Good morning, and welcome to Redeye. We are joined by Lars-Inge Sjöqvist, Gapwaves's CEO, to talk a little bit about the Q1 2022 report. Welcome, Lars-Inge.
Thank you very much, Torbjörn. Nice to see you again.
Likewise. Could you please walk us through the quarter and bring up some of the main highlights in your opinion?
Yeah. What you can see if you compare our first quarter this year with the year before is that we absolutely have an increase in revenue and also in better result, even if it still is minus. But we see a continuous growth in what we are doing. The first quarter this year, we have been delivering quite a lot, and we have not been able to invoice everything, so there will be probably a little bit more in the Q2. Absolutely, I know that. What I can say is that we have also grown. We are 28 full-time employees at the moment, and we were 23 the year before.
It's depending on more and more activities with the customer, of course, we have to assign more people. What also could be worth mentioning is that we also made one of the biggest orders we have done. That's where this tech giant from the U.S. ordered a number of antennas which should be delivered during the spring and the beginning of summer. It's a SEK 10 million deal we made with them in this case then. Other things happened, you know, the war, et cetera, of course, impacted us, mostly maybe in the heart but not so much in the business or in reality. Really it's painful to see what is happening on earth at the moment.
Yeah. Just a quick question about in our latest interview, we talked about the big order you received from the tech giant, SEK 10 million, but it appears you received a small follow-up order now. What is this?
Yeah, yeah. They complemented, so we should also make some more measurement on these antennas, et cetera, which means we had to do more work for them. It's all about engineering work as a complement to this big order, yes.
Okay.
Yeah.
Thank you. Great. I've noticed that you have received orders for production equipment, from Franken Guss and a German company, FWB. What is the purpose of this?
Franken is the supplier which is selected from HELLA to produce our first batch or the big volumes for the HELLA antenna we now are finalizing. It will start, as I understand, in mid-2024. There must be full production up and running one year before, and they need our testing equipment. That's one of the pieces we have produced as a production cell then which is produced in Gävleborg and delivered now to Franken. On the other hand, HELLA is also or FORVIA is the new name for HELLA. We can start to use that as well since they are acquired by Faurecia in France.
They also want to have an European supplier, and in this case, it's HELLA owning this company, FWB, so it's a subsidiary based in Germany. They will also have a possibility to produce antennas over time. They have ordered one of these machines for also for testing and they will build up a line in Germany as well. That's not planned to start 2024 fully, but they will be a little bit later. These are the two production equipment sold at the moment.
Is there anything you can say about these machines, like, in terms of capacity? How many antennas can they test and verify?
Yeah. I will, in my next presentation, I think it will be on 2nd of June, show some a little bit film of how it works. The capacity in the test equipment is now down to five second per antenna. That means every five second we are testing one antenna and confirm it's working or not. It's in the line, that is the tempo, the cycle time we are expecting to have in the full line, five seconds per piece.
Okay.
This is very important, and it's a quite huge step going from as we were some years ago, we just doing prototyping, and now we are really running the production line in piece of it anyway, not the full line, but we do pieces of it. One of the most challenging thing is really to make this testing on 77 GHz in that speed. I can say that's not so easy to do. It also needs our competencies. Our partner, Franken, or FWB, both really are happy to see that someone else can help them to do this because it's a tricky thing to deliver. Now we are there, so I'm happy for that.
Right. Great. You recently made a trip to the United States. Is there anything you can say about which companies you met and what feedback you got?
Yeah. We met a number of companies in Silicon Valley. Some of them are already customers. Before that they were also one stop in Austin, Texas because we have our customer on site there. We have also meeting with them. All in all, I must conclude quickly to say that everyone are very interested on better radar solution, meaning they are interested to go for imaging radar. The trend is very much used in this for what they call Robotaxis or autonomous driving systems like trucks, et cetera. Not so much really for the personal. If you and I will buy our own car, it's not the main focus.
They are more into delivering on what you call commercial equipment like a taxi or a truck delivering stuff. In these cases, I must say that it's really interesting to understand their business models. Some of them are very, very clear. Some of them are a little bit more diffuse, I will say, in where they are. They have the same goal really to be starting up in small areas like, for example, we can share, we saw from Waymo is a part of a company we also met. They do things in Phoenix, for example, when they drive this robotaxi. It's driverless today, and it's in specific areas they have the permission to run these cars.
You can use that car as taxi. It's working. We have seen that, and I have it on film, et cetera. Some of our Swedish colleagues were visiting Phoenix and they were testing this, and it's absolutely working. It's a little bit crazy to sit in the back seat and see that the car is running itself with the wheel is going like this. Anyway, conclude very much why we were interesting for them. They told us very much that the imaging radar is a key component for this kind of equipment. The lidar is also used in many cases, but it's still a very expensive piece, so they are very much looking for a radar, imaging radar solution.
The key problem is the antenna because very much of the losses in a PCB-based imaging radar is then solved if you can have a waveguide antenna from us, for example, to really make the antenna solution much more efficient. You can have this radar coming very close to what they need for the same thing as they do from the leader. Clearly, my takeaway is that I really confirmed a lot of what I believed before, and now I heard it directly from a number of customers. Very, very useful trip in that sense, and yeah, we are on the right track, so to speak. For sure. That's the...
The other takeaway is that, of course, companies are not really, some of them anyway, so much into buying antennas directly, but they want to have a sensor or an imaging radar sensor which is working. There is no one on the market they can buy, they also say, so they really have to develop them themselves, and then they need to understand how to connect and use a good antenna together with the radar chipsets on the market. It was a very, very learning and useful trip. Marcus, my CTO here at Gapwaves and myself, we had good days, absolutely, both in Texas and also then in San Francisco Bay Area, as they call it.
Yes.
Yeah.
Perfect. A final question then. During the quarter, you've received follow-up orders from existing customers like HELLA and a U.S. auto tech company. I mean, it appears they like the products and continue to want to work with you. How do you see the company while your customers entering more commercial agreements with like OEMs during the rest of this year?
Yeah. I have heard that question before and of course, just to clarify how it works, we are in cooperation and development work with a number of OEMs. Not OEMs, but I mean Tier 1s producing these high volume antenna solutions. We also work directly with a number of these tech companies working more on the specific imaging radar. All in all, it's a number of 10 different customer engagement. So far, we have signed a full agreement with HELLA, as everyone knows. Before that also with Veoneer. The other ones currently running, then we do the projects, et cetera.
We use the technology development and do that day by day, and then, in parallel, we also have these commercial discussions with these customers to really finalize one of the ways we should make the business over time. It has not stopped at all. It's absolutely ongoing. Maybe it takes a little bit longer. It could depend on a little bit of the problematic world at the moment with the war in Ukraine, et cetera. I must say that we have not seen any decrease in any areas, so to say.
It's really very much going on in full speed, and we will continue to employ more people to fulfill what we have in our, so to say, portfolio of both development, but also with the commercial agreements, which is maybe a little bit tricky, but it's. We need to do that the best way so we can have a good financial situation over time. Bear with me. We are working hard with these commercial contracts. That is ongoing, yes.
Okay. Well, thank you.
As soon as we have one contract we can talk about, we will of course tell everyone that with a PM or a press release. That's the way we need to do it. If I gave some understanding of when it should happen, it's just difficult to explain afterward if it's not was done that day, but it's ongoing, and it's not only one. It's a number. Yep.
Okay. Well, that's very helpful, and thank you very much for talking to us.
Thank you, Torbjörn. Have a good day.