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Resonant 1Q18 results +5

18:23 09-May-18


The Resonant conference call has just concluded.  The new accounting standard negatively impacted revenue recognition by $48K for the quarter.  That is essentially a one-time accounting blip, where management decided to conserve capital by not going to the expense of restating prior quarters.  Going forward, design revenue will be spread across product life, royalty revenue (which reached a record $50K) is recognized as it is invoiced, generally about 1 quarter after product shipment. 

The 10M+ units shipped this quarter deserves reiteration and comparison to the 7.5M figure for all of 2017.  The figure is all the more impressive given how much current business is in China and the fact that the first quarter is typically 30% lower for the region.  There is no impact from ZTE ban with existing customers, and the next two quarters are expected to see significant design wins in tier-one phones across the globe.  However, management will only update again when it surpasses 25M units shipped.  It did affirm its outlook for about 10 devices from 3-5 customers shipping by year end. 

Better color was also given on the composition of royalties.  About 60% continues to come from low-margin early devices, but the remainder is now newer devices at 10% or above, with some contracts ranging as high as 20% royalty rates.  Even more complex BAW filters are expected to start going into production in 2019.

When you put it all together, there is $450M in end user revenue from current projects.  That means that the mid-seven digit revenue projection for this fiscal year, should easily ramp well into 8 digits for the following one.  As a result, management specifically affirmed what I suspected below: that it sees no need to raise additional capital in foreseeable future.  Its net operation loss was $5.2M this quarter, but with increasing sales, the $33M on the balance sheet should be sufficient to reach positive cash flow.

This report represents everything that an investor could possibly want to hear at this stage.  Accordingly, RESN is back above the $5 mark that I cited.  The market being what it is, I won't be surprised if they drop back below that level, but I would regard it as a buying opportunity.

On 05/09/2018 04:24 PM, Esekla wrote:

Resonant has announced results for its first quarter:

  • a loss of 28 cents per share misses by 8 cents
  • on $157K in revenue, which misses by $139K

The headline numbers don't begin to tell the story here, though.  Resonant-designed parts have been confirmed in high volume tier-one smart phones by tear-downs and first quarter volume has ramped to over 10M units.  Having these phones on the market also serves as validation for the company's business model and capabilities, making it easier to gain further design wins. 

As a result, management sees revenues ramping to mid-seven digits for this fiscal year, whereas previously they simply projected hitting seven digits.  With $33M on the balance sheet, it's possible the company won't need to raise capital again if momentum continues at that rate.  The conference call is 5pm, and will be checking to see what's going with the timing of revenue recognition.  That is likely just the new accounting rules, though, and with everything going on tonight, it may be a while before I get to it.  The good news is starting to be recognized in any case, though, with shares up 8% so far.  I can easily see them at least pushing my $5 mark.