Acconeer : Interim report Q3 2020

Q3-2020

INTERIM FINANCIAL REPORT JANUARY-SEPTEMBER 2020

THIRD QUARTER

• Net sales for the third quarter amounted to kSEK 2,780 (1,693).
• The Gross margin was 52 (109)%.
• Result after taxes amounted to kSEK -12,325(-15,476)
• Earnings per share before and after dilution was SEK -0.53(-0.79).
• The cash flow from operating activities was kSEK -9,338(-12,594).

JANUARY-SEPTEMBER

• Net sales for the nine months period amounted to kSEK 6,549 (3,679).
• The Gross margin was 56 (59)%.
• Result after taxes amounted to kSEK -46,861(-49,074).
• Earnings per share before and after dilution was SEK -2.20(-2.55).
• The cash flow from operating activities was kSEK -38,068(-41,178).
• Cash and cash equivalents including short term deposits at the balance date amounted to kSEK 95,611 (93,812).

SIGNIFICANT EVENTS DURING THE THIRD QUARTER

• Acconeer received an order from Digi-Key worth USD 52,000.
• Acconeer received an order from BEYD worth USD 164,000 USD.
• Björn Bengtsson was appointed as new CFO at Acconeer.
• Acconeer signed a purchase agreement with Future Electronics.
• Acconeer has shipped more than 200 000 A1 radar sensors since the company started selling evaluation kits.
• It is the company's assessment that the effects of Covid-19 will have a limited impact on operations in 2020. No impact is seen on either the development or the manufacturing side. With regard to demand for the company's products, it is likely that some customer projects will be delayed, but the assessment is that this is within the uncertainty margin that always exists.

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD

• Acconeer received order from Digi-Key worth USD 36,000.

COMMENTS FROM OUR CEO

Focus in the third quarter 2020 has been to define the next generation radar sensor, A2, together with AlpsAlpine. This includes to decide on supply chain and project plans, in order to be able to sign a contract during the fourth quarter.

As reported in the previous quarter, we have entered into an agreement with AlpsAlpine to share the development cost of the next generation radar system. The agreement contributes approximately SEK 100 million to the development and is distributed as SEK 30 million in direct investment in Acconeer and a MoU of SEK 70 million as payment for exclusivity in the automotiv industry and contribution with Acconeer

IP. During the third quarter we have worked intensly together with AlpsAlpine to define the A2 product, supply chain and project plans, which is all necessary input to be able to sign the contract. Our goal is to convert the MoU to a contract by 2020, and we expect payments to start in the second quarter of 2021. The product we develop together is planned to reach the market in 2023/2024.

Otherwise, also the third quarter 2020 has been dominated by the global outbreak of the Covid-19 virus. We have previously announced that we do not see any impact from Covid-19 on the development or purchasing side, but that we believe we will see delays in launches and projects on the customer side due to Covid-19. We saw these effects in the third quarter, where we saw several customer projects delay their launches, as well as few new projects being started. This is entirely Covid-19 related and we continue to believe in a slow market as long as our customers are not able to work as normal in their offices and factories. Despite this our revenue grew in the third quarter, both compared to the first and second quarter, a development wholly driven by China which is going very strong, while we see a rather weak development both in the US and Europe. In the quarter, we also reached the important milestone of 200,000 sensors shipped in total.

During the quarter we launched our entry module,

XM132, and the related evaluation kit XE132. The entry module is the final step to push the total system cost as low as possible by combining the radar sensor with a low-cost M0 processor. To get the system cost as low as possible for applications which do not require much processing power has been the single most important demand from IoT customers, so we have high hopes on the entry module.

The sale of evaluation kits gives an indication of the great interest that exists in our sensor and is an

important indicator of the potential of future product launches. We sold 345 evaluation kits in the third quarter, which is better than our goal of selling more than three per day on average in 2020. Since launch, we have now sold 2616 evaluation kits.

As in the second quarter, we saw five customer launches in the third quarter, and so far the total number of customer launches is 27. Five launches per quarter is a pace we believe we can maintain and even accelerate. In the quarter one robot was launched in Japan, Bocco from the company Yukai Engineering. In this product our sensor is used for presence detection. In China, a new parking sensor was launched, along with one level measurement product and one product within smart presence. Finally, another parking sensor was launched in South Korea. Refer to the table below for a more detailed compilation of launched products. Sales to these customers are reflected in our sales to Digi-Key and other distributors.

During the months 25-48 since product launch, we will focus on:

• Continue to launch new customers and help existing customers grow
• Increase focus on customers with high volume potential and support them in launching their products
• Expand collaboration with AlpsAlpine and receive more design wins
• Invest in the development of new more advanced applications such as gesture control, breathing frequency and speed measurement

Our goal is to continue, in cooperation with our network of distributors, to take advantage of all growth opportunities that emerge to establish a leading position in the area of low-power radar. .

Lund, October 27, 2020

Lars Lindell, CEO Acconeer AB (publ)

ACCONEER INTERIM FINANCIAL REPORT Q3 2020	2

THIRD QUARTER NET SALES AND RESULT

As of Q1 2020, the company has transitioned to a functional income statement. Comparative periods have been recalculated.

Net sales for the third quarter amounted to kSEK 2,780 (1,693), ie an increase of 64% compared with the previous year. Net sales relate to sales to customers through the distributors Digi-Key, BEYD and Codico, ALPS and other new distributors.

Gross profit, which only includes direct cost of goods, amounted to kSEK 1,428 (1,853) which corresponds to a gross margin of 52% (109). The gross margin for the full year 2019 was 61%. Product mix between our sensors, modules and evaluation kits and changes in exchange rate affects the gross margin. The

higher gross margin for the last year is explained by an incorrect valuation in quarter 2 of inventories, which was adjusted in quarter 3.

Compared to the third quarter of last year, operating expenses decreased by 21% to kSEK 13,753 (17,329). The decrease mainly refers to reduced consulting costs in research and development. Depreciation of capitalized development costs, patents and equipment was made during the second quarter with kSEK 2,983 (2,882).

Operating profit for the third quarter amounted to kSEK -12,325(-15,476) and the profit after tax was kSEK -12,325(-15,476). The average number of employees during the period was 36 (33), of which 5 (3) were women.

NINE-MONTH PERIOD IN SUMMARY

Net sales for the nine months period amounted to kSEK 6,549 (3,679), ie an increase of 78% compared with the previous year. Net sales relate to sales to customers through the distributors Digi-Key, BEYD and Codico, ALPS and other new distributors.

Gross profit, which only includes direct cost of goods, amounted to kSEK 3,636 (2,157) which corresponds to a gross margin of 56% (59). The gross margin for the full year 2019 was 61%. Product mix between our sensors, modules and evaluation kits and changes in exchange rate affects the gross margin. The higher gross margin for the last year is explained by an incorrect valuation in quarter 2 of inventories, which was adjusted in quarter 3.

Compared to the nine months period last year, operating expenses increased by 1,5% to kSEK 50,494 (51,254). The decrease is mainly related to reduced other external costs and an increase in other operating income. Depreciation of capitalized development costs, patents and equipment was made during the nine months period with kSEK 8,792 (8,635) .

Operating profit for the first nine months amounted to kSEK -46,859(-49,097) and the profit after tax was kSEK 46,861 (-49,074). The improved result compared with the corresponding period last year is mainly due to reduced administration costs and increased other operating income.

CUSTOMER LAUNCHES BY MARKET AND AREA OF USE

	IoT	IoT	IoT	Industry	Robotics
	Parking	Smart	Wasteman-	Level	Object
	sensors	presence	agement	gauge	detection	Other	Total
Europe	4	1	1	2			8
Japan					2		2
South Korea	3						3
Australia & New Zealand				1			1
US						1	1
China	6	3		2			11
Taiwan	1						1
Total	14	4	1	5	2	1	27

The table refers to the accumulated number of customer launches since product launch Q2 2018.

ACCONEER INTERIM FINANCIAL REPORT Q3 2020	3

INVESTMENTS, LIQUIDITY AND FINANCIAL POSITION

On 30 September 2020 the cumulative book value of balanced costs for development work amounted to kSEK 27,541 (36,722). This refers to development work related to the A1 product. No capitalization has occurred during the year since product commercialization is now underway.

The corresponding patent portfolio value amounted to kSEK 1,869 (1,732) most of which is due to investments in patents and patent applications related to the A1 product. Acconeer has 8 patent families including in total 22 granted patents and 9 pending patent applications. The patent portfolio covers various geographic regions, including the U.S., Europe, Japan and China.

Investments in fixed tangible assets and patents

has been financed from the company's own resources, and amounted to kSEK 1,665 (392).

The Group is small and not covered by requirements for consolidated accounts, therefore no Group Accounts has been prepared.

The cash flow from operating activities during the nine months period amounted to kSEK -38,068(-41,178).

After changes in working capital the cashflow for the period was kSEK -42,464(-45,060).

At the balance sheet date, cash and cash equivalents amounted to kSEK 95,611 (93,812).

Total equity amounted to kSEK 135,407 (139,209). Equity ratio was 95, (94) percent.

SIGNIFICANT EVENTS DURING THE NINE-MONTH PERIOD

In february Acconeer received an order from Glyn Limited worth USD 12,800. The order relates to Acconeer's radar sensor A1. The same month Acconeer received an order from Digi-Key worth USD 15,100. The order relates to Acconeer's XM122 IoT Module.

At the end of february Acconeer received an order from CODICO worth USD 62,700. The order relates to Acconeer's A1 radar sensor for a European customer.

It was announced that in february, 24 months after the company started selling Evaluation Kits (EVKs) at Digi-Key, Acconeer AB had shipped more than 100,000 A1 radar sensors to distributors and customers.

In March Acconeer received an order from a

European customer worth USD 14,700. The order relates to Acconeer's A1 radar sensor, for production of the customer's IoT solution.

In the middle of March the company announced

that they are planning to develop an integration-ready entry module with low system cost. The entry module, XM132, was released during the third quarter of 2020.

Acconeer announced at the end of March that the company was awarded three design wins by Alps Alpine for presence detection in cars to a European premium car manufacturer. Acconeer estimates the total potential value of the design wins to US$ 9-12 million over three years starting in 2022. By "design win" Acconeer refers to that the company's radar sensor has been selected for use in a customer product, but it is not equivalent to that an order has been placed.

In April Acconeer received an order from Digi-Key worth USD 29,500. The order related to the XM112

High Performance Module and related connector board and lens kit.

On April 24 the company announced that they had entered into a non-binding Memorandum of Understanding (the "MoU") of a joint development agreement to develop next generation patented Pulse Coherent sensors.The MoU prescribes that Alps Alpine will contribute up to USD 7 million towards the development of the product and that Alps Alpine will, on commercial terms, receive exclusivity for the new product for the automotive market. The product is planned to be ready for production during 2023.

On May 4 Acconeer announced its intention to carry out a directed new share issue of approximately SEK 60 million to Swedish and international institutional investors. Alps Alpine Co., Ltd., undertook to subscribe for shares corresponding to a maximum of USD 3 million in the directed new share issue. Later that day, it was announced that the Board of Acconeer AB, had with support of the authorization granted by the annual general meeting 14 April 2020, resolved on and carried out a new share issue of 4,062,000 shares. The subscription price of the shares in the directed new share issue was SEK 16 per share. Through the directed new share issue Acconeer received proceeds amounting to approximately SEK 65 million before deduction of transaction costs. The directed new share issue was subscribed for by Alps Alpine Co., Ltd. and a number of institutional investors.

In May it was also announced that Acconeer has extended the agreement with Restar Electronics Corporation to include the Americas. Since July 2019 the two companies have a distributor agreement for the Japanese market, and the decision to extend it to

ACCONEER INTERIM FINANCIAL REPORT Q3 2020	4