Hello, and welcome to this presentation, where Gapwaves will be presenting the year-end report for 2023. Joining us today, we have the CEO, Jonas Ehinger, and the Supply Director, Laban Cramér. Please go ahead with your presentation.
Thank you, Ludwig. Welcome to this Q4 report summary. Today, as you heard, we have invited also Laban Cramér . He will discuss some of the special investments and efforts that we're doing in our scale-up work in Gapwaves. Gapwaves, as you know, is a Swedish tech company with a unique and patented waveguide technology.
This allows for high-perform antenna solutions, with special focus right now on radar, and also in the future, wireless communication. The main application areas for Gapwaves antenna technology now is within automotive and other vehicles and applications that we call the mobility market segment.
You may also know that since April, end of April last year, Gapwaves is also a minority shareholder of a full radar sensor product, sensor, which we will discuss towards the end in this presentation. Coming back to our Q4 report, in summary, we're low in sales compared to the previous year. And also, our EBITDA is also significantly lower than last year, which is due to the lower sales.
We have a strong cash position of SEK 89 million, and currently we're around 42 employees. The full year for 2023 ended up with revenues of SEK 27.5 million. That's significantly lower than the SEK 64 million from the previous year in 2022.
However, in 2022, we had a lot of large extraordinary income from license revenues from Bosch, but also the sale of production equipment to our production partner, Frencken. Some other highlights for the quarter was, of course, the announcement of our pilot line production facility, which Laban will discuss more. And towards the end of the quarter, we also were very happy to see a large order from Hella, expanding their collaboration with Gapwaves into antennas for new upcoming radar sensor generations.
And we were also very happy to take a first step into the Chinese market with local representation, entering into a representation partnership with SensRad Shanghai. SensRad Shanghai is also a subsidiary of SensRad here in Gothenburg. In terms of the start of this year, the early part of 2024, we've had a very strong start.
So we were also able to announce a strengthened and changed partnership with Frencken, strengthening Gapwaves' position as a supplier interfacing with the customers. Laban will also discuss this shortly. And of course, we were very happy that a few days ago we could announce a continuation with the European Tier 1. We've not been able to disclose the name yet. So there is a continuation of that project, which started early last year. And I also want to point out that Gapwaves is on a long-term strategic journey towards a supplier position.
That means that we're working with our customers and our partners towards this objective. And it also means due to the long time cycles and the long projects within automotive, that revenues will vary over the quarters, but also over the years.
However, we have very strong customers and customer contracts already, and we need to invest to be able to fulfill those contracts and meet the customer requirements. In Gapwaves' strategy, it's a very important objective to assume a new position in the value chain, not just being a technology provider. Gapwaves needs to be a supplier of antenna components, of the antenna products, and Gapwaves need to be a full partner for the customers, for everything regarding the antenna. And Laban here will also describe what this position in the value chain as a supplier means. Laban , can you please describe this position for us?
Thank you, Jonas. So I will give some more perspective on what this journey means to become a, an antenna supplier from Gapwaves' side, delivering antenna. So first and foremost, it's very important for us, when we now establish ourselves in this new supplier position, to make sure that there is a single interface towards our customers.
And one major reason making this so important is to clear out all the roles and responsibilities in the supply chain, to make them as transparent as possible, and we believe that will both benefit our offering, and then in turn, our customers. And by being this single interface, we at Gapwaves will take full responsibility, full accountability towards our customers.
From early design ideas all the way through series of prototypes into industrialization, and then in the end, supply of a serious antenna, a product. A cornerstone to accomplish this is deep collaboration with production partners. In that context, it's very positive to connect to the news that Jonas quickly mentioned around the intensified partnership with Frencken Group.
We now take that successful partnership, fitting it into the new model of being an antenna supplier at Gapwaves. In addition to the work we do with Frencken, we are also having several work stream to establish strong supply chains, together with production partners, also for our MLW antennas.
Laban , and I know that some of our customers have been very positive, and they request this position also from Gapwaves to take the full responsibility from the provision of technology, but also the design and the industrialization. One thing that we did announce during the quarter is the setup of our new pilot line production facility. Can you elaborate on that?
Yes, I think in addition to the production partners and the importance of those for us now to become a supplier of antennas, it's also very important that we accelerate around industrialization of the technologies. So we now, by beginning of this year, started to build a pilot line facility here in Gothenburg, in direct proximity to our development department. And this will ensure that we get maximum know-how build-up around our designs and the interface for production within Gapwaves.
We think that is a core value. And in addition to that, setting up this line is also essential to implement processes and routines necessary to become an IATF-certified supplier to the automotive industry.
To mention one last thing around this line, it's also a tool for us to be able to deliver low-volume products to the market, including already contracted business.
With a low-volume product, what market segments are you thinking of?
So in the low-volume product market, we have business within, for example, traffic management as one sector, but we also see some applications within automotive industry. We have a total capacity in this line of around 300,000 antennas per year.
Again, this can be used both for injection molded antennas, as well as our new assembly technology, MLW or Multi-Layer Waveguide.
Yeah, that's correct. Our ambition now building this line is that all antennas that Gapwaves has designed so far, and all antennas that we see also into the future shall be... It shall be possible to build them in this line.
Thank you, Laban . Okay, we're moving on. And, although Gapwaves had a weak year last year in sales, the current projects ran well and were progressing as planned. We have communicated before that 2024 will be a very important year for us. We're entering into production with our first automotive antenna design for Hella very early this year.
But also the market outlook for Gapwaves is very strong, and we have communicated before that there are very strong market drivers for Gapwaves in terms of technical requirements related to utilization of frequency bands, but also consumer needs and legal requirements, and the requirements for higher and higher, and higher performance of the radar sensors. And this is a perfect combination for waveguide antennas and for Gapwaves.
The number of radar sensors per car will increase dramatically in the coming years. So it's a very strongly growing market, and we see no change in that for Gapwaves. So we remain very positive and optimistic about the future. Also, it's important to remind about the current contracts that Gapwaves have accumulated already in just after a few years in the automotive segment.
So we have very strong customers among the top 10 Tier 1 suppliers in the automotive industry in the world. And also, we've been pursuing the projects and executing the projects as planned and expected from the customers. And you can see the SOP, which is highlighted in the picture, which is a really important date in the automotive industry.
That's when the product goes, the design antenna product goes into production and ramps up to high volume. As you can see, the first SOP dates are already this year, so we are expecting a really interesting and positive development this year. We also want to mention that in addition to the automotive market, we also see very strong potential and very clear opportunities in other market segments outside the automotive.
For instance, in market segments like smart city and infrastructure, but also industry and transportation. Looking back at the CES event a few weeks ago in the U.S., it's pretty clear that self-driving vehicles will probably not happen in passenger cars initially. It will happen within industry applications and freight and trucks, et cetera.
And I think that we already this year can see fully autonomous trucks, for instance, between transport hubs, driving autonomously on freeways, for instance. And this is a market which has big potential. It has also shorter timelines than the automotive, and this market has the need of a full, finished, off-the-shelf radar sensor product, a very capable 4D imaging radar sensor.
That's also why we made an investment in SensRad, which is providing full, fully finished products off the shelf, very high capability, very high performance for these other segments outside of automotive. And Gapwaves has a 30% ownership and also a possibility or an option to acquire additional shares and become a majority owner.
Of course, this SensRad commercial product, which will be launched early this year, has also a Gapwaves antenna. So coming towards an end, before we move into the question, Q&A part, let's just summarize where Gapwaves is. We're in a very strong market, which is driven by strong market drivers, like regulation and customer needs. We also have a unique technology, well-protected with a strong patent portfolio.
And as Laban explained, we can be a full-service antenna partner from cradle to grave for the antenna during the entire lifespan, from providing a unique, very well-performing technology, to the design and the industrialization, and also high-volume production and deliveries to the customer.
Gapwaves has also established supply chains, and we're adding more supply chains to our capability going forward. We have also identified other markets where our technology can have very strong commercial traction. Already after a few years, like I mentioned, we have been able to attract the attention of very strong Tier 1 customers. In fact, they are the leading Tier 1 customers, and they are expanding their collaboration with Gapwaves. We see more of these customers lining up to explore Gapwaves' technology and the value it can add. With that, I think it's time to turn over to some Q&As.
Thank you very much, Jonas and Laban , for that presentation. Like you said, Jonas, now we'll open up for questions. We'll start with the first one here. Have telecom started to look for frequencies where your antennas would be interesting, or will they go for other solutions similar to Starlink satellite connections, as an example?
They have not gone for higher frequency bands above 30 gigahertz in a large scale. There are a few pilot or evaluation networks that we know of in some countries, like the U.S. and South Korea. But we expect that this will be needed in the future. When that future happens is difficult to say, but as I, I've communicated before, we see it as a clear opportunity, not only for 5G or 6G, but also at even higher frequencies, when radar sensors can also become communication devices for cars, for instance.
So a sensor radar can be both a sensor but also a communication tool for vehicles, for instance. But that's quite far down the road in the future.
Thank you, Jonas. We'll take the next question here. You have said that Gapwaves, like SensRad, wants to be able to deliver the entire package with chips plus antennas soon. And which chip will you use? Will you use a NXP, Arbe, Uhnder or something else, and is there a favorite, maybe?
Actually, Gapwaves does not provide complete radar sensors. We provide the antenna, and we design this, and industrialize, as I explained earlier. SensRad provides a complete radar sensor with a chip, the PCB or electronic board, the antenna and the housing, and the required software. And SensRad has identified Arbe as the state-of-the-art chip technology to use. And but Gapwaves, we are working with other chip manufacturers independently.
And these chip manufacturers, they want to show to their customers that there is a Gapwaves solution already developed, which their customers can then utilize when they approach Gapwaves or choose a certain chip architecture, for instance. So Gapwaves does not offer complete radar sensors. SensRad does.
We provide the antenna element to both SensRad, but also other customers and chip manufacturers.
What will the new production facility cost, and when next year will the mass production start with Hella and Veoneer?
Laban , I think you're in a good spot to answer this question.
Yes, I can take at least the first part of this question, regarding the pilot line. So we are now going live with the first start of production in that line around summertime this year, and we'll fill up with more project into the line during the autumn. For the investment, I leave it to you, Jonas.
Yes, and just to clarify, it's already 2024. That means that the Hella antenna production is already going to start very soon and early in the year. Of course, via a ramp-up phase. As for the investment in this pilot line facility, it's quite limited. Of course, there's a certain amount of space, close to 200 square meters, and a rental contract, and there will be a production equipment, which we would have needed anyway.
And in comparison to the value of these contracts and the value of the antennas that this facility will produce, it's quite limited. Again, this is equipment that we would have needed anyways. However, as Laban explained before, this type of facility is an absolute requirement to achieve the certification that we need to become a supplier to automotive industry, for instance.
At the same time, it can also serve as an industrialization hub for our customers, so they can verify production methods for the large-scale production that we will run through our production partners.
Thank you for that. How big is the expected amount of antennas produced next year?
That is a number that we cannot disclose due to the non-disclosure paragraphs in our agreements. So but it's a ramp-up phase, and the big volume will, of course, be related to the Hella antenna that goes into production this year. And in addition to that, there will be antennas for other customers, like smartmicro and SensRad, of course.
How do you see Gapwaves' opportunity for a direct, positive environmental impact?
That is a very good question, and an important question. We think that indirectly, we can contribute to a positive environmental effect, because if vehicles can drive in a more controlled way, if there are automation that allows for sharing a vehicle, the resource utilization in the society will be smaller.
And of course, when it comes to antenna technology, having smaller antennas, using less material, and maybe more recyclable material, that's also positive effects that we foresee or expect Gapwaves to contribute with. And I especially want to mention the MLW technology, which is taking a step away from using plastics and rather complicated plastics material, which is on top also metalized.
Since the MLW antenna technologies consists of only metal and can be done in more easily recyclable metals also. So this is something that we're looking into and will evaluate and try to assess the positive impact that this may have compared to other antenna technologies or traditional antennas. And in addition to that, we're have also the ESG regulation, or upcoming ESG regulation in mind, of course, as we set up our pilot line facility, and we expect to be able to communicate more about that in the future.
Can you comment on, what your financing situation looks like at the moment?
As I mentioned in my short Q4 summary, and it's also available in the Q4 report, we have a strong cash position. However, we're also in an investment phase and a scale-up phase, and the rate of that scale-up process or development is of course determining the amount of investments and the size of investments. Obviously, the more contracts we add and the bigger those contracts they are, are, the more we have to invest in capacity and also organization and adding competence to the organization to qualify for the automotive industry and their rather high requirements on suppliers.
When do you expect to reach profitability?
Again, it depends on the rate at which we're expanding the company and are scaling up towards the supply position. It also depends on what contracts we add, and how big they are, and what timelines they have, especially the timelines. As we have explained before in this call, the SOP, start of production date, is very important. Of course, there is a lower limit for how soon start of production can happen in the automotive industry.
So it's difficult to say an exact quarter or a narrow time period when this will happen. It depends on the contracts. We're still adding customers to the existing order and contract book, of course.
You have received an order of SEK 1.8 million from a European Tier 1 supplier. When is the expected delivery of the new order taking place?
That order concerns development, and it's happening within the coming quarters and definitely within this year. That SEK 1.8 million is roughly half of the expected development effort. All of that development effort will be concluded and of course invoiced and recognized this year.
What is the purpose of the deepened collaboration between Gapwaves and the Frencken Group?
The purpose is exactly like Laban explained in the slide earlier, where Gapwaves assumes the full supplier position and becomes the full interface towards the customer, rather than the customer finding technology with Gapwaves, maybe designing the antenna, and then they have to go out globally and shop around for a possible potential producer of those antennas. Instead, Gapwaves does this in advance for the customer.
So we already have producers and factories set up that are already qualified and that we know will be able to produce this in the right quality and has the right capacity, et cetera. So there's a value that Gapwaves can contribute with to customers. And several of the Tier 1 customers, they want a single interface towards the antenna partner or the antenna supplier.
One partner which does the full development, industrialization, but also oversees and takes care of the high-volume production.
Okay, we'll take one final question here. What milestones should investors look out for in the next 12 months?
Further scale-up announcements, meaning add additional Tier 1 contracts, but also communication, where we see higher volumes of antennas being produced. Right now, I think it's important to follow Gapwaves and see how we add more customers to our order book and our contract book.
Okay. Thank you very much, Jonas and Laban , for presenting today and answering all of our questions. Yeah, thank you very much, and until next time.
Thank you, Martin.
Thank you.