NextDecade Corporation Price & Performance (NEXT)

That means Securing the sales pipeline for 2025 and 2026 and onwards. Without customers, we will have no revenues, of course. If you you can change to the next slide, please. If you highlight on the Q4 Our strong order pipeline is for this quarter continued But as already communicated, the revenue were down compared to our anticipation. As well as down in comparison with Q4 twenty twenty three. And then is because of the L1 powers that UIDI have set on introducing [indiscernible] products on the market. I will go through a bit more the status and where we are with that on a later [indiscernible] [indiscernible] However, we had a very good gross margin 61% of the in the Q4 quarter. Again, we are guiding that we will stay above 50% This was an exceptional quarter in that perspective because of the sales of the product portfolio contained a lot of China high average selling price products. Again, we brought in six new customers, six new design wins. One of the design wins we announced yesterday coming from India a tablet. It's a tablet for the Indian bank sector. We also had very, very [indiscernible] One year ago, I set up a target for getting Fab 30 engineering samples within Year twenty twenty four, and sort of a Christmas gift, we had engineering samples.

We sent out a message on that. And I will actually show you the demonstration samples. They are now available and they are out with customers. I also promised to have [indiscernible] MOU within [indiscernible] actually, that was more a New Year Christmas, then Christmas gift, So December 30, we actually signed a NII18 million MOU for the Fab 30 device. Which will be the $18,000,000 NUC revenue will start second half of this year since from now until the first half, we are still doing the mass production Parts of the FEP30, We also during Q4 announced a MoU for a new government ID product actually enhanced that 20 product we are now taking a larger portion of the product itself. It means that we will getting higher ASP, average selling price of the of the product. We do not only sell the [indiscernible] but we are actually also selling the Fab 20 in combination with the MCU. Which is then bringing us higher ASP. During the quarter, we also expanded our PC portfolio. We expanded it into very, very closely related technology, which is the touchpads So and we have announced already the first design wins in touch pad.

It's a keyboard. That will be launched during Q1. We are of course eager to get additional design wins in this segment. And we believe during 2025, we will see additional design wins with the touch pad offering. You can go to the next slide, Claudia. And I will I will hand over the Q4 financials to the our CFO, Erik Anderson. Hello, can you hear me? Thank you. Next slide, please. I will now run you through the Q4 financial highlights. On this slide, you can see the summary of the Q4 P and L. Revenues were €13,300,000 versus $14,300,000 in quarter four twenty twenty three. The revenues were impacted by the pause in the India market as well as the slowness in China, that Ulf mentioned.

The gross adjusted gross margin was 61% in quarter four twenty twenty four compared to 45% in quarter four twenty twenty three. This is due to the significantly higher 20 and China ID share in the product mix for the quarter. On operating expenses, we ended up with adjusted OpEx of [indiscernible] $19,900,000 compared to $14,800,000 in quarter twenty twenty three. The adjusted OpEx is increased in line with the plan to increase sales on R and D efforts. The adjusted EBITDA was negative €11,800,000 compared to negative €8,300,000,000 in quarter four twenty twenty three. [indiscernible] cash and cash flow, Next ended the quarter with cash of $62,900,000 compared to $45,500,000 at the end of quarter three, twenty twenty four. In the Q4 period, there was a high concentration of sales in December This impacted the operational cash flow together with the continued late payments on accounts receivables. The positive cash flow from financing was €30,700,000 in the quarter. The main message from this quarter is that the India pause and the China market slowness reduced quarterly revenues. Moreover, the company completed a private placement in November 2024 Another highlight was the strong gross margin level in quarter four. Next slide, please.

The gross margin has increased significantly in 2024 compared to 2023 and it has stabilized above 50% as you can see in the graph. And the Q4 adjusted gross margin was 61%. This This development can be explained by the change in product mix from the high PC sensor share in 2022 and 2023, and then changing to a situation in 2024 where we have a high share of Fab20 and China ID products, which again have higher margins. [indiscernible] With this item, will turn the call over to Ulf again. Thank you. Thank you, Eric. We can stop to the next slide. I will now go through the business and market updates. I have five slides, four slides. And I will start with, of course, the unfortunate short term impact stop in L1 and Harr. You can take the next slide, please. So as we early communicated, we have a temporary pause in the adhaar business. The majority of our running business at this moment. Our main partner is up for final approval for actually this incident that happened. That made the Indian government stop the the rollout of L1 devices. L1 is the new new specification in India.

So there was a accident during Q4. There was spoofing on a on a competitor device, a competitor product a competing technology. Which made the UIDI to actually pause this rollout of the upgraded L1 that we have been talking so much about. So it's a short term impact for NeX NEXT the majority of the sales are within the adhart system But it actually looks like it's a long term gain for the company. We have now an increased market opportunity. Since now the government actually adds requirements on liveness testing, it's a It's a language in biometrics. Basically, it means that you remove all sort of dead matter [indiscernible] your finger on the sensor itself. So these stricter security requirements It's actually 2% next market share because it will actually remove [indiscernible] competing solutions on the Indian market. We We have a strong high security product make sure and actually our positive outlook is that the ADR program is of course crucial for India. And it's also looks that next biometrics market share will increase with this shift or additional requirements that the Indian government have. We believe that the business will resume very soon. Our main partner is up for approval.

And we are expecting them to pass early [indiscernible] So all the unfulfilled orders will, of course, be delivered in Q1. And let's take the next slide. I think, Jim, next slide, please. Yes. So if I if I look at the next biometrics, Our primary focus is and will be for the next few years b Feb twenty six. We have a competitive edge over competitors. We have lower power consumption. We have a very slim form factor. We have a competitive price. We have a unique value proposition compared to many competitors, and we are replacing all the 18 new customers in 2024. We are actually replacing a competitor. We are also taking steps in the FAT20 portfolio and the product development Actually, to stay ahead with the government ID products, That means that we will be having a higher average selling price We communicated already during Q4 that we have a partner and we have a memory MOU agreement and a NOK30 million revenue potential starting second half this year with this government ID product. If you look at our go to market strategy, We are strategically expanding in the government ID markets. And of course, we are strengthening our presence in India in China, and beyond.

Few examples of that is we have had design wins and shipped products to Malaysia. And Pakistan during Q4. And as I said, we have this MOU for the Indian governmental projects for a new upgraded government ID product. With higher ASP. So if you look at the market size, this is what we have communicated also in the Capital Markets Day one year ago. The market size is between 15,000,000 units annually. It's our estimate. Short term goals, of course, are to achieve breakeven quarters with our strong Fab 20 sales. And that's what I see That's how we did in Q3 and that's what what I will see in the coming quarters as well. Our long term vision is, of course, to establish a market leadership with 20% market share. And setting the industry benchmark for liveness detection and our unique selling points. If you move to NEXT slide, I will talk about Fab30. So the product I showed you is now for out for presentation. We are demonstrating it to customers. Compared to Feb twenty twenty, it has [indiscernible] equal unique selling points, low power consumption, extremely slim form factor, again, engineering samples are being shipped to customers.

And we believe We stay on the schedule. We have mass production during 2025, and we will see products available and mass produced during second half of twenty twenty five. The SUK-thirty market is even higher security demand market. This also means that it's actually spreading geographically for us in Africa, U. S, South American markets.

Where we see majority of the Fab 30 going forward. Market size, we have verbally communicated about €1,000,000 We believe actually we have upgraded. We believe it's [indiscernible] And our short term goals are, of course, finish the product internally, and make it mass production ready. And ship at least 100,000 units between within twelve to eighteen months. And when I say 100,000, maybe it sounds very small, but with a ASP of [indiscernible] €80,000,000 and $120 apiece You can see that it's actually substantial revenue growth for NEXT biometrics. Similar to the effect 2020, our long term vision is, of course, to have a 20% market share also in this portion of the of the market. And with the initial discussions and feedback from We believe this is not just a very, very long term vision, but it's actually something that we can achieve within short. [indiscernible] expecting initial purchase orders. Now we have samples with our OEMs. We have demonstrated it So they will now decide and make the mold and the plastic around. So during Q2, Q3, we will see the first purchase orders and market deployment in the second half twenty twenty five And if you look at further strength in this portfolio, this is a huge opportunity for us, which of course, if I look at where we've spent our time, it's probably 80% of the time, if F 2020.

And then a portion of the time on the rest is on the Fab 'thirty. Again, it's a fab 30, it's more high end than the fab 20. But it's actually not a replacement for fab 20. It's a totally new different market. So it's actually expanding our geographically spread Good part here is as well. There's a lot fewer fewer competitors compared to in the fab lab twenty twenty. Because, for example, the technology capacity will not work you will not dare to make capacitive sensor in this size. It will be too much expensive [indiscernible] [indiscernible] a bit midterm up upside, I would say, in the company.

So last twenty nine or thirty of Jan, we had an innovation day. I will would like to summarize that a bit. You can take the next slide, please.

So as we communicated, we are entering into a new [indiscernible] And that is not just because we see that we will shift the focus of this to different sets. We are actually being contacted by large display companies We are we believe we have the right technology and we are now leveraging on our patented active thermal technology creating a solid long term roadmap, a technology roadmap for this piece that we actually are our R and D are working on. We are now in the stage of validating a licensing model financed solely by global display partners To see how we can address this market. As I said in the face to face meeting, we are targeting a demonstration of a prototype at Mobile World Congress in 2027. This is a long term growth long term R and D plan [indiscernible] this is nothing that the sales organization is focusing on at all. It's not nothing the operations focusing on at all. It's an R and D project. And [indiscernible] as I explained, a huge upside of of this technology in this But it's an early phase. It's in our business development But we believe that we have the right technology to build prototype and later on a mass production ready display where you can have a fingerprint sensing technology throughout the display.

And this is, of course, tempting to go into the smartphone, for example, but it could also be tablets, could be other types of displays. This is what we are innovating at this moment. And as I said, during that call, we go out now because we need to start talking to the ecosystem partners in this That's how we have communicated. So let's you can take the next slide, please. I will now move over to summarize and after that we will have a Q and A session. There's a possibility to ask question online as well. And I believe we have received a few questions before. On that as well. [indiscernible] repeating my message as from Q3 report, we are targeting €180,000,000 to €200,000,000 revenues for 2025 [indiscernible] the revenue growth is, of course, coming from the majority of the Fab 20 and the increased ASP in the Fab 2020 portfolio. Sort of to the Later part of 2020, Five. We will see in the product mix we'll also sell the fab [indiscernible] We actually take a stand on the we now have revenue growth. We have larger purchase orders, as you have seen, We actually are changing the way we do the next press releases.

So we will not we will send out equally amount of information but the parts of new design wins, for example, they will be sent us news on our website and on LinkedIn. And e mails. The press releases will be dedicated for higher valued revenue, for example, and special occasions in the company, of course, like the quarterly report and annual report and so on. In general, of course, we continue to focus on Fab 20 states. We held our unique offering and competitive advantages And we believe we will achieve the breakeven quarters driven by sub-twenty sales alone. We have the sort of up side of Feb thirty later on this year. Which will accelerate the revenue growth. Short term, of course, we also focus on the cash collection, which we in the report, we are saying repeating that the Q1 will be going down in accounts receivable. As we know where the customers are actually launching But of course, we are prioritizing this to ensure steady cash flow. We will, of course, also communicate around the new innovation. But already now I can say that the message we've sent have already reached strong industry interest And we have been contacted with different international players.

And again, this is just beginning of this journey that we see And again, this is a bit more long term, but we will keep you all investors updated with the progress we're making and we'll have at least demonstration in in mobile world Congress in 2027. That's all for the Q and A. I don't know if we have any questions online.

Erik. Yes. We have some questions and it's impossible to ask the questions in the Q and A part of this It's in 2025. I don't know if you have any more details on that, [indiscernible] So mass production ready it will be mass production ready first half of twenty twenty five. And then first customer deployment and purchase orders and deliveries in second half. Which quarter? It's a bit too early to say. We, of course, have our internal milestones and so on, but that's the communication we are giving currently. And there's one more here on We have seen a lot of new design wins and announcements But the current revenue per quarter indicating that there's something missing. Can you explain this?

So design wins are measured based on different criteria. So it could be a new use case, a new market segment. It could be a substantial large order Design wins are in the early phase. And I believe we have been talking about design wins previously. When we announced a design win, it's a customer that have selected the next biometrics product. It possibly started integration of that product. But it could also be that they have in its turn nine months for certification, it could be three months doing the plastic around and electronics. Inside the integration of the sensor into a separate system. So I mean, the 18 announced design wins 2024, you will probably see some of them three months out, we see revenue and some of them will be [indiscernible] Twelve months out for the deployment of products itself. The more design widgets we're adding, some of them design wins make 10,000 pieces and some larger, of course, can do 100,000 units. [indiscernible] we have an example I mean, we have our partner in India, ACPL. They are delivering substantial part of the revenue, and that's a big OEM in our measures.

Right. There's another question. Sales are mostly through partners and third parties. Do these really need a lot of support And is it possible for NEXT to to market marketing the same way in other jurisdictions like U. S, Europe, [indiscernible] Is the technology also competitive in these other jurisdictions?

Thank you for the it's a good question. So when we sell this sensor itself, this needs to be integrated into a device That's what the OEM does. It could be done in a tablet reader. A PC, or any type of device that's within our market segments. This normally we are helping them with the integration with the support. There's a lot of software programming to get this up and running. So if the like the distributors They don't have that capability, so today. They are distributing the product. Then next biometrics is Helping and supporting the end customer clients to get the product up and running and certified. So we are there are the biometric experts in this area. So we are taking the approval for their product. This can take sometimes it like ACPL, it took one point five years to get the L1 at harvest certification. But we also see other faster movers that takes less than three months. So that's why it's so different difficult to say okay, there's not one model for all. [indiscernible] based are mainly targeting India and China. Not so much Fab 20 sales will happen in The U. S. Or in Latin America or Africa.

It's actually if you look at the different sizes, the fab 30 With the Fab 30, we will expand our geographical fit because some UN requirements to have voting systems, for example, They are demanding that there's a FAP 30 sensor. In the voting system and the machine. That's why we are enabling additional geographical areas with the Fab30. I'm not saying that we do not sell Fab 20 in different regions. We have a Brazilian customer buying Fab 20 for access products, we have We have some U. S. Clients. We have African clients Israeli clients to actually use the fab training. So not saying that it's impossible. I'm just saying that the market size is smaller for the Fab twenty twenty. Outside India and China.

There are no more questions. That completes the Q and A. Thank you very much. Thank you for listening. I'll, of course, have my e mails available for any other questions or a phone call.