Acconeer AB (publ)

Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Hi, and welcome to Acme IQ for 20.5 earnings report. I am Anna Ahlryd, head of marketing and communications at Aconeer, and I'm here today with Ted Hansson, CEO of Aconeer, who will go through our Q4 earnings and then we will have a Q&A session and you can submit questions through voice or text. Welcome, Ted.

Thank you and good morning to everyone. Let me start by sharing some highlights of the fourth quarter. We saw a revenue of 17.2 million Swedish crown, which is a new record for Aconeer. This is a growth of 67% compared to the same period last year, or with a constant currency, a 91% year-over-year increase. We noted 14 product launches in the market, and we sold or shipped 266,000 sensors. So this was our second consecutive quarter with a record revenue. We also announced that we saw a strong sales growth outside automotive of 73% year over year. In the fourth quarter, we were really happy to see Toyota RAV4 2026 model launched with Acornir access control. by end of yesterday we have firm orders for 2026 shipment with a value that is above what we sold in total 2025 in automotive sector so we see a good momentum in automotive we received the first volume orders for our new sensor a212 and we are happy about the progress we're making when winning larger customers with A212. We also noted the first smaller design win that I will elaborate a bit on in the coming slides. And finally, the board of directors proposed a directed share issue of 31.7 million Swedish crown to Eiffel Investment Group, subject to approval by an EGM. Before we go into the Q4 details, I would like to take the opportunity to introduce Akonir briefly in case there are some new listeners. So Akonir, we are a world leader, a global leader in low-power radars. We develop and sell low-power, cost-effective millimeter wave radar solutions. We're a Swedish company headquartered in Malmö. We have been listed on Nasdaq First North since 2017. Our products are based on a unique technology that originates from research at Lund University. And the benefit of this technology is that we get a very, very low current consumption and a very high accuracy at the same time, something that we are unique in the world with. Recently, we have enhanced our product offering with a new advanced multi-antenna product, which will allow us to target new value applications and increase our growth speed. We have more than 200 products in the market and sold more than 4 million sensors. We have many customers that are working with products that help to improve life and society in general. And that is, of course, something that we are very proud of doing. So as an example, I think it's worth mentioning a bit about this. We not only work with innovative technology in Aconir, we're also proud to develop products that in many cases are used to improve quality of life or even save lives and give a positive environmental impact. Examples are child presence detection in cars, vital sign monitoring of sick people, fall detection of elderly people, detecting persons in containers and so on. Saving energy and carbon emissions with advanced presence applications. saving logistics and transportation with level measurement applications. In addition to being proud of working at a company that is actively contributing to solve some of the largest challenges we face today, the environment and managing an aging population, it also helps Aconeer to attract talent and generate interest for our company. Finally, I would like to say that we are a trusted supplier of automotive industry, which is a strong evidence of our product quality and supply chain. Our radar sensors are used in many applications and we have decided to focus on a limited number of applications where we see a strong advantage with our technology. We see a significant market size and room for growth. We are focusing on level sensing, cargo tracking, automotive access control and interior detection, advanced presence and proximity sensing for industrial automation with the sensors that are in volume production today. With our new sensor, which we call A212, we are adding more radar channels that gives us additional information. We will get the ability to track and count objects in a room, increase range and resolution. With our new product, we're entering new high-value applications. In automotive, our sensors can be used for posture detection and size classification. This information can be used to deploy seatbelt tensioners and airbags in a more optimal way, which increases survival rate. We can count and track people in rooms, used in smart buildings to conserve energy, detect people falling without privacy intruding camera, and increasing concern with an aging population. Improved by design monitoring, which means contactless measurement of respiration and heart rate, can be used in patient monitoring applications from hospitals, prisons, et cetera, to home care. Strong interest from customers in both elderly care and baby monitor applications, We see strong interest from customers in both elderly care and baby monitor applications. We also see a great opportunity in robotics, such as obstacle detection for lawnmowers, robot vacuum cleaners, drones and so on. In 2025, we saw a strong growth in the non-automotive area. We expect this to continue. and that A212 will become a complementary product that will accelerate growth further. So I think it's important for us to note that we see that we have a strong growing business with A1, and we will continue to grow that business. And with the new A2 sensor, we will be able to address additional opportunities that will further accelerate our growth. meaning it is not cannibalizing or replacing our A1 business. A few words about automotive. In the fourth quarter, we were very happy to see Toyota RAV4 2026 model launched with Aconir Access Control. In 2024, Toyota RAV4 was the third best-selling car model globally, according to Statista, with more than one million units sold. As a reference, Volvo in 2024 sold 760,000 cars altogether. Early indications indicate that RAV4 might have been the best-selling car globally in 2025. We received orders for 3.6 million Swiss crowns for the new A212 sensor, and mass production of the first car model is planned to happen in the first half of this year. We were very happy to have a design win where we managed to replace an existing supplier for access control in a premium European car manufacturer. I think this is an important achievement as it proves that our technology is superior and we can even replace existing suppliers, which is of course much harder than winning a new project. Also, we saw that Polestar 3 was awarded Euro NCAP's safest executive car in 2025. Volvo EX90 was awarded five stars out of five possible in Euro NCAP. Both of them are using Acunir radar for interior detection. So with these references, I would like to state that Acunir has very, very strong, probably the best reference you can have in our industry. Toyota is well known as having the highest quality. We are now in their top selling model, might be the best selling car in the world, actually, with our KICK sensor. At the same time, we are in the cars that have been awarded the highest safety rating and in Volvo, which has a perception of the industry as being the most safe and reliable car. So very, very strong customer references in the automotive sector. We also confirmed that we stand behind the design win value that we have communicated earlier of some 76 million US dollars between 2024 and 2032. We believe that there will be 30 altogether product launches in automotive by end of 2027. And as I said initially, we have already by today, firm orders for 2026 delivery in automotive that exceeds the value of 2025 full-year actual. So definitely we will see a growth this year in automotive. Moving on to the non-automotive, we spend a lot of effort now on commercializing our new A212 sensor, and I would like to give you some update about that. First, I'm happy to report that we have achieved a design win, and I call it a smaller Vital Sign customer, And the reason for that is that I told the market earlier that we are going to go after larger customers with A2. We want to find customers that can make a meaningful impact on our revenue, on our business. And that is where we're spending our effort. However, we have also allowed some of our existing highly skilled A1 customers to get access to our A2 evaluation kit. And one of them, a Korean company, completed the evaluation and decided to start a commercial project that will be launched in 2026. The value is not significant when it comes to revenue and that is why we have not announced it separately. We continue the work to win larger customers and during the quarter we saw several of them concluding the technical evaluation for smart building management and elderly care system with positive results, which means that we are now qualified to win commercial projects design wins. Going forward, we continue to focus on maturing our offering and to support customer projects. In the fourth quarter, we saw a record module sales driven by level sensing and cargo monitoring. We also announced a 5 million sec design win for public transport seat occupancy. And it's very pleasing to see that a large part of that design win has already been converted to firm purchase orders. Out of the 14 product launches we saw in the fourth quarter, we had 12 of them coming from product areas outside automotive. Now, I would like to go in and talk a little bit more about the Q4 performance. As I said, we had a 17.2 million SEC revenue in the fourth quarter. Up 67% year-on-year or 91% with constant currency. Constant currency means that in the US dollar, expressed in US dollars, as we are trading in US dollars. We had a 4% growth quarter-over-quarter. EBIT is minus 6.2 million in the quarter. It significantly improved from the same period last year. The EBIT is impacted by a lower gross margin when it came to product sales. So our gross margin for product sales came in at 35% compared to 40% in Q4 last year. There are four main reasons for that. The first one is the product mix. We sold significantly more modules than what we have done before, and modules inherently has a lower gross margin than sensors. In addition to that, we experienced some component shortage when building modules. So a module consists of our sensor, there is an MCU, there are different components. Some of the components specifically related to power supply has been hard to source and that has forced us to buy them at so-called spot market where the price is significantly higher than what it usually is. We have taken strong actions to mitigate this and we are now really focusing on making sure that we can drive the cost to this place where it should be and recover on on the margin when it comes to module sales we also have a negative impact of the us dollar exchange rate that comes from us buying components producing sensors paying in dollar converting that to swedish crown inventory and then selling it in US dollar when the US dollar is at a lower exchange rate. So there is a negative, significant negative impact on this. And also in the fourth quarter, we did an inventory adjustment of 1.8 million SEC. This relates to A111 materials, our first generation sensor, to some specific versions that are not used in automotive and not used in the full performance product that we're selling to most customers. With that, I would like to move to the next slide and look at some of the key metrics. You can see that the inventory we managed to deplete from 55 million end of 2024 to 48.9 million end of 2025. And there is a slight increase compared to Q3. And that is mainly related to us now preparing A212 material. So we have received wafers, we are producing sensors, we are testing sensors, and we will start shipping to our customer actually in this month. So that is a natural and expected increase of inventory. At the same time, we can see that the volumes of A121 are going up. So we are getting more wafers in, we are producing more sensors. So there is no concern about the increased inventory in my view. And when you look at the cost, you can see that OPEX for Q4 came in at 14.5 million Swedish crown, which is down year on year, but it's significantly higher than Q3. And there are a couple of reasons for that. The first one is that Q3 is the big vacation period in Sweden, which gives a very low OPEX because people use annual leave. The second reason is that as A2 has entered the final stage, a larger part of R&D efforts is now spent outside A2 projects. And when we develop A2, those R&D hours are becoming CAPEX, capitalized expenses. They were put on the balance sheet as an asset. And now we are doing more customer work. We are doing more integration work. We're doing more other work than A2 development. So a higher part of the R&D cost is turning into OPEX. And this is something that I spoke about last quarter that we project is being finalized. COPEX is down in the fourth quarter and if you add OPEX and COPEX together, which is a good representation of the total cost in the company, you can see that we have a 23% decrease year over year. Looking at the cash flow, In the fourth quarter, we had a 3.8 million negative cash flow from operating activities, significantly better than the same period last year, but it's worse than the third quarter. And the reason is the cost that I just went through in the previous slide. Cash position, 43.4 million at the end of the year. We had an account receivable at 11.4 million end of the year. This is the highest we've ever had. And I just want to point out that we don't have any problem with collecting payment from customers, but the large part of the quarterly sales typically happens in the last month of the quarter. So when we ended December, we had 11.4 million account receivable that is now being paid to us in January. Most of those customers have 30-day payment terms. Cash flow for the period, minus 12 million Swedish crown compared to minus 19.6 for the same period last year. Finally, I would like to talk a little bit about the revenue split between automotive and non-automotive. This is something that we elaborated on in the preliminary Q4 figures that were released a couple of weeks ago. And as I've already said, we saw a very strong growth outside automotive, 73% year-over-year. And this is something that I feel very happy about, very proud of. I think this is clearly showing that the focus strategy is working, it's paying off. This is the market where our salespeople are active, where we meet the customers. We are the channel to the market, and we managed to grow that 73%, despite that declining US dollar. I think that's a very strong achievement. Now we will see A2 coming and adding to this growth. So we are bullish about the future here. Automotive in 2025 went down 57%. However, there is a positive momentum and I think that's important to stress. We see increased volumes. We are now in one of the best selling car models in the world. We have received orders for A2. We stand by our design win value of 76 million US dollars. And as I already said a couple of times, 2026 already is a growth compared to 2025. The orders we have today for 2026 exceeds 2025 actual. With that, I would like to move to the next slide and talk a little bit about the directed share issue that the board has proposed. So as we have communicated, the board has proposed a directed share issue of 31.7 million Swedish crown to AFIL Investment Group. And AFIL Investment Group is an institutional investor. They have more than 7 billion euro under management. They are a well-known and well-respected investor. And they typically invest long-term in sustainable companies. They are investing at 10.5 Swedish crown per share. which is a premium of 2.1% compared to the closing price when this was announced. This will result in a 3.97% dilution for existing shareholders. And we state that the proceeds will be used to accelerate growth. I would like to make a small reflection on this. We raised money in the beginning of 2025. And I have continuously said that our plan is to use that money until we reach a cash flow positive result. And that is what we are running the company towards. There is nothing fundamentally that has changed. I am confident that we could have achieved cash flow positive with the money we have. However, I'm equally confident that it would be a sub optimization to do so. there are so many opportunities out there both with a1 and a2 that we would like to go after and accelerate faster that will require small additional investments so rather than doing it in a very serial way we would like to go after these opportunities in a more parallel way and this proceeds will be used to very carefully make investments that will allow us to go after this in parallel. That is the main reason behind this directed share issue. The second reason is that I think it's a very strong message to get an institutional owner on board, specifically such a prestigious investor such as Eiffel. It strengthens our owner base. We get an institutional investor on board. I think it's a very strong message as well for the company. So those were the two main reasons behind this directed share issue. And this is, of course, subject to an extraordinary general meeting that will be held on February 19th. My final slide here, a summary. Fourth quarter, record revenue, second quarter in a row. We have received volume orders for our A212 sensor. We have invested more than 100 million SEK in this project over five years. It's been a very tough, a very long project, and it's so relieving to see that we're getting orders and we will start shipping volume in February to our customer. This is a major milestone in this company's history. Very, very pleased to see Toyota launching high quality car brand, their largest volume model, now with A121 for kick sensor. It's fantastic. We see that A212, there's a lot of interest in the market outside automotive. We are progressing now. We have passed technical evaluation with several customers. we are moving on to the next phase. In parallel, we have recorded the first design win, and we have proposed a directed share issue that will enable us to go after all these opportunities in a faster, more parallel way to accelerate our growth, and at the same time, we strengthen our owner base. As you all know by now, we have some financial objectives that were communicated by the board in 2024. The first was an EBIT positive quarter in 2025, which we achieved in the third quarter of 2025. For 2026, we have an objective of reaching a cash flow positive quarter. And I just want to clarify that this is operational cash flow. We are not going to use the proceeds from the directed share issue to achieve the cash flow positive quarter. Operationally, we have to achieve it. We have a revenue target of at least 300 million SEC in 2027 and a long-term EBIT margin of at least 25%. With that, I would like to conclude the presentation and hand over to Anna for the Q&A session. Thank you.

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Thank you, Ted. Yes, so let's dig right into the questions. We received quite a few. So first of all, I have a question about the cash flow positive goals. So the last two quarters, the revenue was similar, but we still iterate the financial goal of a cash flow positive quarter during 2026. Which segment do you expect to increase in revenue the most this year?

In percentage wise, I think automotive will have a very strong growth. As I said, we already have order coverage above 2025 actual. So definitely we expect a very strong growth in automotive. We also start shipping our new A2 sensor in automotive. But we did a 73% growth outside automotive last year. That's a great achievement. I don't see any reason why we shouldn't continue growing that business as well. So basically, we are expecting growth in all our product areas.

Great. And in Q3, you mentioned that level measurement automotive and presence would be the three largest verticals for 2026. Can you elaborate a bit on which use cases you believe in within presence for 2026?

I believe what I said was related to 2025 business. I don't think I made such a comment on 2026 revenue. But I've said before, and you just saw it, that non-automotive was significantly larger than automotive in 2025. In 2026, as I just said, I expect we will have a very strong growth in automotive, but I don't see a reason why we wouldn't continue growing outside automotive as well. I don't think I can elaborate more on percentages, but we expect to see growth in all areas.

And are there any particular use cases within presence that you expect to be strong?

Yes. With A2, we see that there is a lot of interest in A2 when it comes to smart building management. There are more regulations, there are more requirements on managing energy efficiency in buildings. And at the same time, we have an increasing privacy concern from people. They don't want to be monitored with cameras. So radar is a very, very good technology to understand how people move, where people are, without intruding on their privacy. We believe that this will be a significant market for presence. We also have adjacent markets where they want to use presence to understand if a person comes into the room, but once there is a person in the room, they would like to monitor this person. It could be to make sure that they don't fall in case of an older person, or it could be to make sure that they stay in bed if they're supposed to be in bed, or it could be to measure vital signs to make sure that they stay healthy. So basically, with A2, presence will be the initial function, and then many customers will either use tracking or classification or vital sign monitoring in addition to presence, using the same sensor, of course. So those kind of use cases we see a very strong interest for.

Here's a question that's a little bit related to that. Maybe you already answered part of it. So the fleet occupancy market, where we also got the design win in the quarter, It's interesting, and there are a lot of possibilities in the passenger transport industry. Trains, airplanes, buses, and so on. Any thoughts on future business? This could also include city transport and passenger management, for example, gates to some ways.

Yeah. So first of all, regarding the design wind that we announced, the end customer is linear, which is London North Railway in the UK. They actually made a press release where they name our customer and they explain the reason behind the decision to add this sensor. And when you read that, it's very encouraging. They say a very strong and quick return of investment to add this because they will be able to do pricing based on occupancy and so on.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Sorry, I think there was a small mistake here. We will continue the Q&A session even though we closed it here. Sorry for that. So as I said, the end customer released a press release where they explain why they are doing this and how they will make money on this, and that it's a very fast return of investment. I think this is something that we will see more. I know that our customers are looking for additional end customers. There's a lot of interest. So definitely railway is one area. But of course, we also have buses. We also have other kinds of public transportation. So I think there is a lot of potential in that area.

Great, thank you. Some more questions about the A2. So here is one related to design wins. And the question is, are the customers evaluating the A212 outside of automotive, mainly Alpine customers? And are these expected to convert into design wins?

No, Alpine is mainly focusing on the automotive sector. They want to launch this premium car. There's been a lot of work going in to that from their side with our support, of course. AlpsAlpine have the right to sell A2 in any product area they want. They have a lot of business in other areas from gaming controls and logistics and so on. So I'm sure that they will go after those markets or I hope they will go after those markets as well. But what I have been talking about are the customers that we are working with directly. So it's Aconeer sales team, it's Aconeer engineers. Those are the design wheels that we are in control of, that I have been reporting and communicating about, not Alps Alpine's end customers.

Great. And here's a question about the A2 module. So we now see module sales increasing. Are you planning to create the module for the A2 sensor to deliver potential needs related to A2 customers?

There are customer interests in A2 module. It will be a decision purely based on business case on return of investment. If there is a positive business case for us to develop and sell a module in A2 we will do so.

If there is no business case we will not do it. And finally, for A2, is there any feedback, both positive and negative, from the customers evaluating the A212 that you can share?

Yeah, so we've had a rather large number of customers that have been evaluating A212. And the general feedback is that we have the world's best angular resolution, meaning the ability to separate two objects that are close together. We are outperforming competition. We also have some customers that are saying that we are better than competition when it comes to range, which is, of course, very nice to hear. So those are the two strong, positive things that we see. On the negative side, we are not the first one to have a multichannel radar. There are competitors that are in volume production. And being in volume production means that you have a certain maturity and we are still striving to reach that maturity. So I would say that maturity is something that specifically large are concerned about. And that is also why evaluation takes more time and we need to develop or demonstrate features at the higher level, not only the raw sensor performance, but we need to show the customer that we can meet the requirements on use case level. And that is the process that is going on now.

Thank you. So a couple of questions about the share issue that the board proposed. So we recently convinced this large investor to invest in Acomere. Do you see any more need in the future to do it again?

It's a board decision to raise money and issue shares. It's not a management decision. But from my side, I don't have any plan or any request to do so. That's all I can say about that.

Thank you. And I'm not sure you want to answer this, but someone here is curious if the capital raise was initiated by you or by APALS. Has any major customer indicated that the cash position needed to be strengthened in order to enable it finally?

Yeah, let me start with the second part. Actually, when you start working with larger customers, you also start to work with customers that will put the higher priority on de-risking. So having a stable supplier, having a qualified supplier, a long-term supplier, is more important typically for larger customers than it is for smaller customers. And some customers have questioned, are you able to be a supplier to us? You are so much smaller than your competitors. We are so big. Do we dare to use you as a single source supplier? And that is, of course, a challenge that many or all small semiconductor companies will face when you want to grow, when you want to work with all your customers. So having a more stable or stronger owner base is definitely going to be helpful. Having more cash is also very helpful, but ultimately they want you to be a profitable company. And that is where we need to bring this company. Once you're profitable, these discussions become easier. Today we are not in a situation where we are blocked by this, but we are definitely not in a situation where we get bonus points from large customers when they do their assessment of us because of the financial size of the company. So that's a very relevant question. The other part is, I mean, I'm constantly meeting investors, institutions, private people, family offices and so on. And this is an investor that I, both sides, we found that this is a good match, what we are doing, where we are, what we're trying to do and the type of company that they are looking for. So I think it was a strong mutual interest on both sides and very, very happy that we managed to close it. And in fact, that they decided to invest in Acunera at the premium compared to the closing price at the stock market, I think is a very strong sign as well.

And maybe one final question here. Within consumer electronics, which one or two applications do you see as the earliest candidates for large-scale rollout?

So outside, I guess this is, I don't know if this question is related to A2 specifically or... In general, so within consumer electronics. Yeah, yeah. I guess smart buildings will be, there is a high chance that that will be a significant volume relatively fast. And the second one, I'm not sure which will be faster, if it will be vital sign or it will be obstacle detection, but I guess one of them.

Yes, I think that is all. Thank you very much for all the questions submitted, and sorry if we couldn't have time to reply to all of them. Any final comments from you, Ted?

Yeah. Thanks to everyone for listening in. And sorry for the small technical issue here we had. I hope everyone could hear us well. With that, I say thank you and I wish you all a nice Friday afternoon. Thank you. Bye.