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Akoustis Technologies, Inc. (AKTS)·Q2 2023 Earnings Summary

Executive Summary

  • Record revenue of $5.9M (+5% q/q, +160% y/y) with GAAP EPS of -$0.19; non-GAAP EPS -$0.18. Management guided for a strong March quarter with revenue up 20%-40% sequentially, aided by Wi‑Fi 6E/network infrastructure ramps and the GDSI acquisition .
  • Entered the 5G mobile handset market with a first design win and high-volume order enabled by qualified wafer-level packaging; initial shipments expected in the March quarter, establishing a new, higher-volume growth vector for AKTS .
  • Gross margin trajectory highlighted: targeting ~30% in 2024 and 40%-50%+ longer term as WLP/CSP reduce backend costs and mix shifts to higher ASP segments; cash flow breakeven targeted in 1H calendar 2024 .
  • Supply chain headwinds (Wi‑Fi SoC tightness, China/Europe macro) weighed on RFMI and some Wi‑Fi programs, but management expects broad‑based growth and SAW recovery near-term; CBRS and C‑band infrastructure remain constructive .
  • S&P Global consensus (revenue/EPS) for Q2 2023 was unavailable through our feed; estimate comparison could not be performed (missing SPGI mapping for AKTS). Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Achieved a transformative milestone: qualification of in‑house wafer-level packaging, enabling entry into 5G mobile with a first design win and high‑volume order; “availability of this disruptive package technology facilitated our first design win along with a high volume order” .
  • Three new Wi‑Fi 6E design wins for carrier‑class applications and a pipeline of next‑gen Wi‑Fi 6E/7 filters expected to ramp in 1H calendar 2023; first router entered production at end of calendar 2022 .
  • Network infrastructure momentum: ongoing CBRS ramps and sampling of 3.8 GHz C‑band filters with multiple OEMs; second design win for 3.5 GHz filter targeting small cell/MIMO in Europe/Asia .

What Went Wrong

  • Macro headwinds and supply chain constraints impacted SAW (RFMI) and select Wi‑Fi programs, particularly in China and Europe; RFMI saw a “significant dip” in December quarter .
  • Persistent Wi‑Fi SoC tightness elongated lead times despite some recent softening; management still sees 6‑9 months for meaningful improvement, limiting near‑term Wi‑Fi visibility .
  • Cash burn and capex remain elevated (though improving): cash used in operations was $11.2M (down from $15.0M prior quarter), capex $3.2M (down from $4.8M), with cash balance declining to $46.6M pre‑GDSI closing .

Financial Results

MetricQ4 2022Q1 2023Q2 2023
Revenue ($USD Millions)$5.2 $5.6 $5.9
GAAP Diluted EPS ($USD)-$0.29 -$0.33 -$0.19
Non-GAAP EPS ($USD)-$0.26 -$0.28 -$0.18
Operating Loss ($USD Millions)$17.7 $18.0 $12.9
Cash used in operating activities ($USD Millions)$11.9 $15.0 $11.2
CapEx ($USD Millions)$5.9 $4.8 $3.2
Cash & Equivalents ($USD Millions)$80.5 $60.7 $46.6

KPIs

KPIQ4 2022Q1 2023Q2 2023
Customers in production (count)13 15 15 (management discussion)
Wi‑Fi design wins (cumulative)15 20 +3 new 6E carrier‑class wins this quarter
CBRS infrastructure customers ramping (count)3 3 3, with continued ramps through 2023
Patents issued / pending (count)67 / 117 —80 / 127
Backlog duration (Wi‑Fi)~15 months ——

Note: An 8‑K “Selected Preliminary Financial Results” was filed Jan 18, 2023 confirming revenue ~$5.9M and cash $46.6M ahead of GDSI closing .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue sequential growthMarch quarter (Q3 FY23)—Up 20%–40% q/q, driven by Wi‑Fi 6E/network infra ramps and GDSI consolidation New (raised visibility)
GDSI revenue contributionMarch quarter (Q3 FY23)—~$1.0–$1.5M (seasonally lowest quarter for GDSI) New
Cash flow breakeven1H calendar 202415–18 months to operating cash flow breakeven (Q4 FY22 commentary) Targeting 1H calendar 2024 Maintained/dated
Gross margin trajectory2024 and beyond—~30% in 2024; 40%–50%+ longer term via WLP/CSP cost reductions and mix New framework
Mobile shipments1H calendar 2023Enter production 1H 2023 with Tier‑1 RF component customer Begin shipping filters in current (March) quarter against high‑volume order Timing firmed
CapEx trendNear‑termCapEx declining vs prior quarter ($5.9M → $4.8M) CapEx $3.2M in Q2, reflecting nearing completion of NY fab expansion/redundancy Ongoing decline

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2022)Previous Mentions (Q1 2023)Current Period (Q2 2023)Trend
5G Mobile Entry (WLP)WLP brought in‑house; volume order received from Tier‑1; targeting late ’22/early ’23 production Process flow completed; design locked; first 3 Tier‑1 + 1 Tier‑2 engagements, ramp 2024–2025 for some First 5G mobile design win + high‑volume order; shipments begin in March quarter Accelerating; execution milestone achieved
Wi‑Fi 6E/7Qualified multiple 6E/7 filters; 15 design wins, 9 customers in production; SoC shortages limiting AP builds 20 design wins; next‑gen filters with strong rejection; carrier-class ramps begin end of calendar 2022/March 2023 3 new 6E carrier-class wins; next‑gen 6E/7 products to qualify/ramp 1H’23; shift of platforms to 7 Positive mix/ASP; near-term supply constraints easing gradually
Network Infrastructure (CBRS/C‑band)3 CBRS customers ramping; sampling 3.7–3.98 GHz C‑band Continued CBRS ramp; expect greater small cell adoption 2H’23 Ramping 3 CBRS; new 3.5 GHz design win; C‑band 3.8 GHz sampling Sustained momentum
Supply Chain/MacroCOVID lockdowns, rolling blackouts; Wi‑Fi SoC lead times 6–12 months Ongoing SoC tightness; backlog strategy with ODMs SAW weakness in China/Europe; some SoC softening but still long; expect improvement over 6–9 months Gradual improvement expected
CHIPS Act StrategyPlan to apply; expand to 8‑inch wafers; advanced packaging center Application expected early 2023; funding could be multiple of market cap Integration of GDSI to reshore back‑end; proposal magnitude reiterated; plan to apply when window opens Strategic lever; scaling

Management Commentary

  • “The December quarter was a transformative period…centered around our entry into the 5G mobile handset market through the qualification of our new wafer level packages…facilitated our first design win along with a high volume order” — Jeff Shealy, CEO .
  • “We are expecting 20% to 40% sequential growth [in the March quarter] across multiple products and services…while we navigate near-term challenges, we continue to expect incremental sequential growth each quarter” — Jeff Shealy .
  • “On a GAAP basis, operating loss was $12.9M…GAAP net loss per share was $0.19…CapEx spend for Q2 was $3.2M…Cash used on operating activities was $11.2M…cash and equivalents $46.6M” — Ken Boller, CFO .
  • “We expect significant improvement [in gross margins] as we go through the next 12–15 months in 2024, margin towards approximately 30%, and then 40%–50%+ as we move forward through the out years” — Ken Boller .
  • “We hope to secure CHIPS Act funding…to build a U.S.-based advanced packaging center…magnitude of our proposal could be a multiple of the current market cap of Akoustis” — Jeff Shealy .

Q&A Highlights

  • Growth drivers: Management expects broad‑based revenue growth across Wi‑Fi, base station/network infra, defense, and mobile; March quarter to include GDSI revenue of ~$1.0–$1.5M, seasonally the lowest for them .
  • Mobile ramp cadence and pricing: Initial China‑focused platform via Tier‑1 RF component maker; performance‑driven market with favorable wafer economics via WLP (more die per wafer, lower backend cost) supporting margin uplift even amid competitive pricing .
  • Wi‑Fi platform transitions: Shift from 6E to 7 on retail/enterprise, increasing tri‑band/quad‑band architectures and filter content per system; SoC tightness easing modestly with lead times still long, better supply expected 6–9 months out .
  • CHIPS dependency: Near‑term mobile revenue not contingent on CHIPS funding; current WLP flow uses a mix of in‑house and qualified outsourced steps with large OEMs. CHIPS would enable scale (8‑inch lines, U.S. packaging center) and tighter control .
  • Customer count trajectory: Shipping to ~15 customers; management targets adding 1–2 customers every 3–4 months, exiting year near ~20 customers, aided by Wi‑Fi and base station wins .

Estimates Context

  • We attempted to retrieve S&P Global consensus (EPS and revenue) for AKTS Q2 2023 and Q1 2023; data was unavailable due to a missing mapping in our SPGI feed. As a result, we cannot quantify beats/misses versus Wall Street for this quarter. Values retrieved from S&P Global.*
  • Given management’s 20%–40% sequential revenue guidance for the March quarter, we expect upward estimate revisions if execution on Wi‑Fi carrier‑class ramps, CBRS/C‑band sampling conversions, and initial mobile shipments materialize as guided .

Key Takeaways for Investors

  • The mobile handset entry is real: in‑house WLP qualified, first design win secured, and initial shipments slated for the March quarter — a structurally higher‑volume, potentially margin‑accretive vector; monitor shipment timing and order cadence from the Tier‑1 RF component customer .
  • Near‑term revenue inflection: Management guided +20%–40% q/q for March, supported by Wi‑Fi 6E carrier‑class ramps, CBRS, and GDSI consolidation; track sequential revenue and contribution from GDSI ($1.0–$1.5M) .
  • Margin trajectory improving: Expect gross margin uplift through WLP/CSP and mix shift (infra, Wi‑Fi 7, mobile), with targets of ~30% in 2024 and 40%–50%+ longer term; watch product/package transitions and supplier negotiations .
  • Supply chain headwinds easing slowly: Wi‑Fi SoC supply remains tight but improving; SAW/RFMI weakness should normalize as China/Europe recover; build positions with patience as platform transitions to Wi‑Fi 7 increase content per system .
  • Strategic optionality from CHIPS Act: Potential funding (proposal magnitude could be multiple of market cap) to scale to 8‑inch wafers and reshore packaging, accelerating capacity for Tier‑1 mobile opportunities; catalysts include application acceptance and award timelines .
  • Cash discipline and runway: Cash burn improved q/q; capex trending down as NY fab expansion nears completion; equity offering post‑quarter raised ~$32M net, partially funding GDSI — watch liquidity, burn trajectory vs. breakeven in 1H’24 .
  • Trading setup: Near‑term catalysts in March/June quarters (sequential revenue growth, mobile shipments, Wi‑Fi 7 ramps) can drive estimate revisions and sentiment; execution on mobile and CHIPS newsflow likely to be principal stock drivers .

Footnotes:

  • S&P Global consensus values for AKTS were not available via our feed at this time (missing CIQ mapping). Values retrieved from S&P Global.