Neonode Inc. (NEON) Q3 2020 Earnings Report, Transcript and Summary

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. [Operator Instructions] At this time for opening remarks and introduction, 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 third quarter 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, Dr. Urban Forssell; and CFO, Maria Ek, I would 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, guide, 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 be subject to risks, uncertainties 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-K 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. Neonode expressly disclaims any intent or obligation to update these forward-looking statements. At this time, it is 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 have turn over to Maria for some financial details about this third quarter. To start off the strategy presentation, I want to reiterate that is the beginning of this year have organized our business into three 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 me or know 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 or contactless touch, touch and gesture sensing the focus there is on customers and the elevator and interactive Kiosk segments. HMI solutions is the separate business where we focus on customized engineering solutions made for touch and gesture sensing at this point. And the focus is on customers in the military and avionics and 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 distance suppliers in the automotive space in Europe, in North America and Asia respectively. And then this is an introduction, I will also reiterate that Neonode works with the two main technology platforms one of them called zForce that underpins our touch and gesture sensing technologies. And contactless touch that you will hear us talking 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-19 pandemic. Our software platform multisensing underpins our offerings and driver 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 text, 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 touching gesture control solutions for demanding customers in the military avionics and in the industrial segments. This is a solution 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 segments and industrial segments. We are leveraging here that advantages with our advanced zForce technology that would be that it offers for instance a cost effective touching 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 and freedom in sign and so on. And we also can operate for military applications with night vision systems that are frequently used in helicopters and aircraft and also on ground vehicles that 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 this place as a touch on other surfaces is 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 used gloved hands or stylus pens or any other objects to control the underlying system. We can also with our IR based technology offered touching any surface not only linked to a display, but actually we can do on glass windows, on walls, on tables and so on. And very strong offering that we have which is for instance very important in 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 indicated the picture here second from the right. We have two main variants of our zForce technology and one is a blocking technology and we show an illustration on the left. The working principle is that we have on two sides, you have light emitting diodes and on two the opposing side you have photodiodes receiving these infrared light beams. If you place a finger or an object, you will break one or more of these light themes which can be detected and hence we can detect the touch. But this is the simple operating principle behind our zForce blocking technology. Of course, there's much more to it, but it is the simplest way I can explain it. We also work with a second variation of this technology with what we call reflective technology where we have a one sided sensor elements that post emits infrared lights and detects reflections from objects in that light field. And by clever arrangement of the light emitting diodes and the photodiodes receiving a reflections and use of advanced optical lenses. We can position accurately objects in that three dimensional live field. And that life field to 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 it would say, contactless touch solutions. Focuses on military, avionics and industrial. Two 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 Neonode until this year. But only this year and actually just a few months back, since we really focus on trying to enter and penetrate these segments. They are continue to see about the segmentation and sub-segmentation, actually military avionics, if you would say that defense is roughly one-third of the total volume and civilian aircraft and similar two-thirds of that volume. The 150K units as we estimate may not sound much, but typically in military and avionics, the budgets for development and the average sales price for display units with touch is quite high. But actually, it's a very, very interesting segments 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 very interesting segments for us to operating. And then you may ask what happened to printers and automotive applications and so on? Yes, we do not say that they are our main focus. But of course, we will continue to work in this that sort of Neonode legacy segments, printing out the mostly 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 some 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 you have to look at the large companies 85% 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 Neonode that means infrared technology and being contactless, touch, touch gesture sensing. But here, our offering is based on our standardized sensor module that is produced in our subsidiary Pronode in the rest of Sweden. And that's we deliver directly or indirectly via distributors like [indiscernible] to our customers. So a similar technology, but different product offering to customers and the 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 is more licensing business. These sensors 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 a great design freedom and still have a high accuracy and good performance, and we are selling them direct as mentioned and also through value add partners and distributors, and we are expanding basically every month our network partners on, 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 being up on the touch display to 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 a week by week and more companies are joining in and getting interested in starting to purchase these products. Shown in pictures here are some different examples where we have together with value added partners, created new solutions. That's sort of a contact less touch challenge. This picture bottom left is from the Changi airport, we had press release on this that will be released, I think in September. And then there's the similar application with check in term of those points of sales back in from the left and then to elevate their application to the right, one with a holographic display and one with a more basic direct approach installation, a retrofit installation from a partner in Hong Kong. So shown here is an examples of our two target segments, interacting kiosks and elevators. And I will skip this and sake of time. When it comes to contact less touch we have two ways to go. We have our sensor modules, you can use them to project lights field on top of the surface or in the air. And if you arrange the sensor module 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 key pad are similar. You can have the invisible infrared light field but we can then use to detect one or more fingers pointing up or through this light field. And then you as a user can interact with underlying systems without having any physical contact to anything. Actually, everything is done need air, and straightforward. And one example is the retrofit installation for elevators as we saw on the previous picture. The other main alternative would be today to use a holographic display. And we are working with four or five companies in the world now actually developing and selling holographic displays. Before they met with us, they had like a custom component that to display images into mid-air. But by using our sensor modules, you can actually touch activate those hovering images that are projected into mid-air. And all of them work according to the principle to have a semi opaque piece of glass that reflects part of the light shone on it interfere. And depending on how you angle is holographic plate, you will have the holographic image in vertical arrangement or slightly tilted. And of course, you have to be a bit clever, but you can arrange our sense of modules to go with that holographic picture. So, where we see the biggest opportunities for our solution is with interactive Kiosks and elevators through very interesting markets. Massive volumes, if you take all in fact and trust we have an installed base of some 39 million units and strong growth and elevators today close to 20 million just say 20 million and strong growth with 1.3 million or 1.5 million elevators a year. And we have low retrofit play and the new equipment plane both so it's a very interesting market opportunity for us with our contactless touch solution. Interacting Kiosk, could be -- then some segmented according to this. We talk about vending machines point to sale in fast food restaurants, coffee machines, ATMs and different types of self-service kiosk business, self-checking, self-checkout at an airport, ticket machines at train stations and similar. Elevators, I think you will know what do you mean by elevators? Well, if you want to highlight here is that three main categories or companies that we are today engagement. One group is the elevator OEMs and they are well known brands like OTIS, Corner, Synchro, 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 third category would be maintenance or repair companies. And the elevator market in the world is slightly different arranged in the U.S. and North America and Europe and Asia. So in some markets the OEM’s themselves they will do maintenance or repairs. But in other markets these are third party companies -- independent tech companies and the internal service companies and we did 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 visually. This is very much focused on contactless touch, we still have a lot of other opportunities that we are exploring. And that's the beauty of having the standardized products and ecosystem of partners out there. So, we would serve also, customers looking for a touch solution or a gesture sensing. And that could be medical office equipment, white goods transportation other. And we have several examples of other promising use cases for our products in these sectors as well. But our own focus will be going forward interacting kiosks and elevators. Looking more closely at the kiosk markets, because we had vending machines, coffee machines, the fast food restaurant terminals, at McDonald's or similar where you order your food and your beverage, they make up the largest portion, ATM, it's actually a smaller portion of self check-in and check-out, if you would single out those are pretty small. There's 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 is increasing in developing countries in 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 sub segments. So we are not focusing on just single of them. But we are monitoring this to see that some OEMs are stronger in some sub segments or in some geographic regions. But overall, the volumes are very high, there's a good growth rate, and we think is a very, very interesting segment to work on. Elevators, it's a little different, the world market is totally dominated by some 10 or 12 big OEM companies. And you see this pie chart, OTIS, Mitsubishi, Schindler, Kone, ThyssenKrupp, and so on.. And some Chinese the biggest growth in install volumes we can see in China, and other parts of Southeast Asia. But because there is a huge install 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 that's to say we have played both the big OEMs and the control panel companies and the maintenance and service companies. And we can do both retrofits 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, we announced we’ve been working with DDP in Syria, and they are examples of fulfillment distributors. We could add one or two more in this category later this year, 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 so far, they are a mixture of tech companies and engineering firms or both. And they are typically regional or national. So for instance, HY-LINE, they have headquarters in Munich, in Germany, and they worked mainly in the German speaking countries in Europe. Global Electronics Co and Japan Aerospace are based in Japan TNBTECH are in South Korea, and they typically have a strong focus in their respective markets. I mean, have all the other partners, and they range from technology companies like Holo industry and GSR, that's 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 too, for us to penetrate different markets and segments that we are targeting, and to speed up that penetration and growth, 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 at two success stories at elevators, FineTech from South Korea have developed a very neat retrofit solution actually in two or three different variants that they are now promoting to customers in South Korea, both OEMs, and for new equipment and for retrofits to OEMs and local landlords and service companies. And very similar a company called Hong Kong Productivity Council have done a similar solution, which they are promoting in the Hong Kong and China, and they have seen actually a good growth of their business, thanks to the corporation with us, and that's a win-win both with FineTech and HKPC and that's motivates them to promote our solution. It has stem to win and at the same time it helps us to win. So, it's really a win-win, and we have two very good success stories. In that airport shelf space, we have together called Happy Hour in Singapore, a good story to tell them about Changi airport, and now they're in the second or third phase of installing more contact less touch interfaces in the airport terminals at Changi they're also expanding to other airports and to other customers besides airports and aerospace companies. Quite similarly Japan airlines have picked up proposal from Japan aerospace to do contact less touch, check-in, check-out terminals and there is a pilot ongoing at the Haneda airport in Tokyo, and both the Gel and the other Nippon Air in Japan are very interested to install that across all their airports in Japan and all their terminals. So, Japan aerospace and Happy Hour, they are actually pushing this quite hard because they feel that they can expand significantly using our technology. And at the same time partners 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 to our future growth and success. So why do we have these two business areas when they are sort of similar and they both work with human machine interface technology? Yes, they are separate but mutually supporting. So we have different forte for the two business areas. HMI products, they'll have standardized products, HMI solutions, here we offer customized solutions and 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 products as it is. And then you see the contrast to what we do in HMI solutions, very few customers, mainly direct sales, and per program to be quite large development efforts. This is a solution 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've made so far this year. And we will definitely continue to work on these two separate, like 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 points I think in year of 2020 and going forward. Finally, some words about our newest research area, remote sensing solutions that we officially launched this year. And it’s a new business for us as 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'll 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 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 this low system requirements means that we can solve for the demand. So for instance, stipulated in the European GSR and the UM cap guidelines for driving monitoring features and new vehicles from the 2024 and on. We can solve for that with a very low system costs. 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 component. So again, if we 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 competition footprint, and we are there to help them increase basically, and fulfill the legislation going forward. The main drivers in this market is safety concerns. And any 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 this year vision to try to avoid any kind of accidents, the Commission in November last year published the GSR requiring an advanced driver monitoring feature in every vehicle that can be sold in the European Union from 2024 and on. So it's a safety concern about the drivers’ state, if he’s distracted or is falling asleep. And then link to autonomous driving also, if the driver actually holding his hands on the steering wheel or not. Another type of safety concern is what's known as side less behind. And especially in U.S. there's a big debate. And there's an upcoming mix of regulation for these type of features so that you cannot accidentally forget your child or your pet in the locked car in a hot sunny day. And this is another type of safety concern. Also, people are realizing that you can monitor the seatbelt use and actually how you apply the seatbelt that this 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 if 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 auto control in the car. And the software we are developing and in cabin monitoring features we can offer they will 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 this types of safety and comfort features and still have a low cost and this is really our right to win in this space. In your 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 then. Or you are interested in automotive market. So you may have understood that there's development for driver monitoring features going on. What you 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 a 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 is short development cycles, excellent change management, and weak and upfront and the mid-precision, calculate or estimate future development efforts. So in some compared to other companies working with rule based driver monitoring software algorithms, or AI base, we are more efficient, we are faster, we are more transparent and planable. 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 Ek, our CFO. Maria?

Thanks Urban. And you can find our third quarter earnings release and 10-Q available for available for download from the investors section of our website at neonode.com. So I'd like to start with a summary of the quarters. Revenues are up by $0.2 million compared to the same quarter 2019. This is driven by sales sensor modules were licensed for almost flat 15 years. Our operating expense are higher plan for the quarter, $3.0 million compared to $2.4 million in the same quarter 2019. However, on a performance basis, removing onetime costs, our operating expenses for the third quarter 2020 was equal cost 2019. Due to the above our operating loss was up by $3.6 million compared to the same quarter 2019. We have net revenues of $1.5 million for the third quarter of 2020 which is an increase of 14.1% from the competitive quarter last year, and almost a double compared to the second quarter this year. Revenues from our solutions business consists almost exclusively our license fees and were $1.2 million during the third quarter 2020 as well as 2019. However, revenues related to automotive have increased from $0.4 million to $0.5 million, while revenues on consumer electronics decrease from $0.8 million to $0.7 million. We see general lower license revenues due to slower sales in the global markets related to the COVID-19 pandemic. So the increase in automotive is a positive development. It's relates to customer project that was completed a couple of years ago that went into production in 2020 and is expected to be in production at least five years. In the third quarter of 2020, our customers to license our technology shift 1.7 million devices with an average life of field $0.69 and total to-date more than 77 million devices with Neonode technology has been sold. Moving to our HMI client business area. We have seen an increase in the number of sheet products in the third quarter with revenues sold $0.3 million compared to $0.1 million the same period last year. Most of the product sales has been through our partners in the U.S. and China. And as of the end of September we had a backlog of $0.5 million with a planned shipment within the next three quarters. We’re continue to also joins new purchase orders for new sentiment order shipments, have increased our manufacturing activities to meet the increased demands. A rough margin for sales 87% for the third quarter 2020 compared to 95% at the same period in 2019. The decrease is due to weeks of higher product sales and gross margins ranging between 30% to 50% in 2020 compared to a 100% gross margin like we see in 2019. We expect these trends to continue as our sensor module sales increase as a percentage of our total revenues. Operating expenses increased by 25% to $3.7 million for the third quarter 2020 compared to 2019, which is due to onetime costs partially offset by lower payable costs and less traveling. Excluding the onetime cost, our operating expenses would have decreased by 2%. Finance notes for the third quarter, 2020 was $1.7 million, or $0.16 per share compared to net loss of $1.5 million or $0.12 per share for the third quarter 2019. Excluding the onetime cost, our net loss for the third quarter would have been $1.1 million or $0.11 per share. Net cash used in operating activities during third quarter 2020 increased by $0.4 million compared to the same period last year. The main reason is the increase in net loss. We had cash and accounts receivables of $30.3 million 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 Urban for closing remarks.

Thank you Maria. And in closing this presentation, I would love to highlight a few points here. First of all our zForce technology, which Neonode has been developing from mid-2000 and on and that is very well patent protected by us given that enabling technology. Ideally it's positioned to solve for our lifestyle shifts to contactless touch solutions brought on by COVID-19. In comparison to other companies that now try to exploit the surge in demand for contactless solutions, actually we have existing improvement and ready technology. We are ramping up our production. You're seeing the increase in demand that you are seeing at. We see that, and we still believe that there's an enormous market opportunity for this both in new retrofit equipment. We are focusing on the two 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 and 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 zForce and multiple sensing technologies from customers in the avionics and industrial control system industries and 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 becoming 12 to 18 months or so is clearly on execution. On the growing stage and growing the top line and by this we are expecting also to be able to present you in coming calls and improved bottom line or improve earnings. By this, we have come to the end of for our presentation and we will now open up for questions from our analysts. And I will ask you Dave dumped into moderators. Thank you.

Okay. So, Christy you want to open it up for questions.

[Operator Instructions] You have a question from Viktor Westman of Redeye.

You've been doing quite a rebuild of the organization around them. And I just wanted to ask here, how long time you think it will take before we see some effects from this transformation and the changes and what are the first effects we will see?

Yes, we are actually rebuilding Neonode from outside in and inside out. So we are doing quite massive overhaul. But of course we do it tried to do it in a sensible way and step by step. So during the second quarter, two strong additions to our team represented Mr. Johan Swartz and Mr. Jonas Waern and they head up our business units, HMI products and HMI solutions respectively. They have really made, starting 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 pattern network that I mentioned. So here we see examples of results already. Yes, the other week, Mr. Atsushi Ishii joined us a new VP of Engineering. It's too early for him to make a strong impact on what he present here obviously. But I expect that he together with Johan and Jonas and as 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, I mentioned, we hired a two senior sales persons one in the U.S. that will focused on the military and avionics markets, and one in Europe, that is focused 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 a step by step and gradually are regaling 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-19 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 and recruitment and how we use our resources going forward.

And then, you mentioned military market there. And it seems military, the military market is moving really, really fast compared to automotive. So can you say is, I mean in other words really slow, can you say something about it's possible to speed up the process arrived quicker after 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's the transformation that we’re trying to achieve in Neonode will take some time, maybe a couple years. But of course, we try to shorten this time and also use say -- our scalable platforms and reuse a lot of the designs are developments. And this is to help our customers to have a shorter time to market. And this is a, I think of valuing 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. But you what you mean, but what do you refer to in the industrial segments? Is that the dirty very rugged in the sales? Can you give some examples on the sweet spot here?

Yes, I think there are actually two sweet spots, but in these but in these rugged industrial applications and that could be in sort of, if you have actually factory environments, it could be production hall or something where you have -- you can have both moisture in terms of water oil in the air. You could have a 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 first place. But speaking about synergies between our HMI products, this is 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 specific to and adapted to their products. And here we are still Neonode. And we will definitely try to capitalize on such opportunities as well in HMI solutions. So there are, these two sweet spots, if you would say mix up.

And can you give us a short update on the pilot for the fixed retailers with the big self service kiosk manufacturer. They had a quite an aggressive rollout plan. If I recall, you can say something about that?

Yes or no. Our customer in this case, it is a leading player in the interactive kiosk market. We 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 it will play out. But I can say personally, I think that the growth anyway will be like, step by step or this is a very big company that we are dealing with. And they are many customers, but of course each customer will make their own decision. And they will come one by one I expect. So I don't expect like 1 of December, for instance, that it will come an explosion of 15 new programs with this customization will come one by one over the next quarters. But we are still optimistic and it's looking good. And we have encouraging feedback from our customers, but they also think that this will fly in a very good way going forward.

Last question is if I may. On the competition -- on the competing technologies for elevators and kiosks. What are the typical alternative technologies to be used there? You see a lot of radar or time of flight sensors in the market. So it's something else.

I would say personally for a kiosk 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, it's a fragmented market so some will use capacitive sensors and boost up power in those so that they will react actually a few millimeters out. But compared to capacitive solution, we think actually our solution is much more straightforward and better. But there are also some companies doing like with cameras, and there can be more 3D gesture sensing. And I'm sure that also applications that 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 pick-up solutions. Overall, I think we have a very strong compelling offer is simple intuitive. And it doesn't interfere with if there is an underlying display or a keypad. So it works perfectly for retrofits and very easy to use. And it 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 into an office building or apartment building, that I have to pull up my mobile phone, and in this building, they happen to have like a OTIS, elevator as a 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 they're in elevators as a 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, thank you, sir. And thank you everyone for joining. We will publish the slide deck from this presentation on our website later today on neonode.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 neonode.com later today, and you can see that slide deck from this presentation. Thank you very much. And join us again for our fourth quarter call beginning next year. Thank you.

Thank you. This does conclude today's conference call. You may now disconnect.