NEON - Earnings call transcript Q2 2018

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Operator

Hello, everyone. Thank you for standing-by and welcome to Neonode's Second 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 will their Company control navigation the The the prepared slide-deck remarks. through with you. Thank time to the Head like of this would Brunton, Relations. Investor to turn for introductions, call and At I remarks now Corporate David over Neonode's opening David, please go ahead conference. and start the

David Brunton

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

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

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

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

Hakan Persson

The My to Thank customer, very first and it encouraging clear a it have very that can been variety the of We will is planned several you, we imagination technology technology with used need used provides, need cases, are and of and to later with we And I platform our This how capture be to concrete on. is elaborate demand. into employee lot [indiscernible]. for tangible encouraging of be is can is value customer. with that new development we interactions. quarter more conclude we go to build the projects trigger in in to activity, on help much current and use industries has it is partner development and detail OEM use across that cases. technology Neonode me and capitalize the and David. exciting business a customer show a but to engaged

million our remained year, year. short-term you in improved and quarter were and growth. financial and less technology the amounted to to detail last Lars action on, will the let but has growth. achieve as to that than which company my profitable later reiterate me to $X meetings revenues came our to results review same short in customer $X quarter customer resources operating lower first result discuss seen, line second with in our loss have After however last than profitable the As as a is than we approach, expenses Neonode achieve program million capacity due where

Let me elaborate.

This based is zForce important which potential our CORE. of focus on business continue one. on is to full We foundation capturing our the licensing very

easier for our integration to by and business zForce customers to to a technology customers market. we update to decrease implementation performance, us started growth. business will cash organic look CORE grow new the for growth structure from increase models acquisition. to execute to enable and cost of existing existing and us the costs This licensing decrease customer faster time intend projects as steady are is and at profitable that’s This the customer that new to We provides new to flow to enabling models release and as grow, Company’s new the

NRE We revenues related our I will leading detail both in pipeline, later development this on module sensor commitments project our to go us bring have will the in number potentially technology the up and licensing and of into customer to increased which on, more business. customer sales lines. additional increased service

number with for across the second a Expo high sensor used events is technology in technology. evaluate to zForce [indiscernible]. and collaborate on groundwork industries in in Based the there of a concrete lot the our the shipments customers time. show fashion, provide California Among participated will implementing. have partners Sensors will for cases demonstrating and and our interest feedback be This profile to this quarter. every The during We we can of them received, concrete use substantial module key and be

a We our key markets trends of our across technology key offers we we a unique edge. and where competitive number have have believe solutions identified

user to customers differentiation Our function. product unlock technology and without of sensor experience enables our degradation

The to touch case test cars, using technology of determine will surge. provide the licensing solutions from environment performance of provide high-end AIR using will surface devices, customer Sensor displays Modules. any home in and all. and robust and independent providing zForce technology best which rugged high support case which customers a touch our Therefore Those interaction appliances required with solutions efficient use for very industrial CORE different technology display display. ranging and individual interaction, have zForce enable platforms We zForce medical superior CORE AIR use

and with cases door gesture interaction addition, or opportunity market use interaction, require an provides the In include whether identify ways to technology. object, object avoid detection competitive such a dynamically as for object interact cannot authentication device controls mid-air an expands probably advantage AIR collision enabling [indiscernible] allow surface object sensing and by the to a zForce to with additional that our an by pinched AirBar to to object, our creating be be touched the or sensing reasons, or object moving

We EV pipeline our shows projects maturity various stages current by color the that automotive in have new increasing customers' In at with customer projects players introduction large slide. of you cases of the several the industry segments market, go of use our some vehicle give our in players where are have there're AIR will across coding aggressive some customers than case. the electric highlights currently new technologies These depicted develop market we most we’ll evaluation with through I solutions, of development new demonstrating what case and opportunity to slide technology. I the secure not pace and industry primarily them the commitment. to criteria. have in all, more proven in plan with this This XXX close or very a development are met biz using where a driven cooperation cases important the sharing costs but by we in believe the extent in new

progressing next new believe will in with with is we project Autoliv X into with the several soon cooperation come fruition starting that OEMs X Our well to evaluation years.

of systems future increase a a cars, we as OEM technology key seen see drive autonomous in component where is X. from entry key zForce and number interest a AIR area is Our Tier technology for

sensors external through deliveries of in We the have automotive started QX. the detection door discussed collision OEM

In are addition solutions. in several with implementations we opening engaged tailgate

harsh Air work zForce these to conditions. among functions things other Our positioned its ability technology in uniquely to is support due to

to projects these start expect We the shifting few next years. over

cycles, enduring As important. automotive why long industry you with term. [indiscernible] a automotive but the for is the time know the is This longest is complex very

is stages deployment. instrumentation obtaining approval of customer aeronautics aircraft has final for global for who an in the Our solution market developed FAA cockpit panel

have We modules sensor preproduction for in preparation volume shifted production.

where see We also an engaged the devices, technology. we are from our In using aeronautics display see with for we for customer together with additional medical med tech solution. markets opportunities interest provider partners other

are We of solution. tuning in the prototypes and have final delivered

because is different with that our to this for substantial device similar work We forward. suited for the proved to solutions. the address in technology enables be environment. believe us medical sensors of activity ability Diverse well Our us sterile to [indiscernible] industries market technology going of market

slide, see from similar we that This with get us industries use provides the market you the fast. where time request to have the case pathway potentially from is multiple to different industries requirements. As can sell to

a In platform addition, industries for increasing sales kit providing Today opportunities. our from our see customers [indiscernible]. partner we of through future XXX more our technology sensor evaluating are development different than

over see, can will keep you we going I'll of on you now And have lot to As progress. customer on Lars. activities updated I our and turn a

Lars Lindqvist

Thanks Hakan.

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

on and available today present we of a by I'm our summarized that deck slide investor the you find results. to also going of can second start our You section quarter revenues giving the view website.

decreased for revenues sensor We to the or license last year. and our compared total generating fees, experienced NRE. decrease modules reported of all in Our revenue three a quarter second XX% activities $XXX,XXX

is to sales by bit the during $XX,XXX I'm $XXX,XXX BXB we licensing although more a was about positive on to [indiscernible] to $XXXX increased AirBar. expected. number. focus a or sensor a details module revenues. next [indiscernible] and we This as continual first the fees or that license not of sensor a encouraging recorded an BXB decreased total sales sales due slowing decrease in in Gap] in market effort on This sign quarter to Our of sales On Sensor that selected adjustments increase modules huge module segment. [Audio expect note, slide. we see sales quarter embedded XX% customers our going in talk XX% to

partners. to and $XXX,XXX to have activities more one due or position XX%. to completed. fluctuate number AirBar We the options NRE reporting Revenue or different revenues design or the marketing generated been decreased typically and from between retail projects sales of comparable savvy parts evaluating price NRE

that of quarter of XXXX wheel second XXXX. with from projects $XXX,XXX recorded Autoliv, development steering project our NRE completed was in QX The

are approximately to loss results quarter quarter from $X.XX approximately for with per last share XXXX $X.X U.S. between on Our in for per revenues will $X.XX quarter expenses impact be share have rate or aware $X.X USD compared of impact million same to dollars. may Please rate a SEK our $X was million forward net $X in material operating same variance exchange our plan. going The exchange compared and/or $XXX,XXX. the the year they're amounted or by in period in expenses that XXXX. operating million to and SEK the second XX% in the million XX% result loss On variance

first So revenues in decrease license from our a adjustments was year-over-year. The to to decrease Chinese quarter with reported two of combination total customers. a along XX% revenue due fees decreased revenues automotive

Printer forward. second going good licensing fee a on X% last by to capturing foundation, increased the potential fees compared is in year. focused license the Our which full quarter

impacted Epson quarter printer the However, five of reported second was of printer from fees from customers. total year-over-year. XX% first negatively adjustments would license adjustment increased related [indiscernible] have customers our our quarter by by one revenues $XXX,XXX

the second to Our the XXXX. XX% a automotive of license China same decrease part in market compared license period quarter in revenues. was in business fee dominated of XXXX the automotive our Historically,

of was second The license been decrease Chinese automotive these have adjustments some XX%. $XXX,XXX for of excluding quarter by The customers. adjustments reflected would our fee report

XXXX is agreements due only. primarily modules focus to to the decision early sensor Company in the decrease license selling shift selling to from on made However, statistic

models Tier together system [indiscernible] As Chinese are us current designs our with all our a models has these alternative we changed previously in X in customers of continued used zForce and allow that chose release infotainment and will the our screens is new such revenues. revisions include technology. as car that Ignis. been new decision result, deploying S-Cross, new and we’re the Suzuki fee reengaging and Volvo a we an doing licensee release XXX%. with for our increase future believe Swift, models customer touch all of of car car work to had with of certain Vitara, license CORE grow to year-over-year technology two

markets. to mix seasonality and designers Second typically typically diversified issues. in for market affected automotive are these challenging due Customers effects more like quarter Indian not Volvo by have seasonality in market is

balance accumulated have more we For customer and to execute shipped million talking about business XXXX XX believe the X.X We products sheet cash license during XXXX. and product shipped end cash first by position. since million the going plan. sufficient our than to I'm quarter of

controls. cash have We implemented cash and management tight

projects. We are focused on customer and speculative finance no are projects doing development longer

$X Our total is plan. less for operating quarter the accounted expenses, expenses second slightly million, than which on

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

cash had of the of half this we For total. first used $X.X year, million in

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

gives $X.X accounts million we of As receivables, XX, of and $X.X $X.X million equivalent XXXX, June million. which of cash of had cash

are capital a excluding payable revenues within the additional the price continues do business. reverse the proposal account our Our NASDAQ well is last give XXX approved and the days at alternatives split accounts deficiency to At and to liabilities to review the XXX in to June a accrued confident the meeting got of sufficient to expenses NASDAQ shareholder plan deferred and maintain grow our authority June, stock XXX our working in our board board range stock shares. to shareholders listing. to

the to Hakan. Now, I back turn would like call to

Hakan Persson

Lars. Okay. Thank you,

the for those conclude to So cases declared is interest allowance. technology and use our

across value robust technologies several touch have flexible detection industries. zForce gesture Our and unique object providing and

projects and to persist. a see customer a lead As we in increase significant result,

we plan to business sufficient execute control of are We have clear cost we a cash plan. in our our business operating have and and

Our licensing actions even to more and foundation capture requirements. our business make be implementations. the through our case for new to of taking continually an will concrete To demonstrations our and visible value are service is important customers' strategy clearly a business, refined use solutions growth we improved

have engaged am I progress growth and to expanding going industry about in module. are optimistic opportunities made customers the our several using new projects exciting We segments forward. sensor in

confidence to We to modules value hand gives be our now track to and achieved. to our have necessarily of BXB licensing Thank be easily our can it be technology to sensor our for how plan taken can steps understand on business add the the the I moderator is you. sales implemented. me used This enable and customers that questions. over

Operator

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

Mike Malouf

door phase. if give I side you side. the on little of automotive opportunity what the particularly wondering prototype timing like and entry helpful. I'm And But That if little color on it just bit working focus systems. been you're you of size just on could on rear the more and you've a and getting the into more could entry us handles is? Thanks. a module the a that, be would know that, bit lot sounds

Hakan Persson

very technology in [indiscernible] across situation. that after interesting It very, a opportunity us is passed market be for would in done retrofitting because This this supplier area segment. type for it’s smallest gives also an this of can I certain because the say a

So, platform itself types of the as retrofitted at of also on we’re implementations, various looking type but one project.

a become has with this this of in those important actually very discuss to So, a use case. interest us. space see lot We players from

this a with very have and So, case that concrete in having they're is some very working we discussion we’re you. discussed active

Mike Malouf

to going are to little few sort you you of going Lars. Can inventory of about that talk you look Can is when maybe and -- your some the enough side, is then all right for expand next one over what of that get said the that your you inflows you little you what’s take need on Is have now? in that the then the And to that question bit And specifically cash AirBar to a expectations? with or And quarters, fill your a makeup have on overtime plan to a AirBar? you're now goals. you of just inventory sort bit cash?

Lars Lindqvist

a That how that cash there of as of affecting cash to the first approximately basically if sum XXX,XXX of explore starting the flow. your first were and me question a some half think the let adjustments into looks the it for we and going quarter Well, up also as forward. on about look the we sales

on basically equivalence quarter, quarter we first where and made basically million us million just per will X AirBar than that If it’s not save a for it’s stand for of out the of we closed an XXX,XXX it’s the used basically account inventory, we total have inventory, have basically because we type XXX,XXX of that’s that fourth the inventory, AirBar that a for basically return did X.X means we now. quarter of key cost, results took write-down part you of of inventory revenues X.X we instead in minus we quarter XXX,XXX. adjusted million licensing basically position module second or in quarter all [indiscernible] the And well would we Then the XXX in well then report. made majority also minus or and part cash made the with of estimated record. and if would related -- correct the first If then sensor a a

do at expect hitting on, overtime We the little nice a where mainly printer, to to you flow the Well, we're not bit inventory recap. in expect development obviously has tried we So a and downtime for has we Suzuki. with if which Chinese also especially also for analyst, with okay, license which we’re fees a to automotive increase look automotive going. and Volvo do analyst recapture really nice customers,

be not could looking over I’m So forward. thousand I’m about about dollars this talking hundred at couple maybe quarter a capital. it there next talking

see we Now, where into very quite the after to revenues but of per XXXX partners maybe try much, expect projects in to -- X do we where to illustrates X going sensor maybe programs, NREs of expect we of that for answer you that on and find we’re as start mid-term naturally we that are customer expect, customers give maybe quarter ongoing that then the we will going an That And ordered forward. had work basically actually have have into maybe bit NREs some increase, expect That these the short Mike? quartile. if time also years to $XXX,XXX all to take a expand to coming back in there can decent also presented question, out. do the get programs $XXX,XXX to looking part have And we we little but that ballpark get modules the focused data. we lot things from on we some this

Operator

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

James Mezedeith

questions. I have a couple of

So any looking reached you bottom I good them but the on expenses? question there have whether controlling if job in we can tune is expenses, further? is like have them, at downside that Or the

Lars Lindqvist

that to basically so done focused futuristic James. and what bit customer here. living on more focus think say try we project. Lars Hi, project I too Well, little is have much when to

We focused to development the possibility have had be our more in work.

we So, would level reach the to say the I $X see around that target million.

tight are little set bit to below may to bit lower, have the project And but I of maybe some a I control we a We that would But and level. the that over. have is even is with. we some are this $X level at guidance as queue to target think dealing well keep sense put get little we say try we that million to a we

James Mezedeith

project And Normally, time and approval. even final then approved getting auto you the more for of FAA mentioned or said in you in is takes an those for aircraft consuming stages difficult I that getting think time project. is more a an approved FAA than aeronautic time

bit of this you how So, more just be? stands? where talk And opportunity it and a big could might it sort little about

Hakan Persson

are panel are be customer. firstly the we on to this case. perspective, obviously FAA should there in aircraft, information I aircrafts many maintained being form and Yes, a they comes for instrumentation There with approval have is the from is experts as about the the the actually part. out timeline how that the received well, there volume respect mean the

how be in as how will other And getting our from I and look in see now request for accounts' that served industry technology. very a but be not the as we many do we players to the slide reference a our in let's decide growth there. technology aeronautic end would mentioned that this our units say basically simply see take sales we decks interesting interest process, obviously will the So and could control that that at

James Mezedeith

-- be a see or it a is sensor be financial a sensor project or will the -- license written So will module? it is it licensed -- we

David Brunton

is Hi, sensor if is this David, project. this a

James Mezedeith

one aircraft, And more This aviation. a big is I is commercial just general This that. then a assume on this right. aviation isn't aircraft? call or what general either private military we

Lars Lindqvist

on seen the would commercial I say side.

James Mezedeith

you Could Sorry. that? repeat

David Brunton

Commercial qualifications earlier, time you Hi, asked this and it they’ve as your application for actually question is David. ago. as submitted far some FAA

So, this, the going since to is now it not FAA. like

say So at if that now one for this or ongoing two process point. been would has quarters, I

James Mezedeith

like clear, the color designed a more on and just if If one from exactly that I maybe they of you cars maybe those programs next there? out people. you automotive if Chinese away Could on detail just I’d in, squeeze looking the went can little give can could of generation more what more happened little they terminated, the you --

Hakan Persson

And developments Well, of we do that and and Volvo makes is decision if for feel is a But sensor well that's a that least automotive, at customers within your want forth. stake so can I Suzuki the consequence it say. module. it and been have and licensing care, to that won't because with programs the they take nice and -- that very really new and I early always XXXX well that issues

some car cancelled and active but models say significantly so not to is an we lower of have volumes customers at and forth. not reengagement so them after recapture or have that are not design that we and we programs this So, sort target out, to the agreement meet it’s of, been

Operator

line comes and the private from John question of And next investor. a Nelson he's your

Unidentified Analyst

such Beside auto the et potential if automotive countries other could name those manufacturers you manufacturers engaged you in are X Chinese Tier countries cetera. as so Japan, and with Korea, U.S., Germany, other

Hakan Persson

say it like X. eight basically seven, have Tier can will was but Tier I we name Well, X, not I eight,

based the so the in of and from a sentimental they Germany board China and everything or the organization say but them to of Europe Sweden naturally, in I the is biggest in forth. as So would mix is have that you Volvo most it’s know

Xs but agreement is them, have major a this would of different for applications, Tier I but of today mix automotive in for with system. say So, type infotainment all there we is

Unidentified Analyst

that wanted future. his also just think purchase insider up of step of And wanted of to I compliment stock Company's on a Hakan say show if other as I be would sign purchase of a good members to in board it confidence recently and confidence, the

Hakan Persson

comment. that for Thanks

Operator

do Lindsey have Whiteman question [Operator [indiscernible]. a from Instructions] with We

Unidentified Analyst

I wanted there about much to deals don't ask from deal there Figo but more of those a was [ph] was the of on that think with types coming? is revenue, I [indiscernible].

Lars Lindqvist

that is I part I [indiscernible]? there my you of hope the way. pipeline. mean issue can seems It with hear slight me the that by is

Unidentified Analyst

do I No, yes.

Lars Lindqvist

yes, and see the we as what But from happening described of have well, pipeline. terms you can slide bit where in is little

is in a various of number maturity. technology. our using us. have We [ph] Figo stages of using It's cases

So, which opportunities they're deployments the in hopefully here the according the the grow to but and market, progress internal the to will And meeting to sure, show the going pipeline, we see their are forward. And through pipeline plan. every pondering some try slide. we on also day, developing rest we trying to customers

Unidentified Analyst

Is any anything Company that the value there if was years value ago, there Is that to any still discussion? has this the left? value in patent

David Brunton

mean sort This valuable of those they or can't. that know are they is right Dave. I things can be have answer never you

an general. now evaluate portfolio we patent periodically have of going that evaluation we So, in and our on

on right. bank don't never like mean So know, you I we that it's because anything

Unidentified Analyst

Right.

David Brunton

still on to life have patent it's them, The so hard say.

Unidentified Analyst

Okay.

David Brunton

put that me let way. it in not included our It's model,

Unidentified Analyst

that you continuing, a Is and or wasn't that's deal. do continuing onetime was [ph] just buy use to revenue what the that I a Figo tell a about sure continue deal me they components? Okay. or

Hakan Persson

sales obviously that it's grow deal according is Yes There continuous that's continuous upon and the are volumes not their enough. a activities, will still but their a to depends growth. sales

Operator

no we remarks. I call questions. over now the back for further like would And time, at any turn this to have David to closing

David Brunton

rest much joining have us Thank a day. you good today and of your so for

Operator

today's conclude does conference This call.

may disconnect. You now

Neonode (NEON) 9 Aug 182018 Q2 Earnings call transcript