Elliptic Labs 1

[Allgasnobrakes]

I agree with you in that regard that there is hard to find a consistent logic behind when revenue from milestones are recognized , compared to at what point in time the contract is announced. First, lets start with a slide from the Q2 2024 presentation.

This is the revenue generated by the first contract with lenovo for the single thinkpad. It is stated that the milestone revenue was recognised IN Q2’21 AND that the contract was announced at the same time.
Both of these can not be true as in Q22’21 there is no contracts actually being announced by notice to the stock exchange. There is a POC announced on the 18/05/21 but I have assumed that POC’s are not contributing on the revenue. There is also a notice on the 13/07/2021 for the first enterprise license agreement, but that is in Q3.

Either they meant to place the earnings in Q3, the announcement in Q3, or the CFO simply forgot that they did not announce the contract in Q2, when revenue was recognized. My bet is on the latter, but i will send a Email to the CFO regarding this.

Looking further at one of the other slides from the last Q presentation.

And comparing it to this one from Q3 2022

We can see that we can conclude with one thing, that they completely lack the ability to be consistent in their communication.

In the Q3’22 slide, we can see that there are 4 different contracts, 1 i april, 1 in may, 1 in june and 1 in september.

The contract placed in april Q2’23 slide corresponds with one the one in Q’24 for 18 models, but on the bar chart the milestone revenue from the contract is placed Q3’2022 which makes no sense if milestone revenue is recognized when contract is either signed or announced. It is stated the following in the H1’22 report. “We have since contracted with
Lenovo for more than 20 Lenovo
models incl. top seller ThinkPad T14,
which will begin generating revenue in
the second half of 2022 and continue
into 2023 and 2024.”

From that me must assume the milestone revenue for this contract was also recognized in q3’22, which tracks with the increased income in q3’22

So, there seems to be no correlation between when a contract is announced, and when the milestone revenue is recognised. The milestone revenue from the standalone contract was recognised before it was announced, meanwhile the laptop revenue from the contract announced in q2’2022 was recognised in Q3’22.

Regarding the two contracts announced late Q2 and early Q3 this year the following is stated in Q2 report “Revenue in the second quarter was driven by the initial milestone revenue from a new laptop contract for the consumer market, as well as the expansion of a commercial market contract with the same customer.”

I would therefore not assume that there is much milestone revenue in Q3, unless there is a new contract not yet announced that is recognized. Also hopeful that the mobile phone contracts are recognized in Q3. I am however interested to see how much of the we will see more increased revenue from the laptops that have reached the fixed fee, to see what revenue they could be generating. Looking at the revenue from the standalone laptop, there is possibility that we could see a good amount rev. in from laptops exceeding this commitment.

I will also state that we have no Idea how the different contracts are structured. There is a possibility that the % amount of milestone revenue in the new contracts are lower than the previous ones.

[Allgasnobrakes]

Also, regarding the communication from the company. The ones responsible for making slides and info need to be fired. In the listing of expansion contracts with lenovo there are 4 contracts from 2022, suddenly in the slides from Q2 2024 on the slide over contracts and when they reach the fixed fee there is only 3 contracts listed from 2022. What happened to the last one?

If anyone has any feedback, I’m interested.

[Allgasnobrakes]

Barca, im also interested in where the refer to the contracts as large? Because i Could not find mention of that on the notices.

[Barcelona1986]

Caught by my poor memory, I was referring to wording by CEO in the Q2 oral presentation, however, she used the word “large” in a different setting - that the commercial contract was the first step to gain a large share of the Lenovo consumer laptop market. I also reviewed the Sep10 presentation, where a slide presents the 7th and 8th contract as HDP only.
I.e. so far no new signed Smart Share deals. It is possible they will do each sensor app in different contracts. If correct that there will be no more laptop milestones in Q3, then the moderate amount of the milestone payment in Q2 may indicate that the total units in the two combined are below 30.

Listening to the wording of the CEO for H2 expectations, one could expect that something monetary should need to happen: “strong outook for the remainder of the year”…could she state that in case H2 would be considerably weaker than H2-23? Of course, she could if this was not a planned statement based on insights…shareholders can only hope that it is based on something more concrete.

[Barcelona1986]

Thanks for great work.
A comment to the slide overview of milestone contracts: It appears as if the timing is supposed to be the quarter in which the milestone is actually booked.
If so, it helps somewhat:
Contracts # 2-3-4 were all included in the Q3-22 milestone payment of est mNOK 15-20. Low amount for 34 units. Paid the quarter after notices. Ca kNOK 500 per model. Should imply relatively higher as-you-go payments if volumes per model are in the 500k units range per year (for 2 years).
Contract #5 is placed at Q2-23 which coincides with the reports. I.e., in this case, it was paid 3 quarters after stock exchange notice. Estimated value mNOK 20-25 = double the amount per model, mNOK 1+, supporting the emphasis of ELABS to increase the fixed amount per model.

Contract #6 is placed correcly at Q3-23 when also the milestone was paid. Est mNOK 11-15 which is high for only 6 units. The slide indicates SmartShare only, but could also be HPD? Or…the 6 models may already have been included in prior HPD contracts - the first model is a long-term Elabs-HPD-inside laptop. The high amount could also relate to expectations for very high sales on these 6 “revolutionary” Smart-Share models, and/or the contract could include a kick-off / success bonus for the first release of this Airdrop-Killer.

We are then left with a milestone payment in Q1-24 which is not explained in the slide, it is simply not included. It is not explained indirectly either, in any material available. It was another payment probably of the size of the SmartShare, est at mNOK 11-15. So what could this be? I do not have a single good guess.

Then we are at the two last contracts, presented as milestone (paid) in Q2-24, as reported. The aggregate amount paid/received is about the same as for contract #5 which included 21 models.

[Barcelona1986]

The CFO, about which I have complained for years, is responsible for the mess, as he is also the big boss of IR.
As regards the contract #5 which “disappeared”, I believe I answered that in the reply above - it was paid in Q3-23 and has therefore been moved to that quarter in the “milestone” slide. Reason: That is when the milestone was paid. In this case, 3 quarters after the contract was announced. I have only one big questionmark to resolve - and that is what the milestone paid in Q1-24 is all about. There is NO mention of that in the milestone overview. It just does not exist. If you would like to contact the CFO on this matter, it would be most appreciated. He has so far never responded to any of my 3 mails to him, requesting non-sensitive replies.

[Staylong]

Could the smartphone contracts achieve that amount through upfront milestones, or is there a different structure in the PC segment where a portion of the revenue comes from launches? I doubt the latter, but in the smart share launch case, I am inclined to think there’s a possibility for that.

[Barcelona1986]

Du kan ha et poeng, da det ikke nevnes spesifikt laptop knyttet til milestones i Q1-24.

I Q1-24-rapporten skrives det:

In Q1 2024, a significant portion of the revenue originated from contracts with
fixed minimum license fees

I Q1-24-presentasjonen skrives det:

Majority of revenue from contracts with fixed minimum
license fees

Fra kontrakt 2-8 ser de ut til å nevne laptop spesifikt, mens det ikke var tilfelle ifm kontrakt nr 1.

I første runde tenkte jeg at det er ganske sannsynlig at dette kun gjelder mobiler, i så fall kan totalen på mobil også være mer på vei opp enn de fleste av oss har trodd? Slik sett positivt. Kanskje har de vridd og presset på for å få mer upfront igjen på mobil for å sikre buffer ift å unngå emisjon, og/eller så er det også en konsekvens av et mer forutsigbart marked som øker villigheten til å cashe opp mer up-front i bytte mot rabatter.
Det var 4 nye kontrakter i dette kvartalet. I andre kvartaler har det stort sett vært 2 eller 3 nye signeringer. Nå kan og vil selvsagt størrelsen på kontraktene variere.

På den annen side er jeg usikker når jeg leser f.eks. Q2-23. Stort sett er det ca 2 expansions eller nye kontrakter på mobilsiden. I Q2-23 var det en betydelig inntekt på laptop milestone, og da skriver man følgende i Rapporten:

The Q2 revenue reflects both a recognition of incremental licensing
(milestone) revenue and also license revenue based on shipped units. This
incremental licensing (milestone) revenue will not be repeated in the coming
quarters.

Det kan vel tyde på at milestone revenue / Incremental licensing er forbeholdt pc-laptop? Eller er det bare nok et resultat av en lettere forvirret IR-sjef som skriver i hytt og vær som det passer uten å tenke på konsistens eller ordbruk? Nå hører det med til historien at det faktisk ble inntektsførst pc-laptop milestone i kvartalet etter…det KAN ikke ha vært en stor overraskelse siden alt er fra Lenovo…og det gjaldt INGEN milestone revenue i (minst) 2 kvartaler (pga flertall). Håper CFO/IR har en svært lav lønn…uansett lønn vil han være overbetalt i mine øyne, og skader selskapets seriøsitet blant investorer. Dette har også sin pris. Tåkefyrsten 2?

[Barcelona1986]

OBS – notatet ovenfor vesentlig endret også mht konklusjon.

[Aksjekongen]

Håpet må kanskje være at det etter hvert kommer inn en dyktig ledelse som er mer opptatt av å få sjappa til å tjene penger enn å i all hovedsak promotere og berike seg selv.

[Gronnis]

Du kan gjerne utbrodere hvordan du mener ledelsen beriker seg selv, heller enn å komme med disse intetsigende baisse-innleggene dine.

[Aksjekongen]

Har du glemt aksjesalget til Laila?

[Gronnis]

Så det er bare det famøse salget du tenker på.
Du skrev ledelsen, nemlig. I flertall. Trodde noe hadde gått meg hus forbi.

[neidajoda]

Mener å huske at vår kjære CFO sist gjordet et aksjekjøp(?)

[Amina]

Er det slik at de mottar up front/forskudd for denne:

Events after the end of the quarter:
– Announced expansion contract with commercial segment of PC customer

De fremhever at dette er etter q2 2024.

Så da kan det muligens være en sjanse for noe “up-front” midler for dette som hører til q3 2024?

https://ellipticlabs.com/mfn_news/elliptic-labs-q2-2024-executing-on-milestones-to-deliver-on-growth-target/

Edit

Samtidig sier de følgende:

In the second quarter, Elliptic Labs also recognized milestone revenue from two new laptop contracts, expanding the foothold in the laptop segment.

MEN, det ble bare annonsert én ny laptop deal i q2 2024.

Så da kan det faktisk hende at de inntektsførte utvidelseskontrakten de annonserte rett over q2 i q2 (3. juli).

Da er det som noen av dere har skrevet her at det nok ikke er noe særlig/ingen up front/milepælsinntekter for q3 2024.

Anslaget på 15-20 millioner for q3 2024 gir da mening.

En annen ting. Elabs q3-rapport er ganske sen (29. november). Hvis det var gode tall hadde de sikkert presentert den tidligere. Pga reisekonflikt valgte de å utsette den til 29. november heller enn å ha den tidligere (er jo ikke så komplisert å lage den rapporten).

Eneste som kan redde denne aksjen fra å synke ytterligere er at de annonserer kontrakt med nye PC-OEMs pronto.

[stone]

Eller at markedet innser at inntjeningspotensialet hos Lenovo ble doblet i september i stedet for å trolle og sutre
Kursen er nå mer enn 1 kr lavere enn før lansering av seamless tap sensor, bare halvannen måned etter nyhet.

[Hagbart78]

Fra hallelujastemning til krisestemning på halvannen mnd uten negative nyheter…

Ikke lett å være Elabs, med slike aksjonærer.

Hvis vi fortsetter å nedsnakke Elabs i samme tempo som nå, klarer vi kansje ATL?

[Kraakko]

@Hagbart78

Hvis vi fortsetter å nedsnakke Elabs i samme tempo som nå, klarer vi kansje ATL?

tror du er innpå noe her!

[VentureCap_Mcap]

Det er veldig mange nye investorer på Oslo børs siden 2020, så bare å henge seg på, snakke ned ned ned ned, og plukke plukke plukke. Kursen gjenspeiler ikke status i selskapet, det er helt sikkert. Men Markedet er det umulig å forstå seg på, mye psykologi her. IPO var 15 kroner, uten noen kontrakter eller omsetning å snakke om.

[Barcelona1986]

Helt riktig. Ja, det tar litt tid, og ja, det er vanskelig å lage egne inntjeningsmodeller siden det kun er 1 kunde på PC-siden som krever at Elabs må være restriktive med info som gis. Innen 12 mnd er det ca 60 PCer som drar inn løpende per unit-inntekter BARE BASERT PÅ KONTRAKTENE 2-6 (fra 2022 og 2023). Ved 50k pc-laptops solgt per mnd per modell (basis 600k/år), og KUN HPD, er dette ca mNOK 50 PER KVARTAL i løpende variabel-inntekt. Ved å være inne i 30% av Lenovos modeller (der er man i dag) er man inne i ca 60% av antall årlige lanseringer til enhver tid gitt 2 års praktisk levetid med OK salgsnivå . Jeg ser for meg at de over tid er inne i 50%+ når man allerede nå starter opp i privatsegmentet (varslet at første enheten(e) skal lanseres i 2024), og med flere sensorer per enhet i en god del av disse. Flere sensorer enn HPD og SmartShare kan også være relevante og lisensiert i løpet av 2025.
Dette er hvordan ELABS bør verdsettes, med basis i allerede inngåtte kontrakter. Dvs at det er en rimelig stor sannsynlighet for 500 i 2026, risikoen er faktisk ganske moderat. Ikke minst fordi også mobil ser ut til å dra seg til. I min verden er selskapet betydelig underpriset på 12 kroner når det er betydelig sannsynlighetsovervekt for inntjening på 2-3 kroner per aksje i 2026.
Jeg ligger inne med lav limit og har fått noen aksjer på nivåer som har vist seg attraktive også tidligere. Vi har kraftig de-risking på bred front og så sutres aksjen ned pga at det kan bli et par relativt svake kvartaler mens inntjeningen i utestående og økende PC-park øker dag for dag.
Selv ikke en klønete CFO-IR kan forhindre det:)