Neonode Reports Second Quarter Ended June 30, 2018 Financial Results

Second Quarter 2018 Business Metrics

• Revenue was $1.9 million, a decrease of 19% compared to prior year
• Operating expenses on target less than $3.0 million
• Net loss of $1.0 million, or $0.02 per share, the same as prior year
• Cash used by operations for the six months ended June 30, 2018 of $1.4 million compared to $3.0 million prior year
• Engaged in OEM development projects and started delivering pre-production prototypes sensor modules for:
  • Automotive tailgate and door collision systems
  • Aeronautical instrumentation displays

“My first quarter with Neonode has been very encouraging. Over the quarter, I met with several of our largest customers and it is clear to me that our technology platforms are very much in demand.  Our zForce AIR was launched in Q4 2017 and I am therefore pleased to report that we have made progress with customers in new industry segments and are engaged in several ongoing projects using our sensor modules. This gives me confidence that our strategic plan of adding B2B sensor module sales to our licensing business can be achieved,” said Hakan Persson, CEO of Neonode.

“Our licensing business continues to be an important source of revenue and we are actively engaged with customers who are developing new products under our license agreements. We are re-engaging with all our current and new license fee customers and believe this together with the new release of zForce CORE will allow us to grow our licensing business in the global market,” concluded Mr. Persson.

Net revenue for the three and six months ended June 30, 2018 was $1.9 million and $4.3 million compared to $2.3 million and $4.7 million for the same periods last year. The 2018 net revenues are primarily comprised of license fees while the net revenues for the comparable quarter last year includes $2.0 million of license fees plus $0.2 million from AirBar sales. The decrease of 19% in total net revenues for the three-month period in 2018 as compared to the same period in 2017 is primarily related to a reduction of automotive license fees, due to decisions the Company made in early 2016 to shift from selling license agreements to focus on selling sensor modules. As a result, two Chinese Tier 1 customers chose alternative designs for revisions for their infotainment systems in car models that previously used Neonode’s technology. The strategic decision has since then been reversed, and the Company believes that re-engaging with all current and new license fee customers, together with the new release of zForce CORE, will support future growth of license fee revenues.

The decrease in revenue from the sales of sensor modules to approximately $0.1 million from $0.2 million for the three months ended June 30, 2018 compared to the same period in 2017 is due to the Company shifting sales focus from our AirBar consumer products to B2B embedded product customers.

The decrease of 9% in total net revenues for the six-month period in 2018 as compared to the same period in 2017 is due to a decrease of 68% in sensor modules revenues and 80% decrease in non-recurring engineering fees.

Net loss for the three and six months ended June 30, 2018 was $1.0 million, or $0.02 per share and $1.7 million, or $0.03 per share, respectively, compared to $1.0 million, or $0.02 per share and $1.9 million, or $0.04 per share for the same periods of last year, respectively.

Operational cash used was $1.4 million for the six months ended June 30, 2018, reduced significantly compared to $3.0 million for the same period last year. Cash was $3.7 million and accounts receivable was $1.8 million as of June 30, 2018. There are 58.6 million shares of common stock, 1.2 million employee stock options and 11.2 million common stock purchase warrants outstanding at June 30, 2018.

Conference Call Information

The Company will host a conference call Thursday August 9, 2018 at 10AM Eastern Daylight Time (EDT)/4PM Central European Time (CET) featuring remarks by, and Q&A with, Hakan Persson, CEO, Lars Lindqvist, CFO and David Brunton, Head of Investor Relations. 

The dial-in number for the conference call is toll-free: (877) 539-0733 (U.S. domestic) or +1 (678) 607-2005 (international). To access the call all participants must use the following Conference ID: #4352569. Please make sure to call at least five minutes before the scheduled start time.

To register for the call, and listen online, please click:

https://event.on24.com/wcc/r/1797007-1/81B39C2EE828823456891292A9BAF47D

For interested individuals unable to join the live event, a digital recording for replay will be available for 30 days after the call's completion – 8/9/2018 (13:00PM EDT) to 9/9/2018 (23:59PM EDT). To access the recording, please use one of these Dial-In Numbers (800) 585-8367 or (404) 537-3406, and the Conference ID #4352569.

For more information, please contact:

Investor Relations
David Brunton
Email: david.brunton@neonode.com

CFO
Lars Lindqvist
E-mail: lars.lindqvist@neonode.com