WATT - Earnings call transcript Q2 2020

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Operator

Hello and welcome to Energous Corporation Second Quarter 2020 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]. is event today’s note being recorded. Please now Mike Bishop. would like to to over conference the turn I Mr. Bishop, ahead. please go

Mike Bishop

Thank you. And welcome, everyone.

statements. contained company Before to to G. we the the make Q&A forward-looking events, or the inherent to subject or remind please to like financial whether forward-looking will Regulation risks website. call measures these participants financial changes that reflect session in defined prepared begin, which circumstances. be during press today's GAAP during I and with statements note remarks those comparable These company's by herein statements would to in the are call that directly Securities included federal Except posted Reconciliations undertaking Commission. measures required to by will release elsewhere and securities in obligation are during this Energous are today's publicly non-GAAP as is in any release, company's the revisions SEC Energous detailed uncertainties non-GAAP or to Exchange and regard filings that Also, the of expectations disclaims the laws, most discussing with conditions measures on updates as otherwise or

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

Steve Rizzone

Thanks, Energous Mike. And second welcome to call. the quarter conference

is today Vice-President and Chief our me Brian Joining Senior Sereda, Financial Officer.

able both share and the thank Before to current adapted revenue. moving respect to proxy company was to of to to business, continues build for Energous well next the to the shareholders the our to support and for and complexities earnings the I on expectations their meet our has advance the With level. per the pandemic like company an the shareholder meeting. update to would during recent business, foundation steadily

be aid impact product is While our to point. impacted has process, cycles the expenses. the months product chip The now. increased while we to of customer NewSound this believe have illustrates hearing in of our a on company what delays resulting accompanying continues positioned companies with near-term ago been revenues well to Primo reducing aid product lengthening shipments long previewed already the anticipating cycle in revenues. achieve further engagements effect The The of pushing by consumers the hearing both launch NewSound was

the for hearing due to to related travel was onsite However, chain significantly and factory aid the product facility including production cycle to at inability shutdowns, engineers launch the four for extended delays COVID-XX issues the supply be restrictions. due

these As are the too pre-product these of cycles. cycles so delayed is to necessary procurement and support product ships

moving slowing or quality general not year. NewSound the has It chip forward now number of acquisition pandemic had launch in customer end of accompanying the in effect. availability the pipeline. product projects terms is impacted negatively has the Fortunately, and before a procurements The of the

to of technology, are a our integration, suited devices applications as the WattUp ensure these moving and the levels the and range the largely to of the is ready flexibility qualified capabilities despite to unique in the various Speaking notice. ideally military number of monitor at military ability technology to maturity technology the pandemic expansion well to strong distance On to and ruggedized to include its power our support as business due has increased, development targeted of stages and product contrary, of battery through moment's the due opportunities broad and applications, and markets WattUp distance applications of of PowerHub new and report the implementation interest launch go

a significant. of an our expand least on first Despite minimal SAM, before to target production opportunity to the nominal support reliability volume believe customer with in top moving the least impact have of be supply we prospective opportunity coupled half and this and with customer markets companies and of meet current needs the been to military of additional one our the be top advanced to leaders into are the focused into of investment. to capabilities, these has and companies besides to status of their year. availability the are one chain, of at through These that and end year, of the funnel advantages of years. stages accelerate respective represents stages, additional some adding market, progressing final companies have dialogue, the before adding of the which chipsets the we companies We the and win end smaller XXXX. the to per potential remained the risk at general will a of time, and million in qualified top At ability pandemic, these same additional WattUp joining purchase capacity to X these Given of the leading pandemic. with tier NewSound, design we've have end opportunity technology, and production believe the To applications the before the TAM slowing considered impact the list two tier the that four their year. Currently, list stages move the cycles qualifications, of offset product

pandemic move into shipping the will cannot one that progress, continued their cause and of to we assured in be first next the optimism companies be products that production, While these enabled any is year. half of for consumer more the engagement WattUp or despite will

is to WattUp major of regulatory focus global technology. the company complete certification the for Another

India, China. technology RF As are WattUp Korea announced, stages as certified in we There the important XXX of today. three countries countries of are believe and last have certification, the

While very three has for of periods all been have a extended significant goal, agencies we had time. pandemic shut as progress effect, down the continue slowing this to

the certified been We have at frequency in already X.XGHz India.

to are their in will but arms the we certified. obstacles politics XXX which certifying the So At of this are regulatory has team time these and technical, at India point be around. believe megahertz frequency first time, not of process, be all

respective back online. to get certifications on continue will regulatory and these the process agencies update We progress certification the as

important material or these interest, appears [Indiscernible] of is be slowed slowdown to largely not customer countries; Productivity delays. the certification of thanks to prospective in in to that adapt because of strong in talented three a path reduction all The our during product seen cycles employees. we have not takeaway core evolve has and to this difficult and part to changes in Energous business continues committed environment, time. any

inline. progress increase continued qualified headcount increases we validation opportunities number added address six have business believe and in From We expect shareholders perspective, largely over revenue, expenses tracking increased months, to the focused -- customer expanded the on acquisition and a can markets. next of our remaining

commercialization regulatory shipping and on consumers and processes Additional a basis. to regional WattUp the enabled products completing

into IoT expansion market harvesting applications. Continued industrial military, and and

Additional awarded of continued progress expansion of over now which on at XXX regulatory the number service pending. XX stands and patents, certifications and awarded

are kits, launching of Energous executive that Product over through I Solutions, these directors pointing second further us. will company behind a generation and now board mature, the wireless business call of partnerships to to positive XXXX challenging difficult, management inflection largely developer and world in many in all power now the the expanding additional despite consuming their times. that point, The improvements are meaningful employees on XXXX belief and Additional of expensive are obstacles Brian, the The commercialized focused overall to turn you. at is application. united real time most

Brian Sereda

Steve. Thanks,

results earnings June release press of our saw the second announcing today, close financial fiscal QX issued quarter we our you for and market XX. operating As XXXX ended

expenses totaled million expenses approximately including the mainly the in engagements lower tougher in prior For environment our expected and and critical increasing year. The year. quarter we patterns. and quarter echoing result prior Steve's our costs, markets, due million future of earlier second historical progress last advancing the below the quarter continue to we and last quarter, lower comments, lower than customer a keeping and XX,XXX regulatory additional in compared XX,XXX few progress headcount million of $X.X spending $X.X in remaining in make $X.X steadily operating Total total approvals XXX,XXX all compared lower is same check revenues the and the $X.X expenses stock-compensation the than while by Despite engineering quarter, quarter markets, million with quarter, recognize to COVID, second the in of approximately second to expense. prior the to last for GAAP decrease of approximately

fiscal to through second direct travel infrastructure, the important XX. of dialogues, this customer severely we leverage due we We expect half Headcount and limited range trend operations remain global continue expense costs And and are this reduced our initial to to for due current to year revenue fiscal to XXXX. vertical our in level development anticipate the the now the heading sales COVID. this generating the especially which of to is year, is expected interactions into head we engineering balance tied of markets below from as

completion second app lab $X.X revenue was raising the quarters, model increase market In -- XX.X due $X.XX of and expectations an program, at compared outstanding. on the ATM to XXXX. of net future QX, our need shares a in also addition prior net per quarter, million increases $XX.X to share, expect QX us anticipating million the for and to net growth. our loss The $X.X quarter loss was basis or of end in an the million share average also The loss million allows expenses at for in or equity referred to or achieve $X.X investments million the an to giving operating business the the compared the our for GAAP to past to and count second in second equipment net any in per our on prior $X.X This additional share quarter loss current loss $X.XX in as weighted quarter. facilities per million, compares to us without investment lower year capital $X.XX leverage a of cash share our earlier

company information. a of comparison we used non-GAAP our or investors, especially for EBITDA in Now for quarter the for non-GAAP adjusted view GAAP a provides when stage believe numbers together for useful a with our as

QX to stock costs. non-GAAP expense million public $X.X million, higher $X.X expense audit company last million despite Net million million slightly QX compensation down costs operating to XXX,XXX compared to last GAAP year. lower other QX QX expense and of $X.X total lower year, $X.X engineering items of associated Excluding costs. of approximately related and SG&A better operating than as to total QX last headcount $X.X million million, expense compared approximately when lower by QX, year. than approximately approximately and for quarter prior approximately at compared net Non-GAAP better lower from versus depreciation compared chip insurance, and our and the X.X was compared was Non-GAAP approximately project $X our project QX mainly non-GAAP $X.X last X.X for loss $X.X such million by to revenues, million to development million and of of million, year. and and to decreased decreased million approximately attributed $X.X the is same period $X.X cost related QX This

As I remain and we QX mentioned $XX.X earlier, with million free. in ended cash debt

the expense with remain for quarterly We out expect in our -- rate potential operating third range our for current party tape minor cash expenditures. to run any increases

also stage interest to any launch the the and setting We power for in and looking wireless growth in call customers generation back in progress the of remarks. industries diversity towards believe, on-going support announcements for royalties growing I'll Steve quarters, chip our fiscal the solutions, new delivering the the making charging progressing in and and balance the given of of of solve next remain forward confident additional on outlook to to dialogue. by We to and charge we continued We look investors of closing for our track remain partner applications year. for turn potential now devices dilemma for his supported we demand as the improving our the their environment. quarter effectiveness thank coming

Steve Rizzone

first. take for any? We'll We'll the Are go operator questions there to now. questions

Operator

Suji And Yes, comes first with Desilva thank you.[Operator Instructions] ROTH question the from Capital.

Suji Desilva

Certainly, challenging top the Hi, you tier problem. exciting. The pipeline, Steve. have progress of Hi, in four customers congratulations in here environment. no in the a Brian, very

what What some markets regulatory the what's or challenge us key are give are categories. tier could versus Is the what or products you that smaller, more And sense maybe of a of customers targeting approvals factors? Thanks. e-covering may globally for Steve, the be end ones? know, factors? other You nimble lack are top here, the

Steve Rizzone

the traction where the markets of are hearables, gaining tier smart forward so are the for and markets in markets top think moving customers aids, a Those I us are the hearing glasses progressing. are four that are also that particular. the lot

year stages varying in in targeted a from million customers XXX,XXX a also Just XXX,XXX tier top They're to that markets in more to note, that the have not are development, however, ship additional they range. of we products these perspective. have do qualify the

they particular of y with so, the the of we’re per year today presence, really not terms in a the although really business market and related minimum. the projects in significant And slowdown, has their million that engaged realities X top The issues Energous support adapting done they the are are I here, do chipsets these to in terms that are to of good think cycles. job the

of kind have and been running a I think and with the cycles flight the and we're I to fact able established that's that proactive the video, experiences right that that production utilization more internet with our We of customers very video an now. capable example very, engage that of NewSound the have over mentioned capability the but slowed. excellent remains

and closeout in all loading And gotten site, relate in and back the and us it interacting identified testing a we it problem going engineer I differences, have cycle. general of you, time, able been to engaging a engagements the in wouldn’t cycle And on shutdowns have In resolve in hours. because we one customers conferencing problem, can real problem. have tier trips to going software took Then instead of video pre-production if over And our slowly Unfortunately, week and in had with us. software and as we First, that cycles. had to particular, we of top time resolve we couple the traces, we're they the could taken of to -- making have together. that. pre-production an a now past the could forth, back we through

just of kind delays are experiencing. these So that we're the

strong, lot But of dropouts. we're the As we're seeing slowed. any I The distance activity applications. with any hub, not focused we are distance seeing on power mentioned, good remains the And about dropouts. news now. applications though, The a especially new the cycles excited not is and we're interest really military have

well stages, business very a the are looks we're significant very be active for very, a that the of military. us. is number working. but technology suited exciting in we it These Our to to have market And opportunities early business,

Suji Desilva

follow heard is my much around military. Steve, mentioned And question hadn't as up I before. you really it

cautious as possible Or in design newer. something's kind the to I those are to guys military should Should what's moving long and moving they've it? of pulled quickly, of kind of like forward? of relatively sounds about possible, is think it in traditional size we market that cycle you So kind the want and it How opportunities? relative go on think that of other things

Steve Rizzone

annuities cycles cross become and very, virtual with experience upside with at because, have they but market the they there, stages opportunities, extend Well, we're once I the are size longer, cautious of equivalent that but -- military it's we the is do their to need think our markets product largest significant about out potential. this to their over, all we before. the They be investigations and, very initial

I think they suited This watch our will, here. is to need we think things time, will we this applications. take these is technology So -- but – ideally really some these to

terms this of So the business, this again, timing? the meaningful familiarized been we've our part but a farther line think and ones be is that down this in with, that is we can of

Suji Desilva

ruggedness at Well, reliability customers it's speaks products. to looking certainly encouraging and because the military that of

was Brian, kind development make And just you I the I environment? point will news, OpEx you vertical what’s lastly, that focusing about talked helpful? want and kind good driving are that think is costs. markets, is stable there I then to that's either sure markets of in in planned? Or color here, on prudent a So stabilizing of Any reduced vertical heard of sure. or this for that certain then, terms for perhaps, Thanks. be

Brian Sereda

not, creating you mean, markets -- where Well, verticals. you'd We're we not we're mature inventing vertical have initial yes, I in the those where say, technology. -- might particular have

customer technology vertical example, we're that for demand. lot I We in technologies, our that commercialization. we So the have. technology lot of, current now is for make what don't And have there's the in to don't investments market we're activity a funnel, markets there's to have not funnel, for future, of that's out, different we having in ready interest. driven no was customer new because for to to, having on say, foreseeable our roll going And particular is heavy we anticipate any for markets not a -- trying making really Or where investments. the

that can suited technology the which busy the, the we funnel, funnel through we've entire will well developed, for is we customer the that us got. And so customer that And keep serve now XXXX.

Suji Desilva

sense. guys. back. jump that Yep, the back stopped and jump I'll Okay, progress in queue in I I'll makes the

Operator

like back Thank closing this for to you. point, At turn call I the would to management comments.

Steve Rizzone

conference additional Thank quarter you we Please you presenting our like forward at call thank Micro you progress do September. in LD and second call. be wish for a note We in attending We'd look our that conference next early afternoon. reporting Conference good November. to the to in will

Operator

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

now lines. You may disconnect your

Energous (WATT) 5 Aug 202020 Q2 Earnings call transcript