Earnings Call: Q3 2020

Nov 10, 2020

Hello, everyone. Thank you for standing by, and welcome to Neonode's Third Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session with the company's covering analysts. Thank you. At this time for opening remarks and introductions, I would like to turn the call over to David Brunton, Neonode's Head of Corporate Investor Relations. David, please go ahead and start the conference. Welcome and thank you for joining us. On today's call, we will review our Q3 2020 financial results and provide a corporate update. Our update will include details of customer activities, technology developments and other items of interest. Before turning the call over to our CEO, Doctor. Urban Forsell and CFO, Maria Ek, I'd like to make the following remarks concerning forward looking statements. All statements in this conference call other than historical facts are forward looking statements. The words anticipate, believe, estimate, expect, tend, will, guides, confidence, targets, projects and other similar expressions typically are used to identify forward looking statements. These forward looking statements do not guarantee the future performance that may involve or subject to risks, uncertainty and other factors that may affect Neonode's business, financial position and other operating results, which include, but are not limited to, the risk factors and other qualifications contained in Neonode's annual report on 10 ks, quarterly reports on 10 Q and other reports filed by Neonode with the SEC to which your attention is directed. Therefore, actual outcomes and results may differ materially from what is expected or implied by these forward looking statements. Melnod expressly disclaims any intent or obligation to update these forward looking statements. At this time, it's my pleasure to turn the call over to Urban. Urban, please go ahead. Thank you, Dave, and welcome to this call. I will review with you today some strategy and business updates. And after this, I will turn over to Maria for some financial details about this Q3. To start off the strategy presentation, I want to reiterate that we, since the beginning of this year, have organized our business into 3 separate business areas, and we call them HMI Products, HMI Solutions and Remote Sensing Solutions. And in this call, I will talk a little bit about each one of them and give you some insights to both the strategy and the current business activities that we have. HMI stands for Human Machine Interface. And those of you that have followed Neonode for the last 10 or 12 years or so know that this has been the key focus for our business leading up to 2020. And it still continues to be very, very important. And that's why HMI Products and HMI Solutions both are focusing on these areas. In HMI Products, we sell our standardized sensor modules for contactless touch, touch and gesture sensing. The focus there is on customers in the elevator and interactive kiosk segments. HMI Solutions is a separate business where we focus on customized engineering solutions, mainly for touch and gesture sensing at this point. And the focus is on customers in the military and avionics and the industrial segments. Remote Sensing Solutions is a software business for us where we focus on driver and in cabin monitoring. And in terms of customers, we are targeting OEM and Tier 1 systems suppliers in the automotive space, in Europe, in North America and Asia, respectively. And with this as an introduction, I will also reiterate that Neonode works with 2 main technology platforms, one that we call Z Force that underpins our touch and gesture sensing technologies. And contactless touch that you will hear us talk about in this call is a very hot and sought after technology solution that we can provide now to customers that want to avoid touching keypads and displays in public spaces, which is very much in focus due to the COVID-nineteen pandemic. Our software platform, Multisensing, underpins our offerings in driver and in cabin monitoring. And for driver monitoring, often the objective is to monitor and detect drowsiness and distraction with the drivers. And in cabin monitoring is more focused on occupancy and situational context monitoring inside the vehicle, including passengers. It could be pets. It could be objects in the passenger compartment. In this review, I will start to talk a little bit more about the business area HMI Solutions where we, as mentioned, offer customized touch and gesture control solutions for demanding customers in the military avionics and in industrial segments. This is a solutions business, and we focus on 100% bespoke solutions that we adapt to each customer's specific needs and each application. We offer scalable solutions and the business here is based on a consultative long term relationship approach. And as mentioned also, we target customers in the military and avionics segment and the industrial segment. We are leveraging here the advantages with our advanced C Force technology. That would be that it offers, for instance, a cost effective touch and gesture control. It has both good EMI and EMC, and that would be electromagnetic interference and also electromagnetic, properties. Sorry for this. We have very good functional performance, good quality, low latency, freedom of design and so on. And we also can operate for military applications with nice vision systems that are frequently used in helicopters and aircraft and also on the ground vehicles where we are looking today. So this slide is just to illustrate the types of applications we say that we deal with, and it's touch on displays, also touch on other surfaces. It's often in very demanding environments and rugged applications where operators would like to have a touch operation of a system or a display function where they can use gloved hands or stylus pens or any other object to control the underlying system. We can also, with our IR based technology offer touch on any surface, not only linked to a display, but actually we could do on glass windows, on walls, on tables and so on. And a very strong offering that we have, which is, for instance, very important medical applications is that we do not deteriorate the image quality, neither the resolution or the contrast or the lightening of the underlying display, which is sometimes very important. For instance, for examining x-ray images in a system that we indicate in the picture here, 2nd from the right. We have 2 main variants of our C Force technology. 1 is a blocking technology, and we show an illustration on the left. The working principle is that we have on 2 sides, you have light emitting diodes and on 2 opposing sides, you have photodiodes receiving these infrared light beams. If you place a finger or an object, you will break 1 or more of these light beams, which can be detected and hence, we can detect a touch. So this is the simple operating principle behind our C Force blocking technology. Of course, there's much more to it, but this is the simplest way I can explain it. We also work with a second variation of this technology that we call reflective technology, where we have a one-sided sensor element that both emits infrared light and detects reflections from objects in that light field. And by clever arrangement of the light emitting diodes and the photodiodes receiving reflections and use of advanced optical lenses, we can position accurately objects in that 2 dimensional light field and that light field could be hovering above a display or any other surface or it can be directed into mid air, allowing us to develop in air touch or gesture sensing applications or if you would say contactless touch solutions. The focus is on military and avionics and industrial, 2 very interesting markets that are very large. And also importantly, they grow at a steady CAGR every year. We think that we have a lot to do in these two segments, and they have not been in focus for NeoDome until this year. So it's only this year and actually just a few months back since we really focused on trying to enter and penetrate these segments. They are we can continue to see about the segmentation and sub segmentation actually in military avionics, if you would say that defense is roughly onethree of the total volume and civilian aircraft and similar twothree of that volume. The 150 ks units that we estimate may not sound much, but typically in the military and avionics, the budgets for development and average sales price for display unit with touch is quite high. So actually, it's a very, very interesting segment for us to operate in. The industrial segment is larger in terms of volume and also turnover, but on the other hand, it's also fragmented. But still, this is also a a very interesting segment for us to operate in. And then you may ask what happened to printers and automotive applications and so on. Yes, we do not say that they are of our main focus, but of course, we will continue to work in this, the sort of NeoNord legacy segments, printing out the multi medical white goods and so on. But we will deal with this in a more opportunistic way as opposed to military and avionics and industrial that we will go after more strategically and with a stronger focus going forward. Interesting market size and interesting growth. We think that we can have a good growth in these two segments and combined because they have a technical overlap, which is substantial. So we estimate that we can reuse the same type of solutions for both the military avionics and the industrial segments. Typically, the customer will be large companies. And if you look at the largest companies in these two segments, actually 85% of the largest companies are based in the U. S. So it's a very strong focus on the U. S. Market and large companies. But of course, we have customers that are both geographically located outside the U. S. In Europe, there are many strong industry countries and as well as in Asia. But just looking at the large companies, 8% to 5% of them can be found in the U. S. And that's why we are increasing our presence in the U. S. And our focus on the U. S. Market going forward. Turning over to HMI Products. This is still working with HMI. And again, HMI stands for human machine interaction. And for neono, that means infrared technology and it means contactless touch, touch gesture sensing. But here our offering is based on our standardized sensor module that we produce in our subsidiary, ProNode, in the west of Sweden and that we deliver directly or indirectly via distributors like DBK and serial to our customers. So similar technology, but a different product offering to customers and a different way of distributing products. So this is a more classical product business where we sell products. Average sales price is typically higher compared to our HMI Solutions business, which will be more a licensing business. These sensor modules that we offer here, they are easy to integrate and very well suited for both retrofit applications and new OEM designs. And they are quite easy to use, offer great design freedom and still have a high accuracy and good performance. And we are selling them direct, as mentioned, also through value add partners and distributors. And we are expanding basically every month our network of partners, and I will come back to that point later on. With COVID came an important change for Neonode, and we realized that we were actually sitting on a technology that was very well suited to solve for the problems caused by the COVID pandemic, namely that people do not want to touch displays, keypads in public spaces like in the airport, in the shopping mall or in a hotel or office building. So we have the technology, we have the products, and we are building up our order book actually week by week. More companies are joining in and getting interested in starting to purchase these products. Shown in the pictures here are some different examples where we have, together with value added partners, created new solutions that solve for this contactless touch challenge. This picture, bottom left is from the Changi Airport. We have a press release on this that we released, I think, in September. And then there is a similar application with check-in terminals and point of sales that came from the left. And then 2 elevator applications to the right, 1 with a holographic display and 1 with a more basic direct approach installation, a retrofit installation from a partner in Hong Kong. So shown here is then examples of our 2 target segments, interactive kiosks and elevators, and I will skip this in the sake of time. So when it comes to contactless touch, we have 2 ways to go. We have our sensor modules. You can use them to project light field on top of a surface or in midair. And if you arrange the sensor model cleverly and program the software cleverly, you can create what we call a parallel plane configuration. So a few centimeters or even millimeters in front of your display or in front of your keypad or similar, you can have the invisible infrared light field that we can then use to detect 1 or more fingers pointing at or through this light field. And then you as a user can interact with underlying system without having any physical contact to anything. Actually, everything is done mid air and straightforward. And one example is the retrofit installation for elevators that we saw on the previous picture. The other main alternative would be today to use the holographic display. And we are working with 4 or 5 companies in the world now actually developing and selling holographic displays. Before they met with us, they had like a passive component that could display images into mid air. But by using our sensor modules, we can actually touch activate those hovering images that are projected into midair. And all of them work according to the principle to have a semi opaque piece of glass that reflects part of the light shown on it into free air. And depending on how you angle this holographic plate, you will have the holographic image in a vertical arrangement or slightly tilted. And of course, you have to be a little bit clever, but you can arrange our sensor modules to go with that holographic picture. So where we see the biggest opportunities for our solution is with interactive kiosk and elevators, 2 very interesting markets segments, massive volumes. If you take all the interactive costs together, we have an installed base of some 39,000,000 units and strong growth. And elevators is today close to €20,000,000, yacht shy of €20,000,000 and strong growth with 1,300,000 or 1,500,000 elevators a year. And we have both the retrofit play and the new equipment play in both. So it's a very interesting market opportunity for us with our contactless touch solution. Interactive kiosks could be then subsegmented according to this. We talk about vending machines, point of sales in fast food restaurants, coffee machines, ATMs and different types of self-service kiosks. For instance, self check-in, self checkout at an airport, ticket machines at train stations and similar. Elevators, I think you all know what we mean by elevators. What we want to highlight here is that there are 3 main categories of companies that we are today engaged with. One group is the elevator OEMs. They are well known brands like Otis, Kone, Thyssenkrupp, Schindler, Hitachi and so on. The second group that we are in contact with today is companies focusing on control panels or push buttons for elevators. They can sell them to the OEM manufacturers or in the aftermarket. And the 3rd category would be maintenance and repair companies. And the elevator market in the world is slightly different arranged in the U. S, North America than Europe than Asia. So in some markets, the OEMs themselves, they would do maintenance and repairs. But in other markets, these are 3rd party companies, independent tech companies, independent service companies. And we, with our own sales force, but mainly with our partners, we try now to reach as many of these as possible and support them locally because this is how we win digitally. This is very much focused on contactless touch. We still have a lot other opportunities that we are exploring, and that's the beauty of having the standardized products and ecosystem of partners up there. So we would serve also customers looking for a touch solution or gesture sensing. And that could be in medical office equipment, white goods, transportation, other. And we have several examples of other promising use cases for our products in these segments as well. But our own focus will be going forward interactive kiosks and elevators. Looking more closely at the kiosk market, we can see as vending machines, coffee machines and the fast food restaurant terminals at McDonald's or similar where you order your food and your beverage. They make up the largest portion. ATMs actually is a smaller portion. And self check-in and checkout, if you would single out, those are pretty small. There is an interesting growth in all of these except ATMs, which is basically flat. ATMs is on the decline in Western Europe and North America, but on the other hand, it's increasing in developing countries in, for instance, Africa, South America and so on. So that's why in the combination means that there's a flat market size for ATMs. Some of the OEMs we are talking to in this space, they, of course, cover multiple of these subsegments. So we are not focusing on just single of them, but we are monitoring this. We see that some OEMs are stronger in some subsegments or in some geographic regions. But overall, the volumes are very high. There is a good growth rate, and we think it's a very, very interesting segment to work on. Elevators, it's a little bit different. The world market is totally dominated by some 10 or 12 big OEM companies. And we see this pie chart, Otis, Mitsubishi, Schindler, KONE, Thyssenkrupp, Hitachi, so on and some Chinese. The biggest growth in installed volumes we can see in China and other parts of Southeast Asia. But because there is a huge installed base also in North America and Europe and they will be serviced and refurbished and upgraded on a regular basis, It's very much an active market also in these developed countries. And as we say, we have a play both with the big OEMs and the control panel companies and the maintenance and service companies. And we can do both retrofit and new equipment. So elevators is also super interesting for us and promising. I mentioned before that we work both with direct sales and with different types of partners. We have this year now in a very strategic way and very systematic way working to expand our partner network. From before, from 2019, Neonode has been working with DDKEY and CERIO, and they are examples of fulfillment distributors. We could add 1 or 2 more in this category later this year or beginning next year. Where we see that we have a very important channel to the market is through our value added resellers or partners. They could be and shown here, the companies that we are working with so far, they are a mixture of tech companies and engineering firms or both. And they are typically regional or national. So for instance, Highline, they have headquarters in Munich in Germany, and they work mainly in the German speaking countries in Europe. Global Electronics Co and Japan Aerospace are based in Japan. Fine Tech and T and V Tech are in South Korea, and they typically have a strong focus in their respective markets. And we have also other partners, and they range from technology companies like hollow industry and DSR that work on holographic displays and convergence, which is a network of sales reps that we work with in the U. S. So we think this network, although it doesn't automatically mean that we have increased our sales. They are a very important tool for us to penetrate different markets and segments that we are targeting and to speed up that penetration and growth. So that's why we are very happy to have these partners, and I would especially like to emphasize the value added resellers, which we think will be important for us going forward. And to see what they have been doing so far, let's look here 2 success stories with elevators. Finetec from South Korea have developed a very neat retrofit solution actually in 2 or 3 different variants that they are now promoting to customers in South Korea, both OEMs and for new equipment and for retrofit to OEMs and local landlords and service companies. And very similar company called Hong Kong Productivity Council have done a similar solution, which they are promoting in Hong Kong and China. And they have seen actually a good growth of their business, thanks to the cooperation with us. And that's a win win, both with Finetech and HKPC. And that motivates them to promote our solution because it helps them to win. And at the same time, it helps us to win. So it's really a win win. And we think it's 2 very good success stories. In the airport kiosk space, we have, together with a company called Happy Hover in Singapore, a good story to tell about Changi Airport. And now they're in the second or third phase of installing more contactless touch interfaces in the airport terminals. At Cengi, they're also expanding to other airports and to other customers besides airports and aerospace companies. Quite similarly, Japan Airlines have picked up a proposal from Japan Aerospace to do contactless touch check incheck out terminals. And there is a pilot ongoing at the Haneda Airport in Tokyo. And both JAL and the other Nippon Air in Japan are very interested to install it across all their airports in Japan and all their terminals. So Japan Aerospace and Happy Harbour, they are actually pushing this quite hard because they feel that they can expand significantly using our technology. And at the same time, it helps us to grow and penetrate these respective markets. So these are four examples of what we are doing with our value added partners. And the other value added partners we have and tech partners we have, they are working in similar projects with their respective customers in their respective markets. So all in all, we think that this combined direct sales approach and the partner approach is very, very important for our future growth and success. So why do we have these 2 business areas when they are sort of similar and they both work with human machine interface technology? Yes, they are separate but mutually supportive. So we have different focus for the 2 business areas. HMI Products, sales of standardized products, HMI Solutions, here we offer customized solutions and it's a technology licensing business. In HMI Products, we will have many, many customers, mainly indirect sales through distributors and partners. And typically, the customers will buy and use our product as is. And then you see the contrast to what we do in HMI Solutions, very few customers, mainly direct sales and per program could be quite large development efforts. This is a solutions business. But we think the strategy is right, and there are many synergies that we can use between them about business opportunities, product ideas, partners, technology, etcetera. So we feel encouraged in the progress we have made so far this year, and we will definitely continue to work on these two separate but mutually supporting business areas, and we think it's the right way for us going forward. We want to optimize and improve in each one of them, and we want to grow in each one of them, But the combination is a very strong point, I think, in the E and O of 2020 and going forward. Finally, some words about our newest business area, remote sensing solution that we officially launched this year, And it's a new business for us. It's a software business where we aim at becoming a Tier 2 software supplier to Tier 1 system suppliers and OEMs in the automotive industry. The focus is so far 100% on driver and in cabin monitoring. Long term, that may change, and we may also look at other types of applications for this type of AI software that we are developing. But right now, in the next years, we will be full focused on driver and in cabin monitoring. So our technology here is a scalable AI software platform that supports different types of driver and cabin monitoring features. It's a scalable platform. It's hardware agnostic. It has also very limited footprints. It can run on virtually any processor out there. And we can achieve high performance even with a lower resolution camera, which is the main sensor input that we are using. And by having these low system requirements means that we can solve for the demands, for instance, stipulated in the European GSR and the Euro NCAP guidelines for driving monitoring features in new vehicles from 20 24 and on, we can solve for that with very low system cost. And this is a strong point in our offering compared to our competitors, both other Tier 2 software suppliers and Tier 1 system suppliers that sometimes have resorted to more brute force approaches and quite expensive hardware components. So again, one of if you get a chance to ride with a customer in an elevator, what we will always pitch is that our solution is scalable, it's hardware agnostic, low computational footprint, and we are there to help them increase safety and fulfill the legislation going forward. The main drivers in this market is safety concerns. And in the European market, for instance, the European Commission have looked very closely at driver distraction, driver drowsiness and how this causes a lot of accidents in the traffic. And in view of the Sierra vision to try to avoid any kind of accidents, the commission in November last year published a GSR requiring an advanced driver monitoring feature in every vehicle that will be sold in the European Union from 2024 and on. So it's a safety concern about the driver's state. Is he distracted if he's falling asleep? And then linked to autonomous driving also, is the driver actually holding his hands on the steering wheel or not? Another type of safety concern is what's known as side left behind. And especially in the U. S, there is a big debate and there is an upcoming NHTSA regulation for these type of features so that you cannot accidentally forget your child or your pet in a locked car on a hot sunny day. And this is another type of safety concern. Also, people are realizing that you could monitor the seat belt use and actually how you apply the seat belt that is positioned right. And this type of technology that we're working on here can actually support this. So these are all examples of safety features. And at the same time, all the OEMs in this automotive business, they are looking at comfort features. And then it's everything from autonomous driving, which is a safety and a comfort feature, down to very personal preferences and how you prefer your climate control or audio control in the car. And the software we are developing and the in cabin monitoring features we can offer, they would support this type of feature in modern cars. And if you as an OEM would invest in a camera in the cabin of the car and hardware to run software on, what we are seeing is that all of them will have a quite long list of features that they want to realize using that hardware. And we have anticipated this from the beginning with our development of the multi sensing software platform, and we can actually support a wide range of these types of safety and comfort features and still at a low cost. And this is really our right to win in this space. In view of time, I will skip forward here and say that how do we differentiate from competition. Those of you that have followed us this year, you may also be aware about some of our competitors and may also follow them. Or you are just interested in the automotive market, so you may have understood that there's development for driving monitoring features going on. What we rely on very much is some unique proprietary software algorithms. They are AI algorithms using machine learning code. It's very tailored. So in the end, our approach works well with the very, very lean models that then take very little to execute on even a small processor. We are also relying very, very much on synthetic data, and that supports short development cycles, excellent change management, and we can upfront and with precision calculate or estimate future development efforts. So in sum, compared to other companies working with rule based driver monitoring software algorithms or AI based, we are more efficient, we are faster. We are more transparent and, clannable. So we bring different values to our customers in this business area. And with this overview of our strategy and business, I will turn the word to Maria Eek, our CFO. Maria? Thanks, Erwin. You can find our 3rd quarter earnings release and 10 Q available for download from the Investors section of our website atmianon.com. So I'd like to start with a summary of the quarter. Revenues are up by $200,000 compared to the same quarter 2019. This is driven by sales of sales sensor modules, while license fees were almost flat between the years. Our operating expenses are higher than planned for the quarter, dollars 3,000,000 compared to $2,400,000 in the same quarter 2019. However, on a pro form a basis, removing onetime costs, our operating expenses for the Q3 2020 would equal cost 2019. Due to the above, our operating loss was up by $0,600,000 compared to the same quarter 2019. We have net revenues of $1,500,000 for the Q3 of 2020, which is an increase of 14.1 percent from the comparable quarter last year and almost double compared to the Q2 this year. Revenues from our solutions business consists almost exclusively of license fees and were $1,200,000 during the Q3 2020 as well as 2019. However, revenues related to automotive has increased from $400,000 to $500,000 while revenues from consumer electronics decreased from $800,000 to $700,000 We see general lower license revenues due to slower sales in the global markets related to the COVID-nineteen pandemic, so the increase in automotive is a positive development. It relates to a customer project that was completed a couple of years ago went into production in 2020 and is expected to be in production for at least 5 years. In the Q3 of 2020, our customers to license our technology shipped 1,700,000 devices with an average license fee of $0.69 And in total, to date, more than 77,000,000 devices with MEO Note technology has been sold. Within our HMI Products business area, we have seen an increase in the number of sheet products in the Q3 with revenues of 300,000 compared to $100,000 in the same period last year. Most of the product sales has been through our partners in the U. S. And China. And as of end of September, we had a backlog of $0,500,000 with a planned shipment within the next three quarters. We continue also to receive purchase orders for new sensing module shipments and have increased our manufacturing activities to meet the increased demand. Our gross margin was 87% for the Q3 2020 compared to 95% for the same period in 2019. The decrease is due to a mix of higher product sales with gross margins ranging between 30% to 50% in 2020 compared to 100% gross margin licensees in 2019. We expect this trend to continue as our sensor module sales increase as a percentage of our total revenues. Operating expenses increased by 25% to $3,000,000 for the Q3 2020 compared to 2019, which is due to onetime costs, partly offset by lower payroll costs and less traveling. Excluding the one time costs, our operating expenses would have decreased by 2%. Our net loss for the Q3 2020 was $1,700,000 or $0.16 per share compared to a net loss of $1,100,000 or $0.12 per share for the Q3 2019. Excluding the onetime costs, our net loss for the Q3 would have been $1,100,000 or $0.11 per share. Net cash used in operating activities during Q3 2020 increased by $400,000 compared to the same period last year. The main reason is the increase in net loss. We had cash and accounts receivables of $13,300,000 at the end of September, which we believe is sufficient capital to position the company to capture the growing customer demand across all our business units. And with that, I would like to hand back over to Oren for closing remarks. Thank you, Maria. And in closing this presentation, I would like to highlight a few points here. First of all, that our SeaForce technology, which Neonode has been developing from mid-two 1000 and on, and that is very well patent protected by us. These are enabling technology ideally positioned to solve for a lifestyle shift to contactless touch solutions brought on by COVID-nineteen. In comparison to other companies that now try to exploit the search in demand for contactless solutions. Actually, we have existing and proven and ready technology, and we are ramping up our production to fulfill the increase in demand that we are seeing. We see that and we still believe that there's an enormous market opportunity for this, both in new and retrofitted equipment. We are focusing on the 2 very large segments, interactive kiosks and elevators. We have a global reach, and we are talking to customers both North America, Europe and Asia, and we'll continue to do so in the coming quarters years. So this is a very exciting time for us, and we continue to build orders for these products. At the same time, we are also pleased to see that we have a significant interest for our D Force and multi sensing technologies from customers in the avionics and industrial control system industries and the automotive system automotive industry, respectively. So in sum, we think that we have a good play and a good future in all three business areas. We also have by the private placements we completed in August adequate cash resources to grow and accelerate. And the focus for us now and the coming 12, 18 months or so is clearly on execution on growing sales and growing the top line, and by this, we are expecting also to be able to present to you in coming calls an improved bottom line, so improved earnings. By this, we have come to the end for our presentation, and we will now open up for questions from our analysts. And I will ask you, Dave Brunten, to moderate this. Thank you. Okay. So, Christy, you want to open it up to questions? Certainly. And you have a question from Victor Westman of Redeye. Hello. Thank you. Can you hear me? Yes. Okay, great. You've been doing quite a rebuild of the organization, Urban. I just wanted to ask how long time you think it would take before we see some effects of this transformation and the change and what are the first effects we will see? Yes, we are actually rebuilding NeoNodes from outside in and inside out. So we are doing quite massive overhaul. But we of course, we do it try to do it in a sensible way and step by step. So during the Q2, 2 strong additions to our team were presented, Mr. Johan Schwartz and Mr. Jonas Svan. And they head up our business unit HMI Products and HMI Solutions, respectively. They have really made started to make an impact on our business and our strategy and what I present here. And also, they are working to expand our own sales force and the partner network that I mentioned. So here we see examples of results already. Just the other week, Mr. Atsushi Ichi joined as a new VP of Engineering. It's too early for him to make a strong impact on what to present here, obviously. But I expect that he, together with Joanna Jonas and the rest of our team here, will have a stronger and stronger and more clear and more clear impact on our business and our strategy. So we are quite excited about these new additions. Recently, we also I can mention, we hired 2 senior salespersons, 1 in the U. S. That will focus on the military and avionics market and one in Europe that will focus more on the industrial and elevator segments. Both of them have more than 20 years in sales and sales management positions in very, very relevant industries and actually working for competitors of ours. So this is the way we step by step and gradually are rebuilding the team and strengthening the team. So I think we will continue. On my personal agenda, I have some more things I want to do before I say that we are done. On the other hand, in companies like this, you are never done. So it will be more of a continuous development as we go forward. And we always try to be agile, and we are prepared to change our plans and adjust. And what we discussed with the team here last week was one example is that in January, February, I could not see that the COVID-nineteen pandemic would hit us so hard and that we will see this increase in demand for contactless touch. But I think we have responded well and adjusted in a very good agile way. And this is the approach that we will take regarding our organization, recruitment and how we use our resources going forward. Yes. Good. And you mentioned military market there. I think military the military market, it's moving really, really fast compared to automotive. So can you say some I mean, in other words, really slow. Can you say something about if there is possible to speed up the processes and arrive quicker at substantial sales in this segment? It's right that we have we still work with automotive customer. We work now also try to target military customers. And we also have other customers that work in industries where typically the sales cycles are quite long and the development cycles are also long. And we have been quite open and clear about this. We think from actually beginning this year that the transformation that we are trying to achieve in Neonode will take some time, maybe a couple of years. But of course, we try to shorten this time and also use, say, our scalable platforms and reuse a lot of the designs and developments. And this is to help our customers to have a shorter time to market. And this is, I think, a value in our offering to these customers that we can actually speed up things compared to their normal development. And this is thanks to our good technology platforms and also our know how from 15 years working on touch gesture sensing applications for printers, e readers, automotive and medical, for instance. And I think military and avionics is quite clear what you mean. But what do you refer to in the industrial segments? Is that dirty, very rugged industry? Can you give some example on the sweet spots here? Yes. We think there are actually 2 sweet spots. But indeed, rugged industrial applications, and that could be in sort of if you have actually a factory environment, it could be hall or something where you have you can have both moisture in terms of water, oil in the air. You can have dust. You can have also outdoor applications that should work in the wintertime and hot and cold and similar. So rugged is what we have in mind in the 1st place. But speaking about synergies between our HMI Products business area and HMI Solutions, I think also in kiosks and elevators, what we will see is that especially large OEM customers in those segments, they will, I think, to a larger and larger degree, ask us for more bespoke solutions that are specifically tuned and adapted to their products. And here we are. We are still neonode, and we will definitely try to capitalize on such opportunities as well in HMI Solutions. So there are these 2 sweet spots, if you will say, Victor. Yes. Good. Can you give us a short update on the pilot for the 6 retailers with the big self-service kiosk manufacturer. They had a quite aggressive rollout plan, if I recall. Can you say something about that? Yes and no. Our customer in this case, it is a leading player in the, say, interactive kiosk market. They have a worldwide reach and a very large organization. They are quite committed still. They are pushing ahead with their own quite aggressive plans. We know that they have right now, it seems very positive resonance from a big retail chain operating in South America. They are still working with a few chains in North America and in different parts of Asia Pacific. But I don't have any more substantial news that I can share at this point. But it's still looking promising, and solutions are have passed some different internal approval stages at our customers. So we are quite optimistic about this, how this will play out. But I can say personally, I think that the growth anyway will be like step by step for this is a very big company that we are dealing with, and there are many customers. But of course, each customer will make their own decision, and they will come 1 by 1, I expect. So I don't expect like 1st December, for instance, that it come an explosion of 50 new programs with this customer. It will come 1 by 1 over the next quarters. But we are still optimistic, and it's looking good. And we have encouraging feedback from our customer that they also think that this will fly in a very good way going forward. Okay. Last question is, if I may then, on the competition for when on the competing technologies for elevators and kiosks. What are the typical alternative technologies to be used there? Do you see a lot of radar or kind of flight sensors in the market or something else? I would say personally for kiosks and ATMs, I personally regard mobile phone apps as one serious competitor in terms of an alternative technology or alternative way of solving this problem. But it will be a it's a fragmented market. So some will use capacitive sensors and boost up the power in those so that they will react actually a few millimeters out. But compared to capacity solution, we think actually our solution is much more straightforward and better. But there are also some companies doing like with cameras and then it will be more 3 d gesture sensing. And I'm sure there are also applications where radars are being used, plus voice controls. Actually, if you look at this whole market, there's everything from mobile phone apps to camera based gesture sensing, voice control. And then we work in a portion where infrared is more directly competing with, say, Pcap solutions. Overall, I think we have a very strong and compelling offer. It's simple, intuitive, and it doesn't interfere with if there's an underlying display or a keypad. So it works perfectly for retrofits and very easy to use and can also be integrated very nicely new product. In elevators, I know some elevator OEMs are promoting their own mobile phone apps. But if you think of it, how intuitive is it? If I'm going to an office building or apartment building that I have to pull up my mobile phone and in this building they happen to have like Otis elevator. I have to download the Otis app. That's annoying. We have a much more straightforward solution, and it works perfectly with the traditional type of control panels and touch buttons that you have in elevators. And for instance, the very nice solution developed by Finetech and some other companies that we work with in North America, they look magnificent. They look actually very stylish and they work excellent. So there in elevators, let's say, mobile phone apps and other advanced solutions, they are not so intuitive and easy to use as our so we have a very strong offering there. Okay, great. Thank you very much, Urban and Maria and Dave as well. Keep up the good work. Okay. Thank you, Victor. Thank you. And thank you, everyone, for joining. We will publish the slide deck from this presentation on our website later today on neono.com. And I will also mention here in closing that in the slide deck, we have an appendix with some reference to market data that we have used to build up the diagrams and the pie charts that we showed during this presentation. So if you're interested, look at neono.com later today, and you can see that slide deck from this presentation. Thank you very much, and join us again for our Q4 call beginning next year. Thank you. Thank you. This does conclude today's conference call. You may now disconnect.