In Q1 2022, XTPL concludes strategic agreements with the resulting revenues to help the Company’s continued strong growth

XTPL S.A. (WSE: XTP), a global supplier of ground-breaking nanoprinting solutions for the world’s modern electronics market, has posted total revenues of PLN 1,619 thousand in Q1 2022. This includes PLN 930 thousand from the sale of products and services and PLN 689 thousand in grant revenue. In Q1 this year, commercial revenues alone reached 45% of the total sales reported in 2021. The Company’s EBITDA was PLN -2,406 thousand and was broadly similar year-on-year. It is noted that the progressing commercialization already has a marked positive impact on cash flows. After the first three months of 2022, net cash flows were PLN -889 thousand compared to PLN -1,877 thousand in the same period last year. 

In Q1 2022, the Company entered into two agreements for the commercialization of its developed and manufactured conductive inks based on metallic nanoparticles. Furthermore, as part of strategic cooperation with the University of Brescia in Italy, XTPL electronics printing technology will support the development of next generation organic and biodegradable biological sensors for medical diagnostic applications.

XTPL started 2022 as an entity successfully commercializing its technological solutions. The Company also continued major industrial implementation projects with global manufacturers of consumer electronics. New milestones are being reached in all projects, and under one of them an agreement has already been signed with the industrial partner Nano Dimension. The steadily pursued strategy of active search for industrial buyers of the Company’s products and new application for its technology has yielded first financial results.

“XTPL is currently a company with a significantly stronger market position and is at a more advanced stage of development than a year ago. In the first quarter of 2022, we established two important partnerships that will introduce products based on our technology to industrial buyers. The first agreement with Nano Dimension, a company listed on the New York Stock Exchange, entered the second phase of technological work a few weeks ago, which also triggers the first payment tranche. The product that we are developing for this company is intended for its industrial customers and will be mainly used for the production of PCBs (Printed Circuit Boards). Another partnership is the project carried out together with a team from the University of Brescia, relating to development of next generation organic and biodegradable sensors using our technology of ultra-precise printing of nanomaterials. This work – and consequently our solution – is already on the radar of a new group of international manufacturers with a well-established market position,” sums up Filip Granek, CEO of XTPL S.A.

The Company is successfully working on the commercialization of its three business lines: nanoinks, Delta Printing System (DPS) prototype production devices, and the EPSILON module intended for implementation on mass production lines of global industrial players from the printed electronics industry. In Q1 2022, XTPL again increased its sales of conductive inks with silver nanoparticles. Further to that, the Company worked on new formulations based on copper and gold. In April, XTPL reported signing a new private label contract with the American company nScrypt. Under its brand, sScrypt will sell to its clients the Ag CL85 Nanopaste developed and produced by XTPL.

“Nanoinks are currently our rapidly growing business line. Its products were entirely created for the needs of our technology and its underlying concepts. Initially, we received orders mainly from institutions and scientific units, but in the first quarter of this year, the customer base has clearly changed. Currently, most orders come from industrial companies. We have also successfully leveraged the opportunity to gain a strong foothold in the American market, even if under the brand of our business partner nScrypt. What’s important is that our technological solution will be distributed to production system users from medical device, defense and space sectors,” Filip Granek says.

In the process of introducing its innovative technology to the wide industrial market of the printed electronics sector, XTPL decided to use its dedicated Delta Printing System device. In Q1 2022, the Company delivered and put into operation all the devices that were purchased by its clients by the end of 2021. Training was also held for research teams that conducted research using the XTPL technology.

“During the first quarter, we also made deliveries and provided training to the clients who had ordered the Delta Printing System last year. Currently, we are getting positive feedback on the capabilities of those devices. One of the examples is the scientific publication of the research team led by Professor Ravinder Dahiya from the University of Glasgow. We are also working on further sales of devices to new clients. Some of the interested buyers have included the purchase of DPS in their budgets for the current year and are awaiting their approval by the relevant bodies. That said, the following quarters of the year may be quite beneficial for us in this respect,” says the CEO of XTPL.

In the process of commercialization and reaching out to potential clients, the Company is supported by an international network of distributors, which in the last quarter was expanded to include two new partners. In the Western European market, XTPL is represented by merconics from Germany, and on the very promising Indian market: by Vertex Global Solutions. Currently, the Company has a total of five distributors from Europe and Asia.

Building the Company’s value and technological solutions is also supported by properly developed and implemented policy of industrial and intellectual property protection. That is why, ever since its establishment, XTPL has been consciously creating its patent cloud. In January, the Japanese Patent Office granted the Company patent protection for the method of forming lines less than 1 micrometer wide using the XTPL proprietary ink with silver nanoparticles. Previously, that patent application was granted protection in the United States, China and Germany. Currently, the Company has 2 patents and 24 applications in total.

CASH FLOW STABILIZATION OUTLOOK

In Q1 2022, XTPL achieved PLN 930 thousand in revenues from the sale of products and services compared to PLN 65 thousand in Q1 2021. Grant revenue totalled PLN 1,085 thousand compared to PLN 976 thousand obtained in Q1 2021. These figures include both grants and advances towards grants recognized in the balance sheet. EBITDA was PLN -2,406 thousand compared to PLN -2,303 thousand in the same period last year. Adjusting for the non-cash valuation of the incentive scheme, EBITDA was PLN -1,257 thousand compared to PLN -1,253 thousand in Q1 2021.

Net cash flows improved significantly, growing to PLN -889 thousand from PLN -1.877 thousand a year earlier. Driven by sales revenues, operating cash flows alone also send positive signals with a value of PLN -189 thousand compared to PLN -880 thousand in Q1 2021. The Company believes that by maintaining the strong growth momentum, it will be able to balance this line item by the end of 2022.

“Our efforts and initiatives are gradually bringing the expected outcome in the form of sales growth. This year, in addition to revenues from the sale of the Delta Printing System, DPS consumables and inks, we also generate revenues from some evaluation projects – carried out with industrial partners – that have already reached the monetization stage. We make sure we manage our cash carefully and efficiently, particularly as it takes investments to increase sales. We are steadily expanding our equipment and machinery park and are strengthening the technological team. On top of that, we are developing our technological and production capabilities to effectively serve current and future clients. Based on what we have achieved so far and the activities we have in our pipeline, we can be confident that we are already able to self-finance our operations this year,” says Jacek Olszański, CFO of XTPL S.A.

In its activities, XTPL regularly resorts to grants to fund its R&D operations. In March, an international technological project in which the Company participates and which is conducted by partners from five European countries, including business players providing ready-made solutions to the next generation electronics market, received a positive recommendation for a grant of EUR 4.29 million under the Horizon Europe programme. The vision of the project is to develop a new technology for manufacturing microLED displays using selected additive techniques – including the unique ultra-precise deposition (UPD) technology developed by XTPL. The new solution is to help in lowering the cost of fabricating displays for TVs or other larger screens in which microLED is used. The recommended grant for XTPL comes in at almost EUR 430 thousand. The project is to be implemented for two years after the date of the grant agreement.

XTPL develops and commercializes three complementary business lines that can also generate independent revenue streams: the Delta Printing System prototyping devices; conductive nanoinks, and the EPSILON printing heads intended for industrial implementation on the production lines of global manufacturers of next generation electronics. All the indicated technological solutions are based on the Company-developed technology of printing conductive structures. The technology responds to the three megatrends in the production of modern electronics. The industry is currently strongly focused on further miniaturization of the size and weight of electronic devices, modifying their forms and properties, and moving towards an increased flexibility and three-dimensionality. The recent global trend is also environmental protection by efficient use of limited resources while reducing the production waste, which is enabled by additive technology.

In 2020, the value of the rapidly growing printed electronics industry was USD 41.2 billion (+11.0% YoY). In 2025, it should stand at USD 63.3 billion, while in 2030 it is expected to reach even USD 74.1 billion (source: IDTechEx). This means that the market will grow at a CAGR of 9.0% in 2020–2025.