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spk05: Good afternoon, and welcome to the NRGIS second quarter 2022 financial results conference call. All participants will be in a listen-only mode. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Matt Sullivan, Investor Relations. Please go ahead.
spk03: Thank you, Joe, and welcome, everyone. Before we begin, I would like to remind participants that during today's call, the company will be making forward-looking statements. These statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties that are detailed in the company's filings with its Securities and Exchange Commission. Except as otherwise required by federal securities laws, Energist disclaims any obligation or undertaking to publicly release updates or revisions to the forward-looking statements contained herein or elsewhere to reflect changes and expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, Energist will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures, the most directly comparable GAAP measures, are included in today's press release, which is posted on the company's website. Now, I'd like to turn the call over to Cesar Johnston, CEO of Energist. Please go ahead, Cesar.
spk01: Thanks, Matt. Good afternoon, and welcome to the Energist 2022 second quarter conference call. Joining me is Bill Manina, our acting chief financial officer. We would like to start this call by sharing our latest news with you. As announced in our earlier press release this afternoon, we received a breakthrough FCC approval for our new 15-watt WADA power bridge. This significant achievement not only allows us and our partners to deploy wireless power networks capable of higher power delivery to support a broader range of IoT devices, but it also enables us to deliver such power at even further distances than previously authorized. Energy's 15 watt power bridge transmitters can enhance the wireless charging network performance in applications where high receiver coverage and high signal penetration are needed to energize hard to charge hidden receivers. This milestone supports our long term goal of advancing regulatory approvals for wireless power that allow for higher power and greater distances. This is why we are thrilled to announce that our new generation of WADA power bridge transmitters that are capable of charging at 15 times higher power than our one WADA power bridges with no distance limitations are now fully FCC certified. Additionally, on August 1st, 2022, we announced the first retail WADA power bridge deployment in the company's history. A wireless powered network implementing multiple WADA power bridges energizing thousands and thousands of smart RF tags or IoT pixels from our partner, Williott, under the software control of our customer, Flagship. Flagship's innovative software technology automatically tracks the movement of items in the store fitting room, or warehouse helping retailers understand and garner insights into in-store customer behavior. Beyond retail, similar applications of energy technology can also be replicated in multiple additional markets, including industrial IoT, medical, smart home, and smart office, opening new exciting opportunities for deployment of energy's wireless power networks and revolutionizing the next generation IoT experience. We believe that the scalability of what-app wireless power networks is unique in the industry and gives us a sustainable competitive advantage. Our focus strategy for what-app wireless power networks for IoT is showing positive results. In past month, we focused on RF tags and electronic shift label applications and have successfully demonstrated their system capabilities and functionality of our wireless power networks in real deployments. As previously highlighted in our fourth quarter 2021 conference call, our goal for 2022 is to support three applications this year. And we are now announcing that IoT sensors will be the additional third application that Enrgis will target, joining RF tags and electric shift labels. By focusing on these three applications, now in a position to access high-volume markets in retail, industrial, medical, smart homes, and the smart office. We would like to point out that as what-app wireless power networks for IoT are deployed, a new energized and connected world without wires and batteries is being created, enabling future applications and markets, which will take advantage of the initially deployed energy-based wireless power networks. We will update our progress on the IoT sensor application development as we move forward. Moving on to revenue for the quarter. As you saw in our earnings press release this afternoon, we reported a revenue of approximately $233,000 in Q2 2022, which represents a 26% increase over the same quarter for 2021. This 26% year-over-year increase in Q2 2022 as well as the previous 49% year-over-year increase in Q1 2022 compared to Q1 2021 continues to highlight the growing interest in our wireless power network technology as we ship measurable quantities of product and new orders are received. And now I will give a company update on the goals that we set for ourselves for 2022, sharing meaningful progress and results as we continue to deliver on our strategy. Our first short-term goal was to fulfill the commercial delivery of one WADA power bridge orders. We are proud to recognize that this goal has been met and we deliver our first shipment of these orders in Q4 2021 and we have since delivered subsequent shipments in first quarter and second quarter 2022 as new orders were received. Our second near-term goal was to identify a bench-head RF application and related addressable markets, targeting our first production pilot deployment, which has now been completed. We met this goal recently as we announced our first deployment of asset tracking devices with William & Flagship for retail markets last Monday, August 1st, 2022. Lastly, our third stated near-term goal was to complete the development of an electronic shelf labeled end-to-end system and target a first pilot deployment. We completed the development of the end-to-end system and demonstrated the system at CES 2022 in Las Vegas. We will give further updates on this near-term goal in the future. In our first quarter, 2022 earnings goal, we also reiterated several long-term goals, and I'd like to highlight those right now. Our long-term goals, number one and two, are the following. Support air fuel alliance efforts to develop a wireless power transfer standard, and number two, lead the ITU recommendation to align 900 megahertz wireless power spectrum as the first designated wireless power spectrum worldwide. I am pleased to report that NRGIS continues to be part of the efforts to develop the Air Fuel Alliance Wireless Power Transfer Standard while leading in all relevant ITU efforts to have 900 megahertz as the first designated power spectrum worldwide. Our third long-term goal is to certify high power greater than one what conducted power IoT wireless power network power bridge transmitters in the US and the European Union without distance limitations. With the 15 watt power bridge FCC certification in the US that we announced today, and our earlier greater than one watt certification in the European Union, I'm excited to report that we have achieved this objective. Long term goal number four is to identify potential applications of ESL vertical markets and target first pilot deployment. We continue to prioritize this goal form inroads that are important to a pilot deployment. Our long-term goal number five was to identify a third vertical market and to build an end-to-end system for customer technology demonstrations. We just announced that our third vertical market supporting IoT sensors, and we are in the process of developing a differentiated solution based on our core technology. Finally, our sixth and last stated long-term goal is to deliver year-over-year revenue growth driven by expanding IoT wireless power network deployments. As a management team, we are focused and committed on delivering year-over-year revenue growth driven by expanding IoT wireless power networks. And as we mentioned earlier, we are delivering on this goal as our last two quarters have shown revenue growth compared to the equivalent quarters in 2021. Also, in this quarter, I am very pleased to welcome Gianpaolo Marino as our new Vice President of Business Development and Marketing. Gianpaolo brings to Energies significant experiences in solidifying strategic partnerships and building platform solutions for IoT applications. In summary, it's been a very exciting quarter at Energies. Multiple short and long-term goals have been met. proving that our strategy on IoT wireless power networks is gaining momentum through the deployment of active energy RF wireless power networks. New and exciting technology and certification achievements. Energy is making RF wireless power networks a reality. I will now turn this call to Bill Manina, our Acting CFO. Bill.
spk00: Thanks, Cesar. At the close of the market today, we issued our Q2 earnings press release announcing the operating and financial results for our fiscal 2022 second quarter ended June 30th. For the second quarter, we recognized approximately $233,000 in revenue, an increase of 8% compared to approximately $216,000 in the prior quarter, and a 26% increase compared to approximately $185,000 in the same quarter of last year. Cost of revenue for Q2 was approximately $271,000, an increase of $68,000 over the prior quarter, which was due to product sales making up a larger percentage of our revenue in Q2. We did not report any cost of revenue in Q2 of 2021. Total gap costs and expenses for the second quarter totaled $7.3 million. approximately even with the total expense of last quarter and approximately 3.9 million lower than the second quarter of last year. The main reason for the large year-over-year decrease was an approximately 3.7 million decrease in stock compensation expense. Year-to-date, our total gap costs and expenses was 14.7 million, approximately 5.2 million lower than the $19.9 million of year-to-date gap expense in fiscal 2021. And the decrease year-over-year was primarily tied to lower stock compensation expense, which accounted for $5 million of the decrease. The net loss for the second quarter on a gap basis was $7 million, or a $0.09 loss per share on 77.1 million weighted average shares outstanding. This compares to a 7.2 million net loss in Q1, or $0.09 per share, and an 11 million net loss, or $0.18 loss per share, in Q2 of 2021. Also, our weighted average shares were 62.1 million shares in Q2 of 2021. The year-over-year increase in the share count was mainly due to the completion of our at-the-market offering, or ATM, in the fourth quarter of 2021, which raised an additional net $27 million of cash and added 12.2 million shares. Now for a non-GAAP view of our numbers for the quarter, as we believe non-GAAP information provides a useful comparison for investors, especially for a company at our stage when used with GAAP information. excluding approximately $633,000 in severance expense, $576,000 of stock compensation, and approximately $57,000 of depreciation expense from our total Q2 GAAP expense of $7.3 million. Net non-GAAP costs and expenses totaled approximately $6 million, a decrease of approximately $500,000 compared to Q1, and a decrease of approximately 900,000 compared to Q2 of last year. The decreases were mainly due to reduced headcount in research and development and sales and marketing. Net of revenue, our non-GAAP operating loss for Q2 was 5.8 million, an approximately 500,000 lower loss compared to Q1, and an approximately 1 million lower loss when compared to Q2 of last year. Non-GAAP research and development expense was $2.9 million, an approximately $250,000 decrease versus the prior quarter and approximately $650,000 decrease compared to the same period last year. The decreases were mainly attributable to lower headcount and lower chip development costs. Non-GAAP SG&A expense was $2.9 million, a decrease of approximately $300,000 versus the prior quarter and a decrease of approximately $500,000 compared to Q2 last year. The decreases were mainly due to a decrease in headcount as well as decreases in legal and annual shareholder meeting costs. Year to date, our total non-GAAP costs and expenses was $12.5 million, $800,000 lower than the $13.4 million year-to-date non-GAAP expense in fiscal 2021. The decrease was mainly due to lower expense in R&D and SG&A, resulting mainly from headcount decreases. The overall decrease was partially offset by an increase in cost of revenue. Turning to the balance sheet, we ended Q2 with $35.7 million in cash and remained debt-free. We expect our GAAP and non-GAAP cash operating expenses for the full year to trend in the current range with our normal quarterly fluctuations. Also, as mentioned earlier, we continue to forecast year-over-year revenue growth. We are pleased to see the progress being made through our efforts to increase revenue while also managing our current operating expense run rate. I will now give the call back to the operator for the question and answer session.
spk05: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question will come from John Hickman with Leidenberg. Please go ahead.
spk04: Can you talk more about the flagship? They've started with one retailer down in Australia.
spk01: Is that it? Yes. The announcement that we made two days ago was in reference to our first deployment of our platform. tens of our power bridges with thousands of those with the RF tags in one store.
spk04: And then is there a plan to like, is that a store a chain by any chance? Like, is there a chance that this expands beyond one store?
spk01: It's a retail company that has multiple sites. And at this point in time, there's not been any further plans information that we can release or Flagship has released in reference to that potential retailer.
spk04: Are there other retailers on the horizon with Flagship?
spk01: We, in general, work not just with Flagship, with a number of potential customers that we'll use this technology, and by actually showing, and we're very glad to actually show the first one, we're opening up plenty of opportunities, not just in retail, but other potential markets. So yes, it's likely to happen.
spk04: Okay, and then you probably won't answer this question, but you're talking about year-over-year revenue growth, and last year revenues were $757,000. Do you have some kind of, percentage in mind that would make you happy?
spk00: Hi, John. It's Bill. At the moment, we're advising that it's going to be year-over-year growth. And that's the guidance we're giving right now. We can possibly look at giving more guidance next quarter, but that's what we're doing right now.
spk01: And just the first two quarters, we have shown actually 26% and 49% growth.
spk04: Okay, thank you. That's it for me.
spk01: Thank you, John.
spk05: Our next question will come from Suji Da Silva with Roth Capital. Please go ahead.
spk02: Hi, Cesar. Hi, Bill. Congrats on the progress and the cost execution as well here. So the market you talked about, RF tags, ESL, and now the new one, IoT sensors, Can you give a sense of the relative addressable market of each to give a sense how big this new opportunity is relative to what you're already targeting?
spk01: Yeah, I can tell you that all these markets together, they're in the order of $280 billion. That includes smart offices, smart home, as well as retail, industrial, IoT, and medical. As far as the relative sizes of each one of them, I mean, That's for IDC, by the way, so this is data that we get for IDC. My recollection right now is there is somewhere between each one of those around 70 billion or so average. That's how you get four times that, yes. So it's a total addressable market that's extremely respectable.
spk02: And each is pretty similar in size, it sounds like, Cesar.
spk01: Very close to each other. discrete IoT industrial is probably the one that is a little higher, I would say, closer to call it 89 billion or so, but most of them are in the order of 70 and healthcare medical, now that I remember, somewhere around 50 billion or so.
spk02: Okay. And I know you're planning to update us on the newer vertical IoT sensor, but can you talk about maybe what some of the earliest opportunity areas are in that large market, just to understand where you might see traction?
spk01: Yes, Suji, thanks for the question. I would like to remind everyone that this is a very exciting time. And while we talk about independent applications and multiple markets, what we're really doing here at Energes is we are actually deploying what's basically the next generation of wireless-powered networks. And what we announced today is really the next generation of wireless-powered networks at Energes. And what I'm trying to say here is that with the moment we deploy those wireless power networks for any of the applications that we talk about, we are basically enabling the world of effectively any potential receiver taking advantage of that deployed network. Now along those lines, when it comes to IoT sensors, which is your particular question, we're looking at possibility of sensing the environment, being able to look at temperature, humidity, being able to look at air quality. Air quality has become very, very important lately. Being able to track offices that now with COVID have been shut down and being able to have sensors that allow you to look at the light levels and being able to actually have savings when it comes to and being able to also sense people as people go into offices and areas are empty or not. So we're talking about sensing the environment and provide an automated way moving forward to change how those spaces are managed. That's basically what we're looking at and we will give more updates as we move forward. We will announce technology that's being developed today for that purpose. And that will complement our strategy so far dealing with ESL and our stacks. And if you remember what I said before, the same transmitters that we have can actually power all three of those applications and more.
spk02: Okay, great. Just a few more questions. On the flagship customer pilot, what would be the stages of that pilot? Like what should we think about happening next and how long would each take before perhaps production starts?
spk01: That's a very good question, and it's relative to the different customers that we have. I don't have one single generic template for that, but what we can say is effectively what happens is they do one, and after that they do multiple ones, and as they prove that their automation is in place, then they move into a perfect level. And it's going to be basically a function of the different people that are evaluating our technology today.
spk02: Okay, so next would be piloting multiple sites, you're saying? That would be next? Yes. Got it. Okay, that helps. And then I just want to make sure I heard this right. On the 15-watt, it sounds like along with obviously being more power, you can now recharge sensors that might be hard to reach, hidden, or buried. You kind of use that language. I'm curious what an example of that would be because that sounds interesting.
spk01: Yes, very smart question. So two things about 15 watts. Number one, it's a new generation, it's a new product, and it can be actually targeted in two different ways. One direction is complementing our one watt power bridge wireless power network where you deploy 15 watt systems that allow you to have further penetration into hidden areas or hidden receivers. Therefore, expanding the amount of coverage that you have and exceeding, in the case of VLE tags, the type of coverage that you would have with, let's say, an RFID type of implementation. So that's one possibility. The second is 15 watt base wireless power networks that allow you now to have further range. I mean 15 times more power than we previously have reported. And by the way, so far the only product out there in the market that actually is certified at this level. And if you look at our transmitters, very, very small transmitters, only one inch thickness, eight inch by eight inch. And being able to actually deploy these similar to our wireless one systems, but now being able to do two things. Either give you more range on a horizontal side, or giving you more power as you also go up in height. So we are now in a position where we can have wider, areas that we can power with this system. And most important, because now we have 15 watt systems, it opens up the possibilities of other markets that we're not focused on today that we will be working on probably towards next year. So there's other levels of IoT devices that now we can enable that we haven't even focused on because as a small company we need to be very focused on what we're doing right now. So there's plenty of opportunities with 15 watts.
spk02: That provides some good color. And then maybe the last question perhaps for Bill. You did a good job managing OPEX while you were trying to grow the top line as well. Can you talk about what areas or how you approached producing OPEX and what maybe certain projects were pushed out or any sort of impact to the business from the cost management you're doing?
spk00: I mean, some of those costs were mainly attributed to headcount, so it was just managing the hires. And there are also G&A costs we're targeting, like we renewed our lease at a lower rate. That will kick in in Q4. But as I mentioned, some of those are headcount related, those decreases. And in other words, it's also managing just general costs, legal, annual shareholder meeting.
spk01: So contract restructuring in general, yes.
spk02: All right, guys. Thanks. Appreciate the call. Okay. Thank you.
spk05: This concludes our question and answer session. I would now like to turn the conference back over to the CEO, Cesar Johnston, for any closing remarks.
spk01: Thank you. We would like to thank our shareholders and stakeholders for their support as EnerGIS continues to lead the industry in the development and deployment of next-generation RF-based wireless power networks. We are an innovative company, and our successful wireless power network deployment will generate revenue growth through the increased shipment of products. So far, we have achieved that this quarter, and we have reported on the progress of our short-terms and our long-term goals. The energy team will continue to focus on these important core goals, and we'll update on news as we move forward. Thank you for your support.
spk05: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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