Neonode Reports Year Ended December 31, 2019 Financial Results
STOCKHOLM, March 11, 2020 /PRNewswire/ -- Neonode Inc. (NASDAQ: NEON), the optical interactive sensing technology company, today reported financial results for the fiscal year ended December 31, 2019.
FINANCIAL SUMMARY FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019:
- Revenue of $6.6 million, a decrease of 22.2% compared to prior year
- Operating expenses of $11.7 million, an increase of 1.7% over the prior year
- Net loss attributable to Neonode, Inc. of $5.3 million, or $0.60 per share compared to $3.1 million, or $0.52 per share for prior year
- Cash used by operations of $3.5 million compared to $2.9 million for prior year
THE BOARD OF DIRECTOR'S CHAIRMAN SUMMARY
New Executive Leadership
The 2019 financial results are below our expectations. The addition of Urban Forssell as our CEO gives the company experienced top level leadership to take the company to profitability.
- Throughout his career as a CEO and senior management Dr. Forssell successfully managed sales and engineering operations of technology-based products companies.
- Dr. Forssell also brings a deep understanding of the automotive and other markets.
- The company's ability to convert the strong customer interest into revenue generating contracts is key moving forward.
Evaluating a Listing on NASDAQ Stockholm
- The company's Board of Directors is evaluating a dual public company listing on both Nasdaq Stock Market in the U.S. and the Nasdaq Stockholm in Sweden.
- The company's headquarters, management team and all critical operations are located in Stockholm, Sweden.
- A significant number of the company's shareholder base is located in Sweden and we believe growing each month.
- A dual listing provides a more efficient marketplace for the shareholders in Sweden and Europe.
- In summary, we believe a Nasdaq Stockholm listing will enhance overall shareholder value.
THE CEO'S COMMENTS
"I began my tenure as CEO at the beginning of the year and accepted the exciting challenge of turning the company into a profitable, customer-focused business. We have a very good base to build upon in the form of a strong technology and IP portfolio along with an impressive customer list and a well-recognized brand. We have also identified some very attractive new markets and specific customer applications for our technology. We are currently engaged with several new customer projects in the automotive, medical and avionics markets. These projects will help us grow our revenues in the short and medium term. We are also in discussions with several customers concerning strategic partnerships that will support our long-term growth. Overall, we are positioning the company to grow revenues in our targeted B2B markets," said Urban Forssell, CEO of Neonode.
"The COVID-19 Corona virus outbreak may have a negative impact on the company's growth and overall business because of the risk for a global economic slowdown and more direct negative effects of the virus outbreak on our customers' businesses. We are closely monitoring the developments to mitigate the aforementioned risks but also recognize potential opportunities with our optical touch and gesture control for medical and other systems," concluded Dr. Forssell.
FINANCIAL OVERVIEW FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019
Net revenue for fiscal 2019 was $6.6 million, a 22.2% decrease, compared to 2018. License fees were the majority of our total revenue in the past two years and decreased by 25% in 2019 as compared to 2018, primarily due to a 87% decrease in license fees earned from our e-reader customers and 27% decrease in license fees earned from our printer customers partially offset by a 13% increase in license fees from our automotive customers.
In October 2017 we began selling our sensor modules. We are focusing our efforts on our key markets such as: automotive, medical devices and industrial applications. During 2017, we entered into a U.S. distribution agreement with Digi-Key and they currently have a range of sensor modules and development kits for sale. We currently have supply agreements for sensor modules with 4 customers. We sold $560,000 and $227,000 of sensor modules in 2019 and 2018, respectively.
Non-recurring engineering fees ("NRE") decreased 66.4% in 2019 as compared to 2018 due to a decline of new license customers and related NRE design projects. In 2019 and 2018, 0% and 80% respectively of our total NRE fees were earned from automotive projects. In 2019, 62% of total NRE fees were earned from avionics design projects.
Our combined total gross margin was 90% in 2019 compared to 89% in 2018. The slight increase in total gross margin in 2019 as compared to 2018 is primarily due to higher margin on sales of sensor modules which was partially offset by an increase in valuation reserves for slow moving and obsolete inventory and lower gross margins on our NRE projects in 2019. Our operating expense increased slightly in 2019 compared to 2018 and our overall operating expenses remain within budget.
Net loss attributable to Neonode, Inc. for fiscal 2019 was $5.3 million, or $0.60 per share, compared to a net loss of $3.1 million, or $0.52 per share, in fiscal 2018.
In fiscal 2019, our cash used by operations was $3.5 million compared to $2.9 million in fiscal 2018.
Cash and accounts receivable totaled $3.7 million and working capital was $2.4 million at December 31, 2019 compared to $8.4 million and $8.2 million at December 31, 2018, respectively.
For more information, please contact:
Investor Relations
David Brunton
E-mail: david.brunton@neonode.com
Chief Financial Officer
Maria Ek
E-mail: maria.ek@neonode.com
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