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Resonant preliminary 3Q20 results and more +3

09:29 07-Oct-20

Correction: Resonant's third quarter cash use was "net of the milestone payment", so that's more in line with historical norms and increases the chances of a capital raise. 

I'll also take a moment to document the third development agreement this year for Vuzix, even though the "low six-figure" revenue is trivial.  I'm glad the company is finally adding at least some metrics to its press releases, and think the potential is high for this to result in an order toward the end of next year.

The election could make a difference in that, though.  Yesterday's antics from the White House and in the market confirm my view that stimulus is the only other thing that matters.  I'll also note that the one thing that seems to almost unite everyone in Washington (and beyond) is a motivation to do something about Big Tech.  Look for Google to be first against the DoJ's wall any day now.

Resonant has announced preliminary third quarter results:

• $1.4M of revenue, beats by $528K

Better yet, the company used just $3.8M in cash for the quarter, which is about $2M less than usual.  This probably won't be enough to get the company to profitability, but an EPS beat is also likely.  5 analysts were expecting a loss of 10 cents per share on average.  Management also reports over 4.1M units shipped by customers this quarter, which represents a 28% sequential and 163% YoY increase.  However, it's unclear how many of these designs had prepaid royalties.

For the record, Resonant's webinar last night contained no new information.  The real question here is why management has chosen to disclose this information now.  It could be that tomorrow's presentation holds some new revelation, or that another capital raise is coming.  Cash equivalents of $20M on the balance sheet equate to about 41 cents per floating share.  Resonant shouldn't incur big costs for transitioning its XBAR designs to mass production, so some other expensive initiative would be required to justify further dilution in my eyes.

What is clear is that the 5G ramp is progressing in the real world.  Equinix just added support via Nokia and other evidence abounds.  Resonant predicts that the use of new bands (as opposed to re-farming 4G and other spectrum) will only begin next year, though.  RESN is right at my $2.53 mark and I am not inclined to chase it further on this suspiciously positive information.  I will participate in tomorrow night's webinar and may adjust my stance, in which case I will write again.

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