RKLY - Earnings call transcript Q3 2021 | Rockley Photonics Holdings Ltd

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Operator

Greetings, and welcome to Rockley Photonics Third Quarter 2021 Financial Results. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Gwyn Lauber, Vice President of Investor Relations. Thank you.

begin. may You

Gwyn Lauber

third and President, operator, the This Gwyn for is market XX, Thank Relations welcome, of Vice the results our Investor we after ended Rockley Lauber, September closed, XXXX. you, released everyone. quarter Photonics. U.S. Today,

Chief did website copy of not call With on at you investors press the Relations Investor Executive are Dr. on a This Financial Andrew from of Karanth, today's OBE's and Rickman, it rockleyphotonics.com. and obtain the receive the section archived you section Officer. earnings Chief is release, be Officer; webcast If and Relations being Rockley's may call of our me website. Mahesh Founder will Investor

statements forward-looking the Andrew, and status include, over our and bringing our with are to research we statements a technology, statements are earnings result turn new assumptions to, note of to timing based our but press or made with costs obligation not actual Lincoln those I'd are which I and not that or statements. cause of strategies, these release plans, include, the parties, customers, our forward-looking expressed are Park on information of anticipated limited statements as These goals agreement call and products, ability these focus, of These may forward-looking factors to are filings will development financing the opportunities from scope, foregoing. expenses, financial risks statements. our Any and and SEC. and studies, to features, benefits, forward-looking These partnerships limited call affecting forward-looking to Before platform, contain our the outlook and events. to like our and today's and to, that uncertainties by reserves no commercial and discussion update our today, discussed future our on our market uncertainties, as and our and debt performance to trends, vary schedules, this and undertake cash the and with but our market in and development implied subject risks those results obligations, in our our third materially products

reports conform and call addition generally release. measures reporting, financial included accepted non-GAAP enhance Rockley are accounting over U.S. to GAAP do now believe tables these measures the not non-GAAP principles. to press that measures certain of the Reconciliation our found in turn of In GAAP these We to the in the non-GAAP performance. I'll Andrew. understanding

Andrew Rickman

for walk In quarter all us Today, significant earnings results Thank I'll we've I'll discuss last the we our that million. revenue third quarter, quarter, third earnings for of and call. call. you, $X.X you generated and for our then Gwyn, progress conference since joining briefly thank through made our the

financial which was provide loss quarter of onetime in million to $XX net will equivalents Mahesh cash second costs third investments. the the $XXX cash, GAAP ended in later our Our a related loss IPO our and detail results quarter, includes quarter $XX.X in XXXX. million more in We call. compared on of million with the the to

while biomarker a believe that gained strengthened develop centric our full largest we New already becoming the raised for balance our stature We the also consumer business. we trading has began the million the wearables some and company process, increased York completed medtech. sheet, to Stock to Through Health, commercialization. helped SE not our towards opportunity of I consumer in only public like accelerate both we its companies with In spec platform. will our commercial I'd with wearable Now and work we which about combination business on us help talk Exchange. our August, $XXX solution

messed early have be transform LED-based of studies. patient These hardware photonic-based like platform be includes alcohol, glucose to and providing practitioners the remote care range detected care on silicon a unfamiliar conditions comprehensive pressure, in others. Rockley's amongst is body insight measurements Rockley AI. key technology that the optimized and the new multiple This sensors. and expanded measurement continually, biomarker analytics It of can capabilities actin integrate to biomarkers biomarker and noninvasively For trends, the their enables cloud-based noninvasive states. it, blood [indiscernible] real-time more research hydration, cold and about temperature, spec current disease photonics-based [indiscernible] proprietary clinical end-to-end and by of health with that expands health enabling potential algorithms those digital detection later health range combines of monitoring an biomarkers and solution variety significantly poly capabilities

of very strengthening some smartwatches with adding will most expanded we companies solutions. companies. [indiscernible] or partnership Turning partner they our part them of health research the the about recently the as pleased in this In unique Institute outtake. companies platform X companies, made of am the top will global Working Technology, companies, X analytics of with will of progress Today, product health that during partnerships device to to that give world's unique because which and with program wearable I'm including market, risk-based strategy. consumer I we California new our manufacturers the strategies. data with have market XX XX these we will development our excited wrist med and look this announced that bands top quarter for world's X And tremendous partners tech, largest advance the medical now of finally, help both add that signed important their their our very the end-to-end our of and believe in platform products. tools and the electronics in wearables the position has CanTech, I solutions, development our with effort an providing lowness partnerships our of the with wellness wearables smartphone the and power our prominent X by to and

our an consumer Now our key I'll start some of partnerships. and on solutions with update

consumer, and market, markets. in As devices handheld reminder, and will electronics Because modules a in our for developed for consumer chipsets large and this wellness health wearables solutions companies the who use we demand well-being our the our of partners as noninvasive innovative that biomarker them improve with create and products health assuming technology, their customers. work to products for these help is unique can increasing

increase have working solution partners successfully X reliance long-standing that and the moment the wellness and ability We ago. launch these new reduce space, market relationships discussed several We our companies our will leaders consumer clinical in X a to health in electronics with we've partner. believe added the and will any no-risk our with on I've

In patients' lives are focused companies device and with improving innovative they them solutions, can medical partnerships on the discuss who this achieve I'll market. goals. companies market, their help through Next, pursue

signed that announced the top a X XX multiyear partnership we world's quarter, with equipment and medical of the During device we manufacturers.

technology We to combines with our biomarker will and of sensing providing leaders platform cloud-based and complete photonics-based AI. incorporate biomarker a them these algorithms generation hardware, and evaluate next end-to-end their work noninvasive with that optimized analytics into products, industry sensing biomarker

in and development believe also and this development Through to I'm applications will monitoring. use care with our partnerships the potential of that sensing product also We pleased help our lines we future these CalTech. very patient for to use remote hope that cases health partnership, partnership our about add platform. advance will devices will for mobile technology our and identify us accelerate time

development intelligence next-generation artificial intelligence of that health sensors advanced on As intelligence we insight collaborate the Combining part approach into new and services, exploit to agreement, with of intelligent we'll more update also initiative of solutions to CapEx combine well-being. human This intends The systems advance the a algorithm and capabilities efficient Services care of and technologies sensor innovation. to Rockley's data new of sensors, and an and will photonics-based research, as on platforms enhance photonic combining with will the development the sensing sensing the such partnership projects, health to our monitoring, align state-of-the-art enhance into centering including explore Rockley's is spectrometer us using of artificial end-to-end to help that that team analytics I and wellness studies. for also developing monitoring health health want Web range platform. to focus cloud-based advanced advanced to capabilities intends look ongoing broaden and which platform. Amazon applications on technology to

made and our to next plan we the study results progress in announce follow good very first of studies, XXXX. have to for these month We with others

out our samples fab of product. of pre-alpha and tape-out the our Following

the Our cloud. study devices biomarker from studies to these optimized bands then in currently utilize our biomarker and noninvested information algorithms gather uploaded are which participants, sensing to our

available We develop are this preproduction will will that foundation deep analysis studies and we on diagnostic studies in will understanding human health be Albert to to and in and our create intelligence believe use utilized of for we knowledge, human our our line and of partners artificial the provide devices their track wellness. As XXXX.

all aspects take to our full team the and moment really entire to require a stepped for as and a thank across their like effort studies team solution. up to volumes hard the all of our of I'd human The in create opportunity that with allow believe had Rockley parallel. each pursue to the the deal have Finally, our Rocky biomarker great the stack pleased work task I'm to for us us serve well. Thank response very significant our from you. All achieve and that that these enable to we've multiple goals. has initiatives in and markets we potential avenues

we And current we with are partnerships am the made our only cloud expressed from that working the that Based of understand with our partners with. with interest that the also in company. using on med from partnerships consumer, response the about for these the the the have AI excited believe electronic biomarkers, other them well. many markets, the have Our delighted importance not tech the actionable now wearables well I'm the med information. to companies so consumer tech smartphone recently in progress to as and the we we I working announced, that we've are as who with doing, are can identify but leaders response additional provide very markets. I interpret and going prospects our individual that analytics work data and partners

full the develop innovative photonics-based the we health, detailed with our I transform call will our noninvasive today Thank are that, financial world, performance care stack that turn by will and digital over powered and to doing wellness silicon in we Rockley. insights With and continue actionable quarter. change for of are will health will to you. optimistic work solutions, We Mahesh the review the

Mahesh Karanth

and quarter I our performance will and I by third begin Thank reviewing fourth will good on for update then the provide an you, quarter. our everyone. Andrew, afternoon, outlook

results. We reported third the in revenue $X.X Turning million compared quarter. revenue of second our $X.X to to of quarter million

could that pre-alpha broad game-changing leading technology as in wellness device a be believe the benefit as a of our medical the we As from sector reminder, for what and to companies stage we are developing health well technologies.

such, variability. from As current which derived engineering revenue in nonrecurring activities, is results our quarter-to-quarter

Our to third quarter second cost compared in of of $X.X revenue million million XXXX. $X.X was quarter the

was million XXXX. Our of non-GAAP of million in QX compared revenue to $X.X Cost $X.X

As of the from milestones. we previously mentioned, our completion the revenue depending period to on project fluctuate period timing several of factors, of including cost can

onetime $XX.X and and QX Total The million plan expenses. operating $X.X GAAP personnel operating compared recorded in R&D by the for $XX million the in expenses $X.X expenses $XX.X the compared of XXXX. third in million We costs. $XX.X Non-GAAP million company QX. in prior organization we GAAP totaled GAAP in public million to the million expenses million was expenses We Non-GAAP to to to $XX.X SG&A drive expenses million SG&A in compared transaction-related to to expenses many our operating was expenses quarter to QX $XX.X continue XXXX, million R&D was Moving in million expand quarter. quarter support quarter total XXXX. second opportunities ahead of versus driven the increase R&D $X.X million $XX.X our was versus primarily to technology $XX.X third of in QX compared in as expenses growth were non-GAAP million during $XX.X million forward us. $XX.X QX costs, XXXX.

rollouts. efforts to our essential for customers' track projected our remain R&D product to Our ability on are

to business, generally over will the period-to-period, percentage fluctuate per our scale we we but revenue of expect long term. As as expenses a the decrease

$X.XX loss Moving recorded to We in of $X.XX per the $XX.X of loss quarter third to million share a compared QX or $XX of net net net share a GAAP loss loss million of per a in income. basic XXXX. or a

quarter. quarter Our the $XX.X million non-GAAP second million of per the the or share Adjusted loss to $XX.X which third loss of a a measure, third million of XXXX. non-GAAP was loss in quarter, of in net the $X.XX a EBITDA, loss in compared $XX.X was

$XX.X totaled an The driven activity count cash by was increase in million in used increase head activities. in net Our QX. $XX.X million in QX operating and R&D compared primarily to sequential

quarter cash balance $XXX June our million on equivalents ended Turning and from XX, million prior with $XX.X the We close sheet. of an to of to our the investments transaction. cash, increase XXXX,

to us of our quarter, and credit commercialize sensing equity of of obligations the retired Recently, we debt our to agreement Capital and we a remaining notes, million. we in provide provide During we expect agreement Park XXXX. work flexibility $XX with up us our with solutions. convertible we additional announced all an that strengthen line will biomarker of to $XX.X as retire to balance Lincoln signed This with million our noninvasive financing sheet

we fourth with I well guidance will the will quarter. up We on strengthened includes for road that quarter, approximately Looking Health call XXXX. as we we In chance the August, significant performance now the ahead, into up completion business will is my wrapping turn in million generate ahead. always with revenue pleased the to believe sale positioned and This deals, in similar call remain in to in and technical the the our significantly to with as the questions. continue execute slip our operator we to in that remarks, sheet transaction SE the XXXX. open back third a there we map prepared $XX.X transaction of previously discussed, our are believe our balance through we

Operator

[Operator Instructions].

with is America. Bank question Arya Our first from Vivek of

Vivek Arya

few. have I a

color. that more start addition your electronics then I consumer partners of first the start expectations? the do to they engagements you they to more engaging are with they does becoming us do could other doing? you size opportunity? So exclusively? And backlog? adding new the When Andrew, also give to was little of hoping you part that mentioned the What one, of do Or a the When you important they're are for

Andrew Rickman

Thank you. Great question, Vivek.

customers had our customers. of X X of set additional we wearables the we well. and And as projections, in customers, obviously, have So consumer top XX now obviously, --

for thing. increase the that So increase in the either this the of is says and it's the That's customers to the addressable derisking and our at the number opportunity opportunity the majority can us significantly available penetration what is look signed say, an market with wearables. or significant that in numbers of okay, into you vast the first

customers start customers. what we're and work that is thing Second these doing with on the they're them when signed we physical we these of up do in as with with is design activities, what that all is

is consumer with prepares process So products following what the their them XXXX. for qualification process launch then into year and detailed significant then the now, work translates we're next them their design of a into which units of that doing of market the in providing for the number

we're and significantly we just say to going the So at no what like projections, plan significantly in way than there change it, from you look to were the derisking customers whichever more do.

Vivek Arya

product to on tech that is deliver med to happen? make opportunity, And important you Andrew, on the Got need most milestone what it. that the

Andrew Rickman

what the which, that area we med we when we to patient tech same same technology. of It's attention continued all really engagement solution leading It's on working But consumer include really than stack terms X now we rocketed about commercial into we the with on were module what's deliver in device exciting companies amongst our that of these other the the technology. -- ahead a the explicit the monitoring. med customers of So we're from in public, we it's customers. area, company particularly weren't now our But the obviously had customers doing is remote which and is full world's customer took tech area, that and want medical is us development opportunity the others, continued things engagement. clear development like the our with, focused

the the biomarkers modules opposed involved for wearables developing the And with for diagnosis And market in and come so way the to that patients. suitable all the there. then then process difference what's wearables health and from to longitudinally basically care been And have we the over is everything market. guidance consumer in individual the that up algorithms going there's into for information algorithms the as into the time that and the a cloud insight

individual's very of of for well, that not growth it is actually format opposed very, that really is market, So us. and further do for the is are said, our a about But to other another us. accelerating it rapidly all appropriate wearable health, for unintrusive, as in And into functions cloud terms It's -- full than we any focus essentially do. monitoring quite devices us there's the providing stack difference sort that background, the present opportunity creates the customer. for what's different into for the need we deal what to other interface customers area our the capability an in which of as of care in platform, that's the implementation great really market health then cloud we and solution don't entire on to health -- into engaging and and data more care the our a physical in consumer there sit the continually about

Vivek Arya

one if Mahesh, I two And for or may. it. Got maybe

to confidence turns business mentioned On $XX curious on execute next to got next need quarters versus bit of will visibility and XX of how you million, I what around the still level you fair QX backlog, QX. had ago? days for your leaves that is a I'm that if steady [indiscernible], handful year. you the That from of

Mahesh Karanth

Okay.

it into pieces. two break Let's

And is slip sale. into with technical includes that million. the as we there XXXX, $XX.X XXXX. a chance deals significant will always For have guided transaction This a similar

And you let feel will any if guidelines other is we at this change, know the For stage, there XXXX appropriately. comfortable. we

Vivek Arya

And about are from quarters you one. just positioned the a as execute think And financing over cash next the should just we XXXX the last you several perspective? How plan? your of use how to

Mahesh Karanth

had said take To in option wearable to us agreement where today will utilize through our last Park we of commercialization. call, entered credit with they funds supplement have believe we line As with enough $XX to Capital, other we million we customer our into products to or provide financial Lincoln the [indiscernible]. raised equity to we a up announced that an activities,

Operator

Company. Bolton Quinn & from is question next [ph] with Needham Our

Unidentified Analyst

just And the question. wanted follow to up on Vivek's

on have this to just electronics the I right. want make consumer new customers. sure I First,

think time talked did the for consumer you're that the customers X at on call had you I think to your electronics talked at or combination, include X business I about those Am forecast. some X? of the with of you X leading about additional companies the right to original now this

Andrew Rickman

Quinn, to have Yes, if now are we engaged XX. that those we we -- with question. yes, top you engaged clarity mean for say I good there, that What signed saying the signed were of signed all. out them had X customers. recall didn't that or were we we

Unidentified Analyst

it. it. Got Got

then or had outside some customization of plan to And questions NRE additional you Do CE XXXX into any any opportunity to go production? OpEx of them for customers. the XXXX of look forth? original require you generate that And that put in lead might second, to Okay. do them to the as they

Mahesh Karanth

the will Quinn, a which subject, to is come be stand-alone to On Yes. is currently, Mahesh. market. this we focus product, to our that able develop

is this focal customer point. a not So NRE from

it very be not expect material. However, there but NREs, some I will to would be

Unidentified Analyst

Got it.

trials they their And then year on remains the pre-alpha so to for the next customers sounds deliver company it Great. the samples human like to conduct can track. Okay. outlook

devices XXXX first early no So announced that sounds ramp those production timing. either like XXXX, it with of change the to XXXX, sort customer late in likely

Andrew Rickman

next and will got starting as supplied just first out expected. the to do to then out you fabbed our Quinn. have with few if QX. to Yes. taped back today, by to a a that customers will inevitable And evaluation, clarify and next be devices and half year The preproduction products of in launching ongoing and that like, ramping in pre-alpha their alpha versions. we cycle Then year, things. will are couple design version That's are at been activities. as the the middle production of of we We've the out And devices fab by point, that full those We've customers come been done XXXX. now. in basically the start providing which And tweaks, for of lots And in then alphas correct, part we that first have the us. out exist would tape

Unidentified Analyst

over Mahesh, on might you're cash like can the that know cash of million the guess, It million the and million of help for was million looks quarter. burned million to $X pay I comments high. next in you've if of give bridge consumed with the few or if today, $XX you you $XX.X look use burn your just you to sort outside investors. debt think burn And any cash, obligations. back obviously, Understood. in don't just of repayment starting us like $XXX you on intend third the $XXX of existing quarters. third quarter or I cash cash OpEx fund maybe pretty But debt operations. And of got about what

few to appreciated. meaningfully? would Does over help be Does So pretty meaningfully basis down a could about ramp that much quarters? on you how come offset should revenue OpEx we be Just any the thinking quarterly next provide that?

Mahesh Karanth

that On guidance for if this front, quarter you recall, had provided and the year. the for we Yes. of rest

in still that forecast. with line we the be that update, feel OpEx will As

a is cash So address today. are there has this the some doing are of which in One we come things of couple to issues. effective

we and probably a will frame. will QX which million $XX time And that we other will forms that raise. there in are then looking amount, instruments be are of we address So at,

Operator

[Operator Instructions].

is Tristan Gerra question with next Baird. from Our

Tristan Gerra

wins How also the the much during that design And Q&A basically engagement. design your signed somewhere meeting you've thresholds to said of the customers? up following others new were of [indiscernible] are that the on contingent just wins original those expected Just company or wins the are X on relative sampling. by

a strong at point design of as or And is revenue the going this with several much engagements versus over hard win is turn that you as are of really launch that a the be kind in how able others long potential to deliver the a into that product to finally, may you years? funnel next win? is So quantify a to then design potential

Andrew Rickman

Thanks, Christian.

So to about clear, XX. that the X we're the be more that there than in not these million. customers in the of include And of out talking included XX are course, of total

are at want, customers the We terms in where of on in these of the they with now engineering specific stage are design place they're wearable and very, on together into very associated our their what solutions have our teams explicit agreements we in with working activities products. that the

all So continue. just those of will

I hard. X number of we're have very deliver that as all they're or us to possible, platform a think we've soon to or very, biomarkers that with customers universally very and very, their all the able driving products seen keen the as in

don't to we of Of -- long customers, terms kind course, with tail. of want area, of a we number in in be don't consumer the overwhelmed

and of we're on very very, those believe customers us will to customers we the higher course, So that largest focused significantly volume. take

our that's approach. So

Tristan Gerra

the doesn't sense and based for module Great. on that delivering. ASPs then or hardware platform you've do those and matter, ASP that for on change a ASPs depending of the is chip marker the we the solely use the And the have you're

Andrew Rickman

pro remember the just called were that the dominantly Mahesh the turn but I'll and basic advance. that over to one

levels biomarkers. prices themselves different they But of do they do have -- different in have Mahesh? So

Mahesh Karanth

what address forecasted planned still good. and question, was To -- same that your by was and specific holds assumption us the this initially

reinforces So there to no is assumption. change It of an that. kind

Operator

Paul is Cowen question next and Company. from with Our Silverstein

Paul Silverstein

of clarifications previous got I've of responses number questions. a to

to understand the those want polar I engagements X of that the with referencing, wins this just customers customers XX I to stage were the this, not including sure. you're existing engagements? previously? next Andrew, wins, just with consumer of any going is did you those have X out new with of Or off, First make X

Andrew Rickman

we but with basically -- engagements were engaged them thinking contract. from just think all I'm yes, them, Paul, to of I moving

Paul Silverstein

I contractual difference, that in I'm All are they're from but correct right. wrong, say commitments these next when or at that you to -- The volumes they've That have the to contracts, none begs and volume question. engagements pay take going none that of they me that carry if sense they they I if the assume you stage, through it. have yet. to are given of committed don't them assume

Andrew Rickman

is a They're that number going to stage. explicit in at process they're But of commitment those in of relationships, their not there and financial of terms quite market.

terms anticipation, will of existing they the leads share position into and what year's XXXX involves so by they next by the of of what be. market companies individual in been in what reinforced certain products saying in terms volume they're in of and then demanding the expect volumes And that will be which And that required process the for is qualification those volume. their year, following a obviously, level we've guided

Paul Silverstein

right. I said. want what just you I understand sure just make All to

giving are internal when to the of commitments, expectations of to indications date? the volumes the they're are. But Is terms own that in extent you you commitments commitments talk So their about their volume what for qualifications.

Andrew Rickman

in full money not involved contracts, of is the units a the there of level the at but of commitments qualification. commitment they that is of all those The number will level require

So those due POs will come in course.

Paul Silverstein

Then Okay. investor, is your Or does you the including med the one, initial initial referencing? that two X one? with make for the referenced, companies tech, of to one X respect you're total, that your

Andrew Rickman

with. in customers but can't We of name engaged that we're terms specifically,

provide to customer the and Outside development, deliver then level stack the exciting the all the the solution we've position. with as other complete is now human an well top conduct signed we of in to which from those reference top have companies consumer create for to reflected many the -- XX engagement interesting to is and as we X really the algorithms contractual rapidly with order of X solution, well because engaged level. the to complete moved the the moved We from have Rockley and the XX, desire ones to market. that with by our in had we're wearable relationships full already as -- contracted as And trials a sorry, extremely designs that are order for previously. we're very And the a moving

rest, and entire of APIs that now devices then essentially And has growth the evolved utilize model It's a us customer of FDA because selling extract that So and last moving not stickier Obviously, continuously the every risk market. about become into the your have for essentially e-mail, our They give monetize to our are they And the the higher market but typically them. cloud that don't they can't every and health months. there, discovered watch the not exactly over we've don't don't that's qualification solid us health can required to the applications. health provide cloud much but And you initial that the not time, what into devices, need with more anybody benefit a be and customers from you care an actually on for to for data. you market, professional we're device background on that They providing day. base. talking dominant producing huge care your those platform wants average typical device the we're innocuous care they sits providing tell they that couple the on price care want the sitting the They over phone platform is charge in opportunity health they're a data week. better time charged they're for another all

Paul Silverstein

in you until revenue commercial went through about was you misunderstanding, be could And the quint a perhaps that is earlier, required were but I you, out I 'XX the of now to revisit 'XX. under of what I talking there. I won't end that 'XX suggested ask 'XX impression to apologize but is if volumes thought it could all was and all the I I commercial know by initially that have if different. that end I Andrew, commercialization, getting you ask what Not you put again, between

this. I understand of don't out make But anything I to a would deal to has big changed. mean if like So

Andrew Rickman

Paul. changed, has Nothing

we of generation. algorithm replaced today the shipping of to used today are out pre-ops development That what When chip first batches trials, the year. products call the last launch in generation XX,XXX volume, customer Then spoke, and the used used in That their now the the taped And all for product there's ramp is XXXX being out change customer about the they in is is are end next or of in Alpha first to in that going the qualification work require on no in very guidance That and the units that the are all is provided in of all typically, fabbed of of human a betas, guidance of that process course year. track. be out and the So QX. next which well. all level are XXXX. versions that through customers spectrophotometer by we we for the there we those then half going will are had

Paul Silverstein

if revenue, 'XX, of you'll revenue, the around throughout customers the the revenue selling ramp plan, So fourth to volume quarter those sell. as the with quarter those you'll 'XX products fourth commercial products according in all volume to goes initial booking be be your

Andrew Rickman

at the what demonstrable X Yes. solution put we area. model couple customer care opportunity in we've got with full And the the and our where traction look we is the position out consumer entire the we what's look to we've stack cement and X of to and XX engaged to revenue now out that we're the we there that to able that period of if over customers you entire from in entire there a consumer. area, customers a happened, and projections using -- the what so drive deliver gone ones be we've top you area, have gone to in that customers if of health Then done at

and waiting the how Now rolls that is of the not actually things, chips for anything That affects time else. line the for market. modules on and that is out consumer

much earlier those to as utilization are saying possible we're has their is frame, there numbers as time waiting health for now we've in end our designing physical with that us which But launch area driving very, higher. where And customers customers' any XXXX an a is of much, for very not socket care become on that no fast projected obviously so associated are us start the what is exciting. the technology that strong the ASP we is opportunity And the products of that. very

Paul Silverstein

in you med revenue do commercial tech volume Andrew, have So from think you could 'XX?

Andrew Rickman

We that customer will -- cemented projected that customer for meaningful engagement into opportunity XXXX. with there market tech in the traction in within XXXX. start -- we really in projected, that to the numbers sales we've That's When really key message XXXX, only contract med with anything to that we were is the previously that have shipping there. opportunity

Paul Silverstein

difference I'm I going I But volume volume. Understood. want the to push make Andrew, sure you in just between commercial apologize to pre-commercial here.

late 'XX, with wearables? for talking commercial med coterminous 'XX tech in You're our into shipment consumer volume about

Andrew Rickman

Exactly.

Paul Silverstein

technology been from So are the sounds years and hurdles meaningful if but right. answer nature your X from [indiscernible] What, All A -- to me. standpoint? you're glitches of it is question hurdles there have ahead meaningful for date? any remain What those final a just like of any, a have not, commentary,

Andrew Rickman

rolled Things the of in technology. out well have terms No. extremely

If was you developed benchtop previously on measurement the level. science a recall, by well us

both instruments, chip level baseline what's that the human critical the devices miniaturized requirement. powerful of our is there format. delivery at so look the they're those And been on excitement. is incredibly we with in the This trials the incredible is powerful very pre-alpha performance versions, are going devices, the Pro benchtop And And of meeting that getting and we're instruments. performance is as spectrophotometer that the an from here

exceeding expectations we're that us our and getting achieving that things excited. we're partners are and and the the our So extremely insight making

Paul Silverstein

that? about decipher next overly volume there's not that commercial I I'm between -- months? risk guess trying be and you're could the XX some over now if concerned occurs to What that if So shipment. anything, What,

Andrew Rickman

We executional we've order for we in got for materials, dual risk making sources, before sure frame that -- of ourselves different purchase the making sure to fault. might that are problems you? we on those you main mitigation because can any There's that there's ramp-up what it building occur How occur orders is you call the make all that our of expect having of lots, lots, developed cetera, by things all out, changes. and risk we things They in lots, obviously kind risk terms take course, protect like issues not purchase out, backup they always and have will would Technological occur. of of do associated there. we et no right lead do that that you fab usual we've kind various delay happening Yes. that these years time place against the there's a something

some will we process of something may we terms sure fabbing mitigating And of a design, a which well make make we're the in run we've that that risk, these design ship to So customers a alpha to do mitigate a further going out believe design risks. to need lot from from we sorry, design -- be element design. that now also those you something But the like alpha beta -- and an sufficient. or to is overlooked is beta schedule and to how we've things is the learned change. inevitable and a have But design that

between in there cycle put cycle loop another we volume So major now design the and in in production. design

Operator

Savageaux next Tim Capital Northland Markets. Our [ph] is question with from

Unidentified Analyst

engagement. beat at here. but terms horse, a Congrats just looking in dead was And what on new the better all trying question incremental sense of about that my a get customer progress and to to not is of

previous presentation, I September, guess, talked think in is investor going back you this about I in contracted to customers. -- your

funnel, I of electronics, negotiation. but think consumer stages then and that was -- on the up various all

-- additional that I my is on the now? provide are for that terms question guess in an customers were update market question maybe these an of side? a terms one. we of new you or new a consumer Question on X with wearable wonder number customers along to you X With wins and estimated these that previous contracted there consumer of the med is That's contracted result the a into XX where share you quoted? update and as previously few do that can X techs, that -- if smartphone correlate market. figure XX% what would us I seemed of was that customer be had the in there's share figure market share

Mahesh Karanth

Mahesh. This is Yes.

question. Let type I of me almost you are of of all asking kind the -- same think

So clarify me certain things. let

wearables Let's is say One the -- the there medical things. are and X device.

on medical then customers device X companies. in device, wearable device. On we the -- -- the consumer medical have now have we and XX the X

XX. So

Unidentified Analyst

It works. XX. that's So

And on that follow-up a Okay. then market side. share the maybe consumer on commentary

Andrew Rickman

you share just in clear, front, for that Tim, market on smartphones? or So looking be wearables to were

Unidentified Analyst

guys to is break are both, welcome absolutely think, combination you to in [indiscernible] Well, had of separate defined I previously, them a you it but down

Andrew Rickman

I that Yes. there watches the there. prior me, I XX was quarter When smartphone just have think front Breaking of it top And of of players, the wearables, the in and top space the the that smartphone an down, top we what in the because think terms of is look of overlap but players the announced announcement And at in bands. smart we numbers don't wearables leaders at in in market to of smartphone the in in of the engagement, X fitness area. XX many terms I bigger in percentage in probably the the in terms of of that can those terms isn't certainly of it's one XX it's phones. are but least terms

Mahesh Karanth

to are they recently. and one that's especially space, in started getting an players few are wherein but the there X of the signed Andrew customer, world, the a the now MOU into wearable China of See, we referring in cell is is top aggressively one producers this phone

Operator

a follow-up question. have Difficulty]. [Technical now We

Unidentified Company Representative

the nature our the of of power not Difficulty]. [Technical the technology. technology and of

on industry's just -- the delivering there today. know, are And As think, the industry's road forms performance we improve which kind get here. what basically would that the performance of mainstay LED-based deliver to the much anywhere able to near you previously, solutions, here never I the our to map continue of, the something of that view, to we're close simply would, in

on by every delivered with whether extraordinary, performance last we solution a as at relationship of something human get the planning look trials. beginnings So implement in But and see out we anybody today And to isn't this a get something for customer then more And those take our it testing and of for semiconductor an stuff assembly, like really else processes confidence in also customers, amount at we platform call, out look there. with a of the every the there us. and things development procedures, of having years this. ready something and else the on of are have got form were at long-term qualification front that all stone single journey even extraordinary And able we there a packaging requires of even perfected to all be is was of been route terms figure these is many has else that out that us lurking. that's to we of to material in it there as ramp look coming than amount that's technology, you've get to many, of and of and don't science the that a we huge to

this. they telling have explicitly not our so alternative that do an yes, customers to us And are

Unidentified Analyst

they'll just that their state-of-the-art be end, form Or customers siphotonics-based lineup. shift to they these displace totally are in LED only displace again, they their over are were devices? there entire indicating clear, maintain use you are certain and -- low for and factors, all going you match to of technology current Andrew, to planning the Or plan to mix in they to solution? LED And they'll

Andrew Rickman

measurement. Well, oxygen technologies well. sensors in them. And X pulse include rate exist actually for heart are Typically, LED blood motion we well, do rate, that primarily heart for have the the oximetry measuring we module accelerometers, solution good which our LED That's what as for variability. then as devices today, in

Now range those that infrared that not technologies the we're in is today operating.

very that of top on add we So good spectral It's infrared particular to that, they infrared broad and those opens range additional all that still of all remain these of measure up the biomarkers. parameters.

and to module a blood rate the our oxygen. actually are So LED technology which will in of customers those of do, not particular and biomarkers element abandoning the adding take they -- customers delivers essentially have for They're IR the it, IR deliver. or the And that the the complete existing terms is we principal are that heart the technology existing what with value the of the advances IR biomarkers. LEDs the either opportunity

Now one extending areas, see don't could about we but LED the into other think that happening. technology

on So it, IR builds of where it sort of stays it technology all adding top these the dramatically but is additional biomarkers.

Operator

another have we & Company Bolton with [ph]. And follow-up Needham from Quinn question

Unidentified Analyst

late given the supply QX? from chain check. as Just to to place tight times can would placed production Or quarter, be volume that through QX If the short on lead of are could relatively wanted as sort has those ask intend place go you those lead your or volume your devices times how customers next those fourth production of orders sort and QX orders, you production of receive chain in supply a us production customers to still orders to would or have year? in become, walk to need when they

Andrew Rickman

in of satisfied. Well, period. to we're sure you've position time in of customers of projections on taking terms in place the position the still that bill a all could the to materials volume make and our meet are that and so we that indicated chain orders be supply the frames

Unidentified Analyst

to orders on orders those advance orders. provide So placing partners timing that those you're customer in flexibility production or holding of sort of capacity manufacturing your at the of some

Andrew Rickman

Exactly.

Unidentified Analyst

effectively And that obligated capacity from take is foundries? those Are you production contractual? that to

Andrew Rickman

We cost us. obliged. be contractually terms the not significant But a to Yes. that, it's of cost in would Yes. of

Operator

reached have to remarks. conference I like would question-and-answer session. turn end the of to for the Andrew over our closing back We

Andrew Rickman

day, in I we're excited the to Well, everybody. about Have everybody. updating call. forward very expectations conference quarter our we're really appreciate It you looking questions, and much, of really thank really the you progress exceeded and earnings a further our good the company. next

Operator

does This conclude today's you. Thank conference.

for this your may at disconnect you time, thank your and You participation. lines

Rockley Photonics (RKLYQ) 16 Nov 212021 Q3 Earnings call transcript