Neonode Inc

Research note


Neonode Q2: Decline in printer volumes

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Neonode today, Wednesday, reported a Q2 operating loss of USD -1.2 million (exp. USDm -0.7) explained by a negative sales growth of -10 percent (flatish excluding NRE). Sales amounted to USD 2.3 million compared to our estimates of USD 2.7 million. Our error was likely about 50/50 related to AirBar and printers respectively. Weak AirBar sales in Q2 are not a major surprise but we were not expecting printer volumes to go down by 300 000 (about - 14 %) given the launches from new customers. At best, the decline in printer volumes is a temporary effect related to switching to modules but we have no idea if that is the case.

We probably need to lower our printer estimates somewhat but overall, as there were not much news in the report, we do not expect to make any other significant changes in our coming research update besides the ones already discussed in our Q2 preview.

One statement of paricular interest from the conference call was the ASP of USD 20 related to the three new module deals (albeit initially very low volumes) i.e. about 10 times more than today's average license ASP. The three module deals are all consumer busniess related, which could imply decent volumes, but as we do not know anything about these deals we have so far not included them in our estimates, meaning potential upside. 

Automotive volumes of 300 000 was in line with our estimates but we assume Q2 includes some catch up revenue from Q1. We were hoping for information regarding the automotive segment but not much was said on this part.

As the Q2 figures, in Neonode's own words, were "not satisfactory" we assume today's relief rally was related to Neonode closing the USD 9.8 million private placement and hence eliminating the cash risk.  

We will return as soon as possible with our research update.

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