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Akoustis Technologies, Inc. (AKTS)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 FY2024 revenue was $7.0M, flat sequentially and up 20% year-over-year; GAAP operating loss improved to $15.0M and GAAP net loss per share was $0.21 .
  • Management reiterated guidance for record quarterly revenue in Q3 FY2024, with sales expected to rise 18%–25% sequentially on Wi‑Fi 6E recovery and first production demand in Wi‑Fi 7 .
  • Aggressive cost actions target a 30%–38% sequential cut in operating cash burn in March quarter and another 30%–40% in June quarter, with operating cash flow breakeven expected in the December quarter (FYQ2 2025) .
  • CHIPS Act refundable investment tax credit estimated at $3.7M–$4.7M over 12–15 months; company completed an $11.5M underwritten equity offering in late January to bolster liquidity .
  • Key stock catalysts: execution toward record Q3 revenue, visibility to cash breakeven in December quarter, Wi‑Fi 7 enterprise/carrier design wins, and progress on DARPA/defense programs .

What Went Well and What Went Wrong

What Went Well

  • Wi‑Fi momentum: Tier‑1 U.S. carrier awarded design wins for two high‑band Wi‑Fi 7 XBAW filters; Tier‑1 enterprise customers awarded multiple Wi‑Fi 7 design wins with prototype orders for second‑half 2024 ramps .
  • Cost discipline: sequential declines in labor and operating costs, targeted 30%–38% cash burn reduction in March quarter and 30%–40% further reduction in June quarter; breakeven targeted by December quarter .
  • Defense/technology: delivered first X‑Band BAW filter using XP3F to a Tier‑1 defense customer; began Phase 2 on a multimillion‑dollar DARPA COFFEE option extending funding through December 2024 .
    • “We began work on our multimillion-dollar Phase 2 contract option… funding through December 2024” .
    • “The market opportunity for our patent high-frequency XBAW and XP3F filters continues to be substantial” .

What Went Wrong

  • Inventory-driven softness: 5G network infrastructure shipments were soft in the quarter; management cited broader slowdown across Nokia/Ericsson peers, with modest growth expected to return in March quarter .
  • Cash use remains elevated: cash used in operating activities was $11.3M in Q2, with higher payroll from restructuring, legal costs, and AR timing, though normalization is expected in Q3 .
  • Estimates benchmarking unavailable: S&P Global consensus for AKTS could not be retrieved; beats/misses vs Street could not be assessed due to data mapping limitations (see Estimates Context) [SpgiEstimatesError].

Financial Results

MetricQ4 2023 (FY)Q1 2024 (FY)Q2 2024 (FY)
Revenue ($USD Millions)$8.3 $7.0 $7.0
GAAP Operating Loss ($USD Millions)$17.9 $21.7 $15.0
GAAP Diluted EPS ($USD)-$0.25 -$0.28 -$0.21
CapEx ($USD Millions)$1.2 $4.2 $1.6
Cash Used in Operations ($USD Millions)$8.7 $13.1 $11.3
Revenue YoY Growth (%)N/AN/A20%

Notes:

  • Prior-year Q2 revenue was ~$5.9M (Dec 31, 2022), per 8‑K exhibit .
  • Non‑GAAP measures were referenced; detailed reconciliations available in investor materials .

KPIs and Mix

KPIQ2 2024
Top 10 customers (% of revenue)58%
Top 25 customers (% of revenue)74%
Top 2 customers (% of revenue)30% (Asia- and U.S.-based)
Geographic revenue mixAsia 40%, North America 47%, Europe 13%
Cash & equivalents (end of period)~$12.9M (as of Dec 31, 2023)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growth (seq)Q3 FY2024Record revenue; +18%–25% seq (guided in Q1 call: $8.3–$8.8M) Record revenue; +18%–25% seq Maintained
Operating cash burnQ3 FY2024Below $6M (Q1 commentary) 30%–38% seq reduction Clarified downward trajectory
Operating cash burnQ4 FY2024Not specifiedAdditional 30%–40% reduction New detail
Operating cash flow breakevenFYQ2 2025 (Dec quarter)<12 months to breakeven Breakeven later this year (Dec quarter) Timeline tightened
CapExCalendar 2024~$1M pending over next 12 months (Q1 footnote) “Hundreds of thousands per quarter or less”; 500M filters/yr capacity complete Lower/limited spend
CHIPS ITC (refund)Next 12–15 months$3.5M–$4.0M over 18 months $3.7M–$4.7M over 12–15 months Raised range, faster timing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2023, Q1 FY2024)Current Period (Q2 FY2024)Trend
Wi‑Fi 7 adoptionSampling new 5.6/6.6 GHz filters; multiple design wins expected; inventory normalization into 2024 Tier‑1 carrier and enterprise Wi‑Fi 7 design wins; prototype orders for H2’24 ramps; record Q3 revenue expected Improving momentum
Supply chain/inventoriesWi‑Fi channel inventory build expected to weigh for 1–2 quarters Inventories “behind us”; demand returning in Wi‑Fi 6E and first production demand in Wi‑Fi 7 Normalizing
Network infrastructureORAN/RAN slowdown; sampling 7 GHz; Band 41 redesign underway Softness in shipments; modest growth expected to return in March quarter; sampling Band 41 and 3.8 GHz Stabilizing/gradual recovery
Mobile (5G)Tier‑1 audit passed; sampling/ref designs; Tier‑2 foundry activity Tier‑2 shipments progressing; fifth mobile partner engaged; second/third Wi‑Fi filters in process Mixed; China headwinds persist
CHIPS Act/ITCCHIPS ITC $3.5M–$4.0M over 18 months; DOC pre‑application in progress ITC estimated $3.7M–$4.7M over 12–15 months; ME hub memberships active; two EW proposals Positive updates
DARPA/XP3FPhase 2 option award; scaling to 18 GHz Phase 2 funding through Dec 2024; XP3F X‑Band filter delivered to Tier‑1 defense Advancing execution
Litigation (Qorvo)Active suits; motions early-stage Motions for partial summary judgment; patent expiry in summer; Texas case “moving forward at full steam” Actively contested

Management Commentary

  • “We reiterate our expectation to return to record quarterly revenue for the quarter ending March 31, 2024, up 18% to 25% sequentially.” — CEO Jeff Shealy .
  • “We estimate the amount of the refundable tax credit applicable to Akoustis to be $3.7 million to $4.7 million over the next 12 to 15 months.” — CEO Jeff Shealy .
  • “We have undertaken aggressive expense reduction and cost saving measures… reduce our operating cash flow burn rate by 30% to 38% sequentially in the March quarter… drop another 30% to 40% in the June quarter.” — CFO Ken Boller .
  • “We do not anticipate any real material spend in CapEx for the remainder of calendar year 2024… in the hundreds of thousands per quarter or less.” — CFO Ken Boller .
  • “We currently have approximately 189 issued patents and patents pending, providing a substantial IP moat around our technology.” — CEO Jeff Shealy .

Q&A Highlights

  • Breakeven math: Operating cash flow breakeven estimated at $11M–$15M quarterly revenue with 20%–25% gross margins; GAAP OpEx expected to trend to ~$10M/quarter as savings annualize .
  • Wi‑Fi mix: Near‑term Q3 growth led by enterprise Wi‑Fi 7 followed by defense; consumer side picking up with carrier programs; higher dollar content per enterprise system (20–30 filters per system) .
  • Working capital: AR uplift from late‑December shipments and government NRE timing expected to normalize in Q3 .
  • Technology edge: Single‑crystal materials improve power handling and harmonics; building block for XP3F; unique multilayer nanomaterial attracting defense and future 6G FR3 interest .
  • Litigation posture: Motions filed to narrow Qorvo’s claims; Texas case proceeding after motion to strike denied; one Qorvo patent expires in summer .

Estimates Context

  • Wall Street consensus via S&P Global could not be retrieved due to a mapping limitation for AKTS; as a result, EPS/Revenue beats/misses vs consensus cannot be assessed for Q2 FY2024 [SpgiEstimatesError].
  • Implication: With no S&P Global consensus, near‑term investor focus shifts to company guidance execution (record Q3 revenue +18%–25% seq) and cash burn trajectory toward December quarter breakeven .

Guidance Changes Table (Detailed)

MetricPeriodDetails
RevenueQ3 FY2024Up 18%–25% sequentially; return to record quarterly revenue
Gross MarginFY2024 trajectoryTurning positive within 1–2 quarters; exiting FY above 10%; targeting 20%–25% at breakeven timeframe
Operating Cash BurnQ3 FY2024Reduction of 30%–38% sequentially
Operating Cash BurnQ4 FY2024Additional reduction of 30%–40%
BreakevenFYQ2 2025Operating cash flow breakeven in December quarter
CapExCY2024Hundreds of thousands per quarter or less; 500M filters/yr capacity completed
CHIPS ITC12–15 months$3.7M–$4.7M refundable credit

Financial Context from 8‑K Press Materials

  • Preliminary Q2 FY2024 revenue range: ~$6.9M–$7.1M; cash and equivalents ~$12.9M as of Dec 31, 2023 .
  • Equity financing: Company announced proposed underwritten offering on Jan 24; later noted completion of $11.5M offering providing a stronger balance sheet .

Key Takeaways for Investors

  • Execution toward record Q3 revenue (+18%–25% seq) is the primary near‑term catalyst; monitor conversion of Wi‑Fi 7 enterprise/carrier design wins into production ramps in H2 CY2024 .
  • The path to cash breakeven by December quarter hinges on cost actions and margin mix improvement from newer, smaller‑form‑factor products and laminate/yield gains; watch gross margin inflection and OpEx run‑rate trend to ~$10M/quarter .
  • Defense/DARPA programs (XP3F to 18 GHz) and hub memberships offer incremental funding and technical validation; sustained delivery milestones can de‑risk cash trajectory and support valuation .
  • Network infrastructure remains a swing factor; softness could persist near term, but sampling and approvals (Band 41/3.8 GHz) may enable modest growth resumption starting March quarter .
  • Litigation remains an overhang but with active motions to narrow scope and a near‑term patent expiry; outcome uncertainty persists but management articulates mitigation via design updates .
  • With S&P Global estimates unavailable, relative performance assessment centers on internal guidance and sequential progress; investors should track Q3 backlog conversion, AR normalization, and CHIPS ITC refunds timing .
  • Liquidity improved post‑offering; limited CapEx needs and tax credits may extend runway as the company targets operating cash flow breakeven in December quarter .