New focused strategy and revised financial outlook
Inside information
To accelerate LED iBond International’s (LED iBond) top-line growth, the company’s newly appointed CEO has headed up a strategic review of LED iBond’s product offering, market focus and go-to-market approach.
The strategic review came to the following conclusions, which include a downward revision of the company’s revenue outlook for 2022 and suspension of the guidance for cash flow breakeven.
The smart building market – for growing short-term revenue
Most of LED iBond’s revenue currently derives from the TRACY® and GRACY families of products manufactured at the company’s production facility in Farum near Copenhagen. This facility is highly automated and has ample production capacity at solid margins. Therefore, the company will concentrate its immediate efforts on the TRACY® and GRACY product lines with particular focus on the three segments where TRACY® and GRACY have already demonstrated a good product/market fit:
- Kitchen (TRACY® Home),
- Solar carports and indoor parking garages (TRACY® Industry),
- Gas & service stations (GRACY Industry).
Furthermore, building on the solid traction of TRACY® Home for kitchens, the company will introduce a TRACY® do-it-yourself/home improvement line.
The emerging vertical farming market – for long-term growth
Recognizing the substantial longer-term potential within the emerging market for vertical farming, LED iBond will continue its product development activities in this area. The company is working closely with customers to shape specific product requirements and remains very positive about the commercial potential within vertical farming.
However, the ongoing test projects and dialogues with key customers reveal that customers’ requirements for advanced vertical farming lighting solutions are developing in step with the evolution of their general vertical farming methods and experience.
Therefore, in support of long-term growth, LED iBond will allocate most of its R&D resources to developing vertical farming products with a robust product/market fit, based on GRACY, the company’s proven ACP technology platform.
In addition, the company will:
- Continue to grow the vertical farming sales pipeline by engaging in multiple small-scale pilot projects with customers to pave the way for large scale orders and to develop and demonstrate more advanced solutions, combining sensor technology, closed-loop control software algorithms and other features,
- Bring LED iBond’s lighting control software, current in pilot testing, to the market,
- Strengthen the communication to potential customers about the company’s offering and technological capabilities within vertical farming,
- Increase international lead generation and engage in strategic partnerships for accelerating sales,
- Engage with well-positioned OEM partners for developing combined offerings and solutions with integrated lighting technology from LED iBond.
UV disinfection – for component integration
In several UV disinfection applications, compact LED-based UV panels represent a powerful alternative to traditional mercury-based light tubes. However, the transition from mercury tubes to LEDs can be expected to last several years as mercury-based solutions are still the cheaper option and will not be banned in the EU before 2028.
Given this outlook for LED-based UV technology, LED iBond will no longer work to identify specific disinfection use cases nor develop complete disinfection solutions. Instead, the company will take steps to position its LED packaging technology as a platform for customized components and modules for manufacturers of UV disinfection systems, OEMs.
Operational and organizational changes
The company has taken a number of steps to reduce costs significantly, including lowering the total number of employees from 22 to 17 FTE. Furthermore, the company has reorganized to maximize internal focus on sales, including allocating more technical resources to improve the quality of the company’s sales activities.
Outlook revision
Based on the strategic review and a thorough review of LED iBond’s existing customer accounts, partnerships, and sales pipeline, the executive management of LED iBond concludes that:
- Currently, most of LED iBond’s revenue originates from the TRACY® and GRACY product lines for the kitchen, carport and gas & service station segments,
- Currently, revenue from vertical farming pilot projects is limited,
- As the vertical farming industry is still in its infancy, striving to develop the best grow and logistics technologies and methods, large orders for vertical farming lighting systems are unlikly to materialise in the market, short term.
In addition, the company’s short-term revenue generation ability is challenged by the continued international shortage of certain key parts and driver electronics. For some components, the delivery time is 3-6 months or more.
For these reasons, LED iBond reduces the revenue guidance for 2022 to DKK 5-10 million (previously DKK 10-30 million).
In addition, the company will suspend its guidance for cash flow breakeven until the revenue effect of the strategic and operational measures listed above has materialized more clearly.
Commenting on LED iBond’s strategy revision, CEO Martin Løbel says:
– LED iBond has always had high ambitions for scaling the business – and we still do. I firmly believe that our unique technology has the potential for driving solid topline growth for the company. But until now, we have struggled to identify the right products for the market with acceptable production cost that will successfully generate the revenue we need for our journey towards profitability.
– To grow, we must abandon the previous strategy of serving many different customer segments with an extensive portfolio of products. Instead, prioritization must be the key to our planning and development activities.
– Going forward, LED iBond will focus on three key objectives:
- A focused market approach within a handful of customer segments.
- A targeted product portfolio with a precise product/market fit.
- And a much stronger execution of our sales processes to ensure alignment of activities across the organization.
– Or to put it another way: In LED iBond we now have a new mindset; we’re all in sales; either directly engaged in the sales department or indirectly assisting our sales collegues in their efforts to close the next sale.
Further Information
Martin Løbel, CEO
Mobile: +45 2722 6237
Email: mlo@ledibond.com
Company contact
LED iBond International A/S
Agern Allé 5A
2970 Hørsholm
Denmark
CVR 36041609
+45 7070 7855
info@ledibond.com
www.ledibond.com
Certified advisor
Västra Hamnen Corporate Finance
Jungmansgatan 12
211 19 Malmö
Sweden
Telephone: +46 40 200 250
Email: ca@vhcorp.se
About LED iBond International A/S
Founded in 2014, LED iBond International offers innovative solutions for integrating light and data, based on the company’s deep knowledge of modern LED technology and many years of development. The patented technology includes the lightest and thinnest LED basis available, offering a unique value proposition combining total design flexibility, full IoT integration and low total costs of ownership. LED iBond’s technology has been deployed in many projects, ranging from intelligent shelf lighting to large scale indoor illumination projects such as the installation of 3.2 kilometres of Tracy®, the company’s innovative flagship product, at DTU, the Technical University of Denmark.
Due to the data transfer capabilities, superior form factor and cooling properties of the technology platform, LED iBond is focusing on three key business lines: Smart Building, UV Disinfection and Vertical Farming, all projected to show significant growth in the years to come.
LED iBond International A/S is admitted to trading on Nasdaq First North Growth Market Denmark (ticker: LEDIBOND).
