Resonant (RESN) Q4 2020 Earnings Call Transcript

Resonant (RESN)
Q4 2020 Earnings Call
Mar 15, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to Resonant's fourth-quarter and full-year 2020 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the conference over to Greg Falesnik from the MZ Group, the company's investor relations firm.

Greg Falesnik -- Investor Relations

Thank you, Operator. Please note, we'll be using a presentation during today's call, which is accessible on the events page of Resonant's IR website. If you're with us today via phone, please go to the events page to either view or download the presentation to follow along. Turning to Slide 2.

Earlier this morning, Resonant released financial results for the fourth-quarter and full-year 2020. The earnings release that accompanies this call is available on the investor section of the company's website at www.ir.resonant.com. Additionally, some of the information in this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects, as well as words such as belief, intend, expect, plan, and anticipate, and similar variations identify forward-looking statements, but their absence does not mean that the statements are not forward-looking.

Such forward-looking statements are not a guarantee of performance and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in Resonant's most recent Form 10-Q and 10-K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this call and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding circumstances after the date of this call. With that, it's my pleasure to turn the call over to the chairman and CEO of Resonant, George Holmes.

George, the floor is yours.

George Holmes -- Chief Executive Officer

Thank you, Greg, and thank you, everyone, for joining us on today's call. I'd like to welcome you to the fourth-quarter and full-year 2020 financial results conference call. Joining me today is Martin McDermut, our CFO; and Dylan Kelly, our COO, who would be joining for the Q&A. Turning to Slide 3.

2020 was a remarkable year for Resonant as the trend toward a connected world continued to accelerate and, therefore, so did the need for effective RF building technologies. For mobile video conferencing and streaming, through emerging applications such as autonomous vehicles and remote surgery, demand for mobile data continues to grow exponentially. Our proprietary technology platform at its core enables the design and manufacturing of wide bandwidth high-frequency RF filters for high-performance networks. As the need for data ramps up in our society, we are proud to be able to continue to play a critical role in delivering a new age of connectivity.

Let's look at some of the key highlights from our fourth-quarter and full-year 2020. Revenues for the full year were a record $3.2 million, which is over 330% greater than our revenues in 2019. Let me remind everyone that these are royalty revenues, which suggest the equivalent annual component sales of roughly $30 million based on our historical average royalty rates of approximately 10%. Over 6.9 million units developed with our ISN design technology were shipped by our customers to OEMs in the fourth quarter of 2020, representing a year-over-year increase of over 200% and a sequential quarterly increase of over 65%.

This momentum allowed us to hit the milestone of our customers shipping over 50 million RF filters designed with our ISN design technology. This represents real production unit volumes that have been shipped and sold by handset manufacturers to consumers, not just sample or distribution shipments. Even in light of our accelerated unit volumes in Q4 and record revenues for the year, the most significant developments remain with our breakthrough XBAR RF filter technology, which is quickly being recognized as one of the best solutions in the industry to unlock the future of next-generation, ultrafast, high-frequency networks and the applications these networks enable. We continue to work closely and execute upon our strategic partnership with the world's largest RF filter manufacturer to bring XBAR to the market for mobile handsets.

We passed the second milestone of the agreement ahead of schedule in October 2020, which included major technical milestones in achieving previously determined performance, packaging, and initial reliability targets. Upon passing this milestone, we received a $2.5 million royalty payment, and most importantly, are now moving into the mass commercialization and high volume manufacturing phase of the agreement. More on this later. But all of our work with this important customer has remained on track and ahead of our public schedules.

In addition to XBAR's progress on the mobile side, we also showcased the ability to successfully manufacture XBAR filters for nonmobile applications using a standard Surface Acoustic Wave, or SAW front-end process, and multiple foundries. This fundamentally validates our ability to produce these fil -- filters faster, better, and cheaper by using only proven high volume manufacturing processes as opposed to traditional Bulk Acoustic Wave, or BAW foundry processes, which are more complex and expensive. To date, six separate foundries have now successfully manufactured our XBAR filters, which, again, is an industry breakthrough. Why? Because it demonstrates XBAR's simple manufacturing process, applicability to high volume foundries, and fundamentally lower cost.

Indeed, 2020 was a momentous year for Resonant, and I am pleased with the validation of our XBAR-based solutions in the market. We -- we are just now getting to the point where we believe our technology will not only be proven as the best but also the only solution to unlock the true potential for 5G, 6G, Wi-Fi 5, 6, and 7, ultrawideband, and potentially even Millimeter Wave. Driven by this market recognition and potential, we expect 2021 to be the breakout year for our XBAR technology. Turning to Slide 4.

There's a ton of excitement in the media around the promises of 5G, and understandably so as it will affect every industry and broadly improve many parts of our day-to-day lives. However, I'd like to spend some time clarifying where we are and where we are headed as it relates to the rollout of 5G, as well as the ultrafast next-generation networks such as Wi-Fi and ultrawideband, which are often dependent upon each other and are critical to the connected world we all envision in the future. The improvements in speed and latency with their foundation in power handling at high frequency and wide bandwidth, the next-generation networks require to open the door to massive connectivity between people and things are taking shape on a broader scale. Mobile phones, smart devices, home appliances, connected vehicles, and many more applications are poised to benefit from this real-time communication.

And all of the networks powering these applications need RF filter solutions such as the ones Resonant's XBAR technology enables. While the network operators are working hard to deliver nationwide 5G coverage in its initial form, bringing the very early stages in its performance and capability, we are essentially rounding first base with today's 5G as it's only available in relatively few cities across a limited number of expensive devices that exhibit less than marketed performance. The revolutionary improvements that 5G networks will provide is not yet available. Real 5G data speeds will be 100 times faster than 4G with -- with latency 25 times that of 4G, and this will only be achievable with protection against interference.

In January, U.S. mobile network operators spent over $80 billion to acquire new Sub-6 gigahertz RF spectrum, upon which their 5G network services will be built, a new record. This is another indication of our forecast that the second wave of 5G deployment will be in the Sub-6 gigahertz range and it won't be until 5G's third wave for full Millimeter Wave deployment. What this means is in the absence of XBAR technologies being deployed, the market would leverage aluminum nitride BAW, which has shorter range, requiring more base stations to be deployed in the operators' networks, which equals higher cost.

We believe there is a potential for billions of dollars of spectrum that could be wasted in the U.S. alone due to interference degrading spectral efficiency or based on the increased number of base stations to deliver the same coverage. 5G will also depend on next-generation networks such as Wi-Fi 6E and ultrawideband, which bring additional capacity and speed, as well as extreme location accuracy. These new networks serve as a backstop to the 5G cellular network, which can easily reach capacity and become overloaded.

Turning Slide 5. The challenge that exists with these networks is unlike any other in the history of wireless technology. Delivering state of performance to these next-generation networks requires every device to have high-performance RF filters. It's well-documented that the RF filters that were designed for 4G requirements are not technically well-suited and cannot scale to meet the demands of these next-generation networks due to the physics behind the base technology not having the required power handling and bandwidth at high frequencies.

But let's take a few minutes to explore what would happen in a world where Resonant's XBAR technology did not exist. The handset OEMs are going to demand that the market's leading providers of RF filters deliver the best solutions they can that can support the standards of 5G operation. Remember, 98% of the RF filter market is controlled by seven companies. Turning to Slide 6.

Without XBAR, those legacy filter technologies will be adapted to deliver the best solutions available, pushing the boundaries of their existing performance by adding external components or creating modules with different typologies to try to deliver at least the minimum performance thresholds required. Another well-known approach is experimenting with material changes to increase performance. We had an external lab measure the performance of a typical aluminum nitride BAW solution compared to an XBAR solution, and here's what they found. Turning to Slide 7.

These creative approaches using traditional BAW structures still fall remarkably short of the desired performance of 5G, Wi-Fi 6E, and ultrawideband when it comes to interference protection, BAW's power handling, size, and cost. All of these new wireless technologies represent a challenge, resulting in performance compromises for legacy filter technologies, choking the internet throughput of 5G. However, Wi-Fi 6E with the widest bandwidth of 1,200 megahertz is still the most significant challenge, especially in the handset where all previous generations of cellular, Wi-Fi, and ultrawideband must coexist. The performance plot from a third-party test lab highlights the limitations of legacy BAW aluminum nitride technology for Wi-Fi 6E.

The little rejection to 5G and ultrawideband potential interference, which will slow data speeds, reduce coverage, and drain battery life. Power is critical in these new high-frequency applications because as you increase frequency, you have to increase power to maintain the same coverage and speed. These solutions, in many cases, fall short of the typical XBAR solution by up to 75% for total power at the band edge. As we move to Slide 8, Resonant's XBAR technology provides the bridge from today's early rollout of 5G, the wide bandwidth, high frequency, low loss, and high power capability that we expect from the true 5G, Wi-Fi, and ultrawideband to coexist in maximum performance.

And we believe we are the only company that has the technologies that can meet these next-generation requirements innately. Slide 9. Third-party test results highlight measured state-of-the-art Wi-Fi 6E filter data. It's what we believe is the best in class performance when compared to legacy BAW technology currently available on the market.

In both cases, the performance was measured by a third-party test lab. And the improved rejection using our XBAR technology is clearly demonstrated, removing interference, and not choking the flow of data. Resonant is now in the position to sample fully acoustic Wi-Fi 6E devices with 1,200 megahertz of bandwidth and five gigahertz Wi-Fi filters with over 740 megahertz of bandwidth, both with more than 30dB rejection to potential interference. We believe these are best-in-class devices.

As a result of our work and industry-leading progress, we're being asked to spearhead several thought leadership events and panels relating to the role of RF filters and 5G in next-generation networks. In 2020 and through March of 2021, our team has led eight roundtable events, many of which you can find links to on our website. At the beginning of 2021, we also announced that Resonant became a member of the Wi-Fi Alliance, a global nonprofit industry association of companies who share a vision of seamless connectivity. As we transition to Slide 10, let me once again highlight that our unique technical ca -- capabilities stem from leveraging our state-of-the-art ISN design software platform, a key differentiator as we leverage a three-dimensional multiphysics finite-element modeling tool to rapidly create safe designs.

This position results in rapid generation of design -- designs with fewer turns in the manufacturing process, and ultimately reduce time for integration into modules versus the standard, iterative, and imprecise process that is typical in the industry today. Moving on to Slide 11. What's fundamental in this methodology is that as we complete designs for our customers by leveraging our ISN design platform, we actually retain all of the IP. To that end, in 2020, we focused on building a significant protective intellectual property mode around our technology that is increasingly validated by our partners and appreciated by the market.

We grew our patent portfolio by 50% year over year to over 300 issued and pending patents in the U.S. and internationally. The bulk of this growth relates to our XBAR technology. And today, we have over 150 patents issued and pending for XBAR-related technologies to support high-frequency networks like 5 and 6G, Wi-Fi 5, 6, and 7, ultrawideband, and Millimeter Wave.

Slide 12. Before we move on and wrap up this section, I want to highlight the advisory board team we have assembled and all of their hard work through 2020 and early 2021. Along with helping lead our business strategy and execution, advisory team has played a thought leadership role by educating the market on the role that XBAR is and will be playing in the rollout of next-generation wireless networks. As previously noted, last year, advisory team participated in panels at eight conferences and seminars, discussing the current state of the filter market and the main drivers of next-generation networks.

Most recently, we've expanded our advisory leadership that includes several thought leaders who have joined our technical advisory committee. You can find a complete set of biographies on the advisory team and technical committee on our website. Slide 13. Just as we differentiated our approach to developing our technology and IP from the very beginning, we took the strategic approach to our business model.

Rather than competing with the RF filter manufacturers, we're enabling them. We believe the world's leading OEMs will be increasingly dependent on manufacturers to leverage our filter designs to deliver products into the market. It is our belief that finding RF filter solutions that can meet the demands of high-frequency applications is going to be paramount for the industry, and XBAR is quickly gaining recognition. As a reminder, we entered into a partnership with the world's largest RF filter manufacturer last year.

The deal consisted of a strategic investment of $7 million into Resonant, as well as a $9 million multi-year commercial agreement for four bands utilizing XBAR technology. The agreement laid out four milestones to ensure a mutually beneficial and productive process from the start. As I mentioned earlier, we achieved the second milestone under the agreement in October, well ahead of schedule. This is incredibly significant as it validates our XBAR filters for 5G.

Meaning they do what we say they are going to do and we confirmed targeted performance packaging and initial reliability. This achievement brings in prepaid royalties in the millions of dollars rather than having to wait for unit shipments. We have received 50% of the prepaid royalties for these first four bands to date. We are now focused on the next phase of the agreement which focuses on building a commercial platform and high volume manufacturing of XBAR-based RF filters for 5G applications.

From here, we have two more milestones to hit as their designs move to commercial production and high-volume OEM shipments. Our work with this partner is going exactly as anticipated and it remains a potential for us to contract with them for additional designs this year. This partner alone could represent a potential of over $100 million in annual revenue for Resonant. While that seems like a big step from where we are today, it becomes clear when observing our partners' position in the industry.

The Top 7 filter manufacturer control over 98% of the market for filters and duplexes. Our partner has the largest market share in both categories controlling 37% of the filter market and 32% of the duplexer market. Their filter market share is bigger than the second and third largest players combined. Further, our partner has established relationships with some of the world's largest handset OEMs which allows us to leverage their expertise to bring XBAR into the market versus doing it ourselves.

Moving to Slide 14. Existing partnerships uniquely position Resonant for success, the next-generation mobile handset application. However, let me remind you that Resonant's filter design application reaches beyond mobile. We are engaged with other Tier-1 customers in Wi-Fi and infrastructure applications that require high-frequency and wide-bandwidth performance.

In fact, recently, we secured a high-volume 2.4 gigahertz SAW Wi-Fi socket with a Tier-1 handset OEM and are commencing the shipments of our first XBAR Wi-Fi 6E samples. We've announced that one of our existing partners, a Tier-1 RF filter manufacturer began shipping high-value band RF filters designed by Resonant into the automotive market. As manufacturers look to deliver 5G functionality in next-generation vehicles, our expert technology is an ideal fit for auto manufacturers to optimize performance on low-cost production processes. As we move forward through the first half of this year, we expect to secure a contract focus on XBAR for non-mobile applications which could include autonomous and electric vehicles, other IoT, CPE, or infrastructure applications.

With that, I'll pass it over to our Chief Financial Officer, Marty McDermut for a review of our fourth quarter and full year-2020 financial results. Marty?

Marty McDermut -- Chief Financial Officer

Thank you, George. Turning to Slide 15, I'll now provide an overview of our financial results. The amounts I talk about are GAAP, except where noted. Billings were minimal in the fourth quarter as compared to $82,000 in the same year-ago quarter.

Billings were approximately $3.2 million in 2020, as compared to $2.2 million in 2019. Revenues increased 32% year over year to $607,000 in the fourth quarter, as compared to $459,000 in the same year-ago quarter. Annual revenues increased 330% year over year to $3.2 million in 2020, as compared to $735,000 in 2019. At the end of the fourth quarter, deferred revenues totaled $1.8 million.

We estimate that amount will be recognized as revenue over the remainder of the contracts. Research and development expenses totaled $4.8 million in the fourth quarter, as compared to $5.2 million in the same prior-year quarter. The lower amount primarily results from reduced headcount initiated in Q1 of 2020, as well as reduced travel expenses due to COVID-19, partially offset by higher patent-related expenses. Research and development expenses totaled $19 million in 2020, as compared to $18.9 million in 2019 with the increase primarily due to expanded design activities on our ISN platform, XBAR technology, and filter design development and patent-related expenses, partially offset by reduced headcount and lower travel expenses.

Sales, marketing, and administrative expenses totaled $3 million in the fourth quarter, as compared to $3.1 million in the prior-year quarter. The lower amount is primarily due to lower travel expense. Sales, marketing, administrative expenses totaled $12.2 million in 2020, as compared to $12 million in 2019, with a slight increase primarily a result of higher public-company-related expenses and compensation expenses, partially offset by lower travel expense. Our operating loss was $7.1 million in the fourth quarter, as compared to an operating loss of $7.9 million in the prior-year quarter.

Operating loss was $28.5 five million in 2020, as compared to an operating loss of $30.2 million in 2019. Net loss was $7.1 million in the fourth quarter or a loss of $0.13 per share based on 55 million weighted average shares outstanding, compared to a net loss of $7.8 million or a net loss of $0.24 per share based on 32.7 million weighted average shares outstanding for the prior-year quarter. Net loss was $28.4 million for 2020 or a loss of $0.55 per share based on 51.3 million weighted average shares outstanding, as compared to a net loss of $29.9 million for 2019 or a loss of $1.02 per share based on 29.4 million weighted average shares outstanding. Non-GAAP adjusted EBITDA was a loss of $5.5 million or a loss of $0.10 per share in the fourth quarter, compared to an adjusted-EBITDA loss of $6 million or negative $0.18 per share in the prior-year quarter.

Non-GAAP adjusted EBITDA was a loss of $21.7 million or negative $0.42 per share for 2020, compared to negative $23.4 million or negative $0.80 per share in 2019. Cash and cash equivalents totaled $25 million at December 31, 2020, which included $11 million in net proceeds from sale of equity under our ATM program. Remember, we have no debt. With current cash on hand, we have enough to last into calendar year 2022.

On December 31, 2020, we had a total of 67 employees, 16 of whom have a PhD and 48 of whom are part of the technical staff. And then finally, turning to Slide 16 on the topic of guidance. As we highlighted in our preannouncement, we expect revenues in the first quarter of 2021 to be in line, slightly ahead of revenues in the fourth quarter of 2020. For the full year of 2021, we expect both unit volumes and revenues to be significantly greater than 2020.

I'd now like to turn the call back to George for closing remarks. George?

George Holmes -- Chief Executive Officer

Thanks, Marty. Now, let's turn to Slide 17 for what's the track in 2021. While this year was full of accomplishments to be celebrated, our work ahead is cut out for us as the critical challenges that face our industry quickly approach. We are just getting started.

As we look forward to 2021, we expect our volumes and revenues for the year to be significantly higher as we accelerate the pace of what we saw in 2020. Our legacy and foundry programs will continue to grow and provide the initial foothold for customer expansion into XBAR-based relationships. 2021 will be a break-out year for XBAR technology and we expect continued and ongoing validation from the market that XBAR-based solutions may be the only viable solution to meet the demands of not only 5G but also 6G, Wi-Fi 5, 6, and 7, ultrawideband, and potentially even millimeter wave. We will expand our relationship with the world's largest RF filter manufacturer, as we work with them to build a high-volume manufacturing platform for XBAR filters that will meet the exacting demands of the largest mobile handset OEMs in the world.

We expect to secure a contract in the first half of the year focused on XBAR for non-mobile applications which could include autonomous and electric vehicles, other Internet of Things, or infrastructure applications. I want to thank all of our employees, board, and advisory members for their dedication. This year in particular, as we navigated the COVID-19 pandemic and as we seek to revolutionize the connection between people and things, your hard work has translated to the growing success of our company. With that, I'll hand over to the operator to begin our question-and-answer session.

Operator?

Questions & Answers:

Operator

[Operator instructions] Our first question is from Tore Svanberg with Stifel. Please proceed.

Tore Svanberg -- Stifel Financial Corp -- Analyst

Yes. Thank you and congratulations on the continuous success here. First of all, George, could you elaborate a little bit more on the sort of third and fourth milestones for your, you know -- your -- your -- your largest contract customer? I -- I think in the past you've talked about commercial -- commercialization of the products potentially being on track for second '21 and, you know, just -- just wondering if that's still the case.

George Holmes -- Chief Executive Officer

Well, you know, we're still tracking, Tore, to meet the objectives of our customer. You know, they highlighted in their press release that they want to have devices out into the mobile space at the end of this year. And if they continue to plan to do that, we -- we plan to continue to support them in all the efforts to make that happen. I think what you'll see from us from a milestone perspective on the current agreement is, you know, meeting kind of the next milestone this year and -- and really focused on expanding the footprint with that customer into other devices.

And those will not only be in the mobile sector, but I wouldn't be surprised if we saw devices from them in the non-mobile sector as well because they're moving quick.

Tore Svanberg -- Stifel Financial Corp -- Analyst

Very good. And as a follow-up question, this time around, you've talked a little bit more about two -- two new things, one is ultrawideband, the other one is -- is automotive. So, could you perhaps elaborate on -- on why that's the case? So, you're knowing engaging with potential partners on filters for either one of those two segments?

George Holmes -- Chief Executive Officer

Yeah, sure. And I'm going to hand this off to Dylan so he can kind of chime in and talk about why XBAR's technology is applicable in those spaces and why we think we're ideally positioned. Dylan?

Dylan Kelly -- Chief Operating Officer

Hi. Morning, Tore. I think we've seen, you know, we be -- becoming much more popular as, you know, a location service over the last year or so. And as those are, you know, widely deployed in handsets, there's definitely a major interference case between Wi-Fi and -- and EWB.

And so, that's going to -- it's a -- it's a new filtering requirement that wasn't really present before. And then similarly, automotive into so many -- so many modules being shipped in vehicles now based on every car has a -- an LTE module and modem in it. And they'll migrate to 5G. And again, you know, with -- with automotive telemetry using 5G, there's going to be a lot of new filtering requirements there because if we can, we'll see.

If you know the failures of the communication, interference has to be squashed.

Tore Svanberg -- Stifel Financial Corp -- Analyst

Very good. Just one last question if I may. On the Wi-Fi side, you've talked about potentially announcing a -- a contract or customer there first half of this year. Is -- is that still on -- on -- on track? And, you know, I assume that would be separate from, you know, your -- your cellular contract.

With -- well, the largest contract.

Dylan Kelly -- Chief Operating Officer

Well, I think it be -- could be -- easily be a comp -- the issue of both, Tore, where you see Wi-Fi deals coming in -- in a multitude of different factors from a multitude of different customers. I think the -- the key thing that we have is with these latest-and-greatest Wi-Fi solutions, the performance is, you know, we're really excited about it. And what we see is we've got a full-band acoustic-only solution that's going to, we believe, really change the way the market's looking at these types of devices as evidenced by some of the stuff we talked about today on the call.

Great. Good and congrats on the continuous pro -- progress here. Thank you.

George Holmes -- Chief Executive Officer

Thanks, Tore.

Operator

Our next question is from Raji Gill with Needham and Company. Please proceed. Raji --

George Holmes -- Chief Executive Officer

Hey, Raji, are you there?

Raji Gill -- Needham & Company -- Analyst

Hi, can you can hear me? Yeah, sorry I was on mute. Sorry about that. Yeah. Yeah.

Yeah, thank you for taking my questions. A -- a question on -- on the non-mobile opportunity for XBAR. You -- you talked about seeing some traction in the first half of -- of 2021. I wonder if you can kind of maybe frame that in terms of how -- how big that opportunity could be and -- and how you think about that as part of kind of your long-term growth trajectory?

George Holmes -- Chief Executive Officer

OK. Well, first, let me -- I'm going to let Dylan jump in and talk a little bit about -- about the technology itself from what we're seeing with these early devices that we're going to start sampling here in the next week or so. We'll talk about that briefly, and then I'll kick in and talk about what we think that opportunity is. Dylan?

Dylan Kelly -- Chief Operating Officer

Yeah. I think what's really changed is historically, acoustic filters were not used in a lot of Wi-Fi applications. There was a, you know, ceramic filter technology before. Now, we're seeing with the -- the makers of the access point CPE devices want to operate 5, 6-gigahertz bands simultaneously.

But then you really need that performance of a -- acoustic wave filters. And so, at the end of the deck, you know, a comparison against well, you know, we define in the market as the best competing technology and you'll see those major limitations in the implementation of -- of the aluminum nitride bar. To beat all different rejection for requirements will be necessary to open the infrastructure side as well as smartphones. And so, you know, we've had pretty strong conventional -- conviction all year that we are really differentiated in these -- in this space and that we've got the -- the data to prove it now.

So, it's pretty exciting time for us.

George Holmes -- Chief Executive Officer

And from market opportunity, Raji, I think what we're seeing is, you know, the -- the Wi-Fi market, while historically has not been deemed to be as large, you know, as the mobile market, I think the latest data suggest that as they're moving into the acoustic filter requirements that that market is going to be about as big as cellular for acoustic filters. So, we're excited about it. It's a -- it's a market opportunity that plays well with our technology. And it's just going higher in frequency, creating even greater opportunity for us in the long term.

Raji Gill -- Needham & Company -- Analyst

Yeah. Yeah. Thank you for that. Just a -- a question follow-up question, Dylan, on -- on the coexistence filter.

So, you know, the Wi-Fi 6E devices will have both bands in one device. And I think, you know, using Resonant's technology, which is kind of a single wideband filter is a solution that can kind of solve some of the -- the issues that some of the manufacturers are trying to use, which is two filters to meet these requirements and that could impact performance. So, just on -- on that, I was wondering if you can kind of elaborate a little bit further, and you touched upon that on -- on the presentation, but how that kind of differentiation of using a single wideband filter is creating kind of this competitive advantage in -- in Wi-Fi 6E?

Dylan Kelly -- Chief Operating Officer

Yeah. So the one thing I say -- I should have hoped for was that the move to the 6E, which will have both of the five and six gig bands running simultaneously. And on top of it, it is these MIMO systems, you know, multiple-input, multiple-output, it's working with four antennas for a five gigahertz band, four antennas with six gigahertz band. Each one of those needs a filter, so now it's eight filters in a box.

And that's why the scale to market is getting pretty interesting, you know, relative to the size of mobile. And then, what happens when you do the multiple filter implementation that our competition's pursuing, there's -- there's certainly a size and cost impact, and we also have, you know, potential performance issues across those transition frequencies and most likely going to have an additional loss which ultimately results in the shorter range for your Wi-Fi network.

Raji Gill -- Needham & Company -- Analyst

Thank you. And just my last question in terms of the success that you're getting on -- on the foundry side. You mentioned you have now six separate SAW foundries now of mine -- manufactured XBAR. I wonder how -- how you kind of think about the foundry strategy as part of you -- part of the strategy of developing an overall ecosystem to start supporting XBAR and how that will kind of feel more adoption of -- of that technology? Thank you.

Dylan Kelly -- Chief Operating Officer

It's an interesting play for us that allows us to, you know, very cost-effectively build to build samples potentially go to market direct. But is also a useful tool for business development where we can show, you know, it's working consistently surprised the ability really to do this, to go use off-the-shelf SAW process and build these -- these XBAR devices. And so, that's really wonderful to build on and we'll talk with the other Tier-1 makers and show them hardware and get them very interested in the technology.

George Holmes -- Chief Executive Officer

Yeah, Raji. You know, it's -- it's an interesting byproduct of the -- our existing business, right? When we -- when we started this company, you know, in 2014, we were focused on, you know, vertically integrated filter manufacturers. We got into the foundry business looking for ways to collapse the time to market. It's our -- what we -- the work that we did to really understand how you could couple the capabilities of these pure-play foundries with our tools such that we could kind of deliver these devices very cost-effectively just really became an added bonus as we got into the, you know, the development of XBAR and being able to go out and show that we can go get XBAR devices manufactured on a number of different foundries.

And -- and we're talking about a number of -- a number of new foundries today as well. So, it's a -- it's -- it's, I think, one of the very definite competitive advantages we have. We're using a very well-known process. It's not a difficult thing to do to spin up a new SAW foundry on XBAR whereas if you had to go spend up a new foundry on, you know, a custom BAW process I think that's pretty difficult.

So -- and it's proven to be pretty difficult. And so, I -- I think, we're pretty lucky here and it really allows us to, you know, show how competitively advantage this technology is today and we'll be even more so in the future.

Raji Gill -- Needham & Company -- Analyst

Appreciate. Thank you.

Operator

Our next question is from Cody Acree with Loop Capital. Please proceed.

George Holmes -- Chief Executive Officer

Hey, Cody.

Cody Acree -- Loop Capital -- Analyst

Yeah, thank you. Thank you, hey. and thanks for taking my questions. Just onto that point of the -- the multiple foundries -- SAW foundries.

What does that do to the pricing curve to your competitors? I guess how much of a -- of a price improvement are your -- your partners -- your customers partnering with foundries able to come in and be competitive with the -- the internal manufacturing fabs as -- of possibly from Broadcom or Qorvo?

George Holmes -- Chief Executive Officer

That's a great question. And you know if we sit back and look at it and I'll take you back two or four years ago when we were talking about the fundamental differences in -- in cost structures of SAW versus TC-SAW versus BAW devices, you know, and we were seeing that at that point in time, you know, SAW structures were about 30% of the cost than the BAW structure and a TC-SAW was about 60%. So, if you sit back and kind of use that and extrapolate that forward and now you're doing an XBAR-based device, you know, I think, that they are going to be significantly advantaged if you were doing a head-to-head comparison of equal to performance device. I think you're gonna be out of the box in -- in better shape from a cost structure standpoint.

That said, you know, it's not apples to apples, right? I mean, you're -- you have the scandium doped, you have to use different architectures. With these BAW devices, I think, that you know I'll go back to your conversation with -- with Mike and I two years ago at CES, you know, if we could build it they will come and I think that's what we're finding right now today, Cody. It's a -- we're -- we're demonstrating devices that have markedly better performance than what you can do with either a scandium doped or a hybrid architecture of an existing BAW -- BAW structure. So, you know, if it was apples to apples, you've got a significant cost advantage.

Once you start having to do all these other ancillary things to make these devices kind of get close in performance it just gets better.

Cody Acree -- Loop Capital -- Analyst

And one follow-up there and then I've got my final. Just -- are your -- your fabulous customers able then to -- are they passing that along, I guess, and -- or are they using that to improve their margins or is that weighted more toward their customer benefits and therefore more likely that you ramp into the market faster?

George Holmes -- Chief Executive Officer

That's a great question that, you know, would -- would assume that we aren't focused on the major IDMs which we are. We're using the -- the fabulous relationships we have to demonstrate XBAE devices. Yeah. If you recall historically, we just partner with companies and they identified a part for us to design we did a design, and then we had to wait, you know, 12 to 18 months for them to figure out how to build it.

Today, we leverage the foundry relationships such that we can show samples to potential IDMs and OEMs, in references, manufacturers that might want to leverage XBAR technology. For the IDMs, they would want to port that technology into their process much like we're doing with our friends in Japan that we're currently engaged with. Then we've got others that are looking at doing the same thing in other parts of the world. And then lastly, obviously, we -- we have the capability to enable, you know, our reference design manufacturer or even a large OEM because of those foundry relationships.

So, when it comes to how would the foundries be pricing it to those partners, you know, I guess, it depends on the leverage of the partner would have. You know, if you're talking with the Tier-1 OEMs that use these boundaries for other activities, there's probably going to be tremendous leverage. If you're talking about a new entrant that's trying to get into the market, I would guess that these foundries are going to be having more of a margin share type of arrangement with them because they're -- they're both new and they don't have the customer -- our customer wouldn't have the power to negotiate.

Cody Acree -- Loop Capital -- Analyst

OK, great. Thank you. And lastly, just as you're looking -- let's say at the end of '21 as you go through these expansions from just wireless and you look more Wi-Fi and auto and IoT infrastructure, what do you think the year 2022 mix could look like? Your -- just your -- your royalty mix versus the end application.

George Holmes -- Chief Executive Officer

Oh, that's a good question, Cody. I'm not sure I've got a great answer for that, at this point. You know, if we sit back and order -- if we look at the company that we're talking to today, I could easily see, you know, a mix where you know only 40% of revenues coming out of mobile because, you know, we have one customer there who's got an exclusive through March of next year and they're going be the only ones that are going to market there. And where we're teeing up and loading up a lot of guys on the Wi-Fi front.

But you know, I think, it could come to a balance pretty quickly thereafter in the '23 timeframe, where we'd see a pretty balanced Wi-Fi infrastructure, non-mobile set of customers with our mobile customers. Does that make sense?

Cody Acree -- Loop Capital -- Analyst

Excellent. It does. Thank you, George. Thank you, guys.

Appreciate it.

George Holmes -- Chief Executive Officer

Thank you much.

Operator

[Operator instructions] Our next question is from Kevin Dede with H.C. Wainwright. Please proceed.

Kevin Dede -- H.C. Wainwright -- Analyst

Good morning, guys. Thanks for taking my question.

George Holmes -- Chief Executive Officer

Hey, Kevin.

Kevin Dede -- H.C. Wainwright -- Analyst

George, so just can we follow up on the dollar side of the question that Tore asked on the large customer. I think you referenced $9 million as part of milestone payments. And I -- I think you spoke to it during the prepared remarks. I think what have you realized that, I think you mentioned $2.5 million was that -- is that what you recognized thus far? And could you speak to what you're expecting in terms of that -- the commercial side this year and then what that would leave for the balance in '22?

George Holmes -- Chief Executive Officer

Well, Kevin, it's a great question. Let me see if I can answer it for you. As Marty would note and would remind me, I'm not going to get out of my skis and talk about the -- the forecast for the balance of the year much more than next quarter. But let's see if I can answer your question.

$9 million of prepaid royalties, that's exactly what these were. Those prepaid royalties, we got the first prepayment at the signing of the contract, we get the second prepayment when we reach this major milestone in October, which validated the technical aspects, you know, as highlighted in our press release this morning. And it also, you know, created a platform where they had validated the initial reliability and manufacturability of those devices. So, those prepaid royalties equaled 50% of that $9 million.

Those deals, you know, that early deal for XBAR, which you know early mover advantage pricing that that customer got was at $2.5 million per device. As we've noted, you know, it takes 12 concurrent deals at that pricing to get this business to cash flow. And we feel good about the trajectory we have with them on expanding the number of devices we have under contract with them this year. And that's the mission, right? Once you've passed the initial milestones, then you can move on to looking at what's next.

And that's kind of where we find ourselves today. And then, you look at what we're doing with other customers also on the prepaid royalty front, as we've noted, we expect to kind of get our first Wi-Fi customer, you know, this coming quarter. And I think those will be kind of similar kind of deals. So, you know, a pretty good trajectory for us for the balance of this year.

And as is Marty and I both noted in the prepared remarks, we expect 2021 to be significantly higher than 2020.

Kevin Dede -- H.C. Wainwright -- Analyst

OK. Fair enough, George. Thanks. Thanks for the detail.

On -- on ex -- exclusivity associated with that large customer working in an auto environment and non-mobile sort of sidesteps the requirements that you're obligated to them on, I guess, is sort of what I'm thinking?

George Holmes -- Chief Executive Officer

It's a little bit different. We have the ability of freedom to operate in all non-mobile applications. So, a non-mobile application is Wi-Fi CPE, infrastructure, automotive, these are all non-mobile applications. We have the freedom to operate in those areas.

Kevin Dede -- H.C. Wainwright -- Analyst

OK. Last one for me is -- yeah, sorry, go ahead.

George Holmes -- Chief Executive Officer

If you recall -- if you recall, the exclusivity ends one year from the end of this month.So, we're within literally one design cycle of being out of our exclusivity period for, you know, the major mobile applications. So, exciting time.

Kevin Dede -- H.C. Wainwright -- Analyst

Agreed. OK. You -- you referenced multiple times your prepared remarks in your slides, George, the third-party test lab when you did some analysis on aluminum nitride. Can -- can you talk about who that was and maybe who funded the test? I'm trying to get to somehow rationalize whatever bias may have been brought and in -- incorporated in that, given that it's a third party, I understand.

I'm just curious.

George Holmes -- Chief Executive Officer

Well, obviously, Kevin, there's -- there's teardowns that are done. We don't have parts in the marketplace. So the only way you can get third-party testing done is if you provide the parts to them and you paid the bill. And so, in this case, we -- we went out and searched and bought in the market via distribution, some of the cutting edge parts that are being marketed out there to the different Wi-Fi and CPE players.

We bought those parts provided them to a test lab along with our own parts and they did head-to-head testing, comparative testing.

Kevin Dede -- H.C. Wainwright -- Analyst

OK.

George Holmes -- Chief Executive Officer

And their test results -- their test results matched very closely to the what -- test results that we had and also test results we've seen at other customers. But obviously, our customers are not going to share their test results out there in the marketplace generally.

Kevin Dede -- H.C. Wainwright -- Analyst

Yeah, no, understood. Understood. Fair enough. Thanks for the additional color.

Appreciate it.

George Holmes -- Chief Executive Officer

Absolutely.

Operator

Thank you. We have concluded our question and answer session. I would like to turn the conference back over to management for closing remarks.

George Holmes -- Chief Executive Officer

Thank you, operator. In closing, 2020 was a remarkable year. 2021 stands to be even better. Our XBAR technology has the potential to enable our partners to dominate the new 5G Wi-Fi and other high-frequency applications.

There is truly a lot to be excited about and a lot to look forward to. I want to thank all of our shareholders for their ongoing support. And with that, I'll close today's call. Thank you, everyone.

Operator

[Operator signoff]

Duration: 53 minutes

Call participants:

Greg Falesnik -- Investor Relations

George Holmes -- Chief Executive Officer

Marty McDermut -- Chief Financial Officer

Tore Svanberg -- Stifel Financial Corp -- Analyst

Dylan Kelly -- Chief Operating Officer

Raji Gill -- Needham & Company -- Analyst

Cody Acree -- Loop Capital -- Analyst

Kevin Dede -- H.C. Wainwright -- Analyst

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