Neonode 2025 Q1 Earnings Narrowed Losses as Net Income Improves 16.8%

Neonode (NEON) reported its fiscal 2025 Q1 earnings on May 14th, 2025. The company missed revenue expectations, reporting $0.5 million compared to an anticipated $0.65 million, marking a 37.0% decrease from the previous year. Neonode provided a cautious outlook, projecting 2025 revenue between $2.68 million and $3.45 million. The company aims to improve its earnings per share to around -$0.36, focusing on operational efficiency and maintaining strong gross margins amid a competitive landscape.

Revenue
Neonode's total revenue in Q1 2025 was $513,000, reflecting a 37.0% decline from $814,000 in Q1 2024. The revenue breakdown includes $497,000 from license fees and $16,000 from non-recurring engineering services, contributing to the total revenue for the quarter.

Earnings/Net Income
Neonode reduced its losses to $0.10 per share in Q1 2025, showing a 28.6% improvement from $0.14 per share in Q1 2024. The net loss also narrowed to $1.73 million, a 16.8% improvement from the $2.08 million loss in the previous year. Despite these improvements, both EPS and net income figures indicate ongoing financial challenges for the company.

Price Action
The stock price of Neonode experienced a 7.64% drop during the latest trading day, a decrease of 2.77% over the full trading week, while showing a 37.03% increase month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing NEON stock when revenues exceed expectations and holding for 30 days was tested, resulting in three buy events. However, due to data limitations, the strategy faced challenges in maintaining the stock for the intended duration. Purchases were made on day 1, day 3, and day 4, based on revenue performance, yet the plan to hold for 30 days was hindered by insufficient data points. This highlights the difficulty in executing longer holding periods without adequate data support, suggesting the need for strategy adjustments to align with available data length and scope.

CEO Commentary
Neonode's CEO expressed cautious optimism, acknowledging a 37% revenue decline year-over-year but highlighting a robust gross margin of 98.2%. The CEO cited challenges from decreased demand by legacy customers but noted an improvement in net loss from $2.08 million in Q1 2024 to $1.73 million in Q1 2025. The company remains committed to product development and is increasing research and development expenses while streamlining operations to reduce losses in key segments such as automotive and IT.

Guidance
Neonode expects continued challenges in revenue generation, with projected 2025 revenue ranging from $2.68 million to $3.45 million. The company aims to improve earnings per share to approximately -$0.36, prioritizing operational efficiency and maintaining strong gross margins while navigating competitive pressures.

Additional News
Neonode recently announced a significant C-level change, appointing Daniel Alexus as the new President and CEO, effective March 31, 2025. This leadership transition is part of the company's broader strategy to navigate current challenges and position itself for future growth. Additionally, Neonode secured an Excellence Award for Innovation in Driver Monitoring Software, reflecting its ongoing commitment to advancing its technology offerings. The company also announced a strategic shift, with plans to phase out its Touch Sensor Manufacturing (TSM) operations, aligning with its renewed focus on licensing and software solutions.