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Resonant 2Q17 results +2

17:56 09-Aug-17

The Resonant conference call has just concluded.  Two mainstream analysts participated in the call.  To me, the biggest news is that management's projection of a $21-36M of annual royalty revenue stream from current designs, which is above my own best case.  Part of that is because of it has bumped up the TAM to above $300M, but the bigger factor is that it has received word that a customer is sampling its first quadplexer parts to tier-1 OEMs in China.  Management hopes to be able to give a more quantified forecast for break-even cash flow in 2018 on 4Q17 call.  That's great news but characterizing that revenue as break-even indicates increasing costs.

The reason for that seems to be plans to expand into BAW filters, which is a big step.  Again, management hopes to be able to give more detail with the fourth quarter call.  It did mention that the effort could be self-funded or conducted with a partner, but the latter option would limit public information as well as costs.

Some royalty revenue from just one of 30+ designs was received in the second quarter, but it was negligible.  It will be interesting to see if there is enough to be broken out in the coming quarters and enhanced deposits and up-front royalty payments are also possibilities.  An analyst also named Samsung in his questioning, but naturally management refused to confirm.  What we do know is that Resonant currently has 7 customers on 5 fabs with some customers using multiple fabs.  Resonant is also working on developing a market directly through the foundries, but that puts it in a tricky market situation.  As such, the company will no longer reporting individual design wins, just tally milestones from time to time.

In conclusion, it seems like the fourth quarter call is shaping up to be a big one.  Resonant is starting to prove its design superiority by enabling 7-10 designs per designer per year.  There was no mention of any progress on truly tunable designs, but again, that would be a true engineering breakthrough.  In the meantime, I don't want to chase the stock simply on management projections, but the future does look bright.

Resonant has reported results for its second quarter:

• a loss of 24 cents per share, beats by 5 cents
  
• on revenue of $220K, which beats by $170K
  

As usual, Seeking Alpha got the numbers wrong, but my opinion is that both the numbers and that site are best  ignored in cases like this anyway.  The info in the press release that is actually important is that quadplexers should go into production near the turn of the year.  Those stand to generate much higher royalties.  Also, second quarter revenue is primarily composed of upfront and milestone payments, rather than royalties on the initial part.  The conference call is about to start...

Esekla
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All content is the opinion of the author, rather than investment advice.
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