Mobix Labs Q4 2024 Earnings Report

Mobix Labs EPS Results

• Actual EPS: -$3.50
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Mobix Labs Revenue Results

• Actual Revenue: $2.95 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Mobix Labs Announcement Details

• Quarter: Q4 2024
• Date: 12/19/2024
• Time: After Market Closes
• Conference Call Date: Thursday, December 19, 2024
• Conference Call Time: 5:00PM ET

Mobix Labs (NASDAQ:MOBX) is a fabless semiconductor company that develops advanced connectivity solutions for wireless and wired applications. Its technology is designed to support high-speed data transmission, radio-frequency performance and next-generation communications systems.

The company’s product portfolio includes radio-frequency front-end components and modules for 5G and millimeter-wave applications, as well as high-speed wired connectivity products. These solutions are intended for use in markets such as telecommunications infrastructure, automotive systems, consumer electronics, industrial equipment, aerospace and defense.

Mobix Labs is headquartered in Irvine, California, and serves customers and technology partners in the United States and international markets. The company became publicly traded on Nasdaq in December 2023 through a business combination with Chavant Capital Acquisition Corp.

Mobix Labs Q4 2024 Earnings Call Transcript

Key Takeaways

• Q4 revenues jumped 44% sequentially to $2.95 million, and full-year sales grew 42.6% year-over-year, reflecting strong demand across the core connectivity and sensing product lines.
• Adjusted gross margin rose to 56.6% in Q4 (up 16.3 points) and reached 45% for the full fiscal year, driven by favorable product mix, pricing strength and operational efficiencies.
• Signed a letter of intent to acquire Spacecraft Components, adding 150 employees and expanding into aerospace, military, defense and transportation markets with mission-critical connector technology.
• First-quarter fiscal 2025 guidance of $3.05 million–$3.15 million in revenues indicates continued growth momentum ahead of achieving long-term margin targets of 60% gross and 30% operating.
• Cash balance remains only $266,000 as of Q4 end, prompting plans for additional financing to support ongoing acquisitions and rising customer demand.

Presentation

[Operator]

Good afternoon. Thank you for standing by and welcome to Mobix Labs Inc. Fiscal fourth quarter and 2024 financial results conference call. Please be advised today's conference is being recorded, and a replay will be available on Mobix's Investor Relations website. I would now like to turn the conference over to Lori Barker, Investor Relations. Please go ahead.

[Lori Barker, Head of Investor Relations at Mobix Labs]

Thank you. Good afternoon, everyone. I'm Lori Barker, Investor Relations for Mobix Labs, and I'd like to thank you for joining us today as we report Mobix Fiscal Fourth Quarter and 2024 Financial Results for the period ending September 30th. With me on the call today are Fabian Battaglia, Mobix Chief Executive Officer, and Keyvan Samini, President and Chief Financial Officer. This call is simultaneously being webcast on the Investor Relations section of our website at mobixlabs.com. Before we get started, I would like to remind everyone of our Safe Harbor policy. Comments made during this conference call and webcast contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties.

[Lori Barker, Head of Investor Relations at Mobix Labs]

Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections, future market conditions, or future product enhancements or development, is a forward-looking statement. Mobix's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in our SEC filings. Mobix assumes no obligation to update any such forward-looking statements except as required by law. For greater detail about risks and uncertainties, please see our SEC filings, including on our Form 10-Q for the quarter ended June 30th, 2024, and the section entitled Risk Factors in the Form S-1 filed on August 12th, 2024. In addition, this call includes non-GAAP financial measures. Reconciliations of these non-GAAP financial measures with the most directly comparable GAAP measures are included in our fourth quarter earnings release posted on the Investor Relations section of our website.

[Lori Barker, Head of Investor Relations at Mobix Labs]

With that, I will turn the call over to Fabian Battaglia. Fabian, please go ahead.

[Fabian Battaglia, CEO at Mobix Labs]

Thank you, Lori. I am pleased to announce a successful fourth quarter that caps off Mobix Labs' results as we approach our first fiscal year as a public company. It is an exciting time as we unleash the performance of next-generation wireless sensing and connectivity solutions. I am proud of our team's execution as we quickly grow the breadth of our offerings through organic growth and synergistic accretive acquisitions. Integrating employees and technologies is part of our core DNA, and shaping tomorrow's connectivity is front and center for all Mobix employees. In the fourth quarter, we executed on our plan, and we grew revenues sequentially by 44% for a full-year fiscal growth rate of 426%. Also, gross margins increased as we integrated RaGE Systems and continued working on synergies in a more favorable mix of products and engineering services.

[Fabian Battaglia, CEO at Mobix Labs]

We closed out the fiscal year with strong bookings, which position us well for our next fiscal year, and mergers and acquisitions at Mobix Labs will continue to be in the news as we diversify our technology portfolio. Our recent announced letter of intent to acquire Spacecraft Components is an excellent example of our accretive funnel of M&A opportunities. Spacecraft Components is a leader in high-precision, mission-critical components for aerospace, defense, and commercial applications. Also, they are recognized for their cutting-edge engineering and manufacturing capabilities. These electrical connector components and accessories are vital to critical missile technology, submarines, naval ships, oil rigs, rail cars, military and commercial jet aircraft, and many other applications. Notably, these components are utilized in the Patriot missile, the U.S. Army's primary missile defense system, and in technical manned and autonomous vehicles.

[Fabian Battaglia, CEO at Mobix Labs]

Additionally, Spacecraft supplies key components for rail car systems in major metropolitan areas such as Chicago and New York. As a long-standing supplier to Mobix Labs, we were aware of Spacecraft's excellent reputation, and we see them as a natural fit as we expand our offerings into aerospace, military, and defense sectors, and in more near term, the transportation market. We expect that the acquisition will be accretive to Mobix Labs' earnings and will increase our workforce by approximately 150 employees. We are really excited about this acquisition and expanding our reach. Each quarter since becoming a publicly traded company, you have heard me talk about our acquisition strategy. Our mission remains consistent as we target and attract synergistic accretive opportunities that will expand our customer base and footprint and make life easier for our customers as they look to reduce their number of suppliers.

[Fabian Battaglia, CEO at Mobix Labs]

Mobix Labs is a nimble supplier that can deliver demanding next-generation solutions at best-in-class lead times. Today, I'd like to highlight two solutions groups: EMI Interconnect Solutions and our wireless system solutions from RaGE Systems acquisition. Let me start with the EMI Interconnect Solutions, which are used by many leading companies in aerospace, military, and medical applications. In June, we announced our new filtered ARINC connectors, which are setting a new standard in price, performance, and customization. I am pleased to say in the fourth quarter, we saw increased bookings for these high-performance connectors used in advanced aircraft electronic systems. In the fourth quarter, we landed significant new customers in aerospace and defense sectors, and we are now scheduled to produce custom-filtered next-generation high-performance connectors for the customer's flight guidance and cockpit display systems.

[Fabian Battaglia, CEO at Mobix Labs]

We are excited about our overall growth in EMI Solutions and the planned growth in our Interconnect product line, and we believe that we are well-positioned in this core part of Mobix for further developments of these solutions as we expand our strong relationships and deliver what we believe is the fastest delivery of EMI filtered parts in the world. Customers value our engineering support and our nimble hands-on approach. The second area I'd like to highlight this quarter, wireless systems, achieved strong revenue and increased margins during the RaGE Systems first full quarter with Mobix. RaGE Systems has a strong customer base and exciting funnel of opportunities. We are quickly identifying synergies between Mobix Labs and RaGE Systems so we can expand on our customer base and products and to deliver IP and technology across the entire product line portfolio.

[Fabian Battaglia, CEO at Mobix Labs]

Within wireless systems, our security imaging and detection services and products continue to grow and expand. While we continue building and shipping present-generation modules, we are also developing multiple generations of products with our customers to help them offer new products in new markets. This is all about helping our customers to envision different futures for imaging and detection in their established markets and in areas they are targeting for expansion. Also, our multi-spectral imaging and detection, or MSID programs, continue to expand. We added new MSID capabilities to our customer-supported test facility and demonstrated new capabilities and functionality beyond security imaging and detection. We believe the new capabilities that we are demonstrating in non-visual imaging and multi-sensor fusion should begin generating incremental revenues in 2025 and beyond in areas like infrastructure imaging and fault detection.

[Fabian Battaglia, CEO at Mobix Labs]

Partnerships are an important part of developing our business, and a good example is our expanding relationship with UMass Lowell in Massachusetts. Together, we are working on several technologies and projects for infrastructure imaging and satellite communications. The pop-up laboratory created on the grounds of UMass is focused on gaining a better understanding of infrastructure degradation and safety for the rail industry. Another joint program is working on identifying and investigating the feasibility of a low-power, low-cost, and high-performance monolithic software-defined system on a chip for SATCOM applications. Both technology development projects could lead to new product introduction in 2025 and 2026. In summary, customers come to Mobix Labs because we are a nimble supplier that can deliver demanding next-generation solutions at best-in-class lead times. Also, execution of our acquisition strategy is diversifying our offerings and expanding on our end markets while growing revenue and margins.

[Fabian Battaglia, CEO at Mobix Labs]

Now, Keyvan will tell you a bit more about those financial results.

[Keyvan Samini, President and CFO at Mobix Labs]

Thank you, Fabian. I'm excited to walk you through the financial highlights of our fourth fiscal quarter ending September 30th, as well as our full fiscal year ending September 30th, 2024, and to share our outlook for the first fiscal quarter of 2025. Unless otherwise stated, the figures I'll discuss today are on a non-GAAP basis. Before discussing the numbers, I want to underscore the significant milestone Fabian mentioned earlier, our letter of intent to acquire Spacecraft Components. If completed, this strategic acquisition is expected to be transformative for Mobix Labs, expanding our reach into high-demand sectors, including military, defense, aerospace, and rail. Spacecraft Components is a well-established business, and its acquisition is expected to be immediately accretive. In addition to delivering immediate financial benefits, we believe this acquisition will enhance our sales strategy, strengthen our position in critical markets, and significantly accelerate revenue growth for fiscal year 2025.

[Keyvan Samini, President and CFO at Mobix Labs]

Upon closing, we expect the transaction to materially increase Mobix Labs' revenue compared to fiscal 2024 while driving synergies that boost operational efficiency and long-term scalability. Now, let's look at our financial results for the fourth quarter and full fiscal year 2024. We delivered revenues of $2.95 million, surpassing the midpoint of our guidance range and representing a robust 44% sequential increase over the prior quarter. For the full fiscal year 2024, annual revenue grew by $6.44 million, marking an exceptional 426% increase over fiscal 2023. Turning to gross margin, our fourth quarter adjusted gross margin improved 16.3 percentage points sequentially to 56.6%. This impressive growth was driven by a favorable product mix, pricing strength, and operational efficiencies. On a full-year basis, our fiscal 2024 adjusted gross margin reached 45%, a dramatic turnaround from fiscal 2023. We also made substantial progress reducing our adjusted loss from operations.

[Keyvan Samini, President and CFO at Mobix Labs]

For the fourth quarter, adjusted loss from operations declined by more than 12% to $3.6 million, down from $4.1 million in the last quarter. For the full fiscal year, adjusted loss from operations improved by 14.6%, narrowing to $15.96 million compared to $18.7 million in fiscal 2023. Our balance sheet remained stable and improving, with cash growing to $266,000 at the end of Q4, up from $205,000 in the prior quarter. To support our acquisition strategy and meet rising customer demand, we are actively pursuing additional financing that will enable us to execute on our growth opportunities and scale further. Looking ahead to our first fiscal quarter of 2025, we are forecasting consolidated revenues of between $3.05 million and $3.15 million, a strong continuation of our growth momentum. As we look to the future, our long-term financial goals remain clear.

[Keyvan Samini, President and CFO at Mobix Labs]

We are committed to achieving an adjusted gross margin of 60% and an adjusted operating margin of 30%. While revenues scale, we will maintain discipline by ramping R&D and SG&A expenses at a slower pace, driving profitability and operating leverage over time. In summary, we are incredibly pleased with the results from the September quarter and the full fiscal year 2024. Our acquisition strategy has delivered the transformational revenue growth we set out to achieve. With an expanding pipeline of M&A opportunities, increasing customer demand, and operational improvements, Mobix Labs is positioned for long-term success and scalable growth. Operator, we're now ready to take questions.

[Operator]

Thank you. If you would like to ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself, please press star one one again. We also ask that you wait for your name and company to be announced before proceeding with your question. One moment for the first question. And our first question will come from the line of Kevin Cassidy of Rosenblatt Securities. Your line is open.

[Kevin Cassidy, Managing Director and Senior Research Analyst at Rosenblatt Securities]

Yes, thanks for taking my question, and congratulations on the great progress. You have mentioned that EMI Interconnect Solutions is having increased bookings. Can you go into a little more details on that? Is it the market getting better, or are there things you're doing that are increasing the booking?

[Fabian Battaglia, CEO at Mobix Labs]

Got it. Well, thanks for the question, Kevin. As you likely know, the geopolitical strife that exists today, unfortunately, is not calming down. So we're getting increased opportunities or increased requests for products in that area. And as you know, EMI fits in that space. So aerospace and defense is a key driver for EMI, and that's why we're seeing the increases that we see.

[Kevin Cassidy, Managing Director and Senior Research Analyst at Rosenblatt Securities]

Okay, great. Can you say what the visibility is? Is it out one quarter, two quarters?

[Fabian Battaglia, CEO at Mobix Labs]

Typically, it's out to two quarters is what we see.

[Kevin Cassidy, Managing Director and Senior Research Analyst at Rosenblatt Securities]

Okay, great, and just one other question with the spacecraft components. 150 employees is impressive, but will you be able to get some leverage with those employees? Like, they'll be able to take over more of the, say, SG&A portion of the spending?

[Fabian Battaglia, CEO at Mobix Labs]

Yeah. Well, like all acquisitions, we look at the synergies, and that's something that we're very experienced in doing. So we would take a company like Spacecraft, who's got great technology, great capability, especially manufacturing capability, and you match that with our go-to-market strategy and our experience in that space, we feel that that would be a great benefit when we combine forces.

[Kevin Cassidy, Managing Director and Senior Research Analyst at Rosenblatt Securities]

Okay, great. And maybe could you say what percentage of those employees are engineers?

[Fabian Battaglia, CEO at Mobix Labs]

I would say it's less than 5%.

[Kevin Cassidy, Managing Director and Senior Research Analyst at Rosenblatt Securities]

Okay. Thank you.

[Operator]

Thank you. One moment for the next question. And our next question will be coming from the line of Martin Lucas. Your line is open. Martin Lucas, your line is open.

[Operator]

Oh, thank you very much. You went quiet there. Thank you very much for allowing me on your call today. I represent the investor family known as the Lucasades, who watch my YouTube TV show and follow Mobix with great enthusiasm. I have two questions for you. The first one is, what specific strategies or initiatives is Mobix Labs prioritizing to drive shareholder value and ensure consistent stock price growth in both the short and long term?

[Fabian Battaglia, CEO at Mobix Labs]

Thanks, Mark. Thanks for the question. Our strategy has been consistent from day one, so it's in two parts: organic growth and then an M&A strategy to accelerate that growth. On the organic side, we focus on connectivity, wireless communications, security imaging, and detection. Those are our primary focuses. Then on the M&A side, we have a well-defined process, and we're looking at areas in aerospace and defense, transportation, medical, wireless communications. So it's a combination of both short-term. What we have in front of us will drive the organic growth, and then over the longer term, our M&A strategy will accelerate that growth.

[Fabian Battaglia, CEO at Mobix Labs]

Thank you. My follow-up question, as we all know, investors around the world are extremely passionate and excited about where NVIDIA is going. So my viewers have asked me to ask this question. As NVIDIA is so popular now with retail investors, are there any ways that you could introduce your technology to them for a strategic partnership? This would surely be a great move.

[Fabian Battaglia, CEO at Mobix Labs]

Yes, we agree with that. Well, first, we applaud NVIDIA and their great success. We are a believer of GPU-accelerated solutions, and of course, AI is driving that. And I think we're seeing more AI and use cases, right? So we expect that that will continue to grow. Now, we believe that Mobix's IP is applicable in the same ecosystem. So we're excited to be attached to applications that live alongside where NVIDIA lives. Now, what we expect, as of course, with their success, we're going to see use cases which we think are going to require increased expectations for things like higher demand rate and higher bandwidth type applications. And we feel that that fits really well in the areas that we're developing.

[Fabian Battaglia, CEO at Mobix Labs]

Thank you very much for that and giving us the chance to ask you a question, two questions, and congratulations today on your call from all of the Lucasades. Thank you very much.

[Fabian Battaglia, CEO at Mobix Labs]

Thank you, Martin.

[Operator]

Thank you so much for participating in today's conference call. This now concludes today's meeting. You may all disconnect.

Participants

Executives

• Keyvan Samini, President and CFO
• Fabian Battaglia, CEO
• Lori Barker, Head of Investor Relations

Analysts

• Analyst
• Kevin Cassidy, Managing Director and Senior Research Analyst at Rosenblatt Securities