Neonode Inc

Research note


Neonode Q2'18: Our top line estimates 32 % too high

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Neonode today, Thursday, reports declining sales of -19 percent, equivalent to USD 1.9m, compared to our estimate of USD 2.5m. The difference in the outcome from our estimates is all due to to licenses and likely in particular automotive, related to the two lost Chinese car models following the module transition.

Neonode stated that in the report that it is now re-engaging with all current and new license customers. It is also, according to us, good that Neonode has only lost two car models (although high volume ones) as we feared more losses related to the previous stopping of new license contracts as we have described in e.g. our preview.

With OPEX only slightly lower than our prognosis the operating loss of USD -1.2m was also worse than expected (USD -0.8m). 

As we suspected there were not much news for Neonode to comment in the report. However, it did mention a project for door collision systems, which we believe is the automotive project it talked about in the previous report. Neonode also stated that it has had progress with customers in new industry segments, although we have no clue what the volumes are here.

Following the weak Q2 will likely need to make downward adjustments in our estimates once again but we do not expect a new base case lower than USD 0.7 - 0.8. The cash position of USD 3.7m at the end of Q2 in relation to the burn rate in operating cash flow of USD -1.4m for the quarter suggests additional capital raising next year, should sales not improve substantially.

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