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Akoustis Technologies(AKTS) - 2024 Q3 - Earnings Call Transcript
AKTSAkoustis Technologies(AKTS)2024-05-13 14:13
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Financial Data and Key Metrics - Revenue for Q3 2024 increased 7% sequentially to 7.5million,withfilter−relatedrevenueup137.5 million, with filter-related revenue up 13% quarter-over-quarter [5] - GAAP operating loss was 22.6 million, driven by labor costs of 6.7million,agoodwillimpairmentchargeof6.7 million, a goodwill impairment charge of 8.1 million, and other operational costs totaling 12million[16]−Non−GAAPoperatinglosswas12 million [16] - Non-GAAP operating loss was 12.5 million, with a non-GAAP net loss per share of 0.14[16]−Cashburndecreasedby310.14 [16] - Cash burn decreased by 31% sequentially to 7.8 million, with CapEx spending at 0.3million[17]BusinessLinePerformance−Wi−Fi6Eprogramunexpectedlysunset,butthecompanysecuredadesignwinforWi−Fi7withthesamecustomer,expectingproductionorderstobeginintheSeptemberquarter[6]−XBAWfilterproductionrampedfortwoWi−Fi7programsatatier1enterpriseclassOEM,withpre−productiondeliveriescompletedduringthequarter[9]−Inthe5Gmobilemarket,thecompanyshippedthefirsttwoofthreeWi−Fifilterstoatier25GmobileRFfront−endmodulecustomer[11]−Networkinfrastructurebusinessachievedapprovedsupplierstatuswithtwotier1customers,butexperiencedsoftnessinXBAWfiltershipmentsduetoslow5Gsmallcellinfrastructuredeployments[12]MarketPerformance−480.3 million [17] Business Line Performance - Wi-Fi 6E program unexpectedly sunset, but the company secured a design win for Wi-Fi 7 with the same customer, expecting production orders to begin in the September quarter [6] - XBAW filter production ramped for two Wi-Fi 7 programs at a tier 1 enterprise class OEM, with pre-production deliveries completed during the quarter [9] - In the 5G mobile market, the company shipped the first two of three Wi-Fi filters to a tier 2 5G mobile RF front-end module customer [11] - Network infrastructure business achieved approved supplier status with two tier 1 customers, but experienced softness in XBAW filter shipments due to slow 5G small cell infrastructure deployments [12] Market Performance - 48% of sales came from Asia, 39% from North America, and 13% from Europe [5] - Top two customers, both Asia-based, collectively made up 36% of sales [5] - The company is tracking nine design wins in Wi-Fi 7 AP platforms, with a growing trend to ramp major Wi-Fi 7 programs in the second half of 2024 [6] Strategic Direction and Industry Competition - The company is transitioning from Wi-Fi 6E to Wi-Fi 7, with a focus on reducing cash burn and improving gross margins [7][23] - The company is pursuing CHIPS Act funding, with potential refundable tax credits estimated between 2.8 and 4millionoverthenextninetotwelvemonths[8]−Thecompanyisengagedinmultipledefenseandgovernmentcontracts,includingamulti−milliondollarPhase2contractwithDARPAandanewprogramwiththeOfficeofNavalResearch[13][14]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−ManagementremainsbullishonWi−Fi7,expectingaproductionrampinthesecondhalfof2024[7]−ThecompanyisguidingQ4revenuetobeflattodown54 million over the next nine to twelve months [8] - The company is engaged in multiple defense and government contracts, including a multi-million dollar Phase 2 contract with DARPA and a new program with the Office of Naval Research [13][14] Management Commentary on Operating Environment and Future Outlook - Management remains bullish on Wi-Fi 7, expecting a production ramp in the second half of 2024 [7] - The company is guiding Q4 revenue to be flat to down 5% due to the Wi-Fi 6E sunset and transition to Wi-Fi 7 [17] - Management expects to achieve operating cash flow breakeven within the next nine months, driven by cost savings and CHIPS Act tax credits [18] Other Important Information - The company is involved in ongoing litigation with Qorvo, with potential significant financial and operational impacts depending on the trial outcome [20][21][22] - The company introduced XP3F technology, a new nanomaterial developed with DARPA funding, targeting frequencies up to 20 GHz [13] Q&A Session Summary Question: Revenue Dynamics and Wi-Fi 7 Transition - The Wi-Fi 6E program sunset resulted in a 1 million per quarter revenue shortfall, but the company expects a ramp in Wi-Fi 7 programs in the September quarter [27][28] - The company has nine Wi-Fi 7 design wins across multiple customers, with good visibility on orders through the end of the year [29][30] Question: Gross Margin and Expense Dynamics - Operating expenses are expected to decrease to 10−11millionperquarter,withover10-11 million per quarter, with over 20 million in annualized savings identified [33] - Gross margins are expected to improve to double-digits in the coming quarters, driven by new product introductions and cost reductions [34] Question: Operating Cash Flow Breakeven - The company expects to achieve operating cash flow breakeven at $11-15 million of revenue per quarter, with a 25% gross margin [34]