Neonode Inc. (NEON): Business Model Canvas [Dec-2025 Updated]

You're digging into Neonode Inc. (NEON) and seeing a classic, necessary pivot: trading volume for high-margin intellectual property. Honestly, the numbers from late 2025 tell the story clearly; after assigning key patents, the company booked a $15.5 million cash gain, leaving them with $26.2 million in working capital as of September 30, 2025. This Business Model Canvas maps out exactly how their MultiSensing® and zForce® tech now fuels a capital-efficient structure, showing a 97.9% gross margin in Q3 2025 from licensing royalties. Keep reading to see the nine building blocks that define this focused, IP-driven strategy for Neonode Inc.

Neonode Inc. (NEON) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Neonode Inc. (NEON) relies on to commercialize its sensing and AI technologies, moving decisively toward a licensing-first model.

Licensing agreements with Original Equipment Manufacturers (OEMs) and Original Design Manufacturers (ODMs).

Neonode Inc. (NEON) maintains a network of agreements that form the backbone of its intellectual property monetization strategy. As of December 31, 2024, the company held 37 valid technology license agreements with global OEMs, ODMs, and automotive Tier 1 suppliers. This customer base is concentrated in the automotive and printer segments. By the end of 2024, nine of these licensing customers were actively shipping products embedding Neonode Inc. (NEON)'s technology. Since 2010, the cumulative sales of products featuring their patented technology by licensing customers exceeded 95 million units. For the three months ended September 30, 2025, license revenues specifically accounted for $0.4 million of the continuing operations revenue.

Here's a snapshot of the scale of these licensing relationships as of the last reported full year:

Strategic development partners in the automotive sector for Driver Monitoring Systems (DMS).

The focus on automotive safety is a key growth driver. Neonode Inc. (NEON) secured a contract with a leading commercial vehicle OEM to supply its MultiSensing® Driver Monitoring System (DMS) software. Licensing revenues from this specific program are scheduled to begin in 2025, coinciding with the market launch of the equipped vehicles. This partnership also generates non-recurring engineering revenues during the development phase. The company's innovation in this area was recognized when it won the Innovation Award for Driver Monitoring Software at the 2025 Just Auto Excellence Awards.

• The DMS software uses the proprietary MultiSensing platform.
• The award recognized the camera-based hands-on-wheel detection feature.
• The software leverages synthetic data and AI for rapid feature deployment.

Technology licensing to YesAR for holographic infotainment solutions.

The first major step in the pivot to a licensing model was the agreement with YesAR, a Chinese firm focused on holographic display technology, announced on May 22, 2024. YesAR licensed Neonode Inc. (NEON)'s Touch Sensor Module (TSM) technology for developing and manufacturing holographic infotainment solutions. The agreement structure includes an upfront technology access fee, followed by ongoing royalties from future sales. YesAR intends to deploy this technology in the automotive and elevator sectors.

The expectation is that license fees from this type of agreement carry 100% gross margins, which is higher than the historical product sales model.

Patent assignment to Aequitas Technologies LLC for a $15.5 million cash gain.

Neonode Inc. (NEON) is set to realize a significant, non-operating financial event stemming from a 2019 patent assignment agreement with Aequitas Technologies LLC. Following a patent infringement lawsuit between Samsung Electronics and Neonode Smartphone LLC (an Aequitas Sub), which was dismissed on September 2, 2025, Neonode Inc. (NEON) is entitled to 50 percent of the net proceeds. The company announced it anticipates receiving net proceeds ranging from $15 million to $20 million after deducting brokerage fees, legal expenses, and taxes. The financial results for the nine months ended September 30, 2025, explicitly recorded a Gain from patent assignment after brokerage fee of $15.5 million, which was paid in October 2025.

The final net amount is subject to the evaluation of tax implications.

Neonode Inc. (NEON) - Canvas Business Model: Key Activities

The Key Activities for Neonode Inc. center on technology evolution, revenue diversification through new agreements, service delivery, and capitalizing on its patent portfolio.

Research and Development (R&D) for MultiSensing® and zForce® platforms.

Neonode Inc. continues to advance its core technology roadmap, focusing on MultiSensing® and zForce®. This development effort is reflected in the company's operating costs. For the nine months ended September 30, 2025, operating expenses from continuing operations totaled $7.3 million, an increase of 0.9% compared to the same period in the prior year. The operating loss for the six months ended June 30, 2025, specifically reflected increased research and development expenses. The CEO noted the active work to advance the product roadmap across these two core technology platforms.

Securing new licensing deals in high-growth verticals like automotive and medical.

A primary activity is securing new licensing opportunities, though legacy business revenues have been declining. License revenues for the three months ended September 30, 2025, were $0.4 million, a decrease of 44.5% compared to the same period in 2024, attributed to lower demand in printer and passenger car touch applications. The company's strategy remains focused on securing more licensing opportunities for its innovative technologies to ensure stability and future growth.

The revenue breakdown from continuing operations for the recent quarters shows the mix of activities:

The Automotive segment license fees accounted for 44.3% of that segment's revenue for the three months ended June 30, 2025, while the IT & Industrial segment saw license fees make up 94.6% of its revenue for the same period.

Providing Non-Recurring Engineering (NRE) services for customer application development.

The company engages in providing NRE services, which saw significant fluctuation quarter-over-quarter in 2025. Revenues from non-recurring engineering for the three months ended September 30, 2025, were $24,000, a sharp decrease of 77.6% compared to the same period in 2024. In contrast, NRE revenue for the quarter ended June 30, 2025, was $0.2 million, representing a 4.3% increase year-over-year. Earlier in the year, NRE revenue for the first quarter of 2025 was $16,000. This suggests project-based engineering work is lumpy.

Key NRE contribution points:

• NRE revenue for Q2 2025 was $0.2 million.
• NRE revenue for Q3 2025 was $24,000.
• NRE revenue for Q1 2025 was $16,000.
• NRE services revenue had previously shot up massively over 1500% in fiscal year 2024, linked to commercial vehicle projects.

Intellectual Property (IP) management and monetization, including patent assignments.

Monetizing the assigned patent portfolio is a critical, high-impact activity. Neonode Inc. announced on September 3, 2025, that it expects to receive net proceeds of approximately US$15 million to US$20 million from a settlement involving patents assigned to Aequitas Technologies LLC. This figure is after deducting a brokerage fee and estimated legal fees and taxes. For the nine months ended September 30, 2025, the Gain from the patent assignment to Aequitas, after the brokerage fee, amounted to $15.5 million. This gain was recognized in the third quarter of 2025, with the cash paid in October 2025. The company is entitled to 50 percent of any net proceeds from the settlement.

The impact of this IP monetization on the income statement was significant:

• Gain from patent assignment recognized in Q3 2025 was $15.5 million.
• This gain resulted in Income from continuing operations of $13.9 million for Q3 2025.
• The expected net proceeds range from $15 million to $20 million.

Neonode Inc. (NEON) - Canvas Business Model: Key Resources

You're looking at the core assets Neonode Inc. (NEON) relies on to drive its business, especially now that they've monetized a significant piece of their intellectual property. These aren't just line items; they are the foundation for future licensing and development.

The most tangible resource supporting current operations is the balance sheet strength following the patent monetization event. Honestly, the working capital position as of late 2025 looks significantly better than the prior year, giving them runway to focus on new tech adoption.

Here's the quick math on that liquidity shift:

That jump in working capital to $26.2 million from $16.1 million is a direct result of the strategic moves made around their IP. What this estimate hides is the timing of the cash receipt-the $15.5 million gain from the patent assignment was recognized in the nine months ended September 30, 2025, with the cash actually paid in October 2025.

The intellectual property itself remains a critical resource, even after the assignment:

• Extensive patent portfolio, over 100 patents, protecting zForce® and MultiSensing®.
• Proprietary optical sensing technology and embedded software stack.
• Specialized in-house engineering and R&D team.

The focus is clearly shifting. While legacy revenue declined nearly 49 percent for the quarter ending September 30, 2025, the value of the IP is undeniable, evidenced by the expected net proceeds from the Samsung settlement being between US$15 million and US$20 million after fees.

The company's ability to generate a $13.9 million income from continuing operations in Q3 2025, despite revenues of only $0.4 million, is entirely dependent on the value realized from these intangible assets.

Finance: draft 13-week cash view by Friday.

Neonode Inc. (NEON) - Canvas Business Model: Value Propositions

You're looking at the core value Neonode Inc. (NEON) delivers to its customers, which is all about advanced optical sensing technology, primarily its zForce platform.

The company's financial reality in late 2025 shows a significant shift, with nine months cumulative revenue ending September 30, 2025, at USD 1.54 million, down 37.14% year-over-year from USD 2.45 million in the prior period. Still, the third quarter of 2025 saw an income from continuing operations of USD 13.9 million, largely due to a USD 15.5 million gain from a patent assignment. Cash and accounts receivable stood at USD 12.2 million as of September 30, 2025.

Here's how the specific value propositions map to the business reality:

The technology addresses specific market needs, even as overall revenue faces headwinds:

• Contactless Touch adoption is a key trend, with North America and Europe leading due to stringent hygiene standards.
• The company is actively exploring new verticals where its unique value proposition can be deployed more rapidly.
• Legacy business revenue decline was attributed to lower demand in the printer and passenger car touch applications.
• Analyst consensus from February 2025 anticipated positive profits of US$6.9 million in 2025.

The core technology, zForce, is patented, and the company licenses this MultiSensing touch technology to Original Equipment Manufacturers and Original Design Manufacturers.

Neonode Inc. (NEON) - Canvas Business Model: Customer Relationships

You're looking at how Neonode Inc. (NEON) manages its connections with the companies buying its tech, especially now that they've made big shifts in their product focus. Honestly, the relationship structure is heavily leaning on licensing, which is where the high-margin potential lives, but the legacy business is still showing up in the numbers, albeit shrinking.

Dedicated engineering support for Non-Recurring Engineering (NRE) projects

Dedicated engineering support is tied directly to Non-Recurring Engineering (NRE) projects, which are those upfront, non-repeatable design and development efforts. These revenues are quite lumpy, reflecting the project-based nature of this support. For the third quarter of 2025, NRE revenue came in at just $24,000, which was a significant drop of 77.6% compared to the same period in 2024. This suggests a slowdown in kicking off new, large-scale engineering engagements during that quarter. To give you a broader view, NRE for the first quarter of 2025 was only $16,000, down 61.0% year-over-year, but it was stronger in the second quarter at $0.2 million (or $195,000), which was actually up 4.3% year-over-year.

The CEO noted that they are delivering on existing projects, but the overall trend in Q3 2025 shows fewer new NRE starts, which is something to watch as you assess near-term project pipeline health.

Long-term, high-margin licensing relationships with major OEMs

The core of the desired customer relationship is the long-term licensing agreement, which is intended to generate high-margin, recurring revenue streams. As of December 31, 2024, Neonode Inc. had 37 valid technology license agreements in place. Customer concentration is a key factor here; as of June 30, 2025, just 3 customers accounted for approximately 95% of the consolidated Accounts Receivable (A/R). This concentration means the relationship health with these few major Original Equipment Manufacturers (OEMs) is paramount to the company's stability.

The revenue mix from the second quarter of 2025 shows the key players in the installed base: Commercial Vehicle OEM accounted for 34.1% of revenue, followed by Seiko Epson at 23.8%, Hewlett-Packard at 19.1%, and Alps Alpine at 17.5%. License revenues for Q3 2025 were $0.4 million, a decrease of 44.5% compared to Q3 2024, which management attributes to lower demand from legacy printer and passenger car touch applications. The company is actively working to secure more licensing opportunities, especially around its MultiSensing AI computer vision platform, to offset these legacy declines.

Direct sales and support for sensor modules and software solutions

Direct sales and support for physical modules are becoming less central to the relationship model. Neonode Inc. announced a sharpened strategy focusing on licensing, which involved phasing out the Touch Sensor Module (TSM) product business during 2024. This means the direct sales channel for modules is primarily focused on supporting the remainder of the zForce® platform's product lifecycle, as that platform has been moved into maintenance mode as of Q3 2025. The focus for new growth relationships is now on software solutions, specifically the MultiSensing AI computer vision platform, where they aim to expand strategic partnerships in the automotive market.

The financial data reflects this shift, as total revenues from continuing operations for Q3 2025 were only $0.4 million. The company's liquidity, with cash and accounts receivable of $12.2 million as of September 30, 2025, is intended to support this strategic transition and the servicing of existing, long-term partners.

Here's a quick look at how the revenue streams that define these relationships trended in the first three quarters of 2025:

The company's strategy is clear: maintain the existing base through dedicated support while aggressively pursuing new, scalable software licensing deals. If onboarding those new MultiSensing AI customers takes longer than expected, churn risk rises for the overall revenue base, given the legacy decline.

Finance: draft 13-week cash view by Friday.

Neonode Inc. (NEON) - Canvas Business Model: Channels

You're looking at how Neonode Inc. gets its zForce® technology into the hands of end-users as of late 2025. The core strategy remains licensing its MultiSensing touch technology to Original Equipment Manufacturers (OEMs) and Original Design Manufacturers (ODMs) who then embed it into the devices they sell. This is the primary conduit for their intellectual property.

For the nine months ended September 30, 2025, the company generated total revenues from continuing operations of $1.54 million. This revenue stream is heavily weighted toward licensing, which is the direct result of these OEM/ODM relationships. The company's strategy explicitly involves securing more licensing opportunities to stabilize against the headwinds in legacy markets.

The distribution of zForce® sensor modules via third-party channels like Digi-Key serves a different, likely lower-volume, engineering/prototyping segment. Digi-Key Electronics is noted as a global electronic components distributor that carries Neonode Inc.'s zForce AIR Touch Sensors. However, some specific evaluation kits, such as the NNAMC1580PC01, are marked as no longer manufactured and will only be stocked until depletion. This suggests a potential shift away from direct module sales toward pure licensing for high-volume production.

Direct engagement with Tier 1 automotive suppliers is a stated area of focus for future growth, intended to offset revenue declines from legacy business. For instance, revenues for the three months ended September 30, 2025, were $0.43 million, with the decrease from the prior year being mainly attributed to lower demand in passenger car touch applications. This highlights that while the automotive sector is a target channel, the current revenue base is shrinking in that legacy area.

Here's a quick look at the financial context for the nine months ending September 30, 2025, which informs the scale of these channel activities:

The company's channel execution is currently characterized by these key points:

• Technology is currently deployed in over 90 million products worldwide as of Q1 2025.
• The company holds more than 100 patents worldwide, which underpins the licensing channel.
• Legacy customer demand in the printer and passenger car touch applications caused revenue to drop 37.1% year-over-year for the first nine months of 2025.
• The company is actively working to expand business opportunities and product roadmap to counteract the declining legacy business.
• The Digi-Key channel was established to service the global engineering community for initial adoption and prototyping.

If onboarding new, high-volume automotive licensing deals takes longer than expected, cash burn from operating expenses of $2.1 million in Q3 2025 could become a more pressing concern, even with the one-time patent proceeds.

Finance: draft 13-week cash view by Friday.

Neonode Inc. (NEON) - Canvas Business Model: Customer Segments

You're looking at the customer segments for Neonode Inc. (NEON) as of late 2025, and the picture is one of clear strategic realignment, moving away from legacy areas toward high-growth, advanced HMI (Human-Machine Interface) applications, primarily in automotive.

The financial results for the three months ended September 30, 2025, show revenues from continuing operations at only $0.4 million, with license revenues making up the bulk at $0.4 million, and non-recurring engineering (NRE) revenue at just $24,000. This revenue profile reflects the ongoing transition away from older markets.

Automotive OEMs focused on in-cabin monitoring and infotainment systems.

This segment is the clear future focus for Neonode Inc., driven by their MultiSensing AI computer vision platform. The company is actively expanding strategic partnerships here, especially for advanced safety features. For instance, their Driver Monitoring Software, which ensures drivers remain engaged in semi-autonomous vehicles, won the 2025 Just Auto Excellence Award for Innovation. Still, the CEO noted in November 2025 that demand in the 'automotive infotainment segments remained subdued' during the third quarter of 2025, indicating that the transition from customer deployment to full production volume is still pending for some projects.

Manufacturers of self-service kiosks, elevators, and medical devices needing contactless HMI.

While the search results don't provide specific revenue breakdowns for these verticals, the company has historically served the medical field and is now exploring new verticals where MultiSensing can scale quickly. The shift to contactless HMI is a key value proposition for these areas, especially given the focus on advanced computer vision solutions. The company holds 37 active licensing agreements as of September 30, 2025, which likely span these diverse application areas beyond just automotive.

Legacy customers in the office equipment (printer) and consumer electronics markets.

This group represents the declining part of the business. The CEO stated that revenues from the legacy business are declining faster than anticipated. The strategic decision was made in September 2025 to transition the zForce platform into maintenance mode, meaning they only serve existing customers through the remainder of that product's lifecycle, not seeking new ones. The revenue decline in Q3 2025 was mainly attributed to lower demand for legacy customers' products within the printer market and passenger car touch applications.

Here's a quick look at the revenue context for the nine months ending September 30, 2025, which clearly shows the legacy drag:

Industrial automation and avionics manufacturers requiring rugged touch solutions.

The zForce platform, which is being moved to maintenance mode, holds significant promise for rugged applications, according to the CEO in May 2025. While specific revenue figures for industrial automation or avionics are not segmented out, the overall installed base is substantial, with over 90 million products deployed worldwide since 2010, many of which would fall into these durable application categories.

The company's overall customer relationship footprint can be summarized:

• Total devices sold since 2010: over 90 million products worldwide.
• Active licensing agreements as of September 30, 2025: 37.
• Strategic focus: Reinforcing leadership in fully synthetic, data-driven HMI solutions.
• Legacy platform status: zForce platform transitioned to maintenance mode.
• Automotive compliance: Designed to meet stringent EU General Safety Regulation and Euro NCAP requirements.

Finance: draft 13-week cash view by Friday.

Neonode Inc. (NEON) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive Neonode Inc. (NEON) operations as of late 2025. The structure heavily favors fixed, knowledge-based costs over variable production expenses, which is exactly what you'd expect from a technology licensing focus.

Research and Development (R&D) and Engineering Salaries represent a significant fixed component of the cost base. These are the people building and maintaining the MultiSensing® and zForce® platforms. For the third quarter of 2025, Research and Development expenses specifically totaled $0.8 million. This sustained investment in engineering talent is a necessary, ongoing outlay to keep the intellectual property valuable and competitive.

Total Operating Expenses for the three months ended September 30, 2025, were reported at $2.1 million from continuing operations. This figure reflects a 4.0% increase compared to the same period in 2024. That $2.1 million covers everything outside of the direct cost of sales, including those R&D salaries, general administrative costs, and sales efforts related to securing new licensing deals.

Costs related to Intellectual Property (IP) Management are also a factor, though sometimes realized as a gain rather than a direct expense. For instance, in Q3 2025, Neonode Inc. reported a significant $15.5 million gain from a patent assignment to Aequitas Technologies LLC, after accounting for a brokerage fee payable in connection with the original assignment. This large, non-recurring event underscores the high intrinsic value of the company's patent portfolio, which requires ongoing defense and management.

The licensing model keeps the Cost of Sales extremely low, which directly inflates the gross margin. This capital-efficient approach means Neonode Inc. isn't burdened with manufacturing and inventory costs like a traditional hardware seller. This efficiency is clearly visible in the reported gross margin for Q3 2025, which reached 97.9%.

Here's a quick look at the key cost and margin metrics from the third quarter of 2025:

The cost structure is defined by these key characteristics:

• High proportion of fixed costs tied to engineering personnel.
• R&D spending was $0.8 million in Q3 2025.
• Operating expenses for Q3 2025 were $2.1 million.
• The licensing model drives the gross margin to nearly 98%.
• Cash used by operations was $1.5 million for the quarter.
• The company held 37 active licensing agreements as of September 30, 2025.

Finance: draft 13-week cash view by Friday.

Neonode Inc. (NEON) - Canvas Business Model: Revenue Streams

The revenue streams for Neonode Inc. (NEON) as of late 2025 are primarily centered around its intellectual property monetization, moving away from direct product sales of its Touch Sensor Modules (TSMs).

Total revenue for the nine months ended September 30, 2025, was $1.54 million. This performance reflects a decrease of 37.1% compared to the same period in the prior year.

The core recurring and project-based revenue components are:

• Technology license fees (royalties) from embedded zForce® in customer products.
• Non-Recurring Engineering (NRE) service fees for custom application development.
• Sales of MultiSensing® sensor modules and software solutions, though the focus has shifted to licensing the underlying platforms.

For the three months ended September 30, 2025, the breakdown of operational revenue streams was:

License revenues for the three months ended September 30, 2025, represented a decrease of 44.5% compared to the same period in 2024. Revenues from non-recurring engineering for the three months ended September 30, 2025, were $24,000, a decrease of 77.6% compared to the same period in 2024. The decrease in legacy business revenue was mainly due to lower demand for products within printer and passenger car touch applications.

A significant, non-recurring component impacting the financial results for the nine months ended September 30, 2025, was Strategic one-time gains from Intellectual Property (IP) monetization.

• Strategic one-time gains from Intellectual Property (IP) monetization, like the $15.5 million patent assignment.

The Gain from patent assignment after brokerage fee for the nine months ended September 30, 2025, amounted to $15.5 million. This gain is related to the patent assignment to Aequitas Technologies LLC ('Aequitas') and was paid in cash in October 2025. Neonode Inc. expects to receive net proceeds in the range of approximately $15 million to $20 million from this settlement.