Neonode Inc. Q3 FY2023 earnings call

• Licensing revenues in Q3 decreased but year-to-date is stable with last year. Product sales improved in Q3 but still below targets for the first nine months. - Focus on interactive kiosks, especially holographic display applications with touch sensor modules. - Efforts in MedTech for touchless interaction in devices to avoid cross contamination. - Work on Head-Up Display Obstruction Detection for vehicles, with interest from OEMs and Tier 1s. - Activity in DMS (driver monitoring system) with a flexible and scalable platform. - Increased marketing and sales activities, participating in events and planning for CES and NRF shows.

In Q3 2023, revenues were $1 million, a 18% decrease from the same quarter last year. License revenues were $0.8 million, a 20% decrease due to lower sales volumes at customers; year-to-date, license revenues are on par with 2022. Product revenues were $0.2 million, a 5% increase compared to the same period last year. Gross margin for products in Q3 2023 was negative 39% due to a one-time cost effect, but adjusted for that, it was 48% similar to last year. Operating expenses were $2.2 million, a 6% increase mainly due to increased marketing and sales activities. Net cash burn in Q3 2023 was $1.8 million, an increase of 272%, with explanations including component purchases and currency effects. Cash and accounts receivable as of September 30, 2023, were $19.4 million, a $3.1 million increase from year-end 2022.

• Still optimistic about opportunities in automotive sectors like DMS and HUD, but notes complex, multiyear deals with large OEMs and Tier 1s can cause delays. - Expectations of breaking into the expanding driver monitoring market with a flexible platform. - Anticipation of new business wins in the near future, especially in automotive and other sectors.

• Complex, multiyear deals with large OEMs and Tier 1s can lead to delays in closing business wins. - Regulatory and market dynamics in automotive industry can impact sales cycles and implementation timelines.

Q: Talk about development and progress on design wins in automotive, especially regarding DMS and HUD.

A: Still optimistic but experienced slight delays in some cases due to complex, multiyear deals with large OEMs and Tier 1s. Processes take longer than expected but still in the race and in good position.

Q: How does refocusing towards automotive affect cost base?

A: Refocusing cost base towards automotive, not necessarily growing it, but may need to expand engineering for implementation if good news is received.