Energous (WATT) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• Chief Executive Officer and Chief Financial Officer - Mallorie Burak
• Chief Strategy and Growth Officer - Giampaolo Marino

TAKEAWAYS

• Quarterly Revenue -- $3.4 million in the third quarter, representing 167% growth year over year driven by increased commercial adoption of wireless power networks.
• Year-to-Date Revenue -- $9.6 million through Sept. 30, which exceeded the $5.6 million reported for the full year of 2025.
• Gross Margin -- 14% for the third quarter, increasing from 3% in the second quarter due to price increases implemented in July and easing supply chain factors.
• Net Loss -- $7.1 million for the first nine months of 2026, compared to a loss of $8.3 million for the same period in 2025.
• Cash and Cash Equivalents -- $28.8 million as of Sept. 30, which management indicated is sufficient to support operations without additional equity financing.
• PowerBridge Shipments -- 69,500 units shipped since 2024, reflecting the transition from technology validation to commercial deployment.
• Operating Expense Reductions -- $9 million in annualized expenses cut since early 2024, contributing to improved bottom-line performance.
• Sales Cycle Duration -- 6 months to 9 months currently, compared to 18 months to 24 months historically.
• Supercenter Infrastructure Scale -- 125 bridges required per superstore location for the company's largest retail customer.
• Warehouse Club Deployment -- 150 locations planned for rollout in early 2027 at approximately 15 bridges per location.
• E-commerce Customer Outlook -- Management expects revenue from its Fortune 10 e-commerce customer to increase in 2027 compared to 2026.
• Intellectual Property -- 300 issued patents and regulatory approvals in more than 110 countries.
• Active Customer Targets -- Management expects to increase the number of active paying customers in deployment from two to four across 2027.
• Inventory -- $4.6 million as of Sept. 30, up from $1.5 million at the end of 2025 to support increasing unit volume.
• GAAP Operating Expenses -- $3.2 million for the third quarter, compared to $2.6 million for the same prior year period.
• Non-GAAP Operating Expenses -- $2.9 million for the third quarter, reflecting a slight increase from $2.6 million in the third quarter of 2025.
• Total Assets -- $43.2 million as of Sept. 30, compared to $16.7 million at the end of 2025.

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RISKS

• Burak stated, "The production line upgrades needed to -- needed at our overseas contract manufacturer to support the enhanced product design were still being completed during the third quarter so volume there has not yet begun," explaining that all third-quarter units were sourced from U.S. facilities.
• Marino noted that a potential expansion into Canada for a major retail customer "will require new regulatory approvals for the Power Bridge Pro in that jurisdiction," where infrastructure requirements are still being determined.

SUMMARY

Energous Corporation (NASDAQ:WATT) reported consecutive quarterly revenue growth and gross margin improvement as the company moved from technology validation to commercial deployment. Management stated that the company is developing a physical data layer for enterprise artificial intelligence (AI) by combining wireless power with battery-free sensing. The company reported an expansion in its proof-of-concept pipeline through the AWS channel and expects to convert a major program to full deployment in the first quarter of 2027.

• The company is shifting its strategic focus from pilots to broader enterprise deployments across manufacturing, retail, and cold-chain sectors.
• Giampaolo Marino stated, "The most important shift this year is that the focus is moving from pilots to broader deployments."
• The e-Compass software platform is being developed as a Layer 3 platform to convert physical sensor data into actionable insights for enterprise AI applications.
• Management expects the first conversion from its end-to-end solution proof-of-concept pipeline to full deployment to occur in the first quarter of 2027.
• Mallorie Burak stated, "We believe the macro backdrop is a tailwind for our business as enterprises look for persistent energy and trusted data to support physical AI."
• Customer engagement through the AWS channel reached a new high, with the company offering qualified devices and software on the AWS Marketplace.

INDUSTRY GLOSSARY

• Ambient IoT: A category of Internet of Things devices that harvest energy from their environment, such as radio frequency waves, to operate without batteries.
• PowerBridge: A transmitter device designed by Energous to send wireless power over the air to compatible sensors and tags.
• e-Sense: The company's proprietary brand of battery-free sensing technology.
• e-Compass: A software-as-a-service platform used for centralized monitoring, analytics, and control of wireless power networks.
• ATM Program: An "At-The-Market" equity offering program that allows a company to sell shares directly into the public market.

Full Conference Call Transcript

Operator: Good day, and welcome to the Energous Wireless Power Solutions Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. As a reminder, during today's call, the company will make forward-looking statements. These statements are subject to inherent risks and uncertainties detailed in the company's filings with the Securities and Exchange Commission. Actual results may differ materially from those anticipated. Except as otherwise required by federal law, Energous disclaims any obligation to publicly release updates or revisions to any forward-looking statements to reflect changes in expectations. I would now like to turn the conference call over to Mallorie Burak Chief Executive Officer and Chief Financial Officer of Energous.

Mallorie Burak: Thank you, and welcome, everyone, to the Energous Wireless Power Solutions Third Quarter 2026 Earnings Call. For those newer to the Energous story, I would encourage you to review the replay of our first quarter call, which provides a full company overview and our second quarter call, which lays out the commercial framework I will build upon today. I will keep the background brief and focus on what has changed and what is building. At its core, Energous is an end-to-end Ambient IoT platform delivering battery-free sensing and real-time operational intelligence. We are building the physical data layer foundation for enterprise AI.

By combining wireless power, battery-free sensing and intelligent data infrastructure, our products enable continuous real-time visibility into assets, inventory and operations, helping enterprises move from simply tracking what's happening to predicting what might happen next and taking action. This intelligence enables companies to mitigate annualized losses stemming from spoilage, inventory shrinkage as well as operating costs resulting from manual tracking methods like RFID. Since pivoting our strategic vision away from consumer IoT to enterprise wireless power solutions in 2022, our focus has been to move from technology validation to commercial adoption at the largest enterprises in the world.

While our sequential quarterly revenue growth underscores the commercial adoption of our product offerings is underway, we believe that the fourth quarter will more clearly demonstrate that the rate of adoption is ramping as our largest customers are expanding in scope and use cases, our shipments continue to build, and our pipeline is beginning to produce specific conversion milestones. In terms of today's agenda, I will start with our operating highlights and the financial headlines, including our gross margin recovery path. Giampaolo will then give a detailed update on each of our customer programs and the sales pipeline, including how programs convert from proof of concept to deployment.

Greg will walk through the financials in detail, and I will return briefly with a few concluding thoughts. Since our Power Bridge transmitter began shipping in 2024, through September 30, 2026, we have shipped over 6,500 transmitters, primarily driven by demand for our 2-watt Power Bridge Pro. The sequential increases in quarterly shipments that began in the fourth quarter of 2025, reflects the shift from technology validation to commercial adoption of our wireless power networks. The third quarter continued the trend of consecutive quarterly revenue growth. We recorded $3.4 million of revenue in the third quarter up approximately 10% from the $3.1 million reported in the second quarter.

We expect sequential growth to continue and to accelerate in the fourth quarter. Gross margin for the third quarter was approximately 14%, a meaningful improvement from the second quarter as the factors we described last quarter began to ease and our July price increase took effect. On our last conference call, we described the retooling, component costs and customer prioritization factors that reduced second quarter margins and we said that we expected margins to progressively recover. Greg will cover the third quarter drivers of this, including the effect of the July price increase. Also on our second quarter conference call, we shared that we were working towards limited production volume at our overseas contract manufacturer during the quarter.

In the third quarter, however, all units sourced came from our U.S. contract manufacturer. The reason stems back to what we described last quarter. The production line upgrades needed to -- needed at our overseas contract manufacturer to support the enhanced product design were still being completed during the third quarter so volume there has not yet begun. Despite that, we still recognized improvement in our gross margin primarily attributable to the price increases implemented in July. Looking to the fourth quarter, both our U.S. and overseas contract manufacturers are producing at volumes.

As a result, we expect fourth quarter gross margins to improve quarter-over-quarter, and we estimate returning to our historical hardware margin levels in the mid-30% range during the first half of 2027. Our long-term objective remains achieving gross margins of 40% or better. I will now turn it over to Giampaolo, our Chief Strategy and Growth Officer, to discuss our customer programs, our pipeline and the commercial dynamics we are seeing. Giampaolo?

Giampaolo Marino: Thank you, Mallorie. I intend to cover for areas today and update on fewer of our active commercial deployment, where our proof-of-concept program stand and where we expect them to convert. What we are hearing from enterprise customers about data and how our software platform feeds into the equation. Our enterprise adoption is advancing across manufacturing, retail and cold chain. The most important shift this year is that the focus is moving from pilots to broader deployments. While at the same time, our customers are expanding the use cases they run on our network, including sale of inventory condition monitoring and asset tracking.

Active commercial deployments, starting with our largest retail customer portion and companies, we are now working with them on additional use cases, which they intend to begin rolling out across their superstore format in 2027. This customer has over 500 superstores in the United States and the scale per location matter. A supercenter requires over 125 bridges compared with roughly 10 to 15 bridges for a standard store. The same customers warehouse cloud division is planned to deploy across approximately 150 locations at about 15 bridges per location. We expect that rollout to begin in early 2027 and continue throughout the year.

Looking out over the next 12 months, we expect demand from these Fortune 10 customers to continue 2 levels. This customer is also evaluating a potential expansion into Canada across their regular retail format, which will require new regulatory approvals for the Power Bridge Pro in that jurisdiction. Infrastructure requirements in that region are still being determined. Fleet and distribution center application continue to be explored, both involve more complex infrastructure, which our customer is assessing. Turning to our Fortune 10 e-commerce customer. Based on that customer's current planning, we continue to expect growth over the next 12 months. Deployment had and will continue across Europe.

We expect to see acceleration in deployment in the U.S. where we are still in the very early stage of opportunity completion with this customer. Use case continued to expand as well and we are now looking at an expansion opportunities in virtual. While we are limited in what we can share in greater detail, in 2027, we expect revenue from this customer to exceed 2026. We share both of these updates today to provide confidence to our investors that we believe our revenue base looking forward is stronger and set up for continued growth. Our largest customers are strong supporters of our technology and are still in the early stages of their adoption cycle.

Because it is the question we frequently received, I would like to spend some time discussing our sales conversion and where active programs currently stand. Our framework has not changed. A program begins with an alignment phase to agree on goals and metrics, typically lasting about a month. A proof of concept follows generally lasting up to 3 months. Successful programs might then expand to multiple trials or move to commercial deployment. With the current sales cycle spanning approximately 6 to 9 months versus 18 to 24 months historically, programs now move faster, but we judge progress by stage advancement not by the number of trials. We also recognize that we have not announced named customers at this year.

Many of our customers do not permit disclosure, and we will not name a customer without permission. What we can do is tell you where some of the more advanced programs are by stage. Several end-to-end proof-of-concept trials are currently active. The first is with a large semi-perishable consumer product manufacturer. It is nearly completion, and we currently expect the customers to move to deployment in the first quarter of 2027. If that happens as planned, it will be the first of our end-to-end solution programs to convert from our proof-of-concept pipeline to a deployment, creating a recurring revenue stream generated from our end-to-end solution, anchored by the monitoring and analytics provided by our SaaS platform e-Compass.

The second proof of concept, which we introduced last quarter is with our regional supercenter and grocery chain operating hundreds of stores across the Midwestern United States. Building on that data generated in the initial phase, we are now working with the customers to define Phase II around measurable business outcomes, reducing shrink, lowering scanning, hardware and maintenance costs and improving labor efficiency and supporting e-commerce growth. The planned scope includes tracking goods between distribution centers and stores, improving shipment manifest accuracy and integrating physical world data into existing enterprise system and analytics. The focus is on validating how our end-to-end solution can deliver operational and financial value, while fitting into the customers' day-to-day workflows.

Beyond those 2 opportunities, we are exploring additional end-to-end proof-of-concept initiatives: one, notably in the health care space, where the Fortune 10 health care retailer had previously completed a proof of concept through a channel partner has chosen to reengage directly to test our full scope solution. Our strategic partnership with AWS continues to strengthen, serving as an important channel for expanding Energous' enterprise reach and accelerating adoption of our end-to-end ambient IoT platform. Customer engagement through the AWS channel has reached a new high with a growing number of active proof-of-concept programs and joint opportunities.

This momentum is also reflected in the AWS recently increasing its reporting highlight customer launches from more than 50% to more than 100, an encouraging indicator of broader customer adoption across the AWS partner ecosystem. Energous continues to expand its presence in the AWS marketplace with 3 qualified device alongside our e-Compass software platform and our e-Sense battery-free sensing technology. Together, this offering provides enterprise customers with access to our integrated wireless power, sensing and data infrastructure solution. Looking ahead, we expect our collaboration with AWS to remain an important driver of pipeline development, customer acquisition and future development opportunity as joint co-selling initiative progress and existing program advanced towards the broader commercialization.

Our national quick service restaurant program remains active. As we discussed last quarter, this customer completed its initial proof of concept in food preparation and cold storage environment. They continue to evaluate different solutions, although we are only supplying the PowerBridge transmitters for this particular proof of concept, we believe the value proposition of using battery-free wireless technology remains a compelling solution for this use case. Our data strategy. As enterprise expand AI into physical operations, they will need reliable, timely data about what is happening across their assets, inventory and facilities. Energous strategy is to address that need through an integrated solution spending persistent energy, connected sensing and trusted physical data infrastructure.

Our focus is on delivering actionable data into customers' existing systems with customer retaining control of their data and how it is used. Central to this strategy is the evolution of the e-Compass into our Layer 3 platform. The software layer that turns physical world sensor readings into contextualized usable data and events for enterprise applications. Our road map includes enterprise APIs real-time event processing, AI assisted infrastructure management and trusted physical data service. Together, these capabilities are intended to help customers assess data quality, monitor infrastructure performance and integrate physical intelligence into their operational scale.

We are pursuing strategic integration and partnership with enterprise IoT, supply chain and AI software providers to extend the value of our platform beyond hardware deployment. By delivering persistent trusted and contextualized physical world data directly into enterprise intelligence and decision-making systems, Energous aims to enable continuous operational visibility, predictive insight and increasingly automated workflow at scale. We believe that this strategy will create opportunities for recurring revenue through infrastructure management and physical data service, while allowing our partner to deliver specialized analytics, applications and business outcomes.

Although this initiative remains at an early stage, with no assurance of recurring resulting agreement or revenue, our strategic direction is clear: To establish Energous as the foundational physical data infrastructure platform for enterprise AI and physical AI. I will now turn it over to Greg.

Gregory Sadikoff: Thank you, Giampaolo. Good afternoon. I will now review Energous' financial results for the third quarter and 9 months ended September 30, 2026. Third quarter financial results. Revenue for the 3 and 9 months ended September 30, 2026, was approximately $3.4 million and $9.6 million, respectively, versus approximately $1.3 million and $2.6 million in the same period in 2025, increases of 167% and 270%, respectively over the same prior year period. Third quarter revenue increased approximately 10% sequentially over the second quarter of 2026. Gross margin improved from 3% in the second quarter of 2026 to 14% for the 3 months ended September 30, 2026.

As our offshore contract manufacturer ramps production, we believe gross margins will continue to show improvement in the fourth quarter and into 2027. The company has maintained its quality performance record with 0 product returns since commercial production of its PowerBridge Pro began in 2024. Ensuring the highest level of product quality remains a key priority for the company as we work towards widespread adoption of our technology. The net loss for the 9 months ended September 30, 2026, was $7.1 million compared to a loss of $8.3 million for the same prior year period, a 14% improvement year-over-year.

The narrowing loss year-to-date reflects our commitment to remain focused on exercising fiscal discipline as we work towards achieving profitability and cash flow breakeven. To underscore this commitment, since the current management team took over in early 2024, approximately $9 million of annualized expenses has been cut contributing to a 50% improvement in net loss for the 9 months ended September 30, 2026 compared to the same period in 2024. As we look ahead, our primary objective is to strike the right balance between driving sustained long-term growth and accelerating our path to profitability.

We believe that growth and profitability are not mutually exclusive and maintaining this balanced strategic framework serves to build a scalable business model is well positioned to deliver value to our shareholders. As of September 30, 2026, the company's cash and cash equivalents were $28.8 million. No shares were sold under the ATM program during the third quarter. I will now turn the call back to Mallorie.

Mallorie Burak: Thank you, Greg. Regarding Greg's reference to the ATM, I would like to mention that while our ATM facility remains in place, we have made no use of it since the first quarter. During the last 2 quarters' calls, I committed that there were no plans for additional ATM usage this year, and that commitment has not changed. We believe our cash position at the end of the quarter of $28.8 million is sufficient to support our commercial programs and we remain confident in our ability to execute without additional equity financing. Before we move to Q&A, I'd like to reiterate what I hope investors take away from today's call.

First, we expect sequential revenue growth to accelerate in the fourth quarter. Both contract manufacturers are expected to contribute to our unit volume, and we anticipate gross margins will continue to improve. Second, we anticipate continued growth during the next 12 months. We believe 2027 demand from our largest retail customer to at least approximate 2026 levels with the warehouse club rollout beginning early in the year, and we believe 2027 revenue from our e-commerce customer will exceed that reported in 2026. Third, we feel strongly about our competitive position and the direction of the business. We hold more than 300 issued patents in regulatory approvals in over 110 countries.

We believe the macro backdrop is a tailwind for our business as enterprises look for persistent energy and trusted data to support physical AI. Our pipeline continues to grow. Active proof-of-concept engagements through our AWS channel are the new high. Our partners are doing more, and we expect to show the first conversion from our end-to-end solution proof of concept pipeline to deployment in the first quarter. Revenue, shipments, margins and pipeline are all moving in the right direction. The market is beginning to recognize that physical AI requires the ability to continuously generate trusted data from the physical world, and we believe that capability begins with persistent energy. We believe it begins with Energous technology.

As physical AI evolves, one reality is becoming clear. Intelligence is only as reliable as the physical data that powers it. Continuous data requires persistent sensing and persistent sensing requires persistent energy. This is where we believe Energous becomes foundational to the physical AI ecosystem. We are grateful for your continued support, and we will now open the call for questions.

Operator: [Operator Instructions] Our first question comes from Jon Hickman of Ladenburg Thalmann.

Jon Hickman: Mallorie, can you hear me?

Mallorie Burak: Yes.

Jon Hickman: So can you -- maybe this is a question for Giampaolo, but can you give us some kind of year-over-year pacing of new customers? Yes, either like proof of concept?

Mallorie Burak: Like the pipline?

Jon Hickman: Yes. Like what's the year-over-year growth rate here in the number of customers or proof of concepts or I don't know, how you want it to?

Giampaolo Marino: Yes. So John, I think to answer your question, we believe that given the pipeline and the current active proof of concept, we expect that the number of active customers across 2027 to basically double. If today, we have 2 active paying customers currently in deployment, we expect number will go to 4 across 2027.

Jon Hickman: But you have more than 2 customers right now, right?

Mallorie Burak: Yes. I think -- so if you recall back to the second quarter of 2026, when 5 customers made up 74%, I recall, yes. So we expect that to grow. I think as...

Jon Hickman: I'm sorry, say that again, that last bit?

Mallorie Burak: Yes. So we expect the customer base to grow. We're expanding our proof of concept pipeline but also the proof of concepts that are active right now. And I believe it's fair to say that we've also received significant inbound interest asking for demos and to start proof the concept. And I believe that is also somewhat a function of the familiarity that people are gaining and the education that people are receiving about the technology. And that sort of tracks with what Giampaolo had talked about during the first quarter about the technology adoption curve and that we were early on in that curve.

And it takes time to educate the market to demonstrate the value proposition of the technology, and I think we're starting to gain traction in that regard.

Operator: [Operator Instructions] As there are no further questions, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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