Is Resonant Poised For A Breakout With Its Proprietary RF Filter Technology?

The hype around 5G wireless network technology is currently off the charts. But just because your smart phone says it’s on hooked up to a 5G network doesn’t mean it’s truly running 5G. In fact, most people are unaware of the reality that we’ve still got a way to go for true 5G. Resonant Inc. says that its XBAR radio frequency (RF) filter is one of the keys to getting us there.

Resonant, a late-stage tech development company, is headquartered in Austin, Texas, and was founded in 2014. The company trades on NASDAQ under the symbol RESN and has a market capitalization of nearly $225 million. Resonant does no manufacturing itself, but is a provider of intellectual property (IP) and services to device manufacturers.

The primary IP it offers is the aforementioned RF filters. You’ve probably never heard of them, but they’re a vital component of your smart phone. “Today’s cell phone has a big wide data pipe coming in,” explained George Holmes, Resonant’s Chairman and CEO. “RF filters are physical hardware devices that keep signals from colliding. When signals collide, the phone gets hot, battery life goes down, and your movie download takes longer. Preventing those collisions gets harder with 5G, and with the new WiFi spectrum allocated by the FCC.”

That makes the filters important not only because of the greater demands from a technology perspective, but also because of sheer numbers. “The first iPhone had less than a dozen filters,” Holmes said. “The latest one has about a hundred.”

In the end, of course, all the numbers and technology aren’t worth a thing if they don’t improve the user experience. That’s where true 5G holds immense promise: where the download time for a 3 gigabit movie with current technology might take over 20 minutes, properly functioning 5G technology will cut that time to just under half a minute.

And Resonant believes it’s uniquely capable to help deliver what will be needed to make that “properly functioning” qualifier a reality, and that its independence from manufacturing is a strength. When the company was designing its 4G IP, it developed its proprietary ISN design software platform, which it says allows it to leapfrog the traditional iterative filter development process. “Because of the precision of our design software tool, we were able to make use of Chevy manufacturing technology for devices that run like a Ferrari,” said Mike Eddy, VP, Corporate Development at Resonant. “But for the next generation, you need a Lamborghini. Now the legacy guys who are married to foundries are trying to make their Ferraris look like Lamborghinis. With our XBAR technology, we came up with a way to leverage new engineered substrates with our new structures, and our filters are running like a Lamborghini right out of the gate. Our competitors will try to get close to XBAR, but they can’t match it.”

Of course, the proof of all that is in the business results. Like so many tech companies, Resonant has experienced the hype cycle—their stock price spiked after their IPO, and has had some subsequent lesser spikes since with various news releases, but has averaged flat for the past couple years until posting a substantial gain in the first half of this year. Holmes is brutally honest about the missteps along the way. “We got out over our own skis a few times with some public discussions that shouldn’t have taken place,” he said.

And so far the company remains unprofitable. But Holmes believes it’s firmly on the path to profitability. “When I joined, our market cap was $11 million,” he said. “Now it’s headed for $230 million. Our business is growing. We gave honest guidance through the tough times of COVID, and met or exceeded it each quarter. I believe we’ll hit our cash flow breakeven target sometime in 2022. If you look at our peers, they bought fabs and manufacture for themselves, so their road to profitability is much tougher. Our business model is simple: we license our technology to the world’s biggest companies.”

The company points to its licensing agreement with Murata, the world’s largest filter manufacturer, with 38% market share, as the example for its plan of attack. “We have four XBAR devices currently under contract,” Holmes said. “We only need twelve concurrently, of the same magnitude, to reach cash flow breakeven.”

Resonant points to two other factors in its favor: its strong IP portfolio and its advisory board. The company boasts over 300 total patents, with half of those centered on its XBAR technology. Its advisory board, meanwhile, includes such names as Clint Brown, who was Director Business Development Mobility Wireless Connectivity at Broadcom and was the Vice Chairman of the WiFi Alliance; Rubén Caballero, Corporate VP of Engineering, Devices & Technology in the Mixed Reality & AI Division at Microsoft, previously VP of Engineering at Apple; and Peter Gammel, former CTO of Skyworks Solutions, Inc.

In the end, it’s about Resonant’s belief that its technology is the answer for true 5G. “We’re not trying to reinvent the world,” said Holmes. “I think our business model plays really well in this space. It boils down to really simple stuff: downloading a movie in 30 seconds, betting in real time while you drive to the sports field, VR and near-virtual, and glasses with no other hardware where you can pull up a screen and type virtually. Think Mission Impossible or James Bond and tech—this is our life now. When it comes right down to it, everybody just wants it to work. We partner with the best companies to get it to market faster.”

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