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Wednesday, October 31, 2018

Energous Earnings Call Q3 2018

Energous had their earnings call yesterday, and sadly it was a much calmer call than last time - no irate investor actually demanding real answers to pointed questions, demanding accountability for prior statements made. It was completely as expected, same old delays and obfuscation, you can read a transcript here for yourself. Last quarter's earnings call promised hearing aids on the market in the next 90 days, which was essentially today, so what do we get?

Indications are that the hearing aids from SK Telesys and Delight will be the first WattUp enabled products to hit the consumer market hopefully, before the end of this year.

"Indications" that "hopefully" in the next 90 days. Again. Will they just disappear and be forgotten, just like Myant? Why does anyone believe a single thing out of this CEO's mouth? Other 'highlights':

  • Key products such as the spine tracker and some location tags are listed, so essentially tiny markets from non-Tier 1 customers. Not enough to sustain a $200m+ market cap company.
  • Continuing with ~$12.5m per quarter expenses with ~$29m in the bank. Capital raise needed by the end of Q1 2019.
  • They claim progress on their GaAs and GaN chips for transmitter, receiver, and power amp chips, and that they can handle up to 15 Watts. This may actually be true, but the surrounding transmitters and receivers will still be in the <100 mW range. There is legitimate work that can be done in this area, if Energous ever have worthwhile IP, this is where IMO it will be.
  • They still mix consulting and licensing revenues so we can't split them, and they are still a paltry ~$200,000.

One of the more egregious statements came in the Q&A, regarding contact charging vs at-distance:

The strategy has always been that we go in first with near-field, engage the regulators and then migrate the discussions to distance.

The entire basis of the company for the first three years was at-distance, with FCC approval of at-distance always the 'Holy Grail' which finally came in Dec 2017 and then... nothing. They marketed themselves as charging multiple devices, at up to 15 feet, at up to 5 Watts. If they position themselves as a contact only Qi competitor, just without the existing infrastructure, support, standards, efficiency, or max power delivery, they'd never have the funding they have enjoyed. From the earnings call in Feb this year:

We expect the first contact-based transmitters will be in the hands of the consumers in early 2018, followed by the first at-distance transmitters coming in late 2018, culminating in far-field transmitters coming to the market in 2019.

We're heads down focused on commercialization, and we believe that the $40 million is sufficient capital to get us to that point (profitability).

So the first thing never happened, they've just admitted the second won't happen, the third really isn't a priority and never was, and that they will still be in the red by ~$12m/quarter by the time that $40m runs out so they miss the fourth by just a tiny amount.

Why does no-one call them on this? Well, in a way, the markets are doing that. Here's the stock price at around 8am Pacific this morning.


That's nearly a 9% drop first thing in the morning, hardly a ringing endorsement. We'll see if that continues. Unfortunately, you should remember that there are some large institutional investors still owning WATT, so that's part of someone's pension taking a hit there.

Now we wait another 90 days for the same again...

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