Akoustis Technologies, Inc. (NASDAQ:AKTS) Q2 2024 Earnings Call Transcript

Operator: And our next question is from Suji Desilva with ROTH-MKM.

Suji Desilva: Congrats on the progress here. Maybe a longer term question, Jeff. Given you have multiple segments that seem to have opportunity here and promise, what do you think in a year or two are the larger sort of segment contributors? I would think it would be mobile, but the defense programs sound like, with these hub memberships, they could be particularly as well. So, any kind of qualitative thoughts there would be helpful.

Jeffrey Shealy: If you look at activity, I think we’ve outlined quite a bit, going from Wi-Fi 6E to Wi-Fi 7, you see not only the content increase, Dave touched on the wideband and narrowband portfolio that we have. The other thing that maybe didn’t come through is the ASPs. The ASPs in the Wi-Fi 7, that’s favorable for us. So we’re kind of mixing into new platforms, which certainly have starting ASPs that are higher. So we’re very bullish with the content. Dave outlined 2x to 4x of additional content. So we’re pretty excited about that. If you look over in the defense segment, David indicated, it has slowed down. But we do see that picking up through the year. So, while it’s small – and we do expect that business to roughly triple over the next year, if kind of you look at some of the internal modeling.

So Wi-Fi, we expect very strong performance there. On the defense side, several contract programs, and we mentioned in the prepared comments that we would be expecting, if awarded, at least one of those contracts would begin mid-year. And we continue on with the phase two at DARPA. And then that has spawned some additional activity in the foundry. So that’s strong. And also, some of the new spin-off programs that have come there. You mentioned mobile. So I’ll touch on that. We have been addressing. We’ve got foundry activity ongoing there, where we’re providing filters for fully integrated solutions. We’ll see how that plays out. But we mentioned in the prepared comments that we shipped the first filter. There’s two additional filters that are in the design and fabrication phase.

So that can be a contributor. What I what I will say, though, kind of overarching is if you look at the model that we’re charging to, the model would be upside to the model that we’re projecting for the full year. And so, as we talked about getting the cash flow breakeven at the end of the year, and we do expect that cash flow to be a little lumpy going through the year because we got ITC credits and the timing of those, Ken mentioned some of the timing challenges. But, overall, the mobile would be upside to the plan. And with strong performance in defense, Wi-Fi as well as network on a percentage growth basis.

Jeffrey Shealy: Jeff, that’s very helpful caller on what’s embedded in your expectations here. Second questions on the – I guess the new single crystal product you’re sampling and just understand the competitive landscape again and whether the single crystal product expands your competitive advantage, just the color on that and whether that opens up markets or whether it’s kind of continuous across the products you’re doing into that new one.

Jeffrey Shealy: I’ll start with that and then ask Dave to kind of follow in. But that particular product that we mentioned that’s going in a new Wi-Fi 7 design, we’re utilizing that to obtain some performance enhancements that we think are differentiated. It is amongst the narrowband designs that we’re selling. Again, just a reminder, the Wi-Fi 7 incorporates both wideband and narrowband. We have multiple narrowband custom designs, which there really are no second source for. So, we’re not having to compete with a second source on those. And so, that helps us with our bundling activities. So that’s in terms of the single crystal. And maybe Dave wants to add anything else there.

David Aichele: Suji, I’ll comment two things really with the single crystal, the development that we’ve been doing for the last couple of years to introduce [indiscernible] with the aluminum nitride, has enabled us to really service the narrowband and the wideband filters for certain market segments. So, the single crystal gives us some advantages on power handling with some of these applications where you’ve got this really steep rejection and a narrow transition window. Also, we’ve seen some improvement in harmonics, which are critical for some of these [indiscernible] type applications. The other thing is, it’s a building block of XP3F, which, again, is a unique feature of Akoustis. And the technical community recognizes that and that this is a manufacturing process with this multilayer nano material compared to other technologies that DARPA is funding.

So, it’s gaining pretty significant interests from the defense industry base, but also from the 5G sector that’s looking at – or I should say, the cellular sector that’s looking at 6G for FR3 and then also the SATCOM market. So, the single crystal is a good building block for discrete devices and also for these high performance technologies like the XP3F.

Suji Desilva: My last question is just an update, if you can, on the litigation with Qorvo, that’d be helpful.