Good afternoon, everyone, and welcome to E Ink first quarter 2026 earnings call. All participants are currently in a listen-only mode. After the presentation, we will open the floor for Q&A session. Today's conference is being recorded, and the Webex replay will be available on E Ink's website after the conference. Joining us today are Chairman Johnson Lee, CFO Lloyd Chen, and Finance Center Senior Director Patrick Chang. With that, I'll turn the call over to Lloyd.
Good morning, good afternoon, everyone. Thank you for joining us today. Before we move into this quarter's results, you may have already noticed the BMW vehicle featured on our cover slide, the BMW iX3 Flow Edition, unveiled by the BMW Group at the, you know, 2026 Beijing Auto Show. This vehicle basically integrates E Ink technology directly into the car body surfaces, transforming the exterior from static design element into dynamic, expressive canvas. Basically, it demonstrates the production-ready status of BMW E Ink technology. We will talk about more on this later. What I would like to highlight here is that this marks a very significant milestone for E Ink.
ePaper basically is steadily evolving from display interface into an intelligent, interactive, surface material. Through the real-time changes in color, pattern, and information, it enables objects to convey emotion, deliver personalization, and create entirely new modes of interaction between people and products. Before we move to the first quarter financial highlights, let's take a quick look at the safe harbor statement. The first quarter consolidated revenue reached TWD 8.63 billion, with operating profit TWD 2.81 billion. Net income is TWD 2.79 billion. Associated EPS is TWD 2.41. Both revenue and earnings continued to grow this quarter, driven by an improved product mix and steady overall demand.
This quarter, sales revenue, operating profit, and even the net income all reached record highs for the same period in our history, reflecting the gradual results of our product strategy and market position. Next page. Once again, this quarter revenue growth drove operating profit to TWD 2.81 billion, with operating margin improving to 32.6%. As noted previously, we continue to invest in R&D resources, talent development, because we believe future growth definitely will come from these two major elements, gradual iteration of new application rather than any single product cycle. Research, innovation remain the foundation of our sustainable growth and long-term market expansion.f
On the asset side, total assets grew from TWD 93.6 billion in the first quarter last year, basically surpassed TWD 100 billion fourth quarter last year, and continued to expand steadily to TWD 109.7 billion in the first quarter. That increase is around TWD 16.1 billion 17.2% year-over-year. Basically, this increase was primarily driven by continued profitability, operating cash flow, prudent financial investments, and of course, portfolio activities as well as capacity expansion to support business growth.
For cash flow, the first quarter, our cash and financial assets continued to grow, reaching to total of TWD 71.9 billion, supported by stable profitability and solid cash flow. Backed by a strong cash position, we continue to invest in capital expenditures to support our future market demands and growth momentum. This page explain, you know, that Color ePaper demonstrating stronger growth momentum this quarter. Shipment area for Spectra 6, which is the signage color, has officially surpassed that of black and white CE and eNote applications, signaling a clear shift in our variable product mix. Spectra 6 materials and modules are basically supplied to different customers based on specific applications and product requirements.
As color signage application continue to expand rapidly, their contribution to both revenue, gross margin has been steadily increasing, further enhancing our profitability. At the same time, we are seeing sustained demand for low- power color display across retail, transportation, public spaces, which is driving further expansion of digital signage market. On this slide, we would like to highlight the continued expansion of ePaper in large- format signage applications from the screen. As you can see, enterprises, different companies are adopting ePaper signage not only for energy saving, but also enhance the information management efficiency. In upper left, Agile Display Solutions provide the beAWARE platform that automatically converts images and videos into formats optimized by ePaper display.
This basically enables seamless integration with existing CMS workflows, offering a user experience comparable to managing traditional LCD or LED display networks, while significantly lowering the barrier to large scale deployment. On the lower left, AUO Display Plus eco-retail solution combines full- Color ePaper display with electronic shelf labels through cloud, mobile app-based management, basically streamlines content updates and store operations, further driving retail environments toward low power and paperless operations. Upper left, Sharp's ePoster has gained broader adoption in the Japan market.
Lower right, Samsung basically has also introduced its Color ePaper, supporting multiple display sizes and remote content management, making it easier for enterprises to transition from paper-based to digital signage. All right. As I noted earlier, in the cover slide, the BMW iX3 Flow Edition demonstrates that ePaper can be fully integrated into the vehicle body rather than just, you know, simply applied as a surface film. It's very important milestone for E Ink. Automotive grade validation confirms our ePaper durability, reliability, and readiness for mass production, opening up new opportunity across automotive, retail, and smart city applications.
The opportunity for ePaper is expanding beyond screens to a wider range of surfaces. From walls, vehicle, to everyday objects, virtually any surfaces have the potential to become an intelligent medium for information. We basically see this as quiet, ambient revolution, one where every surface can communicate naturally with near- zero power consumption. This is not merely an evolution of display technology, but a fundamental shift in how information interacts with our environment. As we shared at the beginning, in the cover slide, we are transforming from a display company into a smart surface technology company. To close this slide, I would like to share a short video clip of the BMW iX3 Flow. To the next page.
Following just on the BMW example, just shared, we see ePaper evolving from traditional display devices into various types of smart surfaces, gradually integrating into more everyday and personal applications. Beyond the continued penetration in retail, ePaper is also expanding into a broader range of daily and personal devices, including the one we just showed, automotive interiors, mobile devices, and even healthcare applications across these areas. Ecosystem partner continue to introduce new products further, building ecosystem momentums. From the screen, right, in the upper middle, is in the automotive, ePaper basically extending from exterior surfaces from vehicle interiors. Through collaboration with material and system partner, it can now be embedded directly into interior materials, enabling greater design flexibility.
Right in the center, in the mobile, the TECNO Mobile showcased an AI smartphone featuring Color ePaper at this year's MWC, integrating ePaper into that cover for dynamic personalization. Even this product remains at POC stage. The lower middle, in monitor applications, partners introduced a new generation ePaper display this quarter, with continued improvements, performance, and refresh rates, delivering a more comfortable, eye-friendly experience. Last but not least, in the upper right, in the healthcare and daily use scenarios with partners with Chi Mei Medical Center locally in Taiwan, to apply ePaper in patient information cards, ID badges, and magnets, offering convenience through real-time updates and near zero power consumptions.
As ePaper application continue to expand, as we just explained, our capacity needs to definitely grow with them, but in a more disciplined way. E Ink Guanyin expansion will serve as a key manufacturing base for large format ePaper, targeting signage, OOH out of home, and smart retail applications. These projects involve approximately TWD 5 billion of investment, including utility facility, warehouse, and supporting infrastructures. While existing building will also be renovated to accelerate production line setup and mass production revenues. Basically, the phase one construction expected to be completed by second quarter of 2027, with large- format ePaper products entering mass production in 2028.
This important expansion project basically reflects E Ink's long-term confidence in large format ePaper, ultra-low power display, and the growing OOH opportunities in the AI era. We also actively engage with our ecosystem partners across our major global exhibition to expand the reach and application of ePaper technologies. For example, NRF this year we partner to showcase how Color ePaper is transforming retail from shelf edge labels to large format signage, delivering vivid visuals with ultra-low powers. Same scenario for the ISE exhibition and also for LOPEC 2026, we worked with different partners to present our latest technologies and applications across industrials, reinforcing our ongoing driving innovation in ePaper.
We'd like to spend a few minutes to talk about the global sustainability leadership and recognition. We have successfully obtained ISO 46001 certification in Taiwan, basically completing final piece of our environmental management systems. For S&P Global, we achieved a very good score of 93, ranking first in the electronic equipment, instruments and components industry for the second consecutive year and setting a new industry record. This also placed us E Ink among the top 1% of the companies worldwide in the 2026 Sustainability Yearbook. We also achieved LSEG sustainability rating of 3.9 out of 5, ranking in the 98 percentile global within our industry.
Just this week, we received another positive recognition from Taiwan Ratings, with this Taiwan long-term credit rating upgraded from twA- to twA. Basically, this rating notes that E Ink has continued to deliver revenue and EBITDA growth while maintaining solid profitability, healthy cash flow, and stable capital structure, reflecting on the continued improvements in the company's operating fundamentals. Next month, June of this year, at COMPUTEX , E Ink will collaborate with 40 ecosystem partners to establish a dedicated ePaper industry zone at Taipei Nang ang Exhibition Center Hall 1. Basically, this zone will showcase the full ePaper ecosystem, covering materials, display technologies, key components, as well as system integration and application solutions.
It will present a comprehensive view of ePaper value chain and provide a one-stop platform for the massive global customers and partners. We sincerely welcome you to visit and engage with us at such event. Last but not least, we would like to share the thoughts. As AI reaches into every device and every space, information becomes everywhere, so does the demand for power and energy efficient has never mattered more, you know. The world ahead doesn't just need more screen, it needs more surfaces that can carry, you know, information without consuming energy. That is exactly what E Ink delivers. E Ink is evolving from a display company into a smart surface technology company. This is what we, you know, always stand for.
As you can see from screen, we make surfaces smart and green. Thank you. We can move to the Q&A session.
We will now begin the Q&A session. If you would like to ask a question, please click the raise hand icon on the sidebar. When we open your microphone, please unmute yourself before speaking. Next question is coming from Josie Yu from [KE].
Hi, management team. Thank you for taking my question. Congrats again on, like, very impressive growth this quarter. We would like to ask about, like, the 2026 quarterly revenue trend. Can we expect the quarterly revenue to go, like, upward trend quarter-on-quarter this year?
Hello, Josie. Nice to hear you speak again. I think, we're expecting Q2 to be better than Q1, Q3 to better than Q2. Q4 will be lower than Q3, that's roughly the trend we're looking at.
Yeah, yeah. Thank you, thank you. Very clear. Regarding the ESL, we are very happy to hear that, even though Walmart contract is coming to an end, company's still confident in deliver long-term growth. We're just wondering, from this ESL growth, is it mainly from traditional small- tag ESL, or it is from signage? If we look at the combination of 20%-30% growth, what is the growth for each of these two sub-segments that you're seeing?
Josie, that's a great question. I think for ESL, the growth is coming from U.S., right? After the W company, the top 10 retailers are all looking to install price tags and the sizes are usually bigger than what Walmart is using. That's really good news for us. As we move to Spectra 6, where you could put on ads, you could put on product information, the size gets bigger, and those are usually for 6 in and above. We're expecting that part of the business to grow. In terms of which, you know, what is that outlook? I think it's hard to say at this moment.
It's still I think ESL is still the mainstream, then there's additional volume with retail signage coming into this play. That's the situation we're seeing. Also in Europe, we're seeing a replacement cycle that's happening. Most of them are still using three- color and black and white, they're moving to either the next generation platform, which can offer them better quality, more color, and also bigger sizes too, you know. It's where, you know, whatever they have installed 10 years ago or five years ago, the prices today are more competitive than what is back then. It makes a lot of sense for them to replace it with the latest tag. We're also seeing growth in U.K.
has been hit pretty hard with labor shortage, and it's about time that they start installing these tags. We're seeing a lot of demand coming from U.K. as well. I think that's good news. All of them wish to use Spectra 6 for the ESL, but I don't think at this moment it's a right solution because four-color is still the best quality out there. In Spectra 6, we want to focus more on the larger sizes. Yeah. That's where we're at.
I see. Is it okay or kind of like fair for us to maybe in our model to assume like small tags, traditional ESL to grow by still by around like, say, 10%-15% and a lot of like incremental growth coming from the signage? Do you think this is kind of in line with the trajectory of the market that you're seeing?
We're really looking at 20%-25% growth from the ESL side.
I see. This is like a combination of small tags and also signage. Is that correct?
No, no. It's mostly from the small size.
Okay.
From the small size. On, we call it Spectra 3100.
That's where the four color FPL that we sell. We're seeing roughly 20%-25% growth rate in that segment. Spectra 6, which we think is more about signage, more about ads, or information boards, those are more Spectra 6, we consider that more on the signage side.
I see. I see. Very clear. In terms of the signage mix, is there a, is it low single digit or high single- digit of total revenue? Is there any related information to share would be much appreciated. Thank you.
Yeah. Josie, I think in the earlier, in the Chinese version, we talk about overall E Ink is gonna grow roughly 20%-25% in terms of revenue.
Yes.
The market breakdown is really single-digit to maybe 10% in Color eReader, eNote side, which is our consumer product base. That, you know, We were expecting a higher growth, but because of the effect on the memory, which really impact the lower cost version of Color eReader and eNote. We're seeing roughly single-digit to 10% growth rate in that segment. Even with the memory prices, we're still seeing that growth, and we think it's because of the transition from black and white to color. The demand is there and it helps drive that. Also new technology, right? If you look at our latest black and white, it's a lot faster. It's a lot zippier. You know, they call it zippier, quicker update.
They like the user experience a lot. It's wider, too, and a better contrast ratio. Overall, even on the eReader or eNote side, like yesterday there was a launch by reMarkable launching their lower- price eNote device. I think it's at $399, if I remember correctly. You could see that whiteness out of the E Ink black and white FPL. You know, we're taking that to the next level. We're seeing the single-digit growth there. For ESL we're seeing roughly 20%-25% growth.
If overall we're growing at 20%-25%, the rest of that makeup of, you know, to offset the, you know, that 10% or more that's missing from the eReader side, it's coming from the signage that helps offset that growth rate. Yeah. That's roughly the makeup of our business situation.
I see. Thank you. Thank you for the color. I'll go back to the queue. Thank you.
Thank you.
Our next question will come from Charlie [Dimton] from [Ben Life]. Your line is open.
Great. Thank you. Thanks management. Thanks for your time. This is very insightful. Could you just remind us what the margin mix is between eReader and ESL and how that's gonna be affected with that different split in revenue growth this year, and how you see that adjusting longer term?
I mean, for when we sell modules, which is mostly on the consumer side, the gross margin's a bit lower, and we sell on the material side, it's higher. Because of what's happening with semiconductor this year, there's a price increase on the driver IC chips for the module, and that's really hurting the gross profit or gross margin on the module side. On our material side, we're also getting hit because of a higher oil price on the base material side, like PET and things like that. That's kind of offset by better yield on our next- generation FPL lines, which is the H5. That kind of offsets that and really improves our gross profit and overall. Yeah.
It's a neutral impact overall?
There's higher material costs, but then you kind of offset that with higher yield. Because we're just ramping up H5, we've been trying to get that to go up to higher yield. As that yield improves, the gross margin improves.
All right. Thank you.
All right.
Next we will have Allan Wong from [Cathay]. Your line is open.
Allan, your line is open.
Oh yeah. Hi, Johnson, Lloyd, and Winnie. Good afternoon. I want to follow up 'cause Johnson mentioned that this year, like Q2 better than Q1, Q3 better than Q2, and Q4 is slightly like lower than Q3. Does Johnson mean like it's a top line or it's a bottom line? This is my first question. For both, I mean.
Yeah. I mean, Q4 is usually our, it's usually where our revenue is at the lowest. Usually Q4 I'm sorry, Q4 and Q1 is usually the lowest that we've seen for the past years. The peak season last year was at Q2. Usually the peak season's at Q3, and we're seeing that momentum shifting back to what it used to be. Last year was a little different because there's a pull-in because of I think it was tariff. I can't remember correctly. Yeah, it was tariffs, right? People are pulling their material in advance. Q2 last year was like record high and that was great for us. What we're really talking about is revenue, right?
If you were to look at our product mix, during the Chinese version, we talk about how we had our module facility has been sold out for, I think, past two years already. Whatever growth we're getting is really coming from the material side. We're not expanding our module facility. I mean, we're trying to make it more efficient, so we might squeeze a few units out of existing capacity, but really it's quite limited. Most of the growth is coming from the material side. That kind of helped us on the gross margin side as well.
Got it. Thanks, Johnson. My next question is about, you know, Chinese session, you say the company expecting 20%-30% growth in the foreseeable future. In the last call in March, you also mentioned you expect 2027 were better than 2026, 2028 were better than 2027. Do you think that's still valid? Can we assume the company will receive like 20%-30% growth in the coming years? How far can you see now?
Allan, that's a really hard question. Yeah, we expect next year to be better than this year. In terms of that growth rate, we probably need more time to study. Like last year, if we were to look at this, like from last year we're looking at this year, we think we're gonna have, you know, more than 30% growth. Why? We expect 20%-25% growth in eReader, eNote, as we transition to color. Because of the memory situation, it really hurt that growth rate, and we're seeing single digit today. Whatever that's happening in the world right now, it's a bit hard to predict exactly how we were gonna grow.
We kind of offset that because of the growth rate from the signage side. We're expecting growth in 2027, and we're expecting 2028 to be better than 2027. At this moment, we really can't pinpoint what that growth rate will look like. For ESL, we're expecting 20%-30% growth year-to-year, and that's the outlook on the ESL side. That's a market that we have more confidence in. eReader side, eNote side, we think it should grow, but whatever that's happening with the semiconductor, it's just hard to predict, right? People are talking about shortages of memory until 2027 now. They were talking about end of 2026, but who knows? Signage, we don't really depend on memory, right?
That's a good thing. Yeah, we're expecting growth on these two side that we have more confidence in. On the eReader, eNote side, I think memory will play a big role in it.
Yeah. Very clear. Thanks, Johnson. I have a last question. 'Cause you know now we are in a AI trend now, can you give me some like example, like how E Ink benefit from this AI trend?
Well, I think there's a couple things. I mean, first you have to look from the customer side, like how you could integrate AI into their product and make it more sexy or more attractive. For ESL, if you could leverage AI, you could do really good dynamic pricing I think. And you would know that, like, for example, if it rains outside, what are the product that sells better when it rains, right? Then you could do promotions on that, and that would drive more sales and which will make the retailer more willing to use price tags and also signage products. That's good for us. On the eReader and eNote side, it's about leveraging AI for self-improvement.
I mean, a lot of people read because they want to learn, right? A lot of people use eNote because it helps them think and remember and also do creative work. How do you leverage that AI into that product and make that experience seamless? I think that would also help the product to grow. Especially E Ink is continually improving color, speed, cost, everything, right? You should expect better product out of E Ink on a yearly basis. We're gonna make better and better product every year. We expect, yeah, with AI tying with our product, it's gonna help the product to grow.
On the operational side, you know, people are talking about digital twin, how you leverage AI so your production could be more competitive, let's put it that way, and efficient, right? You could leverage that across the whole organization from your back end, from finance, HR to legal, you name it, right? How do you leverage AI to make your organization more competitive? I think at this moment there's more trial and error in the organization. We expect that, and we want our people to try and error on leveraging AI. Security is always a big thing. How do you protect corporate knowhow in the AI world? I think that's something our IT team is working hard on. How do you leverage AI in R&D?
How do you leverage AI to make your R&D more competitive faster? Those are things we're also exploring as well. That's our overall take on AI is how do you leverage AI to make the organization more competitive, more effective at the same time? How is AI gonna be used into product that use E Ink to make it more attractive? That's another part as well. Okay. Allan?
Yeah. Thanks. Thank you, John. Very clear. Thank you so much.
Thank you.
Next, we will have Adam Hakkou from Comgest. Your line is open.
Thank you very much for your time. I have a couple of questions, and apologies I can't speak Chinese so I didn't attend the Chinese call. But 20%-25% growth that you talked about for, you know, overall revenue, 20%-25%, that's for this year, is that right?
Yeah 20%-25% growth is for this year.
For this year for the overall company with, ESL.
Everything.
All right.
Everything.
Oh, understood.
Yeah.
Okay. Got it. Got it. Thank you for that. The other thing I wanted to ask you, right, it's more on a, you know, forecastability perspective. When you guys say you're quite confident about ESL, you're a bit more uncertain on consumer electronics, but ESL you're quite relaxed. I just wanna sort of zoom in on this relaxed feeling. How I mean, you guys, you rely obviously on, you know, system integrators guidance or maybe the, you know, the Hon Hai's of this world who, you know, order from you, in between, you and, Vusion and SOLUM and et cetera. I think that's the main one.
Do you also sort of cross-check what these guys are telling you with, you know, end retailers? Do you have a sense of who's ruling out, who's rolling out when, you know, whether it's in Europe, in the U.S.? I'm just curious how you build these forecasts and, you know, what kind of information you sort of cross-check.
Yeah.
Effectively feel relaxed about it.
T hank you for that question. I think that's a great question. From the business side what we do is that definitely we'll cross-check with the retailer. We know most of the bigger retailer who's gonna do the rollout. We have team to really try to understand that. At the same time, we cross-check with the whole supply chain, or we call it ecosystem, from the system integrators to modules, to IC vendors, to TFT vendors, and to make sure that the information we're getting is correct. You know, the worst is a double booking, right?
Right.
That's a part we spend, we really try to understand and so we won't, Yeah. Less of a double booking situation.
Right.
If you look at ESL, I think one thing that's really good is that they actually have order intake. If you look at their financials, they talk about order intake down their pipeline, and it helps them, their supply chain prepare how many build they need for the module side, for the, you know, for the device assembly side and different things like that. I think that's. You have a better visibility, you have a better understanding of, how that market will do.
Right. Right. With all this information that you're getting, you're not, you're not too worried about, if I can call it the Walmart cliff?
Yeah.
'Cause that's what the—
Yeah
Worried about it.
We talked about.
Right.
Yeah, we talked about that in the Chinese version, right? If you look at Walmart last year, our growth rate is quite limited, right? Why? Because if you look at, you know, Vusion's financial statement, they're growing like 60% or 70%, but we're not. Why is that? Because the price tag used at Walmart is 1.449, I think. 1.49. It's quite small, right? The average price tag is 2.6 or 2.1 or 2.9. There, it's basically half the size of what most people use for a price tag. And what E Ink sells majority is material on the ESL side. And you know, our business depend on meter square. How many meters has been used or how many feet has been used.
Walmart, those small sizes is not that attractive for E Ink, but the other retailers who's using bigger displays, that will really help our P&L. You know, we sell by size. That's the situation what we're looking at. If you look at what's gonna happen after Walmart, Mexico just announced they're gonna start installing as well. Then you hear that the top 10 retailers in U.S. is looking into installation. You look at U.K., they wanna, you know, the shortage of labor, they're all looking to install. They've already done their POC, they love it, and just can't wait to get it done.
Even in Taiwan, if you look at Taiwan, you know, where labor price is fairly cheap, people are talking about installing them, you know. A lot of them just wanna install them. The good thing about Europe is that I think the first major rollout was in 2016. The replacement cycle's coming. Most of them are black and white or three- color, and today we're at four- color or you could do multiple color. Price tags. The price is better, the quality's better, color consistency's better. Everything's better, you know. Why not use the latest and greatest?
Right.
We think that there's that replacement cycle that's happening as well.
Yeah.
Yeah, it's, I think ESL's a good business for E Ink.
Okay. Okay, cool. Very, very insightful. Can I squeeze one more on signage? How much is it as percentage of revenue?
So, I mean—
this quarter or this year, what are you expecting?
Yeah, I mean, so if you do that math, like if eReader is only growing, like, 10% or less, ESL is growing 20%-25%, our overall is growing at 20%-25%, eReader and eNote takes up half of our revenue, the rest is made up by signage. I mean, you could do the math and you know exactly the number.
Right. Okay, fair enough.
Yeah.
Fair enough. When we talk to system integrators, or maybe they don't tell us everything, but it doesn't seem like there is a lot of traction from retailers on the signage side of things. It's mostly, you know, small ESLs rather than, you know, big signage. When I hear you guys being quite bullish and actually put CapEx behind s ignage for the next few years.
Yeah.
Are you seeing traction outside of retailers, or—
No, I mean, yeah. I mean, I think it's how they define signage, right? If they're, you know, like I think there's two types of signage in retail. One is they call it retail media, where basically, those players that they buy digital displays or they can buy E Ink, they can buy LCD, or they can put in paper, and they place them into the retail store, and they go out and get ads. They split that profit with the retailer. That's one type of retail media people are seeing.
The secnd type is the retailer themselves, buying full- color E Ink displays, and they use it for bigger promotion signs, you know, like sale or sale $5.99, regular price of $8.99, you know, with product description on it. Those are a little different. There's multiple players going after that market. You have Samsung, you have Sharp, you have our traditional system integrators going after that market. Also in different retail shops, right? It's a little different, yeah.
Samsung would go straight to Walmart and try to bypass the system integrator?
They don't need the integrators, right? Why do they need the integrators?
Right. Right, right. Okay, interesting.
Yeah.
All right, thank you. Thank you very much.
I mean, there's just more people going after it, after this market, right? It's a much bigger market. When we talk about signage, right, there's an indoor type you could use in transportation, you could use for retail, you could use for hospitals, you can Or even outdoor, right? There's multiple types of signage out there.
Interesting.
Yeah.
Thank you very much, Johnson. I will go back into queue. Thank you.
Next we will have Nipun from Fidelity. Your line is open.
Yeah. Hi there, can you hear me?
Yes, I can. Thank you.
Great. Thanks for the presentation, very insightful. I just want to double, just didn't quite get the point you made on Walmart earlier, in terms of what, how substantial is it as a percent of your ESL revenues, if you can give a range, and how much has it grown this year? Just so we kind of understand what the starting point is. Would that end next year? Like, just some kind of a roadmap.
Yeah, so I mean—
I just want to—
Just to give you an example, right?
Yeah.
There's a U.K., not U.K., a German retailer.
Yeah.
One of the large German retailer. The meter square they use for price tags the same as Walmart. Walmart may have 500 million tags, but the size of that price tag, it's small.
It's not that attractive for E Ink. You know, some of the smaller retail, they use a bigger sign. That's more attractive for E Ink.
I sell materials. I don't sell finished, price tags, right? Those are the system integrators.
The size— sorry, go ahead please.
Yeah. So if you look at Vusion last year, they're growing, like, what, 60%, 70%? You know, those are small units, right? Units, every price tag may cost $3, and then you times that by, I don't know, I don't know if it's 3 or whatever that dollar value is, right?
Yeah.
You times that over TWD 100 million, that's a lot of revenue.
Yeah.
It doesn't mean a lot for E Ink because it's small.
Right.
Right. We need size to, you know, to really grow.
No, I get that. I mean, just because the biggest concern in the market is this whole Walmart cliff, it would be great if you could just tell us sort of how big Walmart is as a percentage of your revenues or percent of ESL revenues, and sort of does that end next year? Is this the last year of Walmart- related revenues?
I mean, we're not really worried about that because if you look at the top 10 U.S. retailer, they're all looking into installing shelf labels, and their sizes are a lot bigger than what Walmart use, right? Even Walmart has 400 million.
The sizes they use, maybe one of them will be equal to the size of Walmart, just one of them, any of them.
Right.
Yeah, I mean, it just, Walmart helps trigger the adoption of ESL in the U.S. market, and we're seeing a lot of bids that's happening, and that's great for us.
Right. Right.
We also think that after shelf labels, retail signage is gonna come.
Right.
For the ones that have installed price tags. That's the next step.
Right.
So—
Right.
One after another. It doesn't end with just shelf labels.
Right. Just to be clear, Walmart revenues end this year for E Ink?
Not necessarily. It's Walmart U.S.A. ends with E Ink.
Walmart U.S.A., to be clear, yes.
Yeah.
They finish.
I mean, for price tags, right? There's also signs—
For price tags, yeah.
Right?
Sure.
Signs, price signs.
Yeah.
At Walmart.
Yeah.
Yeah, everything's gonna be digital.
Roughly what percent of the ESL revenues would Walmart U.S.A. price tags be for 2026?
That's a good question. We haven't really done the math. It's part of it, but it's not, I don't think it's significant. I need to get back to you on that. I don't know the exact number.
It would be great if we could maybe correspond over email about this.
Okay. Yeah.
Yeah.
We have to figure out, I mean, we haven't paid close attention to that, yeah.
Got it. Got it. Okay, excellent. Thank you so much.
All right.
Next, we will have a question from Kenny from Nomura. Your line is open.
Hello. Could you hear me?
Yes, Kenny, we can hear you.
Hey. Hi. Hi, Johnson, Lloyd, Winnie, and perhaps you too. Thanks for taking my question. I have two. Probably the first one I'm following up on the so-called Walmart cliff, honestly, I'm wondering if this may be a good news for you because going forward you may have probably more diversified clientele and perhaps because Walmart is to you as a single diversification maybe provide your perhaps your bargaining power or your gross margin for those non-Walmart customers going forward.
Kenny, I think E Ink's at a position where pricing is not really a main issue. Again, like we sell meter square, right? We sell film, right, to our module partners, and it's based on meter square, how many meters they use. I was just explaining how a Walmart business situation, the total 500 million tags that Walmart needs, it's equal to a German retailer who wants to install price tags in their stores. Their store is a lot smaller than their stores, less items, but in terms of meter square, it's about the same. That gives you a sense that Walmart is part of that.
It helps on the business side, but it's not, we're not worried about the Walmart cliff at all.
Okay. Sure. Thanks. Just one follow-up on the signage part. I kind of remember last year, you guys were talking about some delay for some authority or government project, right? I just did the math. Probably signage could be like high single-digit percentage of total sales this year. It's really a good improvement from last year's low base. Perhaps is it from the delay projects or you kind of surprised by incremental demand here in this year, and could you really digest the backlog here or the momentum could be next year?
Yeah, I mean, if you look at E Ink signs, so in terms of the area shipment, we actually sell more Spectra 6 today than we sell our black and white in terms of meter square. That says something. Where is it coming from? It's coming from, you know, 32-inch, 13-inch, 10-inch, 8-inch, and there's a lot of these sizes. I can't remember all of them, 40-inch. They're all coming from all these different signs that's happening. Some of them are like digital photo frames, you know, that's a part of that. A lot of them are actually just signs used in transportation, in hospitals, in, you know, in retail stores of different verticals.
If you look at the price of E Ink signs they're today maybe 2x of an LCD as a finished product. We think that if we could get that price to be close to an LCD, the volume will be a lot bigger, and that's a customer response we're getting. Of course they want better color, but the number one item is if we can get our price to be close to an LCD, the volume could be huge. I think it's possible, right?
I mean, if you look at what we could do with H5 and then we have H6 that's coming, if we could just, you know, maintain our gross margin and still I mean, our goal is to maintain our margin and help, and get that large, you know, 30-inch, 32-inch, 40-inch display to be same price as an LCD. There's no reason why we can't do it. If you look at a structure of an LCD, it's a TFT, liquid crystal, color filter with two polarizers or a backlight, an FPC and an IC. E Ink is just TFT with E Ink foil and a protection sheet with IC and a PC. The structure's a lot less, and there's no reason why we couldn't get it to the same price like an LCD.
Once we do that, I think the volume will be a lot bigger than what you're seeing today.
See, that makes it very helpful. Sorry, one last question. Because I wasn't able to join the Mandarin session, did you guys talk about the IoT sales mix percentage?
Yeah, I mean IoT, I mean, yeah, we kind of just break that out, right? With ESL and then signage, right? I mean, there is some for other IoT product, but, you know, it's a small part of it, so we just kind of, you know, include that, you know, part of it.
Oh, yeah, thanks. I mean the CE and IoT's percentage first quarter.
Did we break that out? I don't think we broke that out. No, I Yeah. Lloyd, could you, did we break that out, Lloyd?
Kenny, I think right after, today we're gonna release our first quarter financials officially, so you definitely can find the percentage there. All right?
Okay.
Can I get you time to check it out?
Thank you both.
Yeah. Yeah, after this.
Okay. Okay.
Lloyd, you could just give it to him right here. I mean, they're gonna see it anyway, right?
Right. I believe, for the IoT majority ESL around 55%. Yeah. The CE is around 45%. Around this range. Yeah.
Okay. Okay. That's very helpful.
Yeah. Basically material sales is relatively high, yeah, in first quarter, yeah.
I appreciate it.
All right. All right. We noticed quite a few online question. I believe most of them has been answered by Johnson . There's a particular one I think is worthwhile to be brought up. The question is about how are we thinking about the organization in terms of management, divisional layers to ensure each product category has the right focus? For example, ESL has been around a while but global penetration remain low, still a huge opportunity, and digital signage is a new category but seems like the opportunity even wider. How do we ensure we have the right resources and talent to be commercially successful?
I mean, I, Ben, I think that's a great question. We always look at how we can tune our organization so it can help us better grow the company. I think we kind of underestimated how long it takes for that design win to happen initially, and it took us a while. It also took us a while to build that ecosystem to support it. So, it's I think the opportunity's there. We need to do a better job selling it. We need to do a better job working with our partner to promote our technology into the marketplace. There's still a lot of people who doesn't know about E Ink and what E Ink can do.
Maybe sometimes when we talk to them, they're like, "Oh, wow, your display don't need power. I could use this in many places." It just really surprise them that E Ink only consumes power when you update. They look at our display and says, "It looks like paper. Well, how do you do it?" I think educating the market is super important. We need to do a better job doing that. I think you're right. There's many things within the organization we need to work at, right? Lower cost, better quality, faster turnaround, better job marketing the product. There's just endless things we could work on. Yeah.
Hello, everyone. Due to a constraint, now we conclude our session. I'll turn the meeting over to Lloyd for closing remarks.
All right. Thank you everyone, and thank you for your participation. We are looking forward to talking to you again in the second quarter. Thank you very much. Thank you Johnson for your help.
All right. Thank you. Bye. Thanks. Bye.
Good bye.