The electronics company has been in the news for extensively increasing the number of brands shipping its sound technology-enabled devices through its WiSa Wave program. It has managed to onboard some of the largest electronics companies in the world in this program and recently added over 20 new association members, including names like Hisense, Skyworth, Harman Kardon and Platin Audio. All these member companies are in a position to ship WiSA Ready and WiSA Certified products in 2021, which is a highly positive sign for Summit and further brightens its 2021 outlook.
Given the strong results and outlook for the company, could its stock be an attractive buy at current levels? Let's take a look.
Recent financial results
Summit delivered an impressive result for first quarter of 2021 with a top-line of $1.2 million, almost three times as much as its revenues from the same period last year. The loss per share of 29 cents was also more or less in line with analyst expectations.
This solid performance can be attributed to various factors such as new product introductions and extensions as well as effective marketing techniques employed by the management. The performance of SoundSend, the company's flagship product - a wireless transmitter that connects smart TVs to WiSA-Certified speakers - continues to be a big contributor to the top-line. Also, Summit's Next-Gen Discovery Wi-Fi technology continues to broaden the market share owing to its low-cost consumer-friendly module.
The management has provided strong guidance for the second quarter of 2021, where it expects to deliver a 250% quarter-over-quarter increase in its top-line.
WiSA Wave Marketing
The WiSA wave marketing program was designed by the company to educate home theatre consumers regarding WiSA and WiSA certified products, thereby enabling the company to increase its market share as well as license its proprietary technology. The program has driven a significant amount of website traffic during the past few quarters, resulting in increased awareness and demand.
These digital marketing costs are expected to go down with time as word-of-mouth spreads regarding the quality of WiSA-enabled devices.
The company has added a new member to its Board of Directors with specific capabilities to improve its digital marketing yield – Wendy Wilson, an experienced marketer who will be advising the company in enhancing the consumer category with the WiSA Wave.
Launch of WiSA-Certified Devices
In May 2021, the company announced the launch of its association member Bang & Olufsen's WiSA Certified high-resolution wireless stereo speakers, Beolab 28, which will help to grow the integration of WiSA technology.
Another association member, Onkyo Home Entertainment, launched its first-ever WiSA Certified product, SOUND SPHERE audio system, which delivers wireless cinema-quality sound to the Japanese market. Using WiSA's flagship SoundSend technology, audio can be transmitted wirelessly to Onkyo SOUND SPHERE speakers and subwoofers with extremely low latency.
It is also worth highlighting that the company expects to open a WiSA Amazon store soon, which will enable all WiSA Certified products to be sold on Amazon where customers will be able to find TVs, projectors, transmitters and speakers allowing them to validate the category and choose from a specific niche.
In April 2021, Summit also announced the WiSA Ready certification of LG's 2021 OLED and Nanocell TVs which will allow customers to connect wirelessly with their audio systems and create an immersive viewing experience.
Another addition to the WiSA certified speakers' category was the Lithe Audio Pro Series that delivers high-resolution audio from a ceiling speaker.
With the increasing consumption of these WiSA-enabled devices and better awareness of the technology, the company's revenues could zoom in the future.
We saw a spike in the company's stock price after the recent strong result. Summit's cash position is strong with a balance of $9.7 million as of March 2021 compared to $7.4 million in 2020, and appears to be sufficient to fund short-term technological investments. Another green flag is the fact that the company's gearing is low as its cash-debt ratio is high at 8.37. With the new member additions and the series of new product launches, I believe that WiSA has immense growth potential ahead, both in terms of its top-line as well as its stock price, and is an excellent investment opportunity for growth investors.
Disclosure: No positions.
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