TIDMSEE
RNS Number : 1467Q
Seeing Machines Limited
16 October 2023
Seeing Machines Limited ("Seeing Machines" or the "Company")
16 October 2023
Year End Results - FY2023
Increasing global regulatory momentum targeting key transport
sectors underpins significant growth
Seeing Machines Limited (AIM: SEE, "Seeing Machines" or the
"Company"), the advanced computer vision technology company that
designs AI-powered operator monitoring systems to improve transport
safety, has published its audited financial results for the year
ended 30 June 2023 ("FY2023" or "the period").
FINANCIAL HIGHLIGHTS:
- Revenue increased by 48% to US$57.8m (2022: US$38.7m), ahead of market expectations[1]
- Non-Recurring Engineering (NRE) increased 53% to US$9.7m
(2022: US$6.4m) - a lead indicator for future royalty revenue
- Annual Recurring Revenue as at 30 June 2023 increased by 27% to US$13.6m (2022: US$10.7m)
- Total OEM revenue, including both Automotive and Aviation,
increased by 153% to US$26.6m (2022: US$10.5m)
- Automotive royalty revenues increased by 91% to US$7.6m (2022: US$3.9m)
- Aftermarket revenue increased by 10% to US$31.2m (2022: US$28.4m)
- Royalties from Guardian hardware sales of US$2.4m (2022: US$3.6m)
- Gross Profit of US$28.9m represents increase of 65% (2022: US$17.5m)
- EBITDA improved to a loss of US$9.3m (2022: loss of US$16.3m)
- Strong balance sheet, with cash[2] at 30 June 2023 of US$36.1m (2022: US$40.5m)
Paul McGlone, CEO of Seeing Machines, commented : "The global
demand for our technology has delivered strong growth in FY2023,
despite some challenges and delays. Our three business units are
now well established, and we are expecting to see continued growth
from each of them as we move closer to compliance deadlines in
Europe, where every vehicle on European roads will require
technology to mitigate risks associated with fatigue and
distraction. Seeing Machines is working directly with commercial
vehicle OEMs to increase the installation of Guardian technology as
factory-fit (After Manufacture) and with transport and logistics
operators as retrofit, our more traditional application. In
Automotive, while programs are taking longer to be awarded, we
expect there to be fewer, larger awards given the Euro NCAP and GSR
dates looming. And finally, in the growing Aviation business, we
are working with world-leading Collins Aerospace following the
announcement of our exclusive collaboration. The combination of
these factors lead to revenue expectations in FY26 of not less than
US$125m.
At end September, we can report a cash balance of US$30.8m and
expect to achieve a cash break-even run rate during FY25 from our
increasing focus on revenue growth and cost management."
OPERATIONS HIGHLIGHTS:
- Martin Ive appointed as CFO bringing significant public company experience
- Regulatory momentum continues to accelerate as compliance
dates for Europe's General Safety Regulation to enhance road safety
approach; and the US ramps up activity to incorporate safety
legislation requiring technology to reduce risks associated with
distracted and impaired driving
- The Company launched publication of quarterly Key Performance
Indicators (KPI's) to report on growth across Automotive as cars
start production and momentum in Aftermarket with Guardian
connections and hardware sales
AUTOMOTIVE:
- Seeing Machines and Magna International entered into an
exclusive, world-first collaboration to develop Driver and Occupant
Monitoring System (DMS / OMS) technology integrated into the
rear-view mirror, which included a US$65m investment in the Company
via an exclusivity arrangement payment of US$17.5m and a
convertible note of US$47.5m
- An additional program to deliver DMS / OMS for an existing
European based global OEM brings total won awards to 15 across 10
individual OEMs, carrying an initial, cumulative lifetime value of
US$321m with the majority of that revenue to be recognised over the
period to 2028
- A total of 6 OEM programs have now started production, and at
30 June 2023, Seeing Machines' technology is installed in over 1
million vehicles globally
- Over the 12-month period to 30 June 2023, cars on road
increased by 143% to 1,086,176 units (Q4 FY22: 447,225)
- Annual production volume increased 101% to 638,951 vehicles (FY2022: 317,491)
- Omnivision, a leading global developer of semiconductor
solutions launched its OAX4600 system-on-chip (SOC) platform with
interior sensing technology optimised with the Company's Occula(R)
Neural Processing Unit
AVIATION:
- Seeing Machines signed an exclusive licence Agreement with
Collins Aerospace generating licence revenue over three years of
US$10m, to jointly develop pioneering eye-tracking solutions for
the Aviation industry
- Collins will also pay the Company Non-Recurring Engineering
(NRE) payments to develop specific solutions, which will evolve
into potential future royalty payments as shipsets are released to
customers
- With no competition in this space, today, this world-first
collaboration brings together the companies' collective expertise
in navigation, communication, sensor technology, flight controls
and aviation system design to accelerate innovation and safety
across the industry
AFTERMARKET:
- Monitored Guardian connections increased 30% during the last
12 months to 51,975 units (Q4 FY2022: 39,892)
- Total Guardian hardware sales for FY2023 of 14,779 units, with
Q4 achieving record sales of over 10,000 units as backlog demand
met following easing of earlier supply chain constraints
- After Manufacture Segment (factory-fit) developing into a key
market for Guardian Gen 3, as European General Safety Regulation
requires all new commercial vehicles to be fitted with technology
to reduce risks of driver drowsiness in 2024, with requirements set
to expand to distraction from 2026
- Seeing Machines is working with Mobileye to jointly target
Aftermarket business globally, enhancing the Company's Guardian
solution by incorporating the Mobileye suite of external facing
Aftermarket products to alert drivers of potentially dangerous
situations
RESULTS PRESENTATIONS
Sell-side Analyst Briefing - The Company will host an in-person
briefing for analysts hosted by Paul McGlone, Chief Executive
Officer and Martin Ive, Chief Financial Officer. This will take
place at 9:00am BST on 16(th) October at the offices of Dentons
Global Advisors.
Private Investor Presentation - Paul McGlone, Chief Executive
Officer and Martin Ive, Chief Financial Officer, will provide a
live presentation and Q&A via the Investor Meet Company
platform on 16(th) October 2023 at 10:15am BST.
Enquiries:
Seeing Machines Limited +61 2 6103 4700
Paul McGlone - CEO
Sophie Nicoll - Corporate Communications
Stifel Nicolaus Europe Limited (Nominated
Adviser and Broker) +44 20 7710 7600
Alex Price
Fred Walsh
Nick Adams
Ben Burnett
Dentons Global Advisors (Media Enquiries)
James Styles
Jonathon Brill
seeingmachines@dentonsglobaladvisors.com +44 20 7664 5095
About Seeing Machines (AIM: SEE), a global company founded in
2000 and headquartered in Australia, is an industry leader in
vision-based monitoring technology that enable machines to see,
understand and assist people. Seeing Machines is revolutionizing
global transport safety. Its technology portfolio of AI algorithms,
embedded processing and optics, power products that need to deliver
reliable real-time understanding of vehicle operators. The
technology spans the critical measurement of where a driver is
looking, through to classification of their cognitive state as it
applies to accident risk. Reliable "driver state" measurement is
the end-goal of Driver Monitoring Systems (DMS) technology. Seeing
Machines develops DMS technology to drive safety for Automotive,
Commercial Fleet, Off-road and Aviation. The company has offices in
Australia, USA, Europe and Asia, and supplies technology solutions
and services to industry leaders in each market vertical.
www.seeingmachines.com
Review of Operations
The Company's total revenue for the financial year (excluding
foreign exchange gains and finance income) was US$57,771,000
compared to the 2022 revenue of US$39,000,000, representing a 48%
increase on prior year results.
2023 2022 Variance
Product US$'000 US$'000 %
OEM 26,707 10,518 154
Aftermarket 31,064 28,482 9
-------- -------- --------
OEM revenue more than doubled compared to the previous
corresponding period in line with the early stage ramp up of
vehicle production for a number of Automotive OEM programs. Royalty
revenues, derived from installation of Seeing Machines' Driver
Monitoring System (DMS) technology, increased by 91% to
US$7,580,000 from US$3,960,000 in FY22. The growth in royalty
revenues in the OEM business has resulted in the revenue mix moving
to a greater proportion of higher margin revenue streams, which is
expected to continue as Automotive programs become the dominant
source of revenue for this business unit. In FY23, the OEM
operating segment entered into two key exclusive collaboration
arrangements which earned licensing revenue of US$11,332,000 (2022:
nil). The remainder of the revenue in the OEM segment primarily
represents NRE (Non-Recurring Engineering) revenue which is
software development activities undertaken to embed DMS
technologies into the specific OEM configuration prior to the
commencement of production. NRE revenue increased by 16% to
US$6,766,000 (2022: US$5,850,000), and is a lead indicator of
future royalty revenue.
Aftermarket hardware and installation revenue decreased by 2%
over the prior year to US$14,495,000 (2022: US$14,722,000) which
was due to limited hardware supply in the first half of the
financial year. Connected Guardian units increased to 51,975 units
in June 2023 representing 30% growth from 39,832 in June 2022. As a
result of this growth, monitoring services revenue increased by 17%
to US$11,117,000 (2022: US$9,512,000), continuing the accumulation
of recurring revenue from the Guardian connections.
Gross profit increased from US$17,508,000 in FY22 to
US$28,898,000 in FY23. Operational gross profit margin improved 5%
year on year from 45% in FY22 to 50% in FY23 primarily reflecting
increased high-margin OEM royalty and exclusivity licence
revenues.
The Company continued to invest in its core technology
development to further strengthen its competitive moat, rapidly
expand features and leverage its unique systems approach across
global OEM and Aftermarket industries. As a result, Seeing Machines
has reflected a portion of development expenditure which meets
recognition criteria as an intangible asset. During FY23, such
development expenditure amounting to US$23,685,000 (2022:
US$18,611,000) was capitalised and US$2,444,000 (2022: US$829,000)
was amortised. The remaining research and development costs have
been expensed and amount to US$11,264,000 (2022: US$11,251,000).
The total investment in research and development for the current
year amounting to US$34,949,000 (2022: US$29,862,000).
The resultant loss for the period represented a decrease of
US$3,019,000 at US$15,548,000 (2022 loss: US$18,567,000).
Net cash and cash equivalents at 30 June 2023 totalled
US$36,139,000 (2022: US$40,470,000).
On 4 October 2022, Seeing Machines received funding of
US$47,500,000 from Magna International in the form of a
non-transferable 4-year convertible note maturing in October 2026
(the "Convertible Note"). Details of the Convertible Note can be
found in Note 21 to the Financial Statements. The proceeds of the
Convertible Note are being used to meet technology demands, for
general working capital and corporate purposes, as well as to
strengthen the Company's balance sheet so that it is fully funded
to deliver on its current business plan.
Operational Highlights
Seeing Machines continues to grow across all segments, now a
well-recognised leader in the delivery of proven driver and
occupant monitoring system technology with accelerated momentum
achieved throughout FY23.
Martin Ive, CFO, was appointed to the Company in November 2022.
Martin is a highly experienced finance professional and chartered
accountant. He was previously the CFO for leading ASX-listed Altium
Limited and is responsible for overseeing the global finance
function and providing financial insights and information to guide
strategic and operational decisions.
Regulatory tailwinds have increased demand across all road
transport segments as Europe's General Safety Regulation (GSR2) is
now in effect, and Euro NCAP (New Car Assessment Program) five-star
system imminent for all cars sold across Europe, delivering a
positive global impact on DMS fitment. The USA is ramping up its
path towards a regulated requirement for driver assistance
features, including DMS, to address distraction and impairment, in
particular. Seeing Machines is working closely with rule-makers and
other bodies in the USA to inform the protocols that underpin
robust safety outcomes.
The introduction of quarterly Key Performance Indicators (KPIs)
during the period has enabled the Company to demonstrate ongoing
momentum as well as year on year growth for the Automotive and
Aftermarket businesses. In Automotive, revenue has transitioned
from low margin NRE to high margin royalty revenue as cars start
production across a range of programs. Seeing Machines now has more
than 1 million cars on the road (1,086,176) installed with DMS
technology. This number is projected to grow substantially for the
foreseeable future based on current programs and will further
expand as more programs are awarded, currently under Request for
Quote (RFQ). The value of current won business, based on initial
minimum volumes stands at US$321m with the majority of that revenue
to be recognised over the period to 2028.
A highlight during the period was the agreement between Seeing
Machines Limited and Magna to exclusively co-market DMS/OMS
integrated into the rear-view mirror. This location is predicted to
experience the biggest growth across all markets and represents a
big step-change for the Company. Working with one of the world's
largest automotive tier-one suppliers, with a focus on mirrors,
will enable Seeing Machines to increase market share as OEMs work
hard to meet regulatory requirements, deliver a reliable driver and
occupant monitoring solution and respond to the integration
challenge inside the cabin.
In Aftermarket, Guardian connections have increased by 30% over
the year to almost 52,000 global installations, contributing to
expanding Annual Recurring Revenue (ARR) performance. With a
historically low churn rate across this business, ARR is a very
important contributor to overall Company revenue. Regulation,
specifically in Europe with the GSR, is positively impacting the
potential for increased Guardian connections and there has been
good momentum in Europe with commercial vehicle manufacturers
seeking to 'factory-fit' the technology in order to sell compliant
vehicles across the continent, and globally. Seeing Machines is
engaged with these customers and this additional segment ("After
Manufacture") is now a key focus for the Company. The regulatory
momentum has also seen increased interest in large multinational
organisations and Seeing Machines will refocus on the USA as it
launches its third generation Guardian technology early in
2024.
Seeing Machines signed an exclusive licence with Collins
Aerospace, a Raytheon Technologies business, to jointly develop
pioneering eye-tracking solutions for the global Aviation industry.
Collins Aerospace is the world's largest Tier 1 Avionics company
and has been working successfully with Seeing Machines for some
years. Building on this history, the collaboration will enable the
two companies to access the significant opportunity across aircraft
and simulators of over US$700 million in the next 20 years, and to
develop revolutionary fatigue management technology solutions to
increase safety across this sector. The exclusivity will see
Collins pay Seeing Machines US$10 million over three years as well
as NRE payments that will cover development of solutions, evolving
into potential future royalty payments as shipsets are released to
customers.
Seeing Machines exists to get people home safely and now boasts
three revenue generating business units that are contributing to
that mission every day.
Significant changes in the state
of affairs
During the financial year there was no significant change in the
state of affairs of the Company other than those referred to
elsewhere in this report and in the financial statements or notes
thereto.
Seeing Machines Limited
Consolidated statement of financial position
As at 30 June 2023
Consolidated entity
At
30 June 30 June 1 July
2023 2022 2021
Notes US$'000 US$'000 US$'000
Assets
Current assets
Cash and cash equivalents 10 36,139 40,470 35,541
Trade and other receivables 11 27,039 18,588 14,887
Contract assets 12 6,513 3,433 1,613
Inventories 13 11,191 933 1,970
Other financial assets 17 312 325 354
Other current assets 14 1,116 2,244 2,465
-------- -------- --------
Total current assets 82,310 65,993 56,830
-------- -------- --------
Non-current assets
Property, plant and equipment 15 3,861 3,033 2,520
Right-of-use assets 26 1,853 2,376 7,154
Intangible assets 16 45,064 23,609 3,189
-------- -------- --------
Total non-current assets 50,778 29,018 12,863
-------- -------- --------
Total assets 133,088 95,011 69,693
-------- -------- --------
Liabilities
Current liabilities
Trade and other payables 18 11,646 11,290 6,629
Contract liabilities 20 4,634 2,495 579
Lease liabilities 26 708 653 688
Provisions 19 4,414 3,512 3,669
-------- -------- --------
Total current liabilities 21,402 17,950 11,565
-------- -------- --------
Non-current liabilities
Borrowings 21 40,322 - -
Lease liabilities 26 2,195 3,000 3,954
Deferred tax liabilities 7 2,464 - -
Provisions 19 174 245 144
-------- -------- --------
Total non-current liabilities 45,155 3,245 4,098
-------- -------- --------
Total liabilities 66,557 21,195 15,663
-------- -------- --------
Net assets 66,531 73,816 54,030
-------- -------- --------
Seeing Machines Limited
Consolidated statement of financial position
As at 30 June 2023
(continued)
Consolidated entity
At
30 June 30 June 1 July
2023 2022 2021
Notes US$'000 US$'000 US$'000
Equity
Contributed equity 22 240,948 240,948 201,093
Other equity 23 5,749 - -
Accumulated losses 24 (185,520) (169,972) (151,405)
Other reserves 24 5,354 2,840 4,342
--------- --------- ---------
Total equity attributable to owners
of Seeing Machines Limited 66,531 73,816 54,030
--------- --------- ---------
Seeing Machines Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2023
Consolidated entity
Year ended
30 June 30 June
2023 2022
Notes US$'000 US$'000
Sale of goods 14,596 15,911
Services revenue 21,489 15,491
Royalty and licence fees 21,686 7,598
---------- ---------
Revenue 4 57,771 39,000
Cost of sales (28,873) (21,492)
---------- ---------
Gross profit 28,898 17,508
Net foreign exchange gains 5 916 1,022
Other income 5 31 77
Expenses 6
Research and development expenses (11,264) (11,251)
Customer suport and marketing expenses (6,477) (6,525)
Operations expenses (12,865) (8,161)
General and administration expenses (12,938) (11,167)
---------- ---------
Operating loss (13,699) (18,497)
---------- ---------
Finance income 691 282
Finance costs (2,571) (328)
---------- ---------
Finance costs - net (1,880) (46)
---------- ---------
Loss before income tax (15,579) (18,543)
Income tax (expense)/benefit 7 31 (24)
---------- ---------
Loss for the period (15,548) (18,567)
---------- ---------
Loss is attributable to:
Equity holders of Seeing Machines Limited (15,548) (18,567)
---------- ---------
Seeing Machines Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2023
(continued)
Consolidated entity
Year ended
30 June 30 June
2023 2022
Notes US$'000 US$'000
Loss for the period (15,548) (18,567)
Other comprehensive income/(loss)
Items that may be reclassified to profit
or loss
Exchange differences on translation of foreign
operations 24 310 (5,137)
---------- ---------
Other comprehensive income/(loss) for the
period, net of tax 310 (5,137)
---------- ---------
Total comprehensive income/(loss) for the
period (15,238) (23,704)
---------- ---------
Total comprehensive income/(loss) for the
period is attributable to:
Owners of Seeing Machines Limited (15,238) (23,704)
---------- ---------
Cents Cents
Loss per share for profit attributable to
the ordinary equity holders of the Company:
Basic loss per share 9(0.004) (0.004)
Diluted loss per share 9(0.004) (0.004)
Seeing Machines Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Employee
Foreign Equity
Currency Benefits
Contributed Other Accumulated Translation & Other Total
Equity equity Losses Reserve Reserve equity
Consolidated entity Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 July 2021 201,093 - (151,405) (8,991) 13,333 54,030
----------- -------- ----------- ------------ --------- --------
Loss for the period - - (18,567) - - (18,567)
Other comprehensive
loss - - - (5,137) - (5,137)
----------- -------- ----------- ------------ --------- --------
Total comprehensive
loss - - (18,567) (5,137) - (23,704)
----------- -------- ----------- ------------ --------- --------
Transactions with owners
in their capacity as
owners:
Shares issued 22 40,864 - - - - 40,864
Capital raising costs 22 (1,009) - - - - (1,009)
Share-based payments 28 - - - - 3,635 3,635
----------- -------- ----------- ------------ --------- --------
Balance at 30 June
2022 240,948 - (169,972) (14,128) 16,968 73,816
----------- -------- ----------- ------------ --------- --------
Balance at 1 July 2022 240,948 - (169,972) (14,128) 16,968 73,816
----------- -------- ----------- ------------ --------- --------
Loss for the year ended - - (15,548) - - (15,548)
Other comprehensive
loss - - - 310 - 310
----------- -------- ----------- ------------ --------- --------
Total comprehensive
loss - - (15,548) 310 - (15,238)
----------- -------- ----------- ------------ --------- --------
Transactions with owners
in their capacity as
owners:
Share-based payments 28 - - - - 2,204 2,204
Value of conversion
rights on convertible
notes 23 - 5,749 - - - 5,749
----------- -------- ----------- ------------ --------- --------
Balance at 30 June
2023 240,948 5,749 (185,520) (13,818) 19,172 66,531
----------- -------- ----------- ------------ --------- --------
Seeing Machines Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
Consolidated entity
Year ended
30 June 30 June
2023 2022
Notes US$'000 US$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST) 52,183 37,961
Payments to suppliers and employees (inclusive
of GST) (77,412) (49,543)
Interest received 691 284
Interest paid (5) -
Income taxes paid (496) (192)
---------- ---------
Net cash (outflow) from operating activities 25 (25,039) (11,490)
---------- ---------
Cash flows from investing activities
Purchase for plant and equipment (1,703) (1,344)
Payments for intangible assets (patents, licences
and trademarks) (253) (257)
Payment of intangible assets (capitalised
development costs) (23,685) (18,611)
Interest received on financial assets held
as investments 13 -
---------- ---------
Net cash (outflow) from investing activities (25,628) (20,212)
---------- ---------
Cash flows from financing activities
Proceeds from issues of new shares - 40,864
Cost of capital raising - (1,009)
Proceeds from borrowings 47,500 -
Transaction costs in borrowings (1,202) -
Principal repayment of lease liabilities (1,005) (922)
---------- ---------
Net cash inflow from financing activities 45,293 38,933
---------- ---------
Net (decrease) increase in cash and cash
equivalents (5,374) 7,231
Cash and cash equivalents at the beginning
of the financial year 40,470 35,541
Effects of exchange rate changes on cash and
cash equivalents 1,043 (2,302)
---------- ---------
Cash and cash equivalents at end of financial
year 10 36,139 40,470
---------- ---------
To read the FY2023 Annual Financial Report and access
accompanying notes to the above tables, please visit
https://www.seeingmachines.com/investors/announcements
[1] Consensus expectations for FY2023 are revenue of
US$53.9m
[2] Working capital increased due to the timing of Guardian
inventory deliveries, leading to an increased level of inventory
and receivables at 30 June 2023. Inventory levels are sufficient to
support demand for H1 FY2024 and will unwind along with receivables
in the first half of FY24.
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FR FLFIDITLSLIV
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