poLight ASA (PLT) Earnings Call Transcript

Good morning, everybody, and welcome to poLight's third quarter presentation. So together with me today is our brand-new CFO, Joakim Hines Bredahl. He will present himself shortly. And as normal, our Board Chair, Grethe Viksaas. So the agenda, as we normally have, key events, a short introduction to poLight, operation and market review, financial review by Joakim, outlook and Q&A. On that topic, Q&A, if there is a question from the web, please leave your contact details in case we have no time to present answer. If you have a question from the audience, please wait for the microphone so that those questions from the audience is also being possible to follow from the webcast. Key events. Barcode, step by step, giving us some more business. We got a 950,000 PO related to the very first barcode design we -- back in 2000. So that product is still shipping, which we, as expected, a long lifetime in this product. AR/MR market continues to open business opportunity, but there's no doubt that this is a market in definition and it's difficult to predict when things are happening. But as we said many times, we have an extremely interesting and strong position in that market. When it comes to the machine vision and barcode pipeline, it continues to develop nicely. There is quite a good pipeline. We also have been informed that 2 of our customers have received patent infringement file from a company and our position that this is -- that there's no patent infringements related to this. That's what we can state. After Q3, Wooptix announced finally the RT000, the Development Kits Wavefront Sensor. Transcend Vivoscope, another Mini2P supplier, announced their product. Thorlabs, the same. Now there are actually 3 commercial companies who is offering Mini2P solution. They all 3 were presented at the conference in Chicago, the SfN Neuroscience '24. And they actually highlighted the Mini2P solution as one of the kind of the main showcases on the booth. So that's very interesting. It started all with a small cooperation with the Kavli team, Professor Moser and his team and has now gradually developed into a quite an attractive business and also spreading a lot of, I would say, messages and news into the healthcare research environment, which hopefully will help us to someday penetrate into other and new application in that area. Also post Q3, quite many news. One of our existing barcode customer announced 2 new products. And in a way, repeat orders is an extremely important signal, and this is why we emphasize this a lot. That came without the PO, but a few days after, there came a PO of worth 344,000 for new lenses for that application. So poLight for those who are new, a global player, as you can see on the top right, we are spread around the world. The strategy is to be with competent people where the customer and partners are situated. That's why we are so distributed. We have now built an organization of slightly, yes, just below 50 people. As you have seen that we have increased that organization significantly over the last couple of years. And that is -- the reason for that is that if you go back, say, 5 years, we were extremely focused on getting design wins on existing products. We used majority of resources to support that and support getting ready with the manufacturing with the effect that we didn't have resources and time to do a lot of new innovation. What we have done now, we have built an organization where we have strengthened operations so that operation can concentrate on operation. And we have strengthened, meaning relieving kind of R&D tech resources to not necessarily only support operation and customer, but also doing important R&D and strengthening the sales organization. Of course, we do this investment because we strongly believe on the future. And we also see that to be able to show big customer that we are capable, we need to build and professionalize the organization step by step. Big investment, but fundamentally important to do -- to achieve what we want to achieve.  Yes. So we continue working on IP. We have 22 worldwide patent families now and 11 pending applications. PoLight in 4 icons, extremely fast, realized compact solution, constant field of view and extremely low power consumption. All these attributes are being evaluated as key attributes for many of the market segments we are addressing. Also then on the top right, you see a picture of the TLens, one of the versions comparing to a tip of a pen. So it's a small, small, very compact solution. You can see the transparent section in the middle is where the light go through. If you look at the left figure, the drawing, sorry, you can see how the principle is kind of replicating the function of the human eye. You have the polymer sandwiched between 2 glass membranes. You have a MEMS piezo actuator, which is kind of having being excited with 0 to 10 volt -- 50 volt, bending the glass membrane, shaping the polymer, changing the focus from infinity to close. We produce the polymer ourselves at headquarter. We -- the actuator, we get from 8-inch wafer from ST Micro in Milano, Agrate. We are shipping those 2 ingredients to our assembly partner in the Philippines, who is then assembly this into a complete TLens. TLens can be supplied without a package, we call it bare TLens to minimize footprint and thickness, typically used for add-in designs. Or we can sell it in a package format, which eased integration, typically used in, say, barcode products as an example. And we have an ASIC, which is generating the voltage between 7 volt and 50 volt. So these kind of components, we sell to conceptually to OEM and the OEM being a smartphone being a handheld barcode reader or glasses. So we do a lot of our sales and market activity in that end of that value chain. But in the end of the day, we have to enable a camera module supplier to build those camera module. And typically, the – money stream goes to the camera module and we ship TLenses to the camera module player, which we, of course, support. They build different type of designs. They do an add-in design like the logo camera and also an add-on design on the top there. We have built over some years now our own capability of doing reference design, as I mentioned several times, so that the camera module partner we work with is not starting from scratch. We can give them so-called reference design for them to get a good start in optimizing their design, differentiating their solution. We are working in different market segments. And I would say that where we have the highest activity for some quarters now is AR/MR. Definitely, it's a huge interest in these market segments, although as I said, it is a market under definition. There are kind of changes on a monthly basis on plans and releases. But what I can confirm and come back to it is that we have an extremely high visibility among all, I would say, relevant players, most relevant players, at least, when it comes to our technology both for the TLens and the TWedge, which is the wobulator. So that is a key market for us. We are using significant kind of time in the sales and marketing activity in nursing and supporting PoCs and design-ins in this area. Having said that, the consumer part of us is still extremely important. There are laptops, there are watches, there are, of course, smartphones, and we keep on knocking on all those doors. And I will come back to a little bit status on that a little bit later. And then we have the industrial side of us, which is low volume, better prices, lifetime 5 to 10 years. So kind of this combination is quite a nice combination for the company. And then I would say healthcare and automotive is still kind of on the radar, but it's not something we have resources and I would say, product portfolio today to emphasize on a lot, but it's something we are monitoring. So having said that, when we do kind of road map definition, product portfolio definition, we always have the need for these market segments in mind so that what we do now and maybe 5 to 10 years could be a key element in those 2 market segments. I think it's important that also we -- even though we see so many opportunities that we are, as a team, focused on what we see is the most important. And they are so easy to kind of be too spread, which means that we will not be able to achieve what we achieve in most market segments. That's why we are relatively firm and laser focused in these 3 market segments. So I can say that now I was forced to split the design win slides into more than one because it started to be very crowded luckily. So here is -- just to remind ourselves, we have 4 consumer design win, MEIZU 20 Infinity is still shipping. So if you haven't bought the phone yet, it's just to go get it. It's still shipping. The MAXHUB also, we recently bought some few more MAXHUB cameras. We're using it widely. We are happy with it. The 2 smartwatches is, as far as I know, is already end of life. We are shipping into 4 glasses for Magic Leap, LLVision, the latest one VUZIX and the high-end head-mounted display MR device, where we are in the see-through camera. Magic Leap using 1 TLens, VUZIX using 2, LLVision using 1 and the HMD, the MR device is using 2. Okay? On the industrial machine vision side, I have now kind of redefined a little bit the design wins there because there is -- we have before counted the customer and not necessarily the number of products. What we have done now, we cleaned up that. So now we are counting products. And then you can see here, there is 2 from -- there is a Hikrobot. There is a Superlead, which has 4, Teledyne have 2. VUZIX is one, Action is 2, Honeywell is one, Thorlabs have 2 system, which is actually quite interesting. One of the, I would say, relatively mature PoCs and hopefully maybe designed in, started by the customer buying this kit from Thorlabs, which is much easier for them. And Thorlabs have this Internet page, they can buy, ship immediately. And they did that PoC without us knowing with -- based on that device. And suddenly, we were enrolled in a PoC. So quite interesting. And then there is this handle barcode scan, which is the latest announcement, which is 2 products now already shipping related to the last PO we got. That is actually -- we are not allowed to tell, but that is also related to another kind of already existing customer on this drawing. So quite a significant platform we have built, even though it is a market, which I said before, which is developing in a way slowly, and we are still in the machine vision, low-volume barcode side, which is -- which I think that over time, when we build momentum. I think we will get into a higher volume and -- but that needs -- we need to get closer to the point of sales. On the healthcare side, as I said, 3 companies now supplying Mini2P solutions. Transcend Vivoscope, Chinese, Thorlabs, U.S., Phenosys, European. And Kavli is kind of our strategic partner in Norway, where we kind of learn a lot about this technology and how it's going to be used. And as you know, the -- Professor Moser has already received a Nobel Prize for that research work. And I met Moser myself, and he said he was so thankful that we supported Kavli in this research and which is incredibly important for understanding different diseases like dementia and Alzheimer's. Okay. A little bit into the details. Yes, poLight, we are very firm and very persistent in -- when it comes to the consumer market. It is important for us, and we will keep on working in many aspects and to try to improve the situation. Of course, the AR/MR, which we will talk about a little bit later, will become an important consumer market. But -- and that's why we are focusing a lot on that. It's interesting, laptop market has somehow generated quite some activity in the last couple of quarters, specifically this quarter. And yes, we can see major players who kind of indicate that they say from 2025, 2026, they think they're going to need AF. It's not an easy application. It's a thin screen. You are taking the screen and hammering down to the keyboard. So the AF technology they need to use is under consideration. But our understanding is clearly that we are one of the technology in the race, and we are already doing some reference design together with key. So and it's not a small market. Of course, they will start AF in the high-end devices. We are developing a business plan and preparing ourselves in this area. So let's see. Early to say, but I think it's correct to pinpoint it as I will say, I've never seen so much activity before as we see this quarter in the laptop space. Smartphone remains challenging, although we do see that there has been some restart on some activity with a camera module supplier, we know from before and has been actually working with another consumer product. They have now done some design and they are doing some testing, and they have 2 OEMs, smartphone OEMs in mind. And they also have other consumer application in mind. So it's going to be interesting to see how that gel out. So good to see that after some kind of relatively silent quarters in that segment is that at least there are some activity. Yes, how do we intend to kind of improve on this consumer side? Well, of course, AR/MR will be a consumer market sooner or later, we're going to be there. We have started several initiatives on the development side to come with a broader offering and more cost-effective offering that is ongoing, progressing quite well. And as you can see, we are also actively pursuing other consumer application, e.g., laptop, which hopefully, over time, will need an AI solution. So consumer is something we definitely focus a lot on, and there are many, many ways into the consumer market. We have 4 design wins. We have completed 38 PoC. We have 6 ongoing PoC, which is up from 2. And we have 5 planning PoC, which is up from 4. So here, we can see the distribution on consumer side. On this slide, I've also included the AR/MR. So now we can see that there are 17 ongoing PoC, focusing on ongoing PoC, 12 of them are related to AMR. And the rest is different things. You can see also that now there are actually 3, 2 laptop and more kind of accessory type device. So good activity, AR. Actually, poLight is starting to be a relatively established AR/MR supplier. When it comes to the top diagram, the TLens in the camera module, both add-in and add-on, is showing an add-in in this case. So in 2021/22, we got into Magic Leap, '20 getting close to '23, we went into LLVision. Next one, this high-end device and after that, in Vuzix. So we are not nobody in this market segment. And when it comes to AF technology, we are definitely the one with the most design wins. If you look on the bottom side, which is more related to display project, both TWedge, which is the new product we are developing and TLens are already in that kind of space. We started first with the wobulator concept. Around '21, we did TWedge PoC for customer. We started to ship design samples, first TS2 samples, then TS3 samples. We are continuing to gain more customers for sampling. Same when it comes to the TLens, it is this one, which is a design-in project related to an LBS started already in '21 and has soon and the customer have asked us to develop a purpose-made package. which we have shipped and they are currently testing and integrating in their device. This customer is now in the process of finalizing a near form factor demonstration, and I talked to the customer management yesterday, and they are saying that they are on the road in end of November and December. And we are kind of cooperation also when it comes to who they meet and how things are going. This again, a little bit back to the AR/MR space. You can see and you can feel that there are still a lot of, as I say, things to be defined and things to be concluded, things to be solved. We are one of the solutions, but there are also other kind of technology which need to kind of be developed for this to fly, which will happen. But of course, it's difficult to predict when it will happen and what will be the prime solution. Whatever solution we feel will happen on the display side, we will be a potential technology for use. So what do we solve in MR as poLight? If you look at this MR headset, pass-through MR headset is something which you are basically blind. And the only way to see the world is through a heat through video camera. So that's how you see the world. So of course you are basically in a box. When in real life, our eyes are continuously focusing, accommodating focus to remain sharp maintain sharp vision. That video see-through function of quality is extremely difficult to develop and to implement using conventional incumbent technology for AF, which leads that without that AF, it becomes very unnatural vision. TLens, we feel and have demonstrated, you may have seen some demonstration is, as far as we can see today, a technology which is very attractive to enable a natural video see-through experience with minimum size and minimum power consumption. That's the video see-through, which is kind of one of the big cameras on the front end, typically 2. Then you have also here in this device, you have world-facing cameras, many of them. And also here, TLens has a clear role, as you know, as you've seen for all the ambient cameras we are developing with, again, very low power consumption and both for, I'd say, focusing, you take a barcode, you want to scan that barcode, you want to see affinity. The temperature in these headsets are changing. A fixed focus camera will suddenly not be in focus. There will be drifting. So you need actuation. TLens fix that by design. So that's an application. Another application is that we are potentially also been talking to customer who seems that TWedge could actually enable super resolution for small compact cameras. This is still, I would say, in early days for us to understand, but we have several customers who has mentioned that kind of application for TWedge. So as you can see, TLens have several applications in the very same headset and are also space for TWedge. And in Smartglasses, a little bit different, but ambient cameras, so we call them Swiss cameras. So what I see is kind of the new expression they like to use. And TLens is really making that Swiss camera at a minimized power consumption and speed, resulting in a much nicer capture and actuation. Display resolution, we make display much better, much higher resolution without sacrificing brightness. So there are so many applications for TLens technology in these 2 kind of headsets, and this is why we are so optimistic about the future. When it comes to who we are working with in this space, I would say we are working with many, and we are working with many known names, you will know very well. And the number of companies we're working with is increasing. I also said that also the number of consumer-related devices is increasing and getting more mature. There was one design-in this quarter, which was stopped because of a company's strategic direction changes. So I would say that the other design-ins, we have been saying that we don't really know. We were hoping at the point of time that there will be some design wins this year. But at the moment, I feel they are slipping out of the year. Of course, this is a visibility we don't have in detail at all. But I think that we shouldn't expect any short-term design wins. These design-ins will not convert into design wins this year the way we see it today. So this is also illustrating a little bit that the market is in definition. People are considering if this is the right product to launch, when to launch, what will be the spec. And this is something which we see when we have the customer interaction that they are still kind of processes, which can change quite quickly depending on the market information they receive. Having said that, everybody we talk to has a strong belief that it's only a matter of time before AR/MR market is a big market. And then it's up to everyone to assess when that will happen. We have mentioned '26, '27. I think that's still a potential good years, but we need to just monitor that as we move on. When it comes to the TWedge, what I mentioned was more related to TLens. When it comes to TWedge, I feel that there's no doubt that we have a lot of activity on TWedge also. But as I said before, we will not kick off a real product development and mass production before we have a lead customer. And that lead customer, I feel is not there yet to give us that commitment, but they are extremely committed to explore, test and design and test us into form factor products. We have been tested already by several of them with good results. But I think they are still kind of considering what type of display, MicroLED, LCOS, what LBS, what. So they are kind of still -- and we have a role in all these display solutions. But I think there is -- I feel there is things to be defined and things to be concluded before they are ready to commit to a mass production product development program. And we will not, as poLight, take that risk without having a clear customer request because of the risk of we are sitting too far away from the definition of the display solution to be able to assess this. We need to wait for a customer holding our hand and guiding us into the right application. So I hope you can see that the AR/MR market, even though it is, in many aspects, a little bit under definition and immature, it is a key area for poLight. And today, I will say that we have so many opportunities in this space that I think the focus we currently have in putting our flag on that market segment is extremely important, extremely important. I'm myself back from U.S. and Asia, and there are so many motivating meetings discussing kind of volumes and readiness and testing. So it's really, really nice to see. For design-ins, 3 design-ins, 20 completed PoC, 14 ongoing PoC, and 14 planning PoC. Here you can see the same. If you look at ongoing PoC, 14, you can see 12 of them are consumer-related. I would say half of them are TLens or half of them are TWedge. Industrial, yes, started to be a crowded slide, 6 companies using us in 13 products, all still shipping, and expect to do some for several years. Already mentioned that on the first page, I don't want to repeat myself. I just wanted to say that even though if you can feel that this is slow, I would say that we are engaging with a lot of customers in all regions in this area, some smaller ones, some significant big ones. And I feel that step-by-step, the pipeline is showing an increasing opportunity pipeline, which is clearly a positive sign, even though we were, of course, hoping that things could move quicker. So as I said, 16 design wins in the industrial space, which is compared to 7. But remember, this is due to we changed a little bit the way we count. Now we count every product from the same customer, not only the customer. So there is 2 -- sorry, none in the design-in because they moved to the design-in, 40 completed PoC, and 15 ongoing PoC, and 16 planning PoC. Yes, I don't need to repeat those details. It's basically split between machine vision, barcode, and some other things. Healthcare and automotive, already I felt mentioned this is all about Mini2P really and some, I would say, more commercial-related endoscope cases. Automotive, nothing new to report, I would say, so we can make that short, but still, something we keep in mind when we have defined the road map. One of the important things in automotive is that the big TLens with a bigger aperture size is the key enabler for this market, which is in our road map. Yes. Here, you can see the sum. So we have 28 design wins. We have 3 design-in. We have 111 completed PoC. We have 49 ongoing PoC, and we have 48 planning PoC, divided by those market segments. And here is the plot showing the development of the PoC pipeline, which is nicely developing quarter-by-quarter. Okay. My dear new CFO, Joakim. You are hereby invited to talk about the financial, and maybe you can say a few words about yourself.

I will. Thank you so much. Thank you, Øyvind. And thank you for the opportunity to stand here today and present the quarterly numbers for Q3 2024 for poLight. Just a brief introduction to myself. First, I'm 47, I'm married with 2 kids, graduate from Strathclyde Business School in Glasgow. My career has more or less been working in or with the growth companies. Previous 9 years, I've been in not a growth company, but a very established player with the bank, Nordea. But the last 3 years, I worked with financing of growth companies with debt, many of which were loss-making. So I also helped them find potential sources of equity and I helped them pitch the company to different investors. So there's a lot of experience there. I also, before that was 8 years in Verdane Capital, which is now a large Northern European private equity player. But when I worked there -- we were very much an establishment under establishment and in a growth phase. So experienced lots of growing pains in that company. And I believe they're now more than 4x the number of people that when I worked there. So, for a capital company, that's quite a lot. Before that, I also worked as an entrepreneur. I worked in several start-ups, none of which were very successful, so you wouldn't have heard of them, unless you were one of our direct customers. But you get the experience there with everything, planning, budgeting, control, business development, customer development, operations, basically everything that takes running a company. So now I find myself in the very fortunate and happy position of being the CFO of poLight. And nice where I will now also get down to business. So in the quarter, although having sluggish the revenues for the quarter amounted to close to NOK 2 million, all of which represent the sale of TLens and ASICs. And there was no NRE in the period. The distribution of revenues was roughly 50-50 between Healthcare and Industrial segment. If we look at the EBITDA, it ended at around negative NOK 25 million, which compares to a negative NOK 20.5 million in the corresponding quarter last year. That change can be broken down to less revenue, NOK 1.1 million, which delivers quite a small gross margin for the period and NOK 2.5 million in increased operating expenses. It can also be said that within the operating expenses numbers, there's a provision for known expected future costs. So it does not all have a cash effect in the quarter. So we'll get back to that. In addition, there was an increased provision for inventory obsolescence in the quarter of NOK 900,000. If we turn at the balance sheet, the movement in the quarter, the most important is definitely the cash position, which ended at NOK 180 million. This is, of course, a result of the rights issue carried out in May and then the running cash burn from running the company. You will also see that the inventory movement since the start of the year, you see that inventory movement from the start of the year. It was affected by the NOK 0.9 million increased provision of obsolescence, as mentioned under the operating expenses. Now as mentioned, not all the operating expenses had a cash effect this quarter, which means that our financing of operating activities actually was lower this quarter than the corresponding quarter last year. Other than that, there were minor costs that leaves the net cash flow movement of NOK 19.2 million, leading to a cash position of NOK 180.1 million. And with that, I'll leave you in the capable hands of Øyvind for the outlook before we go into the Q&A.

Thank you, Joakim. Okay. One slide left and then Q&A. As Joakim said, a bit sluggish revenue during the quarter, but we do feel as an overall assessment that there is very good reasons to be hopeful for the future. We have built a fantastic organization with a lot of energy and a lot of dedication. We have identified so many opportunities in all the strategic market segments, representing significant business potential. Our technology a platform having today TLens products and of course, ASIC, but also new products in the, I would say, the TWedge platform, which is the first product will be potentially wobulation, is these kind of solutions and technology platform is getting increasingly respected and well known. The visibility of poLight is step-by-step increasing a lot. As I said, we have key design wins in all key market segments. We have initiated, and as I said in the beginning, we have developed an organization which not only are capable of being in the market, getting us into new programs and POCs and design-ins and design wins. We are having that organization. But in addition to that, we have built an organization which can continuously work on improving our supply chain. When I just back from the Asia and the U.S. and when I sit with these big guys, this is so important to demonstrate that we are ready. We shipped 160 pieces of TLenses in a few weeks to the Meizu 20 Infinity phone. When we show them this, when we tell them this, when we show the video from the assembly line, they are really, really impressed. And what we now have done is built an operation team, both headquarter and locally, which is continuously working on aspects, on yield, on capacity. And this is something which is building a lot of trust by the big guys. Without doing this, we will not be actually involved in all the activities we are involved today. So that's why it's so important to invest in that area. So sales and marketing, operations side and the investment we also do now on R&D which is key for this new technology solutions for the future is something we have invested a lot to build that organization, but this is for good reasons. We have to do it, and we have to show that commitment even though it does increase our operating cost. We just have kind of an all-hands seminar in Norway, where we brought in all employees, which we do yearly once a year. And I would say I'm very impressed by that competent organization we have built. There are how many nationalities you work in 15, 16, 17 nationalities. We are in the all important areas in the world when it comes to customer and partners. And we see a dedication, and we can see the capability we have built. And it took a lot of time and a lot of resources and a lot of money to build that organization. But I think we are really, I feel, in a position where we can manage to convince the big names and the smaller names to trust on this organization. I think, as I said, in addition to those kind of key markets, AR/MR, consumer, industrial, I think we need to keep in mind that there are yet market segments which have huge potential, which is only scratching the surface, being health care, being automotive. And I think it's correct to only scratch it and only keep it on the radar because we need to focus. If you don't have focus, that is the recipe for disaster. So we need to have focus. But at the same time, we need to be aware of what's happening. There is a train, and we need to be on that train before it leaves a time. So what I'm saying is that in addition to what you see, we see today of business opportunity, there are more to be explored when the time is right. By working hard by being persistent and constantly being sales and market customer oriented, poLight's progress will continue. There's no doubt. Thank you. Okay. Joakim, will you join me for Q&A?

Yes, sir.

So we have already received some questions. We will take them first. Then there is the opportunity to write questions through the portal. And then, of course, you can ask questions from the audience. If we start with the questions which were sent in beforehand.

First question, we recently observed through shipping data that a new sorting and test machine was delivered to your assembly partner, Tong Hsing in the Philippines. Could you provide an update on the new multi production capacity now that this machine is in place?

First of all, I must say that I'm impressed that you are able to detect all these details. I don't know myself how to find that out. But yes, what we're saying is that we believe that we have -- depending on the spec of the TLens because keep in mind, the different TLens have different spec. The customer have different spec, meaning that they go through a little bit different final testing. But if you say we could -- giving a certain assumption and then we say a standard TLens, we -- I think we could have an installed capacity closer to 1 million per month, maybe not full. And it depends a little bit about the yield, of course, but that will be, of course, unyielded, but it's close to that. And then it depends a little bit of the spec of the TLens, what it has to go through in the final test. But yes, if we're going to give a number, I would say towards that number. Then, of course, it's important to say that, that is installed capacity. Another thing is that there needs to be material coming in. So that, of course, needs to be planned carefully. But at the moment, as you have seen from the inventory, we have quite high inventory on the wafer. So there is going to be quite a big project if we are not capable of doing the first supply. Then we need to trigger new wafer supply, of course.

Then a long question. So bear with us. Could you walk us through the development process of the first TLens add-in solution developed a few years ago from concept to prototype, qualified camera module and finally integration into a specific product. How long did it take from the start of prototyping to having a fully functional camera module ready for OEM use? Are CCMs involved throughout the entire development cycle? And can we expect a similar development trajectory for the next simplified integration for a cheaper add-in solution, TLens Platinum, TLens Diamond and/or TLens Micro?

That was an essay.

It was an essay.

So good question. When it comes to the add-in, it was -- it's quite an interesting story actually because when we were very close to design wins with an add-on TLens, suddenly, Xiaomi came out with a phone with a very big screen, and they didn't want to have a big hole in that screen. So that was actually what was kind of closing some doors, and we were very depressed, and we went home back home and we start to think and we said we need to make a smaller nose of the camera. We need to get that TLens buried down in the lens stack so that the nose can be as small as possible so that we can fit into that scenario. And then we started to do some design work in the tech department, and we came up with some reference design, a conceptual design. And we did a roadshow where we kind of placed that reference design on the table, show this is what we can do. And the customers were interested, but they said, yes, but this is too difficult for the ecosystem. So we just placed that kind of on the table for many OEMs and come on with the guys, but the feedback we got was too difficult. So we went home, we started to work heavily on the smartwatches and the barcodes and other things because we were kind of locked out for a moment on the smartphone side. And suddenly, one customer OEM, big one said, we like that idea. We would like to trigger a project together with our key camera module supplier, make a PoC and then see what we can do. That was -- so the beginning was our kind of reference design, which was after some maturing in the ecosystem, kicked off the PoC, which then that program, then that PoC was -- OEM was involved and camera module was involved. And that, I would say, probably used 2 years, plus/minus before that, PoC went into a real product, which was the major phone. I think the next cases will be quicker potentially for different reasons because we know more. There are more camera module players who has been working on it for a while. And also that there are -- we have announced -- or sorry, we have presented easier way of doing it, which at least can fit some markets. And that's why I think there are hopes that this can be faster for the next camera module players. So that is basically a bit the history.

I think you did well. Yes. How does competing tunable optics technologies compared to poLight's TLens solutions for compact add-in applications in smartphones, XR devices, small medical devices, handheld barcode scanners and similar products. What specific advantages does the TLens technology offer in these markets?

I would say generally speaking, the difference between us and a liquid-based tunable lens is, in essence, it is that we can be quite so compact. We don't use any mechanical actuation, which some of them will do. We don't have liquid. So we are more robust, temperature, reliability, drop test. We have much better speed. We have -- we don't have any posture effect. You move your head, liquid will move. We don't, polymer don't. I think -- and so this is -- so those kind of differences are, I would say, more or less relevant for all markets. Of course, the -- if you go into the MR world, which I talk a lot about, this is about compactness, this is about having, say, a mechanical -- some kind of actuator like VCM, which some of them use will -- means that the optical access stability is bad, which means that you will have extremely bad image quality. And not to talk about power consumption. Power consumption is key. So at the moment, we don't see a lot of competition in this market. What I can say is that the advantage the liquid tunable optics based on liquid is that they can realize bigger aperture size, and they can have more optical power compared to us. So that is an advantage. That's why they were early in, in the industrial market segment than we were because they could add that advantage. Then there are other issues, reliability, which -- and actually cost, which makes us also more and more attractive in those markets.

What is the status of the new compact package add-in solution that you're developing with a well-known partner that involves a camera module manufacturer, a lens maker and an OEM?

So if I understand correctly, this is a project which we kicked off based on a program where we made an extremely slim package to realize a new add-in design. And the status on that is that we have already achieved to find the first customer who in the -- I have to think in the AR/MR space, who actually are doing a PoC as we speak. I just saw a picture of the lens stack which is being shipped to a camera module supplier, which will then be shipped to a major OEM for tries. So quite good progress.

Good. There is a question for me. That's fine.

I can read it.

You can read it.

So Joakim, as the new CFO, who joined us this year, what motivated you to take on this role at poLight? And how have your initial months been? And in what way has your perspective on the company involved since you started?

Good questions. I'll try to keep it brief. But although it's talking about myself, and that's always -- but no, what motivates me to start, there were several factors. Of course, it's -- I have to say, first of all, I was very -- I was actually very happy in my job at Nordea. So I wasn't actively searching for something else, but I received a call. I found out -- I had no like very limited previous knowledge of the company. And so I looked up and I have to commend our shareholders there in various forms, which made it quite easy for me to get a grasp of the company. So thank you for doing such excellent analysis. So -- and then coming in, talking to Øyvind, I think that's when I really started getting motivated because you always -- there are plenty of growth companies, there are plenty of exciting technologies, but you're very reliant on the team to deliver it. And meeting Øyvind, meeting the management team just sort of solidified that motivation and the belief that this team can actually do it. So that was definitely what pushed me over. Also, I think we had a final talk even before we accepted the position, and that was a very open and frank talk, which is a very -- gives a very high degree of trust. What -- how the initial months been? I mean, it's been hectic. There's definitely a difference from working at an established bank and working in a growth company. There are lots of different facets to have opinions about, to consider. But it's been very fun. I've had the fortune of -- in my second week, we had our seminar. So I had the fortune of meeting the entire company, which is global, and that's a very lucky position to be in. And yes, I think we had like a couple of weeks of learning the ropes and then you're sort of thrown into it and you need to start taking decisions. So it's definitely been an exciting journey so far. And in what ways has my perspective on the company evolved since I started? Well, as I said, I feel like I got quite a good impression going in. So there haven't been that many surprises to be frank, also given that I've worked in the similar type of companies, I worked with similar types of companies before. I know I expect there to be some shortcomings on certain aspects. And -- but I tried to make a note of everything that I see that like down the line, things that we can improve on to increase our scalability, which is -- yes, so that's my analysis so far. And I sort of expected a marathon with sprints thrown into it. That's what you get in a growth company, and that's definitely what it is. And I mean, we will have setbacks. Everyone has setbacks. But you know that with each setback, there's like within reach, there's a handful of massive opportunities to start working on. And I have to say that -- I know we can't say a lot about who we're working with, but I have to say that when you come in and you actually see the names that we're working with, that's definitely motivating. Because these are a big name … Okay. Next question to you Øyvind.

Yes.

When do you hope or expect to see poLight technology in the same unit for both camera and display?

Yes. Good question. I think that is definitely something which I think can happen. Then we all know how this market is still kind of developing. But yes, I think in -- when I talked about this AR/MR market starting to kind of happen in '26, '27, '28, I think hopefully, it's in that range.

What is the current status of major global semiconductor distribution channel partners that are expected to be added later this year?

Yes. So I mentioned like Thorlabs is in a way, somehow a vehicle for getting people quickly to assess technology like-for-like. We have different evaluation kit, which customer can buy. But it's quite -- it's not easy to buy it from us because there's a PO, we need to be an approved vendor, et cetera, et cetera. So we are thinking of adding the more kind of usual kind of distribution channels in this industry. We are still working on that, and we are working on agreements. So -- but so far, we haven't concluded, but this is something we definitely would like. And why do we do it? We would like many customers to see what we can offer when it comes to evaluation kits. So as many as possible engineers can easily buy a kit to assess our technology for their application. That is -- for achieving that, I think we need to be having a broader distribution channel, which we are working on, but not yet completed.

So could you provide an update on the progress of your previously announced engagements with new significant customers in the barcode industrial sectors?

Yes. I would say that I can't say more than I said in the presentation. There is a pipeline which is developing positively. We are working with small guys, and we are working with bigger guys. And I feel that we are making progress on all fronts, but it will take time.

Over the past few months, we've observed a positive trend in stock prices among most camera module manufacturers. Are you noticing an emerging optimism in the sector and increased interest in poLight's technology?

I would say that there's no doubt that the AR/MR big OEMs are pushing camera module suppliers to enable TLens camera modules. In that sense, yes.

Okay. So regarding AR/MR projects, approximately half are consumer related. Could you provide a breakdown of these consumer projects specifically? How many are focused on camera solutions versus display solutions for the display solutions, what's the distribution between LBS projection and TWedge technologies?

Yes. If you focus on the PoCs, there is, say, I can't remember now, but at the top of my head, so 12, 13, 14 POCs in AR/MR related to consumer. And I would say half-half. And there is only one LBS, but that is in the design-in.