63% Revenue Growth in 2019 for Kalray

Kalray Corp., in processors for new intelligent systems, reviews its business in 2H19 (from July 1 to December 31, 2019) and looks back over the highlights of the period.

Eric Baissus, president of the executive board, commented: “2019 was a pivotal year for Kalray marked by the achievement of a number of key milestones. First of all, we finished developing our 3rd generation Coolidge processor and presented it for the first time in early January at CES. Mass production is scheduled to start second semester of 2020. Furthermore, strategic agreements were signed with top-tier players including NXP, Wistron, 2CRSI and Intron Technology, which will boost our credibility and accelerate time to market for Coolidge.“

It targets achieving revenues of €100 million by 2022 have been confirmed by the initial performances of Coolidge, the industry enthusiasm measured at CES and the numerous negotiations underway. The initial signs of a growth upswing already visible in 2H19 are expected to intensify in 2020. Given this outlook, the firm is continuing its structuring initiatives, particularly through hiring, and it keeps reviewing a number of potential partnerships geared to support its development.

The recent market concentration and discussions wit partners demonstrate how crucial acceleration and artificial intelligence technologies are for the future, and how they occupy a core position in a market with huge potential. They confirm the relevance of its positioning and technology and confirm its ambitions of becoming a leading supplier on this market.

Successful initial demo of Coolidge alongside NXP at CES 2020
The company gave the first technical demonstration of its Coolidge third-generation MPPA (Massively Parallel Processor Array) processor at the CES 2020 international trade show in Las Vegas, NV held from January 7-10, 2020.

Just a few weeks after receiving the first samples, the firm gave the first public demonstration of its Coolidge processor in conjunction with NXP Semiconductors, a global semiconductor manufacturer and year-long partner, as part of an AI application. As announced earlier, the strategic partnership with NXP is designed to produce a secure and reliable solution for autonomous vehicles. The partnership will combine the computing power and reliability of Kalray’s processors with the decision-making power and automotive know-how of NXP processors within NXP’s Bluebox on-board autonomous driving platform.

So far, the performances achieved with Coolidge ar in line with Kalray’s expectations. This 3rd gen processor offer improvements in the use of MPPA technology: performances multiplied 25-fold (1) compared to the 2nd gen MPPA, extension of AI capabilities, easier programming, high-speed interfaces, etc.

Coolidge will play a key role in company’s plans on both the data center market, by meeting the growing need for data center acceleration, and the automotive market, by allowing the integration of multiple critical functionalities on a single processor while supporting high-level performances.

Coolidge samples are due to be generally available from April 2020 before the planned launch of mass production in 2H20. The vendor received initial product development requests from a number of customers and prospects in both the data center and automotive sectors.

Strategic agreements with top-tier players
In 2019, Kalray continued to seal strategic partnerships with top-tier players, thereby confirming the quality of its technical expertise and appropriateness of its positioning.

In October, it announced a new distribution partnership wit automotive electronics distributor Intron Technology Holding Limited for the Chinese market, in order to accelerate its access to thi market for Coolidge.

The company also announced a collaboration with 2CRSi, French designer-manufacturer of high-performance servers. 2CRSi is using Kalray’s programmable acceleration boards to build an offering of easily configurable servers designed to meet the growing demand for flexibility, modularity and diversity of application.

Revenue up 63% in 2019
The firm posted 2H19 revenue of €810,000, up 78% from €455,000 in 1H19, in line with management forecasts. This performance brought full-year revenue to €1,265,000, up 63% from €775,000 in 2018. These revenues are generated from sales of boards, development stations and licenses as well as evaluation, development and service contracts with customers for the evaluation and qualification phases.

15 new hires in 2019
and new independenrt supervisory board member appointed
As announced, in order to support its expected increase in business, Kalray has continued to invest, particularly in the area of recruitment. The company hired 15 new employees in 2019, 9 in 1H19 and 6 in 2H19, mainly in the R&D and sales departments. Total headcount at 2019 year-end stood at 81.

It also recently appointed Erwan Menard, currently director of infrastructure and applications modernization solutions at Google Cloud, as an independent supervisory board member. Based in California, he will bring his expertise in storage and network infrastructure technology for cloud computing and data centers.

€15.7 million cash and cash equivalents as of December 31, 2019
As of December 31, 2019, cash and cash equivalents stood at €15.7 million (vs. €23.3 million as of June 30, 2019), after investments expenditures in 2H19 on the Coolidge launch (including $4 million on the tape-out mask) offset by an improvement in working capital (research tax credit). In line with management forecasts, FY19 cash outflow was similar to that of FY018.

This cash position will allow to pursue its tech roadmap and sales roll-out program in 2020 and thereafter.

Furthermore, on the recommendation of the compensation committee and under the authorization granted by the supervisory board on January 16, 2020, the executive board, on its meeting on January 20, 2020, exercised the authorization granted by the shareholders’ general meeting on May 29, 2019 (20th resolution) to issue and allot 134,299 bonus shares to executive board members and Kalray Group employees out of which 105,599 shares have been allotted in exchange for waiving the right to exercise 105,599 warrants (BSPCE) previously allotted to employees & founders. This authorization is designed to encourage key personnel to stay while limiting the dilutive impact for shareholders. The supervisory board also approved the allotment and vesting terms applicable to the bonus shares, which shall be vested in tranches of one-third, the first tranche one year after the date of allotment by the executive board, subject to a further lock-in period of one year from vesting, the second tranche 2 years after allotment and the third tranche 3 years after allotment by the executive board.

Sales ramp-up expected form 2H20
Mass sale of Coolidge-based acceleration boards remains firm’s main target for 2020. A period of strong sales ramp-up is expected to kick in during the second half.

In light of the multiple negotiations and commercial evaluations currently underway, it is maintaining its 2022 revenue target of €100 million.

Furthermore, it constantly evaluates opportunities to support its long-term development. These opportunities can involve discussions with industrial or financial partners.

Kalray is in processors for new intelligent systems. Intelligent processors are able t analyze a vast quantity of data on the fly and to make decisions and interact in real time with the outside world. They will be deployed in fast-growing sectors such as new-gen networks (intelligent data centers) and autonomous vehicles, as well as in healthcare equipment, drones and robots. Offering spans both processors and global solutions (electronic boards and software).

Created in 2008 as a spin-off of CEA (Commissariat à l’Énergie Atomique, the French Alternative Energies and Atomic Energy Commission), the firm addresses customers including server manufacturers, intelligent system integrators and consumer product manufacturers such as car makers.

(1) 25 TOPS (Tera Operations Per Second) performance for Coolidge vs. 1 TOPS for previous generation Bostan

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