Good day, welcome to the Energous Corporation First Quarter 2023 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Craig MacPhail, investor relations. Please go ahead.
Thank you, and welcome, everyone. Before we begin, I would like to remind participants that 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 the 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 and SEC filings.
Now, I would like to turn the call over to Cesar Johnston, CEO of Energous. Please go ahead, Cesar.
Thanks, Craig. Good afternoon, and welcome to the Energous 2023 first quarter conference call. Joining me is Bill Mannina, our Acting Chief Financial Officer. Energous started this year, 2023, with a solid foundation based on partnerships and initial business momentum as we reported our first 10 IoT proof of concept installations or what we refer to as POC installations using our WattUp technology. Our focus on increasing the number of Energous technology installations continues to show promising results, and we are glad to announce that we have now expanded that number to a total of 14 in Q1, 2023 across the retail, industrial, and healthcare markets in three different regions, including the U.S., the European Union, and in Asia. We believe that the increase in POCs is a strong product indicator in the adoption of our technologies and solutions.
We will continue to report on POC status in the coming quarters as we feel it is the best metric to track the growth of our business. As the leader in the emerging IoT wireless power network market, we continue to execute our focus and strategy to energize IoT devices in RF tags, electronic shelf labels, and sensor applications across the smart home, smart office, industrial, and retail, and healthcare markets. We are focused on energizing a new generation of IoT devices, reducing the need for wires and batteries, and supporting device mobility and freedom of placement. We aim to enable ubiquitous receiver installations, which can use the higher levels of available receiver power to support integrated artificial intelligence capabilities with the support from the next-generation wireless power network infrastructure that our proof of concept customers are installing using Energous PowerBridges and Energous semiconductor technologies.
Yesterday, we announced the expansion of our portfolio with the availability of a new 2-watt PowerBridge transmitter, pushing our technology and product leadership in IoT wireless power networks to a new level. The 2-watt PowerBridge brings into the industry a level of performance and innovation designed to enable a new generation of charging devices using the latest Part 18 regulations in the US and the latest international certification rules that now recognize wireless power networks as an emerging technology across the world. The new 2-watt transmitter provides extended range, better coverage, and RF signal penetration. It is built using Energous intellectual property, semiconductor, and firmware capabilities. Customers will now be able to access and optimize their networks with 1-watt and 2-watt PowerBridge transmitters to safely provide them a higher energy level resolution as required for their specific applications.
The Energous team is executing an IoT-based business strategy within a worldwide IoT market. The strategy is based on three fundamental pillars intended to ignite the wireless power network ecosystem. The first pillar has been a significant focus for our team. It consists of multiple technology partner companies that complement our technology capabilities to support the applications that we're focused on. That is RF tags, electronic shelf labels, and IoT sensors. Today, we work with 14 companies that support our technology partnership plans and whose technologies can be used as system blocks for our solutions. The other business strategic pillars are critical to delivering our products to the hands of potential end customers. Our second pillar includes distribution partners who facilitate our technology delivery through our semiconductor evaluation kit products to customers to evaluate, design, and build their IoT wireless power network solutions.
As of today, we have announced two partners that are strategic to the markets on which we focus. We continue to identify more potential strategic companies to help us expand our customer reach. Finally, our third strategic pillar, which will be fundamental to support customers installing our products, is establishing a global network of IoT system integrators with strong technical backgrounds and well-established business relationships. We are expanding our system integrator network, which we hope will lead to future further installations in the field. Let's now move our discussion to update on our Q1 2023 specific progress. This past quarter, we welcomed three new IoT system integrator partners, SATO, Thinaer, and InnoTractor. SATO is a global IoT solutions provider for leading manufacturing, logistics, retail, food and beverage, and healthcare companies.
Thinaer is a leading provider of IoT and indoor location services that enable organizations to optimize operations, improve their bottom line, and unlock new value from their assets. InnoTractor is an IoT company with the vision of zero waste supply chains. InnoTractor implements digital technologies for a better world. It reduces waste and emissions in supply chains by using IoT, blockchain, cloud, and the latest wireless technologies. Our newly announced partners have installed our PowerBridge wireless power networks in proof of concept deployments. For example, SATO announced its dynamic inventory replenishment solution aimed at providing real-time on-shelf inventory data to retailers and brands following testing at a Japanese convenience store. Thinaer has also installed a solution for the US DoD designed to monitor assets in secure areas by deploying Energous PowerBridge at entrances to classified areas.
Similarly, InnoTractor installed PowerBridge to track shipments from a supplier in Sweden to a production facility in the Netherlands. InnoTractor has also installed Energous PowerBridge at a mining company to view information about pallets that carry mine materials to customers, and to ensure that those customers are appropriately charged for each delivery. Finally, InnoTractor is using PowerBridge with a company tracking its pool of returnable transfer items to ensure that they do not go missing and are correctly routed to prevent any shortages in the RTI supply ecosystem. We believe that installation reports by our partners using our technology are strong product indicators for the future adoption of our technologies. We look forward to providing additional updates as they become available in the future. In Q1 2023, we also announced that Japan's regulatory body approved our 1W PowerBridge for unlimited power distance transmission.
As a result, this effort completes a series of significant market approvals for 1W PowerBridge, with similar certifications previously obtained in South Korea, China, the United States, Canada, the U.K., Europe, India, Australia, and New Zealand. On the financial side, we recognized revenue of $90,000 for Q1 2023. This is down from the prior quarter. The number of POC customers moving along the path to final production has increased compared with the prior quarter, and we believe that this is an important indicator of future revenue potential. We have made good progress in the last year with 14 POC installations as of today, and we are working to secure additional POC installations and higher production volumes in the future.
As we move forward with building out these global POC installations, we may see some revenue fluctuations in our business on a quarterly basis. However, I encourage you to look at the growing installations trend, which we believe is an indicator of our future growth potential and which I will continue to align over the next quarters. I will now turn the call over to Bill.
Thanks, Cesar. Earlier today, we issued our Q1 earnings press release announcing the operating and financial results for our financial results for our first quarter of fiscal 2023, ended March 31st. Revenue in the first quarter was approximately $97,000, a 55% decrease from the $216,000 we reported in Q1 2022. Sequentially, this compares to $179,000 in Q4 2022. Our revenue guidance for 2023 is unchanged at this time. Cost of revenue was $139,000 in Q1, a decrease of $244,000 compared to the prior quarter and a $64,000 decrease compared to Q1 of 2022.
The Q1 2023 cost of revenue included an inventory write down as did Q4 2022. For the quarter, total GAAP cost and expense, expenses, which includes cost of revenue, decreased by $147,000 compared to the prior quarter, down to $6.4 million, primarily due to a decrease of $244,000 in cost of revenue and a decrease of $165,000 in severance expense, offset by an increase of $117,000 in trade show costs and a $122,000 increase in chip development costs.
Year-over-year, total GAAP spending for Q1 decreased by approximately $1 million compared to the same quarter last year, which is primarily due to a $305,000 decrease in payroll expense, $275,000 decrease in stock compensation expense, and a $223,000 decrease in consulting costs. Net loss for the first quarter on a GAAP basis was approximately $6.7 million or an $0.08 loss per share on approximately 81.4 million weighted average shares outstanding.
This compares to a $6.1 million net loss in the prior quarter or an $0.08 loss per share on 78.3 million weighted average shares outstanding at a $7.2 million net loss or a $0.09 loss per share in Q1 of last year on 76.9 million weighted average shares outstanding. Let me now give you a non-GAAP view of our numbers for the 1st quarter as we believe non-GAAP information provides a useful comparison for investors, especially for a company at our stage when used with GAAP information.
Excluding approximately $522,000 of stock compensation expense and $46,000 of depreciation expense from our total Q1 GAAP costs and expenses of $6.4 million, the net non-GAAP cost and expenses totaled approximately $5.8 million, approximately $90,000 more than the $5.7 million total non-GAAP cost and expenses in the prior quarter and approximately $682,000 less compared to Q1 of last year. Our non-GAAP net loss for Q1 was $5.5 million or a $0.07 loss per share. This is an increase of approximately $158,000 compared to the prior quarter and a $793 decrease compared to Q1 of last year. We saw minor expense fluctuations across all areas in line with our expectations.
Non-GAAP research and development expense was $2.8 million in Q1, which is an approximately $206,000 increase compared to the prior quarter and an approximately $309,000 decrease compared to Q1 of last year. Non-GAAP SG&A increased over the prior quarter by approximately $130,000, due primarily to increase in trade show costs. Compared to the same period last year, Q1 non-GAAP SG&A costs decreased by approximately $307,000, due primarily to payroll compensation, engineering supplies, and trade show costs. On the balance sheet, we ended the quarter with approximately $26.3 million in cash and cash equivalents and remained debt-free. We also added an approximately $3.1 million in warrant liability, which resulted from the warrants that were issued in our March 2023 financing.
To close, we expect our GAAP and non-GAAP cash operating expenses for the full year to trend in the current range with a normal quarterly fluctuations as we continue to look for cost savings. I will now give the call back to the operator for the 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 touchtone 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. At this time, we will pause momentarily to assemble our roster. The first question today comes from Suji Desilva with Roth Capital. Please go ahead.
Hi, Cesar. Hi, Bill. Question first on the numbers. The guidance remains we're up 20% for the year 2023 versus 2022. The 1st quarter was down. I'm wondering if it's a back-end loaded ramp to that $1 million and if the back end implies a conversion of a POC to a production customer or whether those are still POC revenues in the 20% guide?
Yeah. We maintain our 20% guidance. That has not changed. We're looking at POCs increasing of course, which eventually will become production.
Okay. The 2-watt product, new one, Cesar, it sounds like you now have the customers have the ability to mix and match 2 watt and 1 watt. Can you just give me a sense of how the customers might use that, you know, for a topology of layouts and to their advantage? I just presume you'll have higher wattage products in the future, how that'll all kind of map out into a hybrid going on.
Definitely. I wanna remind everyone that we are the leader in wireless power networks. We are the only company that has been able to get full certification by the FCC all the way up to 15 watts in the U.S., and
We continue to do that. The 2-watt PowerBridge transmitter is a game changer. No other company has that capability. Most important, being able to, with this technology, to be able to effectively get the certification moving forward using Part 15 in the U.S. and also really use the latest certification efforts that we contributed all across the world to actually get a wireless network power or wireless power networks actually recognized as an emerging technology, 'cause there was no recognition of that until now. As far as the 2-watt capability and the 1-watt capability, the 2-watt capability PowerBridge opens up the possibility to actually have more applications for our technology. It opens up also the possibility to support other potential markets that we will be looking into.
As far as how you use that out there in the deployment, the 2-watt system allows you to have further range, allows you to have instantaneous power at a given time, higher, twice as much higher than we used to have. Most important, penetration in those applications where there is a need to have full visibility. This new transmitter actually can help. What we foresee for the 2-watt and our two, 1-watt power product line is that both of them will be pretty much mixed and used accordingly depending on the application the customers have.
Okay. That's helpful, Cesar.
Yeah.
Thanks. For a typical customer, how much are they investing, either in dollars or employees, toward running a POC? Just to understand their commitment, as these POCs grow to 14 here.
I can talk, I can mention in general what a POC might look like. Some POCs can be single numbers and some POCs are hundreds of transmitters. It's all a function of the application. It's all a function of where and how it's being used and deployed. Just to give you a hundreds of units application, which we have already actually done as a POC, there's the application of large US DoD warehouses where pretty much it is important to have visibility of equipment. Okay? Again, it's all a function of how it's being used, where it's being used, and by who it's being used. It's a mix of both.
I think what I really wanna focus everyone is that if you were to really look at the large deployments out there and go into, let's say, large retail areas, you're talking about thousands of transmitters deployed, not just in the ceiling, but also all around the deployment areas, as it is important to have penetration. It's important to have energy levels that are consistent and good to be able to have visibility over any of the receivers that are being charged.
One last clarification for me. The POC is 14. I'm just curious, if a single customer has multiple sites like a retailer, do you count that as a single POC or is that multiple POCs? I'm trying to understand if POC is the 14 implies 14 customers or if it's one to many.
In general, what we try to do here is to talk about the different sites.
Mm-hmm.
deployed. Most of them are individual. Some of them have multiple.
Okay.
sites. like for instance, in the case of, some early stuff we did on retail.
Sure.
There were a couple of customers, each one had a couple of sites. In the case of, let's say the warehousing, hundreds of deployments, that hundreds of deployments is in a large warehouse, but there's a number of other efforts all across the country to actually extend that. We're seeing data as the really the indicator that we should be tracking. It is showing that the strategy that we've taken is showing results. We've gone really from two POCs two quarters ago to 10 POCs last quarter, now 14. It's a good indication of the strategy and the fact that we're getting traction here. Thank you.
Definitely. Great. Thanks, Cesar. Thanks, Bill.
Thank you.
This concludes our question and answer session. I'd like to send the conference back over to Cesar Johnston for any closing remarks.
Great. Thank you. Energous continues to progress as we lead in the emergence of active energy harvesting IoT wireless powered networks, and towards removing the need for batteries and cables. We continue to innovate in developing novel solutions using our advanced technologies and robust intellectual property, resulting this quarter on the 2-watt PowerBridge transmitter announcement, which positions the company as a leader in power charging solutions. Finally, we believe that a key progress indicator for potential revenue in future quarters is the number of IoT wireless power network proof of concept installations, which has grown over the past quarter. It is important to understand that as we move forward and progress in opening up the emerging active harvesting IoT wireless power network markets, we expect there to be lumpiness in our results.
Thank you to all our shareholders, stakeholders and Energous team members, and we look forward to updating you on the company's progress again.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Thank you.