WiSA Q1 Sales Crushed on Supply Chain Woes; Logistics 'Still a Big Issue'

Supply chain disruption slammed Q1 revenue at WiSA Technologies, but the company held to full-year revenue guidance of 30%-50% growth to $8.5 million-$10 million on a Wednesday earnings call. WiSA expects sequential growth in Q2 but not year-on-year growth, said Chief Financial Officer George Oliva.

Revenue was more than halved to $566,000 year on year in Q1, and gross margin narrowed to 11% from 26% as a result of volume, said Oliva. Net loss was $3.9 million vs. $3.3 in the prior-year quarter. The company had $9.1 million in cash at the end of the quarter, “sufficient to last through the end of the year,” Oliva said.

In a status update, CEO Brett Moyer focused on WiSA’s “strong technology road map” that addresses a $1 billion total available market, a customer sales cycle that’s expanding “satisfactorily,” a growing intellectual property portfolio that's expected to include 24 issued or pending applications by year-end, and sales contribution from the company’s DS product in the second half.

That combination “presents a company, to the industry, that is of significantly higher value than what we’re currently trading at,” Moyer said. Shares plunged 23.42% Wednesday, closing at a 52-week low of 72 cents.

On supply chain, Moyer said customers report logistics are “still a big issue,” but parts shortages are “less of an issue.” WiSA has supplies for its customers, “but you can’t build 98% of a product,” he said. “A lot of what we’re dealing with now is products showed up late for Christmas, COVID’s opening up, people are going outside" and "customers have to rebalance inventory,” he said.

WiSA is “reasonably optimistic that orders will pick up in Q3 and early Q4, but we’re cautiously watching what happens logistically,” Moyer said. “You can build something in October, but if it’s not in your Christmas markets in November, it’s not going to do you any good.”

The company expects to capture market share in the middle- and low-end speaker and sound bar markets via its WiSA DS technology that has a “healthy pipeline” of companies in the initial sales process, Moyer said. As COVID-19 restrictions continue to relax and employees are able to travel more, “we expect to close those presentations and start technical evaluation” in the next two quarters, he said.

WiSA partnered with Espressif and Realtek on its technology. The Espressif partnership is for a four-channel sound bar at a price that's 65%-75% of its current modules, WiSA said. The Realtek partnership brings “the first platform for 5 GHz multichannel wireless immersive audio" at half the cost of the current solution, it said. Sampling is underway in both.

The audio company has traction with its DS technology in sound bars, TVs and the automotive aftermarket, Moyer said. WiSA’s lower cost DS goes up against a Skyworth product that sells for $450 or higher, Moyer said. “We’re in the $350 or lower range for more channels and a better performing product,” he said.

“A few years out,” WiSA is eyeing taking the IP it’s putting on Espressif and Realtek chips and porting it to “a licensable format” with a team in India, Moyer said. That will open up “all rooms in the house for us to have product offerings.”