Hello everyone, and welcome to Terranet Q3 Webcast. My name is Gustav, and I'll be moderating today. We will start off with showing a highlight video that details the past quarter and its performance. Then we'll move on to an interview section, and then we'll finish out with a live Q&A from the audience. And you have the potential to ask questions in the box on this website. But without further ado, let's go over to the highlight video.
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All right, so welcome to the interview section of this Q3 Webcast. Joining me today are Terranet's CEO, Magnus Andersson, and CTO, Pierre Ekwall. Welcome. So the highlight of this quarter was the autonomous braking demonstration on a vehicle. Pierre, could you tell us what this achievement means for BlincVision and what opportunities it opens moving forward?
Thank you, Gustav. Sure. Earlier, our system only sent a brake request with the actual brake being purely theoretical based on what would happen if a collision was anticipated. But now, for the first time, we have tested the entire system from identifying an object, classifying the object type, calculating velocity, and finally deciding to initiate emergency braking to bring the vehicle to a stop. This proves that the whole system works as intended. And as you might know, there's always a risk that things won't work when moving from theory to real-world testing. But these tests show that our concept works exactly as intended. It's a major step forward that takes BlincVision to a new level of market readiness.
All right, thank you, Pierre. So in June, the announcement came that you were selected for MobilityXlab. And for those of you who don't know, it's a program that offers startups the chance to collaborate with leading automotive companies and conduct proof-of-concept projects. Magnus, can you give us an update on the current progress of this project?
Yes, absolutely. MobilityXlab, yes, we kicked off with them in August. And now the status is that we are doing the proof-of-concept project, and it's progressing very well according to plan. The idea of this proof-of-concept project is to take our prototype and put it on a customer partner vehicle on an actual test track in order to show the advantages and added value of BlincVisio n, but also to see how it reacts with our existing ADAS and AD solutions on the vehicle. So very interesting. Pierre, and I mean, being on a test track, actually on a customer vehicle, is also very important for product development, isn't it?
Yes, sure. First of all, test tracks enable controlled testing of scenarios that would be dangerous on public roads. For example, high-speed tests towards a suddenly appearing pedestrian represented by a dummy that is actually okay to drive over to identify system limitations in the most extreme conditions. Doing the tests on a customer vehicle adds additional verification of system robustness and can identify otherwise overlooked integration differences. The continuous customer dialogue this enables is also an important key factor to success. Great. Thank you both for expanding on MobilityXlab. So just a few days ago, Terranet published a plan for next year. Magnus, what are the next steps for bringing the product to market for potential customers and partners in 2025 and beyond?
Yeah, in 2025, we will continue to work very closely with our customers. And the idea of that is to take it from our prototype into an MVP, minimum viable product. So very close to the market launch. Okay. So once we have that MVP and working together with our customers, the goal is also by end of the year to reach some kind of agreement to enter the dialogue about a volume production process agreement. Right. So that's the plan. And in terms of product development, Pierre, maybe you can give a big picture about 2025, what's really going to happen?
Yeah, we have a busy year ahead of us. In the first quarter, we'll be evaluating the test results from MobilityXlab and making product improvements based on these findings. In the second quarter, we plan to release the first MVP or minimum viable product of BlincVision . Right now, integrating the system into a vehicle requires manual adjustments to customize it for each car. With the MVP, we'll introduce a simplified, standardized product that will be much easier to install and use with greater software support and integration guidelines. In the third and fourth quarters, we'll be focusing on making improvements so that by the end of the year, we have a product mature enough to be evaluated at scale by customers, a key prerequisite in enabling volume production discussions.
All right, exciting times ahead. A goal for the fourth quarter of 2024 has been to reach an agreement. Magnus, will you be able to achieve this?
Yes, this is what we communicated, and this is the plan, what we're still trying to achieve. Right, and I mean, we're only one month into the quarter, so we still have another two months to reach this goal, but yes, the plan is 100% to focus and try to reach that. The idea of this agreement is to move further into finalizing the product development of BlincVision , so if you also heard about 2025 targets and agreements, in 2025, end of 2025, we will try to reach more closer to a volume agreement. At the moment, the agreement we're working on now is more type of finalizing the product development, but yes, we are 100% focusing on that, and we'll try to achieve that.
Great. Thank you, Magnus. So in terms of financing for your upcoming TO8, that's set to start in just one week. Magnus, what are the expectations for this and how might it impact the company's future?
Yes, TO8 warrant program, the subscription period is 18th - 29th of November. And of course, we hope for a good outcome. The last warrant program we did, we actually had 95% subscription. So that was very, very encouraging. If TO8 is fully subscribed from the shareholders, the ones who have warrants, it will give us around SEK 19.6 million in capital. However, of course, the board and the management are also working on a long-term financing plan. As you know, currently we are a product development company. We are in the phase of product development. So that means that we will need funding until we are cash flow positive. But saying that, so far we've done a lot of good progress. And actually now we have attractive customers looking at us and want to be part of a game. So that also opening up other financing alternatives.
It could, for example, be that collaboration partners in some way could also be strategic or more institutional investors want to join us, so that's very good, so I think if we continue to deliver on our ambitious plans, continue the commercialization phase, I think it's going to be easier to attract funding, and historically, if we look at Terranet, we've always been able to attract money, and to be honest, now we are in a better position than ever.
Great to hear. Thank you, Magnus. So in a recent press release, you announced, Magnus, that you plan to leave the company after the new year. Would you like to share your thoughts on this?
Yes, of course, it is a bit of mixed feelings because, as I said, Terranet is in a very exciting phase. But yes, we have taken something from a desk product research to now prototype on a vehicle, initiate a customer project. So I think also the time is pretty good for a new CEO to come in and actually continue this commercialization phase. I will move to a new CEO role, but in a different industry and actually back in my hometown. So I will also be able to spend more time with my family and kids, which is very important for me. However, I mean, I still 100% believe in Terranet and also see the need and importance of BlincVision for saving lives. So I will continue to support that.
And also now, when the new CEO is in place, I will also assist with the handover, of course. But Pierre, will you miss me?
I'm just having Magnus on the team. We work very well together. But of course, completely understand the decision given the family situation. We have together taken BlincVisio n from concept to prototype, and Magnus has brought the company closer to market launch than ever. I'm optimistic and a CEO change opens up the opportunity to bring in new expertise in our next upcoming phase. And you haven't left yet, right? So full speed ahead, Magnus.
Full speed ahead.
Great. Great to hear and sad that you're leaving, Magnus, so as a final question before we move on to the live Q&A here, Pierre and Magnus, what key message would you like to share with shareholders and potential partners?
Yeah, the development is progressing rapidly. In 2023, BlincVision was still on the drawing board. By 2024, we now have a finished prototype, and in 2025, we will be developing an MVP. By the end of the year, it will be refined enough to start initial discussions on steps towards volume production with our customers. Main takeaway, we're closer than ever to bringing this breakthrough technology to market.
Magnus, any closing words?
Yeah, absolutely. And I think, I mean, the potential of BlincVision is huge. If we look just as ADAS, like advanced driver assistance systems, we can see a predicted annual growth of over 17%. We can also see that that segment is the third- highest revenue growth in automotive. Okay. So huge potential. If we then move on and look into autonomous vehicles, in 2024, there's actually been a lot of progress in that area, a lot of investments being done. So you can see that, for example, with robotaxis, Waymo just had an investment round which was oversubscribed and brought in $9.5 billion. And this will be adding more vehicles and new actors is also entering the market, of course. And also Waymo's partnership with Uber is also quite interesting. Okay. So a lot of things are happening in the autonomous vehicle field as well.
So for me, the main takeaway is that it's a huge potential and the potential is actually growing.
Great. Thank you. And that concludes the interview section. We will now move on to the questions from the audience, the live Q&A. And I have a couple of questions here. I am going to start off with this question that you can both feel free to answer. The question is, can BlincVision enhance the driving experience beyond safety?
Yes. Interesting question. Thank you very much. Let me answer that. Of course, saving lives is the most important and our main focus, but what we also can see is that for the driving experience and the comfort in the car, there is a big added value from BlincVision . Today, when you're driving a car and using these kind of ADAS systems like adaptive cruise control or lane assist, you can feel that the car is very careful. It's braking very early when it sees the obstacle, and once the obstacle is gone, it's accelerating very slowly. What happens then, as you as a driver, you get a bit irritated and say, why is the car not reacting? And sometimes you actually take over the car and the control and turn off the ADAS system because it's irritating. Okay. So that's not good, right?
So if you have a solution like BlincVisio n, which is a much faster sensor solution, you can reduce the safety distance, right? So, therefore, the ADAS system of the car will act more as a normal human driver or actually even better. So I think that's a huge added value for the driving experience. And therefore, as you know, the driver sometimes is also a person buying the car and maybe be willing to pay for this kind of solution. So that's another big added value, except of course the importance of saving lives.
Great. We'll move on to another question here from the audience. It's in Swedish, so I'll translate directly here. Have you tested BlincVisio n in extreme weather conditions? And what does BlincVision show in comparison to other systems?
Yeah, that's a good question. So adverse weather conditions is something that we are aiming to test by 2025. And it will be primarily done on the MVP product that we talked about earlier. So some tests have been done, but they are only on a very initial level follow-up with tests on MVP. And we'll come back to some of the results after that. I think one of the biggest uniqueness with BlincVision is the latency, right? How fast the system can be. And that's what we're primarily testing and showing. Then, of course, as Pierre said, we can add other things like weather conditions later on.
Right. So another question here. Thank you both. Will we be able to know who the partner is that you've been working with under the first quarter when the result from the proof of concept is presented?
I can answer that. I mean, that's hard to say today, right? Because we're not in the first quarter yet. Right. But what happens is when you're working with the automotive industry, it's quite common that there is a high level of confidentiality. Okay. So it will be up to our partner to say, can we go out of this or not? So I cannot answer that now at the moment. But of course, if we can tell it, we want to tell you. But it's not up to us, right? And we need to wait and see.
Understandable. A lot of red tape, I understand. Here's another question. I think I'm understanding it correctly, and I'll translate. So in what area of the vehicle will you put focus for the integration? Meaning robotaxis have solutions that are installed on the roof, other systems have behind the windshield or by the front of the car. So where will you put your energy when it comes to integration?
Yeah, maybe I can answer that, so of course, this is very much connected to what kind of vehicle or product we're integrating the system with, and as you know, we're working with different partners, and that also means different vehicles and vehicle types, but if we just look at an ordinary personal vehicle, as you mentioned before, AD vehicles are usually not that complex to integrate into because you have more design freedom to put the sensors where they make most use, but for a personal vehicle, usually design is a very, very sensitive part of the total project or product offer, so the main location for us at the moment is behind the windshield for the cameras and for the laser scanner to be positioned either behind the rearview mirror or in the front grille of the vehicle.
That's usually where there is available packaging space and also where it does not conflict too much with the external design expressions of the vehicle. But depending on the vehicle structure, form, and shape, there might need to be changes to that. And that's what we have prepared the system for. We are adaptive and modular in that way. So in the end, it depends on the customer and the integration.
All right. Interesting. Thank you, Pierre. Another question here from the audience. Does Magnus keep his stocks after leaving the company?
I guess that's a question to me, right?
Yeah.
So yes. Yes. I mean, I can of course not answer that now. But as I said, I still believe in Terranet and I still believe in BlincVision . So let's see what I decide. Then, of course, my personal finances will also impact my decision, not only my belief in Terranet, right? But yeah, let's see later.
Thank you, Magnus. The report today mentions a major collaboration in MobilityXlab that Terranet is working with, but is "unable to name." Can we assume that partner is one of those publicly announced MobilityXlab participants?
Yeah, let me try to answer that. I mean, when we work in MobilityXlab, as you know, there are a few partners in that program. It is AB Volvo, it is Zenseact, it's Magna, it's Ericsson, it's ZEEKR, et cetera, right? So yes, I mean, when we do the PoC project within MobilityXlab, it's with one of them. Yes.
Good to hear. So here's a question about the TO8. Does the board plan to sign a full TO8 like they did for TO7? This would be a sign of strength. How are you going to approach a low signing of TO8?
Yeah, I mean, let's focus on the TO8 now and let it happen, right? But what I can say is that the board and the management are working on a long-term financing plan. And we have a financing plan, right? So we have different alternatives on how to secure financing for Terranet. But of course, we need to come back to that when we know the outcome of TO8. And also, of course, first, they need to publicly announce that before we can tell anything about it.
Right. Great. Thank you, Magnus. What exactly needs to be achieved for proof of concept with BlincVision ?
Oh, that's a wide question. So of course, one question that was mentioned before is, of course, adverse weather conditions. That's one part of the plan to verify that. What we are working with currently is optimization of the system. So with any ADAS systems, there's always room for improvement. And of course, we have our internal set targets to where we believe the product needs to be to be able to enter discussions on volume production. And that's partly why we're also making the MVP to combine those requirements into a product update. In the end, exactly what those requirements will need to be before we enter the market will be set by our partners and customers. And it's also the challenges are also very much dependent on the exact use case. Should it only be used for ultra-low latency predictive detection in a city environment?
Or are there also expectations on using it, as Magnus previously talked about, for additional comfort, for example, on highways? So all of these, which might seem like detailed decisions, also impact the technical requirements on the product. But we have a pretty good roadmap. The focus, as you know, is city use, ultra-low latency for predictive detection at the moment. So that is what we're optimizing for. Yeah. I mean, as you said, I mean, proof of concept is all about proving the concept, right? And we want to prove our uniqueness being a super fast sensor solution. So the low latency is very important. And then, of course, looking at different traffic scenarios, that's why we also are on test track.
Thank you for that thorough answer from you, Pierre, and also from you, Magnus. We will probably finish out with a last question here, and it's about MobilityXlab again. Zenseact is a partner within the MobilityXlab collaboration, and they're doing AD as well. Will there be some kind of collaboration with Zenseact?
As I said, we work with MobilityXlab partners, right? And we cannot really disclose with who, okay? But I mentioned a few of them, right? So we are working with several of them to discuss what we can do. And we are doing a PoC project.
Great. That's all the questions we got here today. So I will hand it over to you, Magnus, to close out this webcast. Thank you all for listening.
Yeah, thank you very much. And please stay up to date with us. And please follow us on social media, especially, I would say, LinkedIn, where we try to post a lot of information. Also, of course, if you have any questions, please feel free to email us on investorrelations@terranet.se. So again, thank you very much for listening and stay in touch.
Thank you.