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Smart Eye Interim Report January – September 2019

Continued focus on Automotive procurements

July – September 2019

  • Net sales totalled SEK 12,264 (15,234) thousand which corresponds to a decrease of 19 %.
  • Operating profit/loss totalled SEK -23,623 (-9,759) thousand, Earnings are developing according to plan and reflects the continued effort to deliver on won contracts as well as to manage the large amount of ongoing procurement. In addition, investments in the new business area AIS (Applied Aritificial Intelligence Systems) increased during the quarter.
  • Profit/loss after financial items was SEK -23,676 (-9,836) thousand
  • Profit/loss after tax per share is negative.
  • Cash and cash equivalents totalled SEK 186,164 thousand at the end of September
  • In September the company earned eight additional design wins from the Japanese OEM that Smart Eye earlier this year has communicated a design win with. The estimated revenue of the order is SEK 200 million based on product life cycle projections.

January – September 2019

  • Net sales totalled SEK 36,312 (35,817) thousand which corresponds to a rise of 1 %.
  • Operating profit/loss totalled SEK -70,519 (-40,369) thousand.
  • Profit/loss after financial items was SEK -70,772 (-40,666) thousand
  • Profit/loss after tax per share is negative.

 

Estimated value of obtained design wins

As of the report for the second quarter of 2018, the company provides information on the estimated market value of obtained design wins at the time of publication of the report. The figures in brackets show the levels at the time of the publication of the preceding report, which in this case was August 23 2019.

The total estimated value of the company’s 53 (45) design wins announced to date currently amounts to at least 1,350 MSEK (1,150) over a product life cycle.

If the company’s system had been used in all car models on existing platforms by the eight (eight) car manufacturers with whom design wins have been communicated, the estimated value would amount to at least 2,650 MSEK (2,650) over a product life cycle.

 

Comments from the CEO

In-car AI from Automotive solutions

The third quarter includes the slightly more quiet summer months of July and August, but that did not mean that the ongoing procurement process from the car industry's giants stopped. Technical issues and other questions continued to arrive in a steady stream, as it will be until a supplier is appointed and a contract is in place. After the nomination of a supplier the work enters into a phase where a project is formed that should deliver software with high precision to the project until the day the car is put into production, one to three years after supplier nomination. During the quarter, the procurement processes continued with full intensity and the decision in many of them is imminent. It’s with the highest confidence we’re looking forward to the awards about to be distributed.

Smart Eye is a respected name in the automotive industry and it’s well known among customers that no other Tier-2 supplier has been nominated for so many car models by so many manufacturers. It’s a stamp of quality and a factor that creates a positive spiral due to the fact that very few car manufacturers will risk developing a costly function which in the end doesn't deliver the intended performance.

Smart Eye is always considered as a possible alternative in all major ongoing procurements. We prove ourselves over and over again in the highly competitive and quality-conscious automotive industry by delivering to advanced projects where the active safety systems work together. This places high demands on safety classification and Smart Eye manages to deliver software according to the very highest specifications.

In the near future, we expect manufacturers whose share of world production exceeds 20% ​​of all vehicles will be determined. However, the procurements will not include all cars in their model programs, at least not at first. In the long run, with support from safety ranking institutes and new legislation, there are reasons to believe that DMS becomes as common as seat belts and airbags.

We also estimate that those car companies whose procurement processes that are in a somewhat later phase and thus will not be decided in the immediate future, but start next year does constitute an additional at least 20% share of world production. In addition, the two major global manufacturers that Smart Eye was nominated for and reported in Q1 and Q2 together have a share of world production exceeding 15%. It’s in the light of this rapid market development that we’re able to proudly communicate eight new design wins from an existing Japanese customer during the quarter, a verification of the fact that our business model is working.

New Busines Area AIS

But the company is more than just Automotive Solutions, even though that business area rightly gets most of the limelight right now. On July 1st, a new business area called AIS was formally inaugurated. AIS stands for Applied Aritificial Intelligence Systems. The word Systems in the name signals that the new business area will offer not only software, but also hardware, which means that Smart Eye soon can offer a complete system to the automotive industry. This does not mean that Smart Eye abandons its winning concept of ​​selling software through global Tier-1 suppliers who in turn sell complete systems to major car OEM’s. Through this development of our offer as an aftermarket system with a focus on China. We’re going to be able to meet the growing market demand in China where regulatory initiatives in the near future are expected to require driver monitoring for certain types of transport of dangerous goods and long-distance buses. By connecting our software to a specific hardware, we’re ensuring that our software is not copied, which is an important factor in protecting our competitiveness and integrity.

AIS will cover the cases where the volumes are not as large as for Automotive Solutions but still much larger than the research customers of Research Instruments. Typical customers are operators of car and truck fleets, bus companies as well as manufacturers of commercial vehicles and special vehicles with small to medium volumes. The product is being developed and tested to the full requirements and standards of the automotive industry, while great effort is put into gaining full functionality including the latest AI technology at a competitive price. In the second half of next year, the product will be launched to a wider audience, but already during the winter, a number of pilot tests with specially selected customers are planned. These tests will provide important information and data for the further development of algorithms and the tuning of customer functions. Part of the capital of 200 million SEK raised before the summer was aimed towards the AIS investment.

Eye tracking system for research purposes

Research Instruments has had a somewhat less intense quarter than the rest of the company, where the trend of delays on large contracts has unfortunately continued. However, we have not lost contracts to competitors or any business opportunities, it’s a shift in purchases beyond the company's control where sales are expected to be realized in the coming quarters. 

The company has started to develop the product range with the aim of broadening the offer. We will move our position forward regarding smaller eye tracking systems with lower price tags and higher volumes. In addition to increasing the total sales volume, it can also help to reduce the fluctuations in the business area in the future by not having as much relativ impact on a few large orders.

Expectations for Q4

We enter the fourth quarter with the highest possible pace in all parts of the business. We aim to defend our market-leading position by continuing to win design wins with existing and new customers. For this we are perfectly positioned. It is with both pride and pioneering spirit that we as a company develop the market for the interface between humans and AI, for the research and automotive industry, today and in the future

Martin Krantz

CEO Smart Eye 

For more information
Martin Krantz, CEO Smart Eye AB
Phone: +46 70-329 26 98
Email:
martin.krantz@smarteye.se

Anders Lyrheden, CFO Smart Eye AB
Phone: +46 70-320 96 95
Email: 
anders.lyrheden@smarteye.se 

 

About Smart Eye

Since 1999 Smart Eye has been engaged in development of artificial intelligence (AI) in the form of eye tracking technology that understands, supports and predicts a person’s intentions and actions. By carefully studying eye, facial and head movement, our technology can draw conclusions about a person’s awareness and mental state.
    Today our eye tracking technology is used in the next generation of cars and is helping the automotive industry take an important step towards safer and more environment-friendly transport solutions. In the research field, Smart Eye’s solutions are providing new opportunities in complicated and real situations and are paving the way for new insights in the aerospace, aviation and defence industries as well as in the fields of psychology, neuroscience, medicine and academic research.
    Smart Eye’s head offices are in Gothenburg, Sweden, and the company also has offices in Detroit, Michigan (USA), Tokyo (Japan) and Chongqing (China). In addition to these offices of its own, Smart Eye also has partners, retailers and distributors in several locations in Europe, the USA and APAC. Smart Eye’s solutions are used around the world by more than 700 partners and customers, leading research teams, brands and laboratories, including the US Air Force, NASA, BMW, Lockheed Martin, Audi, Boeing, Volvo and GM, to name a few. 

    Smart Eye’s business is organized in three business areas, Research Instruments, Automotive Solutions and Applied AI Systems (AIS). In Research Instruments, Smart Eye provides advanced eye tracking systems for measuring and analyzing human behavior. In Automotive Solutions, the company provides eye tracking software for integration in vehicles. In AIS Smart Eye provides both software and hardware for eye tracking integration in vehicles, specifically designed for retrofit for public transportation and commercial vehicles.
Visit
www.smarteye.ai for more information.

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This information is information that Smart Eye AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above at October 25, 2019 at 8:30 am (CEST).

Smart Eye is listed on Nasdaq First North Growth Market. Erik Penser is Certified Adviser and can be reached at +46-8-463 8000 or certifiedadviser@penser.se.