Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ocean Power Technologies Inc (OPTT, Financial) achieved a 102% increase in revenue for fiscal year 2024, reaching $5.5 million.
- The company successfully demonstrated the WAM-V attaching itself remotely to a buoy for sustainable charging, showcasing technological advancements.
- OPT's next-generation PowerBuoy has accelerated average energy production by combining solar, wind, and wave energy capabilities.
- The launch of Merrows, an AI-capable ocean surveillance solution, positions OPT as a leader in maritime security and data analysis.
- Strategic alliances with industry leaders like Red Cat Holdings, Teledyne Marine, and Unique Group are expected to enhance product offerings and drive growth.
Negative Points
- Operating expenses for fiscal 2024 were high at $32.2 million, including $3.9 million in extraordinary expenses related to litigation and shareholder disputes.
- The company reported a net loss of $27.5 million for fiscal 2024, slightly higher than the previous year's net loss of $26.3 million.
- Challenges from a dissident shareholder led to significant costs and impacted fiscal 2024 results.
- Despite revenue growth, the company remains unprofitable and aims to achieve profitability only by the second half of calendar 2025.
- Inventory levels increased by $3.8 million, reflecting the need to satisfy backlog and planned growth, which could tie up capital.
Q & A Highlights
Q: Can you provide a more recent backlog number or should we wait for the next earnings release?
A: We ended the fiscal year with just under $5 million in backlog. We will provide updates on this in the next earnings call. We are confident in achieving our fiscal '25 targets of $12.5 million in contracted orders and similar revenue.
Q: What are the biggest risks to achieving the $12.5 million contracted order KPI?
A: Conversion from initial conversations to getting the purchase order and delivering high-quality products is crucial. Repeat customers help reduce the time from conversation to delivery. Geographic expansions might cause slight delays due to shipping systems from the U.S. to other regions.
Q: Is there potential for further OpEx improvement in fiscal '25?
A: Yes, we have further controlled third-party expenditures and optimized headcount. We are focusing on converting discussions into backlog and revenue, operating systems for customers, and integrating solutions with partners like Teledyne and SES to keep costs tight.
Q: What has driven the recent commercial inflection point?
A: It’s a combination of market conditions, targeted commercial efforts, and focusing on providing solutions that save customers money and reduce carbon emissions. We have a targeted commercial team and have completed R&D activities to focus on commercially viable products.
Q: Are you seeing a shortening of the sales cycle with new customers?
A: Yes, having systems deployed and available for demonstrations shortens the sales cycle. We can quickly show potential customers how our systems work, reducing the need for lengthy feasibility studies and paper exercises.
Q: Is there any political risk affecting your commercialization efforts?
A: We provide systems that strengthen national security, which remains a priority regardless of political changes. Globally, the increasing demand for energy and our dual-use technologies mitigate political risks.
Q: Are you still working on oil and gas decommissioning projects in the Gulf of Mexico?
A: We continue to work with oil and gas operators through their service providers, which helps us increase sales and orders. We are in discussions with Tier 1 and Tier 2 service providers for various monitoring and inspection projects.
Q: How many buoys do you currently have in the water?
A: We have several demonstration systems deployed and are preparing others for customer projects. The exact number can be confirmed later.
Q: What is the biggest market for your products?
A: Defense and security, including illegal fishing, is a major market. We also see significant opportunities in offshore energy. Our solutions overlap in these areas, providing monitoring, drone launching, and survey capabilities.
Q: What does the pipeline consist of, and why did it decrease from $77 million to $71 million?
A: The decrease is due to converting pipeline opportunities into backlog and revenue. Our current pipeline is $85 million, consisting of opportunities under negotiation, submitted proposals, and scoping discussions with customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
