Q4 2021 Neonode Inc Earnings Call
We'll give insights into the work we do to strengthen our brand create demand for our products and solutions to grow our sales.
Before we continue with this presentation I'd like to make the following remarks concerning forward looking statements.
All statements in this conference call other than historical facts are forward looking statements. The words anticipate believe estimate expect tend will guides.
Confidence targets.
Projects and other similar expressions typically are used to identify forward looking statements.
These forward looking statements do not guarantee future performance that may involve or be subject to risks uncertainties and other factors that may affect <unk> business financial position and other operating results.
Such risks, which include but are not limited to the risk factors and other qualifications contained in <unk> annual report on 10-K quarterly reports on 10-Q and other reports filed by <unk> with the SEC.
What's your attention is directed.
Therefore, actual outcomes and results may differ materially from what is expected or implied by these forward looking statements.
<unk> expressly disclaims any intent or objection or obligation to update these forward looking statements.
I will now give.
The presentation over to urban who will describe the highlights of today's presentation.
Please go ahead.
Thank you, Dave and welcome to this call also from my side.
Highlights of today's presentation.
Like many companies have experienced continued headwinds during the fourth quarter due to the COVID-19 pandemic.
Lockdowns and travel restrictions slowed our sales and hindered our business development work several of our customers often have to navigate supply chain challenges due to lack of semiconductor components, which also affected our sales negatively.
Some of the pieces starting to diminish at the end of the year and our licensed revenues rebounded nicely. We also grew our sales pipeline with several new interesting opportunities in all three regions. We are active in.
Pac EMEA and Americas.
We continue to navigate the challenges of the pandemic grain with appropriate on growing our business and work relentlessly with continuous improvements in all areas of our business to strengthen our competitive fitness.
We feel we are very.
Very well positioned to grow our product business and also the revitalized and grower MRE and licensing business during 'twenty.
Thank you too in the years to come.
Elena and I will return to this topic later in the presentation.
And now without further Ado I'll give the work with <unk>, who will present, the financial results for the fourth quarter and the full year as well.
Fredrik. Please go ahead.
Thank you everyone you can find our fourth quarter and full year 2020 earnings release, and 10-K with the details of our financial performance during the year 2021 available for download from the investors section on our website <unk> Dot com.
In the interest of time I will summarize the key points here.
Our cost on revenue for 2021 reached $5 million.
That is a decrease of 3% compared to 2020.
Product revenues for 2012 was one.
An increase of 1% compared to 2000.
During the second half from 2000 and continuing into the first half of 'twenty. One we saw a positive trend for our revenues.
In the second half of 2021, we experienced a slowdown in sales primarily due to global supply chain constraints.
And more specifically semiconductor component shortages affecting our customers within the printer and North American markets.
Slowdown in sales was also an effect of the strict lockdowns imposed by the government in several countries.
<unk>.
For instance, in Japan, Korea and China.
On a positive note our license revenues rebounded in the fourth quarter of 2020 from leading to an increase in license revenue of 4% for full year 2021 compared to 2010.
Our gross margin for products up 4% from 2020 alone, which is a decrease from last year of 13 percentage points.
The gross margin was heavily impacted by one time effects in the fourth quarter of 2021.
One time effects consists of write downs.
Of our remaining inventory and lost revenues and extract costs due to the quality issue to a quality issue related to our TSM.
Because the issue is now resolved and their relationship to the.
It affected customers have been restored.
Which is proven by new purchasing within that.
<unk> from these customers.
If we look at the gross profit and gross margins only for PSM and adjust for the one time effects, we can see a positive trend for the growth.
Morgan.
With 52% in the fourth quarter of 2021.
Long term.
Yes.
Volumes continue to increase we will probably see a pressure on the margin, but short to medium term. We are confident that our margins in the products business will be up to levels. We saw.
Yeah.
Our adjusted gross margin per unit that is around 40%.
Operating expenses for full year, 10% volume increase was 8% compared to transcend the operating expenses in 2020, what's noteworthy costs during 2020 cost governmental support at the same time.
As we introduced customer shifts due to the pandemic.
During 2021, we have invested in marketing and product development and also hired several new key members. This increase our operating expenses, but these investments are strategic.
Thanks, and our medium and long term.
These investments are fully in line with what we communicated with color and how we intend to use the net proceeds from the registered direct offering we did in October one.
Some of it I think the outcome during the fourth quarter and full year, whereas at the following P&L.
We had revenues of $5 8 million and operating loss of $7 1 million and we ended up with net loss of $6 5 million portfolio.
Compared to $5 6 million in 2020.
Net cash used in operating activities during ramp up $707 million compared to 2020 and net cash from operating activities has increased 36%.
The majority of the increase comes from purchase components to secure future production of our <unk> and increased <unk>.
Capacity and personnel to continue delivering on our strategy and continuing to create.
Greater awareness and driving demand for comfort is touch.
I will now turn the call over to Eric.
Our strategy and business updates.
Yeah.
Thank you Fredrik.
Slide five and review some topics regarding strategy and also our business development work.
And.
This is stu.
Hi back into communications, we have done in earlier earnings calls and also to give insight into what we are working on day to day to improve our top line and also the net result of the yen.
Our vision is to transform the way humans interact with machines <unk>.
<unk> developed that.
The handheld and one smartphone.
20 years ago, we did that by removing the buttons from the mobile phones and we've been introducing.
User interface with a touch display.
We also later helped strengthen manufacturers and other companies to remove buttons on their products and replace them by tough display interfaces.
And now we are doing this for kiosks and elevators by simply taking out costs from touch. So that's why we are talking about contactless option Uavs rapidly machines.
This is very true to our vision.
Explain a little bit the backdrop to what's been followed now in the next slides.
Everything to do at <unk> is focused around smart intuitive multimodal human machine interaction solutions.
Such as touch contactless touch and gesture sensing.
We are also dealing with object detection.
The toughest obviously, the fingers, albeit that it detects, but with our technology. We can also.
Other types of objects that all the external fingers on hands from humans.
And.
And some years are also working on camera based screen analysis.
But it's balanced sort of the technology universe that we are working on our two technology platforms <unk> multiple sensing underpins everything we do it anymore.
And Sir this heat snap twice illustrates how our strategies focus around contactless touch for elevators and interactive kiosks that you have communicated.
The last 18 months or so.
We also work more and more with digital signage and similar.
This is like neighboring segment to interactive kiosks in many of our customers are actually active in both so that's why it's very natural for us to also expand the focus a little bit to digital signage.
And.
<unk>.
And market segment that nano that's been addressing for at least 10 years and we continue to see great interest they have problem for our technology from different customers.
So.
This is like a heat map showing the scope and the focus of our work and especially in our marketing and sales floor.
This focus is valued at <unk>, you will see from my latest slides on wholesale analyst presentation.
Before us.
Advanced optical touch technology.
This is a technology platform that consists of.
IP solutions and know how around optics, and electronics kettle chips and software and algorithms.
Is that true.
As I mentioned, our technology platform.
We have been working with it.
The foundation of the company 20 years ago, and we're still refining and improving on this.
We have sold over 85 million licenses solvency for us too.
Customers in automotive tier one customers and other customers.
And some of these customers are still our top.
Top three customers like HP at Sun and LG, but they also have other large corporations on customer lists and further small companies that are licensing disk.
Technology.
Deforest also underpins our touch sensor module with a used today to grow our product business and.
The touch sensor modules are ideal for elevator and kiosk applications they work well in.
But for both retrofits and new installs.
And we will show more examples of how the touch sensor and others can be used and the value they bring to customers.
We talk a lot about contactless tops and why we think that is important that first of all it is.
As a new way of interacting with machines and it follows the general trend of more contactless a touch less.
Machine.
Interaction voice control of face recognition that you have on your.
Mobile phone for instance, or other examples.
Contact less tough in the same category of solutions that it has a growing appropriately the agency and also among consumers.
It offers a way to interact with machines that are putting in of course.
The transmission of pathogens and it's also more hygienic in general and it could be a really convenient.
With our particular flavor of contactless touch Europa preserve less familiar interface that habit touch display and also say buses in an elevator.
Or are you simply are used to extending your finger and pressing the button for the right floor you want to go.
That behavior and that interface is preserved with our technology, but it's even more convenient because you don't have to press the button or helps discrete.
We can also work with.
The situation.
Situations, where you have gloves on your hands or are you kind of want to points or click with other objects like stylus Panama.
And as mentioned.
Our touch sensor modules, our commercial off the shelf available standard products easy to use is integrate and.
Offers great flexibility for integrators and OEM customers alike.
Obviously I'd like to quote is from Otis the world's largest elevator OEM with headquarters in the U S.
And.
It's from their website.
Or are they simply say that today more than ever elevation passengers prefer avoid touching elevated fixtures and buttons that as much as possible to reduce the spread of germs and viruses.
This is exactly the authority of tying in shells that opened in the U S. On a long and large corporations in the U S. Like office, they are fully aware and they see the demand.
Paul look from the.
And the customers for our new ways of interacting with elevators in this case.
We have more quotes and.
Like this in other testaments.
We are on the right track and it's really encourage us to continue to push contactless top similar.
GSM business.
With <unk> the top sensor modules you can basically go two ways to realize the contact is touch interface.
We place our sensor module in France or above.
<unk> or <unk>.
The keyboard.
To create what we call a parallel claim solution.
Our touch sensor module projects, an invisible light screen.
In the infrared frequency range. So it's invisible to the human eye as indicated here by like stripes.
And they have to extend their finger and.
Interact with that two dimension of life field.
The sensor detects and positions that object.
Very accurately and very fast.
Another way to use our PSM is with holographic displays.
And those applications.
The trick is not attractive, albeit you should.
Direct.
And align the tough sensor module.
So the interaction area overlaps the projected image that slope in mid air and by using our touch sensor modules and you can make those projected images interactive.
And for instance, if you are.
Knowing our webpage you can collect.
On the links on the webpage, but only by extending your finger into mid air and it's a good experience is actually quite cool and I will show some examples.
Yes.
Contactless tops has many application areas, we are focusing on elevators and interactive kiosks.
Are those applications.
Additionally, up to sample.
Interactive kiosk, if anything from coffee machines vending machines ACM.
Through information kiosks.
In kiosks at airports self checkout in supermarkets, and so on of course of elevators, maybe focus on the elevator control panels.
And we see more and more of these applications and with our touch sensor module I repeat you can do both smart DC retrofit solutions and you can work with the Oems and creates new equipment solutions.
I mean next.
Three recent examples.
How different companies are using our touch sensor module to create contactless touch interfaces for their kiosks.
And the products.
Perfect example is from Japan, where 711 now are rolling out.
<unk> kiosks with holographic displays that allow us to customers.
Scan.
The product they want to buy and also pay for them through the contact less so.
Here's a picture.
To illustrate the holographic image.
Projected from the predicted below and ups and floating in midair.
The same window projecting up campaigns to scanner to scan the barcode on the product and.
With this particular kiosk solution you can't then painted with a contact less video mobile phone or.
Credit card without touching anything and it's a very compact.
711 is now rolling this out on a wider scale throughout Japan, and obviously, we hope that the rollout will continue as other countries eventually be worldwide.
Super Nice application I recommend if you Google settlement out of Japan, Although graphic you can see a number of interesting and a nice articles about this.
And our project and the rollout is ongoing in Japan right now.
And just one example.
Practical application on the geographic displays.
Next example is from Korea.
Yes, a company called market come have developed different holographic products.
Or elevate their applications. This is a particular zinc.
Florida collector in a high rise building.
Using a holographic.
Display.
And.
I believe this is like a podium that will fit in the lobby of a hotel for instance than before you enter into the elevator you selected for all you want to go through with this.
On a particular product.
Studies show a short.
11, second video, where you see it in action.
As an amateur video taken about one of our salesperson.
But I think to get the picture and it's quite nice to see this in action.
But here you see the user is actually turning the knob.
<unk> holographic <unk> and ACR notwithstanding.
Okay.
Really convenient.
Sure.
Okay.
Yeah.
It works really well so two.
Two examples of.
Although graphic displays.
And.
Maybe to go back.
That's it's Joe.
And it doesn't show here I'm sorry for that.
I see it showing for you. The third example, I wanted to review with you is.
From a Japanese sushi, Shane we worked with a Japanese company, who developed a retrofit solution for their self.
Ordering kiosks. These kiosks have multiple purposes, you cant raise reserve a table or a seat at the restaurants, you can order food and beverages and you can also pay.
Our sensor module in this case.
Inside the level of holder you see just above the displays on these kiosks and they all have been rolled out during the fall in over four or 500 restaurants across.
Japan. So this is already out there and people are experiencing.
Let's start in Japan.
Three four months at least and we hope that we see more and more of these type of applications the retrofit and obviously holographic.
We have presented in earlier earnings calls about our partner network and we worked with our hybrid go to market strategy, where they combined.
Sales through partners.
And here's.
Here's a snapshot of our current most important partners.
And at the same time in parallel we are.
Our protein customers and driving sales with our own salespeople around the world.
We are super happy to read that hybrid approach.
Some of the examples I just showed.
Developed in happened with help from our local partners in Japan and Korea.
But I also said in the third example is a direct customer engagement, we had with a Japanese company. So it shows that we are doing both.
That's why we call it hybrid go to market strategy.
Especially in Japan, and Korea. This has been very very good and strong and helped us to reach new customers and <unk> and.
Tap into those markets in a way that we never could have done.
As a western company, but especially the last couple of years.
The lockdowns and restrictions for traveling and so on in these countries, we would never be where we are today without our partners.
Sure.
We have also recently added sabre I want to highlight Favre from Singapore.
Super Good value added reseller in Singapore, with our Great network, both in Singapore and neighboring countries in Taiwan.
And somehow.
From Hong Kong Similarly in Hong Kong in China, They are very.
Very strong and with a good network and ultra representing other manufacturers in China. So they help us penetrate.
The Chinese market.
In Europe , I wanted to mention embed technology in France.
They've company, helping us to grow our business in Europe , especially in France with different type of kiosk applications.
The way here and we're looking very very promising.
The value added resellers and distributors and other partners they not only help us drive sales, but they also do a lot of promotion both online and then fifth.
<unk> shows as of late and I will come back to and it's really a win win.
They are doing this to promote their business on the girl with Airbus and at the same time.
To follow along and obviously.
If they win more businesses in their local markets we are happening.
So we.
We see a lot of traffic to our website through the work with our partners are doing and vice versa. So it's really a win win and they help us increase awareness for our solutions and drive demand, which is very critical for us when it comes to contact desktops, which is a new type of solution.
They need to push.
And so how it can be done in different examples like the ones I showed before.
Help of course, and a lot of these type of demonstrators and product launches are being developed and launched by our partners in local countries.
Listening to multi sensing because remember this is our second technology platform next to be for us.
This is a software only platform, where we have developed advanced AI algorithm.
The text on track people.
In video streams from cameras.
So we do tend to have a seamless analysis on the focus is ultimate applications for driver monitoring.
In cabin monitoring or occupancy monitoring.
We also look at applications in retail.
For analytics functions.
We see a growing interest to do smart advertisements and real time insights stores depending on people.
People flow people move in.
The customer profiles that we can scan.
This is super interesting as well and.
With this platform, we have another way of growing our NII and licensing business and it's looking quite interesting going forward also.
Combined this I must say with our touch and gesture sensing technology do for us.
Instance, and smart kiosk application in fact digital signage.
Okay.
Okay.
Our business model rests on three pillars licensing product savings and Murray and Murray nonrecurring engineering.
We have good chances of growing.
Sure.
All three.
In 2022, and the coming years.
Hard work in making this happen.
And it's also looking quite promising.
And we feel encouraged by the progress we are making every every quarter.
At.
<unk> supports our licensing business because typically licensing for instance look at automotive applications.
Once we have secured a business it starts at a typical application development project. During two three years as we support our customers to develop their features and applications could be.
Both hardware and software design and testing that they help them with and so this we cannot actually quite substantial <unk> revenues.
And Laurie sometimes also.
That's possible to do with our <unk> or touch sensor module business to help them.
And create software solutions on other applications or at that.
Whatever products that touch sensor module assembly fitted into.
Yeah.
But the big area of potential we see scale and growing product revenues.
Now because of Covid and other issues during in the second half of last year, we saw side.
Sideways on their products.
But we still believe that we have a great chance to starting this year to significantly grow that business and we had a higher average sales price for our touch sensor module compared to a typically typical royalty guests in the licensed technology.
Thats the biggest growth potential this year and the coming three four years is where the products business.
And are there any very very highest the diagram on the right.
We are also happy.
Working hard.
To see that our licensing business, it's about to get.
Some new life.
Our existing customers rebounded nicely I'm absolutely.
So more products in the fourth quarter now of course with the crisis in Ukraine, and other things happening in the world. We have to see if they are having issues because of that.
But we saw a nice rebound and more importantly for us working as yet.
Have a huge interest today in our technology offerings from new customers both automotive.
And from other industries.
And that involves.
Object detection gesture sensing and driver monitoring for instance, so that.
What we are working on and <unk>.
Regarding increase in the royalty revenues.
Probably some years out but in the meantime, we cannot.
<unk> revenues, so it's a good combination there.
Okay.
We have typically are bound by very very strict.
Secrecy agreements of our NDA. So we can't disclose any details about our customers and their project on the launches.
But anyway to give you some insight and comfort and the work we're doing to develop and grow our business on sharing here a snapshot of our current sales pipeline.
And as you can see from the summary in the left column.
Actually quite a lot of opportunities ongoing and.
In elevators for instance, we worked with several integration solution providers worldwide.
They are typically around creating a retrofit solutions and offering them both to real estate companies and service companies.
Uh huh.
And then some sometimes two OEM elevated Oems. We also worked with several control panel Oems strengths as Matt elevator in Canada, and Europe , and the U K.
And our partner Fintech in Korea is opening up business.
These are three of the top 10.
Control panel Oems of the work done that they have already heavily invested in and developed several products that use our touch sensor modules.
And also today, we are engaged with several other top 10 elevator Oems.
<unk>.
Of course, working here to develop solutions with them and launch them in the market.
Underway.
Kiosks, we have an even broader.
<unk> portfolio of customers and opportunities Youre working on and that's also due to the fact that the.
The industry is much more fragmented than the elevators.
But I'm glad to say that we are now with kiosks.
More close to several of the large.
Oems in Japan, and Korea, and also in Europe , and the U S.
And this is a springboard for us to significantly grow our sales volumes in the years to come.
And in some of these Oems are targeting to launch both retrofit solutions for their own kiosks and also due to new new equipment solutions.
Yes.
The double tap opportunity with some of these.
And all the analysts I didn't mentioned this in for instance, in North America and also in Southeast Asia.
We have direct engagements or indirectly.
Partners with some major Oems.
Our developing solutions integrating our touch sensor modules into different types of.
Products.
Regarding <unk> licensing if you look to the right our Sanofi stands out as a.
One of the most important segments.
We should working for me and all of them currently have multiple engagements with Oems and tier ones and for instance related to.
Head up display of Struction detection.
Which is very very interesting new area that we haven't started to work on since mid last year.
Driving monitoring we've talked about before and we still are working and we hope to be able to announce some news there shortly.
And also we see quite a big interest in our gesture sensing solutions, which is now the sought after by more and more customers and we also had other licensing and M&A opportunities.
So are Oems avionics Oems.
Some retail companies, but one licenses already.
So overall.
When we say, that's our sales pipeline is strengthening and quarter by quarter.
We really feel that we have numbers to prove it.
We can see.
I will say this as a result of this from this year and into the following years.
And to grow further of course, we are not resting here, we are continuing to invest into marketing and sales again, Elena and share some insights into that.
Pain is expand our partner network and for instance in Germany on the dock countries. We are looking for some additional partners.
We are fine tuning, how we work with our partners. We are trying to scale our business in the key markets in Japan Korea.
And we are increasing the focus now since mid last year on <unk>.
<unk> and licensing opportunities for instance in automotive in the military.
Also in parallel theory us growing the current sales with the current products, we are developing new variants of new software.
In the January February timeframe for instance, released with totally new software platform, we call. The cost sensor module firm, that's teed up Bureau, and some of that some of you have seen the announcements. So nice video that you can check.
And you'll find it on our website and social media.
So please have a look.
And.
With that.
As my final slides today, I will turn the call over to Elena I will share some insights into our marketing.
Thank you very much <unk> and it's a pleasure to be here today.
He has invited me here today can you give a bit of insight into the work that we've been doing here and the marketing team at <unk> in particular, the work, we're doing to position neonate and uncertainty about the brands.
More specifically and just talk about the work that we're doing to help build their early stage sales pipeline.
Right behind the scenes, we've now set up a more strategic communication framework that we're working with.
As being based on the recent successes that we've had and also when we see a future growth opportunity.
He is in line with our corporate strategy of course, so we will continue to focus on our defined application areas, which is elevated and kiosks, but now we will have more direct connection without a targeted segment.
You can see these in the top line on slide, namely aviation recounts hospitality and auto markets.
This framework has allowed us to start building a much stronger brand reputation within the second and it also allowed us to have a much more concentrated communications with our target audience.
With this framework, we also are able to be more calculated when it comes to.
We're <unk> our content. So this allows us to get the best possible engagement from Africa prospective customers. Thanks.
For today I'll, just give you a brief insight into the two sectors that are highlighted in green.
<unk> and <unk> and just to shed some light on where we think the success with this approach.
Sorry, I'll lead times can be quite long sorry.
Johnny that you see on the slide he started back in August last year.
Basically what we started to gain was position midnight agitation partner for airport solution. So we started to create quite another and sometimes pieces and advertising showcasing MLA can execute within this area.
We clearly focus on kiosks of course, but we also expanded into other opportunity areas within the aviation sector for example, smart trolley and security improvements.
By focusing on the entire sector. We were also able to expand even further again and then talk about the entire airport experience within itself. So for example, talking about how we can increase the retail and restaurants experience within the terminals using contactless touch.
Sorry as mentioned, we expect to have been going on since August last year and at the beginning of this year, we shifted our focus a little bit further down the customer journey and now actively with lead generation.
So as you can see on this slide we started to change our focus when we came to content production and we started publishing evidential examples of our success.
Just recently has now resulted in us receiving inbound leads from aviation customers, which is a really fantastic results.
This quarter, we're trying to St journey for automotive as Evan pointed out. This is a very important sector for EMEA merit. So we have started to permeate our credibility within the sector. We have can you that history that we have been and promoting and talking about outsmart steering those solution and also touch screen escalation.
For infotainment screen.
Steve will start focusing more on the lead generation and we will start publishing I'm pushing content and advertising for new opportunities that we see within the sector.
So for example, we've been <unk> in cabin monitoring legislation, we see a great opportunity for helping the industry to comply with <unk> regulations using our technology.
And also as Evan mentioned with object detection, we also see an excellent opportunity to head up displays.
With this publication and the monitoring tools that we now have in place we already see a notable increase in visits to our website from automotive customers.
Early indications show you that way, we're heading in the right direction, but this particular approach.
And my last slide is just.
Talk about that but it's not just digital marketing that we're investing in we're also investing in brand awareness in the real world.
So we are very happy that the restrictions have started lifting around the world. So I think I asked why did <unk> not.
Sure.
Our team out there in the real world raising our brand awareness and building relationships with our prospective customers and also our partners.
Sorry in the photo you can see some pictures from the South seven innovation Summit in America and also the National public transportation.
Transportation event in trial.
So with that said I will hand, it back over to you. Thank you. Thank you.
And this brings us close to the end of our presentation today and I believe the round off by from sharing some concluding remarks.
Our PSM sales slowed during the fourth quarter.
But our license revenues rebounded and grew slightly during the full year 'twenty, one compared to 2020.
As a result.
The total full year revenues 2021 were similar to the full year revenues in 2020.
And obviously, we are not satisfied we adapt we are working here to grow the business.
The pandemic continues to bring on challenges for our sales and business development work.
During the fourth quarter, we nevertheless, strengthen our sales pipeline.
Several new interesting opportunities.
<unk> touch sensor module opportunities with elevator and kiosk customers.
And interesting and re licensing opportunities with new customers in both automotive, but also from other.
Segments.
During 2021 in the first months of 2022 we have strengthened our team with several new competent person's and improve on our product platforms.
We've also invested in marketing and strengthen our ecosystems of value added resellers and other partners.
These investments, we are well positioned and prepared to capitalize on the growing interest.
Our top sensor volumes.
And our two technology platforms, <unk> and multiple sensing and we are eager.
To take on the rest of 2022 and the following years.
So with that over to you Dave and.
Q&A.
Thanks Robin.
I'll now open the call for Q&A from our analysts do you have any questions. Please I think.
Hit Star, one or something to ask the question. Thank you.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone you may remove yourself from the queue at any time, if I press the pound key.
We'll take our first question Christopher von coach with a Red eye. Your line is open.
Hi, guys.
And in Q3, you're talking about component shortages being.
Being in gambling dampening your licensing sales.
And now you say about the supply demand situation, it's more balanced.
So would you say that the current revenues from printers and automotive at more normalized levels.
Yes, if you ask me, it's certainly too you asked me three weeks ago.
Answer like this.
We saw actually a strong rebound and it shows immediately because the underlying markets.
Like the stable nature, and the demand for printers and optimal service life.
On the stable level.
Where it was a little bit.
Held back in the third quarter due to lack of semiconductor components on other issues.
For our customers.
<unk> rebounded nicely in the fourth quarter and actually the full year licensing revenues were a little bit up compared to the year before.
Yes, it's stable.
Now with the Ukraine crisis.
And the general economic downturn that they can expect from this.
But.
Underlying demand is stable that's my feeling at least.
Alright, Thanks, and you continue to be at to be optimistic about your driver and cabin monitoring solutions.
I have so far.
Not amounts that need to sign a lease there so could you talk a little bit about the <unk>.
The things that you see that would make you make you optimistic.
We continue to work on this.
We are a small team, but we have some.
Good relationships, mainly with companies yet in Europe .
They are exploiting and.
We think that.
Our scale does again actually significantly grow this business as I said help us actually grow both our topline and bottom line in the coming years.
So we continue to work on this we are fully aware that we have competition and for them.
For many of the big.
Programs.
They are already nominated and won by competition, but we still see several opportunities actually in.
This is certainly not a mature market and.
Some Oems have and.
Ultra tier ones are telling us that.
They are looking for solutions that have more of the properties that we can offer.
Limited footprint.
Very fast deployment.
Very controlled.
Development cycles.
And we use.
Extensively.
Yeah.
Accumulated data.
And also our algorithms are tuned packaged in a very very practical and smartphone.
The porch efficient and controlled development of new features.
We are also promoting this as I mentioned in the presentation to retain customers on exploring different use cases that are quite interesting.
Where we see a lot of dynamic advertisements and smart kiosks signage applications, where our technology fits better.
Also.
Okay. Thanks.
So in the in your slide would be sales pipelines.
Pipeline all of licensing opportunities you didn't show any military opportunities. So I was wondering should this be interpreted as a F.
The previously announced large military customer already be customer or that this opportunity has been lost.
So I will not comment on this actually most of the customers that they are targeting here in this space.
We call it military and avionics and I wouldn't say that most of the companies are with avionics and they do both military and civilian applications.
And that could be cockpit displays and other.
Other types of systems persistent cockpits that the pilot operates but it could also be.
Four.
Airlines.
Civilian aircraft.
For the crew in the cabin and also in some cases for the passengers. So indeed military avionics is still within scope.
We still have several opportunities there, but here. If you think is the long lead time in automotive I can tell you that the lead times in this space with military and avionics customers, it's much much longer.
So.
We are optimistic that in the medium long term.
We can grow this.
And we still have a deep.
This customer youre, referring to Thats a bid.
<unk>, we had before and scale of one of our customers and we continue.
I have a close relationship with them.
Alright.
So and.
And as you mentioned in the presentation, you add just add that they announced the deal.
The partnership with a seven 711 that Japan. So could you just talk about the current status on the project and the potential and also the timeframe that you see for this customer.
Yes, so I must say that.
Yes.
We have here.
Supported through.
Actually through nixie, our distributor partner in Japan.
Together with six other companies.
We will have developed these kiosks and launching them on behalf of 711, Japan.
It started out small right now.
Following these kiosks in may.
Maybe.
A few hundred kiosks in different cities in Japan, but what we feel is that the.
Customers are they like it and also 711 has commented also publicly very positively about pilots and then the next step.
And the potential here for instance, with 711 in Japan, it's something like 20000 convenience stores throughout Japan.
And they may have multiple.
Second kiosks.
So it's a sizeable opportunity, yes with seven of them in Japan and of course 711, it's a global thing.
Jim.
And we hope to expand and I can say that some of the other opportunities we have.
With self checkout terminals in Japan, all of its competitors of 711, having similar numbers of source with each multiple self checkout terminals.
So self checkout terminals with holographic or with other parallel planning approach.
Major opportunity for me on the worldwide and we hope that this project with 711 and the publicity it generates.
And then just stimulate others, both in Japan, and the rest of Asia actually the rest of the world.
There is a nice pickup of our press release and also other announcements of articles being written about this launch.
This is Jeff.
A way for us to grow awareness and.
Push things with Elena and her team and also with our partners on their work.
Area.
Yes.
So and you mentioned, some but are there any other customers that whose progress you would like to highlight.
Very much for coming quarters center and so on.
Now, but do you have built up a good momentum on that.
Right.
I can't disclose any customer names, but at this point.
For instance, in Japan, we are actually engaged with.
Four of five of the largest companies.
Companies and also several elevator manufacturers.
And the.
The same in Korea, and other markets that we.
We have started now.
Seriously to penetrate the OEM customer base and some of them are as I mentioned during the presentation.
Developing in parallel both retrofit solutions for their kiosk can head of acres, but also new solutions for new equipment.
I made a breakthrough.
We are now into that phase when the big players.
They see a demand and they see an opportunity for them to launch new features new products on the market and that's.
That can certainly help us grow because volumes going forward.
And also Super happy about the relationship with MSC in France.
They have some very interesting projects underway and we hope to be able to announce some of this in France and Europe very soon and also in the U S. There are some major opportunities.
Contract manufacturers and.
But also have a special relationship with the company called Hollow industries in California will also.
Design and sell holographic displays for different types of applications could be point those sales could be hosted payloads applications.
Some are there opportunities that they are pushing is also very very interesting. So.
It's actually quite a lot of things we're doing here.
We hope that we can share more news about this shortly.
Okay. Thanks.
And about the.
And the elevator Oems and your work towards penetrating that space.
What do they have any projections about like what they're seeing in terms of.
Yeah.
Penetration rates of contactless touch elevators going forward did they say anything.
Yes, everyone.
Everyone I talk to us of course, having their own opinion.
But.
Yeah.
We are working here too.
Awareness for Niall Nolan, our particular solutions.
And also to create demand for contactless touch solutions in general.
And that's now happening is this quota share from Otis probes.
We can also go you can go into almost any of the major Oems websites and checks or clean mobility solutions and so on they are now actively promoting this I'm talking about this in a similar way out this is Noah.
And it's like a snowball effect starts off very very small and slow, but we are feeling that.
The board is getting bigger and bigger and picking up speed and.
Uh huh.
We are trying to push this every way, we can but elevator manufacturer they belong to.
The category of big industry companies, they are not the fastest movers and.
Of course, when they develop and launch something it must be also well tested and proven in a lot of things to it.
Some of the engagement, we are actually almost more than a year in development projects.
<unk> like online.
The bigger the companies get the longer the sales and development cycle also.
No.
That's why I talked about the snowball effect than we hoped.
We actually think we will see them.
Boy faster and faster and picking up speed during this year and into the following years.
Okay, good and so and last to perhaps a question for Frederic.
Oh, Opex at which was about 10% higher in Q4 than in Q3. So what is the reason behind Dave Brown do you see this level of some more sustainable.
Okay.
Yes, I think we have some onetime effects in Q4.
Related to <unk>.
Production season.
And we wouldn't be more stable in the future.
Okay. So both Cogs and Opex was affected by the quality issue.
Yes.
Okay. Okay.
Great. Thank you very much that's all for me.
And we will take our next question from Tara Hemmer with Pietro Securities.
Thank you thanks sure interesting presentation.
I was wondering if you are able to provide any updates on the agreement that you announced during the fourth with a major elevator OEM.
Well stated in the press release.
You expected expected the rollout to start this year.
Talk to deal or when do you expect that to.
To kick off.
Yes.
So.
With the ongoing relationships on the rollout started also investigate by let's say I would use the metaphor of a snowball effect.
Everything was done.
Develops.
The probe.
Like mid last year and they have been decided to go ahead with the launch.
And they are proceeding as far as we know them.
They have.
The outstanding candidate lease share summary, information with the other customers on the investors They said no.
They are.
<unk> on controlling and how this is now presented to the market and launched and.
But those who know they have been able to see their solutions and actually the national elevate their shows.
And in some limited marketing so far.
But we expect that it will grow more and recently, we heard that the same customer that they are.
By satisfying to see the technical solutions under defines them. They are broadening this now to also offer this as a retrofit.
Option, so they're new OEM solution. They will also stock offers a retrofit for the existing customers. So actually that looks quite promising and that can grow and when this is more <unk>.
Openly marketed and announced I think in the increase.
Sure on others to follow.
So I think it's natural that they can see it on a pickup of interest from other customers. When this is more publicly announced.
Yeah.
Yeah go ahead.
The more general question on public safety.
You mentioned you were negatively.
Impacted by Lockdowns during the second half of last year.
This year I mean, the pandemic situation has improved.
Sure.
What effect have you seen so far in 2000.
Two on prototypes.
Removal of smartphones.
We are actually quite happy to see that after two years of very strict lockdowns and not being able to visit the metered customers face to face.
You have now in Europe and in the U S.
Several new things already this year and we are planning more meetings and also some trade shows we will go to in Europe and in North America.
Japan is starting to open up just a little bit and we were planning to go there.
But then with the Ukraine crisis.
All of the aerospace is locked down and.
In virtually impossible to travel from Europe to Asia. These days.
But overall things are going back more to normal in the Ukraine crisis, I think people that find a way that they can print a slide from <unk> into Japan eventually.
And.
It's really helping us and that's why partly we are very optimistic to grow and.
Find new MRV in licensing customers from this year.
So this is certainly helping now that the restrictions have been lifted.
Thank you.
Our final question.
In terms of geographical sales.
In the product segment.
Most saying in Asia, so far.
In terms of touch sensor modules.
Do you expect this to continue I mean, if you look a few years to hub or.
When will you see it.
Maybe it's three years, what's kind of.
Do you expect in terms of geographical spread.
We think that.
Asia, Japan, Korea, Greater China, and also countries like.
Singapore, Malaysia, there's a lot of people living there and they are.
Quite rich countries and they have a lot of it systems and kiosks and similar.
So probably they will continue to lead the way for the rest of the world, but actually.
We think that we have sizable market opportunities open in Western Europe , and North America.
So I don't know.
<unk> 40, 30 30, something like this the long term.
Sure.
One way to look at it is you have to see where are the biggest market overall and then they usually U S Western Europe , China, and Japan Korea, India, maybe.
And these are the top market. So that's why we also have the presence there and we are developing partnerships in those regions.
But so far and also this year next year, we think that Japan Korea will lead the way for other countries.
Right now.
If I'm, taking the best I would offer our investors.
So actually.
We have some interesting opportunities coming up in France, and so on.
Good customers there so stay.
Stay tune therefore news regarding this isn't new for us.
Okay sounds good thank you.
Hey.
And we will take our next question from Christian Schwab with Craig Hallum. Your line is open.
Hi, guys. This is Tyler on on behalf of Christian Thanks wanted to ask a couple of questions.
First question urban <unk>.
Follow up and I'm, sorry, if I missed it on the 711 opportunity in Japan.
As far as a timeline for ramp how should we be thinking about that going from this kind of pilot level.
Tomorrow, you answered that.
Next couple of quarters kind of thing is this a multiyear kind of ramp how should be think about the timeline of that.
No.
Let me say it.
I don't know whether you have to add 711, but my impression.
Is that they really want to ramp it up during the year.
So far I'm very happy with the initial tests that are done.
They are pushing.
Our partners in Japan mentioned, it's actually a consortium of six seven companies working together here.
So they are getting push from 711 to launch this now and.
I would say that.
12 months.
It should be the timeframe that we should look out for that.
Nation wide rollout with 711 Dupont.
That's perfect I appreciate that color and then you know.
Could you maybe kind of comparatively size of those opportunities it sounds like the 711 opportunity 20000 stores.
It was probably more.
Maybe a more severe opportunity sushi restaurants could you kind of maybe rank order a comparably sized the different opportunities across kiosks as well as your elevator win.
Okay.
<unk>.
Hum.
Yeah.
I will not give you any detailed numbers or something but obviously, we believe very very strongly in several of the different sub segments in the interactive kiosk space.
Retail and point of sale self checkout.
Super interesting and thus we have already realized that are actually quite a lot of these supermarkets are many marks on the convenience stores.
You then multiplied by a certain number of them.
Checkout terminals per store.
Okay, that's that's going to be a good opportunity.
For instance in Japan, we all are they Havent solutions develop for some competitors of 711, and we hope the seven elevens launch will push them start to launch as well.
So that's the snowball effect and.
The quarterly effect that we are hoping for.
Transportation kiosks or aviation is identical to them our slides there are besides airport there are.
Subway stations train stations bus stations and similar.
Larry can do ticketing.
In bag is strong.
<unk> kiosks and so on that's another sizeable opportunity I would say that where we have.
Large markets we have both.
Installed base.
In and around the airports and the bus stations and so on.
The growth rate for sellers self service kiosks in those airports and train stations just exploding if you look on a global scale.
And then restaurants.
Anything from fast food restaurants too.
Coffee shops and.
In hospitality, we also include them.
Hotels and check in checkout turnarounds in hotels, which is more common that you have to do it yourself really want to remove all the entries in the lobby unless you do all the work.
So.
Elevators.
Retail kiosks transfer.
Transportation kiosks and restaurant deals probably the top four segments. If you are looking at within elevators and these are active.
Okay.
That's great I appreciate the color alright, that's all for us Thanks Robyn.
There are no further questions on the line at this time I will turn the program back over to our presenters for any additional or closing remarks.
I want to thank you all for joining us on our call today and I also want to.
Let you know that that if youre in Stockholm on March 22nd and interested in any kind of follow up to this call. You are invited to come to the new node officers and meet with urban Fredrick in Atlanta and other members of the team.
Details will be posted on our website.
<unk> dot com and on social media during the next few days. So if you are in town.
Then swing on buying you can take a look at.
Whats happening at the headquarters.
All kinds of stuff so.
That ends the call today have a very good day. Thank you.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
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