Energous Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 28, 2024

There are 4 speakers on the call.

Operator

Good day, and welcome to the Energous Corporation Full Year 2023 Financial Results. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over Craig McPhail, Investor Relations. Please go ahead.

Speaker 1

Thank you, and welcome, everyone. Before we begin, I would like to remind participants that during today's call, the company will make forward looking statements. These statements are subject to inherent risks and uncertainties that are detailed in the company's filings with the Securities and Exchange Commission. Except as otherwise required by federal laws, Energous disclaims any obligation or undertaking to publicly release updates or revisions to the forward looking statements contained herein or elsewhere to reflect changes in expectations with regard to those events, conditions and circumstances. Also, please note that during this call, Energous will be discussing non GAAP financial measures as defined by SEC Regulation G.

Speaker 1

Reconciliations of these non GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on the company's website. Please note that we will not be taking questions on this call. Investors are invited to submit any questions to irenergys.com. Now, I would like to turn the call over to Mallory Barak, Principal Executive Officer and CFO of Energous Corporation. Please go ahead, Mallory.

Speaker 2

Thanks, Craig, and thank you all for joining us. I'm here with Gianpaolo Marino, our Vice President of Business Development and Marketing. I know our recent leadership change announcement is on your minds, and I will say a few words about that before we get into the business update and review of the 2023 results. I want to start by reiterating that we are thankful to Cesar for his contributions to Energous, and we wish him well in the future. Our Board has initiated a search to identify a new CEO with the support of a search firm.

Speaker 2

While the search process is underway, the Board has established an Office of a Chair composed of myself and Raynett, our Board Chair, to take on the CEO duties. Together, we will oversee strategic planning and execution. As our Interim Principal Executive Officer, I will take the lead on operational matters, working closely with Gianpaolo and our senior leaders. Raynett will provide oversight and support from a Board perspective. While I have been in my role as CFO of Energous for just a few months, I bring many years of experience as CFO of high growth and publicly traded technology companies.

Speaker 2

Since joining in January, I've had the opportunity to collaborate closely with our Board and senior team, and I'm confident in our ability to continue to deliver on our mission and take advantage of the large market opportunity for us in wire free, low power charging at a distance. We believe the important thing to take away from this announcement is that our Board, our leadership team and our and the whole Energous team are excited to move forward and build our next phase of growth in a strategic deliberate way. We are intently focused on capitalizing on our first to market advantage and prioritizing protection of our intellectual property portfolio, while also improving And with that, I will turn it over to Gianpaolo to provide a business update.

Speaker 3

Thank you, Mallory. Energous continues to successfully execute its smart IoT centric strategy initiated in early 2022 when we repositioned and retargeted the company to develop IoT power charging product at a distance using the intellectual property, regulatory knowledge and market experience developed over the years and backed by our 200 plus patent portfolio, providing Energous with a significant competitive advantage as we work to develop and build a market for a new generation of technology. Our strategy has been focused on enabling new high value IoT markets such as transportation and logistics and retail IoT with the introduction of Energous wireless power networks. These networks allow our customer greater placement freedom, mobility and lower installation costs by removing wires and batteries across RF tags and sensor application, typically within a cloud enabled environment. As is common, when adopting a new technology, customer initiated wireless power network technology evaluation and then a proof of concept installation, or we typically call POC.

Speaker 3

This engagement not only allow business to understand and test the application of the technology to their specific use cases, but also once seeing it deployed and validating the effectiveness of the technology, oftentimes leads to discussion about expansion opportunities and additional application within the large companies with whom we are currently working. Understanding how Energous is progressing with its current customers and its addition of new strategic customers through these POC or trial installation phases is an important indicator of our global adoption of Energous Technology and the timing of future revenue. This is why we believe that quarterly updates on the number of POC customers are an important part of our stories and good indicator of our growth. Energous 1 Watt Power Bridge, we typically call Eagle, is the only advanced and regulatory certified product for wireless power network installation available on the market today worldwide. We will also be launching our new introduced 2 watt power bridge Condor product in early Q2.

Speaker 3

At the end of Q3 2023, we announced roughly 30 POC trials with multiple customers worldwide across a range of industries. At the conclusion of 2023, customer interest in our product accelerated as the number of company in our focus increasingly understand the value proposition of Energous wireless power network, which are designed to help business team implement more cost effective solution that also serve to solve operational bottlenecks due to the high cost of service and maintenance by enabling battery less BLE tags and center solution and drive automation improvements, improved visibility and improve control throughout global supply chain, where even incremental improvements can generate significant value. Through these engagements, we are also becoming highly efficient on IoT wireless powered network installation as we gain significant experience and knowledge of the technology system capabilities and related markets. These capabilities enable Energous to provide our customer with insight and recommendation on best installation practices for our technology to yield best results. As such, we recently announced our partnership with the global installer Velocity as a preferred system integrator partner and worldwide value added reseller for our technology.

Speaker 3

Velocity will deploy advanced enterprise technology solution to some of the largest brand in the world, provides expansion opportunity into new markets, application and customer for Energous Wireless Power Technology across retail, healthcare, logistics, warehousing and more. Velocity has installed Energous Wireless Power technology, including 1 watt and 2 watt power bridges transmitter systems and also installed WILIOT IoT pixel tags at its innovation lab in Riverside, Missouri to showcase advanced use cases across multiple markets and application. We continue to build momentum in our market and sales development since pivoting to an IoT strategy in 2022. We started with 2 POC in Q3 2022. We grew to 10, 14 and 20 from Q4 2022 through Q2 2023 respectively.

Speaker 3

As of Q4 2023, I'm pleased to report that we have 38 POC across the U. S, Europe and Asia across multiple market covering retail, industrial, logistic and supply chain application. It is important to note that few of these POC are now successfully completed and we are now moving into a deployment sale phase. Based upon a growing operational need, we find that many of our customer trials are focused on delivering real time asset tracking and supply chain visibility in cold chain application for large Fortune 500 organization, enabling their ability to monitor perishable assets in real time across their supply chain operation. This is a tremendous technology improvement compared to the conventional RFID technology where we can now enable full traceability in an automated labor efficient way.

Speaker 3

With its robust intellectual property portfolio and proprietary technology, Energous is ideally positioned to be the emerging leader to support and execute our smart IoT strategy across wireless powered network with a solution that we believe addresses key operational pain point from many large organization. We remain encouraged by the growth in POC trials, which validates this leadership position and attractiveness of our technology across different markets. Our product roadmap supports both 1 watt and 2 watt power bridges with a family of advanced proprietary EN4100, EN-three thousand two hundred and ten and EN-two thousand two hundred and twenty three semiconductor devices. Additionally, as we move forward, we will evolve our roadmap to support the future 15 watt regulatory certified market in the U. S, which will open more market for our wireless power technology.

Speaker 3

Strategic partnership within the wireless power ecosystem play an important role in facilitating rapid and more expensive deployment. Today, we're working closely with 18 technology partners, 2 distribution partners and 4 IoT system integrators partners, all leaders in their respective segment. We expect to engage additional partner as we progress through 2024. On December 13, 2023, we announced our partnership with Identiv, a global system integrator with a specific objective of targeting real time asset tracking and inventory control for industrial, logistic and retail application. In January of this year, we attended NRF Show in New York.

Speaker 3

This conference brings together key companies in varying field of retail IoT and its ecosystem. In summary, Energous continues to execute on its new go to market strategy and is making clear progress as we work to generating a great deal of interest as evidenced by our 38 POC trial installation where our customers have communicated back to us that they understand the clear value offered by our IoT wireless power network.

Speaker 2

Thanks, Gianpaolo. Earlier today, we issued our earnings release announcing the operating and financial results for the year ended December 31, 2023. Focusing on the GAAP financial statements, our 2023 recognized revenue was approximately 0 point 5 $1,000,000 versus the $900,000 reported in 2022, representing a decrease of approximately 44% versus the prior year. Although revenue declined, our cost of revenue in 2023 was approximately $300,000 yielding a positive 41% gross margin versus the negative 50% gross margin reported in 2022. The 2023 cost of revenue includes an inventory write down similar to that recorded in 2022.

Speaker 2

And despite this additional recorded cost, the year over year change represents a significant improvement in gross margins versus last year. Total 2023 operating expense, excluding severance, decreased by approximately $3,500,000 to $21,900,000 from the $25,500,000 in 2022. Research and development expense decreased by approximately $1,700,000 in 2023 to $10,800,000 versus 12 $500,000 incurred in 2022, primarily attributable to a reduction in stock based compensation of $500,000 a decrease of $500,000 related to lower consulting, third party and professional service fees a $400,000 reduction in engineering supplies, components and chip development due to project timing, a $200,000 related to reduced regulatory testing and fees and $100,000 of lower postage related costs. Sales and marketing, general and administrative, s and A expenses for 20232022 were $11,100,000 12.9 dollars respectively. The reduction of approximately $1,800,000 is primarily due to a 1 point $5,000,000 reduction in personnel related and stock based compensation costs, a 0 point administrative costs and a decrease in insurance premiums and board fees of $200,000 partially offset by increased relating to legal fees, investor relations and corporate expenses of approximately $500,000 Severance expenses decreased by approximately $400,000 to $400,000 in 2023.

Speaker 2

The GAAP reported net loss for 2023 was $19,400,000 versus a loss of $26,300,000 in 2022. We feel it's valuable to share an adjusted net non GAAP loss for 2023 given the level of non cash related and extraordinary expenses incurred by the company. After adjusting the 2023 GAAP net loss by noncash related expenses, such such as depreciation, amortization and stock based compensation totaling approximately 1 point extraordinary expenses such as severance expense of $400,000 which includes the associated stock based compensation expense and by $600,000 representing the offering costs related to the warrant liability, offset by the change in fair value of the warrant liability of $2,500,000 the 2023 adjusted net loss was approximately $19,100,000 as compared to the non GAAP loss reported in 2022 of $22,600,000 reflecting a $3,500,000 improvement year over year. Shifting over to the balance sheet and cash flow. We ended 2023 with $13,900,000 in cash and remained debt free.

Speaker 2

During 2023, we raised approximately $4,200,000 through the ATM to supplement our working capital. In addition, we generated approximately $2,800,000 in net proceeds through the sale of common stock and prepaid warrants and approximately $500,000 from the collection of accounts receivable. And we continue to focus on opportunities to improve cash flow through sales, improving gross margins and as well as reductions in spending. In closing, I would like to say thank you to all our shareholders, stakeholders and the Energous team members. We look forward to updating you on the company's progress again next quarter.

Speaker 2

And this concludes our year end 2023 update.

Remove Ads
Powered by Quartr
Earnings Conference Call
Energous Q4 2023
00:00 / 00:00
Remove Ads