2024-02-15 07:12:01
Thursday, 15 February 2024
Headquartered in Trondheim, Norway, with established operations in Taiwan.
A year of market entry and penetration, with considerable commercial progress
Creating next-generation semiconductors that enable a more sustainable and healthier
life for everyone
CrayoNano AS (NOTC: CNANO) is pleased to announce its Q4 2023 update, and also a review
of its progress in 2023 and focuses for 2024.
2023 has been a year of considerable progress for CrayoNano both commercially and
operationally. We have brought our UV-C LEDs to market, and proven our ability to engage
with and win key customers within our target customer groups globally.
2023 Highlights:
5 commercial frame contracts signed with leading global companies
12 strategic sales channel partner contracts signed with distributors, design-in
representatives, and design-in partners across APAC, AMERICAS and EMEA
First product sales generated, with NOK 0.9m in sales revenue in 2023, and a minimum
of NOK 13m contracted to be delivered in 2024
Global sales pipeline strongly scaled and progressed
More than 1,200 sales leads, and over 150 new opportunities sourced, with active
design-in activities (of which 7 already won in 2023)
Enhanced and scaled operations in Taiwan, with a strong local leadership team
Successfully raised gross proceeds of NOK 125m in new capital to support accelerating
growth plans, including 5m from the European Innovation Council
Good progress in the UV-C LED product development, showing improvements in
power performance and cost reduction
Jens Kielland, CEO, said: “I am very pleased with the operational and commercial progress
made in 2023, including the successful entry of our CrayoLED UV-C LED into the growing
market for UV-C LEDs with first product sales. In the year ahead, we are focussed on business
growth and sales generation through converting our extensive global pipeline, as well as
ongoing product development and the successful launch of our UV-C LEDs with increased
price-performance for our customers. We have a strong leadership team in place to deliver on
our plans, and I look forward to sharing updates on our continued progress throughout 2024.”
2023 Overview and Q4 Progress
Customers and Sales
During 2023, we signed five commercial frame order contracts with leading global companies,
three of which were signed in Q4-23. These will generate volume product sales in 2024. First
sales of NOK 0.9m were achieved in 2023 from six sales orders with design-in partners and
distributors. The order book at year-end had a minimum value of NOK 13m to be delivered in
2024, with opportunities to increase the value of each frame contract beyond the initial
amounts.
Additionally, 12 strategic sales channel partner contracts have been signed with distributors,
design-in representatives, and design-in partners across APAC, AMERICAS and EMEA:
6 distributor contracts covering the following areas: Mouser Electronics (global) (link),
Laser Components (EMEA) (link), Unice (Korea) (link), MadrixKorea (Korea) (link),
Vallalar Energy Solutions (India) (link), IRTronix (USA, China, Korea) (link),
2 design-in representative contracts: DUVROO (Korea, APAC) (link), Fanermex
(Mexico, AMERICAS)
4 strategic system design-in partnership agreements: Hergy (Taiwan, APAC, EMEA)
(link), Perscom (Korea, Japan) (link), DIANA Electronic (Germany, EMEA) (link), Audax
Electronics (Brasil, AMERICAS, EMEA) (link)
Eight of the 12 strategic sales channel partner contracts were signed in Q4-23, reflecting our
systematic and successful activities of establishing a global strategic sales channel network.
Our key growth indicator is our sales funnel and pipeline. At year-end, we had more than
1,200 sales leads, a 709% increase since the end of 2022. This considerable increase has been
supported by our global sales team expanding its reach, with own local representatives now
present in five countries across EMEA, AMERICAS and APAC. Additionally, targeted digital
marketing activity in new geographies, including Germany and the Republic of Korea, has
delivered new leads and opportunities. At year-end, 420 of the leads are qualified leads with
the potential to become customers or opportunities. Our sales team and network in the
marketplace has identified a total of 152 customer-driven opportunities for our UV-C LEDs, a
271% increase since the end of 2022, with almost half of it achieved in Q4-23. The number of
design-ins grew by 57% to 74 during Q4-23 (Q3-23: 47). Our ambitious targets for the year
ahead are backed by a robust pipeline, and commercially we are now at an important
inflection point.
In November 2023, a team from CrayoNano attended AquaTech Amsterdam for the first time,
one of the largest and most influential events in the water technology industry. CrayoNano
was positioned as the leading manufacturer and attracted significant interest from target
customers with: 188 new leads generated; over 100 meetings; and the signing of a new frame
contract.
Product and Performance
In November 2023, we announced that one of our key customers had successfully integrated
CrayoLED into their water disinfection reactors. The reactors are compliant to NSF/ANSI 55
for application in Point-of-Use (POU) and Point-of-Entry (POE) scenarios (link).
In December 2023, we announced new performance data following internal tests measuring
the Room Temperature Operating Life of our CrayoLED H-Series UV-C LED at conditions
beyond nominal operating conditions. The tests demonstrated estimates of over 8,000 hours
of operational durability at 500 mA and more than 4,000 hours at 700 mA. See our full
announcement for further detail link. This robustness enables increased applications in
harsh environments and operation conditions.
Our product has also been independently tested and certified by an accredited third-party
test and measurement lab, confirming the robustness and reliability of our CrayoLED H-Series
product.
Operations and Leadership Team
A key undertaking in 2023 was establishing a strong leadership team in Taiwan. During the
year we hired a new CTO, a UV-C LED technology veteran adding further experience at C-level,
and a General Manager with over 15 years of UV LED industry experience. This was
accompanied by the transition of further operations to Taiwan and the reorganisation of
people into customer-facing roles to support both our growing global design-in activity as well
as more efficient operations.
2024 Focuses
During 2024 we will continue to focus on securing more contract wins and growing sales, as
well as the scaling up of production to meet the strong pipeline and anticipated increasing
demand for our products. As above, we have a robust and extensive sales pipeline of
customers across all the APAC, EMEA and AMERICAS regions, and a global sales team focused
on conversion.
Alongside this, we are focused on developing our product portfolio to increase the
addressable application markets and competitiveness. Our product roadmap for 2024 is
focused on three major drivers:
Growth of sales and market penetration with our H-series: through improvements of
competitiveness focused on pricing and performance within the 100 mW power class.
This product is confirmed to be high quality and have optimum performance for our
initial target market of water disinfection. We will focus the evolution of the H-series
predominantly in the area of price reduction based on volume effects in production,
and steady development of further increasing performance of lifetime and power to
gain market share, also in emerging higher volume water treatment applications with
current design-ins.
Growing the total addressable market by systematically driving down the costs of the
UV-C LED technology. We are targeting to implement a significant step forward on
reducing the price-performance parameter by 50% by 2025 to enable our customers
a competitive advantage with better return on investment of their products in the
market, as well as access to price-sensitive high-volume applications in home
appliances and industrial disinfection applications. The development of significant
cost reductions by maintaining quality and performance requires an evolution of the
UV-C LED chip-, packaging-, and assembly technology and is related to a planned new
product introduction. Driving down the price-performance KPI is key for growing the
total addressable market and becoming competitive with other disinfection
technology than UV-C lamps, e.g. with chemical, thermal, and mechanical
technologies.
Specific customized OEM products to grow into attractive new niches. Specific highvolume
applications of OEMs often require optimization and design to performance
and costs. Some of the opportunities in our pipeline have shown that the market can
grow into new attractive niches, with specific optimized products. We implemented
required engineering capacities and skills in 2023 and are planning to realize custom
engineered UV-C LEDs for market influencing OEM business.
To support our growth before we move to a cashflow positive position following scaling of
revenue, we have a near-term funding requirement. We anticipate this to be the last required
funding as we successfully execute on our plans. We continue to look at all options in relation
to funding, with strategic investors at this stage considered preferable over a potential IPO
due to their ability to better support our strategy and operational growth plans. In the
meantime, the Board is focused on operational efficiencies and cost management, and as
detailed in the Financial Update below, it is expected that operating costs in 2024 will be of a
similar level to 2023 despite scaled revenue and operations.
Sustainability: Enabling a more sustainable and healthier life for everyone
We are addressing a hugely important global market with our proven and scalable innovative
technology. Our products enable a more sustainable and healthier life for everyone, with
multiple applications across water, air and surface disinfection. Our UV-C LEDs contribute to
making clean drinking water for the worlds population and are a highly effective replacement
to current methods through having a lower power consumption, CO2 footprint and cost, and
being environmentally safe.
Q4 2023 and 2023 Financial Update
Revenue and operating cost
We continued to generate revenue from initial shipments early in 2023 with the first orders
by Mouser Electronics delivering an uptick in revenues starting from the second half. Revenue
from product sales amounted to NOK 0.4m in Q4-2023, and total revenue of NOK 0.9m was
recorded in 2023. This is related to sample shipments to prospective customers and first sales
to distributors.
Total operating costs were NOK 12.6m in Q4-23, a decrease of NOK 5.4m (43%) compared to
the previous quarter, and NOK 9.8m (78%) below the same quarter last year. The lower
operating costs in the quarter reflect the reorganization initiated in Q2 where we transitioned
part of our operations to Taiwan and divested the lab function in Trondheim. Operating costs
for the year ended at NOK 68.9m (NOK 76.4m FY-22). EBITDA ended at NOK -12.5m in Q4-23,
NOK 4.9m above the previous quarter and NOK 9.5m above last year, and NOK -65.6m for the
year (NOK -68.6m FY-22).
As above, it is anticipated that operating costs in 2024 will be of a similar level to 2023 despite
ongoing scaling of revenue.
Cash flow development
The first part of 2023 saw a successful private placement of NOK 125m which put us in a
strong financial position to scale commercial activities and accelerate revenue generation.
We also secured an asset backed lending facility, which has financed part of our working
capital during the second half of the year and can be increased based on scale-up of
commercial activities.
Cash flow from operations was NOK -19.0m in Q4-23, slightly improved quarter-on-quarter
and below the same period last year. We invested in building our inventory, which increased
by NOK 11.6m during the year, in preparation for scaling sales. As the availability of products
has been a key constraint in the market, having a strategic inventory is an important asset for
our revenue generating abilities. Total cash flow from operations in 2023 ended at NOK -
88.9m (NOK -88.1m FY-22).
With our fab-lite strategy, capex requirements are low, with capex mainly related to R&D and
intangible assets.
Our negative operating cash flow during the second half of the year was partly offset by
received soft funding and working capital financing. At the end of 2023 the cash balance was
NOK 40.2m (NOK 10.2m Q4-22) and NOK 0.3m available through our credit facility.
Q4 2023 Results Presentation and Q&A
CrayoNano will deliver a live presentation to analysts and investors via webcast at 10:00 CET
today (09:00 GMT). The live video webcast will be accessible via the companys website:
https://webcast.openbriefing.com/crayonano-feb24/
An audio recording will also be made available after the webcast via the same link.
For more information, please contact:
CEO Jens Kielland
Email investor@crayonano.com
Phone +47 72 90 98 60
About CrayoNano
CrayoNano develops and manufactures nanomaterials-based semiconductor components
using proprietary technologies. Headquartered in Trondheim, Norway with a branch office in
Taiwan, CrayoNano supports customers with global sales representatives and distributors in
EMEA, APAC and the Americas. CrayoNanos innovative semiconductor components advance
global solutions in health and safety, water purification, consumer, and industrial
applications, and more. CrayoNano is registered on Euronext OTC in Norway under the ticker
“CNANO”.