Neonode Reports Quarter Ended March 31, 2023 Financial Results

STOCKHOLM, SWEDEN, May 11, 2023 — Neonode Inc. (NASDAQ: NEON) today reported financial results for the three months ended March 31, 2023.

FINANCIAL SUMMARY FOR THE QUARTER ENDED MARCH 31, 2023:

• Revenue of $1.3 million, a decrease of 4.9% compared to the same period in the prior year.
• Operating expenses of $2.8 million, an increase of 4.9% compared to the same period in the prior year.
• Net loss of $1.4 million, or $0.09 per share, compared to $1.4 million, or $0.10 per share, for the same period in the prior year.
• Cash used by operations of $1.7 million compared to $2.3 million for the same period in the prior year.
• Cash and accounts receivable of $22.9 million as of March 31, 2023 compared to $16.3 million as of December 31, 2022.

THE CEO’S COMMENTS

“Our licensing revenues during Q1 were stable indicating that the global supply chain challenges related to semiconductor supply shortages that have hampered our printer and automotive customers’ production and sales for the last two years are beginning to improve and that demand for our customers’ products is still strong”, said Dr. Urban Forssell, Neonode’s CEO. 

“Our product sales in Q1 were below expectations with many markets starting the year very slowly. On a positive note, we are seeing strong interest for our solutions in China where businesses and markets have begun to rebound following the lifting of COVID-related shutdowns. We are working together with different partners to try to capitalize on this and plan to increase our marketing efforts in China going forward, which we hope will start to bear fruit later this year and the next,” continued Dr. Forssell.  

“While continuously monitoring our performance and adjusting our strategies and tactics, we continue to execute on our overall business strategy to establish beachheads in key segments from which we later can expand to further grow our business. As part of this strategy, we are using our strong cash position to intensify our marketing work – both online and through participation in tradeshows and other types of events – and are recruiting experienced core competence to strengthen our sales and engineering teams, which is key for accelerating growth,” concluded Dr. Forssell.

FINANCIAL OVERVIEW FOR THE QUARTER ENDED MARCH 31, 2023

Net revenues for the quarter ended March 31, 2023 were $1.3 million, a 4.9% decrease compared to the same period in 2022. For the 2023 period, license revenues were $1.1 million, an increase of 4.0% compared to the 2022 period. The increase is primarily the result of an increase in volume as the global supply chain challenges related to semiconductor supply shortages that hampered our printer and automotive customers’ production and sales for the last two years are beginning to improve. 

Revenues from product sales were $0.1 million, a 30.6% decrease compared to the same period in 2022. The first quarter is typically slow due to the high number of holidays, but the decrease is also due to high inventory levels at some key customers after purchases during the fourth quarter 2022. 

Gross margin related to products was 53.9% for the first quarter of 2023 compared to 65.3% in the same period in 2022. The gross margin for products varies with the product mix. 

Our operating expenses increased by 4.9% for the first quarter of 2023 compared to the same period in 2022, primarily due to higher professional fees.
 
Net loss attributable to Neonode for the three months ended March 31, 2023 was $1.4 million, or $0.09 per share, compared to a net loss of $1.4 million, or $0.10 per share, for the same period in 2022. Cash used by operations was $1.7 million in the first quarter of 2023 compared to $2.3 million for the same period in 2022. The decrease is primarily the result of less component purchases offset by increased accounts receivable and unbilled revenues due to the timing of customer payments.
 
Cash and accounts receivable totaled $22.9 million and working capital was $25.6 million as of March 31, 2023 compared to $16.3 million and $19.1 million as of December 31, 2022, respectively.

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