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.

Welcome to the ACONIR Q1 2026 earnings call. I'm Telle Hansson, CEO of Aconeer. And with me today, I have Anna Hallerid, who is Head of Communications at Aconeer. As usual, I will go through the quarterly report, give an operational update, and then we will have a Q&A session in the end. Let's start by looking at some of the highlights of the first quarter in 2026. We saw a net sales of 18.3 million SEK, which is record for Aconeer. and it's also the third consecutive quarter with record revenue. The revenue grew 34% or with constant currency 57%. It's worth noting that the growth in product sales was 71% year over year with constant currency. So a very strong growth in product sales. The gross margin of product sales was 50% in the quarter That is a bounce up from Q4, where we had 46% before inventory adjustments. This is a result of the effort we have put into working with the margin. We have done further improvements. We have been working hard with our suppliers. We have been increasing prices to customers, and we expect that the gross margin will trend upwards throughout 2026. During the quarter, we shipped A212 in volume. This is, of course, a major milestone for Aconeer. Five years developing, culminating in volume shipment, and it's a great achievement for the company. We also today announced that we have received firm orders that are confirmed for 2026 delivery that exceeds total 2025 revenue in US dollars. So definitely, we are geared for growth in 2026. We might have some new listeners, so I would like to take the opportunity to briefly introduce Akonir. We're a leader in low-power radars, Swedish fabless semiconductor company, headquartered in Malmö, where we have around 50 employees. We develop and sell low-power, cost-effective millimeter-weave radar solutions. We have been listed on Nasdaq First North since 2017. Radars can be used in a lot of different applications. And there are more than 200 end products in the market with our technology. And we have sold over 4 million radar sensors. Our technology is based on research from Lund University. We call it PCR, Pulse Coherent Radar. It combines very high accuracy and very good power consumption. This is a unique selling point for Aconeer, and we're the only company doing this kind of pulsed coherent radar systems. Though radar sensors can be used in a lot of applications, we have decided to put strategic focus on a few areas, and those are automotive, level sensing, cargo tracking, presence, and industrial automation applications. We are also very proud to be a qualified and trusted supplier to some of the largest car manufacturers in the world. In November 2024, I announced an updated go-to-market strategy and an organization to support that strategy. And the strategy, the essence of the strategy is to focus on some sectors of product areas where we see there is a significant market we see that we have some unfair advantage, and we see that there is growth in that market. And as I already said, we selected presence, automotive, cargo tracking, level sensing, and industry and automation. Since then, we have put A212 into mass production, and with that new advanced sensor, we see a significantly increased addressable market. So with the A212, we can address new markets. It will not cannibalize the existing markets. We will use it to reach new large potential markets. And if you look in the picture down to the left, you can see that in the first quarter of 2025, we had one customer in one product area with a revenue exceeding one billion Swedish crown during the quarter. And that was automotive. Now we have been running the strategy for a bit more than one year, and we start to see real concrete evidence or result of the strategy. In the first quarter of 2026, we had customers in five product areas where we had orders from a single customer exceeding one million Swedish crown in the quarter. So there is a real growth in the company coming from larger companies, coming from larger customers, And it is happening in the areas that we have decided to focus on. So for me, this is a clear evidence the strategy is working. And this is how we will continue to drive growth going forward. There's been a lot of progress in the product areas during the quarter. I would like to mention some of them here. Level measurement is still the largest vertical for us in the first quarter. It keeps growing. We are selling significant volumes of both sensors and modules and Very importantly we see that we are getting closer and closer With leading customers. We are aligning roadmaps We're having strategic discussions and we are working together to grow the business very positive momentum in the level measurement Automotive, so 2025, as we have reported, we saw a significant decrease in the business in automotive. And now in 26, we see that the business is coming back strongly. We see A121 volumes increasing. Last quarter, we announced that we are in high volume cars from Toyota, for example, and that really helps to boost the volume. We also saw the start of A212 volume shipment during the quarter. And as you can see in the picture, we can also confirm that we are a part of the Volvo EX60, which we are, of course, very, very proud of. During the quarter, we also made progress in presence area. We received a 3.6 million Swedish crown order for passenger detection in trains as one example. There are also more projects that will enter mass production that we hope we will be able to communicate in the coming months. Looking at cargo tracking, I would say there was steady progress. We received some orders that we made press releases for, but also maybe more importantly, we see that some of the projects are now moving from development to validation phase during the quarter. And this type of validation is not a few units that are tested in a lab. We are talking about thousands of units that are placed in live containers that are shipped around the world. So from a Aconeer point of view, it's already approaching mass volume for us, even though it's still the validation phase. Very positive. In industry and automation, this is something that we have been talking about for quite a while. We see there is a huge potential here. We have been working with customers for several years. Still the business is in the infant stage, it's starting up. But we see that the momentum is increasing. We can now announce that we are working with three of the four largest European industry and automation companies with active evaluation of our products. Mainly they're doing distance measurement, proximity measurement, but also there is vibration and tank level measurement activities ongoing there. Looking at A2, so this is our new product that we enter mass production with. The sensor development as such is now in the final phase, so we are reducing the investment levels. And you will see that when we look at the financial results, that the COPEX is going down for the company because we reduced the investments levels in 8212. As we did the first volume shipment, we also have to start amortize the capitalized development cost that is in the balance sheet. That started in March and that has a negative non-cash impact on the EBIT that I will discuss in the financial slides. We are not finished with A212 when it comes to algorithm feature growth and we're just starting up the customer development work. So we will keep working with A212 for years, but it will move from silicon sensor development to go into developing algorithms, features and customer applications. Today we have more than 15 customers. that are significant in size and that have significant potential working with A212 for presence applications. And most of these customers are using A212 for presence plus something. And something here could be tracking, classification, counting, vital sign as examples. Going back to the numbers, as I said, we had a record revenue of 18.3 million Swedish crown, a product margin of 50%. The EBIT was minus 9.3 million compared to minus seven for the same period last time. And this is not because the cost of the company is increasing. This is explained by the fact that we are now amortizing A2 development costs. So there is a 1.8 million SEC higher amortization, which is a non-cash item compared to Q1 2025. Also, when we move R&D cost from development, which is COPEX, which is put on the balance sheet, into OPEX, it will hurt EBIT. So if you compare with Q1 2025, there is 6.1 million SEC lower capitalized R&D cost. which then hurts EBIT. So if you add them together, it is close to eight million. If you add eight to the minus nine, you will see that it's getting close to zero and it's significantly better than the same period last year. Looking at the inventory, we are now increasing volumes and we are very, very focused on making sure we can deliver without building inventory. We want to keep the working capital to a minimum. And we have previously many times spoken about high inventory of A111. The inventory on total level is going down. Significant part is A111 that we're working with. And you can see in the quarter that it actually went down, even though the business is increasing. And that is thanks to all the effort we put in into managing the working capital. And as I said, OPEX increase, and I would like to take the opportunity to explain a little bit more about that. So if you look at the OPEX for Q1 2026 of 17.7 million SEK cash items, that's the salaries, the office, and those costs that are cash items. That is 2 million higher than the same period last year. But if you look at the COPEX, which is a cash item, it is more than 6 million, sorry, 5.7 million lower than last year, the same period. So the total cash out from the company, if you add the cash items from OPEX plus COPEX, is actually down year over year. And now we have moved from COPEX to OPEX, and that will have a negative impact on EBIT. And please note that In the Q1, we started amortization of A2 in March, so that we expect that this light blue part of the OPEX, which is 2.6 million here, will grow in Q2 because we will amortize A2 in three months in the second quarter. So that will hurt the EBIT, of course, but this is a non-cash item. If you look at the total cost when it comes to cash out, it is actually down year over year. So let's look at the cash flow. We have announced that we have a company target of reaching cash flow positive quarter this year. In fact, we did have that this year. It was plus 23.8 million Swedish crown. But of course, that was inflated by a rights issue that gave us net proceeds of 29.8 million SEK. So that is not our target to achieve it with a rights issue. The target is to have a cash flow positive quarter adjusted for financing activities, meaning we deduct any financing activities. And if you look at the graph down left, you can see the cash flow adjusted for financing activities for the five past quarters. And you will notice that in Q1, 2026, we have minus six, which is a significant, significant improvement compared to previous quarters. That means that without the rights issue, we bled 6 million Swedish crown in the quarter. That is by far the best quarter in the past five years for ACONIR. So we are making significant progress towards our goal, even though EBIT looks worse. Please remember, cash is king here. We are focusing on cash here and cash flow. EBIT will come as the revenue goes up. The cash position end of the quarter was 67.2 million Swedish crown, and we had a count receivable of 12.5 million SEK, which is up from last quarter. That is a consequence of the increased revenue, the increased sales. We don't have any bad customers. We don't have any bad debts from customers. We're getting paid on time. A large part of the revenue comes from the last month in every quarter in semiconductor business. So this is normal. All right. With that, I would like to summarize the quarter. Very happy to report record revenue, very strong growth in product sales. We are on track with A2. We are now shipping in volume. As you just saw, we have significantly reduced the cash bleed of the company. We are making significant progress towards our goal of being cash flow positive. And we are definitely geared for growth. We have firm orders confirmed for 2026 delivery that exceeds total revenue of 2025, and we are only in April. We also reconfirm our financial objectives that we have announced previously. So those are now cash flow positive quarter this year, 300 million SEC revenue during 2027, and a long-term EBIT margin of at least 25%. With that, we would like to move to the Q&A session. Thank you.

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Yes, so thank you for sending in a lot of questions. I will dive right in and start with one about A212 that is related to certification. So Magnus here is asking, according to the annual report, A212 is certified within automotive. We are waiting for certification. Are we waiting for certification in other segments or is A212 ready for mass production outside automotive as well?

Yeah, so when it comes to certification, I assume Magnus is mainly referring to FCC certification, which is the US certification. And our customer, Alpine, they have certified A2124 with FCC. And Aconeer are also doing an FCC certification on our reference design. That has not yet been completed. But we don't expect there will be an issue. And as I said, Alpsalpine design has already passed. And definitely, we are ready to start shipping A2 both in automotive, which is already happening, and outside automotive.

Great. Thank you. There are quite a few questions related to design wins outside automotive for A212. Can you comment a bit on that?

Yeah, so Alpsalpine is our channel partner for automotive, meaning they are driving the automotive business. They are selling complete interior cabins. They're selling complete systems modules to the car manufacturers. So we are really relying on them when it comes to design within automotive. Of course, we are actively supporting them and we are doing everything we can to support them. But it's really they who are driving the automotive business. So I don't think I can answer on behalf of Alps Alpine. But of course, we both companies have high expectation of the automotive market when it comes to A212. Remember, Alps Alpine invested in ACONIR and are funding a large part of the A212 project because they see the opportunity in the automotive sector.

Great. And what about outside automotive? Last year we communicated that we had an ambition to get one during 2025. What is the status now? Is there something we can share?

Yeah, so as I said, today we have more than 15 customers that are actively working with us outside of the multi with A2. And all of those customers are companies that we would like to work with. So it's not random companies that have found us on a website. It's companies that we see there is a significant potential with and they are a significant player in that area. And there is customers that are have designed their own PCB with our sensors. There are customers that are working with designing their own PCBs. So the design-in process is proceeding. And we have announced a small design win last quarter report in Korea. And as I said at that time, we will communicate design wins in A2 using the same methodology using the same standard as we do in automotive. So if there is a design win that leads up to the criteria, we will communicate it when it happens. What I can say is that there's a lot of customer interaction. There are many meetings happening every day with customers around the world on A2. There's a lot of activities. We are very optimistic about the future for A2. And now we are, you know, working towards securing the sign win from all of these customer evaluations and engagements that we have right now.

Great, thank you. There are a couple of persons asking questions about the EX60 and what applications and functions that we are in, if there's anything we can communicate around that.

Yeah, so I can only communicate what can be confirmed using public sources. So if you go to Volvo website and you download the user manual for EX60, you will find a Coneer FCC ID for A121 and it says it is used as a kick sensor. In the same manual, it also says that there will be passenger detection functionality in the car, but they haven't disclosed the part number or the FCC number for that part. So I cannot comment on the child presence solution in EX60, but I can confirm that we are the kick sensor supplier today.

Yes, thank you. Here's a question about the gross margin. Were currencies still affecting gross margin negatively in Q1 like in Q4?

Yeah, but to a smaller extent, I would say. The US dollar has kind of stabilized, meaning that the exchange rate when we purchase the goods and the exchange rates when we sell the sensor is more similar compared to what it was last year. And that is also related to that the cycle time is becoming shorter. We are selling more volume, When we get goods in, we quickly ship it to the customer. So that will help to mitigate the US dollar fluctuation. In Q1, as I said, we saw a bounce back in the gross margin, but we're not happy with 50%. And we have taken a lot of additional actions. We have been working with our suppliers to drive down the cost, to secure volume and drive down costs. We have also increased prices to customers, and we have a clear target of driving up the gross margin throughout 2026.

Great. I think that was the last question we have time for. So thank you everyone for listening in and sending in good questions.

Thanks, everyone. Have a good day.