Good day, welcome to the Energous Corporation Fourth Quarter 2022 financial results. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I would now like to turn the conference over to Matt Sullivan, Investor Relations. Please go ahead.
Thank you, Dave. Welcome everyone. Before we begin, I would like to remind participants that during today's call, the company will make forward-looking statements. These statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties that are detailed in the company's filings with the Securities and Exchange Commission. Except as otherwise required by federal laws, Energous disclaims any obligation or undertaking to publicly release updates or revisions to the forward-looking statements contained herein or elsewhere to reflect changes in expectations with regard to those events, conditions, and circumstances. Please note that during this call, Energous will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on the company's website.
I would like to turn the call over to Cesar Johnston, CEO of Energous. Please go ahead, Cesar.
Thanks, Matt. Good afternoon. Welcome to the Energous 2022 fourth quarter conference call. Joining me is Bill Mannina, our Acting Chief Financial Officer. Q4 2022 is an important quarter. It is the end of our fiscal year and the culmination of 12 months of significant accomplishments, which also sets the foundation of an exciting 2023 with strong partnerships and business momentum. Let's begin this call by summarizing our 2022 highlights, followed by a discussion of specific achievements in Q4 2022. I will end this call with an overview of our direction and business goals for 2023. During the year 2022, we focused the company on our vision to be the leader in eliminating batteries and cables by unleashing the full potential of IoT through wireless power networks.
Our main goal is to enable our customers with the technology elements and capability to build IoT wireless power networks. In 2022, we pivoted the company and our efforts to support applications for RF tags, electronic shelf labels, and IoT sensors with a combined total addressable market of $280 billion, according to IDC report data. Our target was to create new active energy harvesting IoT wireless power network ecosystems for these applications while adding value to our customers. Today, we are proud to report that our 2022 efforts have now resulted in multiple customers purchasing our evaluation kits to learn about our technology.
Most important, we would like to report that at least 10 customers are now in the process of installing or have installed our IoT wireless power networks in proof-of-concept deployments across the retail, industrial, healthcare, and automotive markets in three different regions, including the U.S., the European Union, and Asia. These installations represent important first steps towards driving broader adoption of our technology in the marketplace. Our customers are well-respected leaders across their respective business fields. As new customers decide to implement our technologies, their installation status progresses from proof-of-concept to proof of validation, and ultimately to the final production phase. To give you an example, a proof-of-concept phase typically integrates up to 100 PowerBridges, while a proof of validation and a final production phase can include hundreds or even thousands of PowerBridges.
Today, the majority of our customer applications are focused on IoT RF tags for asset tracking, with at least one customer in the production phase. These are important accomplishments on two forms. First, they demonstrate our success in creating and enabling a new market. Second, they highlight the effective execution of our 2022 short-term and long-term goals that we share at the start of the year. I'll now provide an update of each of these goals. The first two 2022 short-term goals of fulfilling the delivery of 1W PowerBridges and identifying a beachhead for RF applications were accomplished. We have shipped thousands of our PowerBridges and now have at least 10 proof of concept and at least one production installation underway.
The company is now positioned for expected revenue generation as our customers transition to the proof of validation and production phases during 2023. The third short-term goal was to develop an electronic shelf label or ESL end-to-end system, which we have demonstrated in various conferences, including Electronica 2022 and CES 2023. Here, together with our partners, we focus on collaborating on delivering end-to-end systems to very large retail outlets that can offer significant volume potential for our PowerBridges. I will continue to keep you updated here as we progress with our partners and customers during the next quarters. With respect to our long-term goals for 2022, the first was to make wireless power network a standard, and that was finalized in December 2022.
While the ITU's historic recommendation for 900 MHz use for wireless power transfer was approved in October 2022, fulfilling our second long-term goal. Wireless power networks are now fully recognized for the first time as an important emerging technology worldwide. The third long-term goal, to certify wireless power networks without distance limitations, was accomplished in August 2022 with our 15W PowerBridge FCC certification. Our EU certification for greater than 1 watt was accomplished earlier in the year. These efforts have positioned Energous as the leader in IoT wireless power networks with certified capability to charge IoT devices at a distance around the globe. The fourth long-term goal is similar in status to the third short-term goal, we will update you status as we make progress.
The fifth and final long-term goal was achieved in Q3 2022, as we announced our support of sensor market applications with multiple partners and deliver sensor receiver demonstrations in Q4 2022. We announced a third IoT wireless power network application demonstrating indoor air quality and multi-spectral light sensor capabilities at multiple public conferences. On the financial side, on a full year 2022 basis, I'm happy to report that we deliver approximately $151,000 revenue, demonstrating year-over-year growth over 2022 of 12.5% from these early programs, while setting the stage for sustained longer-term growth through the balance of this decade as our proof of concept customers move along the path to final production. This will translate into our PowerBridge product ramps and ultimately increase revenue and cash flow generation for Energous.
Additionally, we continue to prudently manage our OpEx, demonstrating a significant reduction over 2021 through a number of internal cost-cutting initiatives. Let's now move our discussion to update our Q4 2022 specific progress. In Q4 2022, we deliver approximately $179,000 in revenue. Bill will cover this in more detail shortly. We increased the number of our wireless power network proof of concept from two installations in Australia, which we announced in August and September 2022 respectively, to now 10 customer proof of concept installations across multiple markets and across the world with at least one customer in the production phase. This is a 5x increase in the number of important POC installations in just one quarter. It demonstrate the growing customer interest and potential of our technologies.
At Energous, we are constantly identifying and executing in the development of ecosystems based on IoT wireless power network technologies. Our strategy is to build IoT wireless power network ecosystems by complementing our technologies with unique technology partners to open up new applications and markets. Some examples here include a relationship with Catapult, a well-known sports performance analytics company based in Australia. In partnership with Catapult, we announced the American football of the future, which integrates an embedded tracker that charges wirelessly using our technology without sacrificing precision data or ball regulations. The new football reports the athletes and ball movements during a game in real time to the Catapult cloud to track and analyze the results. The Catapult football is just one product example that benefits from our RF power transmission technology, disrupting and advancing the sports performance industry.
Additionally, as part of our new IoT sensor application ecosystem development, we unveil our new air quality CO2 receiver using a Sensirion device. We also announced our receiver sensor with multi-spectral light sensor capabilities in partnership with ams OSRAM. Indoor air quality and light control are just a couple of IoT sensor examples that wireless power networks can support for smart home, smart office, industrial, retail, and healthcare markets, enabling real-time control and efficiency improvement in the ongoing new IoT digital transformation. On the product and systems front, we have partnered with SATO Holdings Corporation, a Japanese global pioneer in auto-ID and labeling solutions to develop next generation smart store dynamic inventory replenishment applications for IoT wireless power networks. As system partners, our aim is to improve overall efficiency of tracking and replenishment management for merchandisers and retailers.
Demonstrations of our combined solutions have been recently showcased at the National Retail Federation 2023 in New York and at the Retail Japan 2023 trade shows. Finally, we announced a technology partnerships with CAP-XX in Q4. CAP-XX is an Australian company that manufactures supercapacitors, which are energy storage devices that replace batteries and result in maintenance-free IoT receiver devices. We also partner with NGK in Japan to introduce the use of lithium-ion rechargeable energy batteries in our IoT receiver devices. Moving on to standardization. We supported and participated in the first industry standard to charge IoT devices over the air. This standard was developed by a global coalitions of companies as members of the AirFuel Alliance.
We also participated in leading the process to develop the International Telecommunication Union, ITU, approval and recommendation for radio frequency-based wireless power transfer in the 900 MHz band. Energous IoT wireless power networks are now a standard-based technology, transmitting power in the wireless transfer official 900 MHz band for wireless power network deployment worldwide. In the regulatory arena, we announced the certification approval for unlimited wireless power distance transmission in South Korea for our 1-watt PowerBridge transmitter. This effort expands the original reach of the Energous IoT wireless power network global ecosystem. The certification in Korea complements previously supported approvals in the U.S., Canada, European Union, U.K., India, China, Australia, and New Zealand, continues to position Energous as the only IoT wireless power leader with certified technology worldwide. I would like to now turn to the current year and outline our 2023 goals.
As such, our 2023 goals are as follows: Maintain our technical and growing market leadership through innovative IoT wireless power network product development. Number two, work closely with our PowerBridge production partners to optimize the cost and corresponding gross margin as we move to higher volume production. Number three, continue to identify key technology and system partners to expand our potential markets and facilitate access to new potential markets through our industry-leading technologies. Number four, move our current and future customers steadily along the path to commercialization, from POC to proof of validation and then to full production. Number five, support the rollout of PowerBridge production ramps with our key customers and partners, and achieve expected annual revenue growth over 2022.
Given the assumptions, we currently anticipate year-over-year revenue growth of 20% or more, which will be weighted towards the second half of the year. In summary, 2022 was a transition year, and in particular, Q4 was a quarter of measure achievements at Energous, making the end of a year centered on pivoting and refocusing the company in IoT wireless power networks. It was the result of finding the best intersection of our technology with our certifications and standards to support a growing IoT market across the smart home, smart office, industrial, retail, and healthcare markets. Throughout our organization, we firmly believe that we have now positioned Energous as the leader in the emerging IoT wireless power network markets with tremendous value potential, due to its proprietary semiconductor, antenna, and software products supporting multiple IoT markets.
We now look forward to 2023 as the demand of our solutions grows and we support our customers to achieve success. I will now turn the call over to Bill.
Thanks, Cesar. Earlier today, we issued our Q4 earnings release announcing the operating and financial results for our fiscal 2022 fourth quarter and full year ended December 31. For the fourth quarter, we recognized approximately $179,000 in revenue, a decrease of 20% compared to approximately $223,000 in the prior quarter, and a 21% decrease compared to approximately $225,000 in the same quarter of last year. On an annual basis for 2022, we recognized approximately $851,000 in revenue, an increase of 12.5% Compared to approximately $750,000 in 2021. This increase was in line with our revenue guidance for 2022.
Cost of revenue for Q4 was approximately $383,000, a decrease of $37,000 compared to the prior quarter. The Q4 cost of revenue included a small inventory write-down, which was similar to the write-down in Q3. We did not report any cost of revenue in Q4 of 2021. Total GAAP costs and expenses for the fourth quarter totaled $6.5 million, approximately $200,000 higher than the total costs and expenses of last quarter. The increase was mainly due to an approximately $165,000 increase in severance expense and a $140,000 increase in bonuses, which were partially offset by a $103,000 decrease in stock comp expense.
Compared to the fourth quarter of last year, total GAAP costs and expenses were approximately $3.1 million lower, which was mainly due to a $2.3 million decrease in R&D, due primarily to an approximately $1.5 million decrease in stock comp expense and a $390,000 decrease in payroll expense. Also a decrease of approximately $1.4 million in sales and marketing, due primarily to an approximately $950,000 decrease in stock comp expense and a $230,000 decrease in payroll expense. For 2022 on an annual basis, our total GAAP costs and expenses was $27.5 million, approximately $14.7 million lower than the $42.2 million of total GAAP costs and expenses in fiscal 2021. A decrease of just under 35%.
The decrease year-over-year was primarily due to an approximately $9 million decrease in stock compensation expense, a $3.2 million decrease in severance, and a $2.2 million decrease in payroll expense, which were partially offset by a $1.3 million increase in cost of revenue. The net loss for the fourth quarter on a GAAP basis was $6.1 million or an $0.08 loss per share on 78.3 million weighted average shares outstanding. This compares to a $6 million net loss in Q3 or $0.08 per share, and a $9.4 million net loss or $0.13 per share on 72.9 million weighted average shares outstanding in Q4 of 2021.
Now for a non-GAAP view of our numbers for the quarter and fiscal year, as we believe non-GAAP information provides a useful comparison for investors, especially for a company at our stage, when used in conjunction with the GAAP information. Excluding approximately $595,000 of stock-based compensation, approximately $45,000 of depreciation, and approximately $165,000 of severance expense for our total Q4 GAAP costs and expenses of $6.5 million, our net non-GAAP costs and expenses totaled approximately $5.7 million, an increase of approximately $173,000 compared to Q3, and a decrease of approximately $513,000 compared to Q4 of last year. The increase compared to Q3 was mainly due to an increase in FCC testing and prototype costs.
The decrease compared to Q4 of 2021 was mainly due to reduced headcount, a decrease in chip development costs, engineering supplies and consulting costs. Again, partially offset by an increase in cost of revenue. Our non-GAAP net loss for Q4 was approximately $5.3 million, an approximately $142,000 higher loss compared to Q3, and an approximately $683,000 lower loss when compared to Q4 of last year. Non-GAAP research and development expense was $2.6 million, which was consistent with the prior quarter, and an approximately $780,000 decrease compared to the same period last year. The decrease compared to Q4 of 2021 was mainly due to decreases in payroll expense, chip development costs and consulting costs.
Non-GAAP SG&A expense was $2.7 million, an increase of approximately $148,000 versus the prior quarter. A decrease of approximately $116,000 compared to Q4 of last year. The increase compared to Q3 was mainly due to an increase in employee bonuses and consulting costs. The decrease compared to Q4 of 2021 was mainly due to decreases in marketing costs and consulting costs. On an annual basis, our total non-GAAP costs and expenses was $23.8 million, $2.4 million lower than the $26.3 million of non-GAAP expense in fiscal 2021. The decrease was mainly due to an approximately $2.2 million decrease in payroll expense, a $930,000 decrease in chip development costs and engineering supplies, and a $750,000 decrease in consulting costs.
Partially offset by an increase of approximately $1.3 million in cost of revenue. Turning to the balance sheet, we ended Q4 with $26.3 million in cash and remain debt-free. Additionally, we continue to raise cash with our ATM. We raised $800,000 in Q4 2022, and year-to- date in 2023, we have raised an additional $2.7 million from our ATM. We expect our GAAP and non-GAAP cash operating expenses for 2023 to trend in the current range similar to 2022 with our normal quarterly fluctuations. We continue to look for OpEx reductions such as rent savings on our headquarters lease that took effect last quarter. For cost of revenue, we are signing up with a contract manufacturer for 2023, which should substantially reduce our cost of revenue on a per unit basis.
As mentioned earlier, we currently anticipate year-over-year revenue growth of 20% or more for 2023, which we expect will be weighted towards the second half of the year. I will now give the call back to the operator for a question -and- answer session.
We will now begin the question -and- answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. The first question comes from Suji Des ilva with Roth MKM. Please go ahead.
Hi, Cesar. Hi, Bill. Congrats on the progress to date here. Question on the retail customers you have with your partners in Australia. What's the update on the status of the pilots there, and what may be the timing of those pilots, shifting into production rollouts or, you know, spreading across more stores?
Oh, hi, Suji. How are you?
Hi, Cesar.
Thank you for your question. We continue supporting our partner in Australia. They're a very important partner. We continue finding further opportunities. We don't have an update on that yet today that I can share with you. What I would like to add is that while we have those two, we just reported a total of 10 by this quarter. What that means is that the interest of our technology is out there, and by the way, that's a 5x increase compared to those two that you just asked about.
Good. That's great progress there. My second question is about the numerous partners you discussed in the press release and have highlighted through calendar 2022. Maybe you could highlight for us maybe the one or two of those partners that has the best near-term opportunity to bring in business for Energous. I know they're all, you know, fairly interesting, but I'm curious if any one or two stand out for the next 12 months.
It is hard to tell you one or two. What I would like to do maybe is look at the different markets. Each one of them offer their unique solutions to each particular market. If you remember, we talked about three applications that we are focused on, RF tags, ESL, and sensors, right? Potential important partners in the area of RF tags, definitely, we work with Wiliot, right? We have, as you know, deployed retail in Australia with them. That combination, that ecosystem, it's important to us. Out of those 10 POCs that we've mentioned so far, I would say the majority of them are in the retail area. That's one particular area and one partner that's important to us. Second one is in the area of electronic shelf labels.
Our transmitters, our networks are required to have extreme low power capabilities at the receive side. There, in fact, we do have an evaluation kit that we sell today with our partner, e-peas. We see e-peas as an important partner as well as E Ink, who, as you know, is a low, low power display company, well known out there and leader on displays. The third application happens to be sensors, and we're proud that we finally made that decision to move into sensors. Most important partners there today that have already been announced, and by the way, demonstrated, which is important. The technology has been demonstrated at Electronica as well as CES. It's Sensirion, which is considered like the top two companies out there for sensors.
Of course, ams OSRAM, a well-known name out there, and we're working with them with, for light, lighting applications. I would say each one of those is important on each one of their applications. More than that, there's others behind that. By the way, the ones that I've talked to you are effectively technology partners that allow us to build those ecosystems that now add value to customers. Also there are other potential partners that we work with that we're not at liberty today to disclose. There are also system integration partners. Customers. Partners that are extremely close to customers and can take those ecosystem that we...
solutions that we have developed and get us closer to a potential POC and towards production, effectively, and eventually, generating revenue for the company.
Okay. My last question, thanks for the guidance for 2023 of revenue doubling. Can you talk about perhaps of the 10 programs you've announced, how many of those might you expect to contribute roughly to the 2023 revenues, just to understand which ones are gonna kind of hit revenues versus which ones will be further out?
Okay.
Thanks.
Hi, Sujit. It's Bill.
Hey, Bill.
I just want to clarify. You just mentioned our guidance. Our guidance is year-over-year revenue growth of 20% or more.
I apologize, Bill. Sorry about that.
That's all right. No problem.
In that growth in 2023, how many of the 10 programs do you expect to contribute roughly? Just to get a sense of how diversified and broad the revenue.
We are early in the development right now, and that is a function of the willingness and the need of the potential customers. It also varies depending on the customer, okay? Let me give you an example. Today, we announced actually one of them in production, right? That particular production happens to be an interesting deployment, and in the hundreds of numbers. That particular one was probably done, I would say, within seven to eight months, right? Just to give you a better answer to your question perhaps, the fact that we are looking to a potential revenue growth, well, weighted towards the second half of the year. That can give you a good idea of what we're expecting to see out of that.
Reality is that while we have those 10, we continue to grow and work on more of those POCs that eventually will become production. Okay? As we mature, we'll be in a better position to give you more specifics about that.
I appreciate that.
We're expecting to be there within the year. Yes.
All right. Thanks. Thanks, Bill.
This concludes our question -and- answer session. I would like to turn the conference back over to Cesar Johnston, Chief Executive Officer, for any closing remarks.
Thank you. Energous is leading the current IoT digital transformation through its advanced active energy harvesting IoT wireless power networks, allowing for ubiquitous deployment of the smart IoT components without the needs of batteries or cables. 2022 was a year of important achievements that has now positioned us well into 2023. We will support and grow our ecosystem of partners and continue to identify new customer opportunities for IoT wireless power network installations, leading to ultimately increased revenue and cash flow generation for Energous. Thank you to all our shareholders, stakeholders, and Energous team members for their support, and we look forward to updating you on the company progress on our next quarterly call.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.