Akoustis Technologies Inc (AKTS) Q3 2024 Earnings Call Transcript Highlights: Navigating ...

GuruFocus Research

Tue, May 14, 2024, 1:00 AM 4 min read

Revenue: $7.5 million, up 7% sequentially.
Operating Loss (GAAP): $22.6 million.
Net Loss Per Share (GAAP): $0.26.
Operating Loss (Non-GAAP): $12.5 million.
Net Loss Per Share (Non-GAAP): $0.14.
Capital Expenditures: $0.3 million.
Cash Used in Operations: $7.8 million, down 31% sequentially.
Guidance for Next Quarter Revenue: Flat to down 5%.

Warning! GuruFocus has detected 5 Warning Signs with AKTS.

Release Date: May 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Revenue increased by 7% sequentially to $7.5 million in the March quarter, with filter-related revenue up 13% quarter-over-quarter.
Akoustis Technologies Inc (NASDAQ:AKTS) has secured nine design wins in Wi-Fi 7 AP platforms, indicating strong future growth potential in this segment.
The company is actively involved in the CHIPS Act funding, enhancing its research capabilities and potential for government-backed financial benefits.
Akoustis Technologies Inc (NASDAQ:AKTS) successfully commenced preproduction deliveries of XBAW filters for Wi-Fi 7, showing progress in product development and customer engagement.
Cash burn was reduced by 31% sequentially in the March quarter, reflecting effective cost management and operational efficiency improvements.

Negative Points

The company experienced an unexpected sunset of a major Wi-Fi 6E program, which could impact short-term revenue streams.
Guidance for the June quarter revenue is projected to be flat to down 5%, indicating potential stagnation or decline.
GAAP operating loss was $22.6 million for the March quarter, driven by significant costs such as labor, goodwill impairment, and operational expenses.
Ongoing litigation with Qorvo poses financial risks and uncertainties, potentially impacting the company's operations and market value.
Despite reductions in cash burn, the company still faces challenges in achieving operating cash flow breakeven, projected within the next nine months under current conditions.

Q & A Highlights

Q: Can you provide more details on the revenue dynamics in the first half of the year, especially concerning the transition from Wi-Fi 6 to Wi-Fi 7? A: Jeffrey Shealy, President and CEO, explained that the transition from Wi-Fi 6E to Wi-Fi 7 was abrupt, influenced by the adoption of the Wi-Fi 7 standard at the beginning of the year. This transition caused a revenue shortfall of approximately $1 million per quarter. However, Akoustis has secured 9 design wins in Wi-Fi 7 with the same customer transitioning from Wi-Fi 6E, indicating a strong shift towards the new standard.

Q: What are the expectations for the Wi-Fi 7 transition timeline and its impact on future revenues? A: David Aichele, EVP of Business Development, noted that despite the sunset of a Wi-Fi 6E program, they have good visibility on orders up to the end of the year due to Wi-Fi 7. He emphasized that the transition issues seen with Wi-Fi 6E chipsets are not present with Wi-Fi 7, suggesting a smoother ramp-up and bullish outlook for the latter part of the year.

Q: Could you discuss the gross margin and expense dynamics expected for the upcoming quarters? A: Kenneth Boller, CFO, highlighted ongoing efforts to reduce operating expenses, projecting them to fall to the $10 million to $11 million range per quarter. He also mentioned that with new products coming online, which are expected to replace older, more costly products, they anticipate improvements in gross margins moving into double digits in the coming quarters.

Q: What are the financial impacts of the ongoing litigation matters? A: Drew Wright, Corporate General Counsel, updated on the litigation with Qorvo, noting that while some claims were dropped, the trial has moved forward with significant claims still being contested. He cautioned that the outcome could significantly impact the company, including its operations and financial position, depending on the jury's decision.

Q: How is Akoustis managing its operational costs and cash flow in light of current financial results? A: Kenneth Boller detailed that Akoustis is actively pursuing aggressive expense reduction and cost-saving measures. These efforts are expected to reduce the operating cash flow burn rate by an additional 30% sequentially in the June quarter. He also mentioned that the company is on track to reach operating cash flow breakeven within the next nine months.

Q: What are the company's strategic priorities for the near future? A: Jeffrey Shealy emphasized that Akoustis is focused on transitioning from Wi-Fi 6E to Wi-Fi 7 while expanding into automotive, network infrastructure, and defense markets. The company is also working on improving product cost savings to enhance gross margins and reduce operating cash burn in the upcoming quarters.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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