Neonode Reports Quarter Ended March 31, 2021 Financial Results
STOCKHOLM, May 12, 2021 /PRNewswire/ -- Neonode Inc. (NASDAQ: NEON), today reported financial results for the three months ended March 31, 2021.
FINANCIAL SUMMARY FOR THE QUARTER ENDED MARCH 31, 2021:
THE CEO'S COMMENTS
"During the first quarter we continued to build our business pipeline. Our main focus was and continues to be contactless touch solutions for elevators and kiosks, where our touch sensor modules provide an intuitive and safe user experience. The demand for our solutions is very high in Japan and Korea, where customers now have numerous development and onsite pilot projects underway for elevators and an array of different kiosks. We also have customers in other countries in Asia who are rolling out and installing retrofit contactless touch systems in airport ticketing and retail self-service checkout kiosks. In addition, we are seeing increasing interest in our contactless touch technology from European and North American customers. To better support our customers in these regions, as well as in Asia, we recently changed to a regional sales organization, which will help us accelerate growth," said Dr. Urban Forssell, CEO of Neonode.
"Our license revenue from existing legacy customers increased during the first quarter compared to the same period in 2020. We believe this to be a rebound effect from the slow printer and automotive sales last year due to the COVID-19 pandemic. Long term, we expect this legacy business to continue to decrease (a trend we observed prior to the pandemic) and to offset this we are focusing on growing our products business with elevator and kiosk customers. We are also continuing to promote our technology to new customers in the Military & Avionics, Industrial and Automotive segments. The sales and development cycles are much longer in these industries than in the elevator and kiosk industries, and although we do not expect royalty revenues from new customers in the short term, we strongly believe in these segments and we do expect to earn non-recurring engineering revenues related to product development," continued Dr. Forssell.
"During the quarter, we continued to strengthen our team of talented and experienced people in sales, marketing, and engineering who will help us create and capitalize on the developing market opportunities. We have also deepened our relationship with our partner network and are actively exploring further partnerships as a means to drive growth. We believe that our contactless touch solution is the best technology in the market that supports the new health and pandemic-driven paradigm shift where users are becoming more and more reluctant to touch public space devices," concluded Dr. Forssell.
FINANCIAL OVERVIEW FOR THE QUARTER ENDED MARCH 31, 2021
Net revenues for the quarter ended March 31, 2021 were $1.7 million, a 28.7% increase, compared to the same quarter in 2020. HMI Solutions revenues were $1.3 million, an increase of 9.9% compared to the same quarter in 2020. This is primarily due to higher license fees from our automotive customers. Our HMI Products revenues were $0.4 million, an increase of 226.8% compared to the same period in 2020. The increase was driven by a growing market demand for contactless touch solutions for elevators and self-service kiosks where our touch sensor modules is a good fit.
Our combined total gross margin was 83.4% in the quarter just ended compared to 96.6% in the same period in 2020. The decrease in total gross margin in the quarter ended March 31, 2021 as compared to the same period in 2020 was primarily due to the change in the mix of the components of overall revenue with an increase in sales of sensor modules, which have a lower overall gross margin compared to the 100% gross margin license business. Our operating expenses increased 29.0% in the quarter ended March 31, 2021 compared to the same period in 2020. Operating expenses increased as we added employees and external consultants in our sales, marketing and engineering groups to service an increasing number of customers.
Net loss for the three months ended March 31, 2021 was $1.6 million, or $0.14 per share, compared to a net loss of $1.0 million, or $0.11 per share, in the same period 2020. Cash used by operations was $2.0 million in the first quarter of 2021 compared to $1.0 million in the same period of 2020. This was primarily the result of a higher net loss and increased inventory to secure our future deliveries.
Cash and accounts receivable totaled $9.5 million and working capital was $8.8 million as of March 31, 2021 compared to $12.2 million and $10.4 million as of December 31, 2020.
We entered into an At Market Issuance Sales Agreement with B. Riley Securities on May 10, 2021, under which we may, from time to time, in our sole discretion, sell shares of common stock having an aggregate offering price of up to $25.0 million, through B. Riley Securities as sales agent. To facilitate the at-the-market facility, we filed a shelf registration statement on Form S-3 registering up to $100.0 million of securities that may be offered and sold by us from time to time, including the shares that may be sold under the At Market Issuance Sales Agreement. The issuance and sale, if any, of these securities is subject to the effectiveness of the registration statement.
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Chief Financial Officer
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