POET signed a $1M+ NRE from one customer. How big is the production order?
I feel like the new NRE from the AGM is getting slept on.
Quick explainer for anyone not familiar: NRE stands for non-recurring engineering. It's money a customer pays a company to do custom development or engineering work for them, usually paid out as they hit milestones. The key thing is it's basically the front door to a real relationship. A customer pays NRE to develop something, then it goes to qualification, then if it passes, production orders follow. Companies don't write big NRE checks unless they're seriously evaluating you for production.
So with that context: POET signed an NRE worth over $1M from a single customer for high power external light source work, signed right after OFC.
To put that in context, their last two quarters of reported revenue were $503K and $341K, and that was primarily NRE across multiple customers. So this one agreement, from one customer, is bigger than that entire recent NRE book combined.
If an unnamed customer is willing to spend over $1M on the development work alone, it makes me wonder how big the actual production order could be once it qualifies. The size of these individual deals is stepping up fast, that's for sure.
All of that said I felt great about the AGM and our future. In fact it strengthened my thesis around POET by quite a bit. I'm not happy with where the SP is at currently but the whole sector has taken a beating recently.
One more thing. When I first listened I thought "crap, no new customers and maybe no major news for a bit." But after reading the transcript (thanks Rainer) I caught what a few others pointed out: "with a couple of major exceptions, we do not expect to announce new customers over the next 12 months." A COUPLE of major exceptions does not sound like no news or new customers for 12 months.