WiSA Technologies, Inc. (NASDAQ:WISA) Q3 2023 Earnings Call Transcript

WiSA Technologies, Inc. (NASDAQ:WISA) Q3 2023 Earnings Call Transcript November 19, 2023

Operator: Good day, and welcome to the WiSA Technologies Third Quarter 2023 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. And now I would like to turn the conference over to David Barnard from LHA Investor Relations. Please go ahead.

David Barnard: Thanks, Marliese. As a reminder, this is the third quarter results conference call for WiSA Technologies. With us today is Brett Moyer, CEO and President. Before turning the call over to Brett, I’d like to remind everyone that today’s conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors discussed in our filings with the SEC. WiSA assumes no obligation to update any of these forward-looking statements except as required by law. With that, I’ll turn the call over to Brett. Please go ahead, Brett.

Brett Moyer: Thank you, David, and thank you, ladies and gentlemen, for joining the call today. Today, we will not be going over the financials we filed the Q last night. If you have questions on financials, I’ll take those during the Q&A. But 60 days ago at the end of July — 90 days ago, at the end of July, we launched the WiSA E module, which is a major four-year milestone for the company. So what we’re going to focus on today is what happened in the next 90 days. So what do we do in July or August, September, October, and I think you’ll find that we really had tremendous success in the launch and getting this product out into the market. So we’ll just go through two quick slides if there’s new people listening to the webcast.

WiSA is about wireless audio, spatial audio. If you look at what the Dolby and Xperi or DTS are doing, they’re trying to bring in elevated audio as well as front, back, rear side audio, traditionally the home theater stuff. So WiSA’s role in it is to make sure that we can get whatever audio is being decoded by the TV or the AV receiver or a smart device to the speakers, all the speakers make sure they’re in sync with the video and in sync with each other so you have a truly immersive, flawless, wireless audio. The other role WiSA does is we have a WiSA Association which is designed to make sure that when a product says WiSA or WiSA E on it, the market knows the consumer knows that, that product will work with any others that is interoperable, and we think that’s a very important thing.

It’s important to the speaker companies. It’s important to all the audio companies as well as if you’ve a smart device, a phone or a TV, you want to know that the consumer has options to listen to the content on your smart device and it works with multiple brands. So that’s the crux of it. Historically, we’ve had really premium audio brands chips designing and shipping our products. But today, let’s talk about WiSA E. So we had launched WiSA with custom chips, a lot of IP took us a while developed. But as we’ve talked about in the last several years, our goal was to get to a software-based technology that can be loaded on to low-cost Wi-Fi chips, whether they are 2.4 gigahertz, 5 gigahertz can be loaded on to smart devices without additional hardware.

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Q&A Session

And with that launch at the end of July, we now have a full suite of WiSA E products to go out and talk to customers about. We have the DS module, which is on the expressive IoT module that handles up to four channels, and we’ll talk about a soundbar at launch with that last week. We have the WiSA E modules, which is what we sampled at the end of July, and that includes the software that can be also loaded into a smart device directly to transmit to speakers. So let’s talk about the soundbar that was launched last week. It was previously announced that we started shipping customers is the Platin Audio 5.1.4 Milan soundbar. We have talked for 18 months now that one of the great things about DS is it can handle five audio channels, and it can give you the ability to have Atmos speakers at a very low cost in the rear of the room.

So you got left rear, you got audio coming from the left side, from the right side and audio going up above you, hitting the ceiling, coming back down to give you that truly immersive sound. So when you look at the Milan 5.1.4, you got two rear speakers that are also two ceiling speakers, and you have a soundbar that’s adding two up-firing speakers. So there’s really four speakers sending audio to the ceiling. There’s total of 10 speakers or six going directly at ear level where you’re sitting. So the combination creates a truly immersive sound. Now if you go out and look at some of your Tier 1 audio companies, Samsung, LG, the soundbar guys, Klipsch, you’ll see these type of products selling at $1,200, $1,800. This product is being launched at an MSRP at $799.

It has a launch promo at $699 right now. And for anybody listening to this call or reading the press release today, you have 48 hours to go to platinaudio.us and enter promo code WiSA E to test this audio system out. So we think it’s a great demo for investors to understand WiSA E and how does it work, what’s the quality of the audio that’s being wirelessly transmitted. We think it’s a great audio product, and we’re offering that 48-hour opportunity for people to test it. But you have to go to platinaudio.us, and then WiSA E for the promo code. All right. WiSA E. So a month ago, give or take, we announced a licensing — free license from the associations to any members, to TV and display members. So that’s TVs and projectors. We think — we thought that was an exciting idea.

We have spent the last four weeks presenting to TV guys. We’ll go through some of the stats. But why did we do that? Because TVs are extremely sensitive to their build material cost. It’s a highly competitive market. And by offering the transmit software to TVs for free, it creates a lot of use cases for them. It doesn’t matter whether there’s these low-end TV, a high-end TV, a gaming TV or a projector, they all have less audio than what most consumers desire. So by having a free WiSA E embedded software to transmit to speakers, it opens up a lot of use cases. So it can go — the TV could go straight to the soundbar. That would eliminate all the HDMI cables or it can go another level. And since the TV decodes audio and the soundbar decodes audio, we have the ability to go directly to the soundbar or speakers and eliminate the cost of decoding and the electronics and the soundbar.

We think that could drop $25 to $50 off of the retail price of low-end soundbars. Some of what the response we got are TVs, particularly this is true in the China brands is they’d like to just simply get a left and right Dario speakers around their TV with a subwoofer to get that better sound, but at a low cost. So that’s a great use case. Headphones for elderly people that have a hard time hearing, for gamers that don’t want to wake up the whole house. There’s no reason that TV can’t use WiSA E to stream directly to headphones designed with WiSA E, or more sophisticated TVs, which if you look hard, you’ll see them in the UK, but a lot of the TV companies are looking at it, of adding speakers in the top of the TV as well as the bottom of the TV, which is where they are today, traditionally, so that Atmos is coming out of the front of the room to the ceiling — from the TV directly or — and if you have WiSA E, then you could add Atmos speakers just like that soundbar we walked through and subwoofers for the back of the room.

Or you can make combinations anywhere you want. So we thought a month ago by offering this opportunity, it would give the TV guys a great opportunity to start thinking about different design applications that serve the customer better. So why WiSA E? There’s other not as dominant or not a sophisticated technologies. Well, as we talked about, the program we now have are offering is a zero cost to bottom. We have the high audio channel counts that we can support Dolby Atmos. We have interoperability between brands. We have a speaker ecosystem and we maybe not be completely transparent to the average investor, most TVs have two or three SoCs that they use to cover their whole product line. So one of the advantages of WiSA E has, is you can implement it at your low end, at your midrange or your high end and whatever audio products, whether they’re soundbar, speakers, subwoofers, you design, it will work across all your TV line.