SKYX Platforms Is Firing Up The Cylinders

seekingalpha10-19

Skyx Platforms offers innovative smart home solutions, including patented plug-and-play technology, aiming to become a standard in safe electrical installations. The company partners with ...

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Needless to say, if this is approved, it would significantly boost sales by requiring the use of SKYX's technology in new homes and buildings. While managem","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4096":"电气部件与设备","SKYX":"SKYX Platforms"},"translate_title":"SKYX Platforms正在启动气缸","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SKYX":0.9},"content_text":"Skyx Platforms offers innovative smart home solutions, including patented plug-and-play technology, aiming to become a standard in safe electrical installations.\n        The company partners with major retailers and manufacturers like Home Depot and GE, enhancing market reach and adoption of its technology.\n        Financials show revenue growth and improved margins, with management expecting positive cash flow next year, aided by strategic partnerships and licensing deals.\n        Despite cash flow challenges, the potential for mandatory safety standard approval and new product lines present significant growth opportunities.\n           BanksPhotos/E+ via Getty Images Skyx Platforms (NASDAQ:SKYX) offers a range of smart home solutions in lightening and ceiling fans and a smart-home platform. The company offers a patented universal power plug and receptacle that is easier and safer to install (no need for handling wires):   SKYX IR presentationThe company is increasingly adding smarts to the products to become a smart home and building producer and platform with products like:   SKYX IR presentation Universal Power-Plug & Receptacle enabling plug-and-play installation of light fixtures and ceiling fans, eliminating the need to handle hazardous wires. Smart Universal Power-Plug & Receptacle adding smart features like app and voice control, scheduling, and energy-saving modes to the same plug-and-play installation. Smart Plug and Play Lighting and Ceiling Fans combine plug-and-play installation with smart technology controlled through the SkyHome App. Smart Sky Platform, an all-in-one smart home platform that integrates various safety and smart home features, including smoke and carbon monoxide detectors, sensors, and more.  The company is going through three generations of products, all of which offer big opportunities:   SKYX IR presentationThe company will advance from selling products to becoming a platform with its smart home and buildings platform:   SKYX IR presentationBusiness model There are various planks in the business model:  Creating a new safe electrical ceiling standard and fostering its adoption. This is a razor and blade model as an increasing variety of products fit its plug-and-play safe ceiling standard. Adding smart home features and creating a platform also with a razor & blade model (see below under Smart Sky Platform). The company sells through some 60+ different e-commerce sites The company is partnering with the likes of Home Depot, GE Licensing, Ruee Appliances, Kichler, Quoizel and Golden Lightning. The company licenses its technology to extent its reach and increase the chance of becoming the standard.  A New Standard?   SKYX IR presentationSKYX has filed an application with the NEC seeking mandatory safety standardization for its ceiling outlet receptacle platform. Needless to say, if this is approved, it would significantly boost sales by requiring the use of SKYX's technology in new homes and buildings. While management is confident they have everything that's needed to become mandatory, there is no guarantee of approval or any set timeframe for a decision. There is progress:  SKYX's weight-bearing safe plug-and-play outlet/receptacle has already received NEC inclusion and is represented by ten different segments in the NEC Code Book. The NEC has adopted a change to the definition of \"receptacle\" based on SKYX's technology, which management considers a significant development. SKYX has received NEC generic name approval for its weight-bearing safe plug-and-play outlet/receptacle for ceilings (WSCR) and its ceiling plug (WSAF). This standardization approval from ANSI and NEMA signifies recognition and acceptance of SKYX's technology by leading U.S. standardization organizations.    SKYX IR presentationWe're still way off its plug becoming a mandatory safety standard (if that indeed happens) and this depends on regulatory bodies, but there are things the company can do to increase its chances and that is for the plug to become as ubiquitous as possible (basically becoming the de-facto standard). This is where licensing and partnering come in, which accelerate market acceptance. Growth drivers There are multiple growth drivers, many of which are arriving at once:  New customers New products New partners and channels Licensing  New customers There is plenty of evidence this is working as its products are in 10K+ US and Canadian homes and management expects this to be in the tens of thousands next year.   SKYX IR presentationWe expect to significantly enhance our market penetration to the builder markets in the coming months. Partners   SKYX IR presentationKey partners are:   EGLO, a European World Leading Design and Manufacturer of Decorative Lighting and Ceiling Fans.  Home Depot, sells a host of its products through Home Depot's 2K+ stores and website.  GE Licensing, a five-year licensing partnership agreement for the U.S. and global markets, established SKYX's ceiling outlet/receptacle technology as the standard for homes and buildings.  Ruee Appliances, the biggest lighting manufacturer in the world.  Kichler, entering a product collaboration with high-end lighting and ceiling fan company Kichler  Quoizel, a U.S. leading lighting company and manufacturer.  Golden Lightning, a U.S. leading elegant lighting company and manufacturer.  Here is what the 5-year deal (with automatic one-year renewals) entails, from the linked PR: GE's licensing team will provide licensing services, including seeking and arranging for licensee partners in the U.S. and globally, negotiating agreement terms, administering contracts, auditing partners, assisting with monetization, and patent protection strategy, while providing mutually agreed support to defend the Company's intellectual property. GE will get a percentage of the revenues generated through these efforts. The deal with Ruee involves Ruee providing several services in areas like financial, mass production, manufacturing capabilities, and distribution to the global markets. Not only does Ruee extend the company reach, it also provides crucial financial leeway which management has likened to the Dell Working Capital Model (Q2CC): Dell Computer really revolutionized the direct sales or rapid sales to customers and they were able to collect their receivables within one to three days. And they were able to have favorable vendor payables that could be over 10 times that time span. So, it could be 30 to 60 days. And that significantly enhances the cash conversion cycle and the liquidity generated from working capital. Very important as the company is still quite some way off from producing positive cash flow. New products SKYX plans to introduce a wider variety of products, including wall sconces, ceiling fans, flush mounts, downlights, exit signs, and emergency lights. This will allow them to target the builder market more effectively. The partnership with Ruee is enabling this product expansion (Q2CC): part of our relationship with collaborating with those vendors, manufacturers, including Ruee, is to address the variety of products. Currently, our revenues mainly go our product and plug and play, go on smart chandeliers. Plug and play chandeliers and pendants. But now we're opening the door for recessed light, wall sconces, ceiling fans, flush mounts, down lines, what we call and down the road exit signs and emergency lights. Those are definitely key to builders. Then there is the recently introduced, patented Recessed Light (Q2CC): We announced this Recessed Light, some people call it hi-hats. No patent on plug and play people still, it's a small, very small fixture, but people still go on ladder, spend time on the ladder, touching hazardous wires and taking can take 30 minutes to someone install one of them. Here it becomes plug and play. This is -- as we said in our press release and earlier, this is a multibillion-unit market. We're very excited that we started production. Those are part of things that are going to go on The Home Depot. This potential product opens the door for many builders and other projects that we're talking to now and we hope we'll be able to announce in the next coming months. This has also great potential globally, not just in the US. Smart Home Platform Then there is the Gen 3 All-in-One Smart Sky Platform which begins mass production late this year. The platform integrates smart and safety features into a single device, simplifying smart home installation and enhancing performance.   SKYX IR presentation This can transform houses and buildings into smart ones in minutes, rather than weeks. The company won multiple awards with this platform at CES in January. There are a host of possible subscription services like:  Communications like internet services. Fire Alarms; leveraging the platform's integrated smart smoke detector. Home Intrusion Alerts through utilizing sensors and connectivity features within the platform. Emergency Response Services, involving partnerships with emergency response providers or integration with existing emergency services. Monitoring Services, using the platform's various sensors to monitor aspects like movement, smoke, fire, carbon monoxide, temperature, humidity, and other environmental conditions and hazards. The platform could also potentially monitor home access and visitors.  The platform can be offered to a host of different markets and segments, like homeowners, rental property owners/managers, hotels, cruise ships, elder living facilities, schools, hospitals, offices, commercial buildings, and retail businesses. These are all plans and opportunities, it remains to be seen how fast these can materialize. Licensing SKYX intends to generate revenue through licensing its patented technologies. They are currently focused on licensing its standard and smart plug-and-play technologies to various industries, including tech, smart home, AI, lighting, ceiling fans, and electrical, This strategy allows SKYX to capitalize on its intellectual property and generate revenue without having to manufacture and sell products directly, as well as widens its reach and increases the chance of becoming standard. The deal with GE licensing in particular is a significant step forward here. International The company is already generating some sales from Canada but overseas markets constitute a huge opportunity. Recent deals with partners, especially the ones with Ruee and EGLO give it significant international exposure so we are keen to see how this develops.  Finances Data by YCharts Revenue was $21.4M in Q2, up from $15M in Q2/23 and up 13% sequentially. Gross margin increased 400bp sequentially to 30.7%. OpEx decreased 11% sequentially to $12.8M and cash OpEx decreased 14% to $8.7M. Adj EBITDA loss was $2.1M versus $4.6M in Q2/23.  So we see revenue growth, gross margin expansion, and a decline in dollar terms in OpEx, all conspiring to improve financials even if the company isn't cash flow positive yet: Data by YChartsThe company had $15.6M of cash left, that's $4.2M less than at the end of Q1. Management argues that the company will become cash flow positive sometime next year and the Dell-like financing that Ruee enables them to be frugal with cash gives them a good shot at avoiding additional financing needs until then. Valuation Given the negative cash flow dilution has been significant: Data by YChartsAnd there is a lot more on the way, from the 10-Q:   SKYX Q2/24 10-QSo fully diluted there are 146.5M shares, which at $1.2 per share produces a market cap of $175.8M and an EV of $160.2M. The shares are selling below 1.7x FY24 EV/S and 1.2x FY25 EV/S. We're inclined to say that's fairly cheap. Conclusion The company has many things going for it:  Unique technology and solutions that fill a real need and have a huge TAM. Multiple growth drivers seem to arrive all at once, like a host of new partners opening significant new channels like Home Depot, new segments and opportunities abroad, and new products, especially the recessed light and the smart home platform which opens up the possibility of recurring revenue streams, licensing deals with the likes of GE, Any single one of these, like a single product line sold through Home Depot, could improve revenue materially, together these developments could open the floodgates of demand. Management is clearly expecting this as they see their products in tens of thousands of homes next year versus 10K homes today. A bit of a wild card, but its ceiling outlet receptacle platform could become a mandatory safety standard, which would be like hitting the jackpot. While the company is still bleeding significant amounts of cash, partners like Ruee are very helpful here greatly reducing the company's cash needs. Management thinks they have enough cash to generate their own, somewhere next year and they could be right. The shares are not expensive.   The risk is a slowdown in growth on a slowing economy scuppering management expectations of becoming cash flow positive next year and needing additional financing. Given the growth vectors that are lined up, this seems a small but non-negligible risk to us.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2476566697"}