Sondrel Plc Regulatory News (SND)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulation

15 February 2023

Sondrel (Holdings) plc

("Sondrel", the "Company" and together with its subsidiaries the "Group")

FY 2022 Trading and Business Update

Strong revenue growth and design wins in line with expectations

Investment committed into material new contract

New design win with tape out to occur in very near future

Sondrel (AIM:SND), the fabless semiconductor business providing turnkey services in the design and delivery of 'application specific integrated circuits' ("ASICs") and 'system on chips' ("SoCs") for leading global technology brands, is pleased to provide an update on trading for the financial year ended 31 December 2022 ("FY22"), and key milestones achieved since the Group's IPO in October 2022.

Key Highlights

- Revenue growth of 116% YoY with FY22 revenue of £17.5 million (FY21: £8.1 million).

- Record new orders received, with growth of over 130% YoY and providing strong visibility over FY23 revenue.

- Maiden post IPO design tape out for a leading provider of Edge AI Hardware Accelerator solutions in January 2023.

- Significant progress made both during 2022 and the start of 2023 in respect of a material turnkey ASIC engagement secured in Q2 2022 for a Tier 1 OEM Automotive customer production for which could be significant over the life of the product. 

- New design wins in line with Board expectations, delivering a strong increase in the pipeline for volume supply.

- Strong design pipeline identified for 2023.

The Company has delivered revenue growth of 116% YoY - with ASIC projects now accounting for an increased 73% of Group revenues (Consultancy: 27%). The net proceeds from the Company's IPO are already being deployed to accelerate the Group's future growth, including increasing the number of engineers, investing further in developing the Group's Architecting the Future IP solutions, and accelerating growth in the USA and other geographies.

During FY22, the Group secured design wins in the automotive, Edge-AI, mobile, networking, and aerospace markets. These wins are strong endorsements of Sondrel's capabilities and have helped to strengthen the Group's design pipeline for 2023 and the opportunity to scale volume deliveries beyond that.

During FY22, the Group achieved record new design orders received with an aggregate value of £25.6 million, a 130% year on year increase, and providing strong FY23 visibility.

Given Sondrel's reputation and differentiated design capability, the Group is often approached by other ASIC designers and manufacturers about how they could work together to benefit from Sondrel's expertise and global footprint. In this regard, the Group was recently approached by a new customer wishing to benefit from Sondrel's expertise in completing the design phase of one of its existing ASICs with Sondrel subsequently responsible for taping out the design, new product introduction/prototyping phases and production services. Having been engaged on this new project, the Group has already completed the design phase, with an estimated value of £1.8 million in 2023 and expects tape out to occur in the very near future. The Group will make a further announcement in this regard in due course.

In the automotive sector, significant progress has been made in respect of the material turnkey ASIC engagement for a Tier 1 OEM Automotive customer - with a project milestone achieved in Q4 2022, albeit later in the quarter than had previously been expected. A second project milestone, previously anticipated to occur in late FY22, is now expected to occur in Q1 2023. Notwithstanding this, investment into the third party components of the project continued in line with expectations during FY22. Whilst FY23 achievement of the second project milestone payment and, inter alia, foreign exchange movements and amortisation treatment will have an effect on FY22 levels of profitability, the Company had unaudited cash balances of £4.5 million as at 31 December 2022 prior to receipt of the stage payment in respect of the Q4 2022 automotive project milestone in January 2023. As stated at the time of the Group's IPO, Sondrel expects typical production volumes for each contract to deliver revenue of £10m to £100m per annum and the contract with the Tier 1 Automotive customer could deliver production revenue at the upper end of this range. 

The Group has continued to deliver all other projects in line with its expectations, as demonstrated by the January 2023 design tape out for a leading provider of Edge AI Hardware Accelerator.

The Company notes some of the challenges for the semiconductor industry forecast for 2023 but given that Sondrel services fast growth end markets with structural growth drivers, the Group has seen no downturn in the industries or markets that it services. Furthermore, the Company continues to benefit from the moves to localising supply chains and international technology trade restrictions and, notwithstanding expectations that FY23 revenues will now reflect the revised timing of already contracted project milestones, the company is confident of its ability to continue to deliver strong growth in 2023 and beyond.

Graham Curren, CEO of Sondrel, commented:

"In our first trading statement since our IPO I'm pleased to report that we have delivered strong revenue growth, with design wins in line with our expectations. We have started to deliver on our growth strategy as set out at our IPO and progress has already been made in expanding our operations in the United States.

I'm especially pleased to see such a strong adoption of our ASIC services by customers, old and new, as evidenced by the recently announced tapeout of an Edge AI ASIC project, production for which is potentially worth $20 million to the Group over 3 years. In addition, our engagement with a new company to finalise its ASIC design and tape out demonstrates the strength of our offering.

Many of our customers are increasingly optimistic about their market opportunities and I am looking forward to working with them to deliver significant production volumes as we seek to achieve our medium term target of revenues of over £100 million."

About Sondrel

Sondrel is a UK-based fabless semiconductor company specialising in high end, complex digital Application Specific Integrated Circuits (ASICs) and System on Chips (SOCs). It provides a full turnkey service in the design, prototyping, testing, packaging and production of ASICs and SoCs.

The Company is one of only a few companies capable of designing and supplying the higher-spec chips built on the most advanced semiconductor technologies, selling into a range of hyper growth end markets such as high-performance computing, automotive, artificial intelligence, VR/AR, video analytics, image processing, mobile networking and data centres. Sondrel designs have enabled products by leading technology brands including Apple (iPhone), Sony (PlayStation), Meta's (Oculus), Samsung, Google and Sony smartphones, JVC (prosumer camcorders), Tesla and Mercedes-Benz cars.

Sondrel is well-established, with a 20-year track record of successful delivery, supported by long standing ecosystem partnerships including Arm, TSMC and Samsung. Headquartered in the UK, Sondrel has a global presence with offices in UK, USA, China, India and Morocco.

For more information please visit: ir.sondrel.com