Datavault AI Inc. (DVLT) Earnings Call Transcript & Summary

Good day, and welcome to the Datavault AI Business Update Conference Call. [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to David Barnard of Alliance Advisors IR. Please go ahead, sir.

Great. Greetings, everyone, and welcome again to Datavault AI business update conference call. I'm David Bernard with Alliance Advisors Investor Relations. And as a reminder, the conference is being recorded. Referring to Slide 2, I'd like to remind everyone that today's conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such forward-looking statements should be considered in conjunction with the cautionary statements in our press releases and risk factors discussed in our filings with the SEC. Datavault AI assumes no obligation to update any of these forward-looking statements success as required by law. We also refer you to -- again to Slide 2, today's accompanying presentation for more information. With that, I'd like to turn the call over to Nate Bradley, CEO of Datavault AI; and also Brett Moyer, CFO.

Thank you.

Please go ahead, Nate.

Okay. Thank you very much. Thank you, everyone, for making the time this morning. Nate Bradley here, really to discuss a comprehensive update with Datavault AI. First quarter under our belts. We've got the name change, obviously, in place and our divisions, the Acoustic Science and Data Science division. I'll start with the Acoustic Science division, spent some time getting to know the personnel at WiSA, our team and executives there, our customers and clientele throughout the world. I have spent some time to learn about that technology group and how we could expand and grow together, the ADIO technology being integrated into that team as -- excited -- a lot of new opportunities. It's opened doors for us all over the world to do events and venues, and implementations of ADIO technology in places where you would normally think of network gear being utilized. So we have an ADIO network technology that we're very excited about, and it moves our technology into new markets and opens doors for us all throughout the world. We also completed our acquisition of CompuSystems, which we're excited about in terms of adding a lifeblood of new clientele and customers, events and venues and the ability to use our acoustic technology and acoustic networks in ways that the world's never seen before. So we're really excited about that, and we have some breakthrough technology in Acoustic Science, that kind of crosses over into DVHOLO and NYIAX. We've realized that we didn't want to manage fully our marketing prowess with the ADIO technology. There's a whole marketing ad platform capability that, that unlocks. But we're very interested in using it in Web3 context and have moved that kind of ad platform business upto NYIAX, a very capable partner of ours that brought a wealth of technology and resources and connectivity in particular, to our Data division around the ability for us to trace data and our information data exchange. And so our Data Sciences division quarterbacked by the Datavault technology. We've also made some announcements around VerifyU and a huge expansion around our sales and sales focus in that area around VerifyU. There's an offshoot of that in NIL that we're perfecting and getting a lot of traction in the marketplace around as well. So Data Refinery, Datavault, Data Exchange, these are all aspects of the Data Sciences division that have really started to get a lot of traction. So that's kind of the layout as it stands today, and we've got a real focus around these 2 divisions and providing all the uplift that they require. We have -- our Data Exchange really being a focal point for the company. We have essentially these 2 divisions feeding that exchange, think of the Acoustic division as an ability to create data, manage data, send data and connect with individuals within our customers' operations, in particular, their customers and their initiatives that use this technology to connect. So we have an Acoustic division that connects very, very closely to our Datavault and Data division, security, reliability, data ownership are kind of staples in that technology stack. There's also data ownership that we've redefined and created ways for data owners to monetize in ways that they never could before prior to this Web3 revolution around the management of data. The ADIO and Web3 disconnect that's out there, there's so much information that we are able to use this tone to cut through misinformation and to deliver connections of clarity and trust within our environment. So we're very excited about the ADIO technology and what that's done to WiSA in terms of the international footprint that we have and the throughput that we have. Our business model remains licensing centric. We had a very strong first quarter in licensing and that will show -- we've also focused around the WiSA licensing and how that's been productize around WiSA HT and WiSA E and the great traction that, that product line has in the marketplace. We're also looking at growing those licensing operations into the ADIO world and the ADIO view of things around ultrasonic technologies in kind of our world-leading approach around the use of ultrasonic. We've also really looked at the drivers of this revenue being focal around our information data exchange by having NYIAX take the laboring oar in the first approach to the marketing side of ADIO. ADIO also marks data assets, and it's used as a connector in our VerifyU and our VerifyU running over our Information Data Exchange has given us a great deal of traction, a great deal of differentiation in the marketplace that we're really proud of. If you look at the path to profitability, it is about customers trusting us and having things like commodities and precious data assets have a connection to our company through these technologies, trust is a key factor, and so IBM with the announcement -- we were real proud to make earlier last week. We were able to announce the partnership there, where we're part of a Partner Plus program that enriches our pipeline of business, but more importantly, enhances the AI strategy that we have that's across all of our offerings and technologies that we have an AI agent approach and the development of agents that we're doing with IBM. We also added NYIAX, an important partner for us, that connected us to key infrastructure on the trading side, the exchange side. They've perfected this in advertising to use NASDAQ infrastructure, their financial framework to enhance the ability to scale and operate a very efficient marketplace. So we brought that technology into our data information exchange. We've also brought in NYIAX as a very capable technology partner, their team in New York, partnering with ours in New York and Atlanta is going to bring a whole new capability set to the table. And then lastly, Clear, identity and trust, key there, we've added them to our arsenal of capabilities rather than having any of our customers struggle with the onboarding process, many of the CEOs and many of the people we work with are already members of Clear and can personally log in and take command of systems that we create for them through Datavault. So that's all real strong pathway to profitability, strategic milestones in the last few months in the last quarter. So we're looking at getting all of this together the CompuSystems close -- as a real accomplishment to end the quarter where we brought on significant clientele and capability and resources -- human resources as well as technological resources to our company. The IBM Partners Plus program I spoke of can't be understated -- overstated, really, it is a system that allows us to use watsonx to protect -- perfect agents that will ultimately allow us to price and manage data assets on behalf of our clientele, creating a system that is focused on these agents that have a pricing and a scoring capability. A look towards regulatory. If you look at NYIAX and what they bring to the table for our data exchange this incredible adherence and regulatory compliance system that takes compliance and regulatory to the next level in that nothing can be placed on that network or traded on that network unless it complies. And this compliance-first and privacy-first approach that we've taken is drastically enhanced by these 2 partnerships. So we're very, very proud of that in this past quarter, excited about the future that, that unlocks for us. Data monetization being the kind of a central theme and focus of our revenue drive we've got now the technology stack to address the very highest of clientele in the marketplace. We also have differentiating IP and technology that sets us apart from the field in a competitive field of data monetization. So this partnership allows us to develop these agents, Data Vault Bank, DataScore and DataValue. Data Bank is about really the fact you don't need a bank when you have smart contracting. In fact, lawyering, an aspect of contracts such as NIL and our VerifyU product, we have the ability to use our Data Vault Bank to mint smart contracts that create a mutable contract, and transactional systems that can feed enormous value creation and cost reduction for our clientele. . So a very important agent, Data Vault Bank is being built out. The DataScore agent and the DataValue agent, scoring, as I mentioned, is about regulatory compliance, and privacy, ownership, sovereignty and your ability to monetize the data value, of course, puts a value on data, allows you to look at a server, look at a phone, look at the apparatus around you and understand how much valuable data are within those apparatus and how that data can ultimately be monetized on behalf of the organization. So our customers are feasting on that capability. We're well positioned to ramp that capability up for an increasing number of customers in growing marketplaces. Information Data Exchange is Nirvana for us. It is the focus of our team around creation of data objects that are monetizable, taking our customers' assets and allowing them without ever being touched or moved or taken from their sovereign hosting locations, that we can have a touchless appraisal and ability to understand value in a Web3 context, also sell data without ever having to move it from our customers' sovereign location, giving them ability to then in their customary or preferred or required modality for delivering ultimate data payloads to buyers whom have already transacted through our system. We have a very distinct and specialized platform in this area, and we now have the partnerships in place and the technology to rise that allows us to scale this capability and focus this muscle, this incredible technology on the marketplaces that we serve. This is a resounding victory for our company, brings a lifeblood of revenue, a starting point to build the revenue velocity and the revenue growth having a system that we can both improve upon its margins by using technology and also grow by excluding others from doing what we can do in the marketplace. This gives us $50 million-plus registering of events, it is 1,000 events and many recurring over 2 decades that we have a reputation in now and a known event and revenue stream based on these events that we're going to feast on and grow upon. We also are going to increase margin through the use of our technology stack. So 5 decades of experience onboarding foot soldiers for our ADIO initiative, worldwide reach, ability to walk into places that we've coveted like the [indiscernible] and others where we're going to make big deals and have big traction around the growth of the CSI business. So very proud to add these team members to our team. We welcome them with open arms. We need the resources. We love the revenue. We're looking forward to growing it as a team. And we've got a long ramp up with this team. So it's exciting to have now our rubber hit the road in getting this transaction to really rip and create the velocity we know it can. So very excited about that. Definitive agreements this quarter to fund our strategic growth. We brought in -- I guess, we closed this morning on $15 million that will be a tranche of capital that came in on a debt structure really protecting our precious equity as the world comes to understand the value of these assets as they've come to fruition as we combine the visual with the auditorial and the data platform underneath of that, the immense value of our company simply being realized, like oil under the porch value that is here and present today that simply needs to be mined, the creative activity around our revenue velocity and our creation of revenue will drive our growth. We are focused on this, targets that we put out, call it, the lead minimum, the target that we put out that allows us to perfect our strategies in revenue creation around these technology stacks to bring in the resources of CSI and put our -- really nose to the grindstone across this organization to create revenue and drop that revenue to our bottom line with the highest possible margins using technology to do this. We're very excited about the future trajectory, the addition of NYIAX, the addition of our IBM Partners Plus program, the addition of Clear, all of these things give us the technology stack within our recognized vertical market to perfect this revenue. So that target is there. Our team has perfected a target much higher to ensure that we achieve that lead minimum target, and we have -- without putting a ceiling on this deal at a very clear minimum target that we will hit. And there is a focus around this, an institutional focus and an enrichment of technology and patented systems that no one else can provide in the marketplace. So with that, I'll conclude my prepared remarks. I appreciate everyone's time just over 20 minutes. And I'm happy to open it to a Q&A today. Thank you very much.

[Operator Instructions] And your first question today will come from Jack Vander Aarde with Maxim Group.

Okay. I appreciate the update. Thanks for covering all that ground. Definitely a lot of moving parts, and I'll try to -- I have a few questions. I'm going to try to touch on as many as I can. So Nate, with -- first off, congrats on the acquisition as well and all the other recent developments. With the acquisition, I guess, of -- and you guys have communicated this in the past, what the plan is, how are things coming along? I think you've already been working with the team for -- on active initiatives prior to the acquisition closing. Can you just provide us an update kind of on how the integration is going, how the team synergies are looking? And how kind of just everyone's attitudes are?

Yes, sure. So firstly, the acquisition of Datavault, the asset, Datavault and ADIO and the name change to Datavault AI by WiSA Technologies. That transition took hold right at the 1st of the year. So this team has come together, we've come to know each other, trust each other, work together. The team takes time to integrate, probably one of the slowest pieces is the human resource integration, but probably the most important integration that occurs in these acquisitions, kind of the make or break part of it the morale and the overall positioning of the company. We had to reset the company and get it back on track, get everyone rowing in the same direction, and we've achieved that through a number of initiatives. But the -- this recent one with CSI, and you're right, we have been working together. This is a bigger team in our team. So the acquisition, we have heavy engineering and now we have incredible talent on the client acquisition. And I always like the Ritz-Carlton, Ladies and Gentlemen, Serving Ladies and Gentlemen, these are hospitable, very acute people who are able to go into situations where events are cyclical. They pop up on various genre, and these are individuals that have changed in more over time to serve clientele over a number of different verticals that we're targeting. So this team is exceptional, CSI, integration has been smooth and easy on the technology side, 2 great technical leaders there on both sides. My Jeff Jones kind of having a skill set around systems integration that is world-renowned. I mean, this guy has chopped, he can integrate anything in the world. And I really relish him being the leader of our technology team and working with these others. Now on the human integration, like I said, we've had so heavy engineering culture at WiSA, not dissimilar to the assets that came in very technical in nature, heavy in patents. But now we have the forward face, the tip of this spear. We have, ladies and gentlemen, that can walk in the front door of our clientele and capture them and get them at a high level, into great contracts. These are contracting machines, the CSI group. They're very good at handling corporate contracting and international business, and that's a very good fit for us. So we're excited -- the team, in terms of coming together, we couldn't have a better team, more diverse or exceptional. I wouldn't trade with anybody, not even IBM, our partner, we walked in there with some good ideas and some great partnerships underway there but I love our team, and our team is extremely strong in Beaverton, where we've had some -- spend some time and spent some time around the world learning about their reputation and what they've achieved in acoustics. So we're very focused on looking at what is right here and building on it, and building out quickly for the benefit of our shareholders.

I appreciate that. Okay. And then maybe just another follow-up, just given you're building out and kind of tackling all these new and certainly not simple initiatives in kind of industry. You're basically creating new industries. It sounds like in ecosystems, partnerships, some of which seems to be the first of its kind. So I just -- I'd be curious to know how are you -- I guess, how would you summarize or, I guess, prioritize your top focuses right now personally? And then what is the biggest challenge you're focused on, I guess, in 2025 of all the things you're focused on? What's the biggest challenge that gets your primary attention?

So in terms of the question on our focus and the answer to your question about how are we tackling so many diverse projects? The answer is platform. I looked up to the Meta platforms. If you noticed the second word there Meta platform always wins. Platform lets you do a lot, with a little. And when you look at companies like Salesforce and other platforms that were very successful in Web2, our Web3 platform, which we have a Web2 gateway too. We let people log in and experience their data assets. But our focal point is platform. Our work in acoustics and licensing and the chips that we're installing into smart TVs and the set-top boxes all over the world, these have a purpose in the platform. And these points of control that are ignited by our activity, whether it's a hologram in a lobby or a chip in a smart TV, that our points of presence and points of control allow us to leverage, towards the answer to your second half of your question about the biggest challenge and the focus. The biggest challenge is adding the most revenue to this company's operations to have the most revenue output as humanly possible across these platforms and systems using the teams in place that we have, under the constraints that we're under and under the platforms that we're under. All of these partnerships and systems focused on revenue generation, the rubber hits the road. This is about technologies used in the marketplace, not its creation, but it's use. And when you use it, it is monetized. And when you improve it, it becomes more exceptional. And to exclude others from doing what we do and by trading revenue through what we do is the focus, and the greatest challenge is defending that position when you're playing at the league minimum, when you're not as big as the biggest bank in the world, you're not as big as the largest players out there. And if you look at our partnerships, we are starting to address our deficits. We've started to come peer-to-peer with the best technology stack, not second to none. And the idea that we are focused on revenue generation is the key. This year is focused on how much revenue can we create in the use of this technology and where can we prove that revenue in the most scalable places where you could see the blue sky above those particular implementation, whether it's in fashion, sports entertainment, high corporate, enterprise, data sales. Our focus is around using these platforms to generate revenue, period.

Got it. Excellent. And then I suppose if I just kind of double-click on the IBM agreement and then, I guess, mix that in with the agents you're mentioning here. So where would you say you are in I guess, like if we're going to baseball analogy in terms of the innings, how far along are we for building out each of these things? The Datavault itself, the partnerships, the integrations of the existing partnerships you do have? And then just kind of getting like, I guess, global or even domestic just general awareness of Web3, more education out there. What stage are we in right now? And what's it going to take to actually -- for the industry to kind of, I guess, start catching up and, I guess, moving forward as well because Web3 is still somewhat of an abstract concept to many kind of dinosaurs out there. So would love to hear your thoughts.

Yes. So the shift from storage and compute to experiential technologies that don't require -- in some instances, the AI and the display and the capability of Web3 requires more compute. But in many instances, it eliminates. It cuts through or utilizes existing Web2 technology to create a new layer, a meta layer. And that meta layer is understood by the largest companies in the world. It's been a process that Bloomberg has -- [ I think it effectuated ] over several decades to monetize data in an encrypted fashion. We've just advanced upon this thinking. There are the most exceptional companies and the most learned are several years into their Web3 strategies. And as that trickles down as great technologies do, they become less expensive and more obtainable by mid- to small-sized companies. And companies like ours, Datavault AI, we're building agents that are not only affordable but that go to work for our company clients. So think of these as workers that end up working for our clients that we're building in an AI format. This is something that is becoming very integrated into our thinking, into what is Datavault AI. It's really the build-out of these agents on behalf of our customers and that our platform is fed by agents and that agent in the future will literally trade data. You'll give your agent the credit card, and they'll come back with the data. The idea that there is an advancement and a futuristic view of it, here in 2025, we have our timing right to the market. And you see that with Databricks and Datadog and Snowflake and this Data AI group that's emerged. We have a differentiating system, that is patented. And in terms of where we are in our development, Web3 is on first base. Our development is already rounding the basis. We already have a platform up and running. We could show you your data estate in any type of company whether it resides in the cloud or on-prem or in devices surrounding your operations or in systems that are cyber securitized within data centers, within or outside of your control. We show you that footprint, along with the artifacts and the score of that currently today. That process is getting more and more automated. Our ability to trade data is exceptionally enhanced with the NYIAX relationship, having NASDAQ infrastructure to be able to scale that trading platform. The Information Data Exchange takes on a whole new light of what can be done there. But our technology stack is 100% there. It will be improved upon just like Salesforce increases its platform capabilities based on vertical market penetration and use cases, we're doing the exact same thing. So our customers will improve the core, as we work with pharmaceuticals and biotechs and fintechs and entertainment. We can tweak our platform to serve them better and tell our agents how to function inside their -- our customer's system to maximize data monetization. So hopefully, that answers your question.

Yes. it does. And maybe just one more because it's such a timely topic that we can't escape obviously. There's a lot of geopolitical developments going on these days, especially today. Any impact or any -- what's your perspective given your kind of -- you kind of have a lot of irons in the fire here in terms of new alternative ways to monetize. You have a lot of partnerships going on -- they're multinational. Just any thoughts on any disruption or any accelerators, any synergies here, any impact with what's going on in the world? Or is this sort of irrelevant to you? Or how would you just maybe summarize if you have any thoughts? I'd appreciate it.

Well, sure. No American company is immune from the global environment. We have a tumultuous system in that we can change every 4 years, and we're going through some of those cyclical changes right now, and we're likely to experience it again in another 4 and another 4 after that. Much of it is above our pay grade. We're focused on our patent protection being effectuated around the world in the form of our technology being adopted. But these things, in terms of the macro view things, companies will be required to compete and compete by having more revenue on their bottom line. And if we can convert data to cash, if we stay focused on our system, which is the Information Data Exchange, shared by the Datavault. This system with trusted content and acoustic capabilities that no other platform has, is designed to make revenue for our clients. And therefore, in good times and in bad, we are a source of strength. We can strengthen the balance sheet of our clients when our technology is used properly. And therefore, we aren't immune to the macro system, the larger global markets certainly, we'll have budgets constrained and other assets that delay in deployment because of resources or because of changes taking place in the macro market. I would just say that in good times or bad, generating revenue from your data assets remains a brand-new opportunity for companies that have not considered even their historic resources or their present or their future. And data is not something to be ignored, and you can see that AI has changed the value of data and the purpose of data and the importance of data. And anybody ignoring that shift likely is less competitive in the future. We help companies keep their eye on the data infrastructure and data estates that they can now recognize and value through our technology and I feel that, that gives us a strong handle with government business and enterprise business around the world in good times and in bad.

[Operator Instructions] And your next question today will come from Spencer Michals with Money Channel NYC.

Congratulations on everything you're doing. I see the platform. I understand the platform how every company is able to monetize their data, put it on the exchange, and therefore, I just wanted to ask you a couple of questions about that you didn't mention, blockchain and your patents and how the tokenization to the blockchain to the Data Exchange works? And what type of patented value do you see on that?

Well, a great indicator of our value is the market price of our stock, and that's what -- the disconnect right now is that, there is no other valuation tool that is available to us other than that -- that we achieve on our own. So we know these -- if you look at Lake Street and some of the work that's been done around the Datavault assets. You can see a much higher valuation in that asset than you would see in our stock price. And so truing that up is nail on the head, the -- results of the hard work of our staff. Now in terms of the Blockchain and what our technology represents, this is why we're a Web3 company is we focused on AI and blockchain, intellectual property development and we've added to that an Acoustic portfolio with the WiSA Technologies as well as ADIO. And if you looked at it, what blockchain does for companies. It allows them to create immutability in records. It also allows them to create an index, as tiny as a grain of sand, think of the Dewey Decimal System of what that did to a library or a pile of books, the idea that it made a library out of a pile of books. The Dewey Decimal is a example of an indexing that can be done. And doing that on the Blockchain has a number of capabilities, and we've unlocked through our patents, the capability of companies of creating a vending machine, ability to vend data directly to buyers whom which have already given them cash for their assets. So the ability to objectify and identify value and then to create indexing and use tokenomic systems to create a meta layer that can literally market, package, envelope and deliver a transaction that enables users to obtain the data that they purchase, and for sellers to have a safe and secure way to know that buyers meet standards that they are of quality and that their data doesn't serve any ill purpose or negative purposes against the owner or the provider of the data asset itself. That also comes with a level of understanding of cybersecurity and that cybersecurity is arguably one of the most important issues facing corporate America, corporations worldwide, in fact. Cybersecurity, it has a partner in Datavault in that we do not work with data assets that are leaky or that are exposed or improperly managed. So we become not only an index, but a manager of resource that allow management to see their data estate and how it's performing, how well protected it is and what it's worth. So I hope that answers your question.

Yes. Just a follow-up on the Web2 to the Web3 and what that means. It seems like you guys are a toll booth or you guys are Visa. I'm trying to really wrap my head around taking that Web2 into the Web3 world, and what that means. Last question, sorry.

So from Web2 to Web3 exceptional Web2 systems in Software-as-a-Service, take any platform that you use banking, entertainment with Netflix, our lives are consumed with logging into Web2 systems. Web3 is about not having the need to log into anything, the ability to be ubiquitous to have a system that runs on top of systems, that's creating a data object in those that are in power within organizations can yield the power of data in Web3 by understanding its value. So that meta layer starts to inform you and it starts to index. And it also allows you with AI and the use of blockchain to decentralize the transaction related to monetizing it. And the ultimate control of utilities and other aspects, that can be done on the meta layer, represent a new management paradigm and a technology that is breakthrough in nature. It is analogous of when we first got websites, we now get AI agents. Websites are synonymous with every business in the world, and you're going to see agents that are synonymous with every business in the world. And that's a tradition -- that's the transition underway with Web2 to Web3. Think of Web3, as passive as a platform serving other platforms an entirely in silico environment. The word meta -- brings to life the Metaverse, where things are entirely digital and that is the transition that many companies have realized can generate a great deal of economy and value of control and power.

This concludes our question-and-answer session. I would like to turn the conference back over to Nate Bradley for any closing remarks.

Well, thank you for the time today and the questions. I think in terms of our go-forward strategy, it's clear. We turn data to cash. We have a revenue focus in this company of using technology stacks that include acoustic systems that no other company has. We have a system that enables our clients to trust the information they see in meta format, and we have the ability to transact at a level that is analogous to how you trade stocks and bonds today. You will be able to trade data in the future and turn data to cash. And we have the technology stack, the team and now the revenue coming into the company, we're proving out a value much higher than where we're traded, and we're going to continue to prove it. And thank you, everyone, for your time today, and I appreciate your interest in Datavault AI.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.