poLight ASA (PLT) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to poLight's Second Quarter Presentation. Today, we are also physically present at the Continental, and welcome to you coming this early morning to Continental, and also welcome to you following us from webcast. My name is Oyvind Isaksen, I'm the CEO of poLight. Together with me today is also our CFO, Alf Henning Bekkevik, who will go through the financial review; and Chairman of the Board, Grethe Viksaas. Today's agenda is key events, introduction to poLight, operations and markets review, financial review by CFO, outlook and Q&A. [Operator Instructions] Okay, key events. Quite many this quarter. We had another design win in barcode area, which is step-by-step becoming an important area, and we'll come back to that. This was a design win from a company called Superlead, a Chinese quite aggressive player. We signed a very important agreement on -- for a medical endoscope device. This is a long-term project. This is a Tier 1 player, which is a leader in his area, and a super important opportunity for poLight to go into this market in a big way. A sizable NRE fee of NOK 1.7 million. I will say that and Henning will come back to it. General good progress on the different PoCs, proof of concepts. Specifically, I would like to mention augmented reality. They are progressing very well, with the potential for more design wins as we go through this year. And you saw maybe from yesterday's announcement on the 16th of August, was it, that we had a repeat order from an AR customer who will release the project this year. There is an increased activity in the industrial segments, I would say, mainly related to barcode. Despite that the smartphone OEMs are having a, I would say, a difficult time because people are spending less money and frequent shutdowns in China specifically, are meaning that -- implying that the OEMs in China are suffering from sales and delaying release of new smartphones, especially the high-end versions. In spite of that, there is still a high activity in this area for poLight, and we are following and supporting some key opportunities, so I'll come back to that. Also, we did a share split during the quarter, 1 share became 5. And we held a Capital Market Day, a very successful one, and you can still review the material and the webcast from that event that was held the 1st of June. Okay. So for those who are new to poLight, I know there's a lot of people following us and a lot of people are knowing us very, very well, but still, maybe some new. So quickly then, poLight in a nutshell, a global player. Even though small, we are very international and very distributed. As you can see it from the top right illustration, we are spread out, you can say, [ thin ] all over the place. And the strategy for the company is to be with high competence where customer and partners are located. We are today, 36 employees. Focused very much -- a very focused company on tunable optics with many application areas. We have a high focus on IP. Today, we have 17 worldwide patents, 9 pending and 3 registered trademarks. In essence, you can say the attributes of our technology on the bottom right corner. Extreme speed, which nobody can compare to. We have a -- we can real us very compact solutions. We have a constant field of view and very low power consumption, which is in many of the markets we are addressing, a key attribute. Not many years ago, a couple of years ago, we had 0 customers. After -- since 2005, we have been working on developing the technology, and we finally managed to qualify the technology and get into products. As you know, the first one was the smart watches, Xiaomi and XUN. Then we had the Honeywell EX30, which is kind of one of the kind scan engine. We are working very closely with Honeywell, definitely. And then we have various follow-on, I would say, barcode readers application, very much machine-vision oriented, meaning, using our technology in and manufacturing applications. That, of course, means that the volumes are relatively small for those applications. Whereas if you go to the Honeywell case, that's more like, call it, a logistic warehouse type device, which is -- have more volume, which you have seen, that we're getting frequent repeat orders from Honeywell. And as we go, we will get into other applications on barcode reading, which will increase the volume. Webcam. MAXHUB, a very good webcam. Important design win, and we're using, of course, that for whatever it can be used for, for getting other customers in that area. It is a very cost-sensitive area. I have to say, it's a relatively cheap product, so I think that we will be even better positioned when we are ramped up and cost optimized our solution. And then the small icon here about AR, it deserves to be bigger, but it is still extremely important, and we expect more to come in that area. I will come back to that. So step by step building good references, which of course is somehow the most important sales tool we have. Happy customers. Quickly on our focus areas. Smartphone definitely, the main, I will say, focus, and that market is probably the only market in addition to accessory market which can give us the volume we would like to have. So we are working and focusing a lot on that, feel we are progressing even though there is some depression in that, should I say, in that market. But sooner or later. Barcode/Industrial, as we mentioned, a key area for us. It will take time to develop. But as we go, we will get into more, I would say, towards point of sales applications, which will increase the volume. And they all think about why should we be in that market is that barcode is moving definitely from scanning barcodes to scanning more like 2-dimensional codes, like QR code. And that means that the laser system has to go to an imaging system, and an imaging system very often need an AF technology. Augmented Reality, super important for us. And maybe that market is a good example of here we are in the beginning of the market. In the Smartphone market, we came in as an -- where an incumbent technology was already used extensively and all the companies had invested heavily in that, what we call the VCM. In the AR side, we are in the beginning and we are kind of part of, call it, the reference design phase, which gives us a completely different starting point. Others, I would say there are 2 other markets I would emphasize on. And that's -- one thing is medical, which we've seen is coming more and more. We have announced a design in with a -- for a disposable endoscope that will come out this year. And we have also this NRE R&D project, which we have signed recently of NOK 1.7 million with Tier 1 players. We feel that the medical is very different from anything else we do. Same product we shipped, but problem -- not the problem, but the difference is that it takes quite some time. It's -- there are qualification processes. But the way we see it is that this will probably become one of the, I would say, the fourth leg of our market focus. We started to see some interest from automobile, which is also today classified as kind of other markets. We are not kind of actively ourself addressing that market. It's more like incoming calls, which is often a good starting point. And the reason for that trend is that what happened in the mobile smartphone market with the camera system is that resolution increased, pixels became smaller, meaning, AF is important, auto focus is important. The same trend you see coming in the automobile, and you know how many cameras are in that industry in a new car. So that is potentially a very interesting market. Also extremely tough from the qualification perspective market, very strict qualification processes, even maybe stricter than anything else we have been doing. But we have been approached, and the reason for that is that they see that the mechanical AF technologies being used in other applications is not suitable, ideal for that application. Reliability, vibration. When you drive your car, there's a lot of vibration, of course. So that's where we are. We have no mechanical moving parts. So potentially, it's -- there is a good fit. But I would say -- I would classify it as a long-term opportunity. Okay, so let's go deep dive a little bit into the different verticals. So this so-called add-in TLens concept is really continuing to attract a good interest. It was a big achievement when we managed to convince the ecosystem to use TLens in that way. And just for you who are new, add-in TLens means that instead of having a fixed-focused camera and you add TLens on the top, building height as a consequence, which is not nice. Instead of doing that -- which is all our customer today is mainly doing that. But now, the ecosystem has started to qualify themselves to take in-the-lense stack, include in-the-land stack a bare TLens. No packaging, no plastic around, a bare TLens. That means that you can realize many, many solutions. You can support bigger sensor format, higher resolution. You can basically adapt to any kind of application or many, many more applications in different products. So this is continuing to be a key for us, and we see more and more camera module guys who want to qualify themselves for being able to do that. Today, there is one specific player who is extremely mature and have qualified themselves and are able to go into mass production with that kind of concept, but there are other coming. As the second bullet, talking about reference designs, we have acquired capability lately in optical design for lens stacks. A Russian specialist on his way from Moscow to our Tampere office these days. That means that we are able to produce a reference design, which it kind of helps the camera module guys and the OEMs to get a good start and though do not need to take everything from scratch themselves. So -- and we are publishing soon a new web page where these kind of reference designs will be publicly presented. And we think that this will help us to address many, many more cases in different applications, also smartphones. Selfie camera. Even though we have a back camera solution, selfie camera is, we think, will be the beginning for us. We mentioned that many times. As I said in the beginning, even though there is OEMs which are struggling, and many of them are struggling, we do -- we are engaged in PoCs, which are progressing quite well. And when it comes to consumer, we also address other markets such as webcams, drones, but I would say the main focus is on the smartphone. On the bottom there, you see there are 3 design wins in consumer market. You know, the watch -- 2 watches and 1 webcam. There are 11 ongoing PoCs and there are 5 planning PoCs. So you can see in the consumer market, including smartphone, quite high activity. Of those 11, 5 of them are related to augmented reality, sorry -- 4. Five smartphone, 1 iris recognition and 1 webcam. AR. As you see from the top right graphics, we are saying professional use cases. I just want to maybe add to that. That doesn't mean that we are only involved in professional use cases, but what we expect to see on the market in the next year or 2 or even 3 will mainly be professional use cases. We expect that the consumer project we are involved in will be a product or market in maybe 2025 or something like that, so that is still some years ahead. But being a part of the enterprise and the professional use case is obviously an important stepping stone for being also involved in the consumer side of it. The -- why TLens is good for AR? We have a very low power consumption. And you can imagine an AR headset, at the end of the day it's going to be something like this. We're going to wear every day, and that has a very limited space for equipment and battery. So power consumption and the power budget in those kind of devices is super critical. And there, this is one of our clearly a strength. It's exactly that. No gravity. Whatever you do, we had, we will not impact that image quality. Interesting one is actually the temperature stabilization. Now being so compact design, you can imagine all the electronics is dissipating heat and heat into, say, an imaging system is really, really a recipe for disaster because it starts to drift. And that means that, say, if you have a fixed focused camera and the heat is increasing, that fixed focus camera is shifting characteristics and suddenly will be out of focus. And that is one of the key reasons why actually they need auto focus, to adjust for that temperature. And that is typically called athermalization. You can Google it and see what it is, but that is one of the important, actually, attributes in our technology. And in a way, inherently, TLens compensate that kind of by design, you can say. Then we have high-speed, compactness, which is -- and I said many times, it's quite interesting to see how wanted we seem to be in this segment for these reasons. And that's why we are doing a lot of -- having a lot of focus in this market. Having said that, whatever we do in smartphone has a direct relevance for AR. So it's not like we have to spend resources on smartphone and AR to prepare ourself. No, it's basically the same thing. Okay. We have already 1 design win, which is with a very, I would say, well-known, recognized player. And that was announced, I think, in December last year, and we got our first MP order already done, a small one. Now it seems to be -- they seem to be on track, and they want to release the product to market this year. And they then had to order new material and also supply chain throughout the world is difficult these days, so I guess they also wanted to be earlier than later. So that's why we got the follow-up order relatively early, maybe earlier than expected. So that's a good sign that we are in, and hopefully, you will see an AR product on the market today, having your favorite TLens installed. There are more projects on the AR side, and there are candidates for additional design wins this year. That will be very late in the year. And of course, they may slip into the next year, but at least the current plan for the customer is this year. Two use cases in -- for TLens in AR, and just to repeat, world-facing cameras for sensing or for imaging or whatever. And then also display solution, that TLens becomes a part of a display solution. There are anyway many things we are learning every day when it comes to AR, and it seems to open many opportunities. We have recently announced the sign in to use TLens for a display solution. That is a laser-based system where TLens will be used in a laser projection system, which projects messages to -- on the glass. And wherever the user is focusing, whether it's close or whether it's at distance, the message from the wife or the husband to get -- to have them dinner ready will be displayed in a crisp and focused way. That is the role of TLens. So this is one display solution, which we are actually in a PoC, which will most likely be a -- will be a consumer product, meaning 2025. So it's a long, long project. Then we have identified other AR display opportunities for poLight. And that is what we call [ wobbulator ], meaning that, that is not a TLens, but it's basically the technology platform where we are scanning horizontally, vertically a display so that you make a lower solution display, a high-resolution display. And this is a new product, which is getting -- new potential product, I should say, which we have -- can get quite big. We are already in the PoC stage, and we're already in, I would say, partnership with a, I would say, very important well-recognized player in this area. So cameras for sensing, for imaging, for video, display solutions, not only one solution but several solutions. So you can imagine one AR headset can give several product opportunities for poLight. And also, AR is moving from enterprise to consumer. This is an area where all the big tech companies are making major investments, and we are being seen today as a key player. 1 design win, 5 design-ins, 1 for consumer, and 5 ongoing PoCs. 4 of the 5 is actually a consumer. Okay. Barcode. Yes, we achieved another design win, so this is actually the fourth design win in the barcode area. This is the picture on the right, as you've seen many times, we have the Honeywell scan engine. And then you have -- so Honeywell is selling this scan engine to different type of OEMs who is making the barcode reader based on that scanner then. One of a kind, high-performance, relatively high cost. The opportunity for this market is, I would say, promising. And we have many activities, as you can see on the PoCs, 5 of the 9 PoCs are related to Barcode. What I would like to explain is that we know we have been able to get into those 4 design wins. And as I mentioned in Italy, there are relatively low volume cases like from a manufacturing line application, which means that is a low volume. You don't buy a lot of devices for having on your manufacturing line, so that is, by design, kind of low volumes. And then also, just because I have got some questions about repeat orders. When we get a design win for a machine vision system which we know is a low volume, we have a minimum order quantity. So we kind of force our customers to buy, say, 9,000 or 12,000 or whatever units because that's -- we say that's the minimum order quantity. That means that, that will keep them busy for quite some years, so that's why it takes time for them to deploy that units in that kind of cases. If you go to Honeywell, they are closer to the, shall we say, point of sale, more of they're logistics supply chain. So they are not at the manufacturing line. They are more at the logistics, warehouse type application. So there, of course, the volume increase. When Honeywell or other is taking the next step, which is making even a more compact scan engine which will fit into a type -- PDA-type application, which you will find in the point of sales you are visiting like the shops and what have you, then of course, the volume will be even bigger. So I think that we just need to be patient and build our position step-by-step. You know how new technology, they are afraid of taking you directly into high-volume cases. They want the cost optimized, so this is the kind of the path. We go from low volume, performance, high performance, step-by-step moving towards point of sales, and then this market will be bigger and bigger for us. But it will take time to build. But also remember, these kind of applications typically have a long lifetime. Like I say, if you take the EX30, it typically can live for, say, 5 years plus/minus. So -- and then, of course, we do hope that we will be in Honeywell's plan for the future. And we do hope that other like Honeywell, the bigger players will start to use. And definitely, there are PoCs indicating that. Then we are involved in other application, not only barcode. They are, I would say, relatively immature, so we don't want to emphasize them too much. But as you can see, there are 9 PoCs, 5 is barcode but there are also other things. Healthcare. Yes, as I mentioned in the beginning, this can be the next important vertical. So we have smartphone, industrial, AR, and then the next one we may want to lift up could be healthcare. We signed a very important, as I mentioned, NRE project, a development project worth NOK 1.7 million, which is with a Tier 1 player, the market leader. And if we behave and deliver in that area, we have a fantastic starting point in the -- in that high-end world of endoscope. We have already a design win. You may remember Kavli, which is using for this -- or technology for microscope, studying the behavior of -- the brain behavior in mouses, which will help to understand Alzheimer's or dementia, and these kind of diseases. So that is impressive how that has really, after the publication from Kavli, how this has raised a lot of interest. And this is an extremely high-value sales but low volume. I would say that at least today, I would say it's more like a brand building for poLight in the healthcare and researcher more than important revenue. But it is significant, we are talking about millions already in this area, so -- and we're expecting more to come. Yes. We have already announced a design in endoscope, you'll remember, and that is moving quite well. I said slow last quarter. I feel that it has started to show some good progress, and the customer still have the target to release that endoscope this year. So as you can see, starting step by step to build up to something. One design win, Kavli. We have 1 design in surgical device, which will be released to market this year, and we have 10 ongoing PoCs. I don't want to talk through all of this again, but this is the table you have been seeing many times. Maybe just on the bottom line, we have now 9 design wins, 8 last quarter. We have 7 projects, meaning project design-in, which can become design win. We have completed now 58 PoCs, 54 last quarter. We have ongoing PoCs, 31 compared to 28 last quarter, and planning PoCs, 29 compared to 19. So you can see that there's a steady step-by-step growth in many areas. And this is only, as I say in my statement in the beginning in the quarterly report, this is showing that this tail end is not going to go away. It's going to enter into many, many market segments over time. My dear CFO.

Thank you, Oyvind, and good morning to you. So deliveries of TLens and ASICs gave NOK 2.5 million in revenue in the quarter compared with NOK 2.9 million the same quarter last year. We had an EBIT loss of NOK 13.9 million compared with NOK 13.7 million. The reasons for that is two, I would say. One is that we have increased the sales resources and resources within R&D and operation, and that is offset by a reversed expense of social security on the share plan -- the share option plan due to the decline in the share price in the quarter. On the balance sheet, we had NOK 124 million in cash deposits at the end of the quarter compared with NOK 56 million approximately. The inventory have been increased by approximately NOK 10 million in the quarter, and at the end of the quarter is about NOK 30 million. This is mainly wafers, which is the component with the longest lead time. On the cash flow, we started the quarter with NOK 150 million in cash deposits and we used NOK 23 million in operational activities. Last year, we used NOK 12.6 million, and the increase is due to the increased inventory. We used NOK 3 million in final test equipment, and we ended up with a cash deposit of NOK 124 million at the end of the quarter. Thank you.

Thank you, Alf Henning. Okay, one slide left and then Q&A. Yes. Maybe I've pointed out most of it already. But again, we feel that the quarter has confirmed again potentially in several market segments. The opportunity pipeline is building up and showing encouraging -- and it's encouraging. The main focus going forward, just to have a statement on that, definitely smartphone cases. This is the market which is important for us. This -- we have a technology which deserves to be used in smartphones, and it will. I've said that many times, and I will repeat it. We will get into that market. And just to say that, I know a lot of people who have been working towards this segment will get into the segment, and everybody experienced the same. It is damn tough, sorry. It takes a lot of qualification, and you need to show that you are there. Over time, you need to show capacity, capability, but this is something we don't give up. We will be in smartphone. Okay. We would like to mature, of course, the AR cases. As I said many times, I think this is super important for the company. So AR will also be a high focus. Remember what I said, it's not like we have technology for AR and technology for smartphone, it's basically the same component. Gradually build a platform on -- in the Industrial segment, and let me also add kind of medical segment. This will be kind of, call it, a recurring type fundament for poLight. Not kind of big project, no project, big promo, it will be kind of step-by-step increasing as a fundament, which will be important for the, call it, recurring revenue in the company. So that is the focus. Of course, we are a small company, and we need to carefully review where we spend our time and resources. And I had to admit that working in poLight, it's not an 8 to 4 exercise. It is day and night, weekends, vacations. And I felt that we have built a team which are willing to put that in, because how many companies like this do you have in Norway and in the world? Not many. Okay. Other opportunities are there. I mentioned automobile, and they will be addressed if business case and resource situation allow. But those market dimensions is definitely the markets which we proactively are taken care of. From a portfolio perspective, there are so many things we could have done. And then also, I've been managing tech companies for 25 years, and the recipe for disaster is to do too many things at the same time. So we do try to be extremely focused in that, and the main focus for us is to make TLens a success. We are on our way, but we still have a way to go. And that means that we need to continuously improve the TLens, make it easier to integrate, make it more reliable, make it more cost efficient. And that is from a portfolio perspective focus. Then we see other product opportunities, e.g., TLens with big aperture. Medical, TLens with small aperture. We see new products on the same technology platform like what we call the [ wobbulator ] for increasing high resolution display or for improving high-resolution display. So there are things which we really would like to do but we need to do it step by step. And whatever new thing we try to do now, you can say the TLens, we developed, call it, in isolation. Not isolation, but we did it on our own balance sheet. New things we do know. We try to get kind of a customer engagement very early so that we can get quicker out to the market. I would like to emphasize again that our capability in the company is getting better and better every day. And one specific thing I would like to mention is our ability to make system reference design. Not only competence on TLens as a component, but we can actually come to a customer, you could use that design for your product, which gives that customer a better start and easier start and starting from the very, very fundamental design. So that's important. So that's the main outlook statement. I would like to invite Alf Henning to join me for the Q&A. [Operator Instructions].

Are you ready?

I'm ready.

Good. Optics is a mega trend. Is there somebody being an OEM or a camera model player who have first tried to use TLens in an add-in configuration?

No, we have -- we are very careful not to give kind of exclusivity or right of first refusal type deal, so the answer to that is no.

In the first quarter presentation, you mentioned that the smartphone opportunities have been shifted to 2023 and beyond. Does that mean that some of these opportunities is shifted all the way to 2024?

Yes. Definitely, you're correct. We do -- due to the situation specifically in China, we do expect that the 2022 opportunities we saw will happen in 2023. And when I say beyond, of course, in our business plan, we expect that this guy, that guy to do, maybe be the first. And then after that, it will be followers. Mainly that the whole business plan, in a way, shifts to the right. So yes, some of them will also be later, but we do see candidates for '23. And then, of course, but some of them will also shift into '24 and onwards.

Regarding the medical PoC news, is this related to what you said about poLight going up in the value chain by making our camera model solution?

Yes, good question. The medical cases we are involved in at the moment, in a way, yes. Because we tend to, in these cases, to be asked to make TLens integrated into a special kit package so that the customer, the medical customer, can easier integrate TLens. Handling a TLens, a bare TLens, a naked TLens, is quite a challenging thing, and I'm referring to this add-in design in the Smartphone is you have to have quite high capability, both design wise and manufacturing wise to be able to handle a bare TLens. But those kind of high-end camera module specialists in, say, in the AR space or in the smartphone space, they are capable, at least, many of them. Whereas if you look at the kind of high-value medical type equipment, lower volume, they are typically not supported by those smartphone camera module guys, they're typically supported by other niche players, and they don't have that capability. So then we are, in a way, having the opportunity slashed, being forced to move up in the value chain in that way that we take a bigger responsibility in integrating the TLens into something they easily can use. But it's more like an opportunity than anything else. But of course, it means that from an assembly perspective, we may, for those cases, which is a relatively low volume, high value, we may not -- do not want to do that at our assembly partner, because that will be kind of a noise in their kind of high-volume plans. So that means that we may want to do that ourselves at Skoppum, that -- those special integrated projects. So a long answer, but in a way, yes.

Does this enable poLight to provide this solution to more medical equipment OEMs?

Yes. But typically, every one of these customers would like to have their own design. And also the guys who want to do it, they typically also try to protect themselves by patents, okay? We have integrated TLens in this way, and they will try to patent that. So another guy need to do is slightly different. But typically, system patents on that level is, I would say, less difficult to go around, but that's typically what they try to do.

Regarding Xiaomi child watch, why are TLens not included in newest releases?

I think I already mentioned this about smart watches. This is a super, super competitive landscape. Very, I would say, cheap devices. You remember that when Xiaomi released a TLens camera in their watch and same did the XUN, it was actually in the beginning of the COVID. And this smart watches we have been involved in is basically used for as a security device for kids, parents-kids having contact when they're not together. And of course, 2 years with COVID in China means that the parents and the kids are more or less in the same flat 24/7. So that kind of watches became like -- which was supposed to be quite high volume, became a very low volume device for all the players, not only those guys. And that's why the focus of these watches now is not performance, but cost. And we are a cost increase element for them when they can buy a VCM for $0.30, which we will not sell TLens for. So that is the reason, cost. We -- I think that, that market will normalize. I think that smart watches we are wearing will also sooner or later have come. I just have a story there. I was out fishing one day, and in my net was a huge lobster. I mean huge, like this. And I forgot my phone. But I had my watch, but there was no camera. So my kids, I was bragging to my kids that I had this fantastic lobster. Send me a picture, don't have a picture. Ha, ha, ha. So of course, they didn't believe me. So I think sooner or later, there is a need for a camera in those watches because it's so much easier to -- instead of having the big phone with you when you're fishing or jogging. I think this market is still an important market.

If volumes get high related to medical solution, are you able to scale up production to market demand at Skoppum, or do you need to expand?

A very intelligent question because exactly that we see in the medical market, we may need to take a bigger role and then we need to increase capacity in Skoppum, and that may happen.

Has there been any follow-up orders by other players than Honeywell?

I'm a little bit uncertain what you mean there. But when it comes to barcode, no. And the reason for that is that the guys who have these other design wins in barcode has been this machine-vision manufacturing line application, where we are forcing them to buy, say, 9,000 or 10,000 or 12,000. And that is kind of -- they're only used to, say, 3,000 a year, as an example. So they are -- that's why they are not ready to have any repeat orders. But that will come, of course. But for other markets, yes, we have.

Regarding smartphone, did the add-in design models draw new players' interest?

Yes. I think I answered that already.

Over time, patents appear more frequent, patents from many different camera model players. Can you say anything about maturity and traction in the market?

I feel also we answered that during the presentation.

Many reports showed our direction switch from low- to end-camera models to high-end OIS and autofocus models, and hence, more expensive solutions. Does poLight benefit from this trend?

Yes. I think that -- the fact that the camera becomes more and more important, selfie camera becomes more and more important. They put more value, more budget in the selfie camera like TikTok, which I'm not using, but which I know many are using. It's -- will mean something for the selfie camera. It will dictate a better selfie camera, and that's clearly an advantage for us.

Of the completed PoCs, how many percentage is realistic to use TLens in a product?

I can't give a number. But what I can say is that what we do see is that, I would say, many of these major players in the different market segments have done PoCs. Not only 1, maybe 2, maybe 3. And I think I can say that majority of those PoC have concluded with a positive statement. Then they take that kind of findings, that research report in the drawer, and they're waiting for opportunities. Somebody are waiting for opportunities and they are willing to be the first mover. Somebody just look at this as no, we aren't ready. Technically speaking, we know TLens. We know how to use it. And when the first mover is moving, we're going to follow quickly. So I think there it's a catch-up effect in a way. When one player will move, there are many people who are ready to move. And if TLens or should I say when, when TLens is a mainstream technology in this market segment coexisting with other technology, of course, I think there are many people being ready and will follow. So without giving a number, I think a significant part of that has at least the potential.

You said add-in design is the solution for selfie cam in smartphone. Is this recognized by the camera model players as well?

Yes, it's not only our statement. We have customers saying that, exactly that.

Regarding investors, did you notice any international interest after market breakthrough?

Yes. Of course, there are always dialogues in that context, without going into details. But yes, I mean, there are companies and investors who are talking to us. And -- without going into more details.

Recently, one of the world's largest camera model companies came out with a report showing that they have reached the mass production stage of their camera model for selfies. This company works with TLens and referred to TLens in previous presentations. How does such a development affect poLight in terms of being ready for a possible order?

And of course, I think you know who you're referring to. And they are, I would say, particular one which are, I would say, mass production ready in add-in designs, and that is fundamental for us. A customer, an OEM doesn't buy a TLens, they buy a camera system. So that are qualified camera model who could deliver high-quality add-in TLens in a sense, yes, fundamental, extremely important. But there will come more, and we have different activities with different camera model players for different market segments, working on add-in design as we speak.

The same company mentions that they have completed R&D on OIS with tunable lens. Can you tell us a bit about the development of OIS with TLens?

Yes. We have some, I would say, research activity and concepts which we are doing. I'm not aware -- also, things can happen on the OIS side based on TLens with other places with camera module guys, which we don't, in a way, know about. But from internal poLight perspective, we have -- as I mentioned that when it comes to innovation and new products, we are carefully monitoring and doing some, I would say, some investigation. But we are focusing on success for TLens, meaning, we can't do too many things on completely new things. But there are concepts which are kind of ready to be executed. But today, we are relatively less mature than definitely the AF.

The smartphone companies now seem to prioritize the development of the selfie camera more than the rear camera. How has the time from Q1 until today been for poLight in terms of inquiries from the smartphone companies? Is there any increased activity to track?

I would say still, I would say, even though there was an increasing interest in selfie and better selfie camera and selfie camera with AF, I will still say that the main budget and the main focus for the OEMs are the back camera structure. And that's also why we have invested in reference design which will be compatible, with say, wide field of view back camera. So we think that we will get into the selfie camera, but then also we think that we're going to evolve to the back camera. But I think if you look at the budget and the focus at the OEMs, I would still say that the back camera is the main area they invest in.

The fourth quarter, it was reported that 3 companies had come a long way in planning smartphones with TLens. Slower activity was reported in China in the first quarter, but at the Capital Market Day, it was barely mentioned that the fourth player has a relatively fast-growing PoC. Can you say something about how things are going with this actor and how far they have come in the process?

I'm not 100% sure what you -- what that question is hinting to. But as I said in the smartphone slide, we are working definitely in that area. There are good progress in the area. We have progress with both Chinese OEMs and others. Maybe you are hinting here to that non-Chinese OEM. And if I'm right, that is still, I would say, continuing in a good way.

It has been mentioned that there is a smartphone customer who has run the first process of building a TLens model together with a camera model player, and this customer is expected to be the first with a TLens mobile. Are there now opportunities for one or the other potential customers to arrive before this customer? Or is this work still being done so concretely that it can be assumed as this first customer will be the earliest?

Yes. Good question. And who knows? If you take it from the camera module perspective, of course, the camera module guy who supported that smartphone who looked to be the first one to release is definitely also talking to other OEMs. So the possibility of that camera module guy to be the first one is still there. Will it be the -- will it still be the same OEM? Maybe, maybe not. As I see it today, there are other smartphone players which have matured faster lately. Still, I would say that the guy who was kind of ready to, in a way, use it was -- is still maybe the most advanced. But also somebody picking up very quickly, meaning that potentially it could be another OEM, but it could potentially be the same camera module guy.

AR is being mentioned to be the next big thing in tech, and orders were recently announced for the first mass production batch. We don't expect any release in 2022. Can you say anything about the product or what role this product will play in the AR market?

I would love to do, but I cannot. What I can say is that it's a well-recognized player, expected to be out this year and start up something good for us. I can't say more details, sorry.

Several of the projects poLight has in AR were standard in the recently-published stock exchange announcement to be the category, important AR market players. Can you name which companies you consider to be in this category?