Hello, and welcome to today's webcast presentation, where we have Terranet presenting their year-end report 2023. With us presenting, we have CTO Pierre Ekwall and CEO Magnus Andersson. If you have questions, please feel free to use the form located to the right, and we'll take it up during the Q&A. We will start up this presentation with a video of Terranet presenting their year-end report 2023. Please go ahead. Okay, let's go over to the live interview with Terranet's CEO Magnus Andersson and CTO Pierre Ekwall. Magnus, you recently hired Pierre as your CTO, Dan as CFO, and brought on Mats Fägerhag as a new board member. Please tell us more about recruitment and what they bring to Terranet. One second, we have to unmute. Can you try now?
Yes. Can you hear me?
Yes. Super. It's a bit of an echo, but, can you try again? Magnus, I think you are muted.
Hello? Hello. Hello.
Yes, I can hear you. I don't see you on the screen, though. Let's see.
Hello? Hello.
Yes. So I think if you unmute on the Dan slide, we'll get the view of you.
Unmute. Unmute. Unmute.
So there, okay, and we can hear you?
Yeah, and you can see us?
Okay, great. I'll rephrase the question, so we get going again.
Thank you.
So, Magnus, you recently hired Pierre as your new CTO and Dan as your CFO, and you brought on Mats Fägerhag as a new board member. Tell us more about the recruitments and what they bring to Terranet.
Yeah, thank you very much for that interesting, important question. I think it's really great to have these people on board, and now we're entering a sort of new phase of Terranet. Dan comes with a very good, solid financial background, also been working for listed companies. And in terms of a technical and business development side, both Pierre and Mats bring great experience to the company. Of course, many, many years from the automotive sectors, but also good experience in product development. So really nice to have them on board now, when we sort of want to enter the market of automotive.
Mm-hmm. And can you give us an update on the roadmap and how the product development is progressing?
Yeah, absolutely. We are according to plan, and as we communicated earlier, we're very much looking forward to demo our prototype in the first quarter, so around this time, in our lab. Then after that, in next quarter, Q2, we will demo a prototype on a vehicle outside. So very exciting times. I don't know, Pierre, if you want to add something to that?
Oh, yeah, sure. Yeah, I fully agree. So, yeah, as mentioned, prototype evaluation is currently progressing and at a very good pace. We are continuously getting verification on our forecasted performance numbers. Looking good so far, and updated system latency tests and outside environment testing are important upcoming events that will happen rather soon. So it's interesting times.
Mm-hmm. And next question: Are you getting closer to partnerships with Tier 1s and OEMs?
Yes, we are. The purpose, of course, of also doing this demo with a prototype in the lab and outside on a vehicle, is because the Tier 1 suppliers and automotive manufacturers, OEMs, that we are talking to want to come and see the product, see that it's working in real time. So, we're getting closer by doing this demo and prototype to a more formal partnership.
Mm-hmm. Speaking of the lab demonstration of BlincVision, Pierre, what can we expect from the demonstration?
Yeah, so the Q1 demo aims to verify the full system solution of BlincVision, both internally in the lab as well in an outside environment. This includes the performance of the laser scanner, the event cameras, feeding our updated software algorithms, and our perception stack, that is trained by our new enhanced AI models. So at this point, we will be able to detect, an object, classify the object as a human, and based on it classifying the object as a human and having a trajectory towards the front of the vehicle, and a potential collision, this will trigger an emergency brake request. So in other words, we will be able to test the full system in a test rig format at end of Q1.
After a successful test, we will switch focus towards preparing for vehicle-based testing by end of Q2.
Hmm. Next question: Are you looking into other use cases and segments for Terranet's product?
Yeah, thank you for asking. Our main focus is the automotive sector, and that's what we're working on, right? Both for personally driven cars, but also for commercial vehicles, such as trucks and buses, okay? Then, of course, if you also think about the autonomous sector, it's also very interesting for us, so that's also a key area. Moving outside a bit of automotive, if we, for example, would then have the world's fastest sensor solution and most accurate sensor solution, there are, of course, many, many areas where this can be used. So yes, we are also looking at other sectors where vehicles are used. For example, you can think mining, you can think indoor in warehouses and production, farming, and maybe even defense.
So there are many interesting sectors that we also have in mind, for sure.
Mm-hmm. You received funding from Swedish Transport Administration for a joint project with government-owned AstaZero test track to develop new testing methods for ADAS systems. Can you tell us more about this?
Yeah, sure. So yeah, we're very proud, of course, to get the trust from the Swedish government, and this funding to develop our safety solutions. Current regulation and the Euro NCAP targets are lagging a bit behind compared to the available technology on the market. That's at least our belief. So this is a great opportunity to save more lives in traffic. The project will develop new testing methods and be used to test Terranet's BlincVision system and show what's actually possible using the right technology that's actually available today, to do so. There is a large interest from Euro NCAP. Euro NCAP is an organization that externally evaluates and rates safety performance of vehicles. It's used by vehicle manufacturers to, in the end, attract customers by proving that the vehicles are safe.
Euro NCAP is currently planning to issue their next revised standards in 2026, following up with yet another standards change for 2029. So it's very important to be able to impact that work. And we believe that these new standards will be much tougher than what exists today, which also then will act as an enabler, yet another enabler for our BlincVision system, and the commercial viability of it.
What are your thoughts on your recent and future financial activities?
Yeah, let's talk a bit about financing. Of course, our board is continuously working on financing the company for our product development and launch of our product. And if you look at the recent financial activities, just before Christmas, we had the warrant program TO6, where we had a 63% subscription, which gave us around SEK 6.3 million, okay? Then in January, we did a directed rights issue to some new and existing owner, which added another SEK 10 million to the company. Looking forward to this year, 2024, we have a warrant program coming up just before summer. And then also, that's TO7, and then TO8, coming up just before Christmas.
So with these activities, and of course, depending on the share price, but with these activities, we feel comfortable that we are financed into 2025. So we have very many financial activities, and working on that.
Okay. What are you looking forward to that you haven't mentioned already?
Yeah, good question. I'm really, really excited about the time where Terranet is at the moment, and that we are just soon to launch our anti-collision product, right? Really excited to see that outside on a vehicle, really seeing it reaching the performance of being really fast and really accurate and saving more lives at the end of the day. So, and of course, then also get it commercially out on the market. So I'm really, really excited about that. Yeah, I don't know. Do you want to mention something?
Yeah, sure. Yeah, of course, I couldn't agree more. We're very excited. We're now entering the last phase of, as mentioned earlier, the lab verifications. We will now be transitioning over to the vehicle verification side of things, and that's what really excites me, because this is where we're actually starting to test it in the real-life environment that we intend to use it in. So getting the system fully integrated and tested together with an OEM, so a manufacturer or OEM later on, will be, of course, the next step as well, where we will start to do the final adjustments and learn a lot from actual integration in a customer vehicle. So that is also, of course, a very exciting step to take, yeah, by end of this year.
I think we've seen quite a few publicized events within autonomous drive lately as well, where our system would have made a difference, would it have been installed?
Mm-hmm.
So I'm very excited to get this system out on the road to really make a difference, starting avoiding unnecessary accidents and actually start saving lives.
Mm-hmm.
Mm-hmm. Well, thank you for that interview questions. I would like to move on to the question and answering of this portion, and we have gotten a lot of questions from our viewers here. So this is both in Swedish and in English, but I'll question them as they are posted.
Yeah, so just to do the English as well, which car manufacturers are we working with today, right? And so as I said before, we have a dialogue with many different automotive manufacturers, and we also have a dialogue with many Tier 1s, okay? In terms of moving that into a more formal partnership, that's where the demo in the lab and demo on the vehicle is very crucial, okay? So once we show that to them, we hope to move into more formal partnerships with them. Mm-hmm.
Okay, so forecast, what revenue will we have year one, two, and three?
I mean, of course, that's very hard to predict. Of course, we have done some calculations. So you can see what's the number of vehicles, new vehicles coming out of the market for the different OEMs. So there is, of course, some calculations you can do on that. Secondly, of course, it also depends on the business model, right? What are we doing? What is our Tier 1 partner doing, and what is the OEM doing, right? So that also there are different revenue streams. So at this stage, I don't want to give you any predictions of that, but, yeah, let's come back to that, right?
Mm-hmm.
Yeah. Let me start to answer that question, and that's regarding to the price of the product or the cost of the product, right, compared to what's on the market. And Pierre can add later on, but in general, what we see, of course, price is important, right? And in automotive sector, it's high focus on that. So we have a very close look at what is the price of the main solution being used today, like LiDAR, Radar, and cameras, okay? And of course, we need to be competitive, competitive with prices. At the end of the day, it's all about what value you add, right? So it's a combination of the value you add and what the price of the product is. So that's something we're working on daily.
But, in terms of what we call BOM cost, bill of material, maybe, Pierre, you want to make some comments on that.
Yeah, sure. Yeah, so as we are not actually replacing a current ADAS system, we're rather adding more features and functions and functionality to the current systems, it means we are extending the value of the system. So in that aspect, it's very hard to compare to the current systems. Of course, there will be a little bit of a price increase compared to the current ADAS systems once you do add this functionality. That's still true. But of course, it also depends on economies of scale, right? So at higher volumes, it will become more and more yeah, cheaper and cheaper. Also, it depends a little bit on the integration. So if you talk about ADAS systems, it's quite similar between the different OEMs.
But if you talk about AD integrations, that can be quite specific. And in those cases, usually, you might need to tailor the technology a little bit towards the actual OEM, where the prices will vary a little bit as well, depending on the integration that the customer expects.
Mm-hmm. And the last Swedish question here, ...
... Yeah, okay. I can answer that as well. As why does not more board members and I guess investing in the company? I mean, it's of course very difficult to for me to answer any specific board member, why don't they invest enough? Because, of course, it's their personal private economy as well, right? But in general, I would say that I feel that all board members are very committed to Terranet, and they are very active, they're very interested. So let's see what happens in the future, right?
Hmm. And do you have patent on the product yet?
Yeah, let me start cover that, and maybe, maybe Pierre can add also something, there. But, we have a global exclusive, patent agreement, license agreement for patents to use our solution on vehicles, right? So we're very protected of that. It's not only one patent in that agreement, it's many patents. So we are absolutely protected, okay? Because what, of course, what we're doing is totally unique, okay? Secondly, I would say that, of course, as we develop a product, we also come up with new parts that we also, of course, will look at patents as well, in the future. And historically, we also have many other patents not related to the BlincVision product, but we also have our own patents since before in other areas. Pierre, I don't know if... Yeah, please.
Yeah. Yeah, yeah, of course, we have this under continuous monitoring, so it's, it's an evaluation that we do on a monthly basis. There is always new technology popping up, and of course, we're always investigating what can be patentable. So it's a-
Mm
... it's a big part of our daily work, to work with this.
But short answer, the solution is protected, it's unique, and we have that protected, basically. Yes.
Okay. You write in the report that the prototype in a laboratory environment should be ready in Q1 2024. For example, within a month. That's it, within a month. Do you feel sure that the schedule will hold? Will we shareholders be able to receive a web demonstration when the prototype is ready?
Okay. Maybe I can start, Pierre, again. I think, because also this happened even before Pierre joined as well, right? We've been working on this for quite some time, okay? And actually, we did some test already before Christmas, which was looking promising, okay? So I think, what we're gonna do, we have quite under control. And yes, as I said before, we are according to plan. We will demo the prototype in the lab during call Q1. We've done some small tests ourselves, but we are doing several now the coming weeks, ending Q1, right? In terms of how we present it to the shareholders, we are looking at that as well, to give, of course, as much insight as possible, to what we achieve.
So we need to come back to that also once after we completed the demo.
Mm.
But yeah.
Yeah, of course, primarily, what we're trying to present the end of Q1 is, is the results of the demos.
Mm.
There might be some bugs found as well during the evaluation.
Yes.
But that is also something that, that's part of the plan process-
Mm
... and it's already in the time plan to be able to have time, for example, from doing, finishing the Q1 work to, fixing anything that popped up before we do vehicle integration. That's why we have a few months in between the different demo stages.
Mm.
But so far, of course, externally, it might look like we only have a few demos a year, but internally, of course, we have a lot more minor demos internally. So far, we are reaching expectations, and we are according to plan. But the summary will come at end of Q1, so stay tuned.
Will do. What do you think about your asset, holoride GmbH? What is your current estimated value of your share in your company, in the company?
Yeah. Okay. So thank you for that question. Yes, we are a major shareholder of holoride GmbH. So you may know, Audi is the largest owner, and we are one of the major ones. Okay. In terms of evaluation and what's going on holoride, I rather let holoride communicate about that, right? We are a owner. In terms of the value that we have on our books, you can find in our reports, right? But we, of course, have very close control of that, including with our auditors, of course. So yeah, that's as much as I can say. In terms of evaluation of them, it's a bit of, they are also fairly a startup company.
But of course, they have launched, started launch their product, so it's a really exciting time. But that also makes the sort of valuation a bit tricky, right? Because they just start selling it. But in terms of the value for us, we have it under control, and of course, we keep a close eye on it.
Yes, okay. You have earlier stated that a partnership can occur with several players. Can you elaborate? What were the takeaway, the key takeaways from the CES event?
Okay. So I guess it was two questions there, right?
Yeah.
If you talk about partnerships, and I mean, there are also different kinds of partnerships, okay? Of course, one, we can have it with suppliers, okay? So that's, that's important, and, and, Pierre can tell us more about that. And then in terms of a sort of, customer and, and, market launching product, that's another type of partnership. And, for example, with Tier 1 suppliers. As you know, Tier 1 suppliers already deliver ADAS solutions to OEMs today. So when we engage with them, we will see how can we integrate this in the car in the best way? And also adding to that, how, what value do our solution add to the full ADAS solution of the car?
I mean, just an example, I like to think about in that way is if we could be the fastest sensor detecting something first, yeah, maybe the other sensors in the car also can focus on that dangerous situation. So potentially, our solution can lift the whole ADAS solution in the car to perform much better. So that's a very interesting aspect. So that is something that we will evaluate and work together with the Tier 1 and car manufacturer to define. So, Pierre, do you want to comment something on the partners, maybe supplier partner, if you want?
I think you covered most of it, Magnus. I mean, relating to CES, of course, we met with both Tier 1s and the OEMs. There are, it's quite similar, let's say, for us, working with the Tier 1s and OEMs, but there are also some differences. That's why it's good for us to meet and work with both parties, both Tier 1s and OEMs, to get a better understanding of the exact needs and the integration needed to better suit their needs. Dialogue is ongoing with both.
I mean, when you mention also CES, key takeaways for that, right? I think except that everyone is there, so to meeting everyone across the globe in one place is fantastic.
Mm.
... both suppliers and potential customer and partners. But also think, Pierre, that we see what's the competition, what is other ADAS solution out there, what's going on with LiDAR, Radar, to see that and feel that we are still unique and we see that we still add value is also a fantastic takeaway from CES.
Mm. Yeah, absolutely. There is a lot of new technology presented, but there is nothing like BlincVision.
Yeah.
Just visiting CES, see how the technology moves, and being able to, let's say, get reconfirmation-
Mm
... and also hearing that both from Tier 1s and OEMs, that there is a gap that needs to be filled, and where our technology will fill that gap.
Mm.
That's great reassurance of that we're doing the right thing.
Actually, now we talk a lot, but it's... You get us going now with these questions. But another thing that I also find quite interesting is that, you know, there still happens a lot of accidents and a lot of deaths in traffic today, right? And most cars today have ADAS solutions. So have LiDAR, radar, and cameras, but accidents still happen. So obviously, the current solutions do not work well enough. So a lot of work that can be done there, I think, our product with BlincVision can add a lot of value.
Mm-hmm. Yeah, that's a good answer, I think. So next question: Have you done any progress in the collaboration with AstaZero?
Yes, we already done some testing up on their track. All right? And also, having Euro NCAP interested and actually attending this testing is nice, okay? And then what we do with them then is looking at the existing testing methods, where are the gaps, right? And what accidents do not current testing methods cover, okay? So that's sort of a first step. So that we already started and done some work on, up on the testing track. The next now, of course, during 2024, is also bring our BlincVision product up there and test it and see can we really close these gaps, so that's what's coming. But we have an ongoing dialogue with AstaZero, and we're very happy to work with them.
As you may know, they are owned by RISE, the Swedish government, right? So, yeah, very lot of good competence as well.
What about the test outside in vehicle? What are you expecting to achieve? Yeah, so I mean, doing something in lab, then you can always recreate the exact environment, the same environment over and over again, which is very good in an early development phase because you rule out all the extreme cases. But then once you reach a certain maturity, it's time to start pushing the system a little bit. And moving it outside, then we will get a lot of other variables in that we otherwise might miss if we're only working in an in-lab environment. For example, dynamic light change, different angles of sunlight, stuff like that. So, it's a different environment. It needs to be tested, and that's why it's in the van, even before we move into a vehicle.
Yeah. And of course, I mean, we've done a lot of calculations, and also we're working with simulations, too, right? But, when you get outside in the real sunlight, that's when you really see it. So yeah, we're very excited about it, but we all think we'll say we're also prepared for it, right?
What does the roadmap look like after you have shown a prototype in vehicle?
Yeah, so that's quarter two of this year. After that, there are several paths that we need to move forward with. But of course, key things is to get a formal partnerships with a Tier 1 or automotive manufacturers. Or as I said, we also looked at other use cases, so let's also see what we can find there. But it's really to... From a demo, to get the product in a vehicle together with a commercial partner, right? That's the next step. In terms of the product development, in terms of developing the product, Pierre, you wanna add something there?
Yeah, sure. So, yeah, after doing the demo in vehicle, we have a, let's say, non-Tier 1, non-OEM partner, where we will do a first step prototype integration in a vehicle where we'll actively activate the brake system to be able to do more thorough investigations at AstaZero.
Mm.
So that's an important, important step. But after that, doing that integration, the next step will be doing it in a-
Mm
... customer implementation. That is what we will be focusing on during, in Q3, preparing for it, and then for Q4, delivering on it. That's the next, next steps, we-
... Also another part that to add, I guess, is also the final shape and form of a product, right?
Yeah.
Because if it's gonna be in the car, where will it be placed? How small does it need to be? So that's some important steps that need to be taken as well.
Mm-hmm.
Depends on where we apply it.
Exactly. So there will be design iteration and design prototypes released during the year as well-
Mm
... to, to enable that progress as well.
Yeah.
Mm-hmm. And the last question is, what would a complete BlincVision system cost per vehicle for a car manufacturer?
Yeah, I think I sort of answered it earlier a bit, but I mean, it also depends when we start working with the Tier 1 and OEMs what they are doing, what we are doing, and these kind of things. But I mean, the target, of course, is to become much cheaper than the LiDAR equipment out there, you know? I mean, there's big variance, but talking about general terms, okay? But of course, it is an advanced and complex product, right? So that's... But we believe if we can add the value we can and say our mid-range on pricing, I think we have a good case, so.
Mm-hmm.
Mm.
Also to add to that, we are designing the system to be able to be used standalone without any ADAS system.
Mm.
But of course, an integration with an OEM, you would probably end up being able to share things, like, for example, processing power. We might not need our own computer to do all the computational calculations.
Yeah.
Some of that could be done in already existing computers.
Mm.
By doing integration work there, you could cut costs. Therefore, there is different levels, I would say, of part price, part prices, depending on the integration level for the customer.
Mm-hmm. Well, thank you so much for that presentation and the, the answers. And also thank you to all the viewers and the posted questions.
Mm.
Do you have any concluding remarks that you wanna hand off to the viewers?
No. Thank you all for listening. We appreciate that, and we like to keep a very close dialogue with our shareholders, and keep you continuously updated. And if you want to get in contact with us, of course, you can read what we publish on LinkedIn, also, of course, our press releases. But also you can email us on investor.relations@terranet.se. So please keep in touch, and we update you shortly again. Thank you very much.