Neonode Reports Quarter Ended September 30, 2022 Financial Results

STOCKHOLM, SWEDEN, November 10, 2022 — Neonode Inc. (NASDAQ: NEON), today reported financial results for the three and nine months ended September 30, 2022.

FINANCIAL SUMMARY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022:

• Revenue of $1.2 million, an increase of 26.4% compared to the same period in the prior year.     
• Operating expenses of $2.1 million, a decrease of 21.8% compared to the same period in the prior year.     
• Net loss of $0.8 million, or $0.06 per share, compared to $1.7 million, or $0.15 per share, for the same period in the prior year.
• Cash used by operations of $0.5 million compared to $1.6 million for the same period in the prior year.     
• Cash and accounts receivable of $12.3 million as of September 30, 2022, compared to $18.7 million as of December 31, 2021.

FINANCIAL SUMMARY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022:

• Revenue of $3.8 million, a decrease of 12.6% compared to the same period in the prior year.     
• Operating expenses of $7.6 million, a decrease of 15.6% compared to the same period in the prior year.     
• Net loss of $3.7 million, or $0.27 per share, compared to $4.9 million, or $0.43 per share, for the same period in the prior year.
• Cash used by operations of $5.7 million compared to $5.0 million for the same period in the prior year.     

THE CEO’S COMMENTS

“Our net revenues were higher and our operating expenses were lower during the third quarter than in the corresponding period last year. We are pleased to see that our efforts to grow sales and control costs generated results. We continue our focused work to expand our business and remain optimistic about the potential of our products and technology platforms. This said, we are not satisfied with the results we have achieved so far. Our sales and growth continue to be affected by several factors, including long sales and product launch cycles in the segments where we are active. Our business is also affected by COVID-19 lockdowns and semi-conductor shortage issues that our customers must navigate. We continue to take measures to mitigate these issues,” said Dr. Urban Forssell, Neonode’s CEO.

“Our products business continues to develop and we are seeing a growing interest in our Touch Sensor Modules (“TSM”) from both elevator and interactive kiosk customers. One driver is the increased interest for holographic display applications we are seeing from different equipment manufacturers and end customers. We continue to work to expand the TSM business and increase our sales volumes in Japan, South Korea, and in other markets,” continued Dr. Forssell.
 
“In developing our licensing business we focus on automotive OEM and tier 1 customers mainly, and we are encouraged by the interest we are seeing for our object detection, gesture sensing, and driver and in-cabin monitoring solutions. Short- and medium-term the revenue potential in this segment is from sales of non-recurring engineering services in application development projects linked to new vehicle platforms. Long-term these projects may lead to increased license revenues, typically through royalty payments per vehicle produced,” concluded Dr. Forssell.

FINANCIAL OVERVIEW FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

Net revenues for the quarter ended September 30, 2022 were $1.2 million, a 26.4% increase compared to the same period in 2021. For the 2022 period, license revenues were $1.0 million, an increase of 27.3% compared to the same period in 2021. We saw a recovery of license revenues from legacy customers in the printer and automotive markets compared to the same period in 2021, primarily due to increased sales volumes from these customers.
 
Revenues from product sales during the third quarter were $0.2 million, an increase of 14.0% compared to the same period in 2021. We saw a slight recovery for the third quarter compared to the third quarter of 2021, but our product sales continue to be negatively impacted by COVID-19 driven lock-downs in Asia. We are also affected by the comparatively long development and launch periods, often 12 to 18 months, or longer, for customer new equipment solutions, which slows our sales growth.  

Gross margin related to products was 48.4% for the third quarter of 2022 compared to 27.9% for the same period in 2021. Our operating expenses decreased 21.8% for the third quarter of 2022 compared to the same period in 2021, primarily due to lower staff expenses and depreciation and amortization.
 
Net loss attributable to Neonode for the three months ended September 30, 2022 was $0.8 million, or $0.06 per share, compared to a net loss of $1.7 million, or $0.15 per share, for the same period in 2021. Cash used by operations was $0.5 million in the third quarter compared to $1.6 million for the same period in 2021. The decrease was primarily the result of decreased net loss.
 
Cash and accounts receivable totaled $12.3 million and working capital was $15.5 million as of September 30, 2022 compared to $18.7 million and $19.1 million as of December 31, 2021, respectively.

For more information, please contact:

Chief Financial Officer
Fredrik Nihlén
E-mail: fredrik.nihlen@neonode.com 
Phone: +46 703 97 21 09

Chief Executive Officer
Urban Forssell
E-mail: urban.forssell@neonode.com
Phone: +46 734 10 03 59

About Neonode
Neonode Inc. (NASDAQ:NEON) is a publicly traded company, headquartered in Stockholm, Sweden and established in 2001. The company provides advanced optical sensing solutions for contactless touch, touch, gesture control, and in-cabin monitoring. Building on experience acquired during years of advanced R&D and technology licensing, Neonode’s technology is currently deployed in more than 80 million products and the company holds more than 100 patents worldwide. Neonode’s customer base includes some of the world’s best-known Fortune 500 companies in the consumer electronics, office equipment, automotive, elevator, and self-service kiosk markets.

NEONODE and the NEONODE logo are trademarks of Neonode Inc. registered in the United States and other countries.

For further information, please, visit www.neonode.com

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Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements relating to expectations, future performance or future events. These statements are based on current assumptions, expectations and information available to Neonode management and involve a number of known and unknown risks, uncertainties and other factors that may cause Neonode's actual results, levels of activity, performance or achievements to be materially different from any expressed or implied by these forward-looking statements.

These risks, uncertainties, and factors are discussed under "Risk Factors" and elsewhere in Neonode's public filings with the SEC from time to time, including Neonode's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are advised to carefully consider these various risks, uncertainties and other factors. Although Neonode management believes that the forward-looking statements contained in this press release are reasonable, it can give no assurance that its expectations will be fulfilled. Forward-looking statements are made as of today's date, and Neonode undertakes no duty to update or revise them.
 

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