Neonode Reports First Quarter Ended March 31, 2019 Financial Results
STOCKHOLM, May 8, 2019 /PRNewswire/ -- Link to Neonode-Q1-2019 Earnings Press Release
Neonode Inc. (NASDAQ: NEON), the optical interactive sensing technology company, today reported financial results for the three months ended March 31, 2019.
"We are executing on our business plan, and see a growing number of customer design activities for both licensing and module projects. I am happy with the progress we are making and I am confident that we are on the right track to achieve revenue growth and profitability," said Hakan Persson, CEO of Neonode Inc.
FINANCIAL SUMMARY FIRST QUARTER 2019
-- Net sales totaled $2.0 million compared to $2.4 million for the same
period last year.
-- Net loss totaled $0.6 million compared to a net loss of $0.7 million for
the same period last year.
-- Loss per share totaled $0.07 compared to a loss per share of $0.12 for
the same period last year.
-- Net cash used in operating activities totaled $0.5 million compared to
$0.6 million for the same period last year.
BUSINESS HIGHLIGHTS DURING THE QUARTER
-- Release of zForce CORE 1.5 with strong customer interest.
-- Signed agreement with Convergence to sell zForce sensor modules in North
America.
BUSINESS HIGHLIGHTS SINCE THE END OF THE QUARTER
-- Signed collaboration agreement with FineTek who will serve as a system
integrator and future electronic manufacturing partner for Neonode
zForce technology.
-- Assigned a portfolio of patents to Aequitas Technologies LLC as part of
an agreement to share potential proceeds generated from a licensing and
monetization program.
-- Received purchase order for sensor modules of approximately $0.6 million
from industry leading medical device OEM who will use our sensor module
in a retrofit touch display system for an X-Ray machine. Delivery
expected to begin in June 2019.
THE CEO'S COMMENTS
We have reshaped our business, working methodology and processes to become more market and customer focused. Our business plan now targets specific markets and use cases providing a solid customer base and pathway to future growth and profitability. There are no shortcuts or easy fixes in the development of our embedded sensor business, but I am satisfied with the progress we are making.
Our strategy going forward is centered around the following initiatives:
-- Capitalize and build on our successful Touch Interaction business by
increasing our market position and sales reach. We provide solutions for
both high and low volume product implementations through an expanded use
case offering. We have an established track record with our touch on
display solutions and will use our strong presence to grow our market
share.
-- Capture growth opportunities for our Mid-Air Interaction and Object
Sensing solutions in automotive entry systems. The automotive market is
one of the new technology frontiers and represents a significant market
opportunity for us to leverage our existing relationships with Tier 1
suppliers and OEMs to gain additional market share.
Our targeted use cases for basic touch, high-image quality display touch, ruggedized display touch and entry systems for automotive systems allow us to capitalize on our competitive advantages in high value markets.
We have a growing number of design activities for both sensor modules and licensing applications with existing and new customers. The latest release of our touch on display license technology has been very well received and is generating opportunities for printers, e-readers and automotive in-vehicle infotainment (IVI) systems. We expect that two of our most important printer customers will increase and expand printer shipments with our technology. We are also in final license negotiations with a new Chinese printer customer for a solution targeting the Chinese market. We are performing an in-depth analysis of the automotive IVI market and are engaging with all relevant OEM and Tier 1 supplier partners for discussions and pre-design activities.
In our module business, we are beginning to receive initial orders for production volumes from our medical device, taximeter and aircraft instrumentation customers. We anticipate that order volumes will expand over time. Our tailgate solution for automotive entry systems has been well received and we expect to be entering into first evaluation projects soon. We are completing relevant testing to meet automotive ISO9001, ISO 16750 and GMW 3175 certification requirements.
Increasing our reach and effectiveness of marketing and sales is a continuous activity. In order to improve our sales presence in the U.S. market we have signed a marketing and sales agreement with Convergence Promotions LLC to coordinate our expanding network of sales representatives in the U.S. We have increased our marketing and trade show activities to support this new sales relationship and to increase awareness of our selected use case offerings. After the quarter ended we entered into a system integrator and manufacturing partner cooperation agreement with Finetek Co. Ltd of Korea supporting both our licensing and module business in Asia and globally. We plan to further grow our presence in Asia by replicating our model with Convergence and are evaluating and negotiating with qualified sales and marketing partners in the region.
In summary, we are executing on our plan and see positive customer response with numerous discussions ongoing and actual shipments happening. This makes me confident that we are on the right track to achieve revenue growth and profitability.
FINANCIAL OVERVIEW FOR THE QUARTER
Revenues for the first quarter of 2019 decreased by 15% year over year, mainly due to a $0.3 million decrease in license fees from one printer customer, as a result of their decision to move to an alternative technology platform. Operating expenses continued on a run rate below plan, down by 20%, and net loss decreased by 24% compared to the first quarter 2018. Cash used by operations decreased by 18% year over year, and cash and accounts receivables totaling $7.6 million allows us to continue to execute according to our plan. Our first quarter Form 10Q is available for download from the Investors section of our website at neonode.com.
Financial Overview
2019 2018 2017 2018 2017
Amounts in USD
thousand
unless
otherwise
stated
Q1
Q1
Q1 Full year Full year
Net sales
$2,012 $2,375 $2,332 $8,538 $10,241
Net sales
growth %
(15.3)% 1.8% (25.5)% (16.6)% 0.3%
Gross margin %
95.0% 98.1% 95.5% 89.2% 77.1%
Operating
profit/loss
$(668) $(879) $(878) $(3,877) $(5,476)
Operating
margin %
(33.2)% (37.0)% (37.7)% (45.4)% (53.5)%
Net cash used
in operating
activities
$(454) $(561) $(104) $(2,859) $(5,581)
Cash and cash
equivalents
$5,822 $4,907 $5,796 $6,555 $5,796
Total Assets
$12,947 $12,963 $13,127 $13,242 $13,127
Equity ratio
469.0% 65.3% 59.9% 74.0% 59.9%
Revenue Distribution by Business Model
2019 2018 2017 2018 2017
Revenue
Distribution
By
Business
Model
. Q1 Q1 Q1 Full year Full year
License
fees
$1,942 $2,323 $2,121 $7,954 $8,684
Sensor
modules
50 52 210 227 814
Non-
recurring
engineering
20 0 1 357 743
License Fee Revenue Distribution per Market
2019 2018 2017 2018 2017
License Fee Revenue Distribution Per Market Q1 Q1 Q1 Full year Full year
Printers $1,283 $1,570 $1,124 $5,490 $5,330
E-Readers and Tablets 163 234 400 837
1 206
Automotive 496 519 597 1,627 2,148
PATENTS
On May 6, 2019, Neonode assigned a portfolio of patents to Aequitas Technologies LLC. The portfolio contains two patent families comprising nine US patents, five non-U.S. patents and three pending U.S. patent applications. The assignment provides Neonode the right to share potential proceeds generated from a licensing and monetization program.
ORGANIZATION AND STAFF
Neonode Inc., a Delaware Incorporated Company, with its executive head office in Stockholm, Sweden are organized in four wholly owned subsidiaries located in Sweden, Japan, Korea and Taiwan and with a majority owned subsidiary in Kungsbacka, Sweden. At the end of the first quarter, our company had a workforce of 55 people, including ten consultants compared to a workforce of 53 people at the same date last year. Our workforce primarily is located in Sweden.
FUTURE REPORTING DATES
Q2 Interim Report 2019 August 14, 2019
Q3 Interim Report 2019 November 6, 2019
FOR MORE INFORMATION, PLEASE CONTACT:
CONTACT:
Investor Relations
David Brunton
Email: david.brunton@neonode.com
CFO
Lars Lindqvist
E-mail: lars.lindqvist@neonode.com
This information was brought to you by Cision http://news.cision.com
The following files are available for download:
https://mb.cision.com/Main/17297/2806640/1039773.pdf
PDF
View original content:http://www.prnewswire.com/news-releases/neonode-reports-first-quarter-ended-march-31-2019-financial-results-300846276.html
SOURCE Neonode
