A Look at Ocean Power’s Risk Factors Post Q4 Results

Ocean Power Technologies (OPTT) provides marine energy, data, and service solutions. Its PowerBuoy platform caters to diverse markets, including offshore oil and gas, defense and security, science and research, and offshore wind.

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Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should know.

The company reported flat Q4 revenue at $0.6 million. For Fiscal Year 2021, revenue dropped 28% year-over-year to $1.2 million. The drop was because of project delays due to the COVID-19 pandemic.

The company incurred higher costs owing to increased engineering, product development, general and administrative expenses, along with expenses resulting from project delays. This led to a net loss of $5.2 million and $14.8 million in Q4 and Fiscal Year 2021, respectively. (See Ocean Power stock chart on TipRanks)

The President and CEO of Ocean Power, Philipp Stratmann, said, “Our growth strategy, including a particular focus on Maritime Domain Awareness and expansion in the ocean protection and ocean data markets, will help solidify our position as a leader in maritime power and data solutions.”

Now, let’s look at what has changed in the company’s key risk factors.

According to the new Tipranks Risk Factors tool, Ocean Power’s two main risk categories are Finance & Corporate and Tech & Innovation, which account for 24% and 20%, respectively, of the total 41 risks identified. Since April, the company has added one new key risk factor.

Under the Macro & Political risk category, Ocean Power acknowledges that COVID-19 could affect its business, financial position, and operations. While the pandemic is no longer having a major impact on Ocean Power, it may still experience challenges from changes in customer behavior and actions. The company’s business depends upon the ability of its customers to satisfy existing payments and other obligations.

Meanwhile, the company has also changed some of its risk factors. Under Legal & Regulatory, the company mentions that offshore deployments of its products are heavily regulated and need multiple permits and approvals. This makes the company dependent on state, federal, and regional government agencies for permissions. Any failure to obtain necessary permissions can hamper its ability to implement planned projects or business plan.

Under the Ability to Sell risk category, the company highlights that if sufficient demand for its solutions and products does not develop or takes longer than expected to develop, and it may affect the company’s ability to generate revenue or achieve profitability.

Since its inception, Ocean power has invested substantial resources in developing the PoweBuoy platform. There is no guarantee that even if wave energy technology becomes widely accepted, Ocean Power’s solutions will be a commercially viable success. If sufficient demand does not develop for these products, it may be unlikely that Ocean Power will be able to grow its business.

The Finance & Corporate risk factor’s sector average is at 43%, compared to Ocean Power’s 24%. Despite the recent downtrend, shares are up 209% over the past year.