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Akoustis 3Q23 results -3

09:02 08-May-23

The Akoustis conference call has just concluded and it included a number of worthwhile points.  First, unlike MACom, Akoustis did share some detail about its CHIPS+ application, which it characterized as a multi-stage process.  The company is asking for twice its market cap, which would be over $400M, and is in dialogue about the terms, which I've characterized as onerous for more profitable companies.

More immediately, managements expects multiple handset design wins in next 3-6 months.  However, this may be pending inspection of the upgraded manufacturing facilities by a tier-1 mobile handset manufacturer.  Akoustis should also sample band 41 and massive MIMO filters this quarter, but automotive and more DoD contracts are somewhat longer term.

Finally, management reports that it got favorable claim marking in Qorvo lawsuit, which it believes will lead to it being cleared of any patent infringement claims.  However, Qorvo has filed a second lawsuit, and Akoustis has countersued.

All of this speaks to my view that Akoustis is truly disrupting the filter market, but that it may only realize true value through a transaction.  That makes government paralysis a risk factor.  In the meantime, management is waffling a little bit by qualifying its prior breakeven projections as operating cash flow breakeven over the next year, and with revenue around $15M.  I find that completely understandable in light of the growth and litigation, but I continue to think the current price stock is slightly high as retail investors ignore the macro environment and buy into the stock's story, attempting to piggyback on insiders.

Akoustis has published results for its fiscal third quarter:

• a loss of 23 cents per share misses by 4 cents
• from $7.4M of revenue, which misses by $0.1M
• guides 4Q23 revenue to $8.5+/-0.35M, which misses by $0.6M at the mid-point
  

Management cites macro challenges for the weak results and guidance and says it has made its CHIPS+ application.  Now we just have to see if DC can avoid shutting the government down over the budget/debt limit, let alone defaulting.  The press release also confirms that the company's commercial WiFi 6E order is for a cable provider, as I implied with the provider link.  Based on the MACom call, I would expect those product shipments to continue to be weak.  The GDSI acquisition is now complete and the conference call is at 8am; I will write more if appropriate.  In the meantime, the $2.75 placement price is my cautious pivot point on AKTS.

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