FiEE, Inc. Q4 FY2022 earnings call

• Midyear, Minim took steps to advance competitive position, improve working capital, and align business with market realities, resulting in a more robust ecommerce channel, all-intelligent product portfolio, and improved balance sheet.
• Revenue for 2022 was $50.6 million, down 9% due to challenging economic conditions and retailers working through high inventories. Q4 revenue was $10.6 million, up 1.4% YOY but down 23.2% sequentially.
• Subsequent to year end, additional cost reduction actions were initiated, expected to generate ~20% annual cost savings split between COGS and operating expenses, including workforce reductions and reduced professional services spend.
• Expect cost reductions to accelerate path to sustainable profitability on Adjusted EBITDA basis. Maintained 40% market share on Amazon in networking. Expanded ecommerce channel in 2022 with new partners.
• On schedule to wind down ISP business and shift focus to premium subscription services. Launching Support+ premium support subscription service in June, with no incremental costs as tech investment is sunk. Technology roadmap includes additional features in H2 2023.
• Reduced inventory by 26% to $25.4 million and accounts payable by 75% to $2.8 million by end of Q4 2022. Signed non-binding term sheet for $12 million 3-year asset-backed credit facility with new lender, replacing existing facility with SVB, providing better terms and reduced financing risk.
• Reverse stock split approved to regain compliance with NASDAQ listing requirements.

For the full year 2022, revenue was $50.6 million, a decline of 9%. Fourth quarter revenue was $10.6 million, up 1.4% year-over-year and down 23.2% sequentially. Minim maintains a 40% market share in the networking category on Amazon. The company significantly expanded its ecommerce channel in 2022 with additions like homedepot.com, officedepot.com, etc.

• Initiated additional cost reduction actions expected to generate ~20% annual cost savings. Expect cost reductions to accelerate path to Adjusted EBITDA profitability.
• On track to launch Support+ in late Q2 2023, with additional features in H2 2023.
• Expect further reduction in inventory to low $20 million as we exit Q1 and head into Q2 2023.
• Aim to execute final agreement on new $12 million credit facility soon.
• Goal to achieve sustainable profitability on Adjusted EBITDA basis in the second half of 2023.

• Challenging economic conditions and retailers working through high inventories could impact revenue.
• Risk of inventory becoming obsolete given rapid technology changes.
• Compliance with NASDAQ listing requirements depends on successful execution of reverse stock split.
• Uncertainty around execution of new credit facility term sheet until final documents are signed.

Q: Tim Savageaux asked about cost reduction timeline, revenue level for profitability in 2023, growth prospects in 2023, and inventory correction on brick-and-mortar side.

A: Mehul Patel said workforce reductions were implemented and effective April 1, with savings booked in Q1. Support+ to be released in late Q2 2023, and other solutions to follow. Full year of ecomm channel growth expected. Brick-and-mortar inventory correction is ongoing with retailers having reduced on-hand inventory.

Q: Donald Rosenfeld asked about timeline for achieving profitability.

A: Mehul Patel stated goal is to achieve profitability in the second half of 2023.

Q: Charlie Lacario asked about marketability of remaining inventory and Motorola contract.

A: Dustin Tacker said Motorola agreement is fixed until 2025, with potential to renegotiate early. Mehul Patel said most remaining inventory is marketable and not obsolete, with time until DOCSIS 4.0 and Wi-Fi 7. No immediate concern about obsolete inventory. Dustin Tacker also mentioned no consideration for capital raise at present, focusing on getting to cash flow positive in 2023 by working on AP, inventory, and cash balance.