Neonode Inc. Q4 FY2022 earnings call

• Business strategy combines technology licensing and product sales. Licensing focuses on zForce and MultiSensing platforms for areas like head-up display obstruction detection and driver/in-cabin monitoring. Product business targets elevator and interactive kiosk segments with Touch Sensor Module products.
• Marketing efforts include attending physical events (automotive, Retail Tech in Tokyo), expanding website content, and increasing focus on physical demos and POC projects.
• Sales team expansion and network of distributors/partners to support growth. Continued investment in product development, engaging external engineering firms to shorten time to market.
• Update on patent litigations: Neonode transferred patents to Aequitas in 2019, with no involvement in lawsuits against Apple and Samsung, and no financial exposure.

Total revenues for 2022 were $5.7 million, a 3% decrease compared to 2021. License revenues saw a slight decrease in 2022 due to component shortages in automotive and printer industries but recovered in the second half. Product revenues reached $995,000 in 2022, a 4% increase from 2021, with a recovery in Q4. Gross margin for 2022 was 22% (including a one-time write-down for obsolete stock), and adjusting for that, it would have been 51%.

• Optimistic about growing business in 2023 and beyond. Aiming to increase sales through expansion of sales team, distributors, and marketing efforts. Developing new product variants to broaden portfolio and leverage strong cash position for growth.
• Anticipate NRE revenues from licensing as RFQs are successful, with royalties to follow once products go into mass production.

• Patent litigations against Apple and Samsung are not under Neonode's control, and the company has no financial exposure or influence over Aequitas' operations. - Component shortages in automotive and printer industries previously affected license revenues.

Q: Could you explain the reasons behind strong product sales in the quarter?

A: Combination of strong sales push in Q3/Q4, normalization in Asian countries, and new businesses with European customers and partners. Also, NRE revenues from licensing contributed.

Q: Was product sales more from retrofit or new equipment?

A: Majority of bigger orders were from new equipment, with a healthy portion of smaller retrofit orders.

Q: How do you see 2023 rolling out sales-wise?

A: Optimistic about product business doing better than previous year, developing new product variants, and setting ambitious targets to break out of single-digit million dollar turnover.

Q: Regarding licensing sales, will NRE revenue come before ramping up?

A: Yes, NRE revenue can ramp up if successful with RFQs this year, with royalties following mass production of underlying products.

Q: Status of licensing sales in military segment?

A: Still have interest but focus is on automotive due to higher volumes, with products business focusing on sectors like retail, proptech, and medtech.