Neonode Inc

Research note


Neonode Q4'16 comment: Substantially lower operating loss despite slow AirBar start

All in all, Neonode's Q4'16 was solid. Neonode reported a 20 percent lower OPEX in Q4'16 compared to Q4'15, meaning we missed Neonode's operating loss of USD -0.4 million by USD 0.6 million (exp. USDm -1.0). Sales amounted to USD 2.9 million (exp. USD 3.5 million) due to a slower AirBar start than we anticipated.

As we mentioned in the preview we indeed suspected that AirBar sales in Q4 would be soft as adding the channels took a few weeks longer than expected and the Chirstmas sales after December 15 was not recognized as revenue. AirBar ASP including the deferred revenue amounted to USD 34-44 (depending on calculating with the report figures or what was written in the report), which was lower than we expected. We might lower our AirBar ASP estimates in our coming resarch update as we expect Neonode to share the price increses on the AirBar with its partners but we expect raised automotive volumes from ramp-up in existing car models and coming car launches to compensate for that.

Many of Neonode's customer's car models have been very succesful. In India, for instance, Neonode's customer's customer Maruti Suzuki has gained a market share of over 50 percent thanks to strong sales of the Neonode cars. India is not a huge car market at the moment but volumes grew substantially in 2016. As we believe Neonode's prospects in automotive remain as strong as before we reiterate our base case of USD 3.7 per share and our pessimistic scenario of USD 1.2. 

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