Neonode provides software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers. We base our machine perception solutions on our MultiSensing technology platform. We market and sell our solutions to customers mainly in the automotive market. However our solution can also be used in many other markets and we plan to expand our solutions into new…
Neonode provides software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers. We base our machine perception solutions on our MultiSensing technology platform. We market and sell our solutions to customers mainly in the automotive market. However our solution can also be used in many other markets and we plan to expand our solutions into new markets in the future. Neonode also provides advanced optical sensing solutions for touch contactless touch and gesture sensing using our zForce technology platform. In 2010 we began licensing to Original Equipment Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products they develop manufacture and sell. Since 2010 our licensing customers have sold over 95 million products that feature our technology. In October 2017 we augmented our licensing business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented technology. On December 12 2023 we announced a new sharpened strategy with full focus on the licensing business. Consequently we phased out the TSM product business during 2024 through licensing of the TSM technology to strategic partners and in parallel we sold parts of the remaining TSMs. The phase out of our TSM product business meets the criteria to be reported as discontinued operations. Refer to Note 2 of Notes to the Consolidated Financial Statements for additional discussion of discontinued operations. All following information presents continuing operations. In September 2025 we made the strategic decision to transition the zForce platform into maintenance mode. We are no longer selling the zForce technology to new customers but will continue supporting existing customers in various markets and segments such as office equipment automotive industrial automation medical military and avionics.
Neonode generates revenue primarily through licensing of its MultiSensing and zForce technologies and through nonrecurring engineering services. Licensing fees are typically earned on a per unit basis when customers ship products that incorporate the company’s technology. As of December 31 2025 Neonode had 36 valid technology license agreements with global OEMs Original Design Manufacturers (“ODMs”) and automotive Tier 1 suppliers. Nine of these licensing customers were actively shipping products that embed Neonode’s technology. The company also expects to add new customers as they complete product development and release cycles. Nonrecurring engineering services are offered on a flat rate or hourly rate basis to assist customers with application development and integration during the early stages of product creation. These services help ensure optimal functionality and performance of Neonode’s technology in customer systems. Revenue from licensing and nonrecurring engineering together accounted for 100 percent of total revenues in the years ended December 31 2025 and 2024.
The company operates through the following segments:
• The licensing segment includes the MultiSensing and zForce technology platforms. Neonode licenses these technologies to OEMs and automotive Tier 1 suppliers who embed them into products they develop manufacture and sell. License fees are generally based on a per unit royalty when the licensed products are shipped. The licensing business has generated over 95 million units sold by customers since 2010. As of December 31 2025 there were 36 active license agreements covering automotive printer and other markets. Nine licensing customers were currently shipping products that incorporate Neonode’s technology. The segment also provides support for existing customers after the zForce platform was placed in maintenance mode in September 2025.
• The nonrecurring engineering segment provides application development and integration support linked to Neonode’s technology platforms. Services are delivered on a flat rate or hourly rate basis depending on the scope of work. Licensing customers frequently engage Neonode for engineering assistance during product development and initial manufacturing phases. The segment helps customers achieve optimal functionality and performance of the licensed technology in their end products. Nonrecurring engineering revenue represented 11.6 percent of total revenues in 2025 and 13.5 percent in 2024.
Neonode competes in the machine perception market against providers such as SmartEye Cipia Xperi Seeing Machines PUX and Jungo. In the touch and gesture sensing arena the company faces competition from resistive and capacitive touch solutions as well as projective capacitive technology which is the prevailing standard in mobile devices. For gesture control the main competitors include Ultraleap and suppliers of radar and ultrasonic sensor chips such as Texas Instruments and Acconeer. Neonode’s competitive advantages stem from its patented optical sensing technology its focus on automotive driver and in cabin monitoring and its ability to offer value adding human machine interaction solutions. The company’s intellectual property portfolio includes patents covering optical blocking for touchscreens and head up displays optical reflective technologies for contactless interaction and machine perception algorithms for driver monitoring. Neonode also emphasizes innovation through portfolio transformation internal development and co‑development with customers and strategic partners.
Neonode’s customer base consists primarily of OEMs and Tier 1 suppliers in the automotive printer office equipment amusement and other sectors. As of December 31 2025 four customers accounted for approximately 95.4 percent of consolidated accounts receivable and unbilled revenues. The largest revenue contributors for the year ended December 31 2025 were Seiko Epson 34.3 percent Alps Alpine 19.4 percent Hewlett Packard 19.0 percent and Commercial Vehicle OEM 14.6 percent. In the prior year the top four customers were Seiko Epson 27.3 percent Alps Alpine 20.7 percent Hewlett Packard 20.4 percent and Commercial Vehicle OEM 11.8 percent. The company also serves customers in the Japanese amusement market following the selection of its TSM technology by Nexty Electronics for slot machine sensors. Additional markets include holographic interaction applications in infotainment surgical planning and emerging opportunities in automated self service check out systems within retail. Neonode’s customers are located principally in North America Europe and Asia with a significant concentration in Japan.
Sector:TechnologySector rationaleNeonode's revenue is derived entirely from licensing software and technology platforms (MultiSensing and zForce) for machine perception and optical sensing, as well as providing nonrecurring engineering services for the integration of this technology. The company designs the algorithms and intellectual property that its customers (OEMs and Tier 1 suppliers) embed into their own products, which fits the revenue model of the Technology sector.Industries:Computer VisionTechnologyPrimaryNeonode's core business is providing machine perception software based on the MultiSensing platform, which uses machine learning algorithms to detect and track persons and objects in video streams. This capability is sold as a licensed technology to automotive OEMs and Tier 1 suppliers for driver and in-cabin monitoring.IT ServicesTechnologySecondaryThe company operates a nonrecurring engineering segment that provides application development and integration support to customers on a flat rate or hourly basis. This segment accounted for 11.6% of total revenues in 2025.Classified using BQ-MICSCIK: 0000087050
Investment Thesis
▲ Bull case
The appointment of Marec Gasiun as Executive Vice President of Sales and Marketing brings a seasoned executive with deep experience in automotive technology partnerships and global business development. His background includes leadership roles at SeeReal Technologies Telia Company and Google automotive software where he drove commercial execution for in vehicle platforms. This hire signals a strategic shift to unify commercial efforts under a single leader capable of accelerating licensing conversations and partnership building. The move is expected to shorten sales cycles and improve conversion rates for Multi Sensing solutions in the automotive sector.
The conversion of a previously announced commercial vehicle design win into a production license agreement marks a tangible transition from validation to revenue generation. This milestone indicates that the Multi Sensing driver monitoring solution has met the rigorous quality and reliability standards required for series production. With the license now active the company can begin to recognize recurring licensing revenue as the customer scales vehicle output. This achievement validates the technology roadmap and provides a reference design that can be leveraged to attract additional automotive OEMs seeking proven cabin sensing capabilities.
Q1 FY26 results showed a nearly twenty% increase in total revenue driven by growth across both licensing platforms and all geographic regions. The increase was primarily fueled by new license agreements that emerged as the Multi Sensing automotive customer moved into production. While the legacy zForce business continues to experience expected declines in printer and automotive infotainment segments the offset from Multi Sensing growth demonstrates the effectiveness of the strategic pivot. This pattern suggests that the company is successfully replacing deteriorating legacy streams with higher growth computer vision based licensing streams.
As of March 31 2026 the company reported cash and accounts receivable totaling twenty three point eight million dollars and working capital of twenty two point three million dollars. This liquidity buffer provides the financial flexibility needed to invest in sales and marketing initiatives professional certifications and ongoing research and development without immediate pressure to raise additional capital. The solid balance sheet also supports the ability to withstand periods of cash outflow from operations while pursuing long term licensing opportunities. Such a foundation is critical for executing the stated strategy of expanding Multi Sensing footprint in automotive and adjacent verticals.
Management highlighted the retail segment as a key area of focus where Multi Sensing technology can deliver loss prevention and customer analytics solutions. The retail environment presents a large addressable market that values contactless sensing for shrinkage reduction and shopper behavior insights. By adapting the existing computer vision platform to retail use cases the company can diversify beyond automotive and reduce reliance on a single industry cycle. Early engagements in this vertical could generate additional licensing pipelines and accelerate the timeline to profitability.
The appointment of Marec Gasiun as Executive Vice President of Sales and Marketing brings a seasoned executive with deep experience in automotive technology partnerships and global business development. His background includes leadership roles at SeeReal Technologies Telia Company and Google automotive software where he drove commercial execution for in vehicle platforms. This hire signals a strategic shift to unify commercial efforts under a single leader capable of accelerating licensing conversations and partnership building. The move is expected to shorten sales cycles and improve conversion rates for Multi Sensing solutions in the automotive sector.
The conversion of a previously announced commercial vehicle design win into a production license agreement marks a tangible transition from validation to revenue generation. This milestone indicates that the Multi Sensing driver monitoring solution has met the rigorous quality and reliability standards required for series production. With the license now active the company can begin to recognize recurring licensing revenue as the customer scales vehicle output. This achievement validates the technology roadmap and provides a reference design that can be leveraged to attract additional automotive OEMs seeking proven cabin sensing capabilities.
Q1 FY26 results showed a nearly twenty% increase in total revenue driven by growth across both licensing platforms and all geographic regions. The increase was primarily fueled by new license agreements that emerged as the Multi Sensing automotive customer moved into production. While the legacy zForce business continues to experience expected declines in printer and automotive infotainment segments the offset from Multi Sensing growth demonstrates the effectiveness of the strategic pivot. This pattern suggests that the company is successfully replacing deteriorating legacy streams with higher growth computer vision based licensing streams.
As of March 31 2026 the company reported cash and accounts receivable totaling twenty three point eight million dollars and working capital of twenty two point three million dollars. This liquidity buffer provides the financial flexibility needed to invest in sales and marketing initiatives professional certifications and ongoing research and development without immediate pressure to raise additional capital. The solid balance sheet also supports the ability to withstand periods of cash outflow from operations while pursuing long term licensing opportunities. Such a foundation is critical for executing the stated strategy of expanding Multi Sensing footprint in automotive and adjacent verticals.
Management highlighted the retail segment as a key area of focus where Multi Sensing technology can deliver loss prevention and customer analytics solutions. The retail environment presents a large addressable market that values contactless sensing for shrinkage reduction and shopper behavior insights. By adapting the existing computer vision platform to retail use cases the company can diversify beyond automotive and reduce reliance on a single industry cycle. Early engagements in this vertical could generate additional licensing pipelines and accelerate the timeline to profitability.
The company’s current revenue growth is heavily dependent on a single automotive OEM that has moved its Multi Sensing driver monitoring solution into production. This concentration creates vulnerability because any delay reduction in production volumes or loss of this customer would directly impact licensing income. While the partnership validates the technology it also means that diversification efforts have not yet materialized at scale. A slowdown in the automotive sector or a shift in the customer’s supplier strategy could lead to a sharp revenue downturn.
The legacy zForce platform continues to experience expected declines in its traditional markets such as printer and automotive infotainment due to subdued demand and product transitions by end customers. This decline reduces overall revenue and puts pressure on the company to offset losses with new Multi Sensing sales. If the Multi Sensing ramp does not keep pace with the erosion of zForce the net revenue trend could remain negative. The reliance on a shrinking legacy base also limits the ability to invest in growth initiatives without sacrificing profitability.
Cash used by operations increased to two point one million dollars in the Q1 FY26 compared to one point four million dollars in the same period of the prior year reflecting higher net loss higher unbilled revenues and higher prepaid expenses. This upward trend in cash consumption raises concerns about the sustainability of the current burn rate given the limited revenue base. Continued negative operating cash flow could force the company to tap its cash reserves or seek external financing sooner than anticipated. Investors may view the rising cash burn as a warning sign that the path to profitability is longer than management projects.
Operating expenses from continuing operations rose eight point six% in the Q1 FY26 while revenue increased only nineteen point seven% indicating that expense growth is not fully leveraged by revenue expansion. The increase was driven by higher professional fees related to ISO recertifications and tax analysis which are non recurring in nature but still consume cash. If such expense spikes become frequent they could erode the contribution margin and delay the point at which operating profit turns positive. Investors may question the company’s ability to control costs while scaling the sales organization.
The market for in cabin sensing and driver monitoring is becoming increasingly crowded with numerous established semiconductor firms and specialized startups offering competing camera based radar based and multimodal solutions. These competitors often benefit from larger scale deeper customer relationships and greater financial resources which can exert pricing pressure and limit Neonode’s ability to win new design wins. If Neonode fails to differentiate its technology on performance power consumption or cost it could lose market share to better financed rivals. The intensity of competition may also lengthen sales cycles and increase the cost of acquiring new customers.
The company’s current revenue growth is heavily dependent on a single automotive OEM that has moved its Multi Sensing driver monitoring solution into production. This concentration creates vulnerability because any delay reduction in production volumes or loss of this customer would directly impact licensing income. While the partnership validates the technology it also means that diversification efforts have not yet materialized at scale. A slowdown in the automotive sector or a shift in the customer’s supplier strategy could lead to a sharp revenue downturn.
The legacy zForce platform continues to experience expected declines in its traditional markets such as printer and automotive infotainment due to subdued demand and product transitions by end customers. This decline reduces overall revenue and puts pressure on the company to offset losses with new Multi Sensing sales. If the Multi Sensing ramp does not keep pace with the erosion of zForce the net revenue trend could remain negative. The reliance on a shrinking legacy base also limits the ability to invest in growth initiatives without sacrificing profitability.
Cash used by operations increased to two point one million dollars in the Q1 FY26 compared to one point four million dollars in the same period of the prior year reflecting higher net loss higher unbilled revenues and higher prepaid expenses. This upward trend in cash consumption raises concerns about the sustainability of the current burn rate given the limited revenue base. Continued negative operating cash flow could force the company to tap its cash reserves or seek external financing sooner than anticipated. Investors may view the rising cash burn as a warning sign that the path to profitability is longer than management projects.
Operating expenses from continuing operations rose eight point six% in the Q1 FY26 while revenue increased only nineteen point seven% indicating that expense growth is not fully leveraged by revenue expansion. The increase was driven by higher professional fees related to ISO recertifications and tax analysis which are non recurring in nature but still consume cash. If such expense spikes become frequent they could erode the contribution margin and delay the point at which operating profit turns positive. Investors may question the company’s ability to control costs while scaling the sales organization.
The market for in cabin sensing and driver monitoring is becoming increasingly crowded with numerous established semiconductor firms and specialized startups offering competing camera based radar based and multimodal solutions. These competitors often benefit from larger scale deeper customer relationships and greater financial resources which can exert pricing pressure and limit Neonode’s ability to win new design wins. If Neonode fails to differentiate its technology on performance power consumption or cost it could lose market share to better financed rivals. The intensity of competition may also lengthen sales cycles and increase the cost of acquiring new customers.