ATOM - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Atomera Third Quarter 2019 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker, Mike Bishop. Please go ahead, sir.

Mike Bishop

Thank you, Sidney. And good afternoon. with Investor shift to like the Relations. company's I'd call Bibaud, Laurencio, Atomera's joining CFO. me and Scott today's on Frank And President is CEO; Atomera's and

the If we presentation to call. by follow up the questions. slide go after call presentation Investor you the our telephone, After will available a page section Scott remarks. on accompanies That website Relations website of comments our remain your and are to our on open that by will Frank, joining prepared for Events please our

securities we to Factors and subject Before are make remind that are uncertainties XXXX obligation elsewhere to of May during or Exchange statements, statements begin, section These or otherwise whether to remarks required the the SEC to with filings Commission, our risks session specifically contained with those in circumstances. such statements. Q&A in reflect to and will federal regards on Atomera prospectus detailed supplement in we inherent the conditions the make everyone events, expectations during except herein revisions I would as update with the Securities prepared in risks like or and laws. today's filed and disclaims Risk XX, forward-looking forward-looking company's forward-looking These call changes by to any uncertainties?

the on measures meet defined which is measures Also, release, Regulation please to note included our that directly G. non-GAAP during in website. will measures be by are SEC as financial press of this non-GAAP financial comparable call posted discussing today's we Reconciliations GAAP these most

Scott Bibaud. over to call President Go will CEO, turn and I the Now ahead, Scott. our

Scott Bibaud

our begin will some turn up the afternoon our to this our comments with I update to questions. and call and announcements, Good call. review quarter open financial everyone I'll third Thanks quarter Frank we'll which to over and results it recent on progress welcome our after discuss to Mike. will

detailed quarters, been insight provide we've the that been into the able into last breakthroughs some Atomera has to technical introducing the few Over market.

customer work on true that more these I when is would was this demand the the the into breakthrough earlier recent like of generated Due market activity work to of a more It consumed activity. customer like R&D been bring engagement been our call announced the the year our potential focus. months Atomera in more licensee getting to new and new last have X with customer today. than focus that as has certainly we able to R&D high fold, result

of allowed wafers number deposition X during achieve We quarter. months, customer in record the last have historic conducted sections on third also the MST which a us to revenue

continue with using to programs on production. very for to MST work interpreting get additional steps closer be customers working to on and busy customer next preparing planning results, We

wafers during engagement customer our on here. fab on to an of sign to includes customers illustrates Atomera justify In license Phase incorporate X the and get most are MST Phase a an X on customers film phases integration It X MST and licenses a use customers. know that X wafers our Phase tool the production. where licensing MST you license where characterization. Phase EPI results Phase of in are planning under fab we distribution conduct run in X technology. is customers manufacturing As their and shown phase to evaluation with their in physical we customers and activity deposit generally X in likely install and NDA customers' transition R&D test technology. with is our execute their who

get deposition to we integration, as which manufacturing process more license into distribution licenses revenue, upfront existing on services customers. license stages and pay customers increase the revenue from deals MST additional as conduct later licenses, and will nodes gets deals to which existing for Atomera engineering runs, grow us X of revenue sources signed will more

based of pay wafers sale who when customers royalties Finally, licensed on us they the into get MST and production. chips

months. During the last X

been process consistent growth has Our customer advancement. face and exhibiting engagement

in while other conducting X X succeeded moving in number sessions in engagements the customers X. deposition have MST Phase We Phase of for already a

added and We new have also one another into X. engagement customer Phase advanced

As with XX are process that XX report us. a X result, have multiple with meaning customers I'm now nodes on pleased we to working customers engagements

least world's at customer engaged be top towards companies Our companies to engagements the semiconductor larger with continue skewed XX% Atomera. with of

to of opportunities advancing we new continue customers existing breakthrough the said, We and opportunities a pursue production. being we've continues earlier that on this make focus be those work evaluate sense. Our year. result the as That get each to through pipeline done towards of

To I us engagement mean it good for continue level will keep this be to to have. resources growth, engineering and increase up to deposition support problem necessary to a

RF expand Indicates to grow are its next of to working pleased extremely fabless a in to and required with years the XG performance XX% the excellent X XXXX and phones point shipped to both of improved to announce frequency where the starts an new support us the to designed over XG for RF-SOI that bandwidth. opportunity significantly will new include bands company. semiconductor research. market They devices using are RF over MST We will with technology. cellular a is integration large a devices the market market execution This provide of license

new gives levels. it of cutting our the the mobile will next devices This the RF drive for believe in that handsets customer, generation development edge we also develop XG new MST devices And will market. them better. these make and all the new to ability RF of technology using license will number of RF drive technology XG performed low power integration content a to high-performance, cellular

the of proprietary have fabless generation with the supplier. first own enough company development on This its also of our foundry case, we that marks process is license and with working large are with next a them to partners In established manufacturing this its semiconductor technology.

have which represents Atomera. typical players it's a that and fabulous own the largest Many foundries not very technologies, Although manufacturing exciting fabless their most with the develop is area this growth for uncommon. companies proprietary of their world's not relationship that common

Of course directly they owned important foundries fabless manufacturing strong there we it's Because with have that them. their process development most influence roadmap engage a work the that on partner. foundry is companies by

You that can imagine convince that their we requests foundry an on if higher immediately MST important trying our we a implement are than to get customer if to may own. fab priority

fabless company development be fabless of for type Atomera's licensed are an they generate this licensee Both with all demand wafers. not an Atomera engagements would would types companies excellent of business. future for So

license more also we that believe faster trend that MST very a partner something me represents a of flavors announcement the time fabless to before our into else different give But is Today's insight some of illustrate technology. with you let I good revenue.

blocks Since calls MST the with industry great understand a new the technology blanket and film is integration early a a deposition easy was one customize challenging can The The from are a we before them to easily it's and done. that technology layer it of film called MST STI one before quite about our technology and right days wafer typically, brand was very MST process. that our of is that that thing temperature is the developed most and the modules, steps blanket to time the had cap we to there that from as building and downside We transistor Atomera so -- perspective, work needs, well on call which process is applied which DT. processing any a blanket we've customers' different applied into done. versions manufacturing was X integrate their of top MST to as other a

Unlike which the order to FTI thereby Atomera have performance. applied protracted more high is it wafer customers bypass where after because X needed on a its created and heat on surface generally effects heat version our is only that the worst call flexibility called can temperature impact through This it's negatively on MST these it our high the film their early because highest avoiding cycles deposit blanket also the it's wafer in where In manufacturing process performance process they selective the and can applied whole steps. only what modules designs. is well environment detrimental a retains the after high we applied another allows of the films the surface, MST MST the X technology needed can quality process. stages

integration example, then it for customers' does MST want the they circuits, of since MST not much MST middle that on others. Maybe, MST our but support one on right X process. level of higher manufacturing require in applied is a some X can

after Sometimes to steps the their before MST. process just deposition require and standard modification of

option Atomera give we X, be X uses can But be and will manufactured will the speaking, regime. Generally faster process revenue. we'll integrate MST a wafer easier customers' where be time only if DT an believe MSC to it to a lower using

now rule of profiles. thumb uses temperature a As process newer lower generally

XX manufactured lower about technology. one Atomera And is nanometer. advances when So we XX technologies nanometer using speak temperatures MST usually are in then they achieved FinFET at

well. as with of using newest we work technology, one RF in in most through customers work to method. that manufactured MST is of other in upside offering RF today, those to prior using Most this integration doing belief production other including SOI our the The aren't work customers Since also we be SOI advantages on advantages customers challenging breakthrough any the our news getting have one MST one all the using obvious the MST potential than very using doing are one. MST available XX there is is shown calls, It and uses X, of be we many customers are since RF and SOI good capable that users will tends we advances at are MST MST X temperatures. sooner lower have working licensee is

shows The and many process providing solutions customer is use nodes applications. our and for with different different of Atomera MST MST X flexible X

provide continues team solutions industry compelling films better is to many to techniques and the to problems engineering generate facing. Our integration

happening how at One patent portfolio in our much metrics. to is to gauge way is look Atomera innovation

and with XX year-over-year XXX last next the patents of and MST shows to devices XX% value how the our company the along in a growth generation enables and This patents has to XXX. grown Over build months granted we from Atomera architectures is core continue pending MST our

attest more licensed foundation valuable great any defended them all will since their businesses our our company very can is customer this licensing which and licenses patents of we can semiconductor in technologists and date a size. expiration also patent our Since technology having long have portfolio know-how, The lives. in any has to be XXX discoverable no the chips end value making of patents over

our semiconductor comes very deep company as to Directors. with of Board a I'm our to Le at impressive pleased Speaking Board within of a of technologists, track companies Duy-Loan record the semiconductor welcome us industry as level. of assisting well pioneer leadership experience the to

She TI fellow and was TI partners. in highest participated the first running of and only working from and business fellow title to be to senior in technical technical history has the at fabs through aspects of the of with development all their woman awarded

she and including Board the experience to the our Systems. our Power moment. be The a on to She sits has and Xulon company is of dollar very companies Directors Cree will at helpful. auspicious of joining contacts very the bring from National board Instruments, currently Ballard -- industry multi-billion X

take semiconductor with cross in tools rare not the fewer one section somewhere; most is is this of to new to to lab in that it continue to that on MST engaged Law bring technology Atomera's available our can with in a an used and innovations exotic of performance industry drive companies right the before of use the of that best market. now. We tools some today technology impressive can the Moore's in enhancements customer than of can development slowdown fabs companies an under trends all are have industry important tools with are those be advantage major

discuss call Let CFO to financial our me turn the results. our over to Frank.

Francis Laurencio

a we operating of Thank results and release announcing XXXX. you, for of close Scott. the our financial the quarter the issued press market third today At

and here, in I Our review more them summary now financial will shown results are detail.

months net for loss ended GAAP September XXXX XX, $X.X of the million Our in X to XXXX. a the million $X.X compared of third loss net was quarter

$XXX,XXX to of this quarter the of due million as in the primarily in was lower of and loss of of XXXX. revenue third $X.X in expenses, net lower quarter of $XX,XXX which $XXX,XXX were million Revenue revenue increase revenue operating $XXX,XXX year services compared third $X.X license a to Our engineering consisted and

much to In higher QX QX, mix due compared had have Gross we revenue XX% XXXX QX in XXXX. in XX% of of not did any $X.XX margin of a and QX QX net we share, GAAP down in to revenue. per of in QX engineering share services this per quarter. per On was share basis, loss $X.XX in from a our XXXX loss $XX,XXX

as in shares decline from QX QX increase reflects as outstanding loss, in an million shares well This lower $XX.X a in net weighted XX.X to XXXX. XXXX average million

our Our press reconciliation contain release GAAP and and non-GAAP between this slide results.

As between non-GAAP is is you difference our results can major item. compensation stock-based which a non-cash GAAP the see and expense,

expense XXXX. in to QX, QX in as compared $XXX,XXX Our stock compensation was XXXX $XXX,XXX

affected Non-GAAP the adjusted the operating the detail a loss components a compared $X.X EBITDA will QX results. in GAAP into same XXXX of was in I go our quarter loss million of factors third of on reflecting that $X.X to now million expenses. more our

reflected a test as which million, approximately allocation engineering of expense services $X.X R&D in of that from a was as expenses decrease our outsourced XXXX QX revenue and fabrication from $XXX,XXX to of cost revenue. million more $X.X well XXXX, of as an higher our decline expenses of a mix QX in both of R&D were

fees in expense. payroll Our expenses part higher decline million. lower decline of expenses XXXX $X.X XXXX compensated professional costs. reflected and This were G&A in QX $X.X Offset $XX,XXX QX non-cash G&A from by million, of a

results loss quarter. $X.X of a our sequential to a on loss in second quarterly third $X.X the compared net quarter million GAAP basis, at Looking XXXX net million was

recent weighted as closed net to per increase equity loss, outstanding declined share GAAP per share May lower our shares well the QX as financing loss in reflecting in note most XX per share, $X.XX $X.XX XXXX. on as in net the from average QX

So Non-GAAP QX only declined outstanding million QX. EBITDA of were of month those adjusted loss in one $X.X $X.X million shares a for QX. loss from in

for R&D in in lower This to MST decline the market. in fabrication half this of our of first SP a test to and to due surge development analog related was due the year technology expenses the QX primarily expenses outsourced

level do professional do more not Although timing expenses capacity add the expense see the sequentially, year growing of expenses epitaxial down quarter in to increases to R&D fees. second we principally of QX expect we support. due to we to R&D revert also next into gradual were the customer for continuing expect and G&A deposition as

at to September XX million $XX.X cash the cash Turning balance sheet, was XX $X.X million, million balance XXXX our from XXXX. our $XX.X down June at

proceeds May of was XXXX million exclusive consumption $X.X cash of QX Our the financing. our

non-GAAP of tool that calls, plans the $XX.X consumption reiterating are We cash to guidance lease will On previous expenses R&D. use wafers full-year and be XXXX million. Epi to additional range in as I as $XX.X for both the well operating to customer our internal earnings talked an about

We be Until we now and the $XXX,XXX, which will our our of which in cash year. happen of statement. a a new not income during next we accepted, tool hit lease, to tool first reached impact will Lease balance. will deposit agreement making the is will quarter QX, new expect have payments obviously

fabless contract recognize how good those performance which revenue technology for as and work this signed obligations QX. in revenue agreement on factor on to just revenue XXX, that from when a our we Because do license to our deliver agreements. met. This our vendor vendor we wafers. on recognition confers customers' both ASC when license integration agreements, As is integration the been from the our on wafers Under when time depends we have executed as we we from most of is deposition MST a contracts MST the rights Atomera timing with provide review well the will important revenue probably license Scott recognition mentioned, recognize an will

require customers work. arrangements Our integration engineering also the payments for service license generally with

types rise on for Based license both recent to in runs be revenue. of of service associated customer wafer can give revenue the signings our our our other a the $XXX,XXX. QX to that $XXX,XXX and anticipate engineering work range engagements, currently So will licensee we

FinFET. limited. services also customers RF momentum We X-volt on remains resulting our are visibility and of services, analog, engagements and licenses, licenses see in we discussions remains multiple those from SOI about for continue engineering to in and breakthrough but with paid our visibility our engineering timing And

will the Scott. before call to to With I summary call up a the that questions. Scott few remarks open we for turn back

Scott Bibaud

Frank. Thanks,

in I continue licensee, X signed accomplishments engagements resulted our a months think you have record expanded will for to agree achieved build that and many We financial results, last new these customer Atomera. our portfolio. patent fine

licensees, existing faster. even on that scheduled Our continue newest we for MST will X licensee hope, to forward their on using move production move and track our

new direction. for be to making to licenses are MST We and progress paid for good work continue push deposition and that in our

ecosystem. of on very be you important the our we potential we semiconductor these look programs to today valuable to much capable a sharing of and forward to get making as will semiconductor more and industry. provider When an folks more customers provider are high IP build working to continue we successful technology the semiconductor on the production industry each member of are a with powerful into own. and company the into Atomera their The We successes certainly we

Operator, we now will questions. take

Operator

Instructions] [Operator

question Capital. first line from of with Cody Acree Loop Our comes the

CodyAcree

is congratulations this the licensee, world? how how Frank, with you of Maybe in are Scott licensee it about in on with kind under the and areas expecting this SOI are long multiple talk other you any progress. Yes, worked projects or just and we can new you engaged simply this if or RF

ScottBibaud

was before a only first SOI this happened had those technology the RF we great to week and Thank Cody, got on we the shortly first it in announced it's May of public the our kind Yes. just think in gotten that that general investors. that I our we to you. of results. call story, actually earnings And very performance breakthrough

March progress to say but I having can't just started in with a customer think that first new that is license exactly, or them of work in X roughly we months, So from timeframe in April. with only getting timeframe. remember this the accomplishment. To a discussions maybe point our great might

We other discussions SOI. with other them are RF on some about in working technologies, than definitely them with

working they a so We anything we it's company so quite But have are in announce so have, good. far yet. to and And, large fabulous there but areas. multiple don't

CodyAcree

guess I you arsenide do following work that gallium and you question, last SOI? RF and then just how what if so, do and just done do Scott, one in past RF the I solutions benefits these you, for bring versus have

ScottBibaud

done you ask you Cody, we arsenide. in when gallium did mean So work gallium that arsenide haven't

CodyAcree

Yes.

here. working Just

ScottBibaud

So the work.

CMOS So there gas our MST and gallium arsenide focused will we if exotic that an -- technology, yes, for making been for a there. work just of can power cellular for very you're right, SOI and mean, actually used know that amplifiers a on. more advantage relatively solution done work applications, we haven't we and big done which on are RF work advantage is both our can't popular on RF in you say because think we transceivers, I haven't not but is on whether be bring has

CodyAcree

Got it.

work. believe we was into you? you a which going is a into cycle, that at actually moving headwind Scott, for is industry go pocket the if said little do, bit that to to past I of uptick, XXXX your Okay. slowdown licensing creating an Does a given create this, for impact view you've recovery the if lastly, does that And of sector in the SME you then that how

ScottBibaud

green signs I I early. that with the Cody, it's customers. of that starting with seen to we yet assessment we of our shoots haven't are think but as impact see too Yes, still your kind come up, agree well.

capacity very experiencing last period and then we what a it this couple typically recovery to that for we would get were really to year it starts the is it to get in years made us a there hard and it. of before So, impacted see some maybe

comes customers recovery some I'm full here So with advantage to force. in take have hopeful and that still good a do that we runway when of lot of hopefully it work

Operator

Suji Capital. from Roth with Desilva comes question next Our

SujeevaDesilva

as Scott, Frank, as well Director third of very agreement a congratulations impressive on license addition. announcement the Board

a I think your it's technology. to great testament

been deferred that understand I this executed after in think, it So presume given deferred revenue Frank, our but and you that close answered revenue, the remarks, there sheet, on there not already if balance dynamic. is be just had prepared the customer and with was license new no I the

FrancisLaurencio

in fact up announcement you in license wouldn't would that So any think you're right, see revenue on to been we a said signing executed deferred there but as in on this revenue made sheet. so deferred to that shown recognition related do the that QX, factors, balance to have sheet have remarks, I required but the revenue do of was related just just the license, related not was the couple during the QX the may I one, the of work MST we're has balance our in QX since with But my that the also wafers. on put the

of extent, wafers. revenue has So, we that deferred to to quarter do the some shows on up at how do much end work the the the with

So, that do guide able to work. get that on not until I'm quarter through the actually we and

SujeevaDesilva

was That IBM. bigger picture for. questions Frank. fair. a about versus and even looking That's And, X one, or working in question, foundry an fabless with I maybe color was the

Now timeframe and cycle? up And, with fabless shorter companies fabless broadly, in and that technology this in faster fabless pairing IBM? a the an running, for it is is getting open up more potentially fabless, another that versus does different, that a that customer for terms working foundry you the other how using foundry now of have foundry

ScottBibaud

one. of interesting that an it's Suji, Yes, handle let me circumstances. set

process As manufacture development process fabless I a the specialized then companies their technology very use their partner to have comments, they some process underneath just for They in and umbrella. my said of that them. large foundry a develop

to very our That's large as foundry working provider. make this the think the to technology, I us of foundry a not to with would would closely. us it's proprietary rest benefits fabless reasonable the very as supplier us both of market. to know to the the technology that, they to that and fabless want gets the engagement, know and of part they with we're directly sell because assume to certainly foundry gets the However, that And engage

that we from definitely of to sharing technology benefits out see a base many our in wider with this, So, terms there. are there our perspective

Now fabless if be to group wide process customers, obviously that standard flow of technology it great. would then does people adopt and of that make available that's we'd making offering all available very that on to our foundry they their their a and be

SujeevaDesilva

Okay.

Just it Any some that. XX as with you color you're all turn is now, foundries, to add of to fabless-idea? or customers the this engaged would

ScottBibaud

No.

XX it's of very healthy right so So, foundries a the lot could lot only customers, mix of are IBM's. one the guys. a future, I foundries these and that which have in now and see fabless growing of IBMs, and but far, we

SujeevaDesilva

first on Okay. new the cash in in to have This about is back far. impact talked rate a And customers, what's that look XXXX so financials, customer only burn? that kind couple growth moving OpEx what the you your of Good know. and then might of support and to fabless questions like

FrancisLaurencio

of the bringing on tool we balance new we're isn't have expense R&D been of why I we probably and range bit at think The this some about qualification a twice bring for more was we actually do capacity. not mean, costs run-rate R&D at to tool, as when start-up but and we need internal give requirement start XXXX. to wafers more the a process the because could that's operating expense, in new that the payments. will coming increase a online on to see expense, on the is runs of be internal to I capacity. we that, be we talking making It's of much, customer times in MST the at going been QX and a installation the lease anticipate and going constrained to happen there than we due more increase; additional Epi happen I've $XX,XXX a maybe the up initial bring tool significant a point quarter, maybe operating to increased there second upfront tool in with basis, external, now $XX,XXX now, some Right first on That with little until heads one tool a an to looking the going you're month, during and

SujeevaDesilva

Okay. to always that the as And headcount service something then along plan is a Or, that, material in this in year-over-year call? and element support the that's those customer R&D well? is incremental lines, increase for Frank, not that

FrancisLaurencio

incremental a had are happened result mean, now. not And in as a our already have plan board of we on call. we quite that probably if this that to are new the hasn't anything; I we head yet, planning right headcount, add Yes. openings count headcount but our to that It's in were plan. have ones

So, when Scott we what talked already resources, to that's not engineering incremental about supporting more customers planned. with have

SujeevaDesilva

I'll then, last along. Okay. And pass question and

not as correlated should the how customer the remind parts that correlated run, there think well. from Frank, being to the a volume those we Just Scott get of you're on customers their was lot to close licensing? of or us, the or how getting happening, finish dollars converting you from line about moving and It that,

ScottBibaud

engineering the Yes, it's kind correlate of services difficult to revenue.

licenses. about they think I the will you're when get talking

the place because it's you us, with our Typically, customers we've but know, a little we customers, a pretty that run on I charge of past. widely in than So, can statement vary about and them in less basis, charge it statement bit agreements had our we say our didn't early $XXX,XXX that. by for would we've of talked of some engineering do services work, that revenue, to work as

in more But, guess good have the I advancing obviously, runs Phase do, think that there look change that progress. is Well, to that out. don't they're you customers trying been we're making So, people can further at the a way and I licenses good that there X but figure very is closer gross is then our licenses, and level, that. a to say get services hopefully no making revenue that towards shows progress and good the At are very specific you getting to engineering closer way high, could to if about and manufacturing.

SujeevaDesilva

appreciate congratulations on again my question the I progress. answer guys Okay. you and

Operator

Mr. a to will any for this with remarks. not We showing have time, Bibaud the do questions turn Capital. Acree at further I I'm Cody from over back Loop now re-queue And any further call

CodyAcree

just Yes. Thank follow to on real up I wanted you. quickly question. Suji's

burn have any I XXXX. cash there? he asked had think guidance Do about in you

FrancisLaurencio

I'm that line for on this a next level, said to I not year, giving as as would $XX,XXX a about increase No, I a mean, operating about gross with where head we it with be are, count. guidance in expense incremental expect R&D but year, I and tool month compared will from

of End Q&A

Operator

like to this And at time. there turn Mr. further questions Bibaud. are I would the now to back no call

Scott Bibaud

all thank right. for results to during to you we to continue very successful you continue up our we'll look articles I of Atomera compelling attending had to keep our more to and posts the rest date today's blog want a All on Please and for progress. believe QX. drive quarter presentation. news,

next seeing some with sign look of soon. Should up you call activities, for our atomera.com. on which you to Mike your can them, we'll to alerts announcing be call and have for with Thanks our Investor forward happy you look during we forward our in update scheduled along again to additional support We February. Bishop, will please marketing follow we and be You website up. questions,

Operator

call. conference today's concludes this participating. Thank gentlemen, and you Ladies for

now disconnect. You may

Mike Bishop	Investor Relations
Francis Laurencio	Chief Financial Officer
Scott Bibaud	President and Chief Executive Officer
Cody Acree	Drexel Hamilton
Sujeeva Desilva	Roth Capital Partners

Atomera (ATOM) 2 Nov 192019 Q3 Earnings call transcript