Earnings call transcript Q1 2023

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Operator

Good morning and welcome to the WiSA Technologies First Quarter 2023 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to David Barnard, Investor Relations. Please go ahead.

David Barnard

thank for and us Andrea you, you joining all today. Thank of are today Oliva; CEO SVP Comhear, on us Brett and Marketing the Binn, Jeff With CFO, call Moyer, from and and Mike Business President;

amended. of turning of of everyone today's meaning XXXX and remind of as Before like XXA XXXX of within XXE forward-looking that call amended, Brett, presentation over I'd the the the Act to statements Section contains as Securities the Exchange to Securities Section Act

cautioned place differ inability forward-looking from the supply other measure forward-looking to are WiSA's statements. current uncertainties Actual of resulting those COVID-XX disruptions these business, pandemic chain and these Readers reliance on impacting macroeconomic result associated not undue by and predict a results materially drivers. statements from our with to or uncertainties including pandemic, risks the may as indicated COVID-XX

necessary proposed of any effects Exchange agreements with risk predict XX-K to Commission, approvals, products ability December future the time and conditions and filings the for revenue the to the as to filed XX-Q the transaction, definitive the the demand markets, Comhear in the so ability and legal XXXX, price and and to the adequate into file production at economy the performance the with in and future or described that Risk the ended wins, Form and retain transaction of of such design described to and potential other WiSA to the competition, respect risk SEC existing quarterly transaction. in subsequently enter predict reports growth, Our another company's various to acting for including including to by intends transaction part law. erupted undertakes our obligations and the and the the no update ability developments, ability the consumer Factors documents related the annual and risks expected changes motivate statement transaction, parties of capacity, consumers' benefits do year the failure of from developments manufacturing Form shareholder the employees, and proxy from competition, technological regulatory in receipt uncertainties design satisfy financial The secure affecting inability timing and future with end markets, hereof, revised on design with is two detailed time and conditions any proposed wins presentation in regulatory realize closing the of rate Securities as for associated hire with the proposed with in entering anticipated regard associated to customer Comhear those definitive of demand wins, XX, proposed the revenue as in to information to connection the company date report preliminary to this on of

that, I'll Go to call ahead, turn Brett. Brett. With over the

Brett Moyer

welcome and investors, like the Comhear you, today. old Thank investors both particularly and to new morning. David, good I'd investors,

our on the and intent be Comhear. to strategy call, the On focusing around we acquiring will describe

above the stadium all they're movie to sides in it consumer sure right? audio and the is itself it, experience do get the commercial to the here room, we're listening, to as room, it, getting devices to if out that live the of strategy, of or smart more reach from WiSA detail on into WiSA, WiSA's would investors, audio on listen around a gets a you focused prior to around game and to as immersive theater they're a watching its audio smart either I wireless the new our the For if but going make behind me the in But calls. space quick on that recommend overview in one devices

in have we IP. a core portfolio strong market So of that wireless and that we're after the going

under standards WiSA. an We interoperability -- have the around brand

line pretty it. Audio has certification mainly we awareness of under a product WiSA our have the with new the speakers broad within WiSA We customer technology and success base drive of that's build electronics drive customers, there demo tier to consumer Platin up technologies stores of small the a retailers, with one WiSA as industry, and launch

last how the into The that revenue and years last that We companies. the the where we investments variability think techniques impact impacts both we'll us. and immersive to three for QX design the -- and technology QX years in $XX companies once But in Comhear's the both adding today impact portfolio, is, of right? audio -- around three where we a a But XXXX, some be a XXXX strong work think Financially, range. there'll we've forecast adapting starting of some there's the million two it they're immerse IP companies. audio to to sitting, of combined be drives $XX for has listener of merged in million

the their for & speakers So either $XX WiSA that a modules a even $XX, WiSA brand. been It's module HT small under performing chip into This industry $XX,XXX about little the technology bit on to in Olufsen into custom each it new allowed hubs, speaker. Bang expensive. had we've it investors. Traditionally, highest is going but use the televisions, wireless was into

launched year. on make of brand IP in first the yet still and performance investment than expressive at we call. There's on products WiSA extremely impact IP that we add WiSA the it'll an last know-how year. send about DS, and gone the WiSA format channels, going less do. We audio a any wins that with the chips, was So deliver is in chip load in impact in cost a can higher a HT. onto that DS DS design and the our it sound to last the it see HT so soundbar with of rollout IP where drivers upfiring that three of But in It non-custom above, under competitors can rear its right? to a is when does years cost right? actively it is roughly the Platin but portable this talked lower And with quarter And powerful few product you WiSA you'll has the revenue take Rio this speakers

The was Realtek moved next phase we IP the it a to and took chip.

the comparable Now that the It cases WiSA expect right? allow gigahertz us of is product five and in we that'll and performance some to to chip. QX, Realtek more in chip performance release a exceed is production HT, to powerful give

E the on an showed which billion five the demo an set prototype to running for up smart developing total units. X.X a step the home set with box demo And for on IP been we small streaming same embedded here box IP and was E WiSA gigahertz but SoC, complete signal at top penetrate platform a the not was set SoC of where product. speakers, and gigahertz working first full the box of top E. as devices Finally, a WiSA audio the X.X can that TAM top a IP. a We IoT WiSA to it the with in into DS only means morphing module a Realtek But has CES not out theater suite, a of IP, think demonstrated

year. all got and position, and this starting market, to think strong best we so technology hit production revenue the it's we And

From a business update.

there gave few I'm those. call, to last so the you, just highlights On a update were that going we

tier customer. the WiSA For those initial branded get test is one industry. the were is beta there's believe with are list, compelling and listening, that in still that on very released it. a production, gets waiting their E When hands It we to to good companies technology a to it

on software Realtek the chip. when So we production that'll QX. start the to in happening And release first

I as mentioned is DS in production.

the It'll price called on Rio brand around a We Platin their soundbar for launch a us and perspective. great consumer names. Audio's good be from will price the Soundbar. for at the X.X.X point point it margin They're a

So the to consumers that DS forward product the to that delivers a WiSA want. we look industry demonstrating

WiSA last And Marketing, finally, talked around we quarter.

from scaled have QX QX. to down the We marketing

efficient. highly working to still are We it be

program to retailer next coming announcing so. WiSA or of drive of think So WiSA we'll the with the marketing another a month Stores. Midwest Certified, objective the be awareness We up is there's -- in a major WiSA store

and So to effective, are marketing Certified we WiSA the still cost to products industry while WiSA be we're trying consumer. the and

electronics the price COVID through is summer. a and From in and through we slump, QX. consumer think early in margin is compression, during erosion overbuilding the think continue last that inventory -- way an QX the impact to We overall the logistical issues leading industry, that'll it'll and maybe and of from

can that your ads. You in see

with to get new their move Demand could hear is soft, ready so the Christmas for that season to Sonos the brands price calls. to inventory try in products. are lowering You

of did And We half products from still products year, have HT designs. three Platin QX the year-over-year with of operating expect second both and designs new a we Rio QX, dollars. are the the price those drop approximately into DS, to million going to new And the expenses growth. production WiSA in quarters

audio audio. the lets before to our to IP a the are out to where AI Atmos steer that, some immersive portfolio. on we're Comhear’s we capability using for locations Mike object-based, Dolby build with opportunity pretty Now, yesterday. audio, WiSA's wireless a think plus compliments portfolio to put taking specific three-dimensional We add and gets pushing depending started, take announcement their is ability about excited audio out consumers the it's and us great products

electronics. last at revenue, have market licensed we We not module like both revenue consumer companies think can it of it heavily terms an IP so the and you investing putting format technology three that and in think licensable spent in there's an when financially, -- taking licensing overlap into look segments their years we have only

that of have or be come synergy international gives may other vendor ability -- to, It the working with We the approved approved to at talk vendor bigger team combined look the one the lets So commercial now a some Comhear more if consumer and And onto products for with companies perspective. the to other the list be that products sales may into on group. makes list. when and corporations, working a a sense group. you

finally, capital Chairman capabilities strengthens onto the Bringing WiSA the and And Board's think some as Comhear we governor's look Andy now at when brings. Chairman, Board, adds who's why Comhear expertise. market and of we Arno, onto

but down to see they and Mike's as Comhear we their to what the going I'm going that's plans. over WiSA, to walk talk strategically, and turn in it what through immersive some to of see audio, about Mike? So Mike

Mike Binn

for as different as and overlaps technology Yeah. future areas the enhance everyone. areas a companies, again two between of can definitely of I excitement synergy Yeah. Thanks Brett, definitely there's would the well lot where Hi, reiterate that your about of time. the areas.

space, suites audio different that with mission bit Qualcomm, and foundations for Comhear's a defensible So innovate from Institute a number world-class highly the We is immersive patents our directional Qualcomm leveraging with technologies from a deliver is experience really about those really the which in little exciting to brands, Comhear. of us. world-class UCSD. really deliver and by are

And the those mentioned, in continue the the IoT audio further cetera, meaning a really for We moves of forward conversation really innovate AI through surround to this wireless as and linear be forward. et us. unique lot and directional are experiences, speaker space. Brett collaborate speakers areas to need opportunity emerging acquisition different that of to Wireless to whether create like audio or we're innovation immersive of application sensors without multiple verticals in finite listening for a is audio and our sound using exciting looking

AI? unique mean? patents, that's in like people information able are objects want how do that and can I marketplace? are if we expand set or movement, we very means can and time different What in do with into audio does audio we areas does beam an real sensors apply we we're doing we room into can enabled with with and we filtering. mentioned, detect what a we create to is and the IoT a in different how interesting. and What that can number to of the Comhear take has dynamic doing is AI audio What reciprocate What to format meaning from of -- or formats, detect sensors that

So it's important for immersive audio.

experiences. in the bit a entertainment or that smart it's be whether For in private or audio, listening about audio partitioned in talk based it whether or different and types kiosks. I'll for home, conferencing casino the verticals we're little And in active XD of

audio or that system just and a it. immersive a of and can audio beam audio. and one space, of kind in our example is can we Just comes fields, We several do background enhance We that and basics audio, our highly linear software systems then some algorithms and and don't an all the of either speaker private say on to another audio do audio. speakers DSP audio beams, having traditional format. We're with steered This trying into to functional how want on in conjunction we sound Meaning, versus create surround a space. -- all we want our really use one chips in beam we can you of from forming. around an ray

Like Brett synergies. there's a said, lot of

We are top home the highly current electronic health TV hearing consumer smart space, emergent in tier have area active the soundbar of the entertainment. with brands meaning and we in active markets, optimization. We're engagements hearing in

quick a Just note.

in as this increase year, active that interest and meaning rulings those and through has we're government the the binaural aids having types go space for a worked experience major applications a as counter of immersive over audio. into headphone on been is to home, hearing happened of Gaming with large the bringing within which some highly well heard that probably experiences. without we've brands partitioned a audio Binaural headphones. You

gaming with that's the industry. So popular highly

working in various to direct are or that or less commercial are also consumer. areas direct consumer We other

So technology, gaming, smart marketing casinos kiosks, advertising technology.

customer AI jump enabled example, correlate just and Some interactive use into for experience content. and their looking added of the more some part new to an of them new base, that just casinos, of to deck, and current having these we'll solutions with quick and enhancement a immersive another for IoT are

platforms, delivery bit solutions. audio little retail And a we AI about. talked smart and then Audio

immersive highly as So marketing in that consumer as and brands and or creating to is well is consumer valuable that shopping experiences experiences where companies the market frictionless spent time more of growing the engage looking that retail technology for engagement a with are ways way. consumer

WiSA of diagram? of can in. the you little Some little bit down clear break is areas a these markets that a Can in you see this that some between correlation working

in digital with or content multi-beam means whether working example. companies or surround audio, delivery. TV media home space, sound that entertainment the and solutions with audio directed So smart an working as Multi-beam integrated

one not a this to do and of one highly audio can Meaning And beam. enhancement side deliver directed hearing solutions. with audio also to this content pertains side audio, our we we capabilities, and room, speech boost room. in the the we decibel other amount of can hearing what EQ. then partitioned optimization room meaning, our level, So is and hearing relevant in of the of call person Or the if someone's our the in room create intelligibility and can parametric hard entire for boosted higher we

traction space. that really a So of lot major that's We're getting with interesting. brands in audio

I retail, call consumer Automated edge engagement. it

AI into our and of that companies, targeted I So to others unique using. as continues solution and an to and just part formats match legacy alike and XD mentioned, technology marketing stack. immersive to sensor really integral kiosks using have be investments deliver been the fusion types audio of and audio really Gaming, experiences visual

other growing imaging and so the XD content, then of the then correlating with time audio segments that real displays. XD XD And having the with correlates content,

So that's interesting us. really for space an

just examples. couple a So on slides

entertainment and direct with health, hearing and major correlated very are So consumer gaming these much all to brands.

health, interesting their deliver already mentioned. their been they a which coworker. their smart audio that in in to a want it's whether different don't are their workplace bleeding conferencing solution on where neighbor a one all brands want home, over someone's with that's engaged tier So desktop, they're or they I whether it's to These or solutions we've whether experience very and hearing

growth growing until audio Comhear space casino bit into a the the immersive for fastest been of gaming or is more four The casino growing ago dynamic three now antiquated, our and space. up for about gaming entrance and One delivery. content segments years into was they've

of not old, that, solutions that the in the interacts. In different and how changing. into that It's content player it has different in mathematics the consumer and addition to types the of space demand been player they games, space

conglomerates celebrities consumer that's better lot a deliver to longer, what Everything to experience. And national of a that engaged. and immersive experience, of licensing, FX racing, playing solutions. Football little a it interesting keeps them It attachment the to movie, lots been there's from it's more is real enhances to content. So and bit then an into movement does League overall

And then on and our smart edge specifically consumer engagement retail. platform

type has run customer natural shopping using that talk a person immersive for We customer this processing have when consumer, of equity really that's audio, a solutions they promotional that create they through helping feeling the enhance whether that a to their is visually for sports this both private it's different conversation, brands audio around allowing experience, their and an brand drink frictionless leaves communicate impactful the to about can streaming wants audio, quite a platform, immersive and some example, with creating and to maybe material through that language while unique brand impactful. a

excited. Comhear So areas overall adds lot consumer trends and necessarily yeah, into a a market to see aren't It's really We we're cycles. that penetration direct areas consumer. into related, brand, has different but market so unique of where

is Also, think software and both reference related. licensing, adds of our we and So suite module something. IP that services

a also ways a great deliver doing. several think revenues complimentary we And we those and is different to So think together it's story, great I be going to it's the I think move. what have two functionally WiSA but is to

Brett Moyer

right. me. All Excuse Thanks Mike.

we're questions open we excited opportunity. for think up today, I So before about this

customers. portfolio. with our deepens IP our strengthens key it It think I relationship

the transaction And vote completing and documents in looking for set final QX. shareholder so closing a this sending forward of to and we're out

up the Q&A. operator, for And with we'll call that open

Operator

question-and-answer now We begin Instructions] session. the will [Operator

come Dawson question ahead. first McIlree James. Please will Jim from our go of And

James McIlree

morning. Good you. Thank

Brett Moyer

Jim. morning, Good

James McIlree

looking it'll revenue you're The break million of WiSA $XX next Comhear? you guys. for just year, from think in down the versus acquired in that $XX be the a range legacy can to you million that what Hey,

Brett Moyer

didn't do that. we So

characteristics makes large think a $XX million million difference. I Any going the quarter pipeline can it in. $X it But between Jim, and each. or by a want to is there's move for the a is if split out, roughly of design two, work you to two

James McIlree

Okay. there it'll split That's as sell is And you about licensing, two us future? the just Comhear you in what be those it helpful. revenue the side? that the Thank the modules shows they you. well Comhear now some streams think IT in as can that's and deck, between -- indication for give And

Brett Moyer

do the for Mike, to that? Comhear side? Just you want answer

Mike Binn

Yeah.

we modules, we hardware mean when So the it, on audio that And software. integrated say right? our has technology

of I So ratio moving the And should reference of or of higher licensing directly will forward, be revenue majority the and off we to see over IP our hardware -- licensing component. designs. software a moving say

Our IP solutions. software stack licensing and our of with suite our

the So hardware our consumers compliment we which income a That revenue is to us for software manufacturing delivered will WiSA. as shrink revenue to do that's of and partners. a off higher increases, take our through share licensing good global is and

James McIlree

I Understood. And recently, range the a of you burn for characterization expectation That's -- release, broad the or in XXXX? the but cash put a Comhear just this in know give you. didn't a Thank great. either us either you can brush or

Brett Moyer

we is company. that our Well, burn when consolidated a not it would impact our get cash as expectations

advantages one the of the built very merger to Comhear been a operation fold now. that's But group company for the them, they And cost expenses. WiSA of think out. that's the a in would there be have lean So absorb to I offsetting reductions into is right

James McIlree

understood. Understood,

separately? or just a teams of couple to sorry, Thank you. a Okay. there be to And of going they Is more. merger are going operate Great. R&D the I'm

Brett Moyer

don't three on there's the opportunities, in on Well, their change one, If out focused it that initial years, If right? what that's on would both right? are, highly But…. day based at timeframe you one all teams think the we value of one. year looking launched, customers go team opportunities depends and working you I you're are getting

James McIlree

XXX day the I'm guess or thinking I of midpoint Yeah. that.

Never Brett. mind Okay.

can I'll you inventory to And but you. I you is you get last saying, think you're are additional that. reserve quarter it. talk in right holding you that is about? Thank need think fine. what inventory that was of for the the reported? that's all What And I withdraw -- about that see now? my I reserve, risk WiSA just that's assuming there the that one so that I'm there is,

Brett Moyer

The well, of So are reserve is we've not reserve so, misbalanced. between that do products addressing is Right? COVID So the legacy which debacles. adequately imbalance different components, a believe to the right different supply chain answer so would've or we right? believe a whole -- I had we that is for an largely reserved there,

HT products life. three have that going production We that on number of year to are into a still have four

So I okay. think we're set

James McIlree

Got it.

might. more if I Okay. And just one

flat, K So the the the current quarter Can to going OpEx the run rate do what about this rest for the directionally you just for operating expenses up? rest operating side you of the stable of year? think QX, expense down, down is on from is the WiSA year XXX characterize

Brett Moyer

Yeah.

some So in be QX so in the DS. with have and launch it. we'll additional -- continuing at down going X.X.X I there's it it QX QX Christmas We back in we're with up soundbar expense look marketing don't expenses WiSA season, QX, to we pushing see up. think as will

James McIlree

And declines that and Qs potential the is in to additional or relative X X? to QX relative

Brett Moyer

Both.

James McIlree

Okay.

you congratulations and Thank interesting. Fantastic. looks on much Okay. the very transaction. so It

Brett Moyer

Thanks Jim.

Operator

comes Jack of The Maxim Aarde go next from ahead. Vander question Please Group.

Jack Vander Aarde

good morning, the strong see to Good outlook. appreciate growth and I Great. guys. XXXX the update, Okay.

you're expecting in So industry your data? mentioned online marketing in Brett, -- consumer you're seeing a still maybe growth. electronics but last for you just your about the industry, been Can clearly I quarter, general and sounds it's XXXX it the environment entire headwinds what tough talk as like

Thanks cycle their their have I an up the pandemic consumers home refresh just upgrading -- highs Is guess I'll refreshing those theaters. XXXX and consumers? from Brett. from follow a upcoming then And in think to there about

Brett Moyer

of Jack. All lot right, questions. big That's All right. a

some from pulse from at make right? so the business, line, fairly if we've main think we we is perspective, seen demand what quarter not we a It turn. stuff Platin we least far, solid this see get from cases seen And There's -- fair but price respond, response. still change on of Audio We've our discretionary a sucking a So demand price amount you income. actions. with tough which consumers tight I price moves, personally believe consumers are the up good, inflation seen is we've wallets. moves, but pretty But in

price out. So to those in products the with and to Right? the rolling speaker that continue we'll QX QX are take actions new align business

marketing QX WiSA The and really to audio. point of about the in QX around the talk and speakers Atmos immersive is and

soundbar. upfiring it's but Atmos speakers, with see both bigger consumer So the Monaco, advantages, we price on rear is soundbar has a lower we speakers. cheaper, got killer the front. the sound move out They bigger have the the focus on upfiring which speakers field Atmos, And ones So is and for will will we that's then side. speakers whereas system focus on smaller point, at in a X.X.X X.X.X the and what we'll the the Right?

you next the had? was What question

Jack Vander Aarde

theaters further Yeah. upgrading the XXXX, in kind those from in Are home pandemic home a a from It upgrading potential we consumers there where was -- for the their refresh cycle their cage, -- theaters? XXXX. is their everyone of COVID back highs

Brett Moyer

entertainment there's piece. Well, I refresh say coming. wouldn't think don't TVs yeah, cycle for there's think the do I audio I I don't that space. opportunity home But -- refresh, on to but an extend a

TV we audio see either price their your the X.X kind around still if at when speaker see event, soundbar or in a your you system a external whatever that sold it's X.X.X, right? look increases experience experience think the So whether you TV, sports discounts, that or with wage income expanding without building, consumers in reach demand. a have soundbar, as fall of is XX% that rebound about of movie disposable you rears their immersive And a wireless with audio. the or audio to should you this professional really theater go impactful, if of think So expands full the so

Jack Vander Aarde

out with just you then, Comhear, And looked of a can Great. acquisition connect sure I'm comment, not yet, sort XX-Q Okay. into the exploration follow-up. I ongoing kind your to would this you can together laid this on all too tied what prior but your pending what the deep Just haven't of update your dissatisfy there of that's in any been filings? be to alternatives Is explorations? strategic helpful.

Brett Moyer

Yeah.

We opportunity a depending active think still is great strengthen in the if a Comhear opportunity are strategic standalone partnering partner. companies. on we we potentially, to partner be talking say strategic our around opportunity to conversations about, value which bigger and bigger So could with of we're

Jack Vander Aarde

Okay. appreciate Comhear. announcement and outlook Again, the growth the comments on I strong congrats there. exciting Great. Well, of the

Looking forward to tracking Brett. it. Thanks

Brett Moyer

Thanks Jack.

Operator

This concludes the for our Moyer like any Brett back question-and-answer session. I to conference over would to remarks. turn closing

Brett Moyer

Yeah.

on of but early people like for the two to are excited the this we're WiSA teams taking call Comhear. with both So calls, fronts, They is and look, for I'd the our versa of coming WiSA possibility, WiSA out and we And time listen DS with our the call. with customers team can today E can that traction the some look Operator? And thank from the morning two the getting customers. the to to that performance the more next partner I'm attempt a available and certainly our be We to vice efforts merge to with think you and to execute the in valuable August. well. that's forward it.

Operator

conference attending concluded. Thank you presentation now may today's and is now The you disconnect. for

WiSA (WISA) 16 May 232023 Q1 Earnings call transcript