Good morning, everybody, welcome to poLight's first quarter presentation. Yeah. Together with me today is, as usual, CFO Joakim Hines Bredahl and Board Chair Grethe Viksaas. Agenda, as usual, key events, introduction to poLight, market review, financial review, outlook and Q&A. During the Q&A, since this is also webcasted, please, if you ask question through the portal, please leave your credentials so that we can contact you, if needed, to clarify the question. Key events. Less events this quarter compared to last quarter, I would say it's still a very strong quarter we feel. Also both when it comes to activity, revenue, but also when it comes to market activity. We're quite happy with the progress. We received a follow-on purchase order for TLens related to barcode. Nice business, existing customer.
That was more or less NOK 1 million. We launched in the industrial segment, we launched MLens, which is the based on the M12 standard, which has received quite some interesting feedback and market interest. I'll come back to it. We have also a follow-on purchase order for TLens, worth approximately NOK 1 million, which is a quite normal TLenses. This is to support a qualification program, meaning qualification program, there is a qualification of a camera module planned to go into a OEM product. This is a proof of continuing progress for this customer. TWedge continues to create a lot of interest. We received a PO worth approximately NOK 1.1 million 7th of March from a customer. We are in engagement with the customer discussing potential mass production-ready unit.
Come back to that. In the industrial segment, two new products was released during the quarter. We are not allowed to. I can say it's a new customer, but I can't say who it is. We did participate at CES and Photonics West successfully. A lot of meetings and a lot of interest. After the quarter, in the beginning of April, we received a very strategic PO for TLens. Quite a lot of TLenses. This is TLenses which has a price, a kind of compatible with mass production price. It's meaning it's starting to mature quite a bit. This is related to, of course, to an existing customer, which is listed under a POC, but the POC is maturing every day. Okay. Very quickly on poLight.
Focusing on growth markets, consumer and industrial. Main focus, AR/MR and barcode machine vision. Of course, we also look at other things, any wearable, laptop, webcam, but as a majority of effort and our support is related to AR/MR. It is basically where we believe will be the big uptake on volume and where the innovation is happening. This is super important and a fantastic good fit for our technology platform. Our technology platform can be described by being extremely fast, a millisecond response time. It can be super compact, constant field of view. There is no breathing due to changing focus for the TLens, as example. Extremely low power consumption. It's basically the driver which is kind of charging the TLens, which is taking the power, which is very limited.
There is no technology close to the speed we have and the power consumption we have. That's the fact. That's also why we are nicely positioned in the AR/MR space where compactness, speed, power consumption is critical. We have been around for a while, 2005. Listed Oslo Stock Exchange in 2018. At that point of time, no customers, only many technical problems. Today, we have many customers and less technical problems. No, not zero, but less. Headquarter in Norway, Tønsberg. Employees in Finland, France, U.K., U.S., China, Taiwan, Japan, and the Philippines. Quite a distributed team. We are around 50 people and increasing. We will leave the year with maybe close to 60 or something like that.
We are building step by step the organization, which is important, which I will come back to in the outlook. That's a little bit about poLight. Our technology platform is best described by two thin glass membranes with a gel, a polymer in between. The first product to the market is TLens, a tunable lens, which is shown on the upper left corner on that slide. Where you have, as I said, two glass membranes and polymer in between. Polymer, this is the AF product. This is replicate the function of a human eye, you can say. We are bending the membrane, the top membrane, a MEMS device. By bending, it shapes the polymer, so basically shapes the lens, which is the what also your eye muscle will do with your lens.
This is the tunable autofocus device, which is competing with such as VCM, voice coil motor. The very same technology platform can also realize other products, as an example TWedge, which instead of squeezing that polymer, shaping that lens, is basically instead of bending that top membrane, it's actually making a wedge. It's tilting it, meaning that the beam coming in will be steered to the right, depending on how you tilt. That's TWedge. TWedge is the same technology platform used for different application, meaning different things can be, but the main focus is for AR/MR displays. TWedge is in development. TLens is in mass production. We are a fabless company, which is nearly correct because we do manufacture polymer in headquarter.
We're scalable, and easy to do, take little resources and little equipment. We do that ourself. We get MEMS wafers from a MEMS partner. In this case is for TLens. It's an 8 in wafer having more than 2,000 dies. This is shipped to assembly partner. We today, the assembly partner producing TLens for the different customer we have today is happening at the Philippines. They are dicing, dispensing, testing so that the fully tested TLens with or without the package is coming out from that manufacturer. We are also in the process of establish capability at Q Tech in China for similar activity. We deliver to camera module our lens.
Either they integrate it into the camera in the, between the lens stack, like in the bottom camera there, or on top on the, on the fixed focus camera, with a package around. Typically, the industrial cases is using the add-on design on top, whereas the more compact, high megapixel devices is using the bottom concept of having TLens in between the two lens stacks. Really, the sales and marketing activity we do is heavily, I would say, towards the product owners. We are communicating with the product owners, the product owners is then hopefully getting convinced to use TLens, they will then kind of tell the camera module guy what camera and what actuators to use. That's how we work. Yeah.
As I said, we are targeting the growth market, momentum markets, extreme focus on AR / MR, but also keep an eye on other consumer devices or applications. After that, more time also spent on machine vision and barcode scanning. The M12 release is an attempt to increase activity in that space, making it easier for market, for customer in that market to implement TLens. We have said in many years, and I think it's still the case, we believe that our other market areas we can contribute to. Two examples are automotive and healthcare. I would say that when it comes to automotive, it's a, it's a tough market, slow-moving market, very competitive market, and we really don't see that we.
We don't have any high activity. We get contacted now and then by name, good brands, and we do talk to them, but we don't invest a lot of time in that market segment because we believe that for most of the application, we need a bigger TLens. For the healthcare, actually from, after having a few relatively slow year or two, I would say, we now see a little bit more activity on the healthcare side, related to type endoscope application. Let's see. The endoscope application is interesting, but also currently they're using relatively low megapixel sensors, which doesn't need a lot of high-quality AF most likely. There is a trend that that megapixel will increase and then maybe AF will be more needed. We use very little time on those emerging use cases.
We use most of the time on the momentum markets and particularly AR / MR, and also a little bit on the machine vision side and barcode side. Yeah. This slide is becoming more and more busy, and that's what we like. I said last time maybe I have to consider to split it into two pages and that will probably happen soon, I hope. As you can see, we now have two new design wins during the quarter in the Industrial. We have quite a good references now in all market segments, both in AR, consumer in general and Industrial.
Those two kind of momentum markets, we are step-by-step getting more and more references, which is helping us a lot in the sales situation. I think we are now have around 43 design wins in total. Okay. Market review. On consumer side, and then I've kind of segmented into comments related to TLens, and next slide will be TWedge. As I said, AR/MR focus, and that I said before, we are being evaluated and tested by many AR/MR players. They are very often, if you look at the products out today, they're very often using a fixed focus.
Our understanding, for different reason, due to optics, due to camera specification trends, AI, which is heavily need, of course, quality input to have a good results from the AI engine, and different use cases, that will in sum mean that they will step-by-step need more advanced cameras, including AF. This is our clear understanding with many of the players in this segment, is that they have cameras with AF on their roadmap. Of course, we are engaged with many of them. I would say that when we see that when we are focusing so much on the AR/MR space, and you will see kind of the activity slide later, it's a very fair statement to say that there's an extremely promising application for TLens and TWedge.
We will never be alone. I mentioned that before. There will be other attempts. The main competitor today is fixed focus, but I'm sure there will be other players who's coming with technology, which is good because competition is what the OEM wants. We need just to perform and deliver, and we will be, for many players, a preferred choice. That's how we see it today. Many of the AR/MR cases we are supporting on the consumer side are definitely maturing. Of course, there are issues. Of course, there are things to be solved, both on our side and on customer side. This is new technology going to very advanced compact designs. There are always kind of challenges to be solved.
I think there are reasons to believe, which probably I also will comment in the outlook, that we are approaching important milestones. Very important milestones. There is reasons to believe and hope and pray that we will, throughout this year, have new evidence that this is a market which will be very important for poLight. In the quarter, two, I would say, very important news and POs. We have already mentioned them in the key events. Just quickly repeat. NOK 1 million POs for a qualification program, TLens. NOK 2.4 million actually, relatively high volume, meant for preparing a, for real products, priced at kind of a mass production type pricing. This is promising.
As I said, there are always, you're not in before you're in, and the market is still kind of, or the customer is still kind of preparing for a product which may face, situations like delays or other challenges, so you never know. At the moment, it looks very promising. On the TWedge side, again, consumer related, I think it's fair to say that the interest continues. We have said, since day one that we really would like customer commitment before we move all the way with TWedge. That's what we have been trying. We have been selling technical samples, for quite some NOK millions now, and we are still doing that and supporting customer in integrating, TLens.
Now I feel we are starting now to more engage with the customer, discussing when do you need a mass production unit, are you willing to commit? We are in that discussions now with some of the key players. We did receive another sizable contract during the quarter, which we announced the 7th of March, which is NOK 1.1 million. We had some of order taken TWedge samples of NOK 1.7 million. Mind you, this is a very high number for selling samples, you know. Last quarter, we had like NOK 3.5 million. It is really, really, you know, when we price these samples, it is of course to be selective to who we work with, because we cannot work with too many.
Are we using price mechanism to kind of make sure that the appetite is correct and the intention is correct. We're using that price for that. We have been very successful in doing that. We are charging a lot for per sample. Let's see. We have a design now. We are at TS5, fifth revision of a prototype. We are now starting an activity to plan the next phases. As I said, hopefully, we can get some engagement and financial contribution from some of the key players. We are talking about a handful of players which we engage with. All, I will say, known names. Many of them are actually moving quite fast towards wanting to implement this into a future product.
In that sense, we need to make a decision whether we move with the full development program or we wait. So far we said we wait until we have decent commitment. This is what we are continuing to say. Of course, but they are challenging discussions, of course. When you ask for money, they ask for rights. We would like to keep as open as possible to work with everybody, so we are hesitating. We need to carefully kind of position a company in the right way in these discussions. One way, one other new application, it has surprised me to see how many different application TWedge can and how many pain points it can solve. You may have seen that recently a press release.
related to Vitrealab, which is a laser-based display actually. What they're saying is that they use You can see TWedge in the second most bottom layer on that picture on the bottom right side. They say that this is important for the solution for the quality of the display, as it reduces the perceived coherence artifacts, which is typically a physics related to a laser-based display. We know that some of the customer we talk to, OEMs, are having engagement with this company. They have also asked us to kindly support them. It's quite an interesting case also. You know, who knows how this.
I've said many times, the display technology in the AR/MR space is maybe so far the most complex and the unknown. What will be the main path? You may remember that we were in an LBS program, which is also laser. That has kind of, yeah, standstill, I would say. This is a new initiative. They have shown demos showing TLens impact on the quality, and it's quite visible. Let's see. I would say LCOS MicroLED is maybe still kind of the technology which is most looked at, there are other alternatives. In a way, we don't care, as long as it seems like all the display solutions seems to would like to use TWedge, which is good. Yeah. Here is the activity plot.
As you can see here, no change in design win or design in. I said, even though I said that there are cases in the AR/MR space, which in a way are approaching a different phase of the development. So far we would like to be prudent and still qualify it as a very mature POC. If you look at POC activity, it's out of these 23 POCs, 19 is related to glasses of different shapes. You can also see there are some laptop and some other variables in the POCs. We do facilitate some POCs also on that area, and it's early to say, but of course, if you can get into a laptop application, that's already an existing significant volume.
It remains to be seen whether we can build a camera which gives, sorry, a TTL thickness of the camera, which is not destroying the kind of the mechanical ID perspective because there are limited space. Also, there needs to be a clear value. There needs to be a clear use case value. The use case value is basically that what we have heard is that it's basically about more people around a device sitting at different positions, showing a close-up to the camera, a business card or a QR code or whatever, and then you need to kind of be able to focus. There are business cases, and we don't know yet if those cases are strong enough.
We are engaged with a quite high-end leading OEM who is actively considering and actually done the first POC and now considering to start the next level of POC. Can be very interesting. At least this is what I'm saying. We are focusing heavily on AR/MR, but of course, we are not neglecting other potential cases which also can use TLens. Same if you look at the planning POC, there are both laptop and there are a lot of AR/MR. AR/MR is also heavily, I would say, enterprise, many enterprise application. I just wanted to show these pictures I got from our dear friend Nissan in Snke. You may have seen it on the LinkedIn.
They are quite vocal on. They are very active in the market. They're building partners. Many partners have signed up now. They have shown a strong interest in using this platform. It's an amazing high-end platform. It's amazing. I will soon get one device. If you look at the partners on the development partners mentioned, you can see there are big names. Of course, poLight is one of them. They have really built a platform which can be used for many things. The first and foremost application they're focusing on is the medical. Here you can see. They are quite light, actually. Taking into consideration all the technology inside these glasses, they are only a few hundred grams, you know, 200 g-300 g. Quite light.
Like, I don't know how many, a good handful of cameras and two of them are RGB, which is on the middle picture there shows one of the applications for that, the stereoscopic magnification, where the TLens is a key element. Very nice partner, very, I would say, very professional team. I just had a meeting yesterday with Nissan and he is very motivated to push this out to market. They are already supplying units to the development partners, making the software and applications around it. They are a platform provider. I think this market could, this platform could potentially go into markets, other market segments, but this is the focus as of today. Very interesting case. Yeah, this is all AR/MR, including enterprise, including consumer. Here you see there are six design wins. The latest one is the Snake, which I just talked about.
The remaining is POCs and planning POCs. As I said, 19 of those related to consumer, both on POC and planning POC. Barcode. Yes. Step by step, going in the right direction. We have been working, as an example, we have been working with one company for, I don't know for how long time, it must be eight years plus. Now they finally have kicked off a program with poLight. It's one of the, I would say, well-known players in the market. To move this players is quite challenging. They're very thorough. They're using a lot of time. It's just an example how long time it can take before they find the optimal use cases in their portfolio. It's a steady business for us, increasing a little bit year by year.
We hope we also got two design wins this quarter. We got repeat orders from existing customer, which is always good. In addition to that, we launched M12. Again, M12 is something we believe will make it easier for customer to use TLens. Instead of buying only a TLens and integrate themselves, doing a lot of design work and have it costing a lot of NRE, they now can buy a solution where we sell an M12 lens. As you can see on the right side of this slide, we have different lenses with different focal length. I think the six and 7.5 is already shipping, where soon in summer, I think the other 2, 13 and 19, will be shipping. These are, if you look at the picture, you can see the flex coming out. That is basically the unit, how it looks like.
It's the size of my thumb, and it can be screwed directly into an M12 interface, and there you go. No need for big NRE, no need for big development. Inside that lens stack is two TLenses. This does two things. We hope it will scale that market quicker for us. We also hope that it will also bring us up to a more a solution provider than a component provider, which is a part of our strategy. We have already shipped, start shipping to a couple of one, two handfuls of players. Now in sum, we have 26 design wins in barcode machine vision, 23 still shipping, and that is shared between seven companies. Yeah, no need to go those details. Healthcare. Yeah, there are signs of activity still. We are still supporting some POCs.
As you remember last time or last time before that, maybe we removed all the industry, no, sorry, university activity. That's why the number of five is significantly, is nine less than a couple of quarters ago. We are seeing some old customer on the endoscope side coming back to us and want to restart something. There are signs that there are things now maybe restarting on the endoscope side. Let's see. Of course, the Mini2P is, yeah, it's kind of giving us a decent, we just, I think yesterday or the only week, and we sent another significant quote to a customer in the Mini2P space. Not long ago, we got a quite big PO from another customer.
Remind you, there are three commercial companies now shipping Mini2P solution and they are representing a nice contribution to the company, not at least on the gross margin side since the price point is very high. I said many quarters now that very little happens in automotive and also we don't really run around and position us heavily. Lately there has been a few cases coming to us for very well-known brands who want to talk to us. We don't know what, but there are signs that somebody, there can be some activity there, but it's not something we as a company focus on and run after. You never know. Here it may be better to show this. This is a revised Øyvind Buer slide. Thank you, Øyvind, for pushing us in that direction. I've added here the design in and design win.
Actually, it's my CFO who did it. I couldn't know how to do it. You can see it's quite interesting to see that solid line shows kind of design wins development compared to the planning POC and POC completed POC volume. Here you can see that that line is ending up at around 42, I hope. The bottom line is the design in, which of course will be up and down. Quite an interesting curve and we keep pushing for more to come. With those words, Joakim, I would like you to talk through the financial review. Yes.
Thank you. The previous quarter, I was very happy to stand here in front of you all and say it was an all-time high record revenue for a quarter. I am even happier to say that in Q1, we are at another all-time high revenue for a quarter with NOK 11.4 million. With a gross margin of 7.9, this is 70% gross profit. Part of the explanation behind that is significant NRE in the quarter, NOK 4.2 million. Even if we rinse away the NRE, we have a 50% gross margin. It is quite good. We could say that, I mean, it is NOK 11.4. That is more than 50% of the full-year revenues for 2025. That is also a promising outlook on 2026. We have to look at these quarters sort of in isolation, and every quarter will not necessarily look like this.
This is not something we can guarantee. We're very happy for every quarter we can come here and say that we have significant revenue, at least in a historical context for poLight. When we come to the OpEx side, I think there are two items that are worth mentioning. One thing we did from 1st of January this year was to start reporting pre-sales customer support, which has previously been reported as R&D because it's very technical. We have started reporting it as sales and marketing expenses instead. We feel this is a better reflection of how the organization works and where we put in effort.
The R&D expenses, although on the surface they may look quite similar to last year, the same quarter last year, they are actually higher, which is much due to some advanced R&D programs, but also just more time spent in R&D. That also explains the increased sales and marketing expenses, at least a lot of it during the quarter. If we shift our eyes to the balance sheet, the cash balance of just north of NOK 260 million is the most significant number. In the other end, the intangible assets starting to close to zero means that we have written off this over time. That will be the case until we start capitalizing some more development, which, I mean, that could happen at a given milestone. This is a very milestone-based assessment. Yes, the inventory is slightly down, NOK 2 million down from last quarter.
That's a plus-minus movement because with the inventory obsolescence provision that we have, which we write down the inventory over time for prudency. There's the cost of goods sold. There's a slight increase in the inventory when we assemble products. An assembled product has a higher inventory value than wafer, which is most of our inventory. The cash burn in the quarter. There's one thing that stands out a bit in this slide, which is that it's significantly lower than in the same quarter last year. If you look at why that is, it's a combination of things. Of course, one thing is a significant contribution from the operating loss was lower in this quarter than one year ago. That's a significant contribution.
Also, the working capital increased, it increased less than it did in the same quarter last year. NOK 3.1 this quarter versus NOK 8.8 last year. That's also a big contributor. On the other hand, we had CapEx, we had NOK 3.6 million in investments into. That's mainly into R&D equipment in the headquarters in Tønsberg. That's our cash development. Ending up at NOK 262 million basically. That concludes the financial review. You can sit down for long, Øyvind.
I can sit now for long.
Tell us a bit about the outlook?
Yes. Thank you, Joakim. Yeah, outlook, one slide, and then Q&A. As I said, in the beginning, is that we feel that we had a strong quarter, both when it comes to activity level, market interest, POCs maturing, and revenue, of course, as Joakim explained. We don't. We are quite optimistic also on the future. If you don't see it on my body language, I'm gonna repeat it. It's an extremely encouraging place to be, I have to say. We have been working now for so many years to position ourself, and we really feel that this is paying off. We have a tremendous good opportunities, not only for one product, but for two products. TLens, when we talk to the market and when we see all the engagement we are...
have. We understand the roadmap of our customers. When we see how things are progressing, yes, it is tough, it is demanding, it is tough customers. We are a small team who is working like crazy to try to be professional and responsive, and that is really tough work, I have to admit. When we see all these cases and the opportunities, and when you add then what people believe about this market, it is going to be a fantastic opportunity, of course, for poLight for many years for TLens. TLens is already in mass production. TWedge is a different story. I think I have never seen. I have been CEO for more than 30 years. I think I have never seen such a market push for a technology like TWedge. It is quite amazing.
Now it's, we need to understand, and we need to see if it's possible to turn that interest into money, because going all alone, completely alone, financing everything ourself with the shareholder money, which we try to take care of a lot, is of course a high risk. We need to see that there is that interest is converted to money somehow so that we can get backing in that, in that. You know, if you think about the TLens, we did it completely alone, but TLens have many application, many customers. TWedge is today a very narrow market, which, yes, can grow heavily. Also, the way we design TWedge is so dependent on the lead customers, how they want to integrate it into their system.
We cannot stand alone, go there without close cooperation with customers. We have that, but to take it to mass production is a different ballgame. We need huge investments in development side and on the manufacturing side. That's why we are trying really hard to get that commitment from the market in such a way that we don't give away the company's future. You know. It's a balancing act. Generally speaking, as I said, I think one of the main challenge we have today is not that we don't have enough customer to support and mature, but it is that, it is the capacity. And this is why the board is also supporting us to build more of the organization, to build capacity with suppliers.
That's gonna increase the cost. At the same time, that's the only way to successfully ramp. That's the only way. We are already very small, before Q Tech invested in poLight, there were many question marks whether is it possible for this small company to be sustainable? Can they... Will they survive? After the investment from Q Tech, many of these question has been less clear and less concerning. We need to continue to build, we need to, of course, capitalize on what Q Tech can do together with us, we also need to build internally poLight resources. Capacity and IP. We do that to secure the investment you have made for so many years. Thank you. Okay. Joakim, will you help with the Q&A session?
I will.
If there's anybody from the audience here who would like to ask a question, our Board Chair will have a microphone which he will hand over to you so that everybody can listen to the question. Sorry. Yes. Yeah.
I tried to categorize them. We'll start with the questions that we got in before we started.
Mm-hmm.
On March 7th, there was a stock exchange announcement that poLight has received a PO on TWedge from a leading AR platform company. Can you explain what the difference is between an OEM and a platform company?
Yeah, a good question. A platform company, what we try to say that it's maybe not a company who would you see being a brand you will see in the shop. It could be a company who supply the some of the technology platform which another OEM will use.
In the same stock exchange announcement, you say that all the customers you're engaged with within TWedge are still working with you to qualify for various applications. Can you explain a little more about what this actually means, such as what different types of applications TWedge can actually be used for?
Yeah
... earlier in your presentation.
Yeah. Yes, we have talked about this a little bit before, and I think maybe also some statements in the report. It's amazing, you know, when we engage with a customer, we see that there are different needs, and very often this starts with a resolution announcement that they want to increase the resolution and display without losing brightness. That is kind of the starting point for Wobulation and for TWedge. We see that there are other kind of use cases which they also are liking a lot, and that could be motion blur when you move your head, which you do quite fast, actually, faster than you can imagine. There are some motion blur, and that's TWedge can help to reduce that effect.
In, in say like in MicroLED, there are, there are typically some dead pixels. So those dead pixel, will be actually also smoothen out a little bit by TWedge. Those are two examples. I'm sure there are others. Of course, also the customer which we engage with are keeping these kind of things relatively close. There are different applications, so which is good because if you take an investment in a component, and if that component can help you solve more than one problem, the sustainability and the likelihood of that component stay in and willing to pay for it is higher.
Another question about TWedge. You recently delivered TWedge technical samples to a leading AR platform company and mentioned ongoing discussions to fund the product development phase. Are you looking to form an exclusive strategic partnership to fund this? What is the realistic timeline for securing this funding and reaching mass production readiness for TWedge?
Yeah, good question, difficult discussions. As I said, when you start to ask the customer for money, they always, "What's in it for me?" We try to balance that. Of course, we need to be respectful for that position. At the same time, we need to protect our company, our shareholder value, that we are not being locked into a situation where we have to say no to a lot of other customers over a long time. This is a balancing act, and I don't have the answer where it will end today, but we're trying hard to make a decent deal for the company and the shareholders.
Then, uh-
When it comes to time, difficult to say, but, there are one very active dialogue ongoing, and they would like to start the program. We were hoping to start something actually mid, within mid this year, if possible.
A number of patents have now appeared from Q Tech on the production and/or use of TWedge. Does this mean that Q Tech is thinking of building up the possibility of producing TWedge or possibly offering complete solutions that include TWedge?
Yeah, that could be. I don't, we don't know that in detail, but, you know, this is typically, everybody we work with will always try to, in a way, protect themself by doing innovation on system level or what have you. Yeah, that could be that Q Tech have some ideas on system level which they would like to protect. This is not unique for Q Tech. Many of the players we're working with, both for TLens and for TWedge is having that approach, which is understandable. Protect their solution on system level, in a way. Very often, though, the protection on system level is much more difficult than protection on component level because there are always ways of coming around a system-level patent.
Anyway, so when it comes to production, the comment on production, I think any, if you look, we are trying to think about manufacturing and assembly on TWedge very much as we think about TLens. In a way, capitalizing on the way we do TLens and benefit then on also how we do TWedge. Of course, in that context, Q Tech establishing their TLens line together with us is of course also making them capable of manufacturing based on that technology platform, which also would mean that it will be possible for them to also manufacture a TWedge. At the same time, I can say for the Philippines that they are also very capable of doing assembly on our technology platform, and likewise they can also do TWedge.
Hopefully we will need more than one, assembly partner for TWedge. yeah, maybe.
Okay, moving on to TLens. On 7th of April, a new purchase order on TLens was received from a consumer OEM for AR/MR. Can you say something about which of the project customers this is for? Is it the Q Tech backing top tier? Is it for the top tier with camera development project you lead? Is it for the leading OEM as the customer from whom the PO came on November 24th, 2025? Is it yet another customer, the new one?
I know that you're eager to understand who is what. As I said, you know, on this particular press release, I talked to the top guy on sourcing side and discussing how to phrase it, and they are so afraid if I say anything which can give any hint who it may be. This I have to respect, you know. My answer to this is no comment.
We have said what we could say.
Yeah. Yeah, we have said.
Referring to the same press release, though, this is from another person.
Yeah.
The purchase order announcement, describing the customer as a consumer OEM for AR/MR use, without the qualification stage language, that is seen in previous announcements. Can you help us understand what stage this customer relationship is at? Is it a production-level delivery, or does it still sit within a qualification framework?
I would say it's as I think I say in the press release that it's a very much maturing POC. That's what I can say.
Moving on. M12 is mentioned. Here you can talk about lots.
Yes.
M12 is mentioned in many places online, both on LinkedIn by several players as well as on various websites. M12 can also be purchased in an online store. How is the interest in M12 now, and can you say something about how many customers have bought samples of it?
Yes, as I said in the presentation that it's a good interest actually coming in M12. Early days, of course, we just kind of saw some inventory coming in the other day from our partner. Good interest. How many? I think we have facilitated maybe between around eight-ish customer already. We think that will grow. Hopefully we will see some decent activity towards end of the year.
What is the status of the camera development project with the top tier? Is it long until samples of the proposed camera for them is delivered?
No, no. It's moving along. There have been challenges, of course, and capacity constraints. I think those cameras should be not many months away. Maybe next time we talk, we have some initial results.
That would.
Yes.
What is the status of the lead-free TLens? Is STMicro running the process on this, or is it in-house?
A good question. It has been, we have now a program with a technology partner, which has moving well, we just started the next phase, focusing on the outstanding technical issues before we can kind of freeze the first design start moving into mass production. That's when we freeze the design we start to say, "This is the design of the lead-free TLens, we kick off a mass production program." At that point of time is when ST start to involve themself. ST is already together with us with a technology partner and looking us over the shoulder, seeing that what we do together is compatible with their processes in the fab. Are not, they have not been running the program.
That program has been running by us and the technology partner. Step by step, the manufacturing partner, in this case ST, will more and more be involved when we getting closer to mass production planning.
There's a question about progress on that top project. That's covered in your presentation, I think.
Yeah. Yes, yes.
In the report, you mentioned that the AR/MR consumer OEM case, is approaching an important milestone but still has design challenges to resolve. Could you elaborate on whether these challenges are related to the integration of the TLens specifically, or if they are broader system-level challenges for the OEM? Furthermore, does this push the expected commercial launch for this specific OEM, and how should we think about the timeline for resolving them?
Good question.
Several ones.
Yes, many, several. Yes, yes. How should I answer to that? Just, I'm trying to be a little bit generic in the way I answer. You know, TLens is for many of the players now a new technology. They have been used to AF, but they've been used to other AF. Typically VCM. When they start to design an optical system, using TLens, which is new for them, they, there may be kind of conditions they don't fully have understood or characteristic about TLens they don't fully have understood. Meaning that the first go will be potentially a not very optimized design, because of the knowledge or lack of knowledge of or the characteristic of our technology.
That often lead to system-level challenges which need to somehow be handled. Very often it's too late to do a fundamental redesign, they need to find solutions around it. This is a generic answer. This we see very often, very often there are solutions, the better solution is to for them to be aware of all these characteristic and design according to it from the day one. This is not always easy because the ecosystem is not mature enough using the TLens. That will of course change. Very often we find by supporting them, we do find, again, I'm generic, the, we do find solution how to handle that. For this particular customer, these, the, they also experience things like that.
They also, they're always when you go into that phase stages of design, there could be other system-level challenges which arise late in the program and which can potentially delay and even cancel. There's no sign of that for this case, you never know. I would say there are likely, hopefully nothing that can be so bad that it will not be sold. There are issues, as I say, and those issue have different characteristics and different reasons, the team is working hard to support and also the customer is working hard to make it happen because they have invested huge money in designing this product, of course.
This is a little bit business as usual when you come with new technology, and there are fitting problems which need to be solved, and they will be solved. Will it have consequences for time delay, for project? We don't know. Of course we don't hope so, and today we can not only see that they are continue to planning and doing what they were meant to do as before, meaning starting and planning for production. That's what's happening today. How long time that will take to solve, of course, they cannot go into production with big problems. This we don't know. Luckily we have a good support team and we the customer is very mature, so they will likely find a solution.
As I said, that's why I'm saying what I'm saying. We never know. You never know before the product is out in the shop.
Jumping a bit here back to the TLens, the lead-free TLens. Regarding the ongoing development of the lead-free TLens material, is this R&D effort driven by a strict and explicit requirement from a specific tier one customer? Will the transition to lead-free materials require a lengthy requalification process for OEMs that are already in the late stages of testing the current TLens?
As I said before, the reason why we do this is that we strongly believe that moving away from lead will benefit us in the market. That's the reason. Of course, there are some players out there which already have a very strong position when it comes to not using any components with any content of lead. Our job is to have as big market opportunity as possible. Our job is to be ESG friendly. That means that both from the market perspective and removing lead is key activities. Many of manufacturing partners is moving in that direction, and of course, we are not the manufacturers, we also need to follow the manufacturing partner strategy.
Can you give us an update on where the Q Tech line stands in terms of qualification and what milestones remain before it's certified for mass production delivery?
Yeah. We are, there are still some things to be sorted out, but they are manufacturing lenses. Those lenses are going through a qualification reliability test at poLight. So far things looks, I would say promising. There are some optimization activity ongoing in the line to improve the manufacturing, to stabilize everything. That will be ongoing for, yeah, some more months, I don't know how many, before we stamp it qualified.
There's another question here. Could you explain a little bit how the yield work at the Q Tech line is going? Maybe a bit early.
Yeah. The initial yield doesn't look so bad actually. Of course, we are using all the experience we have from the Philippines line, but I think we will do fine. You know, Q Tech is a very experienced high volume manufacturer. I think what's needed now for that line to stabilize in high yield is to run volumes. That's the only way to get stabilized high yield numbers is volume over time. Of course, that means we need to load that line, and hopefully, we will need all capacity we need. Remember that line is also specifically meant for a particular U.S. customer, as you remember.
Okay, moving on to the questions that are coming through the question portal.
Mm-hmm.
Hello, I'm following poLight closely. I am curious to see if there's any update regarding the Iris recognition application, the enterprise customer that was mentioned in late 2025?
No, it's actually standing a little bit still for whatever reason. We don't really know. We are still in, they haven't really released that product yet.
We have talked about recruitment.
Yeah.
Regarding your recent recruitment processes, have you filled the two positions that have recently been advertised in Norway for quality manager and senior project manager?
There are high activity in interviewing people. I can say for sure, no, because anybody being employed in poLight needs to meet me.
Yeah
and I haven't met them. The answer is no. I know there are a short list of candidates being interviewed for both these positions.
Let me see. I think this question. Well, could you give some color on where the Q Tech TLens assembly line and test line stands today in terms of operational readiness? We have answered that.
Yeah.
How the support work is expected to evolve during 2026.
Yeah.
Should we expect the NRE-related contribution from this engagement to continue at similar levels going forward?
I think we will be engaged in supporting Q Tech for a few more quarters, we believe. In that context, there will be some NRE contribution. Maybe it will be a little bit less than 25, yes, there will be activity for a quarter or two, I believe.
Mm-hmm.
It's a good process, by the way. We have been moving manufacturing line now and established several times, and it is. Many say, "Yeah, but it's so simple," you know. It is not so simple. It's a very, very sensitive little component, optical component, and there's so many small things in the manufacturing process which can go wrong, which is good because then it's difficult to copy.
In the report, you note that the customer program behind the recent NOK 2.4 million follow-on order is approaching an important milestone, which certain design challenges were certainly meant to be solved.
Yeah.
No, these we've answered.
Yeah, we have answered that.
Yeah, we answered that. Yes.
Okay. Yeah. Mm-hmm.
This Q Tech mass production.
Yeah. We talked about.
Has Q Tech attracted more customers than the one triggering their poLight and production line investments?
In general, I would say that the relationship to Q Tech and the fact that they are heavily invested in poLight, which of course means that they really, really see, poLight as a promising future and they would like to see that happening, means that Q Tech is really trying to help poLight to get successful. So I've said, I've tried to say that in a, in a simple way, that we have, over the night, we suddenly got a big friend, an uncle, a father, in the ecosystem through Q Tech. I would say that the support we get from Q Tech when it comes to customer and promoting is, is huge. Also we have brought, through to we are the owner of the, of the technology, we have also brought, I would say, Q Tech something, you know.
As the OEM who kicked off this push to trigger Q Tech to invest, it is basically, we can see that also that the fact that Q Tech now is seen as a partner of poLight, it's also giving them new leads and new customers. It goes both ways.
The two questions that are quite related. Has it been hard to find and attract new employees, or is it progressing according to plan?
We are doing a lot of recruitment now, and I would say yes, it is hard. I mean, as I said, I've been CEO for too long time, and the most difficult.
Role.
yes, is to find people and to recruit people and to understand that you recruit the right person. We are spending a lot of time and a lot of eyes internally before we decide. Generally speaking, finding people is difficult. We are fighting with many big companies, many big OEMs, the pressure on salary is very high. I'd say it's very difficult. Far, I'm quite happy to see the interest we receive, but there are some positions which are really, really difficult to fill. We are using specialized recruitment services to help us. Those Norwegian position, we also go in into FINN.
Like the specialized recruitment services, they are working really hard, and they are calling hundreds of people and screening, and we end up talking to maybe 10. It's, it is tough, but so far, I'm quite happy with what we achieved. There are some key position which is difficult. Also, we are recruiting in China. That's also very difficult. You know, they have the, you have the language use. You compete with the big OEMs, the rich OEMs. Also we have done a couple of very good recruitment in China. We are planning to double that team. So far so good, but it takes a lot of time. It's really time-consuming to recruit, to employ people.
When you get to him, it's 6-12 months before you get anything out. It's not a quick fix.
Sort of related to that, you communicated in connection with the Q4 report that operating expenses would trend higher during 2026 to support organizational scaling. Looking at Q1 2026, costs came in relatively contained relative to that guidance. Should we view the current quarterly cost run rate as a fair baseline, or do you still expect material step-ups during the year as additional hires and supply chain investments come through?
Maybe you will answer to that.
Yes. It's very related to the previous question. We are actively recruiting quite a few people, that will mean higher OpEx. If you go just compare quarter to quarter, there can be sort of one-offs within the quarter that will affect the OpEx, like bonus payments could affect the OpEx. If you compare Q4 to Q1, that typically kicks in, and then it's maybe a bit difficult to find the baseline. We do expect that the base OpEx will increase during the year. It's sort of two-sided. You never want to take on cost too early, but then you also want to get people in.
It's, hopefully the cost, the run rate cost will increase faster rather than later.
Yeah.
That's all due to recruitment.
Of course, the only reason is that we want to increase the top line. To increase the top line, we need to have a stronger, better organization.
Yeah. Then we have one final question.
Okay.
The, which is not really about us. The coming Samsung Galaxy glasses are equipped with a 12-megapixel autofocus camera. Any comments on what technology is used there? Do we know?
No comments.
No?
No comments.
That was the last question.
Okay. Thank you, Joakim, for supporting that. Grethe is ready with the microphone if there's any question from the audience. It seems not to. I would be amazed if there were any existing of any more questions to be honest. Okay. Thank you all for following us today. Again, another long quarterly presentation, one around 10 minutes. It's not record, but.
Is that a record?
No, it's not record. Thanks for you visiting us on the web. See you maybe at the annual general meeting.
Mm
... 20th of May in Tønsberg. Tønsberg is a beautiful town to visit those days. We have a relatively new and good headquarters. You're welcome to come there. At least we will see you again 6th of August.
Okay
fully rested. take care. So long. Thank you.