WISA TECHNOLOGIES, INC. (WISA)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue was $0.255M, down 46% year over year (Q1 2023: $0.469M), while gross margin improved to -33% from -267% due to the absence of inventory reserve charges; net income was $2.707M, driven primarily by a non-recurring favorable change in warrant liability fair value .
• Management has signed five WiSA E licensing agreements (vs. two at the start of 2024) and expects to reach eight by year-end 2024; initial WiSA E-enabled products are anticipated to contribute revenue in 2H 2024 .
• Liquidity was bolstered by financings; cash was approximately $8M as of May 20, 2024, and monthly OpEx is targeted at ~$0.9M over the next few quarters (near term higher due to ongoing projects) .
• S&P Global Wall Street consensus estimates were unavailable for WISA; consequently, estimate comparisons are not provided, and no beat/miss assessment can be made at this time.

What Went Well and What Went Wrong

What Went Well

• WiSA E commercialization momentum: five licensing agreements signed with multinational TV/set-top box/projector partners; management expects three more in 2024, positioning WiSA E as a zero-BOM-cost, interoperable software transport layer across SoCs and Wi-Fi chips .
• Gross margin improvement: Q1 2024 gross margin improved to -33% from -267% YoY because Q1 2023 included a $1.3M inventory reserve; Q1 2024 did not have such reserves .
• Balance sheet strengthening and Nasdaq compliance: financing transactions raised cash to ~$8M by May 20; the company met the minimum bid price and is executing on steps to maintain listing, following panel approval .

Management quotes:

• “We’ve secured five [WiSA E] agreements…first WiSA E-enabled products are anticipated to be delivered and begin contributing revenue in the second half of 2024.”
• “We’ve…bolstered our cash balance to approximately $8 million as of May 20, 2024.”
• “WiSA E…is System-on-Chip agnostic…operating system agnostic…Wi-Fi agnostic…ensuring cost-effectiveness without compromising quality or performance.”

What Went Wrong

• Top-line pressure: revenue fell 46% YoY to $0.255M, primarily due to consumer electronics demand slowdown; component and consumer audio revenue both declined YoY .
• Continued negative gross margin and operating losses: gross margin remains negative; Q1 operating loss was -$4.158M, highlighting ongoing profitability challenges in core operations .
• Elevated cash burn and financing costs: net cash used in operating activities was $3.540M; interest expense rose to $1.265M due to amortization of debt discounts tied to January financing, underscoring near-term burn and financing costs .

Financial Results

Revenue, EPS, Margins vs. Prior Periods and Estimates

Note: S&P Global consensus estimates for revenue and EPS were unavailable for WISA; thus, estimate comparisons could not be provided.

YoY and Sequential Comparison (Q1 focus)

Segment Breakdown (Revenue)

KPIs and Operating Metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “WiSA E…delivers seamless integration across platforms and devices…embedded into TVs, mobile devices, set-top boxes, and projectors…interoperable [with] speakers, soundbars, subwoofers, smart speakers, and headphones.”
• “Zero BOM cost…lets TV/set-top box makers only incur cost if consumers activate external audio…a game changer.”
• “We should see a couple [licensee launches] go out in Q3…initial shipments…some more in Q4.”
• “OpEx…in that $900,000 a month range…near term higher due to projects.”

Q&A Highlights

• Revenue ramp cadence: initial WiSA E licensee shipments expected to begin in Q3 with broader contributions in Q4; timing depends on partners’ production schedules .
• Revenue streams: agreements vary—engineering services already in Q1, expected to increase in Q2–Q3; one contract includes activation/royalty kicking in late Q3/early Q4, others use module pricing .
• OpEx/burn: monthly OpEx targeted at ~$0.9M; cash generation aided by sell-down of HT inventory; interest expense elevated due to debt discount amortization .
• Geographic focus: international launch with multinational brands across TVs and set-top boxes .

Estimates Context

• S&P Global consensus estimates for WISA were unavailable; formal revenue/EPS consensus and beat/miss comparisons could not be provided at this time.
• Implication: Near-term sell-side models may need to incorporate 2H 2024 WiSA E activation/module revenue, HT order resumption, and ongoing OpEx targets, while treating warrant liability-driven net income as non-recurring .

Key Takeaways for Investors

• WiSA E commercialization is the core 2H 2024 catalyst: five signed licenses with expectation of eight by YE; initial shipments planned for Q3 with broader rollouts in Q4 .
• Revenue mix shift: components/modules and activation/royalty streams from WiSA E partners should increasingly replace low-margin legacy HT hardware sales .
• Margin trajectory improving: absence of inventory reserve charges drove YoY margin improvement; sustained improvement requires scaling WiSA E software/module monetization .
• Liquidity improved and listing de-risked: ~$8M cash post financings and Nasdaq panel approval; monitor cash burn vs. ~$0.9M/month OpEx target and further funding needs .
• Treat Q1 net income as non-recurring: favorable warrant liability fair value changes drove GAAP net income; core operations remain loss-making .
• Near-term trading: watch for additional license announcements, confirmation of Q3 launches, and OpEx discipline; any delays in partner product ramps could shift revenue into Q4 .
• Medium-term thesis: if WiSA E gains embedded adoption across TVs/set-top boxes with zero BOM cost and interoperable RX ecosystem, recurring activation/royalty and module sales can underpin a higher-margin model .

Citations:
All quantitative and qualitative claims above are sourced from WISA’s Q1 2024 press release and 8-K exhibits , Q1 2024 earnings call transcript , Q1 2024 8-K preliminary results , Q1 2024 10-Q , and prior quarters’ press releases .