Earnings Call Transcript - DVLT Q2 2025

Operator, Operator

Welcome to the Datavault AI Second Quarter Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Susan Zhu with Allianz Advisors, Investor Relations. Please go ahead.

Susan Zhu, Investor Relations

Good morning, and welcome to the Datavault AI Business Update Conference Call. Again, I'm Susan Zhu with Allianz Advisors Investor Relations. And as a reminder, today's call is being recorded. Before we begin the call, I'd like to remind everyone that we will be making certain 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 release and risk factors discussed in our filings with the SEC. Datavault AI assumes no obligation to update any of these forward-looking statements, except as required by law. Please refer to Slide 2 of today's accompanying presentation for more information. With us today are Nate Bradley, CEO of Datavault AI; and Brett Moyer, CFO. With that, I'll turn the call over to Nate. Please go ahead, Nate.

Nathaniel T. Bradley, CEO

Thank you, everyone. It's an exciting day here at Datavault AI as we celebrate several key milestones. We're thrilled about our business products and the revenue generated, especially the results from the second quarter. Although we weren't able to recognize revenue from a licensing deal with Nyiax, we believe the value of this transaction is substantial and enhances our company's potential significantly. We're very optimistic about this partnership as it offers new opportunities for us moving ahead. This achievement marks a significant step in our revenue generation strategy as we prepare for larger growth. Additionally, the recent passage of the GENIUS Act in the United States has opened up major licensing opportunities within the U.S. banking sector. Datavault is actively pursuing several initiatives, benefiting from our unique patent position in the market. Unlike many competitors in AI and data monetization, we leverage proprietary technology and possess exclusive rights to certain systems we've developed over time. We've also formed teams specializing in litigation and development with firms like Fish Richardson and Greenberg Traurig to assess financial damages. We're focusing on large U.S. banking operations that are beginning to explore tokenomics and cryptocurrency management, areas where Datavault AI can offer valuable solutions. Our proprietary product line is a significant asset that we intend to protect globally. We're being strategic about our expenses to minimize cash outflows while maximizing value for our shareholders without disrupting our core operations. This developmental aspect of our business will continue to generate substantial value for all stakeholders. We're also advancing our standards-based practices through collaboration with Greenberg Traurig on HD wireless transmission, along with several patent achievements. Joshua Paugh and Brian Owens from our team deserve commendations for their contributions toward creating a portfolio that aligns with standards bodies. This positions us to collaborate with large corporations to set and monetize standards in the WiSA portfolio, which we anticipate will yield exceptional, high-margin revenue. Those are some of the key highlights for Q2. Looking ahead to Q3, we have announced an International Elements Exchange that has garnered global interest. We are engaging with major players involved in precious metals and elements, including carbon credits and geothermal energy, utilizing our real-world asset tokenomics and offering a chain-agnostic solution on blockchain powered by AI. Our partnership with IBM and Watson has enhanced our engineering capabilities, allowing us to scale our software development and customer services effectively. We've set a goal to acquire two companies by 2025, and our recent acquisition of CSI has been both a challenge and a rewarding experience. Mark LoGiurato has played a vital role in integrating the Datavault AI and CSI teams, along with contributions from others who have facilitated effective communication and ramp-up efforts. We are pleased with the progress made in this acquisition and are preparing for a second one. API Media has accepted our terms, and we expect to make a cash down payment in the next week as part of our strategy to finalize this acquisition. Winning the opportunity to be selected by API as a technology partner is an honor, and we aim to enhance our capabilities through this collaboration. So we're positioning the company to close. We're really honored by the opportunity with API, adding that to the exceptional assets of the company. If you look at the recent milestones just this morning announcing the Q2 results, it's a 467% year-over-year number. It has the $2.5 million booking, which was, again, the Nyiax deal that gave us access to the NASDAQ financial framework, which unlocks our ability to launch exchanges using the Datavault tokenomics, which is a patented system that we're excited about and really is not reflected in these numbers with respect to its revenue-generation capability. So turning that on carefully with IBM and looking at these exchanges, loading these exchanges with materials, our Elements Exchange; we've launched an NIL exchange and a political exchange that will all have governance and systems around them that IBM's AI makes possible, that the GENIUS Act unlocked and made legal in the United States to have such mechanisms. And so we're carefully assembling that, working with partners like IBM to make sure that all of that infrastructure is set up in a very professional way. We've also targeted some brand names that we'd like to name these exchanges after in honoring some major American brands that kind of deserve to be the namesakes of these exchanges. So we have an exciting trajectory there. We've made some announcements with respect to that. I mentioned API Media. That's a milestone set for next week. Very important, our company hits that milestone. And I'll explain how we get there. Our senior secured note that we just executed is another $12 million financing August 20th, gave us access to like pulmonary cash and ability there. I'd like to thank Anson ANS and SEG Opportunity Fund. I'd like to thank them for kind of a steadfast support of our company, a belief in us that is really quite an honor. So we're very thankful to them. And when you look at this, the trajectory of our company, this is another injection of capital at the exact right time. It is an ability for us to reach the promised land, the ability for us to move forward to our vision and execute at a level that we're really excited about executing on. IBM Platinum partnership, we're now a Platinum partner there. That's a big honor, something that we've obtained as a team, Jeff Jones, our engineering, the team in Atlanta, Sonia Choi; getting us organized, capturing this unique opportunity and then exploiting it in a way that's allowed us to bring major horsepower onboard. The Nyiax stays on the board as a major milestone because it's an incredible, unique opportunity. It's patent-backed, and the cross-license between us is exceptionally powerful. And the world is about to see what that partnership can do. You also have the Dolby license where we're able to use our WiSA technologies and in conjunction with Dolby, create unique technologies in a space where we have dominated for many years in terms of engineering dominance and ownership of high-definition spatial audio and transmission around that, that is extremely special, unique and powerful. It has a lot of Web3 implementations that Datavault is seizing upon right now. Our engineers are working with very special toolboxes that belong to only us. We have a unique footprint. VerifyU has risen as a very simple implementation of a very complex technology. It allows you to check someone's credentials. Whether someone served in the military operation, whether they were injured and received an award, all of the valor that we document around the world can be utilized with this technology. This technology can also protect colleges and universities and sports organizations like the NFL Alumni. I'd mention Billy Davis, health care leader over at NFL Alumni, great partner, good person, really helping our business expand and has a vision for the future. But he also saw VerifyU very early as a mechanism to help NFL players get their benefits, to get their health care, to get all of the things that he has organized at Alumni on behalf of the NFL players and alumni. They are able to utilize a system that can prove their valor, prove what they have achieved and also receive the benefits owed to them. There are some very unique technologies worth mentioning. On the right-hand side, the Information Data Exchange has been significantly improved through the exchange of exchanges, including Nyiax, the International NIL Exchange, our International Elements Exchange, and the American Political Exchange. These exchanges are being launched on established, reliable infrastructure in collaboration with IBM, focusing on pricing and mechanisms related to our data value and DataScore, which includes our agentic solutions like Datavault Bank. This smart contracting solution addresses major American issues and, in the case of Elements and NIL, responds to a global phenomenon by utilizing blockchain technology and systems developed by Datavault to safeguard identities, claim them, and facilitate monetization worldwide for our customers. Additionally, under our Acoustic Science division, we are aiming to lead in event services, and we are looking at an API Media acquisition next week that could give us access to some of the most prominent events in America. We have taken control of CompuSystems, a global registration company, and completed the acquisition transaction. We are recognizing revenues and enhancing systems to integrate Web3 automation, modernization, and technology. I want to acknowledge WiSA, Brett Moyer, and our teams, Kat, Keith, and Ed, for creating a system that will have a lasting impact. We have a strong presence in audio and an established standards body that will be licensed out, alongside products that will continue to resonate with audiences. Our AI platform, now stabilized with Watson and supported by IBM as a Platinum Partner, enables us to scale operations effectively. Our DB Hollow operation provides impressive visuals to complement exceptional sound, and we have several Web3 implementations and data monetization opportunities. We are very excited about this development. The potential of VerifyU will soon be visible, along with its revenue-generating capabilities. Furthermore, the potential of Datavault is immense and is being activated through the Information Data Exchange. It will soon be launched globally in the form of the International NIL Exchange, Elements Exchange, and the American Political Exchange, utilizing Nyiax technology. We have an outstanding group of customers. As for where the funding is coming from, I received a thoughtful message from a shareholder this morning inquiring about what allows us to launch a revenue-generating company. This revenue is crucial to our valuation and is central to enhancing the appreciation of Datavault AI as a whole. These are the clients, these are the new clients that we can feast upon in terms of our ability to implement our technologies and give them life-giving revenues, new revenue streams within these operations and incredible technologies that enable the revenue generation within our clientele to have capabilities that other companies do not have and give those to companies that monetize in products, in technology, in software. And then a Datavault platform that's captured the attention of leading national laboratories, the ability to showcase an intel capability to look at the bioscience and high sciences as a way to use Datavault at a high level within cybersecure environments that are second to none in the world, solving problems that are amongst the hardest to solve in the world. We have also GFT ability to deliver a blockchain coupon. And I mentioned NFL Alumni partners of ours, White House Experience, the People's House, founded by Jacqueline Kennedy, something that we're proud to be part of. So we have incredible business momentum and new clientele that need our technology to be competitive in the AI generation. We have a business model that takes licensing from Datavault, information data exchange, the Datavault, the DataScore, the Datavault Bank, these are solutions that allow us to use AI agents to generate money for our clients. We take part of what we make for our clientele. We have licensing of our ADIO and WiSA technology that allows us in various industries to revolutionize how things are advertised, how tickets are bought, how people engage in environments. And in closed environments, even in your living room, we have a technology that is exceptional, that raises your attention, that is better sounding than the audio you're hearing right now. And if you simply listen to WiSA, you understand why it's a breakthrough. And when you hear it for the first time, you realize what you missed out. And so turning that on around the world is an exciting proposition for us. WiSA has a strong muscle in this company, and it's about the flex. We have the ability within this to launch exchanges. We have selected three primary exchanges and a fourth, which is the Information Data Exchange, the master exchange, the ability to turn data into cash, the first breakthrough. And we have, within that bifurcated exchange operations that have focal attention around compliance, the ability to create compliant transactions where we can move tokenomics and real-world assets into revenue-generating cash to move objects for political campaigns directly from their donors into campaigns, taking out all the parasitic middlemen that have extracted money and taking it from campaigns and reduce the impact of investments that individuals make into campaigns. So a token that solves for direct investment and a government relationship that is ultra-compliant, open kimono on the blockchain, something that we can all look at and see and have an understanding of; it's an exciting proposition. It's something that we're excited to launch in America, and it solves a problem. It also provides for a level of material data, data about who gets support and how that support is rolling in, information that's readily available if you look for it right now under our current system, but under tokenomics, opens up and is more powerful. It can allow small donors to make big impacts. It can allow for institutions to make investments into campaigns and have that transparency that we've all been dying for in our country. We also have the solution to NIL, college sports and NIL Exchange solving a major American problem, but also having an international revenue opportunity around all education institutions, all individuals who want to claim their likeness and monetize it on a fair exchange. There's also the Elements Exchange, probably the most exciting of the three, probably the first launch of those three and an ability to take real-world assets and monetize them on an exchange. So these are all exciting developments. Our patent portfolio continues to explode. We have already now 72 assets under management. Our Acoustic Science division is absolutely bursting with technology. It's getting licensed into some of the biggest companies in the world, PacRim, Taiwan. We have a number of large-scale opportunities to push that technology into the world on a scale that was first not imagined with WiSA, robotics and other areas that have made that technology more exciting. If you look at the excitement around WiSA, it's about our ability to capture clientele in scale. And if you look at some of the advancements made with Datavault and the team, the ability for Burke Products to name us and select us into government contracting opportunities around key instruments of both our military complex and administrative aspects of our government, we have also made a growth outlook in our patent licensing strategy and our ability to monetize inventions that we own in the United States. And we have a gateway, a key gateway for companies that are looking to enter into Web3 technology, tokenomics and monetization over exchanges. We have strategic IP that underpins these technologies. And as we bring them into scale, we have a $50 million revenue target into next year. We have a platform that is second to none that allows us to monetize data, turn data to cash. We have IBM Platinum partnership in place. The DataValue, the DataScore and the Datavault Bank, security and compliance, a compliance-first infrastructure focused on government compliance, the SEC, the Federal Elections Commission for the Political Exchange, the NIL being governed by all of those governance bodies that individual customers will be governed under, based on their membership at a university, their position as a student within that. Any other person that is in the world that wants to monetize their NIL has various regulatory and taxation compliance issues that our system solves for systematically, automatically, making the complex consumable, allowing the kid to play third base and not be dragged off by the IRS. Very simple solutions that solve American problems and allow the systems like NIL to advance in a way that's not been perceived. We have an Information Data Exchange that solves problem after problem, the political, the NIL, the elements and data to cash, big-time solutions for our country and for our company and our customers internationally. We have a refinery of vault and exchange infrastructure that continues to capture patents. We've moved VerifyU up to enterprise level. We have the ability to verify your education, whether a doctor, at a master's or a bachelor's degree. We can load these credentials with memories, with artifacts of value of data that represent knowledge and education or credential or valor. We have the ability to prove that Valor all over the world. Or if you're like Billy Davis and you're trying to deliver fundamental value in the form of benefits, we have a wrapper that allows you to move this and prove this around the world. We have a tone that ties to this technology that no one else has, that is a Sonic marker that connects these artifacts to blockchain artifacts to be proven. And that proof, that verification, we call it VerifyU. It's a powerful tip of the spear, the beginning of our revenue domination in this company, our move from tens to hundreds of millions of dollars in revenue through this technology. The Sumerian technologies, the anchors that set us apart, molecular, micro and sonic are second to none. No one else has these tools. We have a cool new logo. We have a bunch of assets that we brought into this that allow this to become a very important centerpiece to the company's technological lead and valuation. The Nyiax relationship with the information data exchange gave us access to the NASDAQ financial framework. It allows us to use a matching engine that is trusted around the world. We use IBM as a Platinum partner, and we're using IBM for compliance. We're using IBM for watsonx.ai and deep, deep AI capabilities and engineering, where we can deliver enterprise-level solutions for our clients and build exchanges on the level of the ICE or the New York Stock Exchange. The partnership with IBM cannot be overstated. The ability to have deep engineering bench and deep AI technologies and leadership in the space has enabled us to build leading agents, the Datavault Bank, the DataScore, the DataValue. These are engines that are AI generative, they are unique in that they focus on our customers' assets and derive value from them. They're subordinated AI systems that allow us to deliver data to cash. And this conversion is going to propel our company to the top of the NASDAQ. The DataScore, the DataValue and the Datavault Bank, technologies developed over 8 years. I would like to thank Stump Family Farms, the Zayer family, the Jena family in New Jersey. These are individuals who invested early, that saw this early, that understood early that this technology would have impact in the world and it has. We're starting to spread our wings. We're starting to get this technology rolled out in a way that is scalable, no touch. It is done through our clients' infrastructure. It is pushed inside scale, systems like Oracle PeopleSoft, others that propel our company forward, ServiceNow, other companies that can use our software and propel value in their own systems. We have also created a two-divisional system, one that's focused on ADIO and events and the use of audio technologies in experiential to develop value in our Acoustic Science division, also leveraging patented technology that change events to Web3 experiences. And we have also focused on a second division, Data Sciences division, with robust technology and giant patent portfolio and the ability for that portfolio to be perfected around tokenomics, data ownership, security, reliability, governance and compliance, compliance first, making data a commodity, allowing commodity of data to be sold around the world and to take different forms like carbon credits, geothermal coins, coins that we're going to create in EV and other areas where we're able to solve problems using tokenomics and blockchain and AI to create the maximum yield for America, for our customers, for our company. By doing this, we develop multiple integrated systems. Our systems integration is at the forefront of Web3. We have a robust system surrounding ADIO, Datavault, DataScore, Datavault Bank, and WiSA that we can promote at events we now manage due to our acquisition of CompuSystems. Looking ahead, the acquisition of API Media could bring in additional key events if finalized with API. Overall, the inability to recognize the $2.5 million in licensing, which will be accounted for once Nyiax fully pays for that license, transforms it into a revenue asset instead of a booking. Nonetheless, our current results still indicate growth. We are thrilled about this, with actual performance at $2.3 million. Our revenue targets are on track, including for 2026. I believe these figures are conservative. As CEO, I'm aiming for larger targets, but the team has done an exceptional job of delivering under challenging circumstances, refining the WiSA technology to reduce costs and enhance margins, and the ADIO technology contributing to our revenue. The partnerships with Nyiax and IBM are also significant contributors not entirely reflected in these numbers. You can start to see that the company has remarkable revenue-generating potential. We are well-prepared to systematically create this revenue, leveraging automation, AI, and modern technologies to maximize profitability for our stakeholders. I am enthusiastic and focused as we close out the year, with much to share from the third quarter in our next update. Thank you, everyone. Brett Moyer, our CFO, is here to address any questions you may have, and we will now open the floor for questions. Thank you very much.

Operator, Operator

We currently have no questions submitted. This wraps up our question-and-answer session. I will now hand the floor back to Nate Bradley for his closing remarks.

Nathaniel T. Bradley, CEO

Thank you, everyone, for taking the time today. We appreciate the interest in our company. There's been such an outpouring of support and leads and opportunities that have come our way through the investment groups involved with our company. We're so grateful and honored to have those opportunities. We're good stewards of them. We're bringing them to fruition. I'd like to thank everybody involved in our company for pushing so hard every day and appreciate the amount of progress we've made in such a short time. And thank you very much, and God bless. Have a great day.

Operator, Operator

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