NEON - Earnings call transcript Q4 2018

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Operator

Hello, everyone. Thank you for standing by, and welcome to Neonode's Year-end 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]. direct you to log can this to slide accompanying on like call. that deck view would your the attention PowerPoint to I when you coincide through will slide the company prepared navigation The deck control to with their remarks. the Thank you. and opening turn over Brunton, time, David would of Head call I remarks this like introductions, At Corporate to Neonode's for to the Investor Relations. and start the ahead conference. go please David,

David Brunton

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

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

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

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

Hakan Persson

In welcome has Good XXXX start David. results, fees. used I'm from are where decreased a operations cash year-over-year, by loss On summary, operating decreased very you, of This going XXXX for revenues sales, our and on driven AirBar to busy morning, in and with XX% call. decreased salary summary move expenses the note, thank of then the to decreases a positive financial license by So the and XX% with and we XX% a business. discussion and year for to our us. e-readers, automotive been fees decreased our net XX%, year-over-year.

in Lars So later in will about talk the on presentation. detail this more

on have reshaping and we input a and methodology we Based our our we the lot working based create on this, where real year, spent the customer value. X become changed focused. business have customer processes and of focused to of market analyses During time more

right on have, with we have with and growing we position liquidity on growth. There We a where revenues the focused And have shortcuts that pathway base in the to developed will track cash fixes improve embedded are are solid to markets and markets easy that I'm believe achieve technology our no to provide use necessary customer and traction we company And future we said, believe results. the to with we cases, a specific progress strengthened clear on plan making. execute our we provide the plan. satisfied are our and the a the business. or I business

aimed strategy build forward Our successful interaction touch our going at business. on capitalizing is

and with we and low-volume solutions expanded offering. sales both an our existing To for reach Here, the we offer course, will this, case focus do and market on of but, increase high- customers will primarily presence product use implementations. new

our use one would sensing with growth display Initially, new the and record cases to object We a use touch-on frontiers for opportunity interaction leverage we and grow opportunities share and a systems. represents capture market additional mid-air strong strong to we'll where and solutions. gain specific our relationships traction. we our solutions, track presence will automotive Tier in market of market our have on and huge The technology market our automotive with is entry existing OEMs X focus

on So on capitalize let me we how opportunities. our market elaborate

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be can implemented and solutions retrofitted into existing easily Our products.

ASP, is even In business selling at is this per high, the customer. a individual average for why addition, the proposition good price, volumes low generally

growing see mid-air we poor tailgate object relationships. user solutions and both a a before due For lack of already solution sensing, applicable at aftermarket existing and Neonode to leveraging cost, interest large strong friendliness. We community, on will replacing initially in automotive in are and for performance our robust, is automotive This systems. we interaction competitive a entry and and enable a We existing focus reliable is user-friendly and the implementations. known market.

augmenting selected integrators reps, distributors and sales by sales Digi-Key presence as We such teams reach with Electronics. like sales partners and sales internal are system increasing firms, external our technology-oriented market

Our help with reach will us External internal Europe. focus U.S. selected our targeted will the new and our defined use business markets base sales with key and geographical in cases sales current expand on as partners capturing teams customer such regions accounts. into

have our We capabilities marketing of the activities technologies. increased to showcase

we generation. these building X source and very consumer both past feedback such and shows by technology-specific product Expo favorable, and for quarters, market- trade the have attending providing have BSIDs, events awareness solutions a been Sensor Over The for sales fleet been automotive our demonstrating on events products. our and good at several other as

road functionality screen I detection, sizes, improvements functionalities, latest increase license of release and capital in optimized our automotive on larger gesture us display increase have believe recently well-thought-through will will continuous certification. brings patch our the improvements. some We product to significant sensors increase We cost structure, been a technology to road overall appetite object for also discuss map our addressable for implementation have thereby display reduce allow our The and cost touch-on map activities solutions market. touch-on and initiated. mid-air that overall

me printer start are our Two several currently printer with design Let customers. planning new of customers to models. our

in product printers have are and they discussing them, are design for the lines. our meeting million customers inclusion been touch upcoming our shipped our of appreciative aware with date, map, we product To road in XX have XXXX. using and and fully projects We solutions

display new our X release. for usage customers X prior originally changed interactive XX using an either all the are using touch. and the in used who design XXXX, shipped using the And the coming the important left in is since current are solution think automotive latest is systems. new design one discussions low touch million with completely they There for consumer and who in OEM or are activities lines developing have returning our to current customer our readers those, from reasons a no X entertainment technology are increase technologies have customers, e-reader glare, we design cost speed, our prior back touch of our market competing in shared screen of large e-readers our Neonode. power customers, process customers effectiveness. devices display. it of customer, Since XXXX. We X Our is with that been our They with million overall technologies:

discussions customers are looking familiar of cost several new who our advantages functionality, in update and with pre-design are technology activities for both all provides. with We technology current Xs, automotive Tier which recent of the

cars from Tier customers last new shipped opportunity car have X growth technology. automotive there among we to and supplying Suzuki, touch X on been activities customer the see XXXX, we Volvo to to million addition, take continue our I quarter. would like with to, solution. our Since discussed others, models you update In release who also using

x-ray an ASP. the our use medical high we cannot a but And have complete, initial with first our We system in OEMs OEM, the in limited the design capabilities have over FAA aircraft numbers. sensor X European the to and product initial used currently market. engaged sensor an taxi however, for touch for product timing discussions interactive This production U.S. Chigoo limited production have for our industry-leading of touch display FAA the phase solution OEM next primarily now important meter not market. Tier entry is years. X -- in our relatively will to with on new has This and by large first last for been been XXX,XXX supplier units but quantities FAA-approved interface Initial The for production device low-volume interact into is into retrofit module product unknown. the certification. our selected luggage This several an with module as primarily is for customer begun an A in until selected show a module before smart is still interface as final in airport space. is this certification their panel. automotive a solutions. is the to touch medical global be sensor come full tailgate who machine. step test plans run the production. to least, selected An has system U.S. ship released X instrumentation user They trolley are shipments automotive test a systems, The has go retrofit in to

sold awarded range a large buyers from global market. is to XXX individuals, few corporations. XXX take over has stages and further it early and to sales comes to for final distributor, active foundation note, OEM. know, kits it design by system over These a sensor years to we not a been are a their only be good quite that electric shipments that development project for also a the to expected door And our Digi-Key, before win evaluation auto but delay module is in The On have we provide activities. moved but all is U.S. complex, projects collision on encouraging but radar you have detection sensor vehicle As automotive can discussions. and

So you. Lars, now over to

Lars Lindqvist

Thanks, Hakan.

You website, can XX-K section find our Investors our for available the earnings Neonode.com. full and from year release XXXX download of

we revenues You and find summarized the I'm start also today going a slide year view deck full of XXXX that present same by our available place. can giving a you to results. from

for revenues decreased total at X%, and XXXX, Our The ended decrease December year-over-year. AirBar by XX% non-core revenues the NREs. was year excluding XX,

and our Our e-readers I'm by fees Sales more to all slide. BXB total BXB-embedded AirBar on the fees to license the in year-over-year. license about to to with sensor increased a move decreased of decreased modules customers from details to by sales XX% to $XXX,XXX going talk sales. due AirBar mainly next related X%, focus decision automotive.

key but increase, dollar reporting project NRE wheel from by huge our milestone module of design projects we see for because revenues an XXXX. in to the focus in sign fluctuate markets. periods expect activities BXB Revenue of due a number sensor NRE sales with generated steering as not increase is on and selected we our decreased the completed. comparable typically to sales that this continued encouraging Although a effort of $XXX,XXX between Autoliv price completion

was plan. and Our operating on XXXX, XX% XXXX expenses to is the reduction $XX.X in for from $XX.X down a of year well in million million

kronor. Please $X.XX per exchange loss million or $X.X compared may $X.X material in XXXX XXXX. million rate to from Swedish be going have share results share forward net variance aware or per U.S. dollar that our between Our impact $X.XX in a was and the

going license has reduction excluding continued where was The growth been total decreased alternative made revenues and licenses forward. see increased the X% expected, XX%, And This on year. as by compared by compared from are customers, bears because XX% moving year-over-year to continued of they growth quarter Lexmark Epson a last Our Printer HP, year-over-year. which to XXXX design do Canon, the a platform, quarter an to while increase in fourth we from a preference. third except fee revenue expect all we, Canon. X%

a decreasing XXXX, been year-over-year. the had of but decrease business X resulting during fourth full first in quarters XX% in license with quarter, year during the the automotive Our turnaround

S-CROSS recently now year-over-year, over and car models company from a Suzuki try XXX% revenues touchscreens Swift, as however, Volvo tax Ignis decision and by that selling I Chinese made fee selling the fee to have to XXXX. Revenues year-over-year. XXXX automotive compared and focus Suzuki, by new car in of by reenergize Historically, same China X% fourth way the of strategic ideas early to also on numbers models and The increased revenues, to only. revenues XX% third The which in license China license Xs infotainment to has quarter we reduction regain. grow declined XX% in However, our sold. before, include increased quarter technology has has a XXXX continue to license been in fee our headwind revenues due negatively tariffs fees. Tier the which economy, Licensing year-over-year. modules impacted see which the the Volvo, the full is, quarter affected automotive the floated deployed fourth part to from of such has overall market to experienced shift the in It all XXXX that the year government increased license system increase license Vitara, for some the mentioned the market some also, agreements supply dominating has XX% and with the reduction encouraging of the compared automotive economic automotive in a quarter by sensor for been of market. as impact automotive to cars as released that

release current together customers, We -- the reengaging customers provide believe with I with fees work solution display license our of all and revenues. fee future and grow are touch the to license new now doing will new with abolity our this, are we license

products position. talking cash than to balance I'm customers and since XXXX. Our million end shipped more license during about XX.X million products going the and XXXX sheet shipped XX accumulated by

XXXX used include: cash million XXXX. Our operations for by in XXXX year $X.X the from million $X.X full to in

October million enough of XX-to-X XX, XXXX, accounts capital X, via As $X.X split, XX, cash million regained in $X.X CFO. the and X.X in newly and of including $X.X stock The share, and to December we Bunge Ulf placement -- receivables. did had we we market million $X.X of October XXXX, million the in this requirements. $X.XX with private cash the minimum our of Neonode members at Andreas in a On On reverse sold shares compliance placement million. management, and on strengthened included price issued CEO common price December, Neonode product Directors balance Rosberg the per stock and purchases which

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

Hakan Persson

much. very you thank and Lars, Okay,

over and for outlook product call We use business. I cases versatile segments. do strong on the covering with have turn and my questions, finish several Before a the I offering want to

efforts We opening are and industries where or touch touch cost on automated growth function tailgate touchscreen distinct distinct for existing and -- solutions advantage we customers have for licensing with automotive. see focusing across ruggedized our automatic solutions our a and business, markets high-end and display opportunities, in

both for interest mentioned. strong see license continue business our discussions module are a We a in our to solutions of number as for and and

customer We by targeted increasing number increase partners sales various opportunities. using approach the a will sales have our of and kinds, of reach

market of our awareness will to capabilities marketing technologies and to our showcase pull. We create increase efforts to continue the

use right we evolve confidence high, the In to profitability. case perspective. We and and get continue business the competitive from very the to is to on stay both my that cost are short, our the technology will grow track

over hand moderator So now with for questions. to that, will the call I the

Operator

[Operator we go response Instructions] Viktor have from with Please do And Westman a Redeye. ahead.

Viktor Westman

questions. Thank A Hi. couple of you.

if -- the earnings perspective license get your to First, I partner. could want give the on traditional you for

Is stock would separate that license you think in module new that you're from there's in of values lot Because the going I of contracts. show your forward thinking could a doing? If that your hidden part that the market something reports.

Lars Lindqvist

should do newbies, Hi, the to something true yet. would mean, versus to do I is and the or been not to we all know decided we licensing that business Viktor, say. an But of consider with gross of Yes. operating business -- Lars has margin margin XXX% that's transparency while so be a licensed XX%. this Yes, increase here. that may over it investment

Viktor Westman

Yes, okay.

the Okay, Digi-Key on second question

David Brunton

already the believe Viktor? statement. we This I is do that Dave. income on

sensor fees license -- the we have on the the the out have then have and right? across and and business same we then breaking modules, NRE We then way,

Viktor Westman

for that is But that isn't gross Okay. -- profit?

David Brunton

is. our that you out right. and statement. license But the Yes, gross said to license, separately on the margin, break broken separately, the for stands -- That's out that income are fees they

Viktor Westman

mean, sorry. the I for earnings,

David Brunton

Okay, okay, you. I okay, got

Okay.

Viktor Westman

That third. was the

I I've on Something maybe, may. to think for got another question Digi-Key, about. if you,

so evaluation Is Or that for time sold Okay, year? those Or since the X you what's kits, for that XXX? the mention there. XXX is launch?

Hakan Persson

I would during say is that year. this

Viktor Westman

okay. key for printers these for entirely increase if ask wanted I Okay, of say, question mostly will in just models? be so I'm replacement I going the new models, Or to on this ask, Great. and you? also, other new are to last those is incremental old all-time models that stuff. similar licenses to may,

Hakan Persson

projects I involved new we that with. Yes. mean, design this are is

and new are to cost of coming lot with us. during of it licensed we we, forcefully. of now But So said to action our the of lost technology, to to fact e-readers thus And improvements the monitors. that we've to some both and a back decided I do and due so they're the that course engaging printers not what license for And release done them is about say, business. also, e-readers,

Viktor Westman

models. more car -- Yes, it that mostly the question And models contract, discussion ask so models? putting are Maybe models, the models competing if mean, new But can when on I Because sometimes And say. you car get renewed my contract are okay. new cannibalization that's just about with if the new to better the that's new new joint the refreshed then of those Good. that's way was that, it. old wanted models, be a models. your of the with to

understand entirely now. it before? is that So If you in new did better participate you not models

Hakan Persson

Yes, yes.

understand that actually is question and I think combination. the a I

is kill within And as are say so refreshed, always, -- printer Some out the business, back them. on the hard that, but those automotive then when space are models bringing ones the coming -- us new they into things you made. and obviously, basically are and to we within they're the with a similarly, basis would probably that these the play, have discussing guys old we then are I so you -- there transition of to newer also new the ones, say things with sort phase. the some say, that to say, it's And of

Viktor Westman

guys. Thank Thank And in of much, board. see the in you Okay. best to I very you the you. you luck hope future. also to Lars Neonode

Lars Lindqvist

much. Thank you very

Operator

from Nelson, next question individual The is John stockholder.

Unidentified Analyst

for or product as were could the decision far some you sensors on companies if give some by pitching automotive wondered that your liftgate of I estimates you door to. like and Hi. the decision-making the the things as us timetable

Hakan Persson

test final as be mean, to order it's be inclusion give work we say, hold the design, to is a from and needs design verifications proof is, it from process that exact to decision to very to concept estimates. made lengthy I that Yes, of the for time through there. in hard to

the these at they'll with say between get looking type mass of than types to are up automotive to solution. generally I probably more X-year of order where point all are we when to be complexity entering projects of implementations, the in years, the X they industry, production. to So depending the speaking, on it's X.X will

Unidentified Analyst

of it potential the soonest when little able on also, Okay. bit the the you about be -- discussion any customers And opportunity and just would wheel their of us give the could steering models? utilize to a --

Hakan Persson

try a driving are because overall be going control happen. go our ones in in supply because with that to tied to question very we to Yes, forced it's forecast products, the who But is we hard But to difficult through. partners, can to make obviously, that, when not also and them way working market is we are with much the experience, that best it actually the with order these is when when and to happen going our technology of. who as are automotive giving we any to very

Unidentified Analyst

your wheels interested from sensors? the And difference is in interest pretty utilizations any way? versus door versus automotive amount number at of they Or in these there this testing Okay. are of customer, -- steering a very time much liftgates uniform? in in products products significant mean, there the or your I different the customers particular in Is pretty -- any all

Hakan Persson

where going time this solution, to shortest this -- at and where -- present scenario, decided of the with is with relatively are systems, the fits this perspective, why some these technology focus that's we that from some -- opening we point. can now possible basically, to we very I of to is automated because we and where decided be is we make a that tailgate on that is mean, I that type as at also way we're focus really better we and implemented. close have But know see we taking market see, there well greatest we, marketplace. have put application we already deficiencies traction the entry our and see automated area why Yes. we where interest our it's an is time And why applications, the in that areas this to mean, difference. type of It's under

Unidentified Analyst

access building convenience? automotive usage potentially Okay. than, doors, and that secure type of either or other areas of for aircraft And any for then, significant are your say, other or types access rail the is windows there sensors of

Hakan Persson

can would some there many There to say to major decided fit. problem advertise Yes. is why have where on display, we type display used partners, And increased core I cases them which so know across we can where chosen industry great There's this what to a any for display for have of we That's us, to make cases in system. instance, of be here. is situation. focus then our application, abundance But of that through traction. use within and use are sell our that technologies is and I could automotive. interest enabling we reach type also niche medical we sales mean, where is a the entry do systems

we have in case So problem no potential use finding areas.

can we question and it traction I on more discussion because the stop with about supplying to way be effort basically. and hard value get actually is speculation and behind faster can we here some the the focus shouldn't market put is into revenue where down potentials. serious It to time should now. really that much And here something it details think just get and of something get real some to actually of pure very

Unidentified Analyst

Thank you. pass on. I'll Okay.

Operator

from Loft, private question investor. next our And is David

Unidentified Analyst

a and entries. had just the I question tailgate door the about

or -- you similar As niche there buying market would you what do kind where far are a in competitors there are competition, -- have? of you as that -- up to

Hakan Persson

would is, as there to to understand which so and and bring we a opening, it's need, space iron tailgate focus other discussions on for we're this we already instance, in had obviously to a related in already this closely pinch we deficiencies are the what [indiscernible] from protection, who I of going that when how the that. an into in it our head is initially. -- quickly lot usability. those slamming the if very of we But they're rather of can decided mean, where solutions, terms out, they to traditional type are that's customers, have no for forth. that first to supply like make marketplace see but go want types door provides and to to which you people is But and is and there then object the can trunk value with are solution. that be areas of difference, aware that's -- progressions that it alternative it this I already why we -- detection, you're not of about And that when we or opening -- And and natural we discussions technology already say is space. have so

Unidentified Analyst

you much. very Thank

Hakan Persson

Thank you.

Operator

At this there time, are questions. no further

David Brunton

to joining want on and you call thank We today us our for good all Bye-bye. day. a have

Operator

gentlemen, and you conference today's Ladies for participating call. in thank

You may disconnect. now

Neonode (NEON) 12 Mar 192018 Q4 Earnings call transcript