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Akoustis 4Q23 results -3

09:07 06-Sep-23

The Akoustis conference call has concluded, and the coming year is make or break time, as always anticipated.

Management expects softness in its core WiFi business for 1-2 quarters, and the DoD business should also see a weak quarter as the company transitions from phase 1 to phase 2.  However, a $150M DoD contract decision should be announced by the end of this month.  On the other hand, a chip stimulus decision is not expected until some time in 2024.  All of that is on top of the mobile phone weakness that I've warned about, where management cites high inventory levels.  As a result gross margin remains negative, but management expects it should go positive in next two quarters as more advanced production kicks in.  Their projection for cash flow breakeven is also slipping a bit, as it is now expected at $15-18M, which is still over a year out

As a result of that, more design wins on the way, as the production line passed the inspection mentioned in the last report.  I also note that the company's design wins are no longer just in mobile.  Automotive design wins are a particular area of growth, building on the C-V2X initiative, but these will also take longer to develop than initially expected.

I was disappointed that the company is still not breaking out China sales in the 10-K, but Asia continues to account for almost half of revenue.  Management did mention that it now has two 10%+ customers, and that 3 out of top 10 are Asia-based.

All this leaves us in the position I've already warned about, where shareholder's best hope of avoiding dilution is if management courts acquisition.  I think the best hope is settlement of the lawsuits with Qorvo, which has taken the typical step of requesting a dismissal, and is playing defense by requesting an avalanche of documentation for individual infringement details on each of its over one thousand products.  Failing M&A, I note management expect current cash to last for at least a year, and that Akoustis has $48M still available on its ATM facility.  However,  full use of that would represent something in the neighborhood of 50% dilution at current stock prices, which have fallen back to all time lows, as I expected, despite the company making impressive technological strides.

Note the correction to non-GAAP EPS below, which saves us 4 cents but doesn't really change my outlook.

On 9/6/23 07:28, Esekla wrote:

Akoustis has reported results for its fiscal fourth quarter:

• a loss of 21 cents per share misses by 4 cents
  
• from $8.3M of revenue, which misses by $0.1M
  

Although management right lauds the many recent accomplishments for the business, cost control appears to be a problem, as I've long warned.  We are down to $43M on the balance sheet.  Many customers are supposed ramp in the coming year, though.  We'll see what they have to say on the conference call at 8am, but I expect AKTS to at least revisit recent lows around $1.50.

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