FiEE, Inc. Q1 FY2022 earnings call

• Market Dynamics: The world continues to need broadband at home, with remote work here to stay and initiatives like President Biden's $30 monthly 100 Mbps+ internet plans for 48 million US households making Minim's mission relevant.
• Outperformance Drivers: Held number one market share on Amazon, reestablished order volumes disrupted by supply chain and Omicron, and delivered high-value products despite price increases.
• Supply Chain and Growth Efforts: Diversifying suppliers, increasing retail/distribution partners in the US, expanding US market share, and expanding beyond the US. Scaled production with second ODM partner and set to launch new intelligent product with third ODM partner in summer. Established new rep groups for distribution.
• Profitability: Gross margin was 31.5% in Q1, down from 33% in Q4. Adjusted EBITDA was $1.7 million, an improvement from $3.1 million in Q4 2021.
• Software Transformation: Three work streams include delivering value with intelligent products (aim to surpass 100,000 Minim Intelligent Networks in 2022), delivering value with software via mobile app (began distributing mobile app software with cable modems in summer), and innovative software upgrade features (first home networking product with live in-app chat support, reducing ticket resolution time by 35%).

Minim GAAP revenue for Q1 2022 was $13.3 million, up 27% compared to the previous quarter. In the cable modem and gateway segment, Minim held the number one market share on Amazon, with top sellers including DOCSIS 3.1 modems and the MG-8702 modem router. Market share in this core category grew by an estimated 24%-27%. The average selling price (ASP) increased from $95 to $121 quarter-over-quarter. For the mesh WiFi segment, entry was challenging due to higher advertising costs on Amazon, but Motorola resonates strongly in mesh WiFi, and premium WiFi 6 modem router sales, constrained by supply, are expected to expand this summer. Revenue contribution from various segments is tied to their performance in different channels like Amazon and Walmart.com.

• Revenue Growth: Q1 revenue up 27% quarter-over-quarter and 11% above pre-pandemic Q1 2020 levels.
• Inventory and Cash: Exited Q1 with $30 million in inventory (down from $32.5 million in Q4) and cash at $10.5 million; expect cash position to improve as inventory sells through.
• Pricing: Planning price increases for select products in the second half of 2022 to preserve gross margins.
• Investor Day: Upcoming Investor Day in the first half of June, details on ir.minim.com.

• Supply Chain: Shutdowns in China complicate component supply chains, especially for chips.
• Stock Price: Nasdaq notification that Minim no longer meets minimum bid requirement of $1; company intends to monitor stock price, build sustainable growth, and consider options to regain compliance.

Q: Commentary on supply chain pressures.

A: Supply chain monitored closely; shutdowns in China complicate component supply, but inventory built last year helps.

Q: Seasonality and impact on revenue.

A: Expected to follow normal seasonality, no significant changes.

Q: Gross margin outlook.

A: Confident in maintaining at least 30% margin structure, tracking competitor price movements and adjusting pricing accordingly.

Q: Profitability expectation.

A: Expect to turn corner on profitability over rest of the year through continued execution of operating plans.

Q: New product pipeline.

A: Next-gen mesh solutions (Q11 AX3000, Q14 AXE 5.4Gbps) and software upgrades (security features, premium support subscription) in the second half of 2022.

Q: Alignment with broadband connectivity initiatives.

A: Higher broadband connectivity drives tailwinds, unlocking more people to use home networks, positioning Minim as a premium value brand to benefit from increased demand.

Q: Senior management stock purchases.

A: Considering options, including individual purchases, but subject to blackout periods; Graham Chynoweth invested $500,000 in the last raise.