Acconeer AB (publ)

Hi and welcome to this live queue. Today we have Acquaneer with us with the CEO, Ted Hanson, presenting the second quarter results. This will be followed by a Q&A session. So if you have any questions, make sure that you fill out the form on the website and we will ask those later. But without further to do, I hand over to you, Ted.

Thank you and good morning to everyone. Nice to be here. So I'm Ted Hanson. I'm here to present the Q2 report for Acunir. I will have a very brief company introduction if there is anyone new following us, and then it will be followed by the Q2 earning report, and then a brief operational update. And as Asmus said, we will then have a Q&A session. Acunir, we are a leader in low power millimeter wave radars, Fabdesk Semiconductor Company, headquarter here in Malmö, Sweden. We develop and sell low power millimeter wave radar solutions. Our technology is based on research from Lund University, and we have a unique way of combining micrometer accuracy and extremely low power consumption. That is the key selling point behind the technology in this company. We have a global distribution and a sales network, and we have customers in more than 50 countries today. We are a supplier in the automotive industry, which is a strong testimony to the quality in our products. We have sold more than three and a half million sensors, and we are in more than 200 end products. We are listed on the NASDAQ First North since 2017. To the left, you see our A121 sensor, which is a 5.5 by 5.2 millimeter one TX1RX complete radar solution with antennas. And below you can see our key selling point or unique selling points. It is this extremely low power consumption with the micrometer accuracy in a very small form factor, high integration, giving a very robust measurement that works through plastic materials, rain, and different kind of weathers and temperature and so on. So that's a brief introduction to Akonir. If you look at the Q2 report, we saw a revenue of 10.5 million Swedish crown, which is a 30% decrease year over year. The gross margin of sales of goods was 60%, similar to the 61% we saw in the second quarter last year. We see a strong momentum in level measurement, presence and cargo tracking, These areas are growing significantly quarter of a quarter, despite a dollar that is trending down. We had a very low automotive sales in the quarter due to slow market combined with A111 inventory and the new models that are using A121 are in early ramp up phase. And we anticipate a gradual increase starting from this third quarter. It's also worth mentioning that the dollar has depreciated. And if you compare year over year, we have a 1 million SEC impact with a constant dollar exchange rate. So meaning that if we had a constant dollar exchange rate, we would have had 11.5 million SEC revenue in this quarter. Moving on, looking at the volume and customer launches. So we sold 200,000 sensors in the quarter and had 13 product launches. Nine of these launches were in our product areas where we focus most of our efforts on and four launches were in other areas. These launches outside the product areas were mainly in parking sensors, which you could argue is a type of a presence application. But historically, we have not placed it in that category. If you look in the graph, you can see that the pink part, which represent the volume of modules, increased in the second quarter. We saw a strong quarter for module sales. In fact, we got orders towards the end of the quarter, which we were unable to deliver within the quarter that will be sold in the third quarter. So there is a positive momentum around the module business as well. Looking at the P&L, as I said, we had a sales of 10.5 million with a gross profit of 7.3 million, which led to an EBIT of minus 8.26 million. If you compare that to last year, you can see that we have reduced the cost. The EBIT is roughly 1 million lower than last year, but the gross profit is 2.8 million lower than last year. If I look at the cost, so this picture here shows the total OPEX of the company, plus the A2 investments that we're doing, the capex of A2. That is not 100% of the cost in the company, but it's very close. There are some costs related to patents and A1 capex that it's not in this graph, but this is the vast majority of the total cost of the company. And we saw then in the second quarter this year a significantly lower cost base than last year, 15.5% lower actually. If you look at the first half of this year compared to first half of last year, it's down 11%. And with the changes that we have done and where we are in the A2 project, we anticipate continued OPEX decrease during the second half this year. Looking at the cash flow, I think it's worth mentioning that the cash flow from investing activities, which is mainly A2 investments, is 9.9 million in the second quarter compared to 12.7 corresponding quarter last year. So we can see that the investments are going down and we are approaching the end of the A2 project and it will go into commercialization phase. Cash flow from financing services, 24.8 million. That is the second part of the rights issue that is in the second quarter result. At the end of the quarter, we had a cash position of 69.57 million Swedish crown. I would also like to take the opportunity to reiterate the financial objectives for 2025 to 2027. These were communicated by the board in early 2024. and they are still valid. We are targeting the first EBIT positive quarter this year and the first cashflow positive quarter during 2026. And we see revenue of more than 300 million Swedish crown in 2027. And we target the long-term EBIT margin of at least 25%. Now I would like to go through our product areas and give a brief operational update. So as I have spoken about before, we are now focusing on six product areas, six focus areas. These are level measurement, presence detection, cargo detection, industry and automation, automotive in-cabin, and automotive access control. We also have candidate product areas that we are looking into that we are considering to develop offering and roadmap for and start to go to market with. The main candidates are vital sign monitoring for heart rate and pulse and breathing, robotics, obstacle detection, and gesture control to do the 3G gesture control with the radar. In the market today, we have two sensors, our AE111 and AE121. Both are one channel radar solutions, one TX, one RX. They are giving a very high accuracy and very low power consumption, smallest footprint in the market with integrated antennas. We're also selling modules and we do this to shorten the customer time to market and to give them a pre-qualified solution that they can go to market with easily. We see now there are more opportunities to sell modules in higher volume. And we're actively working now with several customers to bring the module business to a new level of volume. In addition to that, we have our A2. The first product out from A2 is the A212, which is a multi antenna solution with angular resolution. We also have integrated an extra MCU in the sensor where you can run the application and it provides increased range as well as angular resolution. This solution is sampling and we target to ramp up production early 2026. If you look at the product areas, the first one is level measurement. I've spoken about that before. We see there is an increased demand for accurate remote monitoring of inventory. This is a part of the mega trend where everything is connected to the cloud. Our technology, which we call PCR, the pulse coherent radar, really fits well with the requirements of this market. We have a very accurate sensor, extremely low power consumption, and also have the ability to measure close to the sensor accurately. With our technology, customers can develop products that can target many different types of tanks and type of level measurement applications with the same solution. Because of our low current consumption and high integration, it's also easy to install and maintain our products. We are expanding our product portfolio to target both small and large tanks, also work with different materials with different kind of reflectivity, and we are working on additional power consumption improvements to extend the battery lifetime. During the quarter, there were five customer launches, now have more than 25 customer in mass production in this market we made a software release i would say that we were already world leading when it came to power consumption but with this new software update we take another step and become even more power efficient we have a strong pipeline we are working with new customers but we're also working with existing customers to expand our market share within those customers. So a lot of good traction in the level measurement in the second quarter. The next area I would like to talk about is present detection. And also here we see an increased need for advanced human presence detection and non-intrusive monitoring, which is a strong match with the strengths of our radar solutions. This is one of the areas where we will focus on early with A2. because we can add new capabilities with A2 to presence. We can extend the range. We can do people counting and tracking. We can do classification of objects. And we see a very strong interest in combining presence with vital sign monitoring. In the second quarter, there were three customer launches, and we have started to distribute A2 samples to more customers. There are now more than a handful of customers that are evaluating A2. And there is a strong ongoing activity to convert these evaluations to design wins. And I would also like to take the opportunity to mention that we have received some initial feedback from some early customer evaluation. So some customers that has experience with our A1 sensors, they have experience with our main competitors, they have been evaluating A2. And they are giving very, very encouraging feedback on A2. They see that it really is a performance improvement compared to A1. And that is very encouraging for the work going forward. Moving on to the cargo detection, I would claim that we were early to see the opportunity in cargo detection. Also here, there is a strong trend to connect all containers and cargo to the cloud to track where they are. But in addition to tracking the position, there is also an interest to track how full the container is, if there is human presence, the integrity of the cargo, if someone opens the door, for example, if there are vibrations or if something has moved around. And the most important factor here is power consumption. And typically you would like to have 10 years battery lifetime or longer. We are now running projects and having dialogues with most of the large players in Europe, which confirms this potential. In the second quarter, we received the first larger order in this segment, an order of 3.3 million Swedish crown from a company called Digital Matter. We also released a reference application that has been tested in real-life environment, which will shorten customers' time to market and ease their integration. So a very good quarter for cargo detection, and we feel very comfortable and very positive about this market going forward. Moving on to industry and automation, So this is really about replacing inductive proximity sensors in industrial applications. Our technology is a good match. We can see also carbon fiber material, plastic materials that inductive sensor does not work for. In addition to that, we have the ability to measure accurately close to the sensor, which is a problem for our competing competitors with competing technology. We can also offer extended functionality, for example, distance measurement, speed measurement, and also vibration measurement. During the second quarter, we start discussions with several new potential customers to accelerate this market and to get faster to the market. In parallel, we keep working with our lead customer in this segment. And as I have said before, this market has a significant potential. It is a possible mass market for us, but it is a bit slower market. It's industrial application. It takes some time. So the work is progressing and we're doing the best we can to accelerate it by going after more customers now in parallel. Then moving on to the automotive market, there are two product areas in automotive. The first one is access control. And here it's really about improving the user experience. So you have a higher detection rate and you have a lower false detect rate. PCR, our technology offers superior performance compared to the capacitive traditional solutions. We have 11 models in the market and we're working with three of the world's top five OEMs. And we have a standard product with Alps Alpine that is on the shelf. It's available for all their customers. globally to integrating new car models. And during the second quarter, we saw a new car launched, the Jeep Compass. I think now we have a very strong solution here and we feel positive about winning additional business going forward together with Abseilpine. The other segment in automotive is in-cabin sensing. And this is about child presence detection and pet detection which is driven by regulation to make sure that you don't leave behind children or pets in the car. We have three launch car models and during the quarter we delivered the production variant of our A212 to the lead customer and it has been integrated and we are really, really proud and happy about the performance that we see in the real car. And we're looking forward to this model ramping up in early 2026. We also attended tech shows at two global car OEMs to promote our technology. So a lot of interest in interior detection, and there's a lot of interest in our products. So that was a brief update on the operational side. And now I will hand back to Rasmus for a Q&A.

All right, thank you very much for that presentation. We have received a lot of questions relating to your financial targets, so I think we can start in that end perhaps. So regarding the 300 million SEC target you have for 2027, could you give us a more detailed breakdown of the key drivers of this target?