Artificial Intelligence

Aterian Reports Second Quarter 2022 Results

Published

2 years ago

August 8, 2022

Reports Second Quarter 2022 Net Revenue of $58.3 Million

Sees Preliminary Signs of Relief in Container Shipping Costs, Company is Gradually Resuming New Product Development

NEW YORK, Aug. 08, 2022 (GLOBE NEWSWIRE) — Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”) today announced results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

Second quarter 2022 net revenue declined 14.5% to $58.3 million, compared to $68.2 million in the second quarter of 2021.
Second quarter 2022 gross margin improved to 53.8%, compared to 48.0% in the second quarter of 2021.
Second quarter 2022 contribution margin improved to 9.7% from 8.3% in the second quarter of 2021, primarily due to product mix.
Second quarter 2022 operating loss of $(10.1) million increased, compared to a gain of $4.5 million in the second quarter of 2021. Second quarter 2022 operating loss includes a gain of $1.7 million from the change in fair value of earn-out liabilities and $6.0 million of non-cash stock compensation while second quarter 2021 operating income included $23.3 million of benefit from the change in fair value of earn-out liabilities and $4.9 million of non-cash stock compensation.
Second quarter 2022 net loss of $(16.3) million improved from $(36.3) million in the second quarter of 2021. Second quarter 2022 net loss includes $6.0 million in net charges from the changes in fair value of warrants, $6.0 million of non-cash stock compensation and a gain of $1.7 million from the net change in fair value of earn-out liabilities while second quarter 2021 included a $23.3 million benefit from the change in fair value of earn-out liabilities, a $(29.8) million loss from extinguishment of debt, a $(4.4) million loss from the change in fair value of warrants, $(4.9) million of non-cash stock compensation, and a $(1.9) million charge associated with a derivative liability from our term loan.
Second quarter 2022 adjusted EBITDA of $(3.7) million was flat as compared to $(3.7) million in the second quarter of 2021.
As planned, no new products were launched in the second quarter of 2022 compared with 19 in the second quarter of 2021.
Total cash balance at June 30, 2022 was $34.8 million.

Yaniv Sarig, Co-Founder and Chief Executive Officer, commented, “We continue to see overall success with our efforts to protect market share across our product portfolio despite the pressures of inflation and high shipping costs. We attribute this quarter’s year over year decline in sales mainly to the overall softness in consumer demand that is affecting the entire retail sector as well as continued supply chain issues.” Mr. Sarig continued “On the bright side, we are seeing a decline in the cost of shipping containers as global demand subsides and we are optimistic that if the current price trajectory continues, we should be well positioned to reignite growth in 2023. Our focus in the near term is on normalizing inventory levels for products procured at an inflated cost basis so that we can restock inventory while benefiting from lower shipping costs and positioning us for a return to a double digit contribution margin.”

Non-GAAP Financial Measures
For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Non-GAAP Financial Measures and Reconciliations” section below.

Webcast and Conference Call Information
Aterian will host a live conference call to discuss financial results today, August 8, 2022, at 5:00 p.m. Eastern Time. To access the call, participants from within the U.S. should dial (833) 636-1351 and participants from outside the U.S. should dial (412) 902-4267. Participants need to ask to be joined into the Aterian, Inc. call. Participants may also access the call through a live webcast at https://ir.aterian.io/investor-relations. Please visit the website at least 15 minutes prior to the start of the call to register and download any necessary software. The archived online replay will be available for a limited time after the call in the Investor Relations section of the Aterian website.

About Aterian, Inc.
Aterian, Inc. (Nasdaq: ATER) is a leading technology-enabled consumer product platform that builds, acquires, and partners with best-in-class e-commerce brands by harnessing proprietary software and an agile supply chain to create top selling consumer products. The Company’s cloud-based platform, Artificial Intelligence Marketplace Ecommerce Engine (AIMEE™), leverages machine learning, natural language processing and data analytics to streamline the management of products at scale across the world’s largest online marketplaces with a focus on Amazon, Shopify and Walmart. Aterian has thousands of SKUs across 14 owned and operated brands and sells products in multiple categories, including home and kitchen appliances, health and wellness, beauty and consumer electronics.

Forward Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements regarding the strength of our balance sheet; our ability to reignite growth; our ability to retain market share; our ability to optimize our financial strength; our expectations regarding contribution margin; our ability to weather the current environment; global supply chain disruptions and any easing of constraints thereon or any stabilization thereof; expected changes in the costs of shipping containers; our ability to manage our inventory; our expectations around organic growth and our M&A strategy; our technological advances; our strategic investments in partnerships; consumer behavior; and the global macroenvironment. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to the global shipping disruptions, our ability to continue as a going concern, our ability to meet financial covenants with our lenders, our ability to create operating leverage and efficiency when integrating companies that we acquire or have acquired, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; those related to our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; those related to the impact of COVID-19 and the war in the Ukraine, including its impact on consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; the impact of intangible assets such as goodwill, and other impairments; disruptions to the Company’s information technology systems, including but not limited to potential or actual security breaches of systems protecting consumer and employee information or other types of cybercrimes or cybersecurity attacks; our ability to disrupt the consumer products industry; our ability to maintain and grow market share in existing and new product categories; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue and expenses; acquisitions of other companies and technologies and our ability to successfully integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Investor Contact:

Ilya Grozovsky
Vice President of Investor Relations & Corp. Development
Aterian, Inc.
[email protected]
917-905-1699

ATERIAN, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)


	December 31, 2021			June 30, 2022
ASSETS
CURRENT ASSETS:
Cash	$	30,317		$	34,781
Accounts receivable—net		10,478			7,047
Inventory		63,045			76,116
Prepaid and other current assets		21,034			10,842
Total current assets		124,874			128,786
PROPERTY AND EQUIPMENT—net		1,254			946
GOODWILL—net		119,941			90,921
OTHER INTANGIBLES—net		64,955			61,341
OTHER NON-CURRENT ASSETS		2,546			2,653
TOTAL ASSETS	$	313,570		$	284,647
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Credit facility	$	32,845		$	33,999
Accounts payable		21,716			20,459
Seller notes		7,577			3,415
Contingent earn-out liability		3,983			774
Warrant liability		—			11,836
Accrued and other current liabilities		17,621			12,904
Total current liabilities		83,742			83,387
OTHER LIABILITIES		360			412
CONTINGENT EARN-OUT LIABILITY		5,240			—
Total liabilities		89,342			83,799
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY:
Common stock, par value $0.0001 per share—500,000,000 shares authorized and 55,090,237 shares outstanding at December 31, 2021; 500,000,000 shares authorized and 69,219,384 shares outstanding at June 30, 2022		5			7
Additional paid-in capital		653,650			689,955
Accumulated deficit		(428,959	)		(488,044	)
Accumulated other comprehensive loss		(468	)		(1,070	)
Total stockholders’ equity		224,228			200,848
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	313,570		$	284,647

See notes to condensed consolidated financial statements.

ATERIAN, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2022			2021			2022
NET REVENUE	$	68,188		$	58,268		$	116,324		$	99,941
COST OF GOODS SOLD		35,445			26,917			57,518			44,982
GROSS PROFIT		32,743			31,351			58,806			54,959
OPERATING EXPENSES:
Sales and distribution		39,310			31,866			64,379			54,840
Research and development		2,324			1,730			4,452			2,877
General and administrative		9,990			9,571			20,965			19,112
Impairment loss on goodwill		—			—			—			29,020
Change in fair value of contingent earn-out liabilities		(23,349	)		(1,691	)		(7,704	)		(4,466	)
TOTAL OPERATING EXPENSES:		28,275			41,476			82,092			101,383
OPERATING INCOME (LOSS)		4,468			(10,125	)		(23,286	)		(46,424	)
INTEREST EXPENSE—net		4,675			338			9,092			1,138
GAIN ON EXTINGUISHMENT OF SELLER NOTE		—			—			—			(2,012	)
LOSS ON INITIAL ISSUANCE OF EQUITY		—			—			—			5,835
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY		1,894			—			1,894			—
LOSS ON EXTINGUISHMENT OF DEBT		29,772			—			29,772			—
CHANGE IN FAIR VALUE OF WARRANT LIABILITY		4,387			6,014			34,589			7,893
LOSS ON INITIAL ISSUANCE OF WARRANT		—			—			20,147			—
OTHER EXPENSE (INCOME)		5			—			38			(25	)
LOSS BEFORE INCOME TAXES		(36,265	)		(16,477	)		(118,818	)		(59,253	)
PROVISION FOR (BENEFIT FROM) INCOME TAXES		41			(168	)		41			(168	)
NET LOSS	$	(36,306	)	$	(16,309	)	$	(118,859	)	$	(59,085	)
Net loss per share, basic and diluted	$	(1.23	)	$	(0.26	)	$	(4.26	)	$	(0.94	)
Weighted-average number of shares outstanding, basic and diluted		29,547,781			63,947,069			27,886,582			62,749,520

See notes to condensed consolidated financial statements.

ATERIAN, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)


	Six Months Ended June 30,
	2021			2022
OPERATING ACTIVITIES:
Net loss	$	(118,859	)	$	(59,085	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,885			3,894
Provision for sales returns		607			226
Amortization of deferred financing costs and debt discounts		6,378			213
Stock-based compensation		11,760			8,913
Gain from increase of contingent earn-out liability fair value		(7,704	)		(4,466	)
Loss in connection with the change in warrant fair value		34,589			7,893
Loss from extinguishment of High Trail December 2020 and February 2021 Term Loan		28,240			—
Loss from embedded derivative related to term loan		1,894			—
Loss from extinguishment of Credit Facility		1,532			—
Loss on initial issuance of warrant		20,147			—
Gain in connection with settlement of note payable		—			(2,012	)
Loss on initial issuance of equity		—			5,835
Impairment loss on goodwill		—			29,020
Allowance for doubtful accounts and other		4,597			127
Changes in assets and liabilities:
Accounts receivable		(10,736	)		3,304
Inventory		(31,772	)		(13,071	)
Prepaid and other current assets		(6,545	)		2,108
Accounts payable, accrued and other liabilities		30,151			(5,010	)
Cash used in operating activities		(32,836	)		(22,111	)
INVESTING ACTIVITIES:
Purchase of fixed assets		(44	)		(16	)
Purchase of Healing Solutions assets		(15,280	)		—
Purchase of Photo Paper Direct, net of cash acquired		(10,583	)		—
Purchase of Squatty Potty assets		(19,040	)		—
Cash used in investing activities		(44,947	)		(16	)
FINANCING ACTIVITIES:
Proceeds from warrant exercise		9,051			—
Proceeds from cancellation of warrant		16,957			—
Proceeds from equity offering, net of issuance costs		36,735			27,007
Proceeds from exercise of stock options		8,749			—
Repayments on note payable to Smash		(7,503	)		(1,778	)
Payment of Squatty Potty earn-out		—			(3,983	)
Borrowings from MidCap credit facility		14,630			71,914
Repayments for MidCap credit facility		(28,274	)		(70,972	)
Deferred financing costs from MidCap credit facility		(151	)		—
Repayments for High Trail December 2020 Note and February 2021 Note		(59,500	)		—
Borrowings from High Trail February 2021 Note		14,025			—
Borrowings from High Trail April 2021 Note		110,000			—
Debt issuance costs from High Trail February 2021 Note		(1,462	)		—
Debt issuance costs from High Trail April 2021 Note		(2,200	)		—
Insurance obligation payments		(1,557	)		(719	)
Insurance financing proceeds		2,424			—
Cash provided by financing activities		111,924			21,469
EFFECT OF EXCHANGE RATE ON CASH		(175	)		(602	)
NET CHANGE IN CASH AND RESTRICTED CASH FOR PERIOD		33,966			(1,260	)
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD		30,097			38,315
CASH AND RESTRICTED CASH AT END OF PERIOD	$	64,063		$	37,055
RECONCILIATION OF CASH AND RESTRICTED CASH
CASH	$	61,934		$	34,781
RESTRICTED CASH—Prepaid and other assets		2,000			2,145
RESTRICTED CASH—Other non-current assets		129			129
TOTAL CASH AND RESTRICTED CASH	$	64,063		$	37,055

ATERIAN, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	1,727	$	828
Cash paid for taxes	$	41	$	58
Non-cash consideration paid to contractors	$	—	$	1,137
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equity fundraising costs not paid	$	125	$	—
Original issue discount	$	2,475	$	—
Fair value of contingent consideration	$	20,971	$	—
Discount of debt relating to warrants issuance	$	46,756	$	—
Issuance of restricted stock awards	$	3,427	$	—
Issuance of common stock in connection with Healing Solutions and Photo Paper Direct acquisitions	$	50,529	$	—
Common stock issued to High Trail	$	4,056	$	—
Issuance of common stock related to exercise of warrants	$	—	$	767
Fair value of warrants issued in connection with equity offering	$	—	$	18,982
Exercise of Prefunded Warrants	$	—	$	15,039
Reclassification of warrants to equity	$	80,022	$	—

See notes to condensed consolidated financial statements.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release and accompanying tables include certain non-GAAP financial measures. The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with U.S. GAAP. The non-GAAP financial measures presented exclude the items described below. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results. Furthermore, management also believes that these items are not indicative of our on-going core operating performance. These non-GAAP financial measures have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP.

Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by us may be different from the non-GAAP financial measures used by other companies.

We have presented the following non-GAAP measures to assist investors in understanding our core net operating results on an on-going basis: (i) Contribution Margin; (ii) Contribution margin as a percentage of net revenue; (iii) EBITDA (iv) Adjusted EBITDA; and (v) Adjusted EBITDA as a percentage of net revenue. These non-GAAP financial measures may also assist investors in making comparisons of our core operating results with those of other companies.

As used herein, Contribution margin represents gross profit less amortization of inventory step-up from acquisitions (included in cost of goods sold) and e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). As used herein, Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. As used herein, EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. As used herein, Adjusted EBITDA represents EBITDA plus stock-based compensation expense, changes in fair-market value of earn-outs, amortization of inventory step-up from acquisitions (included in cost of goods sold), changes in fair-market value of warrant liability, professional fees and transition costs related to acquisitions, loss from extinguishment of debt, impairment of goodwill, loss on initial issuance of equity, litigation reserve and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue. Contribution margin, EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to loss from operations or net loss, as determined under GAAP.

We present Contribution margin and Contribution margin as a percentage of net revenue, as we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to gross profit, provides useful supplemental information for investors. Specifically, Contribution margin and Contribution margin as a percentage of net revenue are two of our key metrics in running our business. All product decisions made by us, from the approval of launching a new product and to the liquidation of a product at the end of its life cycle, are measured primarily from Contribution margin and/or Contribution margin as a percentage of net revenue. Further, we believe these measures provide improved transparency to our stockholders to determine the performance of our products prior to fixed costs as opposed to referencing gross profit alone.

In the reconciliation to calculate contribution margin, we add e-commerce platform commissions, online advertising, selling and logistics expenses (“sales and distribution variable expense”), to gross margin to inform users of our financial statements of what our product profitability is at each period prior to fixed costs (such as sales and distribution expenses such as salaries as well as research and development expenses and general administrative expenses). By excluding these fixed costs, we believe this allows users of our financial statements to understand our products’ performance and allows them to measure our products’ performance over time.

We present EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue because we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net loss, provide useful supplemental information for investors. We use these measures with financial measures prepared in accordance with GAAP, such as sales and gross margins, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance and to compare our performance to that of our peers and competitors. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful to investors in assessing the operating performance of our business without the effect of non-cash items.

Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similarly titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items.

We recognize that EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue, have limitations as analytical financial measures. For example, neither EBITDA nor Adjusted EBITDA reflects:

our capital expenditures or future requirements for capital expenditures or mergers and acquisitions;
the interest expense or the cash requirements necessary to service interest expense or principal payments, associated with indebtedness;
depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, or any cash requirements for the replacement of assets;
changes in cash requirements for our working capital needs; or
changes in fair value of contingent earn-out liabilities, warrant liabilities, and amortization of inventory step-up from acquisitions (included in cost of goods sold).

Additionally, Adjusted EBITDA excludes non-cash expense for stock-based compensation, which is and is expected to remain a key element of our overall long-term incentive compensation package.

We also recognize that Contribution margin and Contribution margin as a percentage of net revenue have limitations as analytical financial measures. For example, Contribution margin does not reflect:

general and administrative expense necessary to operate our business;
research and development expenses necessary for the development, operation and support of our software platform;
the fixed costs portion of our sales and distribution expenses including stock-based compensation expense; or
changes in fair value of contingent earn-out liabilities, warrant liabilities, and amortization of inventory step-up from acquisitions (included in cost of goods sold).

Adjusted EBITDA

EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. Adjusted EBITDA represents EBITDA plus stock-based compensation expense, changes in fair-market value of earn-outs, amortization of inventory step-up from acquisitions (included in cost of goods sold), change in fair-market value of warrant liability, professional fees and transition costs related to acquisitions, loss from extinguishment of debt, impairment of goodwill, loss on initial issuance of equity, litigation reserve and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable financial measure presented in accordance with GAAP:


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2022			2021			2022
	(in thousands, except percentages)
Net loss	$	(36,306	)	$	(16,309	)	$	(118,859	)	$	(59,085	)
Add:
Provision for (benefit from) income taxes		41			(168	)		41			(168	)
Interest expense, net		4,675			338			9,092			1,138
Depreciation and amortization		1,681			2,048			2,885			3,894
EBITDA		(29,909	)		(14,091	)		(106,841	)		(54,221	)
Other expense (income), net		(5	)		—			(38	)		(25	)
Impairment loss on goodwill		—			—			—			29,020
Change in fair value of contingent earn-out liabilities		(23,349	)		(1,691	)		(7,704	)		(4,466	)
Amortization of inventory step-up from acquisitions (included in cost of goods sold)		2,233			—			4,041			—
Gain on extinguishment of seller note		—			—			—			(2,012	)
Loss on initial issuance of equity		—			—			—			5,835
Change in fair value of derivative liability		1,894			—			1,894			—
Loss on extinguishment of debt		29,772			—			29,772			—
Change in fair market value of warrant liability		4,387			6,014			34,589			7,893
Loss on initial issuance of warrant		—			—			20,147			—
Professional fees related to acquisitions		948			—			1,397			—
Litigation reserve		—			—			—			800
Transition cost from acquisitions		632			—			1,184			—
Professional fees related to Photo Paper Direct acquisition		696			—			696			—
Reserve on dispute with PPE supplier		4,100			—			4,100			—
Stock-based compensation expense		4,862			6,048			11,760			8,913
Adjusted EBITDA	$	(3,739	)	$	(3,720	)	$	(5,003	)	$	(8,263	)
Net loss as a percentage of net revenue		(53.2	)%		(28.0	)%		(102.2	)%		(59.1	)%
Adjusted EBITDA as a percentage of net revenue		(5.5	)%		(6.4	)%		(4.3	)%		(8.3	)%

Contribution Margin

Contribution margin represents gross profit less amortization of inventory step-up from acquisitions (included in cost of goods sold) and e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. The following table provides a reconciliation of Contribution margin to gross profit and Contribution margin as a percentage of net revenue to gross profit as a percentage of net revenue, which are the most directly comparable financial measures presented in accordance with GAAP.


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2022			2021			2022
	(in thousands, except percentages)
Gross Profit	$	32,743		$	31,351		$	58,806		$	54,959
Add:
Amortization of inventory step-up from acquisitions (included in cost of goods sold)		2,233			—			4,041			—
Less:
E-commerce platform commissions, online advertising, selling and logistics expenses		(29,315	)		(25,703	)		(51,052	)		(45,479	)
Contribution margin	$	5,661		$	5,648		$	11,795		$	9,480
Gross Profit as a percentage of net revenue		48.0	%		53.8	%		50.6	%		55.0	%
Contribution margin as a percentage of net revenue		8.3	%		9.7	%		10.1	%		9.5	%

Each of our products typically goes through the Launch phase and depending on its level of success is moved to one of the other phases as further described below:

Launch phase: During this phase, we leverage our technology to target opportunities identified using AIMEE (Artificial Intelligence Marketplace e-Commerce Engine) and other sources. During this period of time, due to the combination of discounts and investment in marketing, our net margin for a product could be as low as approximately negative 35%. Net margin is calculated by taking net revenue less the cost of goods sold, less fulfillment, online advertising and selling expenses. These costs primarily reflect the estimated variable costs related to the sale of a product.
Sustain phase: Our goal is for every product we launch to enter the sustain phase and become profitable, with a target of positive 15% net margin for most products, within approximately three months of launch on average. Net margin primarily reflects a combination of manual and automated adjustments in price and marketing spend.
Milk phase or Liquidate phase: If a product does not enter the sustain phase or if the customer satisfaction of the product (i.e., ratings) is not satisfactory, then it will go to the liquidate phase and we will sell through the remaining inventory. In order to enter the milk phase, a product must be well received and become a strong leader in its category in both customer satisfaction and volume sold as compared to its competition. Products in the milk phase that have achieved profitability should benefit from pricing power and we expect their profitability to increase accordingly. To date, none of our products have achieved the milk phase and we can provide no assurance that any of our products will do so in the future.

The following tables break out our second quarter 2021 and 2022 results of operations by our product phases:


	Three months ended June 30, 2021 (in thousands) (unaudited)
	Sustain		Launch		Liquidate/ Other			Fixed Costs			Stock-based compensation expense		Total
NET REVENUE	$	61,764	$	4,358	$	2,066		$	—		$	—	$	68,188
COST OF GOODS SOLD		28,555		3,464		3,426			—			—		35,445
GROSS PROFIT		33,209		894		(1,360	)		—			—		32,743
OPERATING EXPENSES:
Sales and distribution		25,412		2,131		1,765			8,433			1,569		39,310
Research and development		—		—		—			1,103			1,221		2,324
General and administrative		—		—		—			7,918			2,072		9,990
Change in fair value of contingent earn-out liabilities		—		—		—			(23,349	)		—		(23,349	)


	Three months ended June 30, 2022 (in thousands) (unaudited)
	Sustain		Launch		Liquidate/ Other			Fixed Costs			Stock-based compensation expense		Total
NET REVENUE	$	54,080	$	1,342	$	2,846		$	—		$	—	$	58,268
COST OF GOODS SOLD		24,259		742		1,916			—			—		26,917
GROSS PROFIT		29,821		600		930			—			—		31,351
OPERATING EXPENSES:
Sales and distribution		22,635		632		2,435			3,281			2,882		31,866
Research and development		—		—		—			1,097			633		1,730
General and administrative		—		—		—			7,038			2,533		9,571
Change in fair value of contingent earn-out liabilities		—		—		—			(1,691	)		—		(1,691	)


	Six months ended June 30, 2021 (in thousands) (unaudited)
	Sustain		Launch		Liquidate/ Other			Fixed Costs			Stock-based compensation expense		Total
NET REVENUE	$	103,710	$	6,957	$	5,657		$	—		$	—	$	116,324
COST OF GOODS SOLD		45,860		4,916		6,742			—			—		57,518
GROSS PROFIT		57,850		2,041		(1,085	)		—			—		58,806
OPERATING EXPENSES:
Sales and distribution		44,228		3,528		3,283			10,816			2,524		64,379
Research and development		—		—		—			2,348			2,104		4,452
General and administrative		—		—		—			13,833			7,132		20,965
Change in fair value of contingent earn-out liabilities		—		—		—			(7,704	)		—		(7,704	)


	Six months ended June 30, 2022 (in thousands) (unaudited)
	Sustain		Launch		Liquidate/ Other			Fixed Costs			Stock-based compensation expense		Total
NET REVENUE	$	92,044	$	2,179	$	5,718		$	—		$	—	$	99,941
COST OF GOODS SOLD		40,008		1,153		3,821			—			—		44,982
GROSS PROFIT		52,036		1,026		1,897			—			—		54,959
OPERATING EXPENSES:
Sales and distribution		40,114		1,167		4,197			6,133			3,229		54,840
Research and development		—		—		—			1,970			907		2,877
General and administrative		—		—		—			14,335			4,777		19,112
Impairment loss on goodwill		—		—		—			29,020			—		29,020
Change in fair value of contingent earn-out liabilities		—		—		—			(4,466	)		—		(4,466	)

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Artificial Intelligence

ADQ Appoints Modon as Master Developer for Ras El Hekma Megaproject in Egypt

Published

2 days ago

October 4, 2024

CISION (PR Newswire)

adq-appoints-modon-as-master-developer-for-ras-el-hekma-megaproject-in-egypt

In the presence of Mohamed bin Zayed Al Nahyan and Abdel Fattah El-Sisi
The event marked the signing of several significant agreements aimed at driving the development of the new destinationABU DHABI, UAE, Oct. 4, 2024 /PRNewswire/ — In the presence of President His Highness Sheikh Mohamed bin Zayed Al Nahyan, and His Excellency Abdel Fattah El-Sisi, President of the Arab Republic of Egypt, ADQ, an Abu Dhabi-based investment and holding company, appointed Modon Holding PSC as the master developer for the Ras El Hekma megaproject.

In addition to being master developer for the entire development spanning 170 million square metres, Modon Holding will undertake the responsibility of the developer role for the first phase of the envisaged city consisting of 50 million square metres.
The remaining 120 million square metres, which are part of the master plan presented by Modon Holding, will be developed in partnership with prominent developers from Egypt, the UAE, and the international community under the oversight of the recently established ADQ subsidiary Ras El Hekma Urban Development Project Company and Modon Holding.
This iconic project represents a major milestone for Modon Holding by significantly increasing its land under development outside the UAE. Ras El Hekma is located around 350 kilometres northwest of Cairo and envisioned as a fully functional, smart, sustainable, and inclusive urban community situated against the scenic coastline.
The project is expected to become a powerful economic engine, with cumulative investments anticipated to reach US$110 billion by 2045, an annual GDP contribution of around US$25 billion, and approximately 750,000 jobs to be created, both directly and indirectly.
Upon completion, the development will be home to two million people and feature more than 40 kilometres of green spines, set to make Ras El Hekma the greenest megaproject in the region.
As a result of Ras El Hekma’s location within a four-hour flight for over 400 million outbound tourists, the establishment of tourism infrastructure will be a priority during the first phases of the development, encompassing an international airport as well as high-speed rail connectivity. The masterplan also includes residential areas, office spaces, hospitality venues, retail, leisure, and recreation facilities.
Ras El Hekma will have an international marina and a special free zone. Additionally, Modon Holding will look to develop infrastructure to support a range of high-growth industries, including business services, financial services, light manufacturing, and technology.
His Excellency Jassem Mohamed Bu Ataba Al Zaabi, Chairman of Modon Holding, said, “Ras El Hekma is destined to become a regional crown jewel in a country already famed for its rich and diverse attractions. Modon Holding is proud to bring this 170-million-square-metre visionary megaproject to life, leveraging our expertise and innovative approach. With our partners, we are poised to transform Ras El Hekma into a dynamic economic powerhouse and a global model for urban development.”
His Excellency Mohamed Hassan Alsuwaidi, Managing Director and Group Chief Executive Officer of ADQ, said, “As a project of unprecedented scale and impact, Ras El Hekma will be a catalyst for the development of Egypt’s economy by offering opportunities for businesses and stimulate tourism. Modon Holding brings a wealth of expertise in master planning and will pioneer state-of-the-art, innovative solutions, creating a destination that will deliver long-term value for Egypt and its people.”
Bill O’Regan, Group CEO of Modon Holding, said, “The Ras El Hekma destination is one of the Group’s most significant investment and development projects outside the UAE. The project provides an incredible development pipeline, and Modon Holding looks forward to delivering a destination that will be an exceptional experience for visitors and residents alike.”
During the ceremony, Modon Holding PSC engaged with the initial major partners to join in the development of the Ras El Hekma megaproject on Egypt’s stunning Mediterranean coast.
Ras El Hekma is set to become a leading urban and tourist hub, boasting a wide array of attractions and amenities. Modon Holding aims to harness its large-scale development expertise, collaborating with local, regional, and global partners to bring this visionary destination masterplan to life.
These collaborative efforts, combined with a focus on diverse entertainment, sports, cultural events, and top-tier community management, will position Ras El Hekma as a premier Mediterranean destination.
While the immediate focus is on tourism and hospitality, Modon’s long-term vision for the 170-square-metre site also includes business services, financial services, light manufacturing, and technology.
Modon Engages First Batch of Investors and Partners in Landmark Ceremony
On 4th October, in a momentous ceremony attended by President His Highness Sheikh Mohamed bin Zayed Al Nahyan and Egyptian President His Excellency Abdel Fattah El-Sisi, Modon proudly initiated the engagement of its first group of investors and partners.
The event marked the signing of several significant agreements aimed at driving the development of the new destination:
– A framework agreement with Orascom Construction, designating them as one of the primary contractors for the initial phase of the project.
– A memorandum of understanding with Elsewedy Electric to explore opportunities for supplying building materials and collaborating on industrial parks, manufacturing, operations, and maintenance.
– A memorandum of understanding with Abu Dhabi Airports to collaborate in airport strategic planning, design, development, and operational support.
– A memorandum of understanding with TAQA to explore cooperation opportunities in relation to the development, financing, and operation of greenfield utilities infrastructure projects, water desalination projects, electricity transmission and distribution projects and wastewater projects.
– A memorandum of understanding with Valderrama for the development and operation of golf communities.
– A memorandum of understanding with e& Egypt to facilitate the design and implementation of smart city infrastructure, including digital connectivity, fiber networks, and 5G; smart building technologies and IoT-enabled solutions for residential and commercial properties; city-wide data collection, monitoring, and analytics systems; smart utilities, encompassing automated energy management, water, and waste systems; smart transportation systems; and any other mutually agreed smart city services.
– A memorandum of understanding with Candy International aims to explore luxury real estate development opportunities, leveraging Candy’s extensive international reach.
– A memorandum of understanding with Montage International for the development and management of luxury hotels in Ras El Hekma.
– A memorandum of understanding with Accor and Ennismore to operate hotels and resorts in Ras El Hekma.
– Finally, a memorandum of understanding with Burjeel Holding to develop multi-specialty healthcare facilities, implement innovative healthcare solutions, provide medical training programmes, and collaborate on public health initiatives and community wellness programmes.
These strategic partnerships underscore Modon’s commitment to creating a world-class destination, fostering innovation, and enhancing the quality of life for Ras El Hekma’s future residents.
His Excellency Jassem Mohamed Bu Ataba Al Zaabi, said, “Ras El Hekma represents a visionary and multifaceted endeavour that promises to make a substantial contribution to the Egyptian economy. Crafting a masterplan of such scale demands specialised expertise and capabilities across diverse industries, which can only be realised through robust strategic partnerships. We look forward to working with our partners present and future in harnessing the full potential of this extraordinary location.”
Bill O’Regan, said, “Ras El Hekma is an extraordinarily ambitious and complex project that will significantly contribute to the Egyptian economy through various stages of planning, design, and construction, ultimately bringing this new destination to life. Developing and delivering a masterplan of this magnitude requires sector-specific expertise and capabilities across a wide range of industries and is achievable only through strong strategic partnerships.”
About ADQEstablished in 2018, ADQ is an Abu Dhabi-based investment and holding company with a broad portfolio of major enterprises. Its investments span key sectors of the UAE’s diversified economy including energy and utilities, food and agriculture, healthcare and life sciences, and transport and logistics, amongst others. As a strategic partner to the Government of Abu Dhabi, ADQ is committed to accelerating the transformation of the Emirate into a globally competitive and knowledge-based economy.
For more information, visit adq.ae or write to [email protected]. You can also follow ADQ on Instagram, LinkedIn and X.
About Modon HoldingModon develops vibrant communities, unique hospitality and lifestyle experiences, and world-class sports facilities. Based in Abu Dhabi, Modon Holding is a Private Joint Stock company listed on the ADX Growth Market with the shareholding of ADQ and the IHC Group being our majority shareholders. Through a diversified business portfolio in the UAE, we are engaged in strategic investment and innovation on an unrivalled scale, shaping future smart living. Our goal is to deliver long-term, sustainable value, laying the foundations for intelligent, connected living.
Ras El-Hekma Urban Development Project CompanyA wholly owned subsidiary of ADQ, an Abu Dhabi-based investment and holding company, Ras El Hikma Urban Development Project Company S.A.E. (RED) is mandated to oversee the execution of the Ras El Hekma project, a 170 million square meter visionary megacity located on Egypt’s north coast. Established in March 2024 and based in Egypt, RED holds the ownership rights of the Ras El-Hekma as well as responsibility for the implementation of the multi-phase project together with its partners, which include Modon Holding as the master developer.
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Artificial Intelligence

Electronic Access Control Systems Market Set for Significant Expansion, with Projected Growth to USD 16 Billion by 2031: Market Research Intellect

Published

3 days ago

October 4, 2024

CISION (PR Newswire)

The Electronic Access Control System market is driven by increasing security concerns and advancements in technology. As businesses and institutions face growing threats, there is a rising demand for sophisticated access control solutions to protect assets and data. Technological innovations, including biometrics, IoT integration, and cloud-based systems, enhance system functionality and appeal. Additionally, the trend toward smart buildings and stringent regulatory requirements further fuels the market’s expansion, reflecting a broadening need for advanced security solutions.
LEWES, Del., Oct. 4, 2024 /PRNewswire/ — The Electronic Access Control System market is projected to grow from approximately USD 10 billion in 2024 to USD 16 billion by 2031, achieving a compound annual growth rate (CAGR) of around 7.5%. This growth is driven by rising security needs, advancements in technology, and increased adoption of smart and connected security solutions across various sectors.

Download PDF Brochure: https://www.marketresearchintellect.com/download-sample/?rid=194769
202 – Pages126 – Tables37 – Figures
Scope Of The Report
REPORT ATTRIBUTES
DETAILS
STUDY PERIOD
2020-2031
BASE YEAR
2023
FORECAST PERIOD
2024-2031
HISTORICAL PERIOD
2020-2023
UNIT
Value (USD Billion)
KEY COMPANIES PROFILED
Honeywell International Inc., Johnson Controls International plc, ASSA ABLOY Group, Allegion plc, Schlage (a brand of Allegion), Bosch Security Systems, Tyco International Ltd., and HID Global (an ASSA ABLOY Group brand).
SEGMENTS COVERED
By Type, By Application And By Geography
CUSTOMIZATION SCOPE
Free report customization (equivalent to up to 4 analyst working days) with purchase. Addition or alteration to country, regional & segment scope
Electronic Access Control System Market Overview
Market Size and Growth:The Electronic Access Control System market is experiencing robust growth, expected to expand from approximately USD 10 billion in 2024 to USD 16 billion by 2031, representing a compound annual growth rate (CAGR) of about 7.5%. This growth trajectory is driven by the increasing need for enhanced security solutions across various sectors, including commercial, residential, and industrial applications. The rising concerns over security breaches and unauthorized access are prompting organizations to invest in advanced access control technologies. Additionally, the growing adoption of smart buildings and connected infrastructure contributes to the market’s expansion, as these technologies offer more efficient and scalable security solutions. As the demand for higher security standards continues to rise, the EACS market is poised for substantial growth in the coming years.Technological Advancements:The EACS market is significantly influenced by rapid technological advancements. Innovations such as biometric authentication, including fingerprint and facial recognition, are enhancing the capabilities of access control systems, providing more secure and user-friendly solutions. The integration of Internet of Things (IoT) technology allows for remote monitoring and management of access control systems, increasing their flexibility and effectiveness. Cloud-based solutions are also gaining traction, offering scalable and cost-effective options for businesses of all sizes. These technological advancements not only improve security but also streamline system management and integration with other smart technologies. As the technology continues to evolve, the EACS market is expected to benefit from more sophisticated, efficient, and adaptable access control solutions that meet the growing demands for security and convenience.Market Drivers:The primary drivers of the EACS market include heightened security concerns and the need for compliance with regulatory standards. Organizations across various sectors are increasingly investing in advanced access control solutions to safeguard their assets, sensitive information, and personnel. The growing frequency of security breaches and unauthorized access incidents further amplifies the need for reliable and robust security systems. Additionally, the trend toward smart buildings and the integration of IoT technology are driving market growth by offering more sophisticated and interconnected security solutions. Regulatory requirements related to data protection and physical security are also influencing the adoption of EACS, as businesses seek to meet these standards while ensuring the safety and security of their operations.Regional Insights:The EACS market shows varying growth patterns across different regions. North America and Europe lead the market due to their high adoption rates of advanced security technologies and stringent regulatory requirements. In these regions, the emphasis on high-security standards and the presence of major market players contribute to significant market growth. Conversely, the Asia-Pacific region is emerging as a key growth area due to rapid urbanization, industrialization, and increasing investments in infrastructure development. Countries such as China and India are witnessing a surge in demand for electronic access control systems as they modernize their infrastructure and enhance security measures. The diverse regional dynamics reflect varying levels of market maturity and growth opportunities, influencing the overall global market landscape.Download Sample Report Now: https://www.marketresearchintellect.com/download-sample/?rid=194769Market Segmentation:The EACS market can be segmented based on type, application, and technology. Key types include biometric systems, card-based systems, and electronic locks. Biometric systems are gaining popularity for their high security and convenience, while card-based systems remain widely used due to their affordability and ease of integration. Electronic locks offer versatile security options for both residential and commercial applications. In terms of application, the market serves commercial buildings, residential complexes, government facilities, and industrial sites. Each segment has unique requirements and preferences, driving the development of specialized solutions. Technology-wise, advancements such as IoT integration, cloud-based systems, and mobile access are shaping the market, offering improved functionality and user experience. Understanding these segments helps stakeholders tailor their offerings to meet diverse market needs effectively.Challenges:Despite its growth, the EACS market faces several challenges. High initial investment costs can deter small and medium-sized enterprises (SMEs) from adopting advanced access control solutions. Integration complexities, particularly with existing security infrastructure, can also pose hurdles for implementation. Additionally, concerns about data privacy and cybersecurity risks associated with connected systems may affect market adoption. The rapid pace of technological advancements requires continuous updates and upgrades, adding to the cost and complexity of maintaining access control systems. Addressing these challenges involves developing cost-effective solutions, enhancing system compatibility, and ensuring robust cybersecurity measures. Overcoming these obstacles is crucial for market players to successfully expand their customer base and capture emerging opportunities in the evolving security landscape.Competitive Landscape:The EACS market is characterized by intense competition, with numerous players vying for market share. Major companies include Honeywell, Johnson Controls, ASSA ABLOY, and Allegion, each offering a range of innovative products and solutions. These players focus on technological advancements, strategic partnerships, and mergers and acquisitions to strengthen their market positions. Additionally, emerging players and startups are introducing novel solutions, contributing to market dynamism and innovation. Competitive strategies involve differentiating products through advanced features, improving customer service, and expanding distribution channels. As the market evolves, companies must stay ahead of technological trends and customer demands to maintain a competitive edge and drive growth in a rapidly changing environment.Future Outlook:The future outlook for the EACS market is promising, with continued growth expected as security concerns and technological advancements drive demand. Emerging trends such as the integration of artificial intelligence (AI) and machine learning are likely to enhance system capabilities, providing more proactive and intelligent security solutions. The growing emphasis on smart cities and connected infrastructure will further propel market growth, as EACS plays a crucial role in modernizing urban environments. Additionally, increasing awareness of data privacy and security will lead to greater adoption of advanced access control systems. As the market evolves, stakeholders should focus on innovation, user experience, and addressing emerging security challenges to capitalize on future opportunities and sustain long-term growth.Geographic Dominance:
The Electronic Access Control System market exhibits significant geographic dominance, with North America and Europe leading due to their advanced infrastructure and stringent regulatory standards. North America, particularly the United States, holds a substantial share of the market, driven by high security concerns, technological advancements, and a robust presence of major EACS providers. Europe follows closely, with countries like the UK, Germany, and France investing heavily in security solutions due to strict regulations and high adoption rates. Meanwhile, the Asia-Pacific region is emerging as a major growth area, fueled by rapid urbanization, industrial expansion, and increasing investments in smart infrastructure. Countries such as China and India are witnessing rising demand for advanced access control systems as they modernize and enhance their security measures. The diverse regional dynamics highlight varying levels of market maturity and growth potential across the globe.
Electronic Access Control System Market Key Players Shaping the Future
The Electronic Access Control System market is significantly influenced by key players such as Honeywell International Inc., Johnson Controls International plc, ASSA ABLOY Group, Allegion plc, Schlage (a brand of Allegion), Bosch Security Systems, Tyco International Ltd., and HID Global (an ASSA ABLOY Group brand). These companies are at the forefront of technological innovation and market development, shaping the future of access control solutions through their advanced products and strategic initiatives.
Electronic Access Control System Market Segment Analysis
The Electronic Access Control System market is segmented based on By Type, By Application and Geography, offering a comprehensive analysis of the industry.
By Type:
Biometric Systems: These systems use unique biological characteristics, such as fingerprints, facial recognition, and iris scans, to provide secure access. They offer high security and are increasingly adopted in sensitive areas.Card-Based Systems: These systems use magnetic stripe cards, smart cards, or proximity cards to control access. They are popular due to their affordability, ease of use, and integration capabilities.Electronic Locks: These include keypads, smart locks, and other electronic mechanisms that can be controlled remotely or via electronic credentials. They are versatile and used in various residential and commercial settings.By Application:
Commercial Buildings: EACS in commercial buildings includes office complexes, retail spaces, and hospitality venues. These systems focus on managing employee access, visitor control, and security integration.Residential Complexes: Access control systems for residential complexes include apartment buildings and gated communities, emphasizing security and convenience for residents.Government Facilities: High-security access control solutions are used in government buildings, military bases, and other critical infrastructure to ensure tight security and regulatory compliance.Industrial Sites: EACS for industrial sites manage access to sensitive areas, protect valuable assets, and ensure safety compliance in manufacturing and industrial environments.By Geography:
North America: This region leads the market due to high adoption rates of advanced security technologies, stringent regulations, and a strong presence of major market players.Europe: Europe follows closely, with significant market activity in countries such as the UK, Germany, and France, driven by regulatory standards and high security needs.Asia-Pacific: The Asia-Pacific region is emerging as a key growth area, with increasing urbanization, industrial expansion, and investments in smart infrastructure driving demand for EACS.Latin America: Growth in Latin America is fueled by increasing security concerns and infrastructural development, with a growing adoption of electronic access solutions.Middle East and Africa: The market in this region is expanding due to rising security needs and infrastructure projects, with increasing investments in advanced access control technologies. Automotive And Transportation:
The Electronic Access Control System market within the automotive and transportation sector is experiencing notable growth, driven by advancements in vehicle security and the need for enhanced access management. In vehicles, EACS technology includes electronic locks, biometric systems, and keyless entry solutions that improve convenience and security for drivers and passengers. These systems are increasingly integrated into both commercial and personal vehicles, offering features such as remote access control, advanced theft prevention, and personalized settings. In the transportation sector, EACS is utilized for secure access to restricted areas within transportation hubs, including airports, train stations, and cargo facilities. This enhances the management of personnel and vehicle access, contributing to overall safety and operational efficiency. As the demand for smarter and more secure transportation solutions grows, the EACS market is expected to expand, driven by ongoing innovations and the increasing adoption of connected technologies.
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Artificial Intelligence

System-on-Chip (SoC) Market worth $205.97 billion by 2029 – Exclusive Report by MarketsandMarkets™

Published

3 days ago

October 4, 2024

CISION (PR Newswire)

DELRAY BEACH, Fla., Oct. 4, 2024 /PRNewswire/ — The System-on-Chip (SoC) market is projected to grow from USD 138.46 billion in 2024 and is estimated to reach USD 205.97 billion by 2029; it is expected to grow at a Compound Annual Growth Rate (CAGR) of 8.3% from 2024 to 2029 according to a new report by MarketsandMarkets™. The growth of the System-on-Chip (SoC) market is driven with the increasing trend of SoC in automotive industry along with the adoption of IoT and connected devices that require SoCs to carry out real time processing. Moreover, the surging adoption of AI and machine learning technologies is likely to fuel the demand for system-on-chips.

Download PDF Brochure: https://www.marketsandmarkets.com/pdfdownloadNew.asp?id=99622125
Browse in-depth TOC on “System-on-Chip (SoC) Market”
250 – Tables73 – Figures326 – Pages
System-on-Chip (SoC) Market Report Scope:
Report Coverage
Details
Market Revenue in 2024
$ 138.46 billion
Estimated Value by 2029
$ 205.97 billion
Growth Rate
Poised to grow at a CAGR of 8.3%
Market Size Available for
2020–2029
Forecast Period
2024–2029
Forecast Units
Value (USD Million/Billion)
Report Coverage
Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
Segments Covered
By Core Count, Core Architecture, Device and Region
Geographies Covered
North America, Europe, Asia Pacific, and Rest of World
Key Market Challenge
Rapid technological changes challenge SoC longevity
Key Market Opportunities
Growing penetration of AI PCs and GenAI smartphones
Key Market Drivers
Rising adoption of ADAS in autonomous vehicles to fuel the growth of automotive SoCs
By core architecture, RISC-V is projected to grow at a high CAGR for system-on-chip market during the forecast period
The market for System-on-Chips (SoC) for RISC-V architecture segment is expected to grow at highest CAGR during the forecast period. The RISC-V architecture is bound to grow at a higher rate in view of the flexibility, cost, and scalability advantages it has over others, driving wide adoption across diversified applications. The open-source nature of the architecture is one of the major growth drivers because it reduces licensing costs and accelerates innovation since customizations are allowed for use cases as per various needs. This flexibility is valuable in the emerging and high-growth sectors of AI, 5G, and IoT, where a solution that is tailor-made to complex requirements needs to be provided. For instance, in May 2024, Arteris, Inc. (US) and Andes Technology Corporation (Taiwan) partnered to develop the Andes Qilai RISC-V platform. It incorporates the high-performance RISC-V processor IPs from Andes Technology Corporation (Taiwan) and the FlexNoC interconnect IP from Arteris, Inc. (US). Their joint effort shows their efforts towards advancing RISC-V based SoC designs for a wide range of applications, which include AI, 5G, Networking, Mobile, Storage, AIoT, and Space. With open-source RISC-V model, such developments further continue to accelerate innovation and drive adoption in these high-growth areas, positioning RISC-V as the choice for future technology roadmaps.
The automotive segment in System-on-Chip (SoC) market will account for the high CAGR from 2024 to 2029
The SoC market for automotive segment will grow at highest CAGR during the forecast period. The SoCs integrated in automotive applications enable enhanced performance, reduced power consumption, and compact designs, which makes them essential for numerous vehicle systems. The automotive segment will experience growth due to the increasing adoption of advanced driver assistance systems (ADAS), infotainment systems, and the rising popularity of electric vehicles. EVs rely heavily on sophisticated electronics for battery management, powertrain control, and energy efficiency optimization, all of which require advanced SoCs. For instance, in June 2024, Intel Corporation (US) launched OLEA U310 SoC chip for automotive applications. It is developed to improve the performance of electric vehicles. This chip combines hardware and software in one SoC to enable seamless operation across various EV station platforms. They are designed to manage the complex systems within EVs. It ensures optimal performance, safety, and extended range. The increasing complexity of autonomous driving systems, along with the demand for safer and more reliable vehicles fuels the adoption of SoCs in the automotive industry, driving significant growth in this segment.
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Asia Pacific is expected to register the highest CAGR during the forecast period
The system-on-chip (SoC) industry in Asia Pacific includes economies such as South Korea, Japan, China, and India and Rest of Asia Pacific. The Rest of Asia Pacific countries include Australia, Singapore, the Philippines, Taiwan, Thailand, and Indonesia. There is a presence of leading SoC manufacturers in this region including MediaTek Inc. (Taiwan), Samsung (South Korea), Infineon Technologies AG (Germany), and Renesas Electronics Corporation (Japan). The Asia-Pacific region is still the biggest revenue generator in terms of SoC market globally due to the fast-growing consumer electronics and mobile device-related sectors. Other regions considered as major manufacturing centers in the world are China, South Korea, Japan, and India for making the latest smartphones, tablets, and other consumer electronic products that require state-of-the-art SoCs for delivering high performance, energy efficiency, and integrated functionalities. A highly and technologically advanced population in the region has always formed the basis for a sustained demand in terms of innovative and feature-rich devices, thereby showing sustainable growth in the SoC market. Automotive and industrial automation are another major sector driving the SoC market in Asia Pacific. This region contains some of the largest automobile manufacturers in the world, such as Hyundai Motor Company (South Korea), Toyota (Japan), and Tata Motors Limited (India). These car manufacturers are now putting SoCs into their automobiles so that they are equipped with ADAS capabilities, infotainment features, and autonomous driving technologies.
Key Players
Key companies operating in the System-on-Chip (SoC) companies are Qualcomm Technologies, Inc. (US), MediaTek Inc. (Taiwan), Samsung (South Korea), Apple Inc. (US), Broadcom (US), Intel Corporation (US), Advanced Micro Devices, Inc. (US), NVIDIA Corporation (US), HiSilicon (China), Microchip Technology Inc. (US), among others.
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