Neonode Inc. Q1 FY2023 earnings call

• Licensing revenues were stable in Q1 due to improving semiconductor supply for customers in automotive and printer sectors.
• Product sales in Q1 were below targets as key customers had high inventory levels from Q4 2022.
• Continues to execute on strategy, focusing on establishing beachheads in key segments like printer, automotive, elevator, and interactive kiosk customers.
• Working in human interaction (HMI) and machine perception areas, including cabin monitoring, object detection for head-up displays, rugged touch, contactless touch, and holographic touch.
• Progress with a major OEM in automotive for in-cabin monitoring, with a scalable software platform, and ongoing discussions with Tier 1 suppliers.
• Recent product launch with Structube for taxi meters using infrared touch technology, and a contactless touch implementation at Clarges hotel in London.

Total revenues for Q1 2023 reached SEK1.3 million, a 5% decrease compared to the same period last year. License revenue was SEK1.1 million, an increase of 4% year-on-year. Revenue from products was $0.1 million, a 31% decrease year-on-year. Gross margin for products in Q1 2023 was 54%, a decrease of 11 percentage points compared to the same period last year. License revenue contributed approximately 84.6% (SEK1.1M / SEK1.3M) to total revenues, while product revenue contributed approximately 7.7% ($0.1M / SEK1.3M, converted to SEK).

• No specific forward-looking financial guidance provided beyond continuing to execute on the established strategy.
• Focus on increasing efforts in marketing, sales, and engineering for machine perception and other key areas.

• Forward-looking statements involve known and unknown risks, uncertainties, and factors that may cause actual results to differ from projections. These include risks related to semiconductor supply, market adoption of products, competition, and regulatory matters.

Q: Do you work directly with the OEM customer in the automotive industry or through Tier 1s?

A: In this case, we work directly. But in other cases, it may go through Tier 1 suppliers. As a small company, teaming up with Tier 1s would be beneficial due to their better relations and resources.

Q: What specific markets of OEMs do you target?

A: Headquartered in Stockholm, Sweden, we primarily target Europe first, then North America, and Asia third.

Q: Update on largest accounts in the products business?

A: The products business involves a large number of customers with small to medium-sized orders. We aim to win bigger orders but expect a slow, steady increase in business as we continue to work on winning larger contracts and pushing marketing efforts