Neonode Reports Quarter Ended June 30, 2024 Financial Results

STOCKHOLM, SWEDEN, August 8, 2024 — Neonode Inc. (NASDAQ: NEON) (“Neonode” or the “Company”) today reported financial results for the three and six months ended June 30, 2024.

FINANCIAL SUMMARY FOR THE THREE MONTHS ENDED JUNE 30, 2024:

•    Revenues of $1.4 million, an increase of 18.7% compared to the same period in the prior year.
•    Operating expenses of $2.7 million, a decrease of 1.6% compared to the same period in the prior year.
•    Net loss of $1.7 million, or $0.11 per share, compared to $1.5 million, or $0.10 per share, for the same period in the prior year.
•    Cash used by operations of $1.2 million compared to $0.6 million for the same period in the prior year.
•    Cash and accounts receivable of $14.4 million as of June 30, 2024 compared to $17.1 million as of December 31, 2023.

FINANCIAL SUMMARY FOR THE SIX MONTHS ENDED JUNE 30, 2024:

•    Revenue of $2.4 million, a decrease of 0.6% compared to the same period in the prior year.
•    Operating expenses of $5.6 million, an increase of 0.9% compared to the same period in the prior year.
•    Net loss of $3.8 million, or $0.25 per share, compared to $2.9 million, or $0.19 per share, for the same period in the prior year.
•    Cash used by operations of $3.1 million compared to $2.3 million for the same period in the prior year.

COMMENTS OF THE INTERIM PRESIDENT AND CHIEF EXECUTIVE OFFICER (“CEO”) AND CHIEF FINANCIAL OFFICER (“CFO”)

“Our revenues increased in the second quarter of 2024 compared to the same quarter last year. Non-recurring engineering revenues increased and were mainly attributable to the ongoing Driver Monitoring System (“DMS”) project with the Original Equipment Manufacturer (“OEM”) of commercial vehicles customer that was announced at the end of last year. Product sales also increased in the second quarter compared to the same quarter last year, mainly as a result of last time buy orders from customers to secure supplies, following our decision to focus solely on licensing going forward and to phase out our products business. Licensing revenues decreased compared to the same quarter last year, mainly due to the demand for our legacy customers’ products being lower. Gross margin in the second quarter of 2024 compared to the same quarter last year declined and was the result of increased cost of revenue due to increased product sales and non-recurring revenues combined with decreased licensing revenues. Although our operating expenses decreased in the second quarter of 2024 compared to the same quarter last year, the decline in gross margin led to a higher net loss,” said Fredrik Nihlén, Neonode’s interim President and CEO and CFO.

“Our driver and in-cabin monitoring solutions keep attracting attention, which is positive. We find this promising and believe that our solution is not only competitive but also scalable and flexible, making the solution attractive to both commercial vehicle and passenger car manufacturers. We also keep seeing interesting licensing opportunities for our touch and touchless human-machine interaction offerings in addition to the first touch sensor module technology license agreement announced earlier this year,” concluded Mr. Nihlén.

FINANCIAL OVERVIEW FOR THE QUARTER ENDED JUNE 30, 2024

Revenues for the quarter ended June 30, 2024 were $1.4 million, an 18.7% increase compared to the same period in 2023. License revenues were $0.6 million, a decrease of 43.9% compared to the same period in 2023. The decrease was caused by lower sales volumes for our customers during the second quarter of 2024 compared to the same quarter in 2023. 

Revenues from product sales for the quarter ended June 30, 2024 were $0.6 million, a 641.7% increase compared to the same period in 2023, mainly due to last time buy orders from customers. 

Revenues from non-recurring engineering for the second quarter of 2024 were $0.2 million, a 750.0% increase compared to the same period in 2023, mainly attributable to the DMS project with the commercial vehicle OEM customer that was announced at the end of last year. 

Gross margin related to products was 26.0% for the second quarter of 2024 compared to 66.7% in the same period in 2023. The gross margin for products for the second quarter in 2024 was impacted by a one-time cost of $8,000 related to an impairment loss on inventory due to the phasing out of the manufacturing of touch sensor modules.

Our operating expenses decreased by 1.6% for the second quarter of 2024 compared to the same period in 2023, primarily due to lower payroll and related costs offset by higher professional fees.
 
Net loss for the second quarter of 2024 was $1.7 million, or $0.11 per share, compared to a net loss of $1.5 million, or $0.10 per share for the same period in 2023. Cash used by operations was $1.2 million in the second quarter of 2024 compared to $0.6 million for the same period in 2023. The increase is primarily the result of component purchases in the second quarter of 2024 and the timing of customer payments.
 
Cash and accounts receivable totaled $14.4 million and working capital was $13.2 million as of June 30, 2024, compared to $17.1 million and $16.8 million as of December 31, 2023, respectively.

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