Hi, and welcome to Redeye. Today I'm joined by the CEO, Jonas Ehinger from Gapwaves, to talk about the most recent quarter. Welcome.
Hello, Rasmus, and good morning. Thank you. Nice to be here.
Likewise. Could you start off by telling us about the quarter as a whole?
Yeah, as a whole on a, as an overview, it was a good quarter for us. Pretty much progress, yeah, and overall a strong quarter, with maintained growth both for the quarter and for the year. I'm sure you've seen the numbers. We had SEK 11 million in revenue, and for the year we ended up at SEK 64 million. That's quite strong growth for the year, but also the quarter. I know that you're aware that there will be fluctuations over the quarter, obviously with several projects ongoing and certain deliveries, you're ending up in different quarters. It will have certain influence on the individual quarters.
You have three main customers, HELLA, Bosch and Veoneer.
Yeah.
Could you tell us about the status of the collaboration with? We can start off with HELLA.
Yeah. With HELLA, it's progressing strongly and according to plan. As you saw, we're getting ready for production and we passed a milestone during the quarter with a production line being, you know, approved by HELLA. Now we're getting closer, production will start in 2024. This PPAP milestone is really important as it qualifies and approves the production line. That we were very happy about that. HELLA is progressing quite nicely, I would say, and according to plan, and more importantly, according to HELLA's expectations also.
Okay, that's great. You also reiterated in the report that Bosch is progressing towards start of production in 2026. Could you expand on the status on Bosch?
Yeah. With Bosch, like with HELLA, we're progressing according to plan. Now with Bosch obviously, it's about, it's a lot earlier than with HELLA, and we're still in developing and designing the antenna. In parallel with that, we're also evaluating, yeah, the production methods, the plant production partners, et cetera, that we will utilize in this project together with Bosch. It's really a tight collaboration with Bosch, so they're part of this evaluation and of course the design work on the development side. We're working according to plan in both perspectives, both the development and design of the antenna.
Also already now we're working on the actual production setup to ensure, you know, the right partners, but also to ensure good and healthy margins once we get into the production.
Recently it was announced that Magna is acquiring assets from Veoneer, and Gapwaves has a license agreement with Veoneer. How does the acquisition affect you?
In one word, positively. Because I think Veoneer has been in a bit of a difficult situation because the ownership was not clear, et cetera. I speculate that quite a few car manufacturers were a bit hesitant to really engage in long-term firm contracts with Veoneer without knowing the ownership situation and the future of the company. Now, that is being cleared out as the deal is expected to go through in the middle of this year. I think things will clarify quite a bit on the Veoneer side when it comes to their work towards their customers, the car manufacturers.
We also know, although we have limited insight and transparency with Veoneer, like for all the Tier 1s, we know that all their antennas in their radar sensors are based on Gapwaves technology. That's also a good information piece for us obviously. Once things get sorted out with HELLA and they regain certain traction and momentum in the market, I think that will be good. A third positive with this is also that, from what we understand, and again, it's just my interpretation, the Veoneer ADAS group or radar group in Veoneer will take the lead in the combined entity with Magna.
It kind of gives us a shortcut into working with Magna as well and reaching, you know, through Veoneer and Magna, also the Magna customers. I think it's a positive development for us. There's no other way to see it really right now. Again, we don't have more information than you have on what's going on between Veoneer and Magna and the timeline, et cetera. From our meetings and the information we can gather on the market, it's definitely moving in the right direction for us.
I also noticed by reading their transcript from the acquisition that they saw a very complimentary portfolio with the radars from Veoneer with their own camera systems. Perhaps it's a good way to enter, get that customer as well.
Yeah. Exactly.
Also considering that there's been a lot of, like, acquisitions and, like, buying of assets in the industry, do you think there's any risk or possibility that Gapwaves is on the radar for any of the bigger industry participants?
Yeah, I certainly hope that we're on the radar for any of the bigger ones at this point. In terms of risks, not really. I mean, we have a very strong ownership with the family after Per-Simon Kildal. You know, I think we're in a good, stable position there. I also think that having an industrial partner like HELLA also among the ownership, although small, also gives credibility and validity to Gapwaves and supports us. And the Bosch relationship has also helped us because they're kind of guiding us and helping us and providing know-how based on their, you know, decades or even more experience from manufacturing of these types of products.
I don't see any risk really of any acquisition, unless it would be something that would be really and strongly or clearly beneficial for Gapwaves, but I guess then it would be a good situation.
Mm-hmm.
The controlling shareholding is with the family, you know. It's not really on the market. The risk is really small, just theoretical, I would say.
Okay.
Again, I think, you know, if somebody approaches with a, an opportunity, through an acquisition, yeah, I think we'll have to look at that. There is no such plans obviously, but, you know, if it would benefit Gapwaves in a very clear and strong way, then I think the board would have to, should review it and discuss it with the owners obviously.
Okay. Switching gears a bit, in January, you visited, the CES and your U.S.-based customer. Can you tell us a little bit about what trends you saw in ADAS technology for self-driving vehicles?
Yeah. It was my first time at CES, from what I understand, from the Tier 1s that attended also, it's been gaining traction a lot over the years in terms of the automotive tech industry. We saw car manufacturers, you know, with very prominent presence there, and they all pushed mobility, in terms of autonomous, you know, functions or support systems or even full autonomous driving. It was also clear that they're all looking for better performance type of radar sensors, which is a good thing for Gapwaves because it requires better antenna technology and more powerful antenna performance. So that's one thing.
I think CES is really the place to be together with maybe one or two other events globally to really see the boundaries or the front runners in this development. It was also clear that a lot of people know about Gapwaves now in the industry. It's also clear that there is no, you know, controversy or discussion about waveguide antenna technologies, and that those antennas are required for accomplishing better, you know, performance in radar sensors. A third is also the confirmation of market data and market investigations that radar and ADAS segment is growing rapidly. There is no doubt about that, and we're looking at very strong growth. I think you've seen the numbers also, between, you know, 25%-30% annually already now.
A lot of that growth will also be from really high-resolution radars or imaging radars, which is even a greater challenge for traditional antenna technologies. It fits Gapwaves very well with this trend. We left CES with a lot of confidence about the future.
You seem very well-positioned.
Yes. That was clear. Also it was easy for us to gain access to the Tier 1s and other clients, etc. Again, based on this interest, I think we're all, you know, seeing the same things and agreeing on next number of years, you know, how things will look. This is of course supported strongly by the efforts from the OEMs and what they pushed. You may be aware that, you know, for instance, Sony announced a Level 4 electric vehicle, which they will produce together with Honda. It's quite interesting to see the combination of Sony consumer electronics, yeah, of course, other things also, but partnering with a car manufacturer, you know, to bring a next generation vehicle to the market. It's one of the few Level 4 cars.
Of course, there's a lot of details that were not announced, but at least they communicated that the car will have not less than 45 sensors. That's more than double or almost a double the EX90, for instance, that was just announced. You know, it supports what I already said about the market development. A very good, market observation and market indicator in itself.
For my last question and on the topic of the U.S., you received a follow-up order from an American auto tech company. Could you tell us a little bit more about this order?
Yeah. It's, it's a smaller follow-up order, but it's important because this specific company is involved in a specific segment within autonomous driving and we think this segment will actually be the market that moves quicker than full autonomous driving or, you know, traditional cars. We also get a lot of questions from shareholders and investors about what's going on with these auto tech companies, et cetera. We wanted also to communicate that it's ongoing, but the cycles are relatively long. It's advanced technology that we're developing, of course, and it... You know, every iteration need to be tested and validated in the labs, et cetera, by the customer obviously.
You know, but we're making headway, and this specific auto tech company is of special interest for us because their focus is probably what we'll we will see manifest itself quicker than other segments.
Okay. On that topic, that sounds very interesting. On that topic, I thank you for your time and thank you for viewing.
Thank you, Rasmus, and thank you very much for spending time with us.