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TICKERS: ATOM

Atomera: When Will Revenues Start?
Contributed Opinion

Source:

Daniel Carlson Daniel Carlson of Tailwinds Research delves into the company's earnings report.

Atomera Inc. (ATOM:NASDAQ) reported earnings on Wednesday after the close. The numbers are rather meaningless for Atomera as they are pre-revenue. What investors are looking for is clues to when revenues will start and the likelihood that customers will adopt Atomera's technology en masse. The conference call was very positive in the sense that management hasn't sounded this positive about the technology, customer traction and movement toward licenses in a long while.

Shares in ATOM, however, sold off on the news. This could be from the large move that had occurred over the last two months, or could be a result of expectations for more progress on licenses. From our perspective, the call was stronger than we had expected with the only potential negative being comments about customers providing feedback to Atomera. Feedback suggests additional design changes and, therefore, potential delays.

That being said, CEO Bibaud was more positive than ever about licensing the technology and left us more excited than we were prior to the call. Below are some comments about, and quotes from CEO Scott Bibaud, the conference call that should help give investors a sense on the progress Atomera is making and hopefully help you share our excitement.

Regarding current customers: "During the last three months the interest from our customer base has been outstanding. We have had two new customers start planning wafer evaluations with us, two customers move on to phase two and one customer move into phase three. Each of these moves was the direct result of the technical results we spoke about in our last call." This is an important metric. The number of engagements and progress seem to have stalled earlier this year. The breakthrough last quarter has definitely reinvigorated customers. Importantly, the company continues to move forward with the two licensees who already signed on.

And, new customers: "The publicity around our breakthrough results has generated inbound interest from customers we've never approached before and should help us to grow the total number of customers and engagements in the coming quarters." This confirms that the substantial gains shown in the technology last quarter were indeed eye-opening for the industry.

Moving into fabless customers: "We are starting to do work with a number of fabless semiconductor players who, hearing about these breakthrough results, have begun to ask their fabs to implement the technology for them to use. This could be a very important development. You could imagine that if an important customer were to request their foundry to implement MST it would make it immediately get higher priority." Bibaud spent a fair amount of time on this. He felt that a fab could gain an advantage over competitors by bringing chips with MST designed in to their customers, making it a key performance differentiator.

Engineering services: The company will have between $200,000 and $250,000 in engineering services revenue in Q3. This is a very good sign as it means that customers are willing to pay Atomera to run test wafers. In the past, they have received little, if any, payment for this. Customers writing checks is likely the most key indicator of their interest that there is.

Finfet: MST is beneficial in stopping dopant diffusion in high temperature manufacturing, which makes it helpful in chip designs. This could make it an essential element in Finfet production processes, as dopant diffusion is a major issue. Success here could be huge as Finfet is bleeding edge technology for the industry and is getting a lot of focus and investment dollars from the chip makers.

Final thoughts from the company: "Our customers are very enthusiastic about the potential of MST to solve some of their most difficult problems…Atomera management believes our recent results will translate into accelerated revenue…Achieving breakthrough results in three different technology areas, our customers enthusiastic response, and our understanding of the potential ahead, makes us very optimistic about the future of Atomera…In the near future I expect to see a flow of new customers and faster time to licenses for existing customers."

Final thoughts from Tailwinds: The potential here is massive. The technology appears to be gaining traction. Customers are more engaged than ever. Now, if we can just get some licenses signed, ATOM would be off to the races. In the meantime, expect continued volatility and look to pick up shares on dips. When the floodgates open, if you're not on board, you'll be too late.

Daniel Carlson is the founder and managing member of Tailwinds Research Group and its parent company DFC Advisory Services, which is a licensed registered investment advisor (CRD # 297209). Tailwinds is a microcap focused research company that provides research on and consults to over 20 emerging growth companies in the technology and life sciences arenas. DFC Advisory Services is an RIA that manages money dedicated to investing in the companies covered by Tailwinds. For more information on these two companies and their track record, please see www.tailwindsresearch.com. Prior to founding these two entities, Dan spent many years working with small public companies, having been CFO of two public companies and helping finance many others. A 1989 graduate from Tufts University with a degree in Economics, Dan’s formative years in business were spent as an equity trader, first on the Pacific Coast Stock Exchange then on the buyside at several multi-billion dollar firms.

This article was submitted by Tailwinds Research. For more information on Tailwinds Research, please visit www.tailwindsresearch.com.

Tailwinds owns stock in Atomera. For a complete list of disclaimers and disclosures, please click here.

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Disclosure:
1) Daniel Carlson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Atomera. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies referred to in this article: None. Additional disclosures and disclaimers are above. I determined which companies would be included in this article based on my research and understanding of the sector.
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