Q1 2022 Neonode Inc Earnings Call
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Hello, everyone. Thank you for standing by and welcome to Mirror notes first quarter 2022 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, but the companies covering analyst to.
Ask a question. Please press the Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press the pound key.
Thank you at this time for opening remarks, and introductions I would like to turn the call over to Urban's herself Mirror notes CEO Urban. Please go ahead and start the conference.
Okay.
Thank you for joining us today.
Today's call, we will review, our first quarter financial results and provide a corporate update.
Uptake it really tells you about our business strategy customer activities.
Of interest.
Joining me on today's call is our CFO predicting them vertically presents the financial results of the company for the first quarter kinds of things too.
After that I'll come back and comment on overall strategies customer activities and other operational topics.
Okay.
Before we proceed with the main part of the presentation.
I'd like to read the following.
Flavor.
This presentation contains and related retinal thickness on the Emerald, Inc. And its management may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Forward looking statements include information about our current expectations strategies plans potential financial performance or future events. They may also include statements about the market opportunity in sales growth.
Financial results use of cash.
The development and introduction.
Regulatory matters and certain sectors.
These statements are based on assumptions expectations and information available to the company and its management.
A number of known and unknown risks uncertainties and other factors that may cause the company's actual results levels of activity performance or achievements to be materially different from that.
They expressed or implied by these forward looking statements.
These uncertainties and risks include but are not limited to our ability to secure financing needed unacceptable terms.
Related to new product development, our ability to protect our intellectual property.
Our ability to compete general economic conditions, including <unk>.
The result of the ongoing COVID-19 pandemic art.
Your political contacts such as the war in Ukraine.
That's the other.
Other rapes outlining the findings of the company with the Securities and Exchange Commission.
Under the Securities Exchange Act of the Mountain study for at the numbers, including the sections entitled Risk factors and management discussion and analysis of financial condition and good solid operations.
Prospective investors are advised to carefully consider these various risks uncertainties and other factors any forward looking statements included in this presentation are made as of today's date.
The company and its management undertakes no duty to update or revise forward looking statements.
Presentation has been prepared by the company based on its own information.
Information from public sources.
Certain of the information contained herein may be derived from information provided by industry sources.
We believe such information is accurate.
The sources from which it has been a plane or neither however, the company has not independently verified such information and cannot guarantee the accuracy of such information.
Okay.
Thank you.
At this point I would like to turn the call over to predict but rich you know theres a financial herself for the first quarter Fedex Cusco.
Take care of them you can find the pets for the 2020 earnings and 10-Q.
On the financial performance in the first quarter of 2017.
The download from the investors section on our website.
You know desktop.
In the interest of time.
To summarize the key points here.
Yeah.
Yeah.
Yeah.
Our total revenue for the first quarter of 2022 weeks one thing too.
That's a decrease of 21% compared to the same period in 2021.
License revenues for the third.
That's one thing.
Compared to the.
Same to you.
The decrease is primarily the salt.
Within the printer and automotive markets.
To the premium.
In certain types of license revenues this quarter up 10%.
Pete.
It's got a threat so interesting.
Two.
7000.
An increase of 10% compared to the previous quarter.
First Paul.
We saw an increase in the product side and the second ball.
We continue.
Yes.
To paraphrase were negatively impacted due to COVID-19 lockdowns.
Alright.
Got it.
Nature has been first of all.
That's good news.
As expected most of our initial two senses when it makes it a retrofit solution.
Yeah.
New customer equipment managers can take six months or even longer.
Customers.
Gotcha.
Yeah.
Yeah.
Martin.
So 65%.
Hum.
Which is an increase of 41%.
Competitors tend to be small.
Yes.
If you look at the gross profit and gross margin and you can see with them.
One thing we.
We can see a positive trend for the gross margin.
62% from the first quarter 2020.
Pete.
Milton.
Logan continues to increase.
Do you see the pressure on the margin.
Short to medium term with confidence.
Got it.
40%.
Operating expenses.
The 20% to decreased two 7% compared to the same period.
The decrease is primarily due to lower professional fees and data differentiation.
Awesome.
We can continue to invest in marketing.
A new company team members.
These investments are strategic and been experiencing much medium and then sure.
These investments are fully in line with what we communicated with them.
We tend to use the net proceeds.
The next offering is it.
In 'twenty one.
Summarizing the results of the first set of Triple net.
Net loss attributed to <unk>.
Once again.
Hum.
<unk> for the same period in two.
2021.
Net cash used in operating activities during the first quarter of two two.
Compared to the previous quarter with cash.
Decreased 16%.
In the first quarter of 'twenty.
Just to confirm.
<unk> to 'twenty.
<unk> future production.
Yes.
I would now.
Back to you.
Okay.
Thank you and at this point I would like to go into our strategy and business updates.
Yeah.
Okay.
Our vision is to transform the way humans interact with machines that let's try for this by offering innovative touch contactless touch gesture sensing and analysis solutions.
Our business model rests on two pillars.
Technology licensing and product sales combined with it.
Favorable non recurring managed services.
Our licensing offers are for.
For our technology platform seaports are market sensitive and well thought.
Currently all of our touch sensor Nuggets, Archie assignments that we have to call them shortly.
And this is tracking to be launched in 2000, 2100% focused on business to business and on revitalizing and growing their licensing business in parallel to growing our products business.
In our product business.
The target customers in the elevators interactive kiosk segments yeah.
Also see potential and are working with some customers in the industrial automation digital signage and medical equipment segments.
Our licensing business.
Has historically been focused around EV battery printer and automotive customers I'm currently the main license revenues from legacy customers comes from.
The manufacturers announced Tonight, two pier ones going forward, what do we see the largest potential to grow in the automotive segment.
I believe we can grow significantly the military avionics and industrial automation segments and potential and retail segments.
A parent.
Our most extensive software.
Described in more detail later.
Yeah.
Okay.
Yeah.
We foresee as a technology platform that is comprised of IP related to optics atomic software and how they deploy advanced I O based touch the exercise and not the detection features.
<unk> platform is well proven.
We have sold over 85 million people have licenses to customers worldwide. The last 10 years.
And they continue to sell every month.
A number of licenses to existing customers.
And.
<unk> customer base includes some of the world's largest thinking manufacturer to help them with their tier one suppliers.
She force also underpins our products with TSMC, which are ideal for contactless touch applications as I've described in Beijing.
Okay.
Well, it's something it's a scalable platform.
That can be used to create advanced scene analysis applications driving in cabin monitoring features in vehicles and retail analytics features.
For bespoke custom application tailored for each customer's specific needs and thanks to the flexibility of an extensive software platform.
The efficiency of the underlying machine learning algorithms applications require a very different footprint and it worked even with lower less cameras.
Pants offering a lot of customer value.
Yeah.
To give some insights into our ongoing business development work to procure new development projects that can help us grow our licensing business in the future I'm sharing with snapshot of our business development portfolio.
Directed towards licensing customers.
As you can see we have several ongoing engagement with automotive Oems and tier ones as well.
Avionics companies.
And.
Actually one major printer manufacturer.
Automotive BNS BNS stands for driver monitoring system.
This opportunity is obviously related to our months of sensing platform.
Although this is a show for the year and that they're working on other related.
G suite for its tough for them.
That's good.
It's concerning.
Applications are forced to detect objects obstructing the predictor.
How about display units, which is a.
An area that is doing a lot of attention in North America. These days, we are working with several tier one side we have a.
Kind of a quite far away a couple of them in developing the prototypes and proving the concept.
This is super interesting new application area for our <unk> technology.
Avionics companies.
About <unk> touch and perhaps in demanding aircrafts applications.
They typically professional pilots or professional.
Other people in the cockpit or the customers there a space of it all back.
Hello.
And of course printed touch, it's more or less philosophy straightforward touch application similar to what they have done for HP and other companies for more than 10 years.
Yeah.
It should be noted here that the Samsung development cycles are fairly long when we indicate what we can expect a.
Nominated do any of these automotive projects that being the case here.
We can expect in application development for two three years to come and only after this.
The new royalty revenues will start to.
From the new customers and this has of course to deliver their long development cycles.
Automotive for new models new platforms.
Here, we are no different than any other tier one or tier two supplier and working in the alternative space and.
The lead times for new applications, and new systems in avionics military as many of you realize I know they can be even longer than that.
<unk>.
But the breadth of this portfolio anyway.
Make us very optimistic about the future of our licensing business and that we can grow and I want to.
Underlying that.
During the development phase even in the prototyping phase weekend.
Significant <unk> revenues nonrecurring engineering, we also have opportunities to sell prototypes.
During the period.
The addition of revenues to us.
Moving along to our products business.
Currently we offer.
Commercial off the shelf touch sensor modules.
S M S.
Based on their effective variance of our seaports technology manufacturer needs to get done.
At our subsidiary prominent technology and shrink stuck out on the West coast in Sweden.
So for them in 11 different length from 101 millimeters to 374 millimeters and two named a distinguished quality yet.
Directions up at night is admitted and received from the Sundance a units.
Zero or 90 degrees.
He had done what ideal for contactless touch applications that can be used in two main configurations to create such features.
And what we call the parallel playing population, they're all GSM that are used to predict an invisible interaction.
Yeah.
Or Turkey bombora in front of the display.
Key pad.
Or other surface.
The other main de emphasis to use our PSM to navigate a holographic display technology that are.
Do you sense that it should be positioned and aligned with.
Interesting.
Our sense of overlap in the projected image in the air.
And we tried to illustrate that tier, which we didn't have very good site you can see in the right picture.
Below that seems the glass as an illustration of our.
Sensor module system and pointing up so that's been the use of extending into that.
Predicted image you can actually interact with it.
Thank you Peter.
It's a it stick and it creates a lot of attention whenever we or our partners show that type of solution.
I'd say I've described in earlier earnings calls there are numerous examples.
Applications, where our contactless touch is the way to go and that's a big potential golfer.
Standard customer value.
For instance, the different types of vending machines talking to see self service kiosks.
Quick service restaurants airports self checkout point of sale terminals and supermarkets.
For elevators.
All the use of terminology medically kiosks and medical equipment yeah. It is.
Facing the use or do you not want to touch the display or the buttons and.
Once the experience.
New ways of interacting with their machines contact desktops.
As possible with.
<unk> for all of these types of applications.
And why then.
Even consider a compact desktop Tim why is it important.
The first arguments we get there.
It's contactless or Costless exxonmobil call it.
You don't have to touch.
The display or the <unk> paddle buttons that you are interacting with them.
And.
For machine, an elevator or kiosk seeking public space, where there are many new services into the same machine that can be.
Significant.
For transmission of different pathogens or.
Can you have to give the hum.
Let them user experience he has that contactless touch adds value to the customers. We can interact with the machine without touching and avoid getting whatever bacteria and viruses on your hands.
Still with sort of familiar touch interface or in elevators.
When do you think theres more money today to press the button.
Use all of our technology in the same way, but before the thing that Richard the button you can highlight for Boston, So very optimistic it's very convenient.
Applications say in medical oriented rugged industrial environments.
Users, mainly havent gloves on their hands and then some other touch technology capacitive touch real work on that we already have a.
Solutions on top of the beloved voice user wants to interact with a pen or a key or the corner out each cell phone for instance.
And with our peer banks.
That's all the promotion of off the shelf product you can buy them online or direct from us or from some of our partners.
Yeah.
We offer a free.
To use smart SDK.
That allows you to develop your own software applications and if they fit very well for both new and installed and retrofit solutions.
As described in earlier earnings calls, we used a hybrid go to market strategy that really combined biotech funding via partners.
We also have.
Significant savings through our online distributors.
With <unk>, which is an American company, but they probably are more or less.
Well, we work with another distributor in China called <unk>.
In Japan, we work with a company called mixed electronics, all sizable and well known online distributors.
He worked with partners to penetrate more.
Markets that are otherwise difficult for us to reach.
In Asia.
That's very common.
A success story for us with our value added resellers another car type in Japan, Korea, and China and other parts of Asia, Let's say in Europe , and we are also working to create similar partnerships with companies in North America.
Yeah.
Okay.
And.
This way of describing the markets are like a pyramid.
We feel that we have more and more substance.
For this argumentation that both elevate the market in the kiosk market can be.
Describe this way so.
So for instance.
We have discussed in our call.
Earnings calls during 2020 and 2021.
The elevated market.
Dominated on the talk by some 10 major Oems.
That's often a multinational company.
Take you to dominate the new equipment market.
The lower than there is a segment of mid sized companies that can work regionally or nationally.
And then there are that could be.
Many many smaller firms in the hundreds or thousands.
The company also.
So for <unk>.
Active kiosks, but they're the fragmentation, it's much more apparent and looks at all the time, but first of all interactive kiosks spans a number of sub segments such as vending machines.
Service kiosks, Atms and so on.
In each of these and accident each market various out.
Plentiful all the manufacturers offering sample products, but overall.
Although the kiosk market candidly Scott.
Of course, we are striving to move upwards here to reach the big OEM players.
Which has the potential to bring high.
Order volumes for us.
That order and per year.
Yes.
Yeah.
This has to do also with the same cycle.
It's.
Yeah actually effect in.
Market.
The typical sales cycle starts with a retrofit opportunity if you look at the <unk> segment and one market.
This is how we and our partners introduced the concept of contact let's touch on our PSM solutions.
We worked a lot with partners and they develop different solutions went up for them to the market.
And our target customers are heads integrators and tech companies.
But also to some extent Oems targeting to do their own retrofit solutions and they in many cases.
Mmm are interested in this for different reasons.
<unk> brand reputation quality, but also.
Cash flow and profits that they want to have that business.
Florida, and sadness and not allow type blockades too.
Make money on the product.
And the second phase.
But we are seeing and we are encouraged by this more and more.
Once they have that.
Achieve certain awareness in the market and certain demand.
The kiosk and elevate the Oems get more and more interested in.
You may want to do retrofits or they may only want to look at.
New equipment solutions.
For outstanding base of shifts and of course, we're going to work directly with Oems and they typically want to work directly with us.
Sales cycles are a little bit longer.
But.
On the other hand, the potentially bigger current customer per order.
And the final step in the sales cycle here is that we are designed in from the beginning he had when they make the restaurants to HP lexmark, another alert printer customers.
Our foodservice at our touch technology in a more or less every model that they released and had been so far a saturday or several years now and this is also a development that we are working to achieve and striving for.
TSM business.
May include that on all the way through the.
Third stage.
Also it seems a bit more of it was from product sales to licensing.
We see that one of our strength that we have.
The two business models that are complementing each other and we can serve customers that want to buy low and medium high volumes and the second point customers may likely wanted to shift to licensing round. The volumes grow and then we can continue to work with them and support them in more effective way.
So basically.
And the take back.
We want to penetrate.
Upside down pyramid top down and this happens to be the same actually.
Penetrates the market bottom up.
So the retrofit typically it's Bob.
What we are looking for the small to medium sized companies and also with our partner very much hard work and doing in our own direct services directed towards medium and large companies are.
Looking for a new installed and retrofit solutions. So these two pictures describe the dynamics underway, we are working and the way the elevator in the kiosk market.
Oh.
The last two years, we have been.
Expanding and developing our partner network, we mentioned our distributors. They also had a number of value added resellers.
<unk> in Germany, and then Deb technology brands quality industry can do that for instance.
Our formula is.
Uh huh.
Yeah.
Several factors that we have in Japan, Korea, China and other parts of Asia that are very professional very strong and very active in helping us penetrate before.
Not just on the different segments.
In North America, we had.
Built up last year, our own network, all manufacturers reps and they won't.
Reach customers in North America.
In Canada.
They represent the handheld in front of these customers.
As you know in North America, and U S, especially the big ICT market and we see actually very large volume potential in the future from American and Canadian customers.
Looking at the progress we've been making in the elevator segment, we have actually.
Secured business, it's been a number of M&A at the control tower companies.
But in fact in Korea.
Yeah.
<unk> China.
And that technology cannot add new host UK and so on.
Some of these companies are privately launch and well known when they work both in the aftermarket.
OEM.
Elevate their companies such as <unk>.
It's <unk>, you're seeing there and so on one.
One company that's helped US multiple play there is not another one.
The third one is and it sounds like they all was directed to real estate owners and elevator.
Maintenance firms and upgrade firms, but they also offer insights and solutions and products to the major elevator companies.
We are working today with three elevate their own.
And as.
The next picture shows.
Also today are quite deeply involved.
Wonder.
Either elevate their Oems in the world, we cannot disclose the names of each and we have a very strict NDA and also they are sort of secret in.
Towards us and our partners in their plans and their rollout.
Our strategies.
Yeah, we are.
Very much encouraged by that.
I want to refer back here to the same description.
Subscription and this is proof that we are entering now in a serious way with second phase later discuss directly with Amazon developed new equipment solutions for elevators.
The kiosks. The story is similar we have actually.
Secured businesses, where the number of kiosks manufacturers.
Offshore typically both retrofit solution in new equipment solutions.
Many of these cases, we can today not disclosed the names of these companies, but they range from some of the very largest interactive kiosks companies in the world to medium size.
One case of a small player it's more national players, but still a very very interesting.
Together it shows.
The interactive kiosk market is there and yes, we have started to secure a beachhead, but they are now trying to expand from and to grow our business.
And.
This snapshot of our business development pipeline for interactive kiosk solutions show actually the people of the iceberg you have actually many many more opportunities that we're working on some of the most.
Significant ones.
Yeah.
Most of these opportunities and customers that can be found in Japan, Korea, China and other parts of Asia. So APAC.
But we also have some very interesting.
Our engagement in Europe , and North America.
Yeah.
In Europe , we probably go top down.
Take care.
We work with one company doing that.
For transportation, and we use say a ticketing machines for a train stations and similar.
And another customer doing vending machines, and they happen to do zinc vending machines and.
Both of these opportunities are significant and quite sizable and so we are super excited about this and again Charles.
Section on all the opportunities that we and our partners are working on in APAC and EMEA in North America.
It also show up a little bit about that.
The expected duration of a typical sale.
It's a development project on when we can expect that the customers will launch products. So this is not the immediate and typically what we are.
Experiencing is that the.
The bigger the company yet.
Lower they are so they are in some of these cases very very large corporations that we are working with and they take time to make decisions to develop products and then two device.
Marketing strategy to launch the products and industrialized and actually have been launching it.
Many of these projects are in the last earnings call I was showing an example of a product with 711 in Japan.
That helps.
Typically we have them.
Sort of a consortium.
Seven different companies working together to create that solution.
711, Japan booked and installed in some of their own stores in Tokyo and other parts of Japan.
So also that type of complexity of the supply chain.
Place early here in actually slowing us down a little bit.
But overall we are.
Encouraged by the increased interest and.
Growing maturity of several of these development projects and engagements and we.
We believe that this is proof that we are in the light truck and that we can grow our business in the kiosk segment significantly in the years to come.
And that's basically brings me to the end of our formal presentation.
Next going to share some concluding remarks.
So, let's do that briefly before going to Q&A with analysts.
First point, we'd see an increasing interest in all key upon the knowledge solutions for contact us touch.
We have shown a snapshot of our business development pipelines for both elevators and T O.
And we are also showing a little bit of our existing customer base.
We have multiple customers on multiple new customer engagements.
Several countries around the world.
Japan is leading the way.
Korea in greater China, following chip, but also.
Outside of opportunities.
New customers in North America, and Europe , That's all talk show great potential.
We're also happy to see a growing interest in our default in multiple scientific can only get from automotive customers and also Abi avionics customers.
And I want to highlight here that we have started.
Development project, where that.
European OEM for driver monitoring and also that we are engaged.
<unk> engaged with several automotive tier ones regarding.
I head up display object detection.
And.
Addressing the need of C pulse platform.
We have mentioned in the report that COVID-19 continues to be challenges to our sales and business development.
First of all we have lockdowns and travel restrictions.
And for instance, China and many of you have followed this and know that in China and they are experiencing now a very tough situation, where the outbreak solved on the drawn balance on the Covid virus.
Everything is basically shut down into like Shanghai.
And our neighboring cities, but also in Taiwan. They have very very strict lockdowns. Yeah. That's the plan in Korea now are starting to open up thankfully so.
It's same thing but.
COVID-19 has been an alarm and affecting our goal.
Yes.
Directly affected by semiconductor shortages, but our customers are.
Affected by that.
And.
Heart problems sourcing enough components to scale up their production or launch new products.
So we feel that our customers in some cases are a little bit.
Cautious due to the geopolitical situation.
General economic uncertainty regarding the effects of the war in Ukraine and similar.
The increase in interest rates oil and gas prices going up and so on and.
So that's indirectly affecting us and our customers.
Overall, we believe we are well positioned in that finance expand our travel business and also to revitalize the golar or even licensing business and we are hard at work at this everyday.
Every day in the company and they are.
Very much encouraged by that.
The traction we have in our business development work in Japan in Korea.
The other parts of Asia, plus several opportunities with automotive Oems and tier one.
<unk> manufactures.
Perhaps some additional opportunities as I mentioned in this call. So.
We strongly believe that the right checks and.
We will grow our top line.
Significantly in the years to come.
Thank you.
This brings us to the end of our formal presentation today.
And now we'd like to open up the call for Q&A.
Thank you if you would like to ask a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing the pound key again that is star. One if you would like to ask a question, we'll pause for a moment to allow questions to queue.
Thank you. Our first question will come from Jesper von caught with Red eyes.
Yeah.
Hi, guys.
Thanks for taking my question, so let's start with that product.
What products do you have three major ongoing projects that we do.
The main revenue drivers for kind of tried and true.
711 that they love.
And the Japanese sushi chain, so could you elaborate on the on the progress.
Yes.
Yeah first of all I'm not sure I fully agree that these.
The main revenue drivers this year, but they are indeed get them wins for us and we are very happy with them.
We have.
Without the elevator company, we made an announcement in the fourth quarter I believe it was about.
When you elevate their OEM deciding to use our DSM from a contact with absolute new elevators.
They have already developed solution that started at a smaller scale to launch it in the market.
They are.
Slowly also opening up the cartoons on marketing this publicly and showing commercials and.
Our local people in that market.
Sure.
Pictures, I've got and I'm sure they will continue that rollout and that.
I have no information, suggesting that they may have second thoughts. So the rollout is continuing with looking good.
Also the feedback we have from 711, Japan is very very positive.
They have the ambition to roll this out in the biggest scale across there is far from Japan.
Personally today.
Im missing.
Like Dave crash updates regarding this.
The pace of that rollout, but we have no information, suggesting that they are backing away.
Regarding the same.
One of your debt balance majors, such as sense have already installed in all of our self service kiosks in all the restaurants across.
Japan.
Contactless touch interface.
So that we can get sort of a table and you can always appeal is approved outside of the main restaurant area.
<unk> self service kiosks, they are sitting there in public and being used every day.
Working with other quick service restaurant chain in India.
In Japan and also in other countries and we hope that this.
<unk> will be like a snowball effect.
How that changed to see what the first chain all doing.
Hi.
<unk> solutions.
Okay.
Alright. Thanks.
Good color.
In light of all the uncertainty factors at play an important role at the moment, what's your view on the potential ramp up of revenue you're steering towards here.
It's apparent that the indirectly it's.
We are under pressure due to Covid pandemic Lockdowns and also.
To some extent the strained our supply chain for semiconductors.
We have seen that from some of our licensing customers in automotive and.
And we're also seeing this from some of our products customer.
And.
Yeah.
It's like indirect effect, so I leave it slowing us down and probably taken a little bit of the edge out there a lot of growth this year, but.
Overall.
Nope.
Significant problem all risk.
It's Elizabeth slowing us down, but that's our feeling.
Overall, the trend is positive and.
Our own supply is remember.
Remember our licensing customers to buy.
Special circuits, a fix from Texas instruments.
So you have to realize the touch features that they are using our printers on automotive on similar.
Ti is.
Also maybe a bit under pressure.
They have confirmed to us that.
The situation is under control all of our customers really get all of the Asics they need for their production.
I'm sorry.
It's a tough situation for many.
Yeah.
We and our partners we are actively working to mitigate any problems on risks that this causes.
Okay great.
And so and so my my last question.
Since the Q4 report you haven't been mountain for me any major customer deals you talked a little bit about it but have you experienced the underlying customer activity and interest.
We are very positive.
Of course, we are also working hard to realize new.
Business wins lead customers.
Hum.
We have actually a very broad and deep pipeline and we have shed some insights into that pipeline today.
And we expect gearing.
We are actually going to get.
Positive feedback from several of these customers that we have indicated we are in projects that are indicated here in this call.
From automotive Oems tier ones and also emanates npl's companies.
So we are actually.
Very encouraged by that development scale, although we also we'd like to see.
A faster pickup of the.
Sales revenues definitely in the same volumes.
Thank you. Our next question will come from Walter when Hagen with Perito.
Yeah.
Hi, Thanks for taking my questions.
My first question is regarding <unk>.
Input costs, so a hot topic right now amongst manufacturing companies has increased input costs and I wonder.
How much you have been affected.
How are you kind of what's your ability to raise price or are you able to to do that instantly. When you experienced increased costs or will there be a lag in there.
So.
For our own production of PSM.
Thrown on technology.
We actually have from left we have secured a significant component stock.
And also in the cases, where we have recently more recently booked additional component we didn't experience that.
Any major cost increases.
So.
For that but that's the rates on our own situation, it's sort of stable.
Nevertheless, we have reviewed and updated our pricing strategy.
And then also improve on our margins.
Our products business.
The last 18 months so hence.
The good margins that <unk> talked about.
His presentation earlier during the call.
Yeah.
Other cases, we are keenly aware that our raw materials and components can drive costs out and this is deliberate that perhaps slowing down some of our kiosk and elevate your customers.
But it's not stopping them completely.
I cannot comment on and I don't know.
The magnitude of their challenges.
Increases on the possibility of doing it.
Crude prices on their products.
I know, it's like an indirect.
Or a risk for us is not really a direct issue for Nemo or promo technologies.
Yeah.
Alright, thank you.
Just another question related to gross margin as you mentioned you showed you showed on one side you have to constantly improve because gross margin for.
I mean quarter over quarter for them for more than a year.
Can you just remind us a little bit to what has been driving this development.
Yeah.
Further down to this.
<unk>.
Yes.
During the year as we have the pieces right.
We constantly have that.
We have also increased the prices.
So we have as you can see the puts and takes when you have a table showing you.
The onetime effects.
And the one thing that affects.
Obviously.
Drove the gross margin.
Now, we can see a more stable.
Gross margin.
Did anything wrong.
So okay.
In the report.
There are further boost that included.
That explains the one time effects and some of them were taken already before.
In this quarter, but.
In the fourth quarter last year, and even earlier than that.
Going forward now we think that the.
Actually cleaned up.
The books and taken out a lot of these one time effects that we see.
Let's say the situation going forward.
Alright sounds good thanks, that's all for me.
Yeah.
Thank you. This concludes today's Q&A I will now turn the call back over to our presenters for any additional or closing remarks.
Oh, yes. Thank you for taking the time to joining this call and we wish you a good day. Thank you very much.
Thank you ladies and gentlemen. This concludes today's event you may now disconnect.
Okay.
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