NEON - Earnings call transcript Q1 2018

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Operator

Hello, everyone. Thank you for standing-by and welcome to Neonode's First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. direct can to to view to slide-deck company's this like you that when would your the attention PowerPoint call. I logged on to remarks. will with company control navigation the The the their slide-deck prepared through coincide Thank you. this to turn Neonode's like Head At I Corporate Investor David over the for and the opening introductions, time Relations. would to of call Brunton, remarks David, please go ahead and start the conference.

David Brunton

first provide thank today's call, review update. our On a for and we results us. quarter joining you financial Welcome and XXXX corporate will

of activities, technology details other include of interest. and will items update Our customer developments

On Persson, the Lindqvist, is call today with our our us Håkan Lars CEO; and CFO.

the forward-looking SEC Chief turn please is Officer forward-looking results and forward-looking outcomes to Håkan, which the identify limited go remarks on actual risks, At intent on the materially obligation in Persson, I concerning XX-K, are these or by do your statements. believe, not XX-Q, filed subject estimate, may Therefore, other The by turning Quarterly which attention than will, pleasure this differ would expressions what following to directed. statements. and Håkan over typically and the operating All Neonode. not over statements. other business, affect other results, other ahead. are the in words financial position is to to confidence, the risk include, of statements anticipate, Neonode's used make involve Neonode's any future Before and guarantee from statements expected and it similar time, statements. to to tend, to targets, projects, that or other uncertainties forward-looking with statements. factors Neonode Reports contained that is conference expect, Persson, factors call qualifications Neonode call Annual performance are to like guides, disclaims Report facts, These may but forward-looking these be Executive expressly and Mr. call, may other reports to or implied historical forward-looking this update my

Håkan Persson

probably CEO Thank was and you. here. a Neonode present first highlights give you and David. happy as our today month I a platform. I present note started I myself appointed very where will and Thank the I am the February be you, see to I should quarter, my background and for Today, my precision of ago about flavor in right and

detail So a greater at the quarter, go first first glace later Lars quick will on. into

Our flat quarter the million sales last were to compared first of $X.X of year.

discuss was will year quarter I new announce was to the sensor OEM are Our net cash and for I year. last on used heading development we work I becoming which in engaged slides. in are This has is would to great we that than XX% million in technology drive $XX,XXX later strongly $XXX,XXX loss modules, Neonode’s compared happy that the lower am direction based the right of $X.X operations to define primarily prior need and projects two the in capitalize increasingly and value. opportunity. me to our forward create this the and potential that to what going triggers is to unique I say believe in relevant

relevant experience companies [indiscernible] products take and similar with to ways clear opportunities with several sales my believe to to forceful deliver many for tell solutions market Neonode, why our that my markets, me worked to is I execution our world-class companies the how aspirations tech have strong little about needed look the and direction to products in customers. let a and I little in detail. background our at bit products more and you I now bit market high So companies a

its so opportunities and my some will During with time share our observation focus a for to and the employees you I we challenges talking an feel of a lot of and get business, what with far. my forward. I month, first on understanding have should spent going of

is a my and creating People the have that deep enthusiasm technology employees comes creatively. for word the value our and technology Our see another mind. by confidence company, want are to passionate to improving technology company customers, our about succeed customers our

achieve order we sell, to and have long-term We customer business. we value a sell, a will resources what that and to market products and our provide become actions and short-term with strong and take capacity technology alignments profitable where success long-term sales in company, sell a to and convinced the the processes and to both opportunities propositions grow am Neonode and more opportunities direction lots a has the perspective from advantage In telling and growth. foundation we to the including market of take are short, in company of and we place ensure the focused of how resources to technology explore. segmentation to clear our took there and focus needed will organization the market R&D to customer I full of we over increasing the clear

action as our will be short-term So program follows.

full business based We zForce will to important of This our is focus us. very which on CORE. on stable foundation, licensing potential capturing is to a

also strong believe companies, [indiscernible]. of have shipped our XX automotive selling steady company’s I grow from can we printer cetera, strategy. growing the by we Here new and products potentially and new It’s enabling business revenues have – as acquisition. et projects cash a to business, profitable several great growth grounds existing companies, licensing through customer such who flow products million providing customers, lot but markets

in ground use a we significant work The from have NRE related market key beachhead customers represent development automotive our over see agreement. the module. is lay for working and and a By and and zForce both shipments business. opportunity to sensor partners customer module growth, get The our own the industry we sensor significant potentially selling the up focus an potential We our revenues additional collaboration, large We its for close module a substantial our will licensing leading sales, revenue business customers commitment the sensors a technology. will strong NRE with revenues in AIR time. licensing module right where but projects, grow to

We X XXX,XXX of first have infotainment will we to X to systems technology, This total the zForce increase. million approximately approximately systems cumulating area in a with quarter Tier where shipped seven ship customers an our in is XXXX. continue

holders. place X shorter a these chain Tier during current for time saw new Our significant to We supply knowledge market. customers have systems a already to infotainment car from in

it with to the our best the refine to to Our zForce to charge proven for offer CORE the customers, technology our continues we be such for noted continue CORE and technology ensure reliability has performance and steering highest zForce The with the into testing towards phase and progressing Autoliv vehicle moving entered customers. are implementations. Autoliv with discussions the project commercialization OEMs wheel program is now we several targeted actively engaged where have

OEM which into project We door with an automotive NRE a for sensors external new development payments. includes have entered

to the growing OEMs system in With X and with Tier and solutions our interest entry suppliers. engagement our activities sales interest

big a selling opportunities Modules. future see zForce Sensor AIR also We

exploring a have such interesting solution product new AIR our are zForce the a such markets using now panel entered are instrumentation a and we new In for key of to and as home engaged where proposition. using addition Sensor and we in us products. on our more customers aircraft OEM our And cockpit AIR relationships current appliances, segment and segments in in close devices collaborating select new technology, market market as we discussions number with Modules. strategic with opportunities global a customers and developing industrial, result, compelling value allows medical And the as efficiently zForce new reach to CORE zForce with about building

Lars, I you. the So, over call now hand to

Lars Lindqvist

Håkan. Thanks,

You the neonode.com. Relations of release XX-Q website at and our can for find earnings download quarter our from section first Investor available

estimate standard also the revenues can in quarter available today all in sales actual the reported ASC total adoption first actual $XXX,XXX Previously in reported the report the impact section. received company the deck net first quarter revenues presented which new quarter customer XXXX. XXXX, received customer reported the XXX the adopted corresponds slide requires Investor revenue find a of You financial XXX, not quarter requires reduction report which date. with of the total case that revenues the sales ASC in by filing is in revenues customers. The the the to reporting the Neonode in sales. has from company company In from to the is the that net recognition was

our You the summarized full want results. GAAP. can XX-Q of in and the first read you understand first variance urge the for to give the slide the see and I old quarter to that and view quarter to talk I adoption. our to you again a handling of treatment complete would revenues the between new

have would total last is recognition basically exchange Our we rule. to related in increased prior if revenue to but quarter year started flat the year, X% compared in the revenues

$XXX,XXX Our the total compared had period to same license decrease we increased fees due though year to account last measures. even

is first for higher accounting the Our sales we due as our Christmas fourth products quarter than customers’ fourth quarter season to Previous customers’ to received reports. decreased in the the and higher the more quarter AirBar eReader exchange, about first details during printers. in typically such the next our in sales in licensing slide. $XX,XXX want the quarter XXXX. as when to from sales $XXX,XXX sales expected we I talk to reported

our and different see options collaboration. are a support AirBar as evaluating significant revenue going going to opportunity We’re forward monetize and to investment

the in share quarter loss Our to first per $X.XX the $XXX,XXX $XXX,XXX per compared period share in $X.XX was or same last year. net or

the dollar to krona, expenses material rate Please impact krona expenses quarter in $XXX,XXX. revenues in have A are rate that variance amounted Swedish with approximately may for run in impact operating and the from variance are result aware of all the million exchange be XX% $X.X exchange XX% $X going between dollars. Our and U.S. approximately U.S. our rate of quarterly a would our the and forward while results million. on-plan towards Swedish

would to primarily on business, to higher same solid the going XX% is license in year. in up the technology year-over-year, shipping is capturing potential from second. and increase – have bit licensing restated fee. began the HP. by printers in printers The with year. per screen the The period Our prior we compared shipping first forward. a our made with to Epson is first we HP due quarter and increase They in larger unit full moved for the while size fees XXXX. XX% product focused the five of XX% Printer the moved stable which The quarter Epson if license is last increased profitable been OEMs in increased

of chosen have production. partially compared offset Our plus motors. This of to work automotive designs China from however of increased decrease in models of for with This CORE due is will the believe XXXX quarter shipments to technology mainly release of they current our car new a doing XX% situation. by increased shipments the release fourth quarter in address zForce increase the using Tier license first existing last we’re business a where year. our alternative two new by of Xs this is We

products XXXX. our business I and than license million believe shipped plan. sheet first have Our during balance am going about cash my customers quarter we since sufficient XX talking accumulated cash position. the X.X more products and end We execute XXXX million the to to

management implementing are cash tight on more and cost focus We projects. control key and customer a

Our targeting expenses to accounted and in first for the quarter million we near-term. operating $X $X.X total the million are

in by $X.X in was $XXX,XXX the cash XXXX. compared used million operations first quarter to Our

meet inventory and to sufficient our near mid-term expected have sales. from demand We module

$X we XXXX, XX, and of March accounts of receivables. $X.X have of cash As million

June, Our payable, Xth, split that want working on upcoming believe a to approve where are accrued capital comment and plan account vote. asking an a about XX, is XXXX shareholder well as our we our revenues our listing and to the will within All end reverse date to statement. grow in and on for support. including efficient be I of proxy are is NASDAQ shareholders your a record to important stock accounts in with event able business. proposed April expenses shareholders June asking meeting liabilities are We deferred

would like back call Håkan. I turn Now to the to

Håkan Persson

Okay, thank you Lars.

and solutions, a value a technology have which that we detection conclude object to provides flexible provides touch, So to our gesture robust and great customers. proposition unique

market to ship grow have the and we and allow believe our forward, you makes solid our all key. to also that development activities that’s related started and over This to with project the us the hand to driven me increase license our and We business are about foundation module increasing growing business actions moderator company’s sensor now I We sensor optimistic direction, and growth the Thank we modules sales technology are opportunities business value. solution. a for license transitioning taking focus execution shareholder our first going the questions. are specific customer will and have

Operator

the Your Malouf Mike question comes Capital. first from Instructions] with [Operator of line Craig-Hallum

Mike Malouf

my sounds design that said that Chinese through the that be change. due but then that? Yes, side. of a particularly lost sensor Could about on get you you a able auto a a Thanks. do over in more taking bit I like on have we My opportunities next thanks the kind secondly, have for is guys. give as revenues well. on the little modules, what bit nine to that you it think sort side, first months, look clarity to sensor talk question the questions as And to out you that Could get provide customer period? might you to color little of six you on back to And some us

Håkan Persson

development Yes, interest but solution And then as do we than refining on XX we potentially technology, either. the the perhaps respect which that know good more is work they we sensor respect type these they auto they believe Chinese CORE project, think see on have to I guys very a can of said, we door hello. the segment, to fill perspective, And in, do Lars have rather in one think we we of as clarifying and stable I interests, a similar project from future now ongoing what type forward. that actually sit, And given the play similar is basically respect choose where with performance and our over going is with product. applications. our months are of applications and zForce a I and have how roadmap we mean, to type I With external strong situation, finance we see this the

opportunity have So I the we the am actually. quite in optimistic about that back

Mike Malouf

on And side, sensor the that is door actually…

Lars Lindqvist

Lars here, Mike…

Mike Malouf

Yes.

Lars Lindqvist

in Tier now represented automotive down and to add total Lars something XXk. too. for Chinese approximately here. These quarter first two the the XXXX in I have $XXX,XXX Xs, to they revenue of

So they the now yeah, bring that addressing that is that, we we to that’s lift new and zForce customers. CORE are basically that not to out basically game with why phase also something believe of back all customers

Mike Malouf

to is this more XXXX helpful. great. Okay, at something when calendar handle opportunity? to going you market or the this And XXXX That’s that potentially then year look a that or door opportunity, is go is of

Håkan Persson

some there Yeah the the towards so is process – because at timeline is But happen the hopefully that the always in much end this. can difficult year. like traction we will of end see

Mike Malouf

question you quarter? Okay, great. based you’re trending you per that sustainable? on get that maybe do quarter. And have When you $X said then will to do $X think that a million plans to Lars you expense And think a for that’s million you, your

Lars Lindqvist

focusing into control. – to really cost driven NRE and revenues, hear some are much investment. pretty being Hello, finance, it we Mike, we bit. up streamlined payment, to what but question a also we have tight but expenses little in a offset comes bit little when finance But projects expenses next our hard that expenses, say, louder up you And then our customer when also your of not follow on

I quite quarter, am will run rate that So $X confident the soon. we receive million quite for

Mike Malouf

help. you for the very thank Okay, much

Operator

Cowen of your line question And comes next Company Mezedeith with James & the from

James Mezedeith

Sorry, hear I me? me? me? can hear you Hello? Can afternoon. sorry, good can am you Hi, you hear Hello.

Operator

And James Mezedeith…

James Mezedeith

hello, morning. hear you can good Yes, – me? Can

Håkan Persson

we clear. can you hear and Yes, loud

James Mezedeith

one which modules the in that didn’t and mentioned question. didn’t of one – working modules hear Okay, taking you couldn’t projects to two related that business wanted that about for you’re clearly I second great. to aerospace I was the on, catch ask you’ve new sensor what Thanks was. – and exactly, my the

Håkan Persson

going we what was sensor is One Well, and probably on. project for we door external then is we running, talked an aerospace you cockpit about where two automotive that instrumentation say. as project in which have panel the are space,

James Mezedeith

And door that’s project… a new

Håkan Persson

Sorry?

James Mezedeith

project that’s a on. already are working That’s you

Håkan Persson

a we is that project are on. new this working Yes,

James Mezedeith

it Okay. think next streams business, it future NRE NRE there that quarters but because quarter. is we about How because should generates because was generates good but And business only revenue several the secondly those mentioned or years? revenue in a you not this no in

Håkan Persson

Yeah, laying I projects, through thing coming up would are had well, the on revenues future that the comment a these foundation here sales. but we sensor important NRE see they think is of you do Lars, this?

Lars Lindqvist

our have run, selected we Yeah, stated have earlier contracts, aligned NRE that coming to markets it’s forward if to have Lars as the Yeah, little and here. NRE bit, what maybe more now those we but premature but focused we payment is be, little but let payments will about details. will to will be new the will the to and them. will revenues, back revenues in it we that much And ordered know expect you And NRE say connected too will go come, more see look going to now focus recall, projects down, on that sign bit a very and a NREs. that they you we

James Mezedeith

thanks. And question… final my Okay,

David Brunton

James…

James Mezedeith

Yes…

David Brunton

James, this is Dave.

Just two clear, to NRE. be there happen that things with is

tell to is us they that first revenue such is time milestone it completed. and payment NRE with is and goes whatever as that associated in pay The the deferred

payments get of can will we I So Autoliv payments for go – to back example. the

and completed of or months that over I paid you months those period right. revenue If they related couple accepted of cash recognized milestones years really of month us ago ago, ago into XX think upfront, that a or like remember as back And by �� to Autoliv. XX couple something million a a years XX $X or was period, was

I is time some before not be into has recognized be that cash know make it in and income could – may is dynamics come We milestone Does the have may portion statement the complete and for it don’t So sense? met. that same here.

James Mezedeith

absolutely. Yes,

In next quarter $X wondered fact cause revenue and to I QX in by is of was and – which that the million question, in the deferred in declined perfect million was – of… declined from lead that’s the how the what about by my $X.X that much

Håkan Persson

XX% of some deferred prepaid license is fees of customers. related revenue the our to Okay, for

successful AirBar it We and all of to rest related sales earlier basically is that are agreements the there bit recognition in deferred revenue are of record quite when when module and policy a and it all say to don’t of part our revenues say it I’d accounting some return with sell-through can is through, then so recommendation. the we then they sold of till getting

James Mezedeith

Is safe not thanks. on? it for these come new Okay, you’re that that to yet cash is say the working NRE in projects

Håkan Persson

commitment normally be there they not of me contract that to linked that project. try say could all a sign US$XXX,XXX No, let’s to and NRE. example is normally We at that general it’s are the payments for during upfront, the guidance – of is it they different let fee up get milestones pay NRE rest say because the the XX% part

we customers. absorption want standard So secure agreements. We the finance to fee a have not and to that already with amount will commitment try we

James Mezedeith

Thank Okay. – thank you. Thanks for you.

Operator

this time have no you at And further questions.

Håkan Persson

Thanks joining day. a everybody have for and good us

Operator

And this conference does call. conclude today's

may disconnect. You now

Neonode (NEON) 8 May 182018 Q1 Earnings call transcript