Next Biometrics Group ASA
OSE:NEXT
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Next Biometrics Group ASA
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Okay. I believe we are live, and I would like to welcome everyone. And maybe I should just double check here so that you can hear me. Eirik, can you hear me? Yes? Very good.Okay. So good morning, everyone, and welcome to this webcast, where we are outlining NEXT Biometrics and summarizing our quarter 4 and also summing up the year of 2021. I'm Peter Heuman, I'm the CEO; and with me, I also have our CFO, Eirik Underthun. And we will guide you through this presentation.The material we will present here today is already available on nextbiometrics.com, under Investors. You can also send questions, if you have, to events@nextbiometrics.com, or even better, you can just put your question right here in the chat function here in the -- during the Teams meeting. So welcome, again, and let's get started.So we can go to the next slide on there. All right. Here, we can see the agenda. And since we are a developing company and we are now in a scale-up phase, we will start by providing you a review of where we stand by the end of quarter 4 and end of 2021. And then, of course, we're going to give you the financial figures. Eirik is going to do that for the -- for quarter 4. And we're going to end with a little bit of an outlook and provide you a view of where we are standing in the early phase of 2022. And of course, we end with a Q&A. So with that and no further ado, I think we should start with the first slide.All right. And by the end of quarter 4 and end of 2021, we can now provide 3 proof points out of, what I believe, 4 required for success. These 3 proof points, as you can see here on the slide, is, of course, number one, the design wins. That means customers that have decided to integrate a NEXT Biometrics sensor into their product. That's what we call a design win. It's a new customer for us.We continue to have good traction. We have guided that we are aiming to have at least 3 design wins per quarter. Some quarters might bring more design wins, some less. But on an average, we should aim for providing 3 design wins per quarter to our company. We have ended 2021 with 24 new design wins at year-end. It's a mix of smaller design wins, medium design wins, large design wins, and I believe 2 or 3 of them which have great volume potential. I'm going to talk more about this further at some later slides.The second proof point, and I think today's key message of the quarter 4 report, is that we, today, have in our financial statement, we are providing a 47% gross margin. You might remember that me and Eirik have guided that we are aiming at providing you, shareholders, a blended gross margin within the range of 35% to 40%. But today's key message providing almost 50% gross margin is a result of the large shipments of FAP20, one of our prime products. And I think it states very clearly that we have a great potential with this product, that it is disruptive since our customers are very satisfied with the pricing that we provide and you as shareholders can see the potential in this gross margin. And this is only something me and Eirik have been able to talk about before, and I'm happy today that we can actually provide it as a proof point.The third proof point is the one that we provided the fastest in the transformation of the company and is, of course, that we stay on our targeted OpEx lines, around NOK 15 million per quarter. So I think these -- I feel very humbled today in the way that we can stand with 3 proof points out of 4 in our puzzle to make sure that NEXT Biometrics become successful.And the fourth one is, of course, revenue. And I think this will then bring us to the next slide. Because if we are happy with these 3 proof points, why is there a time lag from a new customer or what we call a design win until NEXT receives revenues? And as you can see here on the slide, there is a natural shift before NEXT receives the recurring orders and revenues.And why is that? Yes, it's quite obvious, I think, because we sell a component, we can call it that, we call it sensors, to these customers. But the customer need to allocate time, dollars and resources in designing a product. They need to do technical integration of all kinds of sorts, software, hardware, mechanical, electrical. They need to do their product development. They need to do quality control. They need to get into mass production of their product, manufacturing. Some of them need to run through regulatory and government approvals to get certifications. They need to ramp up marketing, sales and then ramp up their sales activities. And it's in the later part of this whole process that they know how much volume they will provide and ask from NEXT Biometrics.And this process normally would take everything from 9 months up to 24 months maybe for a PC manufacturer, depending on company, how mature they are, how mature the product and the market is. So this is the natural time lag from the day that we announced a design win and why it takes a little bit of time before we really get the orders.Of course, we do everything we can at NEXT to push our customers via now providing them reasons why we have longer lead times due to the global supply chain situation. And we try to use that, of course, to have early bookings coming into NEXT Biometrics of orders. We also provide some incentives on the products where we believe we can for customers committing and making early bookings. So this is a little bit why you see a time lag from what we are very focused on the design wins.I normally say that the design win is like planting a potato seed in the ground. And we all know that it's not the day after or maybe a couple of days later that you can bring up and harvest the potato. You don't know from beginning if it's a new sort of potato you are growing, how many -- exactly how many potatoes are going to be underneath that earth before you do your harvest. So we are very focused on bringing design wins. And here is a little bit the reason why it takes some time from design win to we get revenues.Okay. With that, Andrea, I'm going to talk a little bit more about these design wins. And on this slide, I'm going to try to provide you insight into 2 or 3 customers where we, from the dialogues we have with these customers, we estimate based on these dialogues that they have the potential to be great volume drivers for NEXT Biometrics out of the current design wins.So if we look at the first customer that I wanted to spend a little bit more time on. It's recently won India OEM. We have classified that as great potential, and they will enter the India market, the L1 market with our FAP20. I will outline this further in the upcoming slides as well. But this is a customer who placed an initial order with us of $2.2 million, which is a substantial amount for an initial order. And we believe that demonstrates a good commitment towards NEXT Biometrics.If we -- if you take up the next customer, Andrea, and maybe that arrow as well belonging to that tech giant, that it's almost a year ago since we announced this customer. I think what the news we try to bring clarity on today, because I can imagine you have seen an initial order coming from this customer, what we are providing you insights around today is that this tech giant will also bring our FAP20 into the India market, which is one of the largest biometric markets in the world.But being able to enter the India market, both the tech giant and this India OEM, they have to run through a regulatory and government approvals. This is not a process that we at NEXT can control. We have good dialogues with these customers. We follow them through these regulatory and government processes, and we support them during the processes. But that's also one of the reasons why it takes time for them.If you look at the tech giant, they have already built a product and a solution, but they are not authorized to sell this solution until they have a certification in this market. And exactly what date that will happen, we try to take all that input that our customers are aware of to understand when it's most likely.And as you can see here, the India OEM and the tech giant, they even believe some -- it's around the same time frame, but they believe that this market will open up early quarter 3 or mid-quarter 3. So not even our customers have the same opinion. And that's why we are a bit careful to provide you as shareholders with exactly when we can expect orders and volumes. And this is also a reason why you can see that it takes some time, several quarters for some of the design wins and the customers where we believe there is a great volume potential and why you can't see that represented that quickly into the P&L. But I think we have put ourselves in a great position.Another very interesting customer, so if we take the third one, Andrea, it's NGRAVE. Recently, you saw we got a follow-up order from NGRAVE. NGRAVE is making a cryptocurrency wallet. And they have -- it's a startup company, just launched. They have a long waiting list. They are -- they have entered mass production, but they have some challenges with supply chain, not related to NEXT Biometrics, but to some other important components.We do believe -- and I'm going to demonstrate to you a little bit more details about each and every one of these design wins and explain to you why we believe they have a great potential. If you bring the arrow also on NGRAVE here, Andrea, you saw that we won the design win in quarter 4 2020, and they placed a small initial order, and now we've got a follow-up order. And this is also explaining why it takes some time from design win to recognizing revenue and starting to get recurring orders from our customers. But I think here, you have 3 of the customers out of the -- and design wins out of these 24, where we believe that we have great volume potential.And of course, the fourth one, Andrea. We are not stopping with the design wins we have and the seeds we, so-called, have planted. We are going to continue to aim at adding 3 design wins per quarter going forward. And that's what's going to bring us the volumes later on here.Okay. And with that, I think I'm going to go to the next slide, and I'm going to provide you a little bit more detail about all of these 3 main design wins. And if you look at NGRAVE, and for those of you who haven't heard anything about this before, NGRAVE is -- for us, it was a small design win. But understanding more of the market and the potential here, we now estimate, and from the dialogue with this customer and when we know what they are aiming for, that we have a great volume potential with this customer.So it's a startup company. The design win, by end of 2020 with an initial order. NGRAVE's product development process and all the steps that I explained earlier, it took almost 12 months from design win to they went commercial launch with their product. It has become a very successful launch of a product. We believe in this product.And why do we believe there is a potential? Yes, if you look at the market where NGRAVE is currently in, it's around the usage and protecting your cryptocurrency keys and your passwords when you are trading with cryptocurrencies. Now you can question oneself, how many are actually doing that? And it's a very fast-growing market. Only during 2021, globally, we were adding 200 million unique users of cryptocurrencies. So it's now totaling up to 300 million. There are estimates that there's going to be around 2023 in an aggressive case to the 2025, 2026 over 1 billion unique users of cryptocurrencies.Currently, there is roughly 80 million of these wallets, cryptocurrency wallets in the market. NGRAVE believes they have a new offline wallet because -- and what they are solving is that many of the current cryptocurrency wallets are USB-based protected mainly by a very long password that customers forget or they are very easy to get hacked because they are integrated into your computer. So NGRAVE have a cold wallet, meaning it's not online connected to your computer. And here, you then -- in this product, you protect your cryptocurrency keys and you protect your passwords, totally separated from your online computer where you're doing the trading.NGRAVE is aiming to get at least 10% of this market. And like I said, there is currently 80 million of these wallets out there. If they succeed, we believe -- and even if they don't even reach that market share, we believe that there is a possibility for NEXT to have NGRAVE as a volume-driven customer. And that's why we keep a tight relationship with them.Okay. Then, Andrea, we can go to the next customer on the next slide. And that's then the India-based OEM and the tech giant. I think I might have said most of this, but the India OEM, there, the initial order, $2.2 million. Our deliveries will start around April to the customer. This partnership, we believe, will open up the India market as they will certify the FAP20 and go for the L1 certificate. The tech giant is the same. And those 2 companies are now part of NEXT Biometrics' new go-to-market strategy for India, where we partner with strong, local partners.If you remember, 2 years back, NEXT Biometrics, we were certifying our own products and customer products in India for the government and regulatory approval. These are long processes, costly processes and also takes a lot of resources. And then we believe it's much better to partner up with strong, local partners. And here, we have 2 of them.And I think we should go to the next slide, Andrea, because then I will explain a little bit what is the big change that we are going and why do we believe there is such a volume potential related to India. So then if I take a step back, the India is up for a technology shift from what they call, in biometric terms, a government-related biometric certification. Currently on the market, you are only authorized to sell these products if you have an L0 certificate. The government bodies will now authorize certain suppliers and require from a certain date that you are only allowed to sell these biometric products if they are L1 certified.And as you know, India is a big country with around 1.1 billion population. They have one -- the largest database in the world of fingerprints. The L0 readers, so the current biometric readers on the market, are used to buy SIM cards, to buy train tickets, et cetera, and they have been shipped in the market since 2016, '17. All these L0 devices will be replaced by higher security certified L1 certified devices. And our customers and our local staff believes that the L1 certified biometric readers and the first ones in the market will be around end of quarter 2 or early quarter 3.You should be aware that this should have happened. According to the authorities, this should already have been launched almost a year ago. But due to COVID, it has been delayed. And we at NEXT don't know for sure when it's going to be launched. By our customers and our partners we are now working with locally, together with them, we can make expectations at least.Okay. So why do we believe there is such a volume potential and why this go-to-market strategy is so much stronger for a product development company like NEXT Biometrics? If you look at the total volume of L0 historic devices, it's around 3 million to 6 million units per year. And there is also -- from the moment the authorities require an L1 certificate, there's going to be over time 15 million to 20 million devices that needs to be replaced to be on the new certification. So you have an annual volume of 3 million to 6 million devices, and you have a replacement volume that the certified companies will go for.And with this new updated go-to-market strategy and with these recent announcements, what NEXT have done is that we now have 2 of the main players, and 2, I would say, 2 out of 5. It's approximately 5 larger companies in India who grasp 80% of the total market. We are now in contractual agreements with 2 out of these 5. And of course, we are trying to get even into a third and maybe even a fourth, but at least we have 2 out of 5. And I think that gives us a much stronger market entry position compared to if we would have done all this ourselves. It also provides other benefits. We ship our standard sensor, our great FAP20 sensor, to larger companies, so we don't need to be exposed to all smaller local end customers, et cetera, providing them the total volumes, with some of the risks that we then avoid. So I think NEXT is in a great position for the L1 launch. And it's a volume market, and we now have 2 strong partners that we're going to go with.Okay. I think now, Eirik, we should go to the next slide. And I think that's going to be the quarter 4 numbers. I'll leave it up to you, Eirik.
Thank you, Peter.So during this quarter, we achieved revenues of NOK 13.7 million compared to NOK 8.8 million in quarter 4 2020. We have a slight echo. The quarterly revenues would have been NOK 23.7 million if components had been available, and that relates to the PC sensor revenues that continues to be impacted by the semiconductor component shortage.Adjusted gross margin was 47% in the quarter, which is up from 17% in quarter 4 2020. The gross margin in the quarter was favorably impacted by the product mix of shipped products with a higher share of high-margin products. And I think you heard earlier that we had an all-time high of FAP20 shipments, which contributed to this situation. The company booked a NOK 6.3 million inventory write-down in the quarter, which was predominantly related to payment card and first-generation sensor components inventory.The company's adjusted OpEx remains in line with previous quarters of around NOK 15 million. The lower OpEx in quarter 4 2020 can be attributed to the booking of Skattefunn benefit in a single quarter in 2020. In 2021, the benefit was booked evenly across the different quarters in the year. The adjusted EBITDA was similar to quarter 4 2020 at negative NOK 7.9 million.The company's cash level was NOK 102.7 million at year-end. The company's working capital increased due to the ramp-up of FAP20 production and shipping of modules at the end of the quarter, which left us with a higher accounts receivable than what we had at the end of quarter 3. The operational cash flow was negative NOK 12.4 million in the quarter, and this is more negative than the company's adjusted EBITDA, and the difference can be attributed to the increase in the working capital during the quarter.So in summary, the company's main financial achievements in the quarter are the record high adjusted gross margin and continued low quarterly OpEx around NOK 15 million per quarter.Thank you. Then we go to the next slide.
And I believe it's me again. Andrea, are you hopping to the next slide? Perfect. So thank you, Eirik.And to sum it up, the quarter 4 and the key takeaways. And like I said, 12 to 18 months ago, I could only -- we could only inform you about what we were aiming for, me and Eirik, in the transformation of creating a new NEXT Biometrics. And today, we can provide 3 main proof points on NEXT's way to success.The operating cost, in line with the earlier communicated target. Adjusted gross margin, well above the communicated target, establishing us in a very positive way and demonstrating that our technology could be disruptive in a positive way in the market. The design win that we believe is a basic fundament, that was maybe a Swedish word, but for building the success is also tracking according to communicated target, 3 design wins per quarter and accumulated 24 since we started the transformation.The missing piece would be the revenues. But if you look at what we are providing in recognized revenue, NOK 13.7 million, but if you look at what our sales team and our customers and orders that we have at hand and wouldn't we have any supply chain challenges, we would have provided NOK 24 million. And that, in combination with a very high gross margin, you can start to imagine that we are not that far from the magic line of breakeven, would we be able to continue to deliver this.But in addition, in quarter 4, we delivered the highest quarterly FAP20 shipment levels in the company history. That's a good start. Like I said earlier, we established a new go-to-market model. But not only that, we also secured local partners according to that go-to-market model in India, one of the most promising biometric markets. And subsequent to quarter 4, we announced the initial $2.2 million deal with the OEM in India, and we also announced a new repeat purchase order from what we are very excited about, the NGRAVE crypto-wallet.So with that, I think we should go to the next slide, Andrea. And I think we're going to end up this session, before we go to Q&A, with 1 or 2 slides on outlook and what you can expect. And like I said in the beginning of this call, we are in a scale-up phase right now. We have gone through a tough restructuring. We have transformed the company. We are still doing that in certain aspects. But I would say that right now, we are in a fairly clear scale-up phase.We continue to plant our seeds in the ground through new design wins, and we will continue to try to provide you as shareholders with 3 new design wins per quarter. We are also very focused since we can see the financial benefit from our FAP20 type of sensor. So we try in a structured way, make sure that we have a ratio of our funnel, including a large portion of FAP20.We have multiple ongoing dialogues with prospective partners with different volume potential. I think this is something positive. We are going to have some small volume customers, but we are also going to have medium. We are going to get some large, and perhaps, we are also going to have some that can provide exceptional volume if everything comes into play. And I think this is the strength of our product that we are not focused only on one -- in one area. There are many different use cases, many different markets, many different type of customers.So with a strong balance sheet and a slim operation, NEXT's main focus is now scaling up revenues with both the existing design wins as well as through providing new design wins.So with that, Andrea, we can go to the last slide. But of course, higher revenue is the final piece of the puzzle. It's the fourth piece of the 4 required, where 3 of them are already taken care of. So with NEXT's cost structure, that was resolved fairly quickly. And of course, it takes longer to improve the gross margin, but with this report and this financial statement, now that transformation is also done and demonstrated.I should say that you should not expect that we will stay on these levels. I think on the -- with the volumes we have right now that are fairly low, it's going to take some quarters and we need some higher volume. So it's going to be rather volatile. But this report provides you a proof point of what we will be capable of providing when the volumes increase.We are, of course, diligently working on converting current pool of design wins to revenues, like I explained a little bit earlier. And I think to try to provide you as shareholders with some kind of statement, and if you look at what I said here before, would we have booked the NOK 24 million, NOK 25 million revenue that -- with all the orders we have at hand, what is required for us to reach breakeven if we do a little bit of simple math here. So let's say, NOK 35 million to NOK 40 million in revenue and adjusted OpEx of staying on that NOK 15 million, and if we have around 40% gross margin, which is in the target level that we have said, then NEXT will reach breakeven. I think you all can calculate that.But I think what we want to end this session with is the statement at the bottom here. I feel confident with the estimates we make through the dialogues we have with those 24 companies and the 24 design wins we have. If I look at the volumes that they can provide through the dialogues that we have with them and the data that we can get from them, we feel confident the current pool of design wins is expected to be sufficient for NEXT Biometrics to reach EBITDA breakeven. So if we would stop right now and don't bring any more customers any design wins, in a matter of time, these 24 should be sufficient to bring us to that level.Of course, we are not going to stop there. Like I said, we are going to try to continue to bring 3 design wins every quarter on an aggregated level going forward. But I think the main message of today and of today's report is that we have 3 proof points and that we believe that the current pool of design wins should be sufficient enough.And I think with that, we should hand over, and both, I think, you, Eirik, we have already -- we thank you very much, and we should go to Q&A.
Yes. So we have some questions here, and we are still receiving questions in the meeting chat. So it's possible to provide questions in the meeting chat if you haven't done it already.So Peter, great with this high gross margin. Is this high gross margin something we also can expect in the future?
Yes. I think, Eirik, thanks for that question. It's a good one. I think I touched upon it already. I mean, like I said, we are in a scale-up phase now, and we are at fairly low volumes from a volume revenue perspective. So you should expect certain volatility going forward through the different quarters. It's going to be very much depending on the product mix, how much FAP20 versus other standard sensors. We have, like I said, guided for 35% to 40% long term that, that's what we should aim for. But I think today's message is that now we can demonstrate to our shareholders that we have satisfied customers, and you can see that there is a really good potential with our FAP20.
Then we have the next question.First, congratulations with the initial purchase order of $2.2 million to the Indian OEM. That was a great start in India. Soon, it is 1 year passed since you signed a contract with the tech giant. Can you give us any update and comments on the cooperation with this tech giant? And how much orders that you're expecting from this customer during this year?
Yes. Thank you, Eirik, and thank you to the one who -- I can understand from an external point of view that you wonder a little bit why you don't see much more. But remember, we have already received one initial purchase order from this tech giant. I have today informed you that they have built a product for one of the most promising and the largest and the market with the highest potential, which is the India biometric market, where they're going to enter. But they have to pass regulatory and government approval before that will be launched.But like I also said there, only -- and this is the major project which we are involved with them, but they do see other benefits as well. But Remember, I personally don't believe, and we might have some insight in, but this tech giant is not -- they are already present in India. They are not aiming for 1% to 2% market share, being such a large company. And remember, I said the yearly volume of historic L0 is 3 million to 6 million units. Now even if they do 1% or 2%, it's going to provide volume to us. We do believe they're going to win more than that. And in addition, we had this other India OEM.But staying around the tech giant, this is why it takes a little bit of time, but this is the main project that we are working on with them. There are also other projects where this tech giant is involved, and that could be different products and also different tenders, where we have a dialogue where they see a benefit from our FAP20. So I think we're going to see some additional orders coming from there. But I think the most where we expect the highest volume from and the most regular volumes from is from the India market with the tech giant.
Thank you, Peter. So there's another question about India. In the presentation, you state that the local partner holds the certificate. Does this represent a risk to NEXT?
No. That's a very good -- they hold the L1 certificate, so they are allowed. So I don't see this brings any larger risk compared to if we would do it ourselves because there are so many dimensions if you want to succeed in the India market. But it basically means that the only risk I see is if they will not be happy with our product, they are going to integrate our sensor into a product that they need to get certified. I find the risk very limited since it's a hefty process to run through to get that approval.And there are other components like MCUs, et cetera, that, for example, the tech giant and this OEM. They need to bring those components, and then they need to get the certification. For us, I think the upside is much, much larger than any risk, and we are also removing many other risks. So when all come to play, I believe this is a much safer and much better way for us to go to market.
Very good. So there's another India-related question, and that relates to the recently launched Oyster III product. Is Oyster III to be L1 certified?
Yes, good question. And at the moment, no, because like I said, we -- that's a product -- a global product that we have bought that we can sell globally, but we sell it like a standard FAP20 PIV certified reader. We are currently not aiming to step into and run through this government and regulatory approval and get our own certificate. Depending on how this market develops, there is nothing stopping us from doing that.But right now, we are very focused on trying to partner with companies who we believe can drive the volumes, both the largest volumes and also to get those volumes the quickest and the safest way for NEXT Biometrics, and that's not going to be through entering and competing with these partners ourselves to start with, at least. But the door is not closed, but that reader could be sold in many other markets around the world.
I have another question that's about design wins. Peter, you're informing us that you're very focused on design wins. When can you describe the volumes that you're expecting from these different design wins?
Yes. Again, a good question. And I think we're getting close to where -- what I've tried to do today is to provide you a little bit more insight into some of the design wins where we believe an estimate that we're going to have the largest volume potential. You have heard about the India OEM. You have heard about the tech giant. You have heard about NGRAVE. From the dialogues that we have with these customers and the understanding we can get, that's how we make our own estimates. But of course -- so I think this is the way how I tried to provide you where the volumes right now with the current design wins most likely will come from and where you can expect the largest volumes.When it comes to exact timing of it, there are so many factors of uncertainty that me or we at NEXT Biometrics can't control. And I don't want to be a CEO sitting here promising to you a certain time line when I know for sure, there are factors in there I can't control because then you're going to -- I'm going to tell you something which I can't control. And I don't want to put us as a company, myself as the CEO or you as shareholders in any wrong corner there.As you saw, for example, with the tech giant and the OEM, even these partners have a different opinion of when they believe the L1 biometric market will open up in India. I think I will make a mistake if I said something outside of that and guided you as shareholders. So I will be a little bit careful there, so no one of us end up in the wrong corner.
Right. It's still possible to come up with questions. We're reaching towards the end of the list here, but we have another question here, and that's relating to the NGRAVE product. What product does NEXT Biometrics supply to NGRAVE?
Yes. Good question, again. And as you can potentially see here, if I try to hold it up, you have a sensor here on the back, and you can probably see there, it's a rather small sensor. It's kind of a FAP10 sensor. So it's one of our standard sensors that we normally provide to the PC industry, et cetera. So it's one of the smaller. But NGRAVE is very security focused, and we are in dialogues with them on how this could be developed going forward. But currently, it's one of our -- I think, we call it the 200 family sensors.
Right. And then there is another question relating to products. Can you update us with regard to the laptop market and the sensors that you're providing to the PC industry, the top-end sensor?
Okay. So this is a little bit of a mixed bag. I mean, if we start with the positive, so our largest PC customer is actually doing very well, have done very well during the pandemic, and we see an increase in orders. However, they are also a big part of our backlog, meaning we have the orders at hand, but we have certain components that we are very challenged to absorb.Also, the PC manufacturers themselves have challenges with components of other sorts that are important for them to build and ship their computers. But the underlying numbers and the forecast, and this is one of the only customers which is mature -- in a mature market where we can see and forecast expected volumes. But unfortunately, both that customer and we are in some challenges when it comes to supply chain. But the underlying demand is very, very positive.And we work in a very good relationship with this customer. But this has also put them both with the standard sensor and with the Secure Bio solution, where a certain certified kind of chip is required in a challenging position. But I think in general, the demand is very good from the PC industry.
Right. And then there's another question about new market segments. You already talked about your main segments right now, but are there any other new market segments that you're looking at, let's say, for example, the car industry?
Yes. But I think we are, on our website, for example, trying to explain in a customer-focused way what our main segments are. But if you read all of that, you can see that we are also quite open. And I think our current design wins prove that we are valid in many different market segments. We try also to go outside some of the classic biometric segments like access control, physical logical access, these buzzwords that the industry is using.And I do believe, like this payment and fintech, certain years back, not many people believe that the point of sales terminal would use a biometric fingerprint sensor. Today, we are working with several of them. Who would have guessed that the cold crypto-wallet, protecting your crypto keys and passwords would really like to have a biometric fingerprint sensor on it? So we do believe that there are several other market segments that are opening up.You mentioned the automotive industry. I know many of our competitors have been there with everything from very small convenience sensors to very large expensive bulky sensors. And you can look at the market, some of the automotive brands have actually integrated fingerprint sensors and other biometrics into certain line of cars. So I think there is a potential there potentially also for NEXT.
Right. And then there is a question about, it seems like NEXT has a great product and technology in the FAP20 sites. Are you looking at developing new products for FAP20 or other larger FAP30 or other types of sizes?
Yes. Thank you, Eirik. That's almost a trick question for me as a CEO because I would agree to everything that question put forward in terms of that we believe now that we have good proof points for that we sit on a great technology, a disruptive technology that can be very beneficial for customers as well as you, shareholders. At the same time, this company has a history. We have a limited pool of cash. We have a limited pool of resources. And I think that is the trade-off that I need to -- and me and Eirik need to look at before we -- because they are -- for a company of our size, it's quite hefty investments both in terms of competence, time and dollars to develop further products.Is there an opportunity to do that? Yes, I think the response we start to see from our FAP20 tells me more and more that there is a possibility to go to potentially even larger sensors, where the market prices are even higher and the margins could potentially be even better with our technology. I think here is a trade-off more of timing when we would like to start that. And without going too deep into exactly our road map and what we are doing, but that's what we see going forward as a potential -- one of the potential roads. And that can be solved in different ways, either internally or with partners, and it's a little bit related to the timing of when we also get the volumes from our existing and new design wins. I think that would be my balanced answer on that.
Thank you, Peter. I see we have some question about margins on the different products that we have. And unfortunately, we are not commenting on specific margins or products. But as you can see, we are communicating the overall gross margin that we achieved in the quarter.And I don't know whether you have any additional comments to that, Peter.
No, no.
Okay. So then there is a question about, can you say something more about the sales pipeline that you have at the moment?
Absolutely. I can try to say something, but I would be a little bit careful here as well. But you can look at it from this perspective, we are guiding you as shareholders that we will try to bring 3 design wins per quarter. As you can see, they come from different segments, different products.Two aspects. One, I would love to see, and I know we have in our funnel, a mature product, meaning in a mature market, meaning a product that has been sold historically in certain volumes, that if we win this design win and this customer starts to integrate our sensor, directly, I can communicate to you what product we are going to get integrated into and how many products this company had sold historically. That would be something very nice for us and for you as shareholders, if we can score such a customer which has that kind of history.Because many of our current design wins are new products or in a mature market or in a market where they need regulatory and government approvals for a new product. So there is no history really on how they're going to succeed. That's why it's difficult for us to communicate clearly about the volume. But we do have certain of these in our funnel. So that's one aspect that I think could help us guide you as shareholders on the volume.The other aspect is more related to if we -- like we do provide you a guideline of aiming at 3 design wins per quarter, of course, I have a funnel which contains certain X above that to be able to secure that we most probably are going to score the 3 design wins per quarter. But that's more how we steer and guide our salespeople and when we are reviewing the sales funnel, et cetera.And I think that funnel looks interesting. Like I said, there is a mix of small, medium, large and with great potential. And the other dimension I just mentioned was also a mature product would be great to be able to bring into that bag.
Right. Now we are approaching the end of the questions from the meeting chat. And I would just check the e-mail as well if there is any additional question. But Peter, is there any way to accelerate sales and design wins beyond what you're already doing?
If I answer no to that, I think I'm the wrong guy. There is always something that we can improve, and for sure, where we -- the history we come from. But let me say this, I'm very happy that we got Ulf Ritsvall on board, who has industry knowledge, has been in the industry for a long time.There are different ways how we, as a smaller company, can work with both directly with companies or through certain products could potentially be sold through distributors, et cetera. They can be online. There are all kinds of things that we can do. And I think for us, it's just a balance of doing the right thing with the right priority and don't wasting time, dollars and resources, which doesn't provide quickly bang for the buck versus the volumes it can provide in the long term.But I think we have some new, great insight coming with the new people that we bring on board, for example. And I think that's going to provide regular and continuous improvements. And we do that on our products. We do that in the way how we go to market. We do that in how we sell our products and et cetera. So maybe that's a balanced answer on that.
And then there is a new question. Do you think you will reach breakeven during 2020?
2020, I can guarantee you we're not going to reach breakeven because that's 2 years ago. But I guess the question was 2022.
It was 2022, sorry.
And like I said, I'm going to be very careful before I give any timing guidance. I tried to provide you a small calculation today. I tried to provide you the proof points, but I'm going to be careful with stating I could potentially see a pessimistic scenario, a mid-scenario and an optimistic scenario. But I think I should stick to the message I put forward today that if we stop everything right now, the current design wins should be enough to get us there. And when I say that, of course, that is within the time frame of the available cash that we have.
Right. Then we got a couple of more questions. How are you dealing with the challenges in relation to shortages on microchips, Peter?
Yes, but there are -- I don't go into details exactly where the challenges are and exactly related to what component within our product. But we have a supply chain team in NEXT Biometrics. We utilize them. We utilize the partners that we have, the suppliers we have, distributors and network and contacts. And also, like I said, we also work like with the PC customer. That company is a much larger company compared to NEXT, and this is very important for them. So we are actually jointly approaching some of these component suppliers, which also has demonstrated some good results. So we have all kinds of measures for how we try to tackle it.I'm not -- I don't want to underestimate anything in the challenge, it is, and especially maybe for being a rather small Scandinavian company versus being something much larger established that drives huge volume with some of these component suppliers. But there is a flip coin to that as well. If you're smaller, you don't demand that high volume, so it should also be possible. But it is a challenge. And -- but I'm happy our team is on the task and that we even have good relation with some of the customers where this -- where we see this effect.
Okay. Then we have the final question here. There was something you mentioned back in 2021. You said that FAP20 would be a disruptive power in the fingerprint technology sector and that take -- replace certain other finger scanning techniques. Are you seeing any progress in this? Are you -- do you have some examples of design wins or customers that chose NEXT instead of other types of technologies such as capacitive or optical sensors?
Yes. But I don't think I want to go into a specific customer. But I mean, if you look at it like this, I think we stand behind that claim that Eirik told you about. And if you look back, I mean, 50% to 60% of our current design wins are on FAP20, where the customer clearly sees both a price and a form factor benefit utilizing our technology and get the same or higher security aspect provided.So I think for every design win we get and for every design win of FAP20 we get, in many of those cases, we are replacing someone, and where the customer use a more expensive solution, maybe with another form factor. So I think it just provides us for every design -- additional design win and especially when it's a FAP20, I think it just proves further and further that we are on the right track with the technology. So I think we are satisfied with that.
Yes. And that's the end of the question-and-answer session. Thank you for participating.
All right. Thank you very much for attending. And if you have any further questions, you can feel free to reach out to me or Eirik after the meeting. All right. Thank you.