WATT - Earnings call transcript Q2 2019

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Operator

Good afternoon. And welcome to the Energous Corporation Second Quarter 2019 Financial Results Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note, this event is being recorded.

to Relations. conference like Bishop to now Investor with would turn over the Mike I ahead. go Please

Mike Bishop

Thank you, welcome operator, and everyone.

make undertaking disclaims to as statements, Before otherwise release filings required federal the we during any Securities risks today's will obligation and during to Exchange remind the with Energous participants or to statements. begin, I reflect revisions subject are contained would the call, like Q&A session, uncertainties Commission. Except the or to with changes and statements in conditions events, herein remarks that publicly and those in elsewhere, company's securities updates by forward-looking prepared whether expectations laws, to are that, the forward-looking to or These inherent circumstances. regard company in detailed or

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

over like call Go turn the ahead, Rizzone, Steve I would of Now, Steve. CEO to to Energous.

Steve Rizzone

Chief me quarter Thank afternoon, the Officer, second you Sereda, and conference today. joining Financial our call. for you, Energous is Brian attending thank Good Mike.

conference progress over I to for As and in Brian update past comments turning company's with call the calls, financial provide will business on the begin before a general a update.

to call will questions. then the open We

major wireless on our validation two technology. launch days is Amplification announced and the PSAP, know, Amazon. for our Product, you Telesys, Sounds sale charging that point WattUp is on conjunction Amazon of available of many Personnel SK to The now a Oasis-RC Delight, Oasis-RC milestone As ago, customer, in their with or

strong key with We noted traceable of a that to to industry a few is these first market elements. elements one leadership position being have an in always

X.X accelerates. additional the the of over Charging forward coming products coming partners looking launch are WattUp months as to Wireless We from to Amazon

saw manufacturer also a the leading hearing-aid We from week China. NewSound, in based announcement this

EUAH be in and will NewSound this at expected with October, Europe hearing-aid in year. U.S. end in availability Germany the of by generation launching a next the

As aid in markets, seeing technology pain strong PSAP RF very as calls, hearing constant removes technology types the based being our point on noted charging and the of we've our interest these prior battery for product, that we're replacement. major for

remove availability announced developer June, In by battery of for kit, hearing-aid of swaps endless market. to was integration the first users. faster PSAP their finally we which the the and a manufacturers looking enables chore to Delight

And end smart NewSound we will in year anticipate the and the WhttUp medical glasses wearable, between second. market markets. sensor products, and announcements the additional also the only for now but be enabled hearable in of not the

transmitter WattUp Field the At our receiving FCC technology. we July, of end GaN-based certification Near for announced

approved Whereas, current developer others. kit foundation for costs our as aids, the higher application now for upcoming We be devices, to for transmitter planned [band] partners without approvals impacting aid hearing us hearing fitness the the certified us and the power our wireless quarter. glasses. solution also as earbuds, continue been launch our smaller GaN lowest June, the also developer allows incoming we partners and such offers developer resources. in same CMOS as for in bands noted their like their newly announced kit Union. will applications kit and an support watches This Much engineering very hearable additional important has this based to hearables the European for offer efficiency sale to for on smart technology system power such -- available devices provides with These options expand This lower based product needs. GaN smart we improved are

comment approvals. additional regulatory on An

based RF is Energous past, campaign for charging. As we've the in noted a driving regulatory worldwide

the goal has of part, Korea For Japan, the been this exception China. achieved with and most

expect timing positive is, is are next predict difficult government when potentially year Asia. these agencies, in could markets, we approvals that it of indications are half the in important to not for movement with see first regulatory we moving anticipating later regulatory certifications that of the to to months dealing first terms While this year, years in

will As the all revenue ramp regulatory to the maturity, are strategic achieve how main quickly will and now How partnerships, the shipments it pieces questions to forward clear. become profitability? of we With these questions technological the surrounding for look answers passing answering customer approvals, global together, can Energous. coming and fast each month, company

let's the profitability. question the So of commentary move to

product I to would what expect of see end by revenue our and the initial what and between the the XXXX like. ramp, look year potential with to customers this begin on for is by can picture now we discussing like starting launches consumers to to focusing

U.S. we their production IoT before have have requiring for least to sale year. customers, launching while moved certification has end point of launch customers being, before committing markets. the there chips top electronic, for some consumer quantities that Delight And global Oasis-RC regulatory other tier buying top have launched will and this and certifications believe probability noted, top launch, the of tier and a the Union is tier original European to company, delayed one focus. is we As free at from in capability cycles of or start to on opportunities Asian a high that the our NewSound we launches The commit Amazon U.S.

XX have chip from typical over period. or again the more. strong time, even three in sales our each from for the customer, the two basis, seven on momentum Each period. of top potentials figure scaling a is launch, product sales to represents tier opportunities a launches lifecycles product tens thousands month with to over second years, a a opportunity, product thousands regional perspective, a a From with scaling At tier revenue month effect for regional same of of layering the measured XX launches

of gradual the each accelerating XXXX. All revenues of and scaling to this of a this points ramp year, end quarter through of

picture, a provide this we as is will from remark. for expenses. be stage have to more the models would the case our are to lowering see while to in expense it time on Energous not his most at complete the That declining, due our appear company, developmental to the despite move at To a profitability. stage. commercial This But say, enabled ramping the color largely factors. counterintuitive are Brian lower same acceleration revenues expenses suffice with to two bar trend this

First, we benefit partnership. the dialog the have of

we which the of drivers for the stated past, one principal customers, customers our are As is in the dialogs partnership.

costs a team, qualifying, associated from with net associated inventorying backend dialog operations and force. standalone dialog savings result sales. several of us the sales millions relationship cost to dedicated costs leveraging with The all the the and just and benefit avoiding substantially supporting model. The commonality of of allows customers annual the sales operational over assumption dollars the effectively their is with reduces of Also

Second, the company's biggest chip expenses and are development. employees

last and to years, expectations, in chips. based chips company's flexible three has the as flexible power near invested The company is the to Over development contact has transmitter, the catalog now point heavily distance portfolio enough amplification chip revenue a customer charging. transition both support from of of and acquisition receiver well where term and to Energous as the the complete, and powerful enough, strong very current

our position innovation to the development elongated chip first commercial currently market of costs continue Further, remain relatively invest will will with million to be other in which in will at expense, deployment we our year, company about dialog XX to and and highlights roadmap. XXX% will have maintain to Energous to flat and number expand respect relationship. chip to to revenue, table. their employees. number be more we lower While through developments are to that due respective this leadership launches, the believe a development leverage generate model We not the to $XXX in our thanks part We the largely believe in brings next and major

product operating is expand stay acquisitions XXXX our without technical the flat. or to result customer The can of kick consumers maintain in a Energous it now is net will reduction model The believes annual expenses ramp, And efforts which shipping company customer in and both impacting as negatively shareholders to sustainable scalable, into it starting appreciation that and in, value begin revenues benefit expenses, very these is leadership. annual of significant the economical.

trends it TAM and hearables, sold wearables, a than on, to penetration. positive very was put XXX little acceleration Moving anticipated relative is to in the four This is point and path over year. can markets medical we accelerating. expense addressable in estimates cash realistic But revenues and we be devices perspective achievable market Energous to goal. the At and took target market Yes, would estimate and penetration. market our X% of the longer level, glasses to Current I of and flow as in get current our smart anticipated. in a million clear dominance revenue like it is market addressable this sensors, breakeven total with expected or as to commercial profitability that

to comments final turn are Discussions strategic few the A with before I Brian. long-term partners over continuing. call our

of So there competition. is nothing relationship comments at on time. A on this the new couple to update

momentum, for aware product are are is surrounding generate consumer and which the Charging as potential have press. X.X interest of and the and announcements, general, they have announcements we many interest market regulatory regulatory the charging. recent It As of demonstrate garnered believe there some been In good in investors in Wireless technology X.X positive.

Wireless devices. and at wireless to we are not in successfully announcements leadership with we not very has show But a they the is in. mainstream, will yet. what that the market When these and for potential and of on mind customers stage focused a These ready see differently, Clearly, integration interesting They energy to initial consumer engaged Energous solutions tags competitions are like by and then market power RFID deliverable electronic significant in we market it's markets X.X advantage first represent. technologies establishing with, harvesting. has Charging important exactly in the that peripheral mainstream are sustainable active keep position deployment IOT happened markets comment enlarge attacking but solution are X.X but are

wearables, leading medical position hearables, and Finally, numbers technology, are Field itself. contact-based in smart WattUp a and technological given to to a terms The sensors, I earlier of of glasses Near highlight sustainable its is in business market more, four to and penetration that want advantages, the a technology. market the first to very leadership in markets target discussed and profitable establish position in for dominant

always has industrial, If addressable is in market, staggering. you to smartphone layer so very sustainable The billions X.X gaming, on expand to license the possible. the markets, of over XXXX fact profitable, portable and vision computing, Energous add significant very a and IOT of which been model for targeting will into the that potential company is building

possibilities We turning are now into reality.

Brian, I call the you. to turn will over now

Brian Sereda

Steve. Thanks

Summarizing saw the fiscal compared quarter our issued at second ended today, the operating announcing close results and press and second second in we release market of earnings the XXXX, in you $XX,XXX June quarter XXth. As $XXX,XXX the of we revenue our last for in QX quarter, quarter recognized $XX,XXX to prior year. financial

with complete related final integration announcements, additional in releases discussed, the expect orders Steve we quarters the customer next and chip production customer two we As company work. two recent in as

the Like partners. base and and power the require and builds we overtime first customers expertise other transfer knowledge amount as to wireless support, RF all of expect breaking technology ground new this of significant technologies, a customers at decrease engineering matures

future one second the for variety for million recent the expected totaled timelines. $XX.X In quarter markets and for design, the years the future will $XX million over last and three as of addition, help integration we than improve lower announced in prior the vertical design expense $X.X also million, a approximately same Total and lower introduction quarter, cycle sales reference period year. $X.X and GAAP of recorded reference million lowest such releases the than

decrease quarter to is and stock and prior compensation a cost prior lower the mainly compared The expense. lower result engineering of year

the current potentially year We core the bulk expect XXXX, with this trend and us of behind up of the generation shift fiscal ground of innovation this expensive our the through for technology. to balance continue through

fulfillment. chip depending costs, plan out However, spikes see direction from we due production will who to take order and the Dialog up take of operational could minor on aspects

global customer headcount future, total we $XX was the approximately share minus we Dialog's the QX million allow in million chip will an what leveragable headcount a in or per for to $X.XX with compares see foreseeable outstanding. and to This expectations the or on engagements, QX the us highly XX a Despite our XXXX. model, GAAP net of volume benefits $XX.X we share loss million, loss should $X.XX of or for net XX. plus QX Leveraging our of believe even production keep and people and share shipments $XX.X average grow. increasing per or $X.X is net of for a to operations ended continue range The chip on third as revenues basis and a million quarter shares loss weighted $X.XX per engineering in

me or company for switch non-GAAP non-GAAP the useful to numbers stage investors, adjusted quarter especially our at let believe over for a year-over-year as with together used comparison we Now a information. a EBITDA provides when GAAP for

last over from $X and year. down Excluding operating total $X.X expenses $XX of million our and compensation depreciation than -- $X million total XQ expenses of non-GAAP just QX our GAAP $X.X of lower stock under approximately million million, expense, total approximately QX net million,

in million to We to SG&A was second prior million is over cash over period QX year. costs. cash other QX was to burn $X $XX.X million, quarter. continue cash spending. prior the Non-GAAP lower and mainly Non-GAAP in of quarter engineering a million approximately We headcount increased to lower approximately translates $X.X year million our cash higher lower QX than for versus of also prior SG&A $X.X and $X project incurred revenues, $X.X the million second essentially and to to remain or expenses ending last due Lower same by related company $X.X debt-free. typically million with Net comparing spending flat EBITDA development, of legal and $X.X proxies approximately last costs This non-GAAP decreased year. to operating the approximately quarter quarter, chip last we loss attributed adjusted the rate. million by quarter, in used were when year-end the public lower

expense tape current the rate To range chip cash to out increases close, remain costs. for with of run our for in we minor quarterly expect operating production potential our

technology of setting to saying, believe We but task. and our without customers supported for Dialog. additional track on new no the next small this customers chip of and to increasing on a later continue are we year, the goes from partners. in confidence stage royalties, see bolstered partner company, our continues to public being by technology our while growth a and But launch commercializing by been the be generation scale, depth It support global has interest the

to turn additional and our for I'll We commentary. their continued investors And for thank patience support. the back call Steve

Steve Rizzone

technology of more [Technical enough today's not comments have you, around more company. are Energous for keep centered technology. Thank a and this and important There the fact profitable sales Brian. the model revenue. to that than Near that point, building the To compelling, opportunities momentum is Difficulty] potential business to opportunity and WattUp distance drive sustainable for of with mind in is itself chip profit a is its in if in equally, terms It Field

field. The and far also is will midfield WattUp near same market technology core field driving that power the

to of expect year. on unique Near makes Field distant next so in to part of is top compelling. the can layer see Energous begin what latter investors Our This and product launches

equally am each accelerating sure our of and goal quarter, and viable have who the charging ecosystem the to by the But we will ability are I with only deliver to the only wireless passing demonstrate we continuing We skeptics Difficulty]. across dominated a being technology that company, have Charging a doubts consumer broad [Technical and I to a spanning X.X about company to a sure will spectrum, X.X technology end to this roadmap with contact Wireless continue will am distance. Energous. through process mature

questions. will now I take Operator,

Operator

first Securities. Ilya National comes The of Grozovsky instructions] from [Operator question

Ilya Grozovsky

Web -- to available product months site on from really the much which There you confidence Web the Amazon's believe them Alibaba's Web traction Thanks. I six What on Delight hasn't being the the is is there chip site, product since site. Web gives hearing very available reporting, going given the aids hasn't on dynamic? launch, obviously, that Alibaba the site, some are that been Steve, ago. have volumes change popular you been

Steve Rizzone

as in of the here. Well, category this there at that U.S. the unsure the product. Energous, is a the whole available until this the the play consumer. that -- sales is -- product, primary to least for traction now at out the that that And see some hearing until believe milestone And that a have it's it think product how this to major it's a of PSAP new first to the that ramp delivery product. shifting aid and revenue We're driver of start benefit to the -- we is or relates U.S. is all, been fact I is not to I

I this forecast PSAP issued also not is their market. U.S. the think as only a they've very into the adventure, conservative into first but

we available Delight in now And of the importance product is so to the think have consumer fact the I that and a shipping U.S. market. the

that revenues to that this I see additional important build into But you year. continue that and expect quarter-on-quarter as as we in the launches, accelerating They to We associated success small additional believe and mentioned, gradually it's from of Each as a on begin to next will layer ramp, the year will think I to as the you customer. with sales. of this we product said, know three depending on life the may product start one then I of revenues can begin year And to the expect, layer expect also end this we to it. we'll customers, then has important these element. customers. That's ramp two these

Ilya Grozovsky

gears mid-range. the little to bit a Shifting

by of to? that roll-out a you think roll a said think do be a latter anticipate type married Thanks. What of in have half you partner XXXX. -- would product I that the mid-range out, you

Steve Rizzone

that of number think possibilities. there a are I

of that seeing is one them Speaker Smart certainly interest we're think I in.

standalone option. with the that in technology. of really currently be ones a used how field are to the think and hearables devices efforts underway another smart launches I first. will these the number, significant near news is distance initial digit of dual coming might the Again, be be same that it's same will are opportunities Again, there the going that the chips product the which transmitter months number like here conjunction the and distance the a determine are unfold driving glasses in The in with good are technology.

of matter out, which to what next come -- come a end product it's will how of So at year. which or as will application rollout and decisions product and and out the

Operator

question next The will from come ROTH Capital. Gibson of William

William Gibson

do you chance Steve, there's of a think revenue non-recurring any this engineering year?

Steve Rizzone

a I there's there want chance. I because certainly, variables coming are it, don't here. play of are a number that to forecast into think

But I'm the Our revenue, this focus to our chip is to happen. commitment as make will to revenue and focus be. not at services if revenue possible. product so, revenue. launch, that engineering as kind directly any prepared on magnitude a revenue translates might if the is this is or on level chip would frankly of And of quite time what clear see I chip because

William Gibson

products products mentioned potential partner, devices about from strategic consumer IoT separate before the Is the we a company second you top-tier talked out? And and company a that, company. then whose two pushed that top-tier from your

Steve Rizzone

were focused originally we're ramp. Asian global has Initially, have in actually tremendous category of as portfolio certifications continues And this on potentially anticipated. longer our nature. quite And taken know, the reports launches targeting our excited to the there impact significantly expand. revenue about of it we or a you was tier top opportunity. It's product customer than concerns We expanded regulatory because that and were

U.S. top-tier their basis, of primary with focus for EU, and they identified the launch now number a the drivers companies, the we launch realigning Fortunately, and and are decisions. covering product as opportunities a on regional their applications

least I initial sales have before launch to as so, commit product of a we significant chip top-tier at And product think a hitting said, is with number year. or of we it opportunities. formal likely will And that this the end highly one

Operator

come will Hickman from question next The Ladenburg. Jon of

Jon Hickman

answer with if -- could question. has been the you your -- But fact is that want any partner? this progress don't I there to was with frustration the limited building wondering I strategic you maybe don't

Steve Rizzone

made, a companies, I that question changes forth. a of Well, level are with think high are always really And dealing that crop as the not it's I optimism that is don't the what top-tier have very, product frustration. I that very don't of very think and I single is of the interest you're frustration, internally. are changes up, technology. so are so number, on technology is active issues based. because there for we seeing significant fact said, there and large there's or in Again, and caused in are a the think engagements their interested digit significant Anytime companies

things to we were certainly of of we Would directions is the Have happen the core because technology quicker? or shipping have the And not case. movement? the we some The and We're disappointed would this like of core if Absolutely. is to involved, real. that Certainly. now are been technology, consumers. viability the solid. But The applications in concerns.

And will so been of viability, any answered. have question hopefully,

things again, said, I confident this cycles. very, certainly terms because contact that's cycles that profitable fact consumer these of in technology, and on, very as we built and and being layer longer of the a number a are of the build we both than engaged sustainable distance opportunities we actively product can But are optimistic our roll take They'll as top-tier their to business. distance begin And that second-tier typically, in. momentum out the of and and opportunities, we're based there

Jon Hickman

one I have more.

other able As product you this like you name-names, done some be you've mentioned, later announcements you'll and…? Delight with you year. think Do expect

Steve Rizzone

the markets in establishing participating a Wearables position markets. terms these coming markets. medical I actual additional see in and kick We significant aids classes start Yes, to all as customers think announcements of very very, PSAP, interesting think in see that in. have we'll for I of these and to Hearing a months as market really able these sensors, we're smart think very said, we'll us. name-names. in I And markets you'll I be

Operator

to the any And session. our like would I over for to and Steve remarks. question this concludes back now conference closing Rizzone answer turn

Steve Rizzone

very your for much you Thank attention.

patients product the customers As now thought. thank advancements investors where consumer, Brian I now any we customer But longer have concern us to as the our has continue drive that inflection your we've to think we said, Certainly, it we than company we for want reached point forward. an to taken confident viability continuing technology. are that additional eliminate which shipping should are a about on And revenues of we path in and placements. are that we extremely of

And each so to better follow going quarterly call we're able roll out -- be I a on that to to as continue to believe results in movement power be wireless announce X.X. aggressive is going we position to and

we'll to look So And all three in thank you months. again. you talking to forward

Operator

Thank presentation. for conference all you. today's has attending Thank now The you concluded.

disconnect may You Have a lines. your day. great

Energous (WATT) 8 Aug 192019 Q2 Earnings call transcript