Earnings Call Transcript - REFR Q2 2024

Operator, Operator

Good afternoon ladies and gentlemen. Welcome to the Research Frontiers Investor Conference Call to discuss the Second Quarter of 2024 results of operations and recent developments. During today's presentation, all parties will be in a listen-only mode. This conference is being recorded today. A replay of this conference call will be available starting later today in the Investors Section of Research Frontiers website at www.smartglass.com and will be available for replay for the next 90 days. Please note that some of the comments made today may contain forward-looking information. The words expect, anticipate, plans, forecast, and similar expressions are intended to identify forward-looking statements. Statements that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions that are part of the Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those expressed. Significant factors that could cause results to differ from those anticipated are described in our filings with the SEC. Research Frontiers undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. The company will be answering many of the questions that were emailed to it prior to this conference call either in their presentation or as part of the Q&A session at the end. In some cases, the company has responded directly to email questions prior to this call or will do so afterwards in order to answer more questions of general interest to shareholders on this call. If you find that your question has been substantially answered as a courtesy and to allow time for other shareholders to ask their questions, please remove yourself from the queue by pressing star two. Also, we ask that you keep your question brief in the interest of time. I would now like to turn the conference over to Joe Harary, President and Chief Executive Officer of Research Frontiers. Please go ahead, sir.

Joe Harary, President & CEO

Thank you, Paul, and hello everyone and welcome to our investor conference call to discuss the second quarter of 2024. On our last conference call, we anticipated higher royalty income for the second quarter based on leading indicators. Indeed, compared to the same quarter last year, our royalty income increased by 165%. The first quarter of 2024 was dynamic and the second quarter saw royalty income rise by over 56% from those elevated levels. For the first half of this year, royalty income surged by over 85% compared to the same period last year driven by substantial growth in our two largest markets, automotive and aircraft. This impressive revenue growth builds on the strong performance from 2023 where fee income increased by 69% over 2022 and overall revenue was up by 109% from the prior year. The second quarter of 2024 marked our sixth consecutive quarter of revenue growth compared to the prior year. Looking ahead to the second half of this year, we expect Q3 and Q4 royalty income to surpass last year's levels, further solidifying our growth trajectory. We expect our growth this year to come from expansion in our existing markets and from new product introductions. Expenses this quarter were about $105,000 lower, bringing our net loss for the second quarter to just $94,000 or $0.0 per share. Our average cash burn rate has been steadily decreasing. Based on projected revenue growth, I do not anticipate the need to raise additional capital in the foreseeable future unless a strategic reason arises. We continue to be free of debt and are in strong financial shape. As of June 30th, 2024, the company had over $1.9 million in cash and cash equivalents and our working capital was $2.8 million. We currently expect to have sufficient working capital for more than the next five years of operations. Now let's together look underneath these numbers so we can all better understand where we are and what we can expect. Sales of cars using our SPD-SmartGlass technology at Ferrari and McLaren remain quite strong. Ferrari has stated that in order to maintain the exclusivity of the Purosangue, which uses our SPD-SmartGlass, they will voluntarily limit production to 20% of their total unit production for all Ferrari cars. Based on these numbers, an extremely high percentage of Ferrari customers are opting for the SPD-SmartGlass roof option. Ferrari just reported an excellent second quarter in terms of sales. Additionally, third quarter production at Ferrari is typically their highest. If these trends continue with the Purosangue, we can expect higher royalties from it next quarter as well. Remarkably, even though we're only halfway through the current 2024 year, these roofs have almost equaled the total number of roofs from all of last year. The popularity and high take rates of the McLaren models using SPD-SmartGlass are also evident. Even though we're only halfway through 2024, the total number of roofs on just one model of McLaren puts us on track to triple the number of SPD roofs this year compared to last year. I also want to take this opportunity to congratulate our licensee Isoclima on the introduction of SPD-SmartGlass on the panoramic roof of the Gemera by Koenigsegg Automotive, the beautiful car made even more beautiful and comfortable by SPD-SmartGlass. Isoclima announced this new program in June. In our last conference call, we noted with anticipation the IPO of our licensee, Gauzy, and the introduction of a retrofit application by our licensee, LTI, at the AIA show in Washington, D.C. Both took place in early June. We also highlighted the successful development of an SPD-SmartGlass sunroof for a flagship, relatively lower-priced, midsize model from an Asian auto manufacturer. This program is still on track for introduction, and we, along with Gauzy, are eagerly awaiting the OEM's launch announcement to share more details. There is a meeting about the launch of this car scheduled for later this month. What's particularly exciting is that the manufacturing cost of products using our technology has declined significantly, making it feasible for use for the first time in moderately priced vehicles like the one I just mentioned. This creates opportunities for higher volumes of SPD-Smart technology in middle-market cars worldwide. Moving to our second-largest royalty-generating market, aircraft, we also once again had higher revenues there in the second quarter. There's been a fundamental improvement in that market for us as well, stemming from the way that decisions are made. For general aviation aircraft, primarily private jets, we are on the HondaJet and the King Air among a number of other models. In those and other cases, the OEM made the decision to integrate our high-performing SPD technology into their aircraft. The significant shift is that in larger aircraft made by Boeing and Airbus, now it's the customer who decides. This has been tremendously enabling for our licensees selling SPD electronically dimmable windows or EDWs because the performance in terms of switching speed being instantaneous, and the wide change in tint being uniform has made it an easier choice for customers to pick SPD. Apart from the obvious benefits of improving the passenger experience by giving them more control over their environment and reducing noise in the aircraft cabin, there are temperature benefits as well. Half of heat comes from infrared and the other half from solar heat gain from visible light. Infrared has always been relatively easy to block. It is the visible light where the other half of heat comes from that historically has been challenging. We block 99.5% of that visible light. Heat inside the cabin has always been a known issue, and until takeoff, aircraft had to rely on expensive terminal or auxiliary power or run their engines and waste fuel to generate electricity while on the tarmac. I'll give you one example of what's been observed. Our licensee Inspect Tech did a SPD EDW installation on a LearJet. One day there were two Lears parked next to each other on the ramp, so they were in the same environmental conditions. Both Lears were being worked on for maintenance. One of them had Inspect Tech's SPD EDW, and the other did not. The maintenance crew said the cabin in the Lear with SPD was 26 degrees Fahrenheit cooler than the one right next to it. Now remember, in cars, Mercedes tests have shown an 18 degree Fahrenheit reduction in temperature. Once, we had a NASA scientist visit our office, and I asked him why it would be higher in an aircraft. He went to the whiteboard and explained seven different equations and showed three diagrams of the fuselage before stopping and saying, 'and that's why,' to which I was simply glad it worked well. The first line of defense against heat right now while an aircraft is on the ground is trying to prevent the cabin from becoming excessively hot to begin with, according to Charles Horning, a professor of Aviation Maintenance Science at Embry-Riddle Aeronautical University. He pointed out that many of us have experienced flights where flight attendants requested passengers close the sliding windows before disembarking. That's probably the best measure to keep the cabin from heating up. However, there's a significant issue with that approach. It's historically been difficult to prompt passengers to close shades, and flight attendant unions have resisted instructing their passengers to do so. Rather than simply closing the shades, SPD EDWs have proven to be more effective at blocking light than closed shades. Additionally, other technologies, such as electrochromic technology can inadvertently generate heat. They may have even been shown in videos to cause windows to crack mid-flight, because they operate similarly to a cell phone battery. In contrast, SPD EDWs automatically switch to their maximum heat blocking state upon arrival at the gate. This creates a significantly more favorable environment. Recently, reports have emerged about cabin temperatures reaching dangerous levels on the tarmac, leading to passenger hospitalization. This situation has prompted calls for stricter government and FAA regulations regarding cabin heating, and we present an excellent solution to this. Customers themselves are now opting for SPD for larger aircraft. Comlux and Airbus recently delivered another ACJ-220 in late June and anticipate delivering another later this year. Next year, they're targeting four to six large aircraft with SPD EDWs. Even bigger is the international airline mentioned in Gauzy's IPO registration statement, involving part of their Boeing fleet, strengthening our partnerships with both Boeing and Airbus. Now let's discuss the architectural glass market. In our last conference call, we highlighted the cost and logistical benefits of an architectural retrofit application for SPD-SmartGlass. AIT, the parent of our licensee LTI SmartGlass, publicly launched this at the American Institute of Architects (AIA) show in Washington D.C. in early June. The General Services Administration of the U.S. government, or GSA, is the world's largest customer for energy efficient glass and has initiated new mandates and programs to upgrade government buildings for energy efficiency and security. These initiatives serve as positive drivers for our business, and since the AIA show, we've identified and are working to scope out some initial government projects for SPD-SmartGlass. Additionally, the Dynamic Glass Act offers substantial tax credits of between 30% and 50% for adopting SmartGlass and putting it into service, encouraging its adoption in all types of buildings and homes. This legislation will facilitate the private sector's adoption of SPD-SmartGlass. We have also begun work on private projects utilizing SPD-SmartGlass as well. Now, in the interest of time and to cover as much ground as possible, I've taken a number of the questions that we have received by email and incorporated them into my presentation today. I would now like to open up the conference to additional questions. First, I'll read and answer some of the questions we received by email, and I encourage people to email their questions before the conference call so we can tailor our presentation to cover the most ground for the benefit of all shareholders and address all topics of interest. Here are some of the additional questions that were emailed to us, and in some cases, I'm combining several related inquiries into one. Can you please talk about some of the developments with your competitors in the SmartGlass industry? As many of you know, View recently filed for bankruptcy, and Crown ElectroKinetics narrowly escaped delisting on NASDAQ by executing a second reverse stock split of 150 to 1. If anyone's keeping track, they have executed a total of 9,000 to one reverse stock split over the past year. Before this latest split, Crown would have been trading at three one hundredths of a penny as of yesterday's close. That's the reasoning behind their split. They have yet to produce their long-promised smart window inserts after many years of being 'just around the corner.' I actually look forward to the day if it ever arrives, as I believe their product, in a side-by-side comparison, might serve as our best salesperson. Another company, Halio, formerly known as Kinestral, which has received significant investments from glass manufacturers, is in the process of liquidation. We and our licensees have even been approached about acquiring some of their equipment or hiring senior executives. The severe challenges facing the SmartGlass field are mainly linked to other technologies. Fortunately for our shareholders, SPD technology is performing well in contrast. On a positive note, our licensee Gauzy successfully executed a traditional IPO instead of opting for a SPAC route, raising their targeted $75 million. They plan to utilize these funds for expanding production lines, enhancing R&D, and increasing sales and marketing efforts. All of this supports Research Frontiers and the SPD-SmartGlass industry as a whole. As I mentioned in our previous conference, shareholders now benefit from having two leading players in the SPD industry—Research Frontiers and Gauzy—operating as public companies and sharing information and developments. While we are on this topic, I want to address another shareholder question we received. As we've mentioned numerous times, Gauzy film sales are the leading indicator of sales of SPD Smart products. Gauzy sells their SPD film to our end product licensees, such as the glass laminators, who then fabricate them and sell the finished products to customers like automakers, airlines, and aircraft manufacturers. One of our shareholders, Sam Finta, emailed us with questions regarding a noticeable rise in Ferrari Purosangue vehicles on the road with a high percentage featuring SPD-SmartGlass. Sam, if you were aware of how high that figure is, you'd be amazed. The Cadillac CELESTIQ has also been sighted on the road alongside the McLaren models that have long offered SPD. All three vehicles are high-end, ranging from $400,000 to $700,000. Can we assume that the royalty on these vehicles is much higher than on mid-priced cars that usually range from $50,000 to $100,000, for example, a Mercedes where it was a $2,500 option? The Ferrari SmartGlass roof option is priced at $20,000. It would seem that we collect a significantly larger royalty compared to the previous $2,500 option. Well, thank you for your question, Sam. As many of you know, we derive our royalty based on the selling price from the glass laminator or the end product licensee to the car manufacturer. So, it pertains to the selling price of the glass to them. We can only collect the royalty once. Currently, we collect it on the highest practical value area of the supply chain, which is on the sale of the end product rather than on the SPD film sales. As you would expect, this royalty could be higher on more expensive cars since the premium features associated with the SPD-SmartGlass roof are typically included in that selling price from the laminator to the customer. In practical terms, higher-priced vehicles can incorporate more premium features into their roof systems due to their higher selling prices. Thus, the greater the price of the SmartGlass roof, the higher our royalty, and the more features that can be included in the roof systems in luxury vehicles. For high-volume models, such as the previously mentioned Asian automobile manufacturer in the mid-price range, you would expect that economies of scale and greater purchasing power would lead to a lower selling price for the SPD roof from the licensee to that automaker. Here, we might receive a lower royalty per vehicle, but presumably a significantly higher overall royalty based on increased sales volumes. To reiterate, Gauzy's SPD film sales serve as a leading indicator for Research Frontiers and for our end product licensees where we generate our royalties. Gauzy has provided guidance for their second quarter revenues that were announced two weeks ago. Their second quarter 2024 revenues are expected to be between $24 million and $24.5 million, reflecting a 22% increase compared to the same quarter last year. Their projected revenues for the first half of 2024 are expected to fall between $48.7 million and $49.2 million, marking a 31% increase from the same period last year. This positions Gauzy on a trajectory to achieve almost $100 million in revenues for the year. I want to share a quote from Eyal Peso, Gauzy's co-founder and CEO, who stated that, 'Our exceptional start to 2024 extended into the second quarter with revenue expected to exceed prior expectations. As anticipated, the robust pace of revenue growth in the first half is driven by key customers that accelerated their full-year purchasing commitments to meet increasing demand. We believe we are well-positioned for strong double-digit revenue expansion in the second quarter.' Mr. Peso continued in this press release, 'Since our IPO, we remain laser-focused on executing our growth strategy. We see OEMs increasing their adoption of our SmartGlass technologies, major urban areas replacing mirrors on their bus fleets with our ADAS and CMS systems, and our products being integrated into iconic new commercial and hospitality developments. We are very excited about our future and the progress we are achieving to fully deliver against our objectives for 2024 and beyond.' Now, let me address some more of the questions we've received by email. From Steve Azer, can you provide updates on Hyundai? Did they withdraw their investment in REFR Gauzy? As many of you are aware, Hyundai was a strategic investor in Gauzy. I came across a confusing report on one of the websites that suggested Hyundai had exited their investment in Gauzy. This misunderstanding likely arose from considering an IPO as an exit event. However, I inquired and confirmed that Hyundai did not sell its Gauzy stock before or during the IPO, and they remain a strategic investor in Gauzy. Next, a question from Steve Azer: With Gauzy's increased revenue forecast, will this translate to future REFR sales? Yes, as noted earlier in my presentation, SPD film sales act as a key leading indicator for our royalties. If you closely monitor the relationship, you will likely notice a correlation. Regarding Steve's last question, he mentioned concerns about the lack of recent positive news releases over the past few years, suggesting a decrease in business momentum. I wouldn’t say there's less business coming in; if you examine the revenues, there is actually a substantial increase in business. Steve, you have been a long-term and loyal shareholder and have never been just a cheerleader, which I genuinely appreciate. However, I believe the transition from being a technology company in the development phase to one where our products are utilized by numerous large companies like Ferrari, General Motors, Mercedes, McLaren, Boeing, and Airbus has perhaps paradoxically reduced our capacity for announcements. In the past, we could announce new license agreements at our discretion, but now, with major companies as customers, we often must wait for them to make announcements. This practice is consistent in the automotive and aircraft sectors, which represent our two largest industries currently. While this might evolve somewhat in the architectural sector, where customers tend to be less secretive, we still need to wait for automotive and aircraft industries to share information due to their established practices. That said, the revenue figures will speak for themselves. This quarter and the previous quarter have demonstrated strong growth. Both we and Gauzy experienced significant increases, especially during the first two quarters of this year as we continue to gain traction. We have covered a lot of exciting topics today, and I would now ask our Operator Paul to please open the conference for any additional questions that haven’t already been addressed. Some of our largest shareholders have recommended keeping these conference calls shorter, so I ask for your assistance with this. If your question has been substantially answered but requires more details, please feel free to email us. We have had productive conversations through email previously. Please try to keep your questions concise and focused.

Operator, Operator

My pleasure. And our first question comes from Neal Goldman of Goldman Capital Management. Your line is open. Mr. Goldman, please go ahead.

Neal Goldman, Analyst

Okay. Is that good?

Joe Harary, President & CEO

Oh, there we go. Hi.

Neal Goldman, Analyst

Okay. First question is Gauzy was up 22%. We were up 56% in royalties. Who are the other key distributors for us?

Joe Harary, President & CEO

Well, they're supplying the film, and then it depends on the markup. So Ferrari is a substantial portion, McLaren, Cadillac is a small contribution by one of the same licensees that's working with Ferrari. Then you have the aircraft markets, which are Vision Systems and Inspect Tech primarily. So those are our key distributors. The film price is essentially the same across all industries. However, the end product price can fluctuate greatly based on who the customer is and the premium features, like I previously mentioned, which can also contribute. It's all positive.

Neal Goldman, Analyst

Before Gauzy does major expansion with the funds they secured from the IPO, if they were operating at full capacity today, if demand were available, what kind of incremental revenues would we receive from Gauzy?

Joe Harary, President & CEO

That's difficult to answer. If they were at capacity, it would probably be about a million square meters. Consider that the average Ferrari sunroof measures roughly 1.267 square meters or approximately 1.3 square meters, a standard sunroof could be around one meter. If you include both the front and back panoramic, it could measure between 1.5 to 1.8 meters. This context gives you an idea of the potential number of sunroofs. Yet, if they were operating at one million square meters of capacity, I anticipate the royalty per vehicle could be lower due to volumes, potentially ranging from $25, $50, $75, $100, or even $200 per vehicle depending on market dynamics. If that same film is used in aircraft, a million square meters could generate a couple hundred million dollars in revenue.

Neal Goldman, Analyst

And what would be our share?

Joe Harary, President & CEO

No, to us.

Neal Goldman, Analyst

To us, uh, what did you mention that number?

Joe Harary, President & CEO

It truly depends on the market it targets. For example, that same 1.2 square meter window would retail for significantly less if it were designed for a sunroof compared to being used in an aircraft window, given the difference in selling prices.

Neal Goldman, Analyst

And what did you say the price would be if they were all aircraft, the incremental volume to us?

Joe Harary, President & CEO

Probably around $100 million. I'm not issuing a prediction, however, as there are various market factors at play. This would be on the high end of the market.

Neal Goldman, Analyst

Okay. But that would be –

Joe Harary, President & CEO

Yes, that would likely be the highest price per square foot that we would receive.

Neal Goldman, Analyst

Yes. $3 a share just from that.

Joe Harary, President & CEO

Exactly.

Neal Goldman, Analyst

Okay. Right. Thank you, Joe.

Joe Harary, President & CEO

Thank you, Neal. Bye.

Operator, Operator

And our next question comes from Michael Kay of Kay Associates. Your line is open.

Michael Kay, Analyst

Hello, Joe.

Joe Harary, President & CEO

Hey, Michael. How are you?

Michael Kay, Analyst

Okay. Let me just get a dissenting voice on something. One of the reasons I'm still with Research Frontiers, having never sold a share in the last 25, 50 years, is because your conference calls are so detailed, encouraging questions, and you don't impose strict time limits like other companies where I can't even get on the line.

Joe Harary, President & CEO

Thank you. It's a self-serving plus for us, because sometimes the best source of information amidst the noise of fluctuating stock prices is to really understand what's happening from our calls. Operating in industries where we can't always disclose information means these conference calls can be the best venue for communication. We appreciate that.

Michael Kay, Analyst

Yes, and I truly value that you allocate no time limits, welcome email inquiries, and allow everyone, irrespective of their shares held, the opportunity to pose questions. Given our consistent earnings over the past few quarters and Gauzy’s trajectory, alongside the increasing focus on climate change, it seems like any technology capable of reducing interior temperatures is a tremendous asset. I'm curious: What initiatives is the company taking to engage institutions and money managers? There exist mutual funds and micro-cap funds that should be made aware of Research Frontiers, as even car buyers utilizing SPD may not realize its origin.

Joe Harary, President & CEO

Excellent question, Michael. Regardless of climate change discussions, it's always beneficial to conserve energy and enhance comfort, which SPD accomplishes. Back in 1965, that wasn’t necessarily the primary concern, but thankfully it is now. Regarding how we will promote this, let me clarify what we'll and won't do. Several companies have been criticized for 'ESG washing,' falsely touting environmental claims and facing significant consequences. We are, however, the opposite. As a green company since day one, we would be promoting sustainability regardless of societal perspectives on climate change. Our approach is consistent and needs to be effectively communicated. A significant part of our messaging articulates the benefits of our technology. For electric vehicles, we aid in expanding driving range; for buildings, we improve energy efficiency, and for airplanes, we enhance energy conservation while providing comfort benefits. We’ll tout these advantages. Now, with Gauzy, we have a partner amplifying that message. Additionally, as the market has transitioned, the distractions constituted by other public companies have diminished. We have competitors like View that are no longer public, and others, such as Crown, which have yet to fulfill their promises. Those that have succeeded are now gaining meaningful recognition, like Gauzy, and Research Frontiers as leading entities in SmartGlass technology.

Michael Kay, Analyst

Thank you. One more brief question: Is Gauzy the only or the primary company producing the film? Are there others like Hitachi or Isoclima?

Joe Harary, President & CEO

Gauzy did acquire Hitachi's SPD business, which is a very positive development, as it not only elevates their capacity but enhances their expertise as well. Hitachi was a very knowledgeable company, having a wealth of experience in SPD technology. They possess substantial know-how that now resides with Gauzy, allowing them to expedite advancements.

Michael Kay, Analyst

Does Isoclima produce the film?

Joe Harary, President & CEO

They do not manufacture the film; they procure it from Gauzy.

Jeff Harvey, Private Investor

Hi, Joe.

Joe Harary, President & CEO

Hey, Jeff. How are you?

Jeff Harvey, Private Investor

A couple of things. First of all, I must express that I perceive the Gauzy IPO as one of the most disappointing IPOs in my 35 years in business. I’m unsure about what went wrong, but the underwriters should have played a role in stabilizing the market after the initial offering, which they did not fulfill satisfactorily.

Joe Harary, President & CEO

Yes, judging from the stock price, they certainly did not. However, Gauzy did achieve their target price and the $75 million they anticipated securing. So they have the necessary resources as intended. It would have been ideal to see positive stock price increases following those results. Notably, they reported a very positive first quarter year-on-year and an excellent second quarter. We'll observe how the market reacts once the actual numbers are made available.

Jeff Harvey, Private Investor

I think I missed what you mentioned earlier regarding the middle-tier vehicle set for introduction from Asia. What are the anticipated timelines?

Joe Harary, President & CEO

As I mentioned, there's an upcoming meeting at the end of this month regarding the launch. We should gain more clarity then.

Allen Ginsberg, Private Investor

Yes. Hi, Joe. How are you?

Joe Harary, President & CEO

Hey, Allen. How are you?

Allen Ginsberg, Private Investor

Will there be a breakdown in the future between Gauzy’s performance with PDLC compared to SPD? Such detail could greatly clarify Gauzy's output regarding these technologies.

Joe Harary, President & CEO

I doubt it, as the SEC regulations necessitate companies group their operations into what they characterize as business units. Gauzy presents their operations as ADAS and other divisions but categorizes smart film together. However, it's crucial to consider that they also secure higher profit margins through their SPD line. So, they, and we, certainly have a vested interest in increasing the proportion of their operations dedicated to that field, especially if their aim is both revenue growth and profitability, which is evident from the response I shared earlier.

Leonard Lietzow, Private Investor

Joe, considering they have raised $75 million and given the notes in their S-1 where their SPD film contracts for this year have been outlined, would I be correct in assuming they are preparing for an expansion?

Joe Harary, President & CEO

Absolutely. They've also identified a second line in Germany that's prepared for launching beside their current setup in the Stuttgart area. Alternatively, they could opt to establish one in Asia, based on customer needs. Nonetheless, producing film and shipping it worldwide is manageable, as we've seen many companies successfully do that with far heavier items. Film is relatively lightweight and simple to ship, so their potential locations for expansion are flexible.

Leonard Lietzow, Private Investor

With architects beginning to incorporate our products alongside autos and airplanes maximizing their output, it seems crucial for them to escalate production if they're aiming for substantial sales, correct?

Joe Harary, President & CEO

That's precisely it. We've witnessed this process with two capable firms establishing SPD production lines—initially with Hitachi and presently with Gauzy. Once you have the knowledge to construct it, which is part of their expertise, and how to configure the production system, it becomes simpler to replicate successful processes. Given that manufacturing permits or factory spaces are sanctioned, setting up another line shouldn't exceed six to eight months.

Operator, Operator

Okay. I am seeing no further questions in the queue. I'll turn the call back over to our host.

Joe Harary, President & CEO

Thank you. If any questions remain unanswered, please feel free to email us, or consult the information we provided during today’s presentation or in the live Q&A. Now, I’d like to provide a few closing remarks. The outlook for the SmartGlass industry remains extremely promising, bolstered by growing revenues in automotive and aircraft and increasing regulatory support, such as the Dynamic Glass Act which provides substantial tax credits for adoption, making other markets, including architectural ones, more mainstream for us. Research Frontiers is an established leader with an innovative, high-performing, and reliable solution. We and our licensees are witnessing growing demand from reputable, iconic brands globally. As customer choices expand, they are consistently opting for SPD, evident through our new Airbus and Boeing programs. Our strong strategic partnership with Gauzy continues to present opportunities across multiple sectors, as we collaborate on business development and product innovation. In fact, we have a meeting scheduled for Monday together. Gauzy's recent IPO has also increased transparency and resources within the industry, and their expanded production and marketing will further lower the costs associated with using SPD-SmartGlass while highlighting the immense potential of SPD technology to a broader audience of customers and investors. In our previous call, we projected increased royalty income for the second quarter based on the leading indicators we identified at that time, and we were correct. We achieved this, realizing a 165% increase compared to the same quarter last year. We enjoyed a remarkable first quarter and witnessed second quarter royalty income rise over 56% from elevated first-quarter levels. Our royalty income for the first half of the year soared above 85%, primarily fueled by substantial growth in the automotive and aircraft sectors. Looking forward, we expect Q3 and Q4 royalty income to exceed last year’s levels. To put this growth into perspective, it builds upon a particularly strong 2023, with fee income increasing by 69% over 2022 and overall revenue growing by 109%. The second quarter of 2024 has marked our sixth consecutive quarter of revenue growth compared to the previous year, showcasing sustained revenue growth. As I mentioned during prior calls, as we progress further, revenues will become less sporadic; thus, we expect to maintain an upward trajectory moving forward. Looking ahead, we anticipate ongoing revenue growth in the automotive and aircraft sectors driven by new product introductions, increased offerings from new automakers incorporating SPD-SmartGlass in their new car models, as well as growing penetration among current customers. Naturally, the retrofit market for buildings also represents a significant new growth catalyst as we work towards enabling smarter, more sustainable infrastructure globally. As we conclude today's call, I want to express my gratitude to our shareholders for their unwavering support, which has been immensely valuable to us. The momentum we've built over the past six quarters, evidenced by our consistent revenue growth and successful strategic initiatives, positions us strongly for current success and future opportunities. Our SPD-SmartGlass technology is increasingly acknowledged as a benchmark of excellence within the SmartGlass industry, further confirming our industry leadership. Notably, our sector has strengthened, with our licensees amassing more resources for expansion and our technology being adopted across different industries for various applications. We consistently gather more traction as we leverage our innovative energy-efficient light control technology and robust partnerships to drive advancements in value creation for our shareholders and our industry. Thank you all for being part of our ongoing efforts; we eagerly anticipate sharing more milestones with you shortly. Thank you very much.

Operator, Operator

This concludes today's conference call. Thank you for attending.