Bradley: <unk> for us to harness data and.
Nate Bradley: It's both a consumable forms we have launched a hollow vision D. V. Hollow that uses holographic technology can take data asset and convert brand and data asset into digital experiences.
Nate Bradley: Our human like we'd been able to take the main image and likeness of individuals and provide now a display that's connected to our data and our AD ecosystem that allowed for monetization. So we literally a pay per view box that can unlock our content on a on a paid for.
Nate Bradley: Basis, or a license basis.
And and control the display of holographic content.
Nate Bradley: Including our brand displays and in highly scientific data, where he proved a model for scientists that allow them to use data within their research schuh, Craig in silicone <unk> environment.
Nate Bradley: To view and experience their experimental data in a way that that allowed them to to experience and have better connection to datasets that they're creating in and explain to others are what their scientific research means it presents to the world. So we perfected this across a number of shopping malls.
Nate Bradley: Event, and convention centers hotels, and resorts sports arenas and stadiums as well as university campuses, which we have a very focused.
Nate Bradley: Focused effort around generating revenue in that marketplace and that that leads us to this which is a dual degree credential. In addition to experiential holographic content, we perfected holographic content that represents degrees.
Nate Bradley: College degrees Bachelors Masters and doctoral can be delivered in a very high quality and experiential coin that is issued to the graduate and it can be used in a format that are adios tome provide for a signal that.
Nate Bradley: Can be confirmatory of the degree credential, meaning that a utility coin issued to the graduate that coin has within it audio technology that we use patented called <unk> and when you play that alio tag It can literally confirm with that college and.
City, the the credential itself things like transcripts and other assets of data can be conveyed using that same technology. So we're extremely excited about this it's a great product innovation of the combination of our acoustic division and our data division it product tie down to our clients.
Nate Bradley: And we proved it that Arizona State University, working with their luminosity labs to cut our teeth and get all of the the necessary data arrangements made within that University. So that we're able to issue coin a in a way that is pass it to the university. They simply do what they are doing normally.
Nate Bradley: And we're delivering a web three credential on top of that that is a revenue center for the school certainly for us it's a.
Nate Bradley: Local revenue center to prove the data vault and Adeel models in in in the marketplace and this one a highly scalable vertical market, where every graduate is developing a revenue for our company in the form of this coin, which is also saving the college and.
Nate Bradley: The money is actually generating revenue on top of the money they save and these protective credentials are represent a web three systems integration and our revenue generation. That's never existed before so we're very excited about that I have a vocal effort and we're knocking down a number of known brands.
Nate Bradley: We've also announced our collaboration and work that we're doing it with scientific laboratories, we have protected our supercomputing software application of data vault, where we index a data no matter, how large are the repository or national laboratories.
Nate Bradley: Having amongst the largest data repository is outside of our federal government and <unk> and then some of them are owned and controlled by the federal government agencies and what we are able to do with respect to the data.
Nate Bradley: I ask that is to develop an index or software is the web three utility that not storing the data of our customers, but it is characterizing it.
Nate Bradley: This new meta layer and at that net of layer, we can function as a librarian an index or think of it of the Dewey decimal system of data assets and we're able to then also provide a value layer.
We can understand how much data cost to create a we can't understand the value of data and how much. It represents of the marketplace and most importantly, we developed technologies that allow us to monetize data on behalf of our clientele and by doing that we perfected a system that allows a national.
Nate Bradley: For us to share data to do a funnel data into the other systems, while also being remunerated for the cost of data and the creation of data and this is a breakthrough in scientific research are data vault is also protected our system as I showed with the hologram to view our scientific data.
Nate Bradley: In experiential ways that help scientists collaborate and communicate their scientific objectives. So we're very excited again about this initiative and we do have a focal point here on.
Nate Bradley: On the East coast, where we're developing that strategy with a leading laboratory. So if we go to the next slide.
Nate Bradley: Our data and technology are really in in Synopsys.
Nate Bradley: We have a you know a history of proven success with our team.
Nate Bradley: We've taken IPA IP portfolios that were much smaller than that that we have here at data vault and wise, though and we protected that into a commercial operation.
Nate Bradley: We're both are both technologies in that same position now we happen to meet at that inflection point and increase each other's value as we've learned to use wireless technology. We've also looked at their IP asset and N ours, together and what that means to the market state we have a combination of 67.
Nate Bradley: Patents that'll be 100 patents going into the mid part of next year as we get issuances were filing continuation continuations apart and we've been meeting as engineering teams to combine our technology stacks and find these acoustic connection to data and data monetization, which we're protecting them.
You have also high margin licensing models that are congruent at data vault and myself, we have a high performance computing software licensing strategy, we've also leverage that across sports venues and our our biotech and education Fintech real estate.
Speaker Change: Health care.
Speaker Change: And energy sector clientele, where we've looked at the effect of that AI and blockchain combination.
Speaker Change: Using web three are in total addressable markets that are expansive in those cases, so automation technology utilization across a big bang opportunities opportunities, where we unlocked inside the scale of our clients and so we're doing that across a number of acoustic and data.
Speaker Change: Initiatives, we have traction with these clients L. A that are are household names are large brands that have adopted and trust our company and our technologies to bring forth a number of revenue generating strategies. So this is our outlook going into 2025.
Speaker Change: And really with that I'll conclude my comments.
Speaker Change: So with that operator, we'll open up the call for questions.
Speaker Change: We will now begin the question and answer session.
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Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Jack Vander Ark with Maxim Group. Please go ahead.
Speaker Change: Okay, great. Good morning, Brett Good morning, appreciate the third quarter update and congrats on the recent steps you've you've made to finalizing the data of all transaction.
Speaker Change: No shortage of moving parts going on so let me start with a question for Brett on the third quarter.
Speaker Change: Looking at the fourth quarter, So Brett third quarter revenue of 1.2 million. That's a nice strong uptick was this solely driven by gen. One a wife's H T cells or was there any YC E narrow at all thanks.
Speaker Change:
Speaker Change: That's two questions. Yes, there was why is it in there.
But yes, it's still primarily gen. One why is that H T.
Speaker Change: Okay.
Speaker Change: Primarily gen. One, but there was so much that you're okay, and you have five YC E agreements formalized and more in the pipeline. It sounds like can you just remind us what your what are your X do you have any initial expectations for.
Speaker Change: For YC E. In this fourth quarter like well it will ramp up a little a little bit from the third quarter here and then if you could just remind us of your you're probably 2025 YC E expectations.
Okay. So we haven't done any guidance on 2020 five.
Speaker Change: But we.
Speaker Change: We will say that YC E.
Speaker Change: Why is the <unk> related revenue will have a significant up take in Q4 versus Q3.
Speaker Change: Okay.
Speaker Change: So that's that's helpful to now and then.
Speaker Change: It sounds like just intuition wise and just obviously more and more time with the YC E brands Rolling out it sounds like 2025 or <unk>.
Speaker Change: No guidance, what will further ramp obviously.
Speaker Change:
Speaker Change: Okay. So good and you know one other point Brett in the in the.
Speaker Change: Third corner here your gross margin did recover.
Speaker Change: Do you expect.
Speaker Change: I think that kind of you know the the wife's H T. Gen. One the gross margins around it can be around 30% on a unit basis is that still a fair assessment or.
Speaker Change: Is there any lumpiness to the gross margins.
Speaker Change: It's fair on why is that H T. Two model you know 30, 35%.
It is.
Speaker Change: I would anticipate as you go forward with both YC E kicking in with NR Recharges why should he be in a software license for transmit and royalty payments.
Speaker Change: At as you model out through 'twenty, five 'twenty six and we bring in.
Speaker Change: These.
Speaker Change: Our software licensing out of it but at a data vault.
To have significantly higher gross margin percentages.
Speaker Change: Yeah.
Okay, Great. That's helpful color, maybe I'll switch switch gears, a couple of questions for Nate.
Speaker Change:
So there are many moving parts and a lot of wasted developments you guys have I've been checking your press releases.
Speaker Change: On the database side, maybe can you just walk us through some of the just a couple of the near term monetization drivers you're most focused on are our think are the most.
Speaker Change: Meaningful.
As you enter 2025.
Speaker Change: You've covered a range of examples in the range of or partnerships, you know audio and video and high provision in and verify you can you just touch on some of the specific ones that you see as the most likely are the most meaningful monetization drivers as we head into next year, yeah. So yeah.
Yes, so on on the two data vault and audio patio sports entertainment venues our live events.
Speaker Change: Large sporting events.
Speaker Change: In the golf space in particular.
Speaker Change: He event really where you have a sprawling canvas.
Speaker Change: Two to produce from or to host our fans. Upon so if you look at P. G E.
Speaker Change: And some of the sure concepts around <unk>, that's a big driver for the audio business events and venues and concerts, they're broadcast corollary. So streaming and you know traditional broadcast delivery of Adeel so that.
Speaker Change: That all is handled E AD network. So it has a traditional kind of monetization I think of the complex technology, but very simplified it.
Speaker Change: In its operation and and it's it's creation of revenue around AD network. So very.
Speaker Change: Complex technology that gets very consumable and how its product ties and brought to market. So an AD platform adios across venues sports Entertainment and then with data vaults are the high science are the ability to use the olive grams of high provision that we are you know with the <unk>.
Speaker Change: V Hollow brand, bringing a paid for a pay per view gateway experiential layer around the use of hologram in high science. So that's using scientific data that we proved and show that an exhibit at the digital Twin Institute that we were able to show.
Speaker Change: A plant being grown off of the data into it. So you see a a son cycle into a seed.
Speaker Change: Seed nutrients and you feed other datasets into an object that has a genome that is mapped and you can grow that seed right in front of you into a plant rather than waiting six months and so there's this is a strategy where we use data to display them. We've proven it in one of the hardest use cases, but it has.
Speaker Change: In downstream and much easier to understand easier to implement things because just looking at a car or looking at a building looking at things in three D that are driven by data and our ability to inspect them into trust. What we're seeing is accurate through the data vault. So that's we're anchoring and other I asked.
Speaker Change: That's come in so we're going to focus on that high Science laboratory sitting in Monza monetizing data as an index and data as a value and downstream from that effort colleges universities. Other commercialization efforts of data vaults are that will start to emanate all of that again.
Speaker Change: As a D O. It's focused on an AD network data volt is focused on an exchange we have the ability with our information data exchange to simplify all of that business into an exchange we sell data on behalf of our clients sell in a safe and secure environment that's never existed before.
Speaker Change: Sure on our information data exchange so that those are the those are the focal points the AD network and the information data exchange.
Speaker Change: Driven by those two platforms.
Speaker Change: Excellent excellent and I appreciate that that's helpful color and maybe just maybe just go one step further there so on the on the dead halt.
Speaker Change: And it kind of did it create digital twins side of the business.
Speaker Change: Well I mean like how do you actually monetize well will this require like contracts to be announced signed or is this more of just is this like a live market place where.
Speaker Change: And customers can actively go on and purchase data from you guys or is it.
Speaker Change: What kind of visibility will in analysts be able to see I suppose would there need to be a contract that's a downturn or more partnerships that would just be helpful color.
Yes, so our partnerships on the buy and sell side. So you will see a number of clients.
Speaker Change: Sign into the platform, where at the commercialization stage of data vault, it's the flagship.
Property of of why is the data vault why is that has a strong data back and that's a very a very useful to date evolved and it's you know, it's it's function for like sonar, bringing data back to the data vault.
Speaker Change: You know through the the ultrasonic technology, but the the monetization to answer your question on the information data exchange you could expect a 70 30 split 30% of our yield of a trade you don't think of it at 15% buy side, 15% sell side interests in that day.
Speaker Change: As that comes back to our company. So a 70 30 split 30 coming to data halls, 70% in the pocket of our client where we've taken like Bloomberg does a terminal and we have a virtual meta terminal that we turn up for our clients called data bolt and what.
Speaker Change: We add for our clients to their datasets is a meta layer that adds value. So we value in score we have patented technology that values and scores that data and when we split it's on at 70 30 basis. So you'll see turned up clientele with announcements around contracting.
Speaker Change: On the sell side or on the on the data side the inventory and then on the on the buy side organizations that we've aligned with such as Bloomberg and Blackrock and Accenture.
Speaker Change: That our large institutional buyers of data that have very complex requirements that data vault me on behalf.
Speaker Change: So both sides announcing buy and sell side and then the the events and venues and the use of <unk> being other areas that we'll announce and when we do announce those keep in mind data vaults the back and all of those add systems and other systems are really built for the purpose of creating data.
And we harnessed that at data vault.
Speaker Change: Excellent Okay, no that makes a lot of sense I appreciate that rundown Nate and then maybe just one more for for both of you for both Brett and Nate.
Speaker Change: Just it sounds like you know she got the proxy.
Speaker Change: Such formalize that'd be sent out here it sounds like if our shareholders approved the transaction. This will happen pretty quick soon after that.
Speaker Change: You guys envision hosting a joint kind of Investor day of some sort after in the shortly after just you know once all the dust has kind of settled in in the name everything kind of tranches over.
Speaker Change: What should we be expecting will there be an investor day type event, where you kind of.
Speaker Change: Normalizing crystallize everything and crystallize the message maybe in January or late December just what are you guys thinking there. Thanks.
Speaker Change: I think the time that you should think about as it'll either be at or immediately following C. E S.
Speaker Change: So first of January.
Speaker Change: Okay.
Speaker Change: Yeah.
Brett Moyer: Do you plan on both the being being at Sea, Yes, Brett.
Brett Moyer: Showing off both technologies and I know why she has had a strong playoffs there in the past obviously.
Yes Santos there.
Brett Moyer: Alright.
Brett Moyer: Technology both teams.
Brett Moyer: Fantastic.
Speaker Change: I think that's it for me for now Theres, a lot lot going on and I look forward to watching goes execute a good luck.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Brett familiar with twice the technologies for any closing remarks.
Yeah. So you know I think clearly there to quote Jack there's a lot of moving parts, but it is a very exciting combination of IP that we've acquired.
I think the whole those teams are looking forward to executing this out and watching revenue grow and as we come into 2025.
Speaker Change: And with that I'd like to thank everybody for joining the call. This morning.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.