Hi, and welcome to Q4 and full year report for 2021. My name is Laila Danielsen, and I'm the CEO of Elliptic Labs. I'm here together with our CFO. Today, we'll be covering three main areas. First, we'll do an introduction to Elliptic Labs and market status. Then two, our CFO, Lars Holmøy, will share further details about our NOK 63 million in revenue for the year, which means 41% growth in revenue, and rather more interesting, 81% growth in sales revenue. He will cover that. Third, but not last, we will also talk a little bit about market moving forward. Let's jump into our vision. Sensors touch every aspect of life and drive digital transformation.
Our vision is to build the leading software platform for all sensors in the market, making every device in today's market and future markets smarter, more human, and environmentally. Let's take a closer look at what this means. Okay. What we are doing is that we are leveraging existing single-purpose sensors that are in most devices today. We start out in the smartphone and the laptop market, where every single smartphone and laptop will have today a microphone and a speaker. Our platform leverage this. We embed this, our software into these devices, and then from there, we generate new user experience, for example, like virtual proximity sensor, presence sensor, et cetera. Let me illustrate with an example. Today, most likely you are sitting in front of a laptop. You hear my sound through a speaker.
This we call audible sound. We leverage the standard speaker that's on a laptop, but we just lift it up, and we leverage ultrasound, which is a different frequency that comes out of the speaker at, in parallel with audible sound. This ultrasound bounces off your body and goes back, and the microphone listens to this ultrasound, and then from there, we apply our software to do different functionality.
What we launched with here recently is with Lenovo that wanted to have a virtual presence sensor onto the device to detect if people sat in front of their device or not, and to make sure when you're sitting in front of the device, the screen and display is on, and when you leave, the display and the screen would automatically lock, so to make sure that your laptop is more secure, as well as reducing the power consumption. This is the primary feature we're leading with, but we do more. We also work with partners, for example, like Texas Instruments and Infineon, that has sensors like radar they then come to us, and we apply our platform, enable a new set of feature, for example, heartbeat and breathing.
Furthermore, in cases that when we truly, for example, in the smartphone market, we needed to optimize the performance, we took advantage of not just the microphone and the speakers on a smartphone, but also a set of other sensors like gyro and accelerometer, and we did what we call a sensor fusion, combining output to truly create high-performing sensors. I want to make crystal clear that our platform, what we are delivering is 100% software that we use to make devices more intelligent and environmentally friendly. We're standing on a very strong foundation. There are billions of devices in the market today that already have hardware sensor components. We started out in the smartphone market, and of course, this total market is enormous, 5.5 billion market opportunity and growing.
We started out in a smartphone market, high volume devices of smartphones. However, the price point for the hardware sensor that we place in this market is very low. Thus, the overall market opportunity is about NOK 140 million-NOK 350 million. The next market we're going after, the hardware sensor we're looking to replace in this market and have already started, is to have a higher price point, and we'll get back to that. But this is the reason for that, this market opportunity, even though they're lower, about 450 million laptops and tablets being sold, is lower than the smartphone market. But due to the pricing difference in the hardware sensors, we have a greater opportunities, and we see we also have a wonderful opportunity in the rest of the market as well. Okay.
How we are leading with our customer is that we look at what type of use case they would like to do. In 99% of the cases, we see that we can solve and deliver what the customers in today's market would like to do with software only and replace hardware sensors, single-purpose hardware sensors. What does this mean? It means automatically we reduce the cost for the customer. Furthermore, we can also add additional features above and beyond, something that we will discuss later on, in the future, in future presentations. We also mitigate the risk for the supply chain, and we completely eliminate the sourcing risk, since we're replacing software instead of delivering the same functionality with the hardware. We see an enormous response from the market.
We have smartphone, laptop customers out in the market. We also have signed an agreement, of course, in the IoT space as well. The physical sensors we're replacing in the smartphone market is an infrared sensor. In the PC, it's a different type, a higher cost. It's actually a bigger sensor. It's a time-of-flight sensor, and in the IoT space for Bosch is an industrial PIR sensor that we are replacing. Different price points, but overall the general underlying platform that we are using can nicely deliver this set of different features and capability across these verticals. I'm gonna try to illustrate with example again.
In the smartphone, the distance that we have to detect, this basically we use an infrared sensor is, the phone rings, you put it up, the screen turns on, you put it up to your head, the screen turns off, you put it away, it turns on again. We're talking about detecting 3 cm -5 cm. The same underlying technology we move then over to the PC market and now we use the detection when you sit in the front of the laptop, so that's about 1 m. From there again, we again take the same underlying technology, and we move it over to a new set of market in the IoT for Bosch, and here now they want the distance 3 m -5 m.
Different physical sensors needs to be delivered for this capability, but we use the same underlying 100% software solution to deliver this. Okay, here we see a string of models that we have launched across multiple verticals. We are starting to follow the same principle as we did in the smartphone into this new vertical. In the smartphone market, we signed our first PoC all the way back in 2013. Spent literally the whole company to support this first project to launch on one smartphone model. This was three years later in 2016. Then we started scaling and automating our platform more and more.
Instead of using, you know, 20-25 engineers, now we just use a few field application engineers to support large deployments onto these smartphones. Furthermore, today, we no longer sign any PoCs when we are working with smartphone customers. We go straight to the production model. However, in the laptop market, we have signed several PoCs, and of course, here recently we also launched. We're following the same process, and we expect and we plan for that eventually we will also follow the same process as we do in the smartphone market, where we go straight to production and do not have to do a PoC as we are scaling out in the PC market.
Our commercial scaling is based on a truly strong foundation, and our solid virtual smart sensor platform is supported by market enabler, like it's a really strong ecosystem of partners. We leverage this, and then we keep adding on more and more PoCs that we are successfully converting into real business model launches. Let's take a closer look at how we're doing this. First, as I've mentioned several times already, underlying technology, completely scalable across verticals. What we're focusing now, as we're hiring more engineers, is that we keep increasing this process of automation, so we can use less and less resource for each deployment that we're doing. Of course, we have spent a decade building this platform, and it's already very, very scalable to billions of devices.
In addition, we have spent almost a decade also to work with many chipset providers in the semiconductor industry, so we can embed our software easily into the products for the customers. Of course, we continue creating new products while we are aligning all of our roadmaps together with partners and customers. This has been a critical path and a very successful path that we have done over the past decade. In regards to the organization, we continue increasing hiring across engineering, sales, and sales support in all locations. We are now global in U.S., Europe, and Asia, and we are close to where all our customers are. Not only are we moving into new verticals from just between PC and IoT. We also creating business in new geographical areas.
This is very important for diversification of your business. We have now customer, of course, in China, Asia. We also have now customers in Europe, and we have customer in the U.S., and we expect to keep growing in all three geographical areas. In regards to partnership, in particular in Q4, this was very critical. Obviously, we've been working with Intel for a long time. Intel owns about 80% of the laptop market. A truly critical relationship that we have established with Intel and primarily due to also a few things, but primarily due to the enormous pull they see from the laptop market. The fact that we work so closely with Intel, as well as AMD, because if you work with Intel, AMD automatically follows.
We can now target basically 100% of the laptop market. This has been a very long journey establishing this relationship with Intel. We are extremely pleased that we are in this position. Now we have formed more like I would say a symbiotic relationship with Intel that Intel is looking to us to also bring new features and innovations so they can deliver to the customer. Extremely nice relationship that we are very excited about. Of course, we will continue working closely with Intel and AMD and Qualcomm that is just starting to kick the tires also in the laptop market. We have a solid track record and a consistent track record in converting PoC into real business. This is important.
Of course, as I mentioned, we sort of skipped the PoC in the smartphone market and go straight to business, and we see this here in Q4 that we signed a license contract with a new customer for seven models, so no PoC needed. I would say the most exciting PoC conversion that we have done here recently is, of course, the fact that we are able to land such a large customer as Lenovo and not just landing them because, you know, any type of model, but landing a high volume commercial laptop from Lenovo. That's critical because in general, in the commercial space for laptop providers, they're more conservative. We don't do a high-end low volume laptop. We do a mid-end high volume laptop.
This is super exciting. We'll share a little bit more about this journey with Lenovo. We have broad deployment already, hundreds of millions of devices with our technology. We keep launching in the smartphone market. We expect to keep expanding in the PC market. We are on track for the market launch with Bosch Spexor. An incredibly good track record in converting PoC into real business and seeing that the customer comes back for more and we can keep expanding into new markets. We always get a lot of questions around who we are competing against. Even though in some cases we are partners with some of these hardware sensor vendors, in general, we end up many times competing against them, replacing physical sensors with virtual smart sensors.
In the smartphone market, we started initially back in 2013, looking at how to replace an infrared proximity sensor. This was a very difficult task. Why is that? Well, one, because the technology back then has already been for about 10 years since in the market, since the first Apple smartphone in 2007. So a very mature technology. Also a technology that has been sold in very high volume. Furthermore, a sensor that was tiny, meaning overall the cost was low. So it actually incredibly challenging to replace this technology. But we did it. Now, as I said, we are moving into the next market, the PC, and we look at primarily replacing time-of-flight sensors.
Today, we see time-of-flight sensors mostly in the high-end laptops, which is low volume because of the cost of the time-of-flight sensor. The beauty here in this PC market in comparison to the smartphone market is that there is no standard, there's no incumbent in this market. We are in a nice, beautiful position to become the de facto standard to deliver presence detection and more into this market. This is extremely exciting. Furthermore, as we are exploring other markets within the IoT, we see that there are lots of opportunity in general for presence detection. Very exciting times here for Elliptic. Now I'm gonna hand over the word to our CFO, Lars Holmøy, that will talk about our finances. Thank you.
Thank you, Laila. Elliptic Labs are funded for a continued expansion across all verticals. Year-over-year, our customer revenue grew 81%, meaning Elliptic Labs are on a strong growth trajectory. Our other revenue are slightly declining as we are focusing all our resources towards customer revenue. Total revenue grew 41% year-over-year. Giving a 28% EBITDA margin in Q4 alone, and for the year it was -NOK 2.8 million. We had one-off costs related to our uplisting to Oslo Børs main listing, but we also had a reset and a true-up effect on our share-based payment agreements. We also had consultant fees, which will be a one-off for the Q4 alone. As we said, we were solidly funded.
Our solid cash balance supported by our equity raise in September, and we had negative cash flow from operation. One of the reason is just payment schedules from the customers. We also have an increased recruitment and new hires cost. Investments mainly reflecting capitalized software and development costs. All in all, we have a robust balance sheet. Elliptic Labs are funded for continued expansion across all verticals. Cash position is good, and there is currently no need to raise additional capital. Over to you, Laila.
Thank you, Lars. We are set to grow, and we're nicely positioned to grow along multiple dimensions. Everything is surrounded and built around our core platform. In 2021, we added on two more verticals. We are now in a total of three verticals. For each verticals, we are expecting to expand with more and more customers, and each customer would add more and more models into their portfolio. On top of that, we also see that we are in position to even add more products for each customer. Let's illustrate with an example. We started out in the PC market, where we landed and launched with Lenovo. Of course, Lenovo has many, many PC, tablet, and laptop models that we are targeting to launch with in the future.
Furthermore, on top of that, for each of the model, we also are targeting to add more of our products, different type of virtual smart sensor. Multiple opportunity for expansion with our underlying solid platform. This is very, very exciting. In conclusion, we see a clear path to our significant revenue uplift. Our revenue target is NOK 500 million. Of course, this is an ambitious target, but this is what we see today. Let's break it down. We expect to continue growing in a smartphone somewhat. As we have been stating, our next significant key growth vertical is the PC market, where we expect to have the majority of the growth over the next two years.
In the IoT market, we are in the process of building a strong position, starting out with a large enterprise as Bosch. Just wanna mention here all the way to the end, just wanna make a note that we see an increased price point for our virtual smart sensors or software sensor outside the smartphone market. This is essential for us to reach our ambitious target of NOK 500 million. Thank you. We will take a quick minute break just to review the questions that has been ticking in. We'll be right back. Thank you.
Hi. We are back, and thank you for all the questions. Also thank you, it's a gentleman that before every quarter, quarterly report gathers many questions from other investors and shareholders. Once again, really appreciate that. I'll jump straight in.
This first question is to you, Lars, or to both of us. I'll have you answer it. Are you still targeting EBITDA of 50% at revenue target 500 million NOK in 2023?
Yes. We are still targeting 50% EBITDA at NOK 500 million. As a software company, we do expect high margins. We have done our heavy lifting and in investing in our scalable platform, and we do see high margins coming in as we ramp up revenue in the future.
Yeah.
Yeah.
Yes. I'll just ask the... Well, the next question is from me, but I'll just ask it since-
Yeah
you're looking at. How good is Elliptic Labs' virtual sensor technology for laptops in comparison with, for example, radar and time-of-flight? This is specifically in regards to having the ability for the presence detection.
Yeah.
It's when the customer or the, for example, Lenovo, when they are testing, going through a testing process.
Mm-hmm.
You know, we have the same set of specs for time of flight and what they're using for radar, and they do dead on.
Mm.
Head-to-head, completely head-on direct comparison.
Yeah.
We're absolutely at the same level, and we expect to continue training to even go beyond that. Of course, on top of that, there's more we can do than just detection. For now, we see that.
Mmh.
For the use case, for the presence detection, we are on par with the hardware sensor. This is, of course, super exciting because if you have the ability to replace hardware sensors with software only, there are lots of benefits for everybody around.
Next question is-
Yeah.
Yeah.
This one?
Yeah.
This is for you. Does Elliptic Labs plan to be listed at other exchanges?
We continue to assess whether or not to do secondary listings. When the timing is right, that will, if we see demand from the market, of course. Yeah.
Okay.
Exploring it.
Okay. I'll jump in for one for me.
Yeah.
Regarding the IoT vertical and assumed high market potential going forward, you have already signed an agreement with Bosch, yes?
Mm-hmm.
Bosch spexor. Of course, you have some PoCs with other verticals as well. What do you consider for the IoT market be the most relevant for the Elliptic Labs technology? What we're seeing. Of course, we have stated that in the IoT market, we are exploring and navigating this market to identify the most lowest hanging fruit. Of course, this is a enormous market. We started out with Bosch.
Mm.
Bosch is a wonderful company to work with because they have so many different departments. You know, we have all the way from automotive to, you know, appliances in the house. We are expanding, of course, planning to expand, targeting to expand with Bosch.
Mm.
We are navigating and looking at other, similar type, companies. What we are seeing-
Mm.
Is that all in the IoT space, companies are looking for the ability to turn off and on a device based on somebody's presence.
Mm.
For many reasons, for security, for power saving. This is what we see. We see our core technology be applicable everywhere.
Mm.
Once again, we're exploring, figuring out where the lowest hanging fruit, and we have to be practical how we are attacking this market.
Laila, this is for you as well.
Okay.
Can you please say something about competition, market shares, and potential and technology?
Yeah.
There is also.
We have talked a lot about the competition. In general, what we're seeing is that sometimes we compete against hardware sensors, sometimes we are partnering. I've reiterated several times that we work with companies like Texas Instruments, Infineon to apply our software, for example, on the radar sensor for new features such as breathing, heartbeat, fall detection, et cetera. In general, what we're seeing thus far is dedicated single purpose hardware sensors.
Yeah.
That we are competing against. Of course, there are billions of hardware sensors in devices today, so it's a solid foundation for us to go after.
Yeah.
I'll do this one.
Yeah.
Okay.
You do this one.
China is supporting Russia. What type of diversification are you doing against potential sanctions against China?
We also put that in the report this quarter due to the war going on in Ukraine. We continually monitoring potential sanctions in countries where we have operations. We currently do not have any operations in Russia or Ukraine. Looking into 2022, we're having a more diverse revenue stream than we had prior, and we also see now revenue streams from both U.S. and Europe. In terms of risk diversification, I feel we are on a good footing there.
Yeah. Entering into new verticals.
Yeah
... In new geographical areas. You know, Bosch is in Europe. You know, Lenovo has a huge presence in the.
Yeah
U.S., and is also headquartered in Hong Kong.
Mm.
Of course the other laptop manufacturers, many of them.
Are-
I mean, they're all based outside, excuse me, China.
China.
I don't know, do you have any more-
Um-
... On this one or...?
I have one here, and that is the one relating to true-up or also consulting fees. It's including both. One-offs, we are approximately NOK 6.5 million. Yeah. That's there. Can you say how much revenue we're getting out of the Lenovo deal, Laila? No.
Uh-
We are not at liberty to speak about those numbers, so.
In general we get, of course, many questions about, specifically about our pricing.
Yeah
About customer, number of models and so forth.
Mm
This is, you know, in regards to our pricing. We do not wanna share that because of competitive reasons.
Yeah
As we're going into other customers and markets, et cetera. Furthermore, in regards to sharing any details about the customer, we can of course not do that, but can just say in general, we've received very fantastic feedback.
Mm.
... In regards to our implementation with Lenovo. This is exciting. Of course, we're targeting all the other companies. I just wanna mention this also here to end-
Yeah
because I don't think we have more questions, is that, you know, last quarter in Q4, we did announce this partnership with Intel. That this is critical, and the fact that Intel is now aligning their roadmap with us.
Mm
... also demonstrates the attraction that they are seeing from other PC OEMs.
Yeah.
Note that they own over 80% of this market share. We're starting to see a really solid symbiotic relationship with Intel.
Yeah.
Also, of course, AMD.
Yeah.
So.
Just one.
Okay, one more.
Last one. It's just IR related in terms of what type of communication we will give up after we go on the main listing of Oslo Børs. Yeah, it will be a little bit changed, but we will be in line and compliance with all the regulations, of course.
Yeah, absolutely.
Absolutely.
All right.
So.
Well, thank you very much for the questions.
Mm.
Have a good day.
Thank you. Bye.