Royalty revenue moves closer after Q3
Weebit Nano is one of our favourite stocks and one we have been covering with Pitt Street Research for eight years.
Weebit is now close to a major shift in where value is created. Royalty revenue is moving onto the horizon, and we think royalties could represent 20–30% of business revenue by 2029, before reaching 50%+ post-2030.
That is where the model becomes much more powerful.
We can see this by looking at two close comparable companies, eMemory and Alphawave Semi. Both are IP businesses in the data centre and semiconductor space, and both show what a mature IP business model can look like. They also give investors a useful reference point for where Weebit could eventually reach.
Investors will also want to keep a close eye on onsemi’s final qualification stages, which are expected by the end of the year. This will effectively tell the market that Weebit’s ReRAM is fully integrated into an IDM product line.
That would be a major validation point for ReRAM and could open the door to further partnerships.
If you enjoy our writing on Weebit and want to learn more about the company, you can read our full research note here.
What Actually Happened This Quarter
This quarter, as many investors would already know, Weebit completed its A$87 million raise, taking its post-raise balance sheet to A$159 million.
The company also lifted its revenue guidance, which we thought was likely, given the original A$10 million target already looked low after Q1 and Q2 cash receipts came in at almost A$16 million.
Q3 cash receipts of A$0.8 million should not worry investors. This is mainly a timing issue. Weebit’s value is tied to a milestone-driven commercial pathway, and not every quarter will deliver multi-million-dollar cash receipts.
The bigger point is that year-to-date cash receipts reached A$16.7 million across the first nine months. That confirms the underlying commercial momentum is real and the company is progressing as expected.
One important detail investors should not overlook is the expected commercial product tape-out by the end of the year. This is when a chip company sends its chip design, including Weebit’s ReRAM, to a foundry to begin production.
That is the moment the foundry flywheel starts to spin. Every product company that tapes out becomes a potential future royalty source.
Four Fronts, All Advancing
Weebit’s commercial agreement timeline continues to build, now totalling six agreements following the two new commercial deals.
The technology transfer process has also been successfully initiated and remains on track. This is where Weebit focuses on embedding its ReRAM into customer technology and manufacturing flows. onsemi qualification is also progressing to schedule.
In other words, Weebit is delivering on multiple fronts, and the recent capital raise should only strengthen its ability to execute.
What investors can also see in the cash flow report is that staffing costs have increased significantly. This is not a red flag. It reflects a deliberate expansion of the engineering team to support more commercial relationships.
This was clearly detailed in the company’s capital raising presentation. Weebit needs more engineering capacity to manage technology transfers, customer qualifications and new commercial agreements as it heads into CY27.
The Investors’ Takeaway for Weebit Nano
For investors, the key takeaway at this stage is that Weebit is clearly accelerating its commercial momentum.
This quarter reinforces that thesis.
The South Korean government-backed program announced during the quarter is particularly important. It draws a clear parallel with what eMemory experienced during its Phase 1 growth cycle, where government and institutional validation helped establish the technology before the full commercial royalty engine ignited.
Pitt Street Research Directors owns shares in the company discussed. This article reflects personal views and is not financial advice.
