Welcome to Elliptic Labs quarterly presentation, Q3, November 10th, 2021. My name is Laila Danielsen. I'm the CEO of Elliptic Labs. Today, I'm here with Lars Holmøy, our CFO. Before we jump into the presentation, just some practical information. There's a chat window in the presentation that you can ask questions that we will be answering after our presentation, after our presentation. Okay, so let's just jump straight into the Q3 highlights. This quarter was a very exciting quarter for us. We made solid progress in multiple verticals. We continued improvement of our financial performance compared to Q3 of 2020. Operating year-over-year. Also, it's worth noting that Q3 revenue exceeded first half revenue of 2021. That was NOK 12.1 million. Also, EBITDA improved from -6.2 to -0.4. In September of this quarter, we also placed a private placement successfully and raised NOK 150 million. We continue to grow business with existing smartphone customers. We'll talk a little bit more in details about that. We also signed a PC enterprise license agreement, and we are on target for mass product launch. This is very, very positive. Also, we are on target to deliver on our first IoT product, which is with the very large company Bosch Spexor. For the people that are new to Elliptic, wanna just also share a little bit about our core value proposition. What we do is that we develop virtual smart sensor that use AI, ultrasound, and sensor fusion to sense you and your surroundings. Let me clarify how this works and how we are working with the customer. For example, one thing when I'm talking about sensing, you could be to sense presence detection, for example, if you're sitting in front of a laptop. Let's say when you are watching this presentation, you are sitting in front of the laptop, the screen is on, your display is on. When you get up and you leave the laptop, we can use our technology to automatically, quickly turn the screen of this laptop off, lock it, so it's secure and save power. How we do this is that we use ultrasound and the standard speaker and microphones that is on the laptop. What does ultrasound really means? Well, it is regular sound. It's just a different frequency. When a speaker plays out sound, it plays out at two levels, audible level that you can hear as a human, and an ultrasound that you cannot hear. This is what we are leveraging. Our go-to-market strategy in this area is very concrete. It's a concrete value to the customers. What we're saying to the customer, instead of using a physical sensor, let's say a time-of-flight sensor, a radar sensor, or even a physical ultrasound sensor for that matter, to do this detection, you can use software only to leverage the current speaker and the microphones that is on a device. We do the same thing when it comes to, for example, smartphone. When you talk on the phone, when the phone rings, your screen will turn on. When you put that up to the ear, the screen turns off. You continue talking, and you make sure that when you're touching the screen with your head, that the phone doesn't accidentally turn off, and also that you save power. Same principle. Here we use the speaker and the microphones that is on the smartphone. On top of that, I'm talking also about sensor fusion, we use a few other sensor, accelerometer and gyros, and we combine this to create this type of capability, so 100% software. But we don't stop there. What we also do is that we continue and support all type of sensor. We don't just focus on the leveraging speakers and microphones and leverage the ultrasound bandwidth. We also work with different partners, for example, in radar. We work with several partners like Infineon and MediaTek and Texas Instruments, and we use their tech, their physical sensor, and we apply our software, so we can make devices even smarter. For example, I talked initially about presence detection. The next step might be the fall detection or heartbeat detection. We see that the customer come to us to reduce cost, and the partner comes to us to add additional functionality, so we can sell to the same customer. A very straightforward, concrete value proposition that is very, very scalable. Today, we are the leader in virtual smart sensor for the consumer market. We are based in Norway, and we also have presence throughout Europe, Asia. We are in China, Taiwan, South Korea, and Japan, and also in the U.S.. Our virtual smart sensor can deliver multiple features. I mentioned about proximity. We can do, of course, presence detection, which is a longer distance. We do gesture, heartbeat, and so forth. The platform we have built for about a decade is a solid and well invested technology, and it's proven today on several hundred million devices that we can really deliver this technology at scale. The beauty is because this is software only, we can also over time, as we're scaling, deliver, you know, excellent growth. We still commit or recommit that we can reach NOK 500 million within the next two years with an EBITDA margin north of 50%. I'm talking a little bit. I talked a little bit about the two markets that we are going after here initially, which is the smartphone market as well as the laptop market. The same underlying technology can also be used in multiple verticals. We've seen interest from. We've signed a few POCs with smart TV. We also, of course, as you know, last quarter signed with Bosch in the IoT space. We see multiple features here with that we can spin out from the same underlying platform technology that is valid and has a strong interest in multiple verticals. Let's talk a little bit about sort of the price point as well as some of the competition. What we're competing today, it's sort of. In some cases we compete against a technology, and other times we are partnering with the same company. In the smartphone we see that here we are replacing a proximity sensor. The first customer we launched with here that we will talk about is Xiaomi, and we've replaced a technology back in 2016 that had been already in the market for close to a decade. A very challenging technology to replace. We still did it. The price point is low. The volume is significant and so we have been successful in growing that market. However, the PC market is a greater market because the sensors that we're replacing, it's a bigger sensor. It delivers a different set of feature in comparison to the infrared sensors being used in the smartphone. We see this as a significant opportunity that we will talk a little bit more further in the market. Once again, for us, it's the same underlying platform that through our machine learning, we train differently to be able to deliver the various features. Furthermore, also in the IoT market, we're starting to get more and more traction, as well as smart TV. We do some work through partners in the automotive industry. The automotive industry in general has quite a long sales cycle. We're trying to focus what we see as the short term low hanging fruit that is one smartphone, laptop, and then in some arenas in IoT and smart TV. Let's talk a little bit about our latest enterprise license agreement that we signed with Xiaomi. We have a solid business relationship with Xiaomi, and as you may know, Xiaomi has grew to be the second largest smartphone vendor in the market based on volume, and they have decided to increase the usage of our technology. We signed an enterprise license. An enterprise license agreement means that they can decide to also use this license into other products. However, this particular license was initially focused to expand the smartphone relationship and expand installation on number of smartphones that we're running on. The value that we're bringing here is back to sort of our mission statement. We, you know, replace a hardware sensor with software, we eliminate sourcing risk and reducing cost. They replace this infrared sensor. Also because this is, we sell only software and only a software solution, they don't have to worry about the supply constraint that still exists, particularly since COVID, which also strengthened our competitive position today. We did a few more things in the smartphone market this quarter than only signing with Xiaomi. We also signed another contract with our current customer, Honor, as well as with Black Shark. It's good to see, and it also says something about our technology that this is unique and solid when we see our current customer is expanding our contracts with them. Let's talk about the next large vertical, which is the PC market. On the left-hand side, you see partners, I'll get to them. Then the right-hand side, you see the customers. Let me just give a sort of the value proposition when we have these conversations with the customer. We, as you know, we have announced different POCs that with all the biggest players in the market. The reason is that they are looking for this presence detection to lock the display, to make sure it's secure, and to reduce power consumption. They're looking to deploy this very broad. As you may know, in the market today, there are some of these companies that already have used a physical time-of-flight sensor to provide a presence detection. These sensors, as you saw from the previous slide, is costing $2.5-$3. For software, we can deliver this at some lower cost. On top of that, we can also deliver more features. More features. On the left-hand side, we work with partners to deliver our solution. For example, Intel, which is the largest player in the PC market, we embed our software onto their chipset and work closely with them and other partners to deliver our solution to our customers. It will be a partnership with the customer and the partner, either Intel and AMD, and most of the time you work with both because in most cases we see that our customer wants to have both platforms. We have very close collaboration with these chipset vendors. Of course, how do you attract these huge type of partners? Well, it's because they see an aggressive demand from the PC market for our technology. This is very good. I wanna talk a little bit about the first enterprise license agreement that we signed. This was a very important milestone for us at Elliptic Labs in this quarter. This enterprise license covers their whole organization, so we can also potentially sell into other type of pro-like IoT or smartphone or other segments they may have, as well as they cover both, you know, consumer, commercial, all-in-one, all the type of PC laptops that the customer may have. Really solid program and contract. The reason for they want to sign an enterprise license agreement is that this customer has, as a goal to deploy us very broadly. This is good. Because of this particular agreement, we also see that the attention and the demand for our technology from the PC market has accelerated. This quarter, we continue expanding PC sales and support footprint in the U.S., in Taiwan, China, and Japan. This is important. Once again, back to our core value for our mission statement, reducing risk, reducing hardware cost, and for this market, they replace a time-of-flight sensor. Solid, concrete value proposition for this market. Just wanna reiterate, due to the fact for this particular contract has been signed, we see an acceleration of interest from the PC market. Super excited about this particular relationship. Once again, strong interest from the PC market. We also keep adding more partners. We see that because of this, the word is spreading within the ecosystem, so we see more and more partners are coming and wants to work close to us as we see a greater interest from multiple customers in the PC market. Okay, wanna jump into the Elliptic Labs KPIs. We're growing in all our KPIs, increasing the number of patents, number of partner agreements. We also increased the number of POC contracts, and as well as the number of models launched. From here, I would like to give the word over to our CFO, Lars Holmøy. Thank you. Thank you, Laila. This quarter has also been a financially solid quarter. Our customer revenue is significantly up from Q3 year-over-year, and also year-to-date they are significantly up. This quarter, this year actually, we do see revenue from multiple verticals. It's worth noting that our sales revenue alone is up 278% year-over-year. They're also year-to-date up 224%. It's also worth noting on the cost side here that our personnel expenses is coming up. It's due to the fact that we are hiring more people as we are scaling this company. However, we do have a prudent approach to cost, so we continue to improve our EBITDA, and it's NOK 0.4 million this quarter. We are guiding for a positive EBITDA for the year. We're also expecting a significantly stronger top line this year compared to last year. Seasonal effects are still in place. Not as much as 2020. On the balance sheet side, we have a very strong cash position. We had a capital increase of NOK 150 million in September, and the reason to do this capital increase is that we are experiencing growth in multiple verticals, and we need a strong cash and a strong balance position to be able to do all of our plans going forward. Our cash flow from operations is as expected, and we also see that we are paying back some portion of our interest-bearing debt. All in all, we do see a clear path towards significant revenue uplift. We do have an increase in our smartphone segment from both current and new customers. We do foresee that laptops is going to be our largest revenue driver. However, in the IoT market, we do already see a significant interest, but on the long-term revenue growth, we believe that IoT is a huge market, it's gonna be very important for us. We are reiterating our target at NOK 500 million and a EBITDA margin of 50% within the next two years. Shareholder structure, we do have enhanced liquidity in the stock. We have significantly increased our numbers of shareholders, and we also do see increased interest in our both retail institutional market. The company is on track on the move to the OSE main listing, and we do have a target for Q1 2022. The reason for why it's not happening on this side of the new year is that the timing is not correct at this point, and we do see Q1 as the correct timing for us. There is no plans to raise increased capital when we do the main listing. Laila? Thank you, Lars. To summarize, Elliptic Labs is well-positioned for multi-vertical growth. We are growing with our current customer in the smartphone market. We're adding new customers in the PC and IoT market. To support these activities, we're expanding global sales and support for these markets. We continue also to file patents and ensuring that our technology is protected. With this, we are reconfirming our target of NOK 500 million revenue within two years. Thank you. If you can just give us a few minutes now, so we can review the questions, and we will be right back to answer them. Thank you. Thank you. Now we're ready to answer some of your questions you have sent in. The same as last time, we also want to thank the gentleman that is representing many of the retail shares and have gathered lots of questions. Appreciate that. Thank you so much, and we will start by addressing some of those. Many of those we have also addressed during our presentation. I'll just jump straight into it. We have received the general sort of theme of the question is about POC, how that works, how we are communicating the POC, and also more specific around our contract. We'll try to address as much as possible. First, the definition of a proof of concept is we do proof of concept together with a customer, they can qualify our technology. How we scope out is that, you know, we scope out the work, targeting a specific vertical within PC, we receive a lot of questions. The scope of work, we charge in general for this type of work. This project that we're doing is also targeted specifically a production product that's gonna be launched in the future. Based on the successful POC. We will then be able to launch the target product. In general, we also get the questions about how long is the POC from POC to production launch in the PC market? Depends on the production cycle for the customer, but we see this being in general 12-24 months. Another comment about this is that some of these PC manufacturers also only do refresh of their hardware sensor, which is not related to us, but they do refresh of their hardware sensor, for example, in their display on their laptops. I mean, they will change the motherboard, but they won't change any of the components in the display. The only way then they will do that every second year, sorry. The only way to create, for example, the presence detection will be by our solution. Sometimes this cycle can be a little bit shorter, but because it's aligned to production cycle, that's the reason for a longer cycle from POC to production in comparison, for example, to smartphone, which in general is three-six months. We don't do POCs in smartphones anymore. We go straight to production. Some things that we expect will be happening after we've been in market a while for the PC market as well. We also get some specific questions around how do we announce POCs, and we will change this moving forward with the PC now because the enterprise license agreement that we have signed, we do not have the permission from the customer that we sign with to point back the number of POCs that we will also work on underneath this contract. We will add some more POCs under it, but we cannot communicate it. This means moving forward, for our POC announcement for PC, we will be very general. We won't say even the size of the if the top three or top five, we will just make very general. I know that can be a little bit frustrating, but we have to really be careful how we are working with communication and respect the contracts that we have in place. Furthermore, we get questions about pricing. We do not share pricing. We don't share the specific. This has to do with competition. We like to keep the numbers very close to our best, and also from a customer point of view, once again, these contracts are confidential. A lot of trying to clarify some and also explain that why we have to communicate the way we are doing it these times. Next question is for you, Lars. Yep. Why did we raise capital this last quarter? I think we also addressed it in the presentation, but as a corporate, we need a strong balance with the clients we have and the customers we have. We're scaling and yeah, that's the short, sweet answer. Yeah. Very good. Thank you. Yep. I have another question here. Many of the companies are postponing, canceling, reducing sales expectations, particularly for consumer electronics, et cetera. Many of these could be potential customers for Elliptic Labs. Does this change your expectation for Elliptic Labs proposed 2023 revenue guidance at all? The short answer is no, it doesn't change the guidance. We currently see that it doesn't have a significant impact. We work with mostly large enterprises, and we don't see that they have significant impact in their ability to deliver. They have strong relationship, long-standing relationship with the various vendors, and they also get a lot of times the first right. They might pay a little bit more for the various components that they are purchasing. We see that their volume is not going down based on the forecast we see from 2022 and 2023. Also it's worth noting that except Xiaomi of course, we in the PC market, we're just starting out. You know, even if the volume should go down 10, 20% from our customers, it wouldn't have that much impact on us because it's not that we have 100% of the laptop market. I mean, we are just starting. So we are still providing the same guidance. I can quickly ask you a question. We got a question here from the chat room that we are communicating differently. No. Or, or. No, it's the, This is the question. It's the same communication. Our target is the same. Yeah. Yeah. I see another question about POC coming in. If we have experienced any POC in the PC market that we have done or as a proof of concept projects where the customer has gone with a hardware sensor instead? The answer for that is very short. No. We haven't experienced that. Yeah. After the contract, it's a lot about the PC. Yeah. How do you experience the contact from the other companies or potential customer after you signed the agreement in the first PC enterprise license agreement? In general, what we see is acceleration from the other laptop vendors. They, you know, we work with multiples, and we're expecting to add more PC vendor onto it. It's not just from the customer. We also see from the whole partner ecosystem that our signing with this large enterprise customer that many of the partners also wanna collaborate even closer with us. Stay tuned for that. There will be an interesting journey ahead around also the partners around this market. Very exciting. I don't know if you have any questions there while I'm finding the. Yeah, we have received a question about CapEx and why it's higher this quarter than previous quarters. It's basically through our work with the patents and direct costs related to that that we are able to activate by the end of the quarter. We are an R&D company, and it's important for us to yeah protect and create new patents for our business. That's the short answer for that one. Yeah. Yeah. I have another questions around the Xiaomi agreement. This is an enterprise license agreement, and does this mean that we can conduct business into other groups- Mm Beyond smartphone? The answer to that is yes. This agreement enable us to do business also with the various departments. Obviously Xiaomi is large in the whole IoT space, and there are other initiatives as well beyond IoT. This enable us. However, you know, the volume and the price for this, the cost for this contract is directly tied to the smartphone. Just want to be very direct in the communication. Mm For that, those specifics. They will see that as we are launching with them in multiple smartphones. At least the contract now enables us to go beyond the smartphone business that they have. Mm. Let me see what we have. We have covered. Is any more coming in here? Yep. Okay. We get a question about the increase in revenue this quarter, and we do not go into specifics on the verticals, but this, we do have revenue in multiple verticals. Yeah. We also have a question here about which we won't share. Yeah We can at least state it that when do you recognize revenue for what? Yeah. Have you recognized anything for the PC? How much of the smartphone? Enterprise license agreement, have you recognized for Xiaomi, et cetera? No. We won't share. We can't share that. We can't share. Okay. We do follow IFRS 15, so that's not the point. The point is that we don't want to share the exact specifications out of competition, it's negotiation with the clients, and so forth. Yeah. Then we have another question here about how we are getting in, and they have asked some specific large enterprises here, how do you get into these type of customers? In general, we don't. I'm not gonna even bring up these names. No that they're asking for here. In general, you know, we don't comment on how we are reaching a certain type of customer. We can just say our general go-to market strategy is that for the smartphone market and the laptop market, we go direct, and we collaborate with partners. Mm. The same with how we're initially starting out in the IoT market. If you look at the profile that we're going after, the Bosch, which is a large enterprise, we also go direct, and also we collaborate with partners. Later on when we are going into the broader IoT market, we will most likely look more at different type of business models, but this is how we are collaborating. Then I can jump into another question here. Mm A bout the expectations and the guidance for revenue for 2023. Mm. Do we expect, now after we have signed the IoT agreement, that IoT revenue to be significant towards the target for 2023? The answer to that is no. The guidance that we have provided, at least for now- Yep is that we will continue to increase in smartphone over the next few years until at least 2023. We expect PC to be the greatest revenue coming in towards the target for 2023. We expect somewhat from the IoT customers. The profile we're going after, we will go after similar to Bosch, meaning their profile is, you know, we're going after a new business within a large enterprise that has the broad distribution network and collaborate with them. If they have success in the product, then they can deploy this in 120 countries, for example. We haven't put a large number for this in the forecast. However, this may change. For now, and what we're seeing for now, this is how we are guiding. Yep. Smartphone, PC, and then IoT for the 2023 numbers. Yeah, what is, I guess, then another question here, and maybe this is probably the final question so far. Yeah In regards to scaling or expanding our business, what is our biggest challenge? It's hiring, and when we continue hiring a lot, strong focus, we hiring in Norway for engineers. Any engineers, throw in your CV. Join us. We also have been expanding global sales and support in Europe, in the U.S., in Taiwan, in Japan, in China. Yep in South Korea. We keep expanding, but, and we're, you know, aggressively hiring. Yes, it is challenging to hire, but we see that we have the ability with all the excitements that is happening at Elliptic Labs. T hat people find it attractive to work with us, in particular because they get to work directly with so many large partners like, you know, the Intel, the Qualcomm, the AMD of the world, and as well as these very large enterprises. You know, excellent team, but this is very, very important to us to continue hiring and really build a good sort of, you know, growing culture. Yeah. And then- I think that's it. That's it? Yeah. Thank you very much. I appreciate all the questions, especially a thank you to our gentleman. Yeah Gather all the questions from the retail and all the support. Really appreciate it. Thank you so much, and have a good day. Okay. Thank you. Bye. Bye.