Datavault AI Inc (DVLT) 2020 Q2 法說會逐字稿

Greetings and welcome to the Summit Wireless Technologies Second Quarter Business Update. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kirsten Chapman. Thank you. You may begin.

Thank you, Maria. Good afternoon, and thank you, everyone, for joining us today. I'd like to welcome you to the Summit Wireless Technologies second quarter 2020 business update. With us today from management are CEO and President, Brett Moyer, and CFO, George Oliva. Before I turn the call to Brett, I'd like to remind everyone of the safe harbor statement referenced in the SEC filings.

Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during the course of today's call. Statements contained herein that are not based on current or historical facts are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934.

Such forward-looking statements reflect the company's expectations about its future operating results, performance, and opportunities. These forward-looking statements are based on information currently available to the company, and are subject to a number of risks and uncertainties and other factors, including current macroeconomics, uncertainties associated with the COVID-19 pandemic, and others that could cause the company's actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by the forward-looking statements. For more detailed discussion of the ongoing risks and uncertainties of the company's business, I'll refer you to the company's various SEC filings.

Now it's my pleasure to turn the call over to Summit's CEO, Brett Moyer. Please go ahead, Brett.

Thank you, Kirsten. And thank you, ladies and gentlemen, for joining this afternoon. Hopefully find the -- our update as exciting as the management team does and informative. Traditionally, I will go through the first three slides that our general overview to make sure new listeners have a clear understanding about Summit and WiSA. And then we'll get into the meat of the call. Quickly, Summit is a technology company that has a wireless audio for immersive sound. Goes for smart devices, smart TVs, ultimately into IoT space.

Now WiSA's role -- and we were the original founder, is to build a interoperability standard so that TVs know how to talk to speakers, soundbars know how to talk to TVs, soundbars know how to talk to speakers, and be the leader of the industry to build the ecosystem around the technology.

We have -- so the roll, there is more than 16 brands right now in WiSA. If they've been WiSA certified, that means they have submitted products. They paid for it to be tested. We have checked it with all other products, and they have met the interoperability standard. That's critical part of WiSA. Second part is that the marketing departments of these companies know exactly what to do with the WiSA brands, the logos, where to put them, will they go on a TV screen, will they go on a box, a manual, the website. Because it's important to us that the consumer knows one WiSA product works with another just like Bluetooth works with Bluetooth, HDMI works with HDMI. And that WiSA represents simple setup, high quality wireless audio.

We don't put all brands up here, gets pretty convoluted. But for those that are new, a lot of these brands are the most strategic and most active ones. Then the new one from the last presentation would be Skyworth, which is the Chinese guys, and we'll talk about them shortly.

For the rest of the meeting, past the overview, we'll do a quick COVID update. We will talk about the display industry, so TVs and laser projectors and those design wins. We will talk about where the speaker design wins and products are. And then what the WiSA Wave is that we talked about this morning, what we're trying to do with that, and the industry support we have so far gotten from members. And then finally, we'll have George will give you a quick update on the corporate position.

So COVID. We did say in our year-end call that COVID was impacting designs only nominally. And you can see that now than a year ago in Q3, we had six audio systems out in the market. This year we'll have 18 or more in the market. So designs were slowed up. The design process in China was slowed up four to six weeks. But kept right on going, and those products are half launched, started launched, or are launching.

And in fact, even though Q2 was a very challenging quarter for everybody, obviously, 45% of our revenue was all new projects. Those are initial production runs which are usually small or prototypes, but high activity from new design projects in Q2.

In (inaudible), consumer demand was slow for speakers in late March through May. A lot of -- largely because of retail stores were closed. But the larger stronger brand customers of ours were able to ramp up their direct to consumer digital marketing by the end of Q2, and that helped offset some of the decline for them in retail sales, but not entirely.

All of that comes into why -- what are we trying to do with the wave, and how to help our brands market to consumers directly, either to support their retailers as they open up, or market for their own purposes of close off sales sooner.

Displays. This month or -- I'm sorry, in July, we expanded the display membership with Skyworth. They are the largest Chinese TV manufacturer according to them. We take their word for it. But they're certainly large. They will announce their first products in August, a product announcement coming out. There are multiple other prototypes in design, both on some of the members on the left as well as unannounced members. And later this quarter, we will have -- or later this year in Q4, we expect a laser TV project to be announced, which will be a tier one brand as well. In total, we still think we'll be have five, six, seven TV brand display brands supporting WiSA in the 2021 year.

Our speakers. So as I said, the speaker system projects have increased three times. It will be 18 or so maybe and probably over 20 by time we get into Q4. They cover all territories, North America, Asia, China, Europe. They cover all price points for a surround sound system from $799 to $20,000. They cover all form factors, whether it's sound bars -- Harman has soundbars. Savant has sound bars with home control systems in it. Very well reviewed product.

3.1 for spatial frontal sound. So good left to right action across the front of your room. Better dialog. And true surround sound for 5.1 and 7.1 systems for larger groups. You'll start seeing Dolby Atmos being supported for elevated sound, sound that's airplanes flying above your ceiling. And a lot of those projects are listed on the right that are in market and you can go out and buy this fall.

Quick update. We talked about this last call, so I'm not going to go into SoundSend in any detail. But this is a HDMI hub that can plug into any of the HDMI smart TVs have been built the last four or five years. So roughly 800 million or more. It goes into production next month. It will be here for to line up with our marketing plans in October. And this is the universal bridge for all TVs to connect to all those speaker projects we reviewed on the earlier slide. And that will be a WiSA branded product. So it's clear to the consumer and the retailer that WiSA displays can -- any display can talk to any WiSA speaker.

So, what's the WiSA wave? So when you look at it, I've been asked many times, when is WiSA going to do more aggressive marketing for WiSA and it's members. Until we had critical mass at retail, both in the US and Europe, and ultimately Asia, it wasn't cost effective. But we're at critical mass. We have a lot of speaker brands, a lot of form factors, a lot of price points out there. Next when you look at it, at those brands and projects, none of our WiSA certified products have overlapping brands or designs or pricing or marketing messages. They're all unique. And if you think about reaching out to consumers on a direct marketing basis, consumer may see a (inaudible) ad, but not want to buy a (inaudible), because they can't afford it, but they'll buy an Enclave.

Or they may see an Enclave ad, or a better example might be a (inaudible) ad, which is not a strong brand in any way. Say I don't trust a brand, but I'll step up and spend a couple of hundred dollars more and buy an Enclave or so forth, right? So the fact that we're all unique, there's a lot of opportunity to cross populate consumer targets and leads from each other's marketing activities.

So when you pull it all together in the digital marketing world, this now lets us run WiSA educated campaign -- consumer campaigns to either direct to brands demand to their own store, direct to brands demand to e-tailers or to retailers as they open up. One of the conversations this week, and we've been talking to all the key members in the last 10 days was, no, well, we're opening up retailer XYZ. Can we parse it out regionally or geographically so that when we know a store is open, so we can send leads and marketing leads consumers into those stores and support the retail launch. So quite exciting for us, no matter where that brand once those leads to be sent, we can support it and build a database that is economical for everybody.

Now how many people are those who we have talked now -- and this is consistent, right? We talked in Q2 about doing some tests, digital marketing. The WiSA wave is a result of that. We saw in Q2 that we continue to see a growth in consumer visits to the WiSA site, and we expect in Q3 that we'll get at an estimated 100,000 visitors.

Well, these are high value consumers for somebody that's marketing a WiSA product, right? They are somebody that's come to the website because they read about WiSA or a license certified product and product reviews, they did the search on WiSA, they saw an ad by a WiSA branded product, they saw ads or marketing from Xbox or LG. On the average, they've been spending about a 1:45, 1:42 seconds on our websites this year.

So if you think about, (inaudible) wants to drive sales or Enclave or any of the others, so here's somebody that they can go back to. They don't have to get them excited about WiSA. These people are already excited. They're engaged with WiSA and are educated. So this is just doing the traditional marketing to speak the company would do to move them to their brand speaker versus somebody else's. So we will -- this will be a continuous project. We'll be talking about the Wave for years, right. Because we think this is very high value for our members and for WiSA itself.

And now I'm going to -- before we open it up for questions, we're going to turn the call over to George for a corporate update. And then I'm happy to take questions afterwards. George?

Thanks, Brett. I just have a short update. We finished the June quarter with $12.1 million in cash. That's after fully repaying the $2 million bridge loan that we took previously. We also regained compliance with NASDAQ. We're fully compliant with listing requirements now on minimum shareholder equity and share price. During the quarter, we've also strengthened the Board. We've added Sri Peruvemba. Sri has extensive contacts in the display industry and is a seasoned global marketer. So we have some new energy on the board. We enjoy having Sri.

Q2 results. The revenue was down slightly quarter to quarter. The reorder of product was down due to the closures of retail. And as Brett mentioned, it was mostly offset by initial quantities of new product launches. The OpEx, we focused on decreasing OpEx over the Q4 run rate of $2.9 million. We started taking action in Q1, reducing OpEx to $2.7, and in Q2 that just ended, you see the full impact of the actions we took to get OpEx down to $2 million. That included deferring some discretionary spend and some voluntary pay cuts. In Q3, we are projecting an increase in OpEx of $2.4 million, and that's returning to full salaries and a few strategic investments in the business. So that's all I have.

All right. Thank you, George. Maria, at this point, we'll open up the call for questions.

(Operator Instructions)

Maria. We'll just thank everybody for joining us this afternoon. I'm certainly available for follow-up calls for the rest of the week. With that, we'll end the call.

Okay. This concludes today's conference. Thank you for your participation, and you may disconnect your lines at any time.