Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ideal Power Inc (IPWR, Financial) secured initial orders from a global tier one automotive supplier, indicating growing interest in their Vran technology.
- The company added two new distributors, Rios Show and C Corm, expanding their global reach and demand creation capabilities.
- Positive initial test results from third-party automotive qualification testing of Vran devices, with no failures reported.
- Increased the current rating of their power module by 25% while reducing its size by 50%, enhancing power density and reducing costs.
- Ideal Power Inc (IPWR) is dual-sourced for wafer fabrication in Europe and Asia, mitigating supply chain risks and ensuring ample capacity.
Negative Points
- The company recorded very modest revenue for the third quarter, prioritizing devices for automotive qualification testing.
- Cash burn increased to $2.4 million in Q3 2024, up from $1.9 million in Q3 2023, with expectations of further increase in Q4.
- Operating expenses rose to $2.9 million in Q3 2024, with anticipated increases in R&D and sales and marketing spending.
- The timeline for customer adoption and revenue ramp is uncertain, with initial orders expected to be small as customers evaluate Vran technology.
- Ideal Power Inc (IPWR) needs annual revenue of $30 to $50 million to achieve cash flow break-even, with current gross margins below long-term targets.
Q & A Highlights
Q: How do you think the recent US election impacts the operating environment for green energy over the next four years?
A: Dan Bedard, President and CEO, noted that while there was an immediate reaction, historical data shows that solar energy performed well even under previous administrations that were less supportive of green energy. The global market for electric vehicles and renewable energy remains strong, and Ideal Power's customers are focused on reducing costs and improving performance, which should mitigate any short-term political impacts.
Q: Can you provide more details on the new distributors added this quarter and how you see these relationships developing?
A: Tim Burns, CFO, explained that the new distributors, like Richardson Electronics, are involved in demand creation and introduce Ideal Power to large customers. These distributors handle order fulfillment, especially for international customers, and act as an extension of the sales team. The relationships are expected to grow as they introduce Ideal Power to more potential clients.
Q: Could you elaborate on the progress with Stellantis and the timeline for entering phase three of the project?
A: Dan Bedard stated that Stellantis has been focused on resolving inventory and labor challenges, which delayed some technology program approvals. However, the technical and production teams have continued to work, and Ideal Power expects to start testing the new power module for the inverter next year, aligning with Stellantis' strategy to introduce more electric vehicles.
Q: What are you most excited about for 2025 and 2026?
A: Dan Bedard expressed excitement about working with large global customers who are capable of launching innovative products. The ongoing engagement and resource investment from these companies indicate potential for significant volume as they progress through their design cycles.
Q: How much annual revenue does Ideal Power need to achieve profitability and cash flow positivity?
A: Tim Burns mentioned that Ideal Power would need approximately $30 to $50 million in annual revenue to reach cash flow break-even, assuming gross margins above 30%, with a long-term target of 50% gross margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
