Energous Corporation (NASDAQ:WATT) Q4 2023 Earnings Call Transcript

Energous Corporation (NASDAQ:WATT) Q4 2023 Earnings Call Transcript March 28, 2024

Energous Corporation beats earnings expectations. Reported EPS is $-0.76, expectations were $-0.85. WATT isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

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 to Craig MacPhail, Investor Relations. Please go ahead.

Craig MacPhail: 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.

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 making — taking questions on this call. Investors are invited to submit any questions to ir@energous.com. Now I would like to turn the call over to Mallorie Burak, Principal Executive Officer and CFO of Energous Corporation. Please go ahead, Mallorie.

Mallorie Burak: Thanks, Craig, and thank you all for joining us. I’m here with Giampaolo 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. While the search process is underway, the Board has established an Office of the Chair composed of myself and Reynette, 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 Giampaolo and our senior leaders, Reynette will provide oversight and support from a Board perspective. Well, 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. 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.

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Q&A Session

We are intently focused on capitalizing on our first-to-market advantage and prioritizing protection of our intellectual property portfolio, while also improving operational efficiencies as we work toward enabling the next generation of wireless power networks. And with that, I will turn it over to Giampaolo to provide a business update.

Giampaolo Marino: Thank you, Mallorie. 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, our customer initiated wireless powered network technology evaluation and then proof-of-concept installation or we typically call POC. This engagement not only allow business to understand and test the application of the technology to their specific use cases, but also one seeing it deployed and validating the effectiveness of the technology, often time 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 1W WattUp PowerBridge, we typically called 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 PowerBridge, Condor, product in early Q2. 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 focused market increasingly understood 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 batteryless BLE tags and center solution and drive automation improvements, improved visibility and improved control through our global supply chain, where even incremental improvements can generate significant value.

Through this engagement, we are also becoming highly efficient on IoT wireless power 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. Velociti will deploy advanced enterprise technology solutions to some of the largest brands in the world, provides expansion opportunity into new markets, applications and customer for Energous wireless power technology, across retail, health care, logistics, warehousing and more.

Velociti has installed Energous wireless power technology, including 1 Watt and 2 Watt PowerBridge 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 applications. We continue to build momentum in our market and sales development since pivoting to an IoT strategy in 2022. We started with two POC in Q3 2022. We grew to 10, 14 and 20 from Q4 2022 through Q2 2023 respectively. As of Q4 2023 I’m pleased to report that we have 38 POC across the US, Europe and Asia across multiple markets, covering retail, industrial, logistic and supply chain application. It is important to note that a 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. 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 power network with a solution that we believe addresses key operational pain points from many large organizations.

We remain encouraged by the growth in POC trials, which validates this leadership position and attractiveness of our technology across different markets. Our product road map supports both 1 Watt and 2 Watt PowerBridges with a family of advanced proprietary EN4100, EN3210 and EN2223 semiconductor devices. Additionally, as we move forward, we will evolve our road map to support the future 15 Watt regulatory certified market in the US, which will open more markets for our wireless power technology. Strategic partnership within the wireless power ecosystem play an important role in facilitating rapid and more expansive deployment. Today, we are working closely with 18 technology partners, two distribution partners and four IoT system integrators — partners, all leaders in their respective segment.