Resonant Revenue & Valuation (2021)

Resonant generated $3M in revenue in 2021.

Resonant reported $3 million in royalty revenue for 2020 and $3.2 million in trailing twelve-month revenue as of mid-2021, up from $524,000 in 2018. Holmes told Latka that the company has grown revenue quarter over quarter every quarter and has met or exceeded its internal and external projections for seven to eight consecutive quarters.

Resonant served a couple of customers in the twelve months leading up to mid-2021, generating $3.2 million in trailing revenue across that small base. Named licensee customers include Broadcom, Qorvo, and Skyworks. Holmes identified the largest customer as the world's largest filter manufacturer, which has publicly told its own shareholders that Resonant's technology is among the most important it holds for the RF front-end going forward.

Resonant's royalty rate on the average selling price of devices it designs ranges from 7 to 15 percent, compared to the 1 to 2 percent benchmark Holmes cited for large technology licensors such as ARM, Tessera, and CEVA. The RF front-end accounts for 20 to 25 percent of the total material cost of a smartphone, and the cost of RF filters in a current 5G smartphone is approximately $30. Holmes noted that the current 5G iPhone contains roughly 100 RF filters, compared to approximately 6 filters in the original 2007 iPhone. Resonant's licensees have cumulatively sold more than 60 million devices incorporating Resonant-designed filters into the marketplace.

Resonant's business model is built on three components: proprietary EDA software, an IP portfolio, and integration services. The company licenses this combined technology to RF front-end manufacturers on a per-unit royalty basis. Because Resonant does not manufacture anything, it carries no cost of goods sold on its royalty revenue, resulting in 100 percent gross margin.

The company earns between 7 and 15 percent of the average selling price of each device its licensees manufacture and sell. On $30 million in device sales by licensees in 2020, Resonant recognized $3 million in royalty revenue, an effective blended rate of approximately 10 percent. Holmes noted the company is also moving toward prepaid royalty arrangements, under which customers pay before delivering product to market, to make royalty revenue more predictable.

The company's operating loss was $6.5 million in the period discussed, and its quarterly cash burn rate runs between $6.5 million and $7 million, the majority of which is R and D spending. Resonant has more than 300 patents filed and issued, with more than 150 in the 5G space, and has qualified its platform against more than 12 foundries, with more than 6 qualified specifically on 5G technology. Holmes stated that Resonant is not currently licensing its EDA software directly to customers but has designed the platform so that it could do so in the future. Profitability was not discussed beyond the operating loss figure; Holmes did not confirm a path to breakeven or a specific timeline.

Resonant employed roughly 70 people as of mid-2021, with approximately 50 of them in technical or engineering roles. Holmes described the team as heavily weighted toward scientists and engineers, noting that he is typically the person in the room with the fewest academic credentials. The company's R and D headcount is the primary driver of its quarterly cash burn of $6.5 million to $7 million.