Energous Says Regulatory Issues Its Top Hurdle, as Stock Falls Amid Questions on Business
Regulatory hurdles are the top hurdle for Energous, CEO Stephen Rizzone said of the company's wireless charging plans. Some of its products have gotten FCC OK (see 1804110034). Following Q2 results that included a slightly narrower net loss of $12.3 million as revenue fell 31 percent from the year-ago quarter to $205,773, shares closed 8.9 percent lower Thursday at $12.32.
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Consumer electronics companies want assurances they can launch globally, even if planning regional introduction, Rizzone said. Product release dates for Energous-based products will be influenced by global regulatory approvals in North America, Europe and the Asia-Pacific region. Approvals for all three regions for distance transmitting RF power could happen as early year-end but will more likely extend into the first half, he said.
The company is working with regulatory agencies or submitting products for testing in more than 125 countries, said Rizzone, including China, Japan and South Korea. “China is very important,” he said. “I don't think we’re being helped all that much by the geopolitical environment, but I think we’re comfortable in saying that for all of the countries that we are engaged in, the question is when, not if.” The U.S. and China are sparring over Trump-administration tariffs (see 1808020028).
Aegis Capital's Matthew Winthrop said Energous has claimed its WattUp wireless charging technology would charge “cellphones and Teslas.” Wednesday evening’s call focused on hearables and wearables near term, with charging solutions for smartphones and smart speakers expected in 2019 and 2020. Energous, said Winthrop, boasted only a “couple of hundred thousand of revenue” in Q2 and “quarter after quarter” is guilty of making product predictions that don't materialize. He implored Rizzone to produce a customer or a contract “I can hang my hat on.”
Rizzone conceded it took longer than it anticipated to bring product to market. He told the analyst: “You’re wrong to say that it’s not happening,” and “you're wrong to say that we’ve been misstating or misleading; we have not. This company is coming together, it’s rolling, the launch of Wireless Charging 2.0 is real, it’s happening and there is nothing that’s going to stop it.”
Rizzone noted Energous’ relationship with “billion-dollar” semiconductor company Dialog, its “key strategic partner” that brought Energous technology to top customers and is supporting Energous with chips and its sales organization. The chipmaker has invested $25 million in the smaller company.