Guerrilla RF announces its third-quarter financial results. (Graphic: Business Wire)
Guerrilla RF reported that its operating financial contribution margin and gross profit margin expanded during the third quarter 2022. The Company’s contribution margin during the quarter increased 600 basis points over the prior year period to 75.1%, and its gross profit margin increased 90 basis points over Q3 2021 to 57.2%.
The Company announced that average lead time between taking and fulfilling orders has declined to pre-COVID levels
Triad Business Journalnames CEO Ryan Pratt as “2022 Power Player”
Eight new design wins confirmed with a strategic customer, which the Company anticipates will generate an aggregated peak volume of 30 million units per year
Surpassed the 150 million-unit milestone for RFIC/MMIC deployments, a 50% increase in lifetime shipments over the past 15 months
Introduced GRF5521, one of ten ¼ W linear power amplifiers designed for 5G/4G wireless infrastructure applications
Appointed Susan Barkal to Board of Directors, adding extensive quality, operational, and technical expertise
Shares began trading on OTCQX on July 28, 2022
Operating margin improved consistent with management’s financial plans
Gross profit for the third quarter of fiscal 2022 was 57.2% of revenues as compared to 56.3% for the third quarter of fiscal 2021
Cash at the end of Q3 2022 was approximately $2.1 million
“While Guerrilla RF’s third quarter revenues were impacted by customer inventory over-hang, consistent with the semiconductor industry in general, we believe this issue has been resolved,” said Ryan Pratt, CEO, and founder of Guerrilla RF. “We expect that GUER’s sales in the fourth quarter will be in the range of $2.2 to $2.5 million, up double digits from the third quarter and also the year-ago period. This will be driven by the addition of new customers and new sales channels for our catalog of products. However, it is important to note that our priority continues to be in the areas of R&D and sales, as we continue to build our designs to meet the specific needs to suit each of our potential clients. Therefore, it is imperative that we continue to invest in areas that will drive future growth despite initial capital expenditures. We are continuing to execute on our business plan despite a relatively flat quarter, and expect to continue to grow with the added design wins and our continued aggressive business development activities.”
Financial Results for Three Months Ended September 30, 2022
Revenues increased slightly to $2.22 million for the three months ended September 30, 2022, as compared to $2.17 million for the three months ended September 30, 2021. The increase in revenues was attributable to an increase in royalty income while product revenue remained flat. Within product revenues, sales to our large automotive supplier customers were being impacted by macroeconomic conditions beyond our control.
Direct product costs remained relatively flat over the year-ago quarter. As a percentage of product sales, direct costs increased 0.3% to 47% over the same period.
Research and development expenses increased $1.0 million to $2.1 million for the three months ended September 30, 2022, compared to $1.1 million for the three months ended September 30, 2021. The increase was attributable to $0.4 million of staffing additions in our engineering department, $0.6 million of research lab and equipment depreciation, and engineering support and prototype expenses.
Sales and marketing expenses increased $0.5 million to $1.2 million for the three months ended September 30, 2022, compared to $0.7 million for the three months ended September 30, 2021. The increase year over year was driven by increases of $0.4 million in staffing costs and $0.1 million in various sales and marketing expenses including sales commissions, information technology support, and customer support.
General and administrative expenses of $1.3 million for the three months ended September 30, 2022, were up from $0.7 million in the year-ago period, primarily as a result of bringing the Company public and its associated costs. The Company does not anticipate further material increases to its G&A expenses in future periods.
Financial Results for the Nine Months Ended September 30, 2022
Total revenue increased 18.4% during the nine months ended September 30, 2022, as compared to the comparable period in 2021. Product revenue, which accounted for 92% of total revenue increased by 16.4% while royalty revenue, which accounted for 8% of total revenue increased by 49%. The strong growth in royalty revenue had a positive impact to our gross margins due to the overall revenue mix. The increase in revenues was driven by increased product sales to our repeat customers and our catalog products over a wider breadth of applications and customers. Sales to repeat customers grew approximately 24% from the prior year period and catalog products grew 29%. Increases in our overall number of product offerings and the number of customers we ship to contributed to increased sales. Increased sales during this nine-month period were driven by increased sales in the first half of 2022.
Direct product costs increased $0.7 million to $3.8 million for the nine months ended September 30, 2022, compared to $3.1 million for the nine months ended September 30, 2021. The 20% increase in direct product costs was primarily driven by a product sales volume increase of 16% (excluding royalty revenue). Direct product costs relative to sales increased due to increases in Operations and Quality staffing.
Research and development expenses increased $2.7 million to $5.9 million for the nine months ended September 30, 2022, compared to $3.2 million for the nine months ended September 30, 2021. The research and development expenses increase were attributable to $1.4 million of staffing additions in our engineering department, $0.2 million of research lab and equipment depreciation, and $1.1 million of engineering tools and support, as well as prototype expenses.
Sales and marketing expenses increased $1.5 million to $3.4 million for the nine months ended September 30, 2022, compared to $1.9 million for the nine months ended September 30, 2021. The increase year over year was driven by increases of $1.4 million in staffing costs, and $0.2 million in various sales and marketing expenses including sales commissions, information technology support, and customer support.
General and administrative expenses increased $2.4 million to $3.8 million for the nine months ended September 30, 2022, compared to $1.4 million for the nine months ended September 30, 2021. The increase was primarily related to increases in wages and benefits of $1.7 million, $0.5 million in directors and officers insurance, and $0.3 million in professional fees. The increase in wages, benefits, and professional fees was driven by headcount additions within our information technology and accounting departments, and expenses incurred to support our public company structure.
GUERRILLA RF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2022 (unaudited)
December 31, 2021
Accounts receivable, net
Total Current Assets
Operating lease right-of-use assets
Property, plant, and equipment, net
Liabilities and Stockholders' Equity
Operating lease, current portion
Finance lease, current portion
Accounts payable and accrued expenses
Total Current Liabilities
Preferred stock, $.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021
Common stock, $.0001 par value, 300,000,000 shares authorized, 33,384,894 and 33,222,192 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
GUERRILLA RF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30,
Nine Months Ended September 30,
Direct product costs
Research and development
Sales and marketing
General and administrative
Total Operating Expenses
Other income (expenses)
Total other income (expenses), net
Net loss per share
About Guerrilla RF, Inc.
Founded in 2013 and based in Greensboro, NC, Guerrilla RF develops and manufactures high-performance microwave integrated circuits (MMICs) for wireless OEMs in multiple market segments – including 5G/4G macro and small cell base stations, cellular repeaters/DAS, automotive telematics such as SDARS/V2X/GPS/DAB, military communications, navigation, and high-fidelity wireless audio. Guerrilla RF has an extensive portfolio of over 100 high-performance radio frequency (RF) and microwave semiconductor devices. The existing product line includes ultra-low noise amplifiers, gain blocks, driver amplifiers, mixers, RF switches, digital step attenuators (DSAs), and linear power amplifiers (PAs) – the critical building blocks for mission-critical, performance-driven wireless applications. To date, the Company has shipped over 100 million devices and has repeatedly been included in Inc. Magazine’sannual “Inc. 5000” list. Guerrilla RF recently made the top “Inc. 500” list for the second year in a row, coming in at No. 421 and 489 for the 2020 and 2021 rankings, respectively. For more information, please visit https://guerrilla-rf.com or follow the Company on Twitter and LinkedIn.
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